Lumberman's Insurance v. Preble

Citations

• 50 Ill. 332

Syllabus

<p>1. Release—by one of several joint obligees—its effect as to those not joining therein. One of several joint payees or obligees, may receive payment or satisfaction, and discharge the entire obligation, and the others will be bound by his acts in that regard. This is the general rule.</p> <p>2. But this rule has its exceptions, as, where the payee of a note sells and transfers it by delivery, without assignment, and the maker pays the payee with notice of the transfer; in such ease, the courts will protect the rights of the equitable holder.</p> <p>3. And the same is true of a like transfer of an obligation not negotiable. In such a case, the payment, or the performance of the agreement in such a manner, is a fraud upon the equitable holder, and the courts will not permit its perpetration.</p> <p>4. But while it is true, that one of several joint obligees may execute a valid release by which the entire obligation will be discharged, yet, to give the release that effect, it must be the intention of the parties to the release that it shall so operate, unattended by any fraud upon the rights of those of the obligees who do not join in the execution of the release.</p> <p>6. So, where a policy of insurance was issued to three persons, a loss having occurred, the insurer proposed to two of the assured that he would pay them a given sum if they would release the entire policy, or a less sum if they would release their proportionate interest in the insurance money ; they accepted the latter proposition, and signed a paper which the insurer represented to be a release only of their two-thirds interest, when, in fact, by its terms, it was a release of the entire policy. It was held, that, reading the release in the light of these facts, it could not operate to discharge the obligation on the policy as to the assured who did not join in the release, and had no knowledge of its execution. Either the parties to the release did not intend it should so operate, or the insurer