Case Name: Lemuel Kendrick, plaintiff in error, vs. J. B. O'Neil, Foster & Company, defendants in error
Court: Supreme Court of Georgia
Jurisdiction: Georgia
Decision Date: 1873-01
Citations: 48 Ga. 631
Docket Number: 
Parties: Lemuel Kendrick, plaintiff in error, vs. J. B. O’Neil, Foster & Company, defendants in error.
Judges: 
Reporter: Georgia Reports
Volume: 48
Pages: 472–479

Head Matter:
Lemuel Kendrick, plaintiff in error, vs. J. B. O’Neil, Foster & Company, defendants in error.
(Atlanta,
January Term, 1873.)
1. Partnership — Debts of — Joint Obligor’s Release. — When A, holding a written obligation made by a partnership composed of three persons, received from one of them nearly one-half of the amount due, and gave to him a written receipt for the money, “to be credited on a certain written obligation” made by the firm “now in the hands of Hillyer & Brother for collection, and in consideration of said sum I do hereby consent and agree that the other partners shall and will duly pay the balance due on said obligation without further cost or detriment to the said Thrasher.” Afterwards, the other parties failing to pay, A commenced suit on the obligation against the firm, and the firm pleaded the receipt and the covenant therein contained as a release from the debt, inuring by operation- of law to the whole firm:
Held, That the latter clause of section 2810 of the Revised Code providing that “a bond to indemnify the debtor against his own debt, is equivalent to a release” does not apply to this receipt and agreement.
2. Same — Same—Same.—This is not the debt of the person taking the receipt alone, but a debt on which he is jointly liable with others, and whilst a release to him would be a release of all, yet a covenant to indemnify him, may well ^consist with the continuance of the debt as an existing obligation against all, which was, upon the face of the paper, the clear intent of this receipt; besides, the other partners were not parties to this covenant, and could not sue on it, nor was this Thrasher’s own debt.
Warner, Chief Justice, dissented.
Release. Bond of indemnity. Covenant. Partnership. Before Judge Hopicins. Fulton Superior Court. April Term, 1872.
Kendrick brought suit against O’Neil, Foster & Company on the following instrument:
“Atlanta, Georgia, December 27th, 1867.
“This writing will witness that there is a balance due of $567 31 on a note given by John W. Grantham to L. Kendrick for the purchase money of a certain gold lot, in the county of Cobb, which the said Grantham afterwards sold to us, we agreeing and binding ourselves to pay off and take up his said note to Kendrick, and giving therefor our certain obligation therefor, in writing, and having made various payments on said note, there is still due from us the balance above stated, which amount of $567 31 we promise to pay to said Kendrick,'’with interest from the 21st day of November, 1866, the date of the last credit. But it is expressly understood ¡that this promise is given and delivered to George Hillyer, Esq., as the attorney of the said Kendrick, and that John B. O’Neil, one of the undersigned partners, claims a set-off of $187 00 against said Kendrick for building a mill in the year 1860, but which, the said Kendrick-being absent, his said attorney is not authorized to allow, and this new promise is given without prejudice to either party, as to any claim of set-off the one against the other, and all former papers are delivered up and canceled.
“J. B. O’Neil, Foster & Company, “By J. B. O’Neil.”
The defendants pleaded the following instrument, given by plaintiff to John J. Thrasher, one of the partners composing *the firm of O’Neil, Foster & Company, as a release to all the defendants:
“AtranTa, Georgia, August 7, 1869.
“Received of John J. Thrasher $300 00, paid by him, to be credited on a certain written obligation of O’Neil, Foster & Company to Lemuel Kendrick, dated December 27, 1869, and now in the hands of Hillyer & Brother for collection, and in consideration of said sum, I, as agent for said Kendrick, do hereby covenant and agree that the other partners shall and will duly pay the balance due on said obligation, without further cost or detriment to said Thrasher.
“George Kendrick.”
Under the charge of the Court, the jury returned a verdict for the defendants. Whereupon, the plaintiff moved for a new trial, upon the ground that the Court erred in charging the jury, “that the legal effect of said receipt, signed by George Kendrick, was to release John J. Thrasher from his liability upon the instrument sued on, and that the release of Thrasher operated in law as a release of the other obligors, and that if the jury shall find that George Kendrick was the authorized agent, for that purpose, of Lemuel Kendrick, and that he, as such agent, gave the receipt referred to, then the other parties to the obligation were discharged.”
The motion was overruled, and the plaintiff excepted.
Hirryer & Brother, for plaintiff in error, submit that the case at bar is not within the operation of the principle contained in section 2810 of the Code, citing: 4 Ga., 185; 5 lb., 550; 3 Cowen, 155; 2 Johnson, 186; 8 lb., 58, 59; 20 Ga., 415, 676; 24 lb., 288; 30 lb., 731; 2 Story on Con., 994; 2 Parson on Con., 249, et seq.; 8 Mass., 480. The Code of Georgia a mere “compilation,” and in construing Code, old law looked to as a key: 37 Ga., 412; 38 lb., 510.
Thrasher & Thrasher, for defendants.
Partnership — Debts of — Joint Obligor’s Release. — In the case of Marietta Savings Bank v. Janes, 66 Ga. 290, where an administrator signed a note as such in renewal of a debt due by his intestate, and the payee in the note agreed that the note should “never in any way or manner prejudice” the maker individually. It was held that the agreement was a covenant never to sue, and operated to release the maker from any liability growing out of the signing of the note. Citing with approval the principal case.
Same — Same—Same.—In the case of Powell v. Davis, 60 Ga. 70, where a plaintiff held a judgment against D. and .P., two joint defendants, and for a valuable consideration agreed with D., without the knowledge or consent of P. “to release and discharge D. from paying any more on said judgments:” It was held, the contract'being an absolute release of B. the judgment could not be enforced against P., for the legal effect of the release of one copartner is the release of all. Principal case cited with approval.
■ Same — Same—Same.—The case of Martin v. Monroe, 107 Ga. 333, 33 S. E. Rep. 62, cites with approval the principal case.’

Opinion:
*McCay, Judge.
Section 2810 of our Code is as follows: "A covenant never to sue is equivalent to a release; so, also, a bond to indemnify a debtor against his own debt." It is noticeable that this section does not say that a covenant not to sue or to indemnify one against his own debt is a release, but that it is equivalent to a release. It is noticeable also, that the latter clause of the section says, against his own debt, and does not say against his liability on a debt on which he is liable, jointly with others. And this language is very significant, for it is precisely the language of the common law. The doctrine that a covenant not to sue or a bond to indemnify one against his own debt is equivalent to a release, is found in Bacon's Abridgment, Release (a,) and is a familiar doctrine to every student of the old books. But the decisions are, so far as I can find, uniform that this doctrine does not, in any case, apply where the covenant refers to a debt on which the covenantee is not liable alone, but is liable jointly or severally with others. In Lucy vs. Knyaston, 2 Sackield, 575; 1 Lord Raymond, 688, the Court, after laying down, in strong terms, that a covenant of A not to sue a debt he has against B, or to indemnify B against such debt is equivalent to a release, says: "Because then one should precisely recover the same damages that he suffered by the other bringing the suit. A is bound to B, and B covenants never to put the bond in suit against A; if, after, B will sue A on the bond, he may plead the covenant as a release. But if A and B be jointly and severally bound in a bond to C in a sum certain, and C covenants with A not to sue him, that shall not be a release, but a covenant only; because he covenants only not to sue A, but does not covenant not to sue B For the covenant is not a release in its nature, but only by construction to avoid circuity of action. For when he covenants not to sue one he still has a remedy, and then it shall be construed as a covenant, and no more." This same point was decided in Dean vs. Newhall, 8 Tennessee Reports, 168, and in Hutton vs. Eyre, 8 Taunton, 280. *Chief Justice Marshall, in Garnett vs. Macon, 2 Brockenborough, 220, 225, very elaborately discusses this question, and lays down the same doctrine, and quotes with approval the words of Chief Justice Gibbs in 6 Taunton, to-wit: "We must look at the principle on which the rule has been applied, that a covenant not to sue shall operate as a release. Where there is only A on one side and B on the other, the intention of the covenant by A not to sue B must be taken to mean a release to B, who is accordingly absolutely discharged from the debt which A undertakes not to put in suit against him. The application of the principle in that case not only prevents circuity of action, but falls in with the clear intent of the parties. But in a case like the present, it is impossible to contend that by a covenant not to sue the defendant, (B,) it was the intention of the covenantors not to sue the plaintiff (the other partner) who was able to pay what his partner might be deficient in. It would have been easier and a shorter method to have given a release than to make this covenant. The only reason for adopting this course was that they did not choose to execute a release to the defendant, because that would also have operated as a release to the other partner, whereas they considered that a bare covenant not to sue the defendant would not extend to his partner; as, therefore, the terms of the covenant do not require sucn a construction, (that it is a release) and as it would manifestly be against the intent of the parties, we are decidedly of the opinion that it ought not to be permitted so to operate." It is to be noticed that in this case the defendant was the person released, the other partner had paid the debt, and was suing him. The reply was that the covenant not to sue was a release of both, and that the payment by the other partner was' gratuitous. Judge Marshaee says:. "I can add nothing to the language of Chief Justice Gibbs," but says in reference to the case before him, "that though it was a joint assumpsit and not a joint obligation, there is no difference in the principle as applied to the cases."
This same doctrine is laid down in Collyer on Partnership, thus: "Although a release to one partner is generally a *release to all, yet a covenant not to sue one of several partners will not operate as a release to the others, because the use of such an instrument evinces an intention on the part of the covenantor to avoid the legal effect of a release as to co-partners;" and he refers to 4 Greenleaf, 421; 7 John, 207; 4 Wendell, 607; 19 John, 120; 21 Wendell, 424; 18 Pick, 416; 17 Massachusetts, 628; 24 Maine, 506, and other cases. A covenant to indemnify against a suit is not so strong as a covenant not to sue. A covenant to indemnify is the most that can be made of this agreement, and it distinctly reserves the right tc go on the others. Thrasher, to whom the covenant is given, has no right to use this release as a means of preventing the plaintiff from doing the very thing he contracted to do, to-wit: to make the others pay it. Nor can the others use it, (the covenant,) because it is a covenant with Thrasher alone. They could not sue on it, because they are not parties to it. What shall be the effect on this covenant of a recovery here against all, is immaterial. If the covenant is ever claimed to .be broken, the fact of breach and the damages will be for the Court and the jury to say. It is sufficient now to determine that it is not a release to any of the parties, much less to all.
Judgment reversed.