Logan County National Bank v. Barclay

| Ky. Ct. App. | Jun 11, 1898

JUDGE WHITE

ebliveeed the opinion oe the coukt.

In February, 1880, the appellee, J. W. Barclay, and one of the appellants, W. F. Barclay, executed a note to the Logan County National Bank, due four months after date, for $700. After the maturity of the note it was sold and. delivered to Ryan & Barclay, a firm composed of C. H. Ryan and W. F. Barclay, one of the obligors, and after-wards sold and delivered to H. Barclay Caldwell. The note seems to have passed without assignment, but by delivery merely, to Ryan & Barclay, but by this firm was-assigned by separate instrument to H. Barclay Caldwell. This action was brought in the name of Logan County National Bank, C. H. Ryan, and W. F. Barclay, and H. Barclay Caldwell, for the sole use and right in the latter, against appellee, J. W. Barclay. The appellee filed answer in two paragraphs, the first one as follows: “The defendant, J. W. Barclay, for his answer herein, says that the plaintiffs are not entitled to have judgment against Mm in this action, because he says that the note sued on and filed with the petition was fully paid off and discharged long before the institution of this action.” By a second paragraph of the answer it is pleaded that the plaintiff W. F. Barclay is the same W. F. Barclay who was a joint obligor in the note sued on, and engaged in business with C. H. Ryan under the firm name of Ryan & Barclay, and that, by reason of the assignment of the note to that firm, the liability of W. F. Barclay was extinguished as an obligor, and by operation of law this appellee was released from liability upon said note; that the firm of Ryan & Barclay held the note till they ceased to do business as a firm, before the assignment to H. Barclay Caldwell. After the court had overruled a demurrer to the second paragraph, appellants filed reply, controverting its allegation that before the assignment to Caldwell the firm of Ryan & Barclay had ceased to do business. Upon the issues thus presented trial was had before a jury, and a verdict rendered for appellants. The appellee then moved the court for judgment notwithstanding the verdict. This motion the court sustained, and rendered judgment dismissing the action, and from that judgment this appeal is prosecuted.

It will be observed that the appellant did not reply to the first paragraph of the answer pleading payment, and appellee insists the answer should be taken as confessed, and there was no issue as to payment. The petition contains the usual allegation that the note is just, due, and wholly unpaid, except interest paid. In the case of Ermert v. Dietz, 19 Ky. Law Rep. 1639 [44 S.W. 138" court="Ky. Ct. App." date_filed="1898-01-18" href="https://app.midpage.ai/document/ponder-v-lard-7133753?utm_source=webapp" opinion_id="7133753">44 S. W. 138], this court said: “We are of opinion that it was not necessary for the plaintiff to file a reply traversing the allegation of payment. The plaintiff alleged, as we have stated, that no part of the account had been paid or any interest thereon. The answer does not, in express words, deny the allegation of the petition, as to payment, but does so by affirmalively alleging that the defendant has paid the debt and interest. Section 126, Civ. Code Prac., provides that every material averment of a pleading is to be taken as true, unless specifically traversed (but with certain exceptions which have no application to this case). When the affirmative averment, as in this case, in effect, is a denial of an averment in the petition, a traverse is unnecessary.” By this it is clear that a reply to the plea of payment was unnecessary.

The reply to the second paragraph of the answer denied that the firm of Ryan & Barclay, before the assignment to Caldwell, had dissolved and ceased to exist. However, it did not deny, and therefore admitted, that the W. F. Barclay, of the firm of Ryan & Barclay, one of the plaintiffs, was the same party who was a joint obligor on the note when executed to the Logan County National Bank, and the note was sold and delivered to the firm of Ryan & Barclay. The question then presented is, was the liability of the appellee on the note extinguished by its transfer and sale to Ryan & Barclay? In the case of Long & Robertson v. Bank of Cynthiana, 1 Litt., 290" court="Ky. Ct. App." date_filed="1822-06-13" href="https://app.midpage.ai/document/long-v-bank-of-cynthiana-7382763?utm_source=webapp" opinion_id="7382763">1 Lit., 290, the court said: “The indorsement of the note to the defendants must operate as an extinguishment of their obligation to pay it; for, by the indorsement to them, they became its proprietors, and they could not be bound to themselves. Nor could the obligation, thus extinguished, be resuscitated by theindorsement and delivery by them to the bank; for, in general, when an obligation is once extinguished, it can not be revived.” In the case of Debard v. Crow, 7 J. J. Marsh. 7, the court said: “It is true that, if the obligee makes his obligor executor, the cause of action may be extinguished. So, too, if a feme obligee marry the obligor, Ms legal obligation may be released by operation of law. And the same consequence will result from either of those acts , by an obligee although there may be other co-obligees and other co-obligors' than the obligee and obligor immediately engaged in the act of extinguishment; for a release by one of several co-obligors will release the whole obligation, and any voluntary act of an obligee, whereby an action on the obligation is destroyed or suspended, is, by operation of law, equivalent to a formal and actual release.” In the case of Williamson v. McGinnis, 11 B. Mon. 74" court="Ky. Ct. App." date_filed="1850-12-21" href="https://app.midpage.ai/document/williamson-v-mcginnis-7378004?utm_source=webapp" opinion_id="7378004">11 B. Mon. 74, this court said: “An absolute release to one of several, who are jointly bound, exonerates all the obligors. This is a well-settled rule of law.77

We are of opinion that the sale and delivery by the bank after maturity to the firm of Ryan & Barclay operated to extinguish the note as to W. F. Barclay, as at that time he was both co-obligor and co-obligee, and that at that time the Arm of Ryan & Barclay could not have maintained suit on the note against J. W. and W. F. Barclay. This being true, the extinguishment as to W. F. Barclay operated as an extinguishment as to J. W. Barclay. Nor is this doctrine in conflict with that laid down in Smith v. Latimer, 15 B. Mon. 61. That case decides that “one of several joint and several obligors may pay off the note to the obligee, and, by agreement with the obligee, reserve the right to sue the other joint and several obligors at law in the name of the obligee upon the note.” In the case at bar it is not pretended that one of the obligors paid the note off, and reserved the right to sue in the name of the obligee, but the allegation is that the note was sold and delivered after maturity to Ryan & Barclay, not that it was paid off by W. F. Barclay as surety, and the note taken, reserving the right to sue in the name ¡of the obligee. The case of Smith v. Latimer has no application to the case at bar. We are therefore of opinion that the court did not err in rendering judgment for appellee notwithstanding the verdict of the jury. Judgment affirmed.