if he will make affidavit that the acceptance is forged, his suit will be barred on the making of such affidavit.258 An agreement, however, not to sue one joint maker, on his payment of half the debt, until after endeavoring to collect the balance from the other maker, is without consideration, and will not bind the holder.259

261

A covenant with one maker never to sue him, with a reservation of all rights as to other parties, has been held not to be a release, but only to take effect as a covenant.26 And although damages are recoverable for breach of an agreement not to sue, it has been held that it cannot be pleaded in bar to the action.2 A covenant not to sue one party is not a release of another party; 262 e. g. of a joint maker or acceptor.263 And a more formal release of a joint debtor may be construed, if so intended, as a mere covenant not to sue.264 So, a covenant made by one joint holder not to sue on a bill will not be a release of the rights of the others.265

Novation.

§ 1840. An agreement for novation by the substitution of a new debtor or the note of another party is a release of the original maker.266 So, where the note of two of three partners is taken on their assuming the debt for a valid consideration, it will be a release of the third.267 So, where the holder agrees to accept the liability of one of two joint makers, and release the other.268 If a novation of the debt is intended, it must be proved.209 And a mere promise

258 Stevens v. Thacker, Peake, 187. 259 Pabodie v. King, 12 Johns. 426.

260 Kenworthy v. Sawyer, 125 Mass. 28.

261 Smith v. Grabill, 15 Ind. 267.

262 Henderson v. Stobart, 5 Exch. 99.

263 Byles, Bills, 243; Chit. Bills, 353; Dean v. Newhall, 8 Term R. 168; Hutton v. Eyre, 6 Taunt. 289.

264 Byles, Bills, 243; Chit. Bills, 353; Solly v. Forbes, 2 Brod. & B. 38; Willis v. De Castro, 4 C. B. (N. S.) 216.

265 Walmesley v. Cooper, 11 Adol. & E. 216, 3 Perry & D. 149.

266 McClellan v. Robe, 93 Ind. 298. But see Kelso v. Fleming, 104 Ind. 180, 3 N. E. 830.

267 Rusk v. Gray, 83 Ind. 589.

268 Lyon v. Aiken, 70 Iowa, 16, 29 N. W. 785.

269 Cockrill v. Johnson, 28 Ark. 193.

to hold the maker of a new note is not sufficient.2 270 Where a partnership note is made to A., and one of the makers, on a dissolution of the firm, assumes its debts, with A. as security, to the other partner, and afterwards forms a partnership with A. to continue the business, it will not be a release of the firm from its liability on its note to A.271 And where the acceptor of a bill given for coal purchased by the acceptor's company shows that the business of the company, and the coal in question, were turned over to another company, which agreed to pay the amount, and was charged by the seller with it, on his agreement to look to the new company, and not to the original debtor, it will be a sufficient defense, without showing that the plaintiff was a party to the agreement.272

Surrender of Instrument.

§. 1841. If the bill is surrendered by the holder to the maker, it is a sufficient release.273 So, if the first part is returned by the payee to the drawer on its nonacceptance, it will discharge the second part, in the hands of a holder with notice.2 274 Even a voluntary surrender of a bill without any consideration will amount to a release, if there is no fraud or mistake.275 So, a surrender in consideration merely of a part payment; 276 or of a new note for a smaller amount; 277 or by way of gift, without any consideration.278

270 Clark v. Billings, 59 Ind. 508.

271 Gulick v. Gulick, 16 N. J. Law, 186. 272 Clay v. Turley, 27 Law J. Exch. 2.

273 Cooke v. Darwin, 18 Beav. 60; Sherman v. Sherman, 3 Ind. 337. So, if the holder agrees to take off the surety's name, and let the note remain against the principal, and afterwards receives interest for several years from the principal, it will release the surety. Taylor v. Lohman, 74 Ind. 418. And a retransfer to the payee will discharge a maker who signed for the payee's accommodation. Flagg v. Kirk, 20 D. C. 335.

274 Ingraham v. Gibbs, 2 Dall. 134.

275 Larkin v. Hardenbrook, 90 N. Y. 333. But a cancellation by mistake will not discharge a note. Steinhart v. Bank, 94 Cal. 362, 29 Pac. 717.

276 Stewart v. Hidden, 13 Minn. 43 (Gil. 29). So, where the payee tore off one maker's name on receiving a partial payment from him. Silvers v. Reynolds, 17 N. J. Law, 275.

277 Draper v. Hitt, 43 Vt. 439.

278 Young v. Power, 41 Miss. 197. But it is not a sufficient plea that the

But a surrender to the maker for a limited time, and for a certain purpose, without any intention to release him, will not be a release.2 279 So, the surrender of a note to one maker, on an agreement for another note, to be executed by both, will not discharge either of them.280 So, if a note is surrendered after tender and refusal of Confederate currency, a receipt from the maker, in which he acknowledged his continued liability, and promised payment in other currency, will not amount to a release of the note.281 So, if the surrender of the instrument is obtained by fraudulently concealing that the note given in renewal was a forgery; 282 or if it was made in fraud of creditors, 283 or on receipt of other invalid securities.284

The cancellation or destruction of a bill by the holder, and with design, is a release. But if the holder tells his wife to burn a note, and she fails to do so, the maker will not be discharged.28 So, if the first indorser erases subsequent or secondary indorsements which are merely collateral, he will not discharge the maker thereby.288

Release of Execution.

§ 1842. Mere waiver of an execution against one party to a bill will not discharge other or subsequent parties.287 But if the holder deceased holder "gave the note to the maker, and made arrangements to have it delivered up to him," if it was not done. Henderson v. Henderson, 21 Mo. 379. But it is sufficient if the payee, in her last sickness, gave the note to her sister for the maker, saying that the maker had boarded her, etc., although the sister neglected to surrender it to the maker. Edwards v. Campbell, 23 Barb. 423.

279 Garlock v. Geortner, 7 Wend. 198.

280 Smith v. Awbrey, 19 Ala. 63.

281 Lewis v. Davisson, 29 Grat. 216.

282 Goodrich v. Tracy, 43 Vt. 319. Even against a surety who was misled, like the holder, by the fraud. Lovinger v. Bank, 81 Ind. 354.

283 Maine Mutual Marine Ins. Co. v. Pickering, 66 Me. 130.

284 Deyo v. Otoe Co., 37 Fed. 246.

285 In re Campbell's Estate, 7 Pa. St. 100.

286 Morris v. Cude, 57 Tex. 337.

287 Byles, Bills, 240; Chit. Bills, 611; Pole v. Ford, 2 Chit. 125. But see remarks of Lord Eldon in Mayhew v. Crickett, 2 Swan. 190. And in Tennessee it is provided by statute that a stay of execution against the principal discharges the indorser or surety, if given without his consent. Shannon's Code, 3522.

releases a levy against the maker's property, which is sufficient to satisfy the note, it will discharge the accommodation indorser.289 And if a judgment against the maker is set aside by agreement between the maker and holder, it will discharge the indorser only to the extent of the levy actually released.289 If property attached by the holder is released to an intervening claimant, it will discharge an indorser, where the claim was made by collusion, and might have been defeated.290 But where the holder of a note discharges the principal debtor from a ca. sa., with the consent of the guarantor, the latter will not be discharged. 291

Release Includes What.

§ 1843. Where the holder gives a sealed release of all debts, it cannot be shown by parol that it was not intended to include a bill.292 The release of a bill or note discharges all collateral security.295 And an agreement not to sue except on future contracts will include a note which was indorsed before, but not taken up by the plaintiff until afterwards.294 Where one guaranties a note of B. & Co., and gives the payee an indemnity bond against all debts. of B., and the bond is afterwards released by the payee, the release will not include the note of B. & Co., although it was given in part for a debt of B. which was covered by the bond.295 And where the holder of a bill gives a release in general terms, it will not include another bill of the same debtor, indorsed by the releasor, and held by a third party.296

In like manner, the release of a stockholder of the corporation

288 Priest v. Watson, 75 Mo. 310.

289 The burden of showing the extent being upon the holder. Pease v. Tilt, 9 Daly (N. Y.) 229.

290 Twiggs v. Bank (S. C.) 2 S. E. 398.

291 Terrell v. Smith, 8 Conn. 426.

292 Pierson v. Hooker, 3 Johns. (N. Y.) 68.

293 Byles, Bills, 244; Cowper v. Green, 7 Mees. & W. 633. But an extension which releases an indorser will not discharge him from a second note secured by same collateral. Hopkins v. Gray, 51 Iowa, 340, 1 N. W. 637.

294 Cuyler v. Cuyler, 2 Johns. (N. Y.) 186.

295 Davis Sewing-Mach. Co. v. Buckles, 89 Ill. 237.

296 Harrhy v. Wall, 2 Starkie, 195, 1 Barn. & Ald. 103. So, in a release of "all debts." Nichols v. Tracy, 1 Sandf. (N. Y.) 278. And see § 639, supra

(which made the note), as indorser, will not discharge him from his statutory liability as stockholder. 297 Neither will a release by an indorser, stipulating "not to take advantage of the statute by which indorsers are released from liability after the first court," release the holder from laches in not suing the maker for three years, and until he had become insolvent.298 Where the president of a bank indorses a bill in its name, in excess of the statutory limit of amount, he will not be discharged from liability for the consideration by the release of a prior accommodation indorser, with the consent of the bank.299

Release-By Whom Given.

§ 1844. A release by any party will be good between the parties to it, although the releasor is not at the time the holder.300 But, to affect other parties, the release must be by the holder.301 Α guardian has no power to release a note made to him, as such, and take new and worthless securities for it. 302 But an agent, taking a note and holding it for his principal, may release the maker, and the principal will be estopped from denying his authority to do so.303 On the other hand, a mere collecting agent in possession of a note cannot question the owner's right to release him.304

If the payee of a note secured by mortgage releases the mortgage after transferring the note, the indorsee of the note will not be bound by such release.305 And, even where a collateral mortgage is given

297 First Nat. Bank of Barre v. Hingham Mfg. Co., 127 Mass. 563. 298 Foster v. Stafford, 14 Ala. 714.

299 Brannin v. Loving, 82 Ky. 370.

300 Byles, Bills, 242; Chit. Bills, 352; Scott v. Lifford, 1 Camp. 246, 9 East, 347.

301 E. g. an accommodation indorser setting up the release of a prior party. Armstrong v. Lewis, 61 Ga. 680.

302 Smith v. Dibrell, 31 Tex. 239.

808 West Boylston Mfg. Co. v. Searle, 15 Pick (Mass.) 225. But an attorney has no power to covenant not to sue, if collateral received prove sufficient. Bradford v. Arnold, 33 Tex. 412. And see § 369, supra, as to the authority of a corporate officer.

304 Flanagan v. Brown, 70 Cal. 254, 11 Pac. 706.

305 Keohane v. Smith, 97 Ill. 156; McCracken v. Insurance Co., 43 Md. 471: Dewing v. Crueger, 7 Wash. 590, 35 Pac. 393. Although the releasor sup posed the notes had been paid. Martindale v. Burch, 57 Iowa, 291, 10 N. W.