Whitcomb v. National Exchange Bank

Urner, J., delivered the opinion of the Court. The Negotiable Instruments Act, forming Article 13 of the Code of Public General laws, provides by Section 141 as follows: “The holder may expressly renounce his rights against any party to the instrument, before, at, or after its ⁶¹⁴ maturity. An absolute and unconditional renunciation of his rights against the principal debtor made at or after the maturity of the instrument discharges the instrument. But a renunciation ■ does not affect the rights of a holder in due course without notice.

A renunciation must he in writing, unless the instrument is delivered up to the person primarily liable thereon.” In view of this provision the Court below declined to submit for determination as an issue of fact the question whether there had been an oral agreement for the release of the defendant as an endorser of the promissory note in suit. The judgment below was in favor of the National Exchange Bank of Baltimore City, the present appellee, for a balance, including interest, of $3,331.90 on a promissory note of the Boxbury Distilling Company for the original sum of $9,000.00, dated October 13, 1908, payable on demand to the appellee’s order, and endorsed by the appellant and others before delivery. It is shown by the proof that this note was given as a substitute for a time note to the bank which had been executed by the same parties. At the inception of the last mentioned note the Distilling Company had deposited with one of the endorsers, for their common indemnification, eighteen bonds of the company of the par value each of $1,000.

After the substituted demand note had been in existence for about a year, it was reduced by a payment of $5,000, and the bonds just referred to^ were delivered to the bank as collateral security for the remainder of the indebtedness. This occurred in November, ■ 1909. Interest was paid on the note to December 31st of that year, after which no further payments of any kind were made until August, 1913, when a dividend of $335.95 upon the collateral bonds was paid by the receivers of the Distilling Company, and this was followed by another of $135.31 from the same source on the note itself in December, 1913. The defendant endorser testified that the sum. paid on the note in 1909 represented the amount realized by the Distilling ⁶¹⁵ Company from a salo of $5,000 worth of whiskey to the defendant which was made in pursuance of an arrangement for such an application of the proceeds.

The money required for this purchase was obtained by the defendant upon a mortgage of a portion of his property. It was through his action that the bonds hold as an indemnity for the endorsers were delivered to the bank as collateral. The- defendant states that these results were accomplished by him under an agreement with Air. Waldo .Newcomer, .President of the National Exchange Hank, that in consideration of this service the defendant should be released from further liability on his endorsement.

This testimony is met by Mr. Newcomer’s express denial that there was any such agreement; hut the defendant claims the right to have the disputed question of fact submitted, under a prayer for that purpose, to the finding of the Court sitting as a, jury. The theory advanced by the defendant is that tho provision we have quoted from the Negotiable Instruments Act applies only to renunciations made without consideration, and that it has no reference- to releases of liability under agreements which operate by way of accord and satisfaction. In view of the general policy of the statute wo are; unwilling to restrict its application by adopting the construction suggested. Assuming that the transaction described hy the defendant, and upon which he relies, would furnish a sufficient basis for an accord and satisfaction with respect to his liability as an endorser, we are of the opinion that under tho plain and comprehensive- language of the Act the only mode of proving the alleged release is by a renunciation in writing.

Undoubtedly the word “renunciaton,” as used in the section quoted, appropriately describes the act of surrending a right or claim without recompense, but it can be applied with equal propriety to the- relinquishment of a demand upon an agreement supported by a consideration. It is defined 'as meaning: “The act of renouncing or giving up- something possessed,” Websters international Dictionary; “The act ⁶¹⁶ of giving up a right,” Bouvier’s Law Dictioncui'y (15th ed.) ; “The legal act by which a person abandons a right acquired, but without transferring it to another,” Century Dictionary. These definitions are practically the same as those given in the same authorities for the word “release,” as follows: “A giving up or relinquishment as of a right or claim,” Webster; “The giving up or abandoning a claim or right to the person against whom the claim exists or the right is to be exercised or enforced,” Bouvierj “A surrender of a right,” Century. Both the terms thus similarly defined are classed as synonyms of “relinquishment.” There can be no doubt that the word we are interpreting is sufficiently broad in its meaning to include the release of a claim by virtue of an accord and satisfaction as well as a waiver of liability, made gratuitously.

If we were to accept the