CHAPTER LI

DISCHARGE BY CANCELLATION OR ALTERATION

Cancellation and surrender is the normal method of discharging a specialty 1876

Conveyance though altered vests title, but covenant must be valid when

enforcement sought. . . . .

1882

Conveyances of corporeal and incorporeal hereditaments.

1883

Substantive law and evidence equitable relief . . . . . .

1884

American rule governing alteration of a deed by a stranger.

1885

Assignment of altered contract generally gives no validity-contract with blanks.....

1909

Formerly a debt died with the writing-reason for the rule...

1910

Recovery on original debt allowed in the United States where alteration

§ 1876. Cancellation and surrender is the normal method of

discharging a specialty.

At common law the normal method of discharging a contract under seal was by the cancellation of the document. As such a contract was not merely evidence of the intent of the parties, but was itself regarded as the obligation, even more fully than a railroad or government bond is to-day, when the physical identity of the document was destroyed the obligation ceased to exist.1 Though the destruction of the document was accidental, the legal obligation was discharged, and equitable relief was necessary to save the obligee's rights.2

§ 1877. Surrender insufficient in early law.

In order to give a contract under seal validity, delivery by the obligor was essential. What constitutes delivery is a question which to-day depends largely on intention, but originally the physical act of delivery was undoubtedly the essential thing.3 Surrender might have been regarded as the converse of delivery and for that reason as undoing the effect of delivery. This, however, was not the doctrine of our early law, which held that "even though the specialty was upon payment surrendered to the obligor, the latter was still not safe unless he cancelled or destroyed the specialty, for, if the obligee should afterwards get possession of the instrument, even by a trespass, the obligor, notwithstanding the payment, the surrender, and the trespass, would have no defence to an action at law by the obligee.

114

19 Harv. L. Rev. 49, by Professor Ames. This is illustrated by the doctrine in regard to alteration. See infra, §§ 1881 et seq.

29 Harv. L. Rev. 49. See supra, § 210.

49 Harv. L. Rev. 49, 54, by Professor Ames, citing "Y. B. 5 Hen. IV. 2-6; Y. B. 22 Hen. VI. 522-4; Y. B. 37 Hen. VI. 14-3; Y. B. 5 Ed. IV. 4-10;

Y. B. 1 Hen. VII. 14–2; Waberley ». Cockerel, Dy. 51, pl. 12; Cross v. Powel, Cro. El. 483; Atkins v. Farr, 2 Eq. Ab. 247; Licey v. Licey, 7 Barr, 251, 253. In the last case Gibson, C. J., said: 'Even if a bond thus delivered [to the obligor] but not canceled come again to the hands of the obligee, though it be valid at law, the obligor will be relieved in equity.'"

Equity, however, early gave relief in such cases and at the present day there can be no doubt that even a voluntary surrender of a bond, if made with intent to extinguish it, would be effectual between the parties.5

§ 1878. Bills and notes-insurance policies.

Cancellation and surrender being appropriate means of discharge for sealed contracts are similarly appropriate to discharge other formal obligations as bills and notes. Voluntary destruction of a note operates as a discharge of the maker. And so its surrender to the maker with intent to extinguish it has that effect as against the party who surrenders it."

If the surrender is after maturity it is immaterial whether surrender is still to be regarded as an equitable defence or has become a legal extinction of the obligation. If, however, surrender is before maturity, and the document is afterwards wrongfully put in circulation, also before maturity, by a party to whom it was made payable or indorsed, the question becomes vital. Under the Negotiable Instruments Law, it would seem that the maker will be liable again to a holder in due course, since a valid redelivery by the maker will be presumed.

Hurst v. Beach, 5 Madd. 351; Jaqua v. Shewalter, 10 Ind. App. 234, 243; Vanderbeck v. Vanderbeck, 30 N. J. Eq. 265; Beach v. Endress, 51 Barb. 570; Picot v. Sanderson, 1 Dev. 309; Wentz v. Dehaven, 1 S. & R. 312; Licey v. Licey, 7 Pa. 251; Albert's Exrs. v. Ziegler's Exrs., 29 Pa. 50; Piercy's Heirs v. Piercy's Exrs., 5 W. Va. 199.

Gilbert v. Wetherell, 2 Sim. & St. 254; Darland v. Taylor, 52 Ia. 503, 3 N. W. 510, 35 Am. Rep. 285; McDonald v. Jackson, 56 Ia. 643, 10 N. W. 223; Fisher v. Mershon, 3 Bibb, 527; Vanauken v. Hornbeck, 2 Green, 178; Blade v. Noland, 12 Wend. 173, 27 Am. Dec. 126. So of a bond. Gardner v. Gardner, 22 Wend. 526, 34 Am. Dec. 340; Bond v. Bunting, 78 Pa. 210, 218; Rees v. Rees, 11 Rich. Eq. 86.

"In re 35% Automobile Supply Co., 147 Fed. 377; Sherman v. Sherman, 3 2nd. 337; Gibson v. Gibson, 15 Ill. App. 328; Denman v. McMahin, 37 Ind. 241, 246; Peabody v. Peabody, 59 Ind. 556; Slade v. Mutrie, 156 Mass. 19, 30 N. E. 168; Stewart v. Hidden, 13 Minn. 43; Marston v. Marston, 64 N. H. 146, 5 Atl. 713; Vanderbeck v. Vanderbeck, 30 N. J. Eq. 265; Larkin v. Hardenbrook, 90 N. Y. 333, 46 Am. Rep. 176; Jaffray v. Davis, 124 N. Y. 164, 11 L. R. A. 710, 170, 26 N. E. 351; Kent v. Reynolds, 8 Hun, 559; Bridgers v. Hutchins, 11 Ired. 68; Melvin v. Bullard, 82 N. C. 33; Dittoe's Admr. v. Cluney's Exrs., 22 Ohio St. 436; Ellsworth v. Fogg, 35 Vt. 355; Lee's Exrs. v. Boak, 11 Gratt. 182.

8 N. I. L., Sec. 16. § 1142.

See supra,

The same method of discharge would be applicable to policies of insurance, and in jurisdictions where written contracts are by statute presumptively founded on good consideration' it may be that all written contracts are thereby given a formal character.

§ 1879. Simple contracts.

The effect of cancellation or surrender upon written contracts which are not formal contracts must depend somewhat upon the particular circumstances of the case. Surrender or cancellation frequently forms part of and is evidence of a parol agreement to discharge the contract. 10 The validity of such an agreement depends upon rules previously considered.11 Even though it is impossible to make out a binding parol contract of discharge, the rules of evidence may save the original promisor from liability upon his contract; for the voluntary cancellation of the writing by the promisee may have deprived him of his only legal evidence. 12 If the writing is still in existence the mere fact that it has been surrendered will not, however, it seems, prevent its use in evidence, or prevent the admission of secondary evidence of its contents if the holder of it refuses to produce it.

§ 1880. Enforcement of cancellation by equity.

A court of equity has jurisdiction to cancel an instrument to which the obligor has a defence but which on its face is valid, and so is capable of a wrongful and vexatious use; and this jurisdiction will be exercised whenever it is necessary to afford complete protection to parties otherwise liable to injury, actual or threatened, from the fact that the writing is outstanding. The jurisdiction has been frequently exercised in cancelling deeds or other evidences of title to real estate, recorded or susceptible of record, which until cancelled constitute a cloud on title,13 deeds which are prima facie evidence of the regularity of proceedings connected with tax assessments and sales, 14 or

'See supra, § 218.

10 Wanamaker v. Powers, 102 N. Y. App. D. 485, 93 N. Y. S. 19.

11 See supra, §§ 1826 et seq.

12 See infra, § 1884.

13 General Film Co. v. Sampliner, 252 Fed. 443, 448, 164 C. C. A. 367, citing Ingersoll v. Crocker, 228 Fed. 844, 852, 143 C. C. A. 242.

14 General Film Co. v. Sampliner,

negotiable bills and notes, or a guaranty upon negotiable bonds, fair on their face, which might otherwise pass into the hands of bona fide purchasers. 15 In the Federal courts, however, it is well established that where a party, assuming his theory of the controversy to be correct, has a good defence at law to a 'purely legal demand," he must be left to that means of defence, unless he is prepared to allege and prove special circumstances showing that he may suffer irreparable injury if he is denied a preventive remedy. 16 This limitation of the right to equitable relief does not everywhere exist. 17

§ 1881. Alternation. Pigot's Case.

It was an early doctrine of the common law that alteration avoided a deed. The leading case is Pigot's Case, 18 and the doctrine is stated therein by Lord Coke, as follows:

"These points were resolved: 1. When a lawful deed is rased, whereby it becomes void, the obligor may plead non est factum, and give the matter in evidence, because at the time of the plea pleaded, it is not his deed.

"Secondly, it was resolved, that when any deed is altered in a point material, by the plaintiff himself, or by any stranger, without the privity of the obligee, be it by interlineation, addition, rasing, or by drawing of a pen through a line, or through the midst of any material word, that the deed thereby becomes void. . . . So if the obligee himself alters the deed by any of the said ways, although it is in words not material, yet the deed is void; but if a stranger, without his privity, alters the deed by any of the said ways in any point not material, it shall not avoid the deed.

252 Fed: 443, 164 C. C. A. 367, citing Rich v. Braxton, 158 U. S. 375, 407, 15 Sup. Ct. 1006, 39 L. Ed. 1022.

15 General Film Co. v. Sampliner, 252 Fed. 443, 164 C. C. A. 367, citing Insurance Co. v. Bailey, 13 Wall. 616, 622, 20 L. Ed. 501; Louisville, New Albany &c. R. Co. v. Louisville Trust Co., 174 U. S. 552, 567, 19 S. Ct. 817, 43 L. Ed. 1081.

16 General Film Co. v. Sampliner, 252 Fed. 443, 164 C. C. A. 367, citing

Insurance Co. v. Bailey, 13 Wall. 616, 623, 20 L. Ed. 501; Cable v. Insurance Co., 191 U. S. 288, 305, 306, 24 S. Ct. 74, 48 L. Ed. 188. In each of these cases the right of an insurance company to maintain bill in equity for cancellation of an insurance policy claimed to have been fraudulently procured was denied.

172 Pomeroy, Eq. Jur., §§ 912,

913.

18 11 Coke, 26b.