Case Name: THE FIRST & CITIZENS NATIONAL BANK OF ELIZABETH CITY, Plaintiff, v. W. E. HINTON, GEORGIA HINTON and Husband, R. L. HINTON, Defendants
Court: Supreme Court of North Carolina
Jurisdiction: North Carolina
Decision Date: 1939-09-20
Citations: 216 N.C. 159
Docket Number: 
Parties: THE FIRST & CITIZENS NATIONAL BANK OF ELIZABETH CITY, Plaintiff, v. W. E. HINTON, GEORGIA HINTON and Husband, R. L. HINTON, Defendants.
Judges: 
Reporter: North Carolina Reports
Volume: 216
Pages: 159–161

Head Matter:
THE FIRST & CITIZENS NATIONAL BANK OF ELIZABETH CITY, Plaintiff, v. W. E. HINTON, GEORGIA HINTON and Husband, R. L. HINTON, Defendants.
(Filed 20 September, 1939.)
Bills and Notes § 17 — When liability of surety is discharged by compromise and settlement, maker is entitled to credit only for amount actually paid.
The payee of a note, by compromise and settlement, accepted cash and lands at an agreed value from the surety or accommodation endorser in full satisfaction of the surety’s liability, and credited the note with the sum total of the cash and the value of the lands at the price agreed. Held: The maker is not entitled to a credit on the note for the full amount of the surety’s liability, but only to the credit entered on the compromise and settlement, since payment by the surety does not discharge the maker, and since there is no obligation between the surety and maker that the surety shall pay the debt, and the parties being jointly and severally liable to the payee or holder in due course. C. S., 3101.
Appeal by defendant W. E. Hinton from Carr, J., at February Term, 1939, of Pasquotank.
Affirmed.
J. Kenyon Wilson for plaintiff, appellee.
Q. C. Davis, Jr., and George J. Spence for defendant, appellant.

Opinion:
Seawell, J.
E. L. Hinton was an accommodation endorser on three notes of the defendant W. E. Hintpn to the plaintiff bank, aggregating $14,500. The plaintiff elected to bring an action against E. L. Hinton alone (Bank v. Carr, 130 N. C., 479, 41 S. E., 876, and cas.es cited), and obtained judgment for the amount of his liability. The defendant W. E. Hinton, indebted to tbe plaintiff in a nrncb larger sum, made a promissory note to tbe plaintiff, consolidating tbe indebtedness, in tbe sum of $32,728.01, wbicb included tbe amount of tbe notes endorsed by E. L. Hinton and represented by tbe judgment against bim. Subsequently, tbe bank sought to bave execution on its judgment against E. L. Hinton, and tbe said Hinton brought suit to enjoin tbe plaintiff from enforcing tbe judgment. Tbe grounds set forth are not material to a decision of this controversy.
Tbe plaintiff also brought a suit against W. E. Hinton upon tbe consolidated note of $32,728.01.
Tbe two cases were consolidated for a bearing. Pending tbe bearing a compromise was effected between plaintiff and E. L. Hinton, whereby tbe latter paid tbe plaintiff $7,000 and conveyed certain lands at an agreed value in consideration of tbe cancellation of tbe judgment against bim, and tbe judgment was accordingly canceled by order of tbe court. Tbe defendant ~W. E. Hinton contended before tbe trial judge, and contends here, that be is entitled to bave tbe entire amount of tbe judgment against E. L. Hinton — $14,500—credited as a payment on bis $32,728.01 liability to plaintiff. Tbe trial judge took tbe view that be was entitled only to tbe amount actually paid tbe plaintiff and could not avail himself of tbe full $14,500 as a credit. This is tbe only question before tbe court.
Tbe defendant "W. E. Hinton bad no interest in tbe judgment obtained by tbe plaintiff against E. L. Hinton and no equity in its enforcement, and bis own obligations to tbe bank were neither determined nor affected thereby. Certainly any payment made by E. L. Hinton to tbe bank would inure to tbe benefit of both, since it reduced tbe debt; and, correspondingly, any payment made by tbe maker, W. E. Hinton, would bave a like effect for tbe same reason. C. S., 3101. But while a release of tbe maker from bis obligation releases tbe surety or endorser (Lumber Co. v. Buchanan, 192 N. C., 771, 136 S. E., 129), since it discharges tbe debt, and while partial release has tbe same effect pro tanto, tbe release of the surety or accommodation endorser does not relieve the principal debtor. There is no obligation between tbe maker and tbe accommodation endorser that tbe latter shall pay tbe debt, and there is no equity in favor of tbe maker to require that tbe endorser shall do so. As to tbe payee or bolder in regular course, these are severally, as well as jointly, bound.
Tbe compromise arrangement between tbe plaintiff and E. L. Hinton was merely a release of tbe latter as endorser, and doubtless tbe inducement thereto on tbe part of tbe bank was that it was realizing all it reasonably could from tbe security.
Consolidation of these cases bad no effect upon the individual rights of the parties. There is nothing affirmatively appearing in the record from which it could be inferred that the compromise was made in the interest of "W. E. Hinton, and no presumption to that effect can be indulged.
The substitution, pro tanto, of R. L. Hinton for the bank as subro-gated payee did the defendant W. E. Hinton no financial harm, since he is bound for no more than the actual sum paid by his endorser, and is credited by the same amount on his obligation to the bank. Pace v. Robertson, 65 N. C., 550. There is no room beyond that for speculation either upon his endorser or upon the bank by reason of the compromise.
The maker of the note, W. E. Hinton, should be morally gratified, and certainly must be legally content, that his accommodation endorser sustained no heavier loss through his default.
The defendant Hinton is entitled to credit only for the amount actually paid, and the judgment is, therefore,
Affirmed.