Hazlehurst Oil Mill & Fertilizer Co. v. Booze

• Decision Date: 16 March 1931
• Docket Number: 28911
• Citation: 160 Miss. 136,133 So. 120
• Parties: HAZLEHURST OIL MILL & FERTILIZER CO. v. BOOZE ET AL
• Court: Mississippi Supreme Court

133 So. 120

160 Miss. 136

HAZLEHURST OIL MILL & FERTILIZER CO. v. BOOZE ET AL

No. 28911

Supreme Court of Mississippi

March 16, 1931

Division A

1. BILLS AND NOTES.

Word "renounce," in Negotiable Instruments Law providing renunciation must be in writing unless instrument is delivered up, means release without consideration (Code 1930 section 2778).

2. BILLS AND NOTES.

Oral release of liability on promissory note for consideration was valid without instrument being delivered up to persons liable thereon (Code 1930, sections 2776, 2778).

HON. R E. JACKSON, Chancellor.

APPEAL from chancery court of Bolivar county, Second District, HON R. E. JACKSON, Chancellor.

Action by the Hazlehurst Oil Mill & Fertilizer Company against Mary C. Booze and others. From the judgment, plaintiff appeals. Affirmed.

Affirmed.

W. S. Henley and Webster Millsaps, both of Hazlehurst, and Moody & Johnson, of Indianola, for appellant.

A renunciation must be in writing, unless the instrument is delivered up to the person primarily liable thereon.

Sec. 2876, Hemingway's Code of 1927; Brannan on the Negotiable Instrument Law Sec. 122; Jammeson v. Citizen's National Bank, 130 Md. 75, 99 A. 994, Ann. Cas. 1918 A-1097; Engle v. Brown, 216 S.W. 541; Baldwin v. Daly, 83 P. 724; Pitt v. Little, 108 P. 941.

The term renunciation,' describes the act of surrendering a right or claim without recompense, but it can be applied with equal propriety to the relinquishing of a demand upon an agreement supported by a consideration. Therefore this term includes the release of a claim by virtue of an accord and satisfaction, as well as a gratuitous waiver of liability.

Whitcome v. National Exchange Bank 123 Md. 612, 91 A. 689; Jammeson v. Citizen's National Bank, 130 Md. 75, 99 A. 994; Ann. Cas. 1918-A 1097; Engle v. Brown, 126 S.W. 541; Baldwin v. Daly, 83 P. 724.

Shands, Elmore & Causey, of Cleveland, for appellees.

An oral agreement releasing liability on a promissory note is valid and effectual.

Bass v. Boeries, 116 Miss. 419, 77 So. 189.

OPINION

Smith, C. J.

The appellant sued the appellee on two promissory notes for one thousand and fifteen hundred dollars respectively, executed by the Farmers' Co-operative Mercantile Company, payable to the appellant, and indorsed by Eugene P. Booze, Isaiah T. Montgomery and M. R. Montgomery. The Montgomerys died before the suit was begun. The appellees, defendants in the court below, are Eugene P. Booze individually, and as administrator of the estates of both of the Montgomerys, and Mary C. Booze. The last named is a daughter of the Montgomerys, who were husband and wife, and who had purchased certain property belonging to their estate, assuming their debts as part of the consideration therefor. The Farmers' Co-operative Mercantile Company was adjudged a bankrupt prior to the institution of the suit. After the execution of these notes other money was advanced to the Farmers' Co-operative Mercantile Company by the appellant, and while these advances were being made, a promissory note payable to the Farmers' Co-operative Mercantile Company, secured by a deed of trust on real property, was assigned by that company to the appellant as security for the two notes and the additional money that was being advanced.

This collateral note was surrendered by the appellant to the makers thereof, who then executed another for a smaller amount, secured by a deed of trust on the same property, payable to the Booze Mercantile Company, which was indorsed by the payee and by E. P. Booze, and delivered to the appellant as security for the hereinbefore mentioned debts. There is a conflict in the evidence relative to the agreement on which this transaction was based, but the court below was warranted in believing that included in the agreement was an oral release by the appellant of the two Montgomery estates, of which E. P. Booze is administrator, from liability on the two notes here sued on.

The deed of trust securing the collateral note was foreclosed, and the money derived therefrom was applied by the appellant to the payment of the debt due it by the Farmers' Co-operative Mercantile Company for money loaned it, in addition to that evidenced by the two notes here sued on.

The appellant invokes section 122, Negotiable Instruments Law, being section 2778 of the Code of 1930, under which it claims that the release of the Montgomerys' liability on the two notes, if made, is void.

Clause 4 of section 119, Negotiable Instruments Law, being clause 4 of section 2775 of the Code of 1930, provides that "a negotiable instrument is discharged; . . . (4) By any . . . act which will discharge a simple contract for the payment of money."

Under this section, which but announces a rule of the common law, an oral release of liability on a promissory note for a consideration is valid, though not in writing, and without the instrument being delivered up to the persons liable thereon, unless the requirements of section 122, Negotiable Instruments Law, section 2778 of the Code of 1930, applies thereto. This section provides that: "The holder may expressly renounce his rights against any party to the instrument, before, at or after its 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 be in writing, unless the instrument is delivered up to the person primarily liable thereon."

This section has given the court considerable trouble, and the decisions thereon are in conflict. The history of the section seems to indicate that the word "renounce" therein means "release without consideration." That history, as will appear from 3 Williston on Contracts section 1832, and several of the decisions hereinafter cited, is this: In Foster v. Dawber, 6 Exch. 839, the court held that liability on a...