Page Trust Co. v. Lewis

BeogdbN, J. 1. Does a confession of judgment by the maker of a promissory negotiable note release and discharge the liability of the endorsers of said note, who are not parties to said confession of judgment? 2. Is an oral agreement valid and enforceable between the vice-president of a bank, which holds negotiable promissory notes, executed by a corporation, and the endorsers of said notes, who are officers of the corporation, that the bank will release said endorsers from all liability on the notes if such endorsers will procure a confession of judgment in favor of the bank by the corporation? The law answers the first question in the negative. Bank v. Lumber Co., 123 N. C., 24, 31 S. E., 348. In that case a confessed judgment was involved and the Court said: “Between the parties to an action wherein a judgment is rendered the judgment is a merger and the note or instrument sued upon is extinguished; but as to sureties or endorsers who are not parties to the judgment, there is no merger or extinguishment of the note or instrument.” Likewise, the law answers the second question in the negative. Bank v. Lennon; 170 N. C., 10, 86 S. E., 715; Bank v. West, 184 N. C., 220, 114 S. E., 178; Manly v. Beam, 190 N. C., 659, 130 S. E., 633. C. S., 3104. Bank v. Clark, 198 N. C., 169, 151 S. E., 102. In the Lennon case, supra, the Court held that the cashier of a bank had no power to release the liability of a party upon a note upon the payment of a certain sum by another party to the same instrument upon the ground that such an agreement was without consideration, and upon the further ground that the “cashier had no power or authority to make such agreement as . . . alleged, by virtue of his office and no express authority is shown.” Moreover, under the provisions of C. S., 3104 a verbal renunciation is ineffective. Thus, in Manly v. Beam, supra, the Court said: “The note sued on in this action is a negotiable instrument; plaintiff is the holder of said note; it has not been delivered up to the person primarily liable; a renunciation of her right to hold defendant liable on the note as one of the makers, in order to avail defendant, as a defense to an action against him on the note, must be in writing. A parol renunciation is not sufficient.” *290 In the case at bar the trial judge appointed a referee to pass upon all claims that may be asserted against the Motor Company. Hence, if the defendants have any right to assert against the Page Trust Company upon an accounting, such right is fully preserved. Therefore, we hold that upon the record the ruling of the trial judge was correct. Affirmed. Adajxs, J., took no part in the decision of this case.