Ives v. Bank of Lansingburgh

Manning J.: We think the Court should have charged as requested, that the taking of the quit claim deed from Bell was a. [367] rescission of the contract by which he had purchased the land of Ives. Bell had purchased the land of Ives, and given the notes in question in payment, and was to receive a deed on paying the notes. Ives indorsed the notes to' the bank, at the same time giving the bank a warranty deed of the land subject to Bell’s interest therein under the contract. The bank afterwards took a release from Bell of his interest in the land under the contract. Had Ives before he parted with the notes and land taken such a release from Bell, I think, from the authorities and on principle, that it would have been a rescission of the contract, and that Ives could not afterwards have sustained an action against Bell on the notes that were the consideration of the contract. See Coon v. Reed, 1 Hilton, 511; Porter v. Vaughn, 26 Vt. 624; Arbuckle v. Hawks, 20 Vt. 538. The bank having succeeded to all the rights of Ives, stood in his place, and what would have been a rescission of the contract between Bell and Ives before the latter transferred his interest in the contract and land to the bank, would be a rescission of it between Bell and the bank after the bank became the owner of the notes and land. It is said, howrever, and the bill of exceptions states there was evidence tending to prove it, that there was an agreement between Bell and the bank, at the time the release was given, that Bell’s liability on the notes should continue. But Ives was not a party to the agreement, and therefore can not be affected by it. His only liability on the notes was that of an indorser, and to make the agreement binding on him, he should have been a party to it. The agreement was evidently made to parry if possible the legal effect of the release to annul the contract. If Bell and the bank did not understand the release [368] would or might discharge Bell’s liability on the notes, why was the agreement entered into ? If Bell had gone to the bank with the money to pay the notes, and, after handing it over and before the notes were delivered to him, had turned around and said to the bank, .“let me have the money sixty or ninety days longer, and you may retain the notes, and I will agree my liability on them shall continue,’’ — would Ives, the indorser, have been bound by such agreement? Could the bank thereafter have sustained an action against him as indorser? I think not. The legal effect of such a transaction would have been a payment of the notes as to Ives. He could not have been bound by the agreement between Bell and the bank; neither is he by their agreement in the case before us. The judgment must be reversed, with costs, and a new trial ordered. The other Justices concurred.