§ 2578. Release of and by Co-debtors and Co-creditors. A release of one of several debtors jointly, or jointly or severally, liable for the same debt, releases all,' even where the release contains a proviso that the other debtor shall not take advantage of it. But a release of one co-debtor may reserve a right against the other debtors, in which case they are not discharged. A covenant not to sue one of co-debtors jointly, or jointly and severally, liable, although it operates by construction as a release as between the covenantor and covenantee, does not operate as a release of the other debtors.*

The release by one of co-creditors jointly entitled to the debt discharges the debtor as to all. A release under the seal of one of the members of a copartnership is a sufficient release of a joint cause of action. A release by two of three joint obligees is a bar to a suit by a third, brought in the name of the three, for one third of the benefit of the contract. In such joint action the plaintiffs cannot set up that such release was a fraud on one of their number, and thus deprive the defendant of a legal defense to the claim of the three. But if an absolute release be given by one co-creditor in fraud of the others, and in collusion with the debtor, the court will set it aside.

Leake on Contracts, 929; Baldwin v. Gray, 4 Martin, N. S., 192; 16 Am. Dec. 169; Allin v. Shadburne, 1 Dana, 68; 25 Am. Dec. 121; Berry v. Gillis, 17 N. H. 9; 43 Am. Dec. 585; Bozeman v. State Bank, 7 Ark. 328; 46 Am. Dec. 291; Williamson v. McGinness, 11 B. Mon. 74; 52 Am. Dec. 561; Hale v. Spaulding, 145 Mass. 482; 1 Am. St. Rep. 475. But see Ellis v. Esson, 50 Wis. 138; 36 Am. Rep. 830; 2 Benjamin v. McConnell, 4 Gilm. 536; 46 Am. Dec. 474.

3 Yates v. Donaldson, 5 Md. 389; 61 Am. Dec. 283; North v. Wakefield, 13 Q. B. 541, the court saying: "The reason why a release to one debtor releases all jointly is, because, unless it was held to do so, the co-debtor, after paying the debt, might sue him

who was released for contribution, and so in effect he would not be released; but that reason does not apply where the debtor released agrees to such a qualification of the release as will leave him liable to any rights of the co-debtor." Contra, Gunther v. Lee, 45 Md. 60; 24 Am. Rep. 505.

Goodnow v. Smith, 18 Pick. 414; 29 Am. Dec. 600; Berry v. Gillis, 17 N. H. 9; 43 Am. Dec. 585; Bozeman v. State Bank, 7 Ark. 328; 46 Am. Dec. 291; Williamson v. Ginness, 11 B. Mon. 74; 52 Am. Dec. 561; Brown v. White, 29 N. J. L. 514; 80 Am. Dec. 226. Leake on Contracts, 932. Beltzhoover v. Stockton, 4 Cranch C. 695.

C.

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Myrick v. Dame, 9 Cush. 248. 8 Leake on Contracts, 933.

§ 2579. Rescission by Act of One Party.—The act of one party incapacitating himself from performing entitles the other, if he choose, to treat the contract as rescinded.1 So where one party has refused to perform an essential part of an entire contract. If a contractor stipulate to build and finish a house by a certain day, and at the expiration of the time he has not commenced the work, the other party may rescind the contract. The vendee may rescind a contract of sale, in the event of a total departure from it by the vendor. On a contract to deliver corn, where the article tendered is not merchantable, the vendee has the right to rescind the contract and recover the purchase-money. In a conditional contract, whether the condition is express or implied, if one party fails to perform, the other may retract. The fact that the contract was induced by fraud gives the party defrauded the right, on discovering the fraud, to elect whether he will continue to treat the contract as binding or avoid it; but the contract continues valid until he has determined his election by avoiding it. If a purchaser of goods make material statements as to his debts and means, at the time of the purchase, which are relied on, and turn out to have been false, the sale is voidable. Where a contract is entered into under the inducement of a false representation made by the other party, he will be entitled to consider the contract at an end on discovering the fraud, though the misrepresentation was innocently made." The

1 Shaffner v. Killian, 7 Ill. App. 620. 2 Luey v. Bundy, 9 N. H. 298; 32 Am. Dec. 359; Allen v. Webb, 24 N. H. 278; Webb v. Stone, 24 N. H. 282; Preble v. Bottom, 27 Vt. 247; Selby v. Hutchinson, 9 Ill. 319.

3 Miller v. Phillips, 31 Pa. St. 218. Phillips v. Bruce, Anth. 89. Peck v. Armstrong, 38 Barb. 215. Dodge v. Greeley, 31 Me. 343. Whitworth v. Thomas, 83 Ala. 308; 3 Am. St. Rep. 725; Holbrook v. Burt, 22 Pick. 546; Perley v. Balch, 23 Pick.

purchaser is not entitled to rescind for breach of warranty, unless there be fraud in the case, or an express agreement that the goods might be returned in the event of such breach.1 A contract of sale cannot be rescinded after delivery simply because the article delivered is not equal in quality to that contracted for. The difference must be one of kind or class. A purchaser cannot rescind a contract for sale of land because it is not reduced to writing.

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A contract cannot be rescinded by one of the parties, unless the other can be placed in statu quo. Thus where one party has partly performed the contract, the other cannot rescind it and recover the money paid because of the failure to perform it completely. So if the complainant has disposed of and cannot restore part of the consideration, he cannot rescind."

A party cannot rescind a contract and at the same time retain the consideration. He must rescind in toto or not at all. In order to rescind a contract for the sale of a chattel, the property must be returned, or an offer to return made, unless it is valueless to both parties. A party entitled to rescind a contract on the ground of fraud can

1 Kiernan v. Rocheleau, 6 Bosw. 148; Prentiss v. Russ, 16 Me. 30; Muller v. Eno, 14 N. Y. 597.

2 Hoadley v. House, 32 Vt. 179; 76 Am. Dec. 167.

Rowland v. Garman, 1 J. J. Marsh. 76; 19 Am. Dec. 54.

Conner v. Henderson, 15 Mass. 319; 8 Am. Dec. 103; Bassett v. Brown, 105 Mass. 558; Morse v. Brackett, 98 Mass. 205; Carneal v. May, 2 A. K. Marsh. 587; 12 Am. Dec. 453; Luey v. Bundy, 9 N. H. 298; 32 Am. Dec. 359; Chance v. Comm'rs, 5 Blackf. 441; 35 Am. Dec. 131; Evans v. Gale, 17 N. H. 573; 43 Am. Dec. 614; Fay v. Oliver, 20 Vt. 118; 49 Am. Dec. 764; Pettus v. Roberts, 6 Ala. 811; Buell v. Tate, 7 Blackf. 55; Calhoun v. Davis, 2 Ind. 532; Teter v. Hinders, 19 Ind. 93; McGuire v. Callahan, 19 Ind. 128; Griffith v. Frederick Co. Bank, 6 Gill & J. 4; Masson v. Bovet, 1 Denio, 69; 43 Am. Dec. 651; Brown v. Wither, 10 Ohio,

142; Hammond v. Buckmaster, 22 Vt. 375.

Stevens v. Cushing, 1 N. H. 17; 8 Am. Dec. 27.

6 Durrett v. Simpson, 3 T. B. Mon. 517; 16 Am. Dec. 115.

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Jennings v. Gage, 13 Ill. 610; 56 Am. Dec. 476; Buchenau v. Horney, 12 Ind. 336; Tisdale v. Buckmore, 33 Me. 461; Cocke v. Rucks, 34 Miss. 105; Evans v. Gale, 17 N. H. 573; 43 Am. Dec. 614; Utter v. Stuart, 30 Barb. 20.

Cristy v. Cummings, 3 McLean, 386; Dill v. Camp, 22 Ala. 249; Hancock v. Tucker, 8 Fla. 435; Love v. Oldham, 22 Ind. 51; Minor v. Kelly, 5 T. B. Mon. 272; Stewart v. Dougherty, 3 Dana, 479; Buford v. Brown, 6 B. Mon. 553; Sanborn v. Osgood, 16 N. H. 112; Smally v. Hendrickson, 29 N. J. L. 371; Benson v. Littlefield, 2 Mill Const. 180; Poor v. Woodburn, 25 Vt. 234; Smith v. Smith, 30 Vt. 139,

only do so by returning, or offering to return, everything of value which he has received under it. One who would rescind a contract must do so distinctly and unequivocally. He cannot treat the contract as binding and rescinded at the same time. The rescission of an executed contract on the ground of fraud or failure of consideration, and the like, is a right in equity subject to a restoration of the consideration. The party seeking equity must do equity; he must return the property obtained, or reconvey the title, and a failure in this particular will be followed by a denial of equity. But if the thing the consideration for which is sought to be recovered is entirely worthless, there is no duty to return it in order to entitle plaintiff to recover.3

The right to rescind a contract must be exercised within a reasonable time. To enable a party to rescind a contract for fraud, he must act with reasonable promptness after he discovers such fraud." The failure of a party to perform his part of a contract does not per se rescind it; the other party must, within a reasonable time, give notice of his intention to rescind. What is or is not a reasonable time within which a party may rescind a contract, where no time is fixed by its terms, is a question of law." When a party rescinds a contract, even without cause, he cannot renew the same without the consent of the other party.8

CHAPTER CXXIII.

MERGER.

§ 2580. Merger on taking higher security.
§ 2581. Merger by judgment.

§ 2582. Merger in case of joint debtors.

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§ 2580. Merger on Taking Higher Security. — The taking or acquiring of a higher security merges and extinguishes the legal remedy upon the lower one.1 A debt is merged when its original form is changed into a form importing a higher dignity, as a parol contract converted into a bond, or a bond or other contract into a judgment.2 Prior contracts are merged in and superseded by a subsequent contract on the same subject, which, as the last act of the parties, must be held to contain and express their true meaning and intention. Where a party to a contract, after a breach by the other party, instead of rescinding the contract, in effect releases and discharges it, merging it in a new and different contract, he can have no remedy for the breach of the contract thus released and superseded. He must predicate his rights upon the new contract. A parol contract, or an implied one, merges in a written agreement. It is on this principle that all parol negotiations and agreements which precede the execution of a written contract are not admissible to explain or contradict it, as they are considered as merged

1 Price v. Moulton, 10 Com. B. 574; Groverman v. Diffenderffer, 11 Gill & J. 15; Wann v. McNulty, 2 Gilm. 355; 43 Am. Dec. 58; Baker v. Baker, 28 N. J. L. 13; 75 Am. Dec. 243. A superior right is never merged in an inferior one: Myers v. Hewitt, 16 Ohio, 453. Thus taking a note does not relinquish a lien: The Charlotte v. Hammond, 9 Mo. 58; 43 Am. Dec. 536.

McDonald v. Ingraham, 30 Miss. 389; 64 Am. Dec. 166; McNaughten v.

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