Cano v. Walker
297 Neb. 580
| Neb. | 2017Background
- Cano obtained summary judgment (Nov. 20, 2013) against co-obligors Michael Walker and Billy E. Claborn, Jr., on a joint-and-several promissory note for $387,433.20.
- On Nov. 11, 2013 (without Walker's knowledge), Cano and Claborn executed a stipulation: Claborn would pay specified sums and provide services; upon satisfaction of those terms Cano agreed to release Claborn from the judgment.
- Cano filed a “Satisfaction” stating Claborn had satisfied the judgment, while expressly noting the judgment remained unsatisfied as to Walker; Cano continued collection efforts against Walker.
- Walker later moved to discharge the judgment, arguing Nebraska’s common-law rule releases all co-obligors when one is unconditionally released; the district court denied discharge but reduced the judgment by $40,000.
- The Nebraska Supreme Court considered whether the stipulation and satisfaction amounted to an unconditional, voluntary release of Claborn such that Walker was also released, and whether the common-law rule should remain viable.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether the stipulation operated as an unconditional release of Claborn and thus released Walker under the common-law rule | Cano: the stipulation merely stayed execution against Claborn; release language was executory and limited; later satisfaction reserved Walker’s liability | Walker: stipulation, once performed, unconditionally released Claborn and thus by rule released Walker | Held: The stipulation, once its terms were satisfied, operated as an unconditional release of Claborn and thereby released Walker |
| Whether the later filed satisfaction (which recited Walker remained unsatisfied) prevented the release from applying to Walker | Cano: the satisfaction’s qualifying language shows intent to preserve Walker’s liability | Walker: operative release occurred when stipulation terms were performed; the later satisfaction’s wording is irrelevant | Held: The effective release occurred upon performance of the stipulation; the satisfaction’s reservation language did not prevent the release from operating |
| Whether the district court properly reduced the judgment and deny discharge | Cano: reduction and denial appropriate because Walker remained liable for remainder | Walker: court should have discharged Walker entirely | Held: Denial of discharge was error; judgment must be discharged as to Walker (reversed and remanded with directions) |
| Whether Nebraska should abandon the common-law rule that a release of one joint obligor releases all | Cano: urges abolition of the rule | Walker: defends continued application of settled Nebraska precedent | Held: Court declines to abolish rule; stare decisis and predictability favor retaining rule |
Key Cases Cited
- Bankers Life Ins. Co. v. Ohrt, 131 Neb. 858, 270 N.W. 497 (1936) (articulates rule that unconditional release of one joint maker releases all)
- Coleman v. Beck, 142 Neb. 13, 5 N.W.2d 104 (1942) (applies common-law release rule; distinguishes surety/assumption contexts)
- Lamb v. Gregory, 12 Neb. 506, 11 N.W. 755 (1882) (early adoption of the rule that release of one joint obligor discharges all)
- Huber Mfg. Co. v. Silvers, 85 Neb. 760, 124 N.W. 148 (1910) (applies rule despite equivocal facts; release without recourse held to discharge co-makers)
- Farmers State Bank v. Baker, 117 Neb. 29, 219 N.W. 580 (1928) (releases of one joint debtor held to operate as releases of all without others’ consent)