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Extinction of Cause of Action by Release or Covenant not to Sue
Published online by Cambridge University Press: 12 February 2016
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A release has been defined as the “giving up or abandoning of the claim or right to the person against whom the claim exists. A release is itself a discharge of the claim or obligation.”
Strictly speaking both releases and covenants not to sue are instruments under seal. A simple agreement, if supported by valuable consideration, has in equity the same effect as a release. Therefore the terms “release” and “covenant not to sue” are now often applied to such agreements, and in the present article they will be used in this extended sense.
The purpose of this article is to discuss the rule as to release, to analyze the reasons underlying it and to make some suggestions for reform.
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- Copyright © Cambridge University Press and The Faculty of Law, The Hebrew University of Jerusalem 1969
References
1 Manthei v. Heimerdinger, 332 Ill. App. 335, 348; 75 N.E. 2d 132, 138 (1947).
2 The Borough of Salford Corp. v. Lever [1891] 1 Q.B. 168, 178, Court of Appeal (a mere postponement of the right of action is not enough). At common law the consideration had to result in satisfaction before the liability was discharged: Peyton's Case (1611) 77 E.R. 847. Now, however, the accord itself, if so intended, extinguishes the liability: British Russian Gazette v. Associated Newspapers Ltd. [1933] 2 K.B. 616, 643. In Israel the necessity for consideration is not clear. The State v. The Estate of the late Moshe Hydena (1959) (II) 14 P.D. 926, 930, 936–7; Brouk v. Brouk (1965) (II) 20 P.D. 6, 12; Dary v. Uretzky (1959) 19 P.M. 153, 155.
3 Pinnel's Case (1602) 77 E.R. 237; Cocke v. Jennor (1614) Hol. 66, 80 E.R. 214; R. v. Bayley (1824) 171 E.R. 1262; Duck v. Mayer [1892] 2 Q.B. 511, 513; Cutler v. McPhail [1962] 2 Q.B. 292. But see “Law Revision” by John Foster (1938) 2 M.L.R. 14, 20.
4 Bayley v. Garford (1614) 82 E.R. 441; Ward v. National Bank of N.Z. Ltd. (1883) 8 App. Cas. 755, 764; Mercantile Bank of Sydney v. Taylor [1893] A.C. 317.
5 Cocke v. Jennor, cit.; Morton's Case (1584) 78 E.R. 296; Kiffin v. Willis (1694) 87 E.R. 455; Gardiner v. Moore [1966] 1 All E.R. 365.
6 Everard v. Herne (1628) 124 E.R. 202. In the U.S.A.: Abb. v. Northern Pac. Ry. Co. (1902) 58 L.R.A. 293.
7 Cocke v. Jennor, cit.; In the U.S.A.: Brown v. March, 7 Vt. 320 (1835); Pinkham Lumber Co. v. Woodland State Bank, 156 Wash. 117, 286 Pac. 95 (1930); O'Shea v. N.Y. Cent. & Str. L.R.R., 105 Fed. 559, 561 (1901).
8 Hutton v. Eyre (1815) 128 E.R. 1046; Apley Estates Co. v. De Bernales [1947] 1 All E.R. 213; In U.S.A.: Gilbert v. Finch., 173 N.Y. 455, 66 N.E. 133 (1903); Carey v. Bilby, 129 Fed. 203, 206 (1904).
9 Solly v. Forbes, 129 E.R. 871. In Australia: White v. Glass (1871) 2 V.R. (L.) 46.
10 Probably even to date.
11 In Lonergan v. Saskatoon Co. (1915) 21 D.L.R. 866 it was held that words like “in so far only as (the releasee) is concerned” amounted to an express reservation, but see Russian Mercantile Co. v. Achtemyezuk [1925] 4 D.L.R. 2d 1011.
12 Cutler v. McPhail, supra n. 3.
13 A settlement was also reached between the plaintiff and the publisher, but it does not concern the subject under consideration.
14 The learned judge then went on to mitigate his ruling by holding that the plaintiffs could base their claim against the author of the defamatory letter on his separate act of sending it to the editor for publication.
Cf. Greenlands Ltd. v. Wilmshurst and London Ass. for Protection of Trade [1913] 3 K.B. 507, 530–31 (reversed on another ground); and see Lambert v. Roberts Drug Stores [1933] 4 D.L.R. 2d. 193.
15 Gardiner v. Moore (Q.B.D.), see n. 5.
16 Ibid., 390; In Israel: Shitrit v. Gabriel and an. (1968) 63 P.M. 186, 190.
17 Cutler v. McPhail, supra n. 3.
18 Unless a contrary intention is therein expressed, or is at least clearly to be implied. For such an instance see n. 49a, infra.
19 Or, perhaps, an implied one.
20 Lacy v. Kynnaston (1701) 91 E.R. 835.
21 Keyes v. Elkins (1864) 122 E.R. 820; Boosey v. Wood (1865) 159 E.R. 620; Apley Estates Co. Ltd. v. De Bernales [1947] 1 All E.R. 215, letters G-H; In the U.S.A.:45 Am. Jur. § 3, p. 676. Generally: Williams, , Joint Obligations (1949) § 51, pp. 107–8.Google Scholar
22 Cabell v. Vaughan (1669) 1 Wms. Saund. 288, 291, cited in Egger v. Viscount Chelmsford and others [1964] 3 All E.R. 406, 412.
23 King and an. v. Hoare (1844) 153 E.R. 206; Cf. Ex parte Honey in re Jeffery (1871) 7 Ch. App. 178, 183.
24 Smith v. Streatfield [1911–13] All E.R. 362; [1913] 3 K.B. 764; and (obiter) Adam v. Ward (House of Lords) [1916–17] 157; [1917] A.C. 309.
25 Egger v. Viscount Chelmsford and others, n. 22, pp. 411–12.
26 Heydon's Case (1584) 3 Co. Rep. 7a (cited in Egger, supra.)
27 Egger v. Viscount Chelmsford, supra n. 25.
28 The Koursk [1924] P. 140; [1924] All E.R. 168.
29 By virtue of the Rules of the Supreme Court.
30 In the U.S.A. the modern view seems to be that concurrent tort-feasors creating or causing one damnum are joint tort-feasors and therefore jointly and severally liable. There is much to be said in support of this view. In some cases (e.g. collision) the separate act of one concurrent tort-feasor standing alone would not have caused the accident at all. Therefore, if it is regarded as separate and distinct—the action against him should be dismissed, an unjust result for the injured plaintiff. However, if he is made liable for the damnum in solidum, it is because the united effect of the separate acts had caused it. Therefore, it would not be illogical to look upon those acts as if they were the result of concerted action. In the U.S.A.: Baylor University v. Bradshaw, 126 Tex. 98, 84 S.W. 2d. 703 (1935); Fitzgerald v. Thompson, 167 Kan. 87, 204 P. 2d. (1949) cited in Harper, and James, , The Law of Torts (1956) § 101, pp. 704–9Google Scholar.
31 The liability of partnership contractors is here joint and several: section 12 of the Partnership Ordinance; Shmetterling and an. v. General Tyres and Rubber Co. Ltd. (1959) 14 P.D. 486, 488. As for joint promises: each promissor is regarded as liable to pay his part of the debt (in proportion to their number), unless otherwise agreed: Sections 646 and 1113 of the Mejelle; Fisher v. Epstein (1959) 13 P.D. 1843, 1845–6, and Cohen v. Aknin (1966) (IV) 20 P.D. 299, 302; but see Kaspi v. Jacob (1955) 9 P.D. 1858, 1861 (held liable in solidum) which seems to have been impliedly overruled.
32 Formerly by plea in abatement, abolished by the Judicature Act and now in the discretion of the court.
33 [1879] 4 A.C. 504.
34 Williams, , Joint Obligations (1949) §§ 43–5Google Scholar; Pickford, L.J. in Goldfrei, Foucard & Co. v. Sinclair [1918] 1Google Scholar K.B. (Court of Appeal) 180, 188; Byrne, J. in McLeod v. Power [1898] 2 Ch. 295Google Scholar; and see n. 35.
35 Supra, at p. 525; approved by JusticeWitkon, in Shmetterling and an. v. General Tyres etc., n. 31.Google Scholar
36 Williams, supra, § 45, p. 102.
37 By the Law Reform (Married Women and Tort-feasors) Act, 1935, Part II.
38 116 E.R. 1368.
39 9 Williams, supra, § 56; Cf. Apley Estates Co. and others v. De Bernales and others [1946] 2 All E.R. 338, 340, letter G. In the U.S.A.: Laurenzi v. Vranizan, 25 Cal. 2d. 806, 155 P. 2d. 633, 637 (1945); Aldridge v. Morris, 377 Ill. App. 369, 86 N.E. 2d. 143, 148–9; 4 Restatement of Torts § 885 (3) and comment “e”; Harper, and James, , The Law of Torts (1956) § 101, p. 714, 121.Google Scholar
40 On this point which is beyond the range of this article, see: Havighurst, , “Principles of Construction and the Parol Evidence Rule As Applied to Releases” 60 Nw. U.L. Rev. 599 (1965).Google Scholar
41 Called “a general release”.
42 In U.S.A.: Killian v. Catanese, 375 Pa. 593, 101 A. 2d. 379 (1954); Davies v. Dotson, 198 F. Supp. 612 (E.D. Pa. 1961); Rimpa v. Bell, 413 Pa. 274, 196 A. 2d. 738 (1964) (general release extinguishes claim for contribution). Contra: Restifo v. McDonald, 426 Pa. 5, 230 A. 2d. 199 (1967); Leitner v. Hawkins, 311 Ky. 300, 223 S.W. 2d 988 (1949); Edester v. Heady, 364 S.W. 2d. 811 (Ky. 1963); Martin v. Guttermuth, 403 S.W. 2d. 283 (Ky. 1966).
43 McNair v. Goodwin, 262 N.C. 1, 136 S.E. 2d. 218 (1964), and first group of cases in n. 42.
44 Restifo v. McDonald, supra, n. 42, and the second group of cases of the same note.
45 Contra: A Note by Sanford Gail in (1968) 17 De Paul L.R. 427–432.
46 Williston, 25 M.L.R. at p. 209.
47 As pointed out by Professor Williston, ibid., p. 222 in Contracts, ii §§ 336, 336A.
48 Act 34 of 1956, see Macintosh and Norman—Scable, 4th Ed. (1958) 216, especially sec. 2(10).
49 Article 276: “When the creditor grants a release to one of the joint debtors without expressing his intention to extinguish the whole obligation, such release operates in favour of the other debtors only up to the amount of the share which is incumbent on such debtor.”
49a As suggested by the Supreme Court in Kamer v. Shzeky (1962) 16 P.D. 2604, 2607–8. In the absence of such a provision the court felt bound to reach the conclusion, described by it as deplorable, that the Institute could claim from the third party the entire amount and that the latter could turn to the employer for contribution, despite the fact that the Institute was by law deprived of the right to claim restitution directly from the employer. It seems to me that this result could have been avoided by regarding the employer's immunity in this particular case as a final release. Such a result seems to have been in accord with the intention of the legislature. Obviously the Institute would have had to bear the entire loss.
50 Act 34, supra, n. 48.
51 Ibid.
52 Williams, supra, § 56, p. 119.
53 Williston, Contracts (Revised ed.) ii § 341.
54 Approved by Professor Williams, supra, § 64, p. 138.
55 9 U.L.A. 156, §§ 4–5; and see E.J. Cohn (1948) 11 M.L.R. 230.
56 A similar rule prevails in Scotland, see Glegg, on Reparation (4th ed.) 24.Google Scholar
57 Termed “the master's tort” by Professor Williams, in “Vicarious Liability. Tort of the Master or of the Servant?” (1956) 72 L.Q.R. 522.Google Scholar
58 Denning, L.J., who subscribes to the master's tort theory, in Broom v. Morgan [1953] 1 Q.B.D. 597, 607–8Google Scholar.
59 Denning, L.J. in Jones v. Manchester Corporation [1952] 2 Q.B. 852, 870Google Scholar; see Jones v. Staveley Iron & Chemical Co. Ltd. [1955] 1 All E.R. 6, 8, overruled by the House of Lords in [1956] 2 W.L.R. 479; [1956] 1 All E.R. 403.
60 The majority in Jones v. Staveley [1956] 1 All E.R. 403, 406.
61 See the highly interesting theory of three categories: personal, mixed and vicarious, expounded by Professor Aharon Barak in his doctoral thesis submitted in May 1962 entitled “Vicarious Liability and Master's Benefit”.
62 Semtex v. Gladstone [1954] 1 W.L.R. 945, 949.
63 Shor v. The State of Israel (1964) (III) 18 P.D. 341, 348 (an earlier judgment dismissing the plaintiff's claim against the servant constitutes an “estoppel by record” in favour of the master to whom vicarious liability is being imputed in subsequent proceedings). On the other hand, see Zucker v. Leibovitz (1964) (I) 18 P.D. 337, 350–51 (an earlier judgment dismissing the claim against the master, to whom vicarious liability has been imputed, is no bar to a subsequent action against the tortious servant). This exception to the rule of mutuality is explained by the derivative nature of the master's liability: The Municipality of Ramat Gan v. Pardess Yanai (1952) 10 P.D. 1804, 1813; Freeman, section 428 p. 929; Bernard v. Bank of America National Trust and Savings Associations, 122 Pac. 2nd 892, 895.
64 In Imperial Chemical Industries Ltd. v. Shatwell [1965] A.C. 656, 685.
65 Williams, supra n. 57, at page 543.
66 Ibid. And see Stapely v. Gypsum Mines Ltd. [1952] 2 Q.B. 575, 583–84. On Appeal— [1953] A.C. 663.
67 Williams, supra n. 65.
68 But see The National Insurance Institute v. Doron (1960) 16 P.D. 7, which seems to be a case sui generis.
69 Supra, n. 63.
70 Broom v. Morgan [1952] 2 All E.R. 1007 (husband and wife—procedural immunity).
71 In Imperial Chemical Industries Ltd. v. Shatwell, House of Lords [1965] A.C. 656, 688.
72 These words appear bracketed in the original.
73 In Jones v. Staveley, supra n. 60.
74 Egger v. Viscount Chelmsford [1964] 3 All E.R. 406, 412.
75 The Law of Suretyship, 1967.
76 Ibid., sec. 4(a).
77 Ibid., sec. 5(c)(2).
78 Ibid., sec. 12.
79 Sec. 5 of the Mercantile Law Amendment Act, 1856.
80 Professor Williams, in an interesting but rather complicated way, reaches the conclusion that a covenant not to sue, though perpetual (as distinguished from a release) should not deprive the surety of these remedies. The distinguished author relied on the distinction between covenant and release to reach this conclusion; see Joint Obligations, § 59, pp. 124–25; but compare with his disapproval of this fictitious distinction in § 51, p. 108.
81 But this is the prevailing rule in England: e.g. Oriental Financial Corporation v. Overend Gurney & Co. (1871) 7 Ch. App. 142, 150; Polak v. Everett [1875–6] 1 Q.B.D. 669, 673 (even postponement for one hour would cause this result).
82 Joint Obligations, supra, § 59, p. 123.
83 Whiting v. Burke (1871) 6 Ch. App. 342, 345.
84 In Law and Literature (1931) p. 51 Cardozo asks: “How many judges, if they felt free to change the ancient rule, would be ready to hold to-day…that the surety is released, irrespective of resulting damage, if by agreement between principal debtor and creditor the time for payment of the debt is extended for a single day?”
85 Formerly sec. 655 of the Mejelle, now sec. 5(c) of the Law of Suretyship, 1967, which gives the surety a choice between the original terms (i.e. to pay the creditor as previously agreed and claim indemnity from the debtor) and the acceptance of a similar postponement. See also Rapport v. Azmon (1968) (II) 22 P.D. 51, 55; Bergerson v. Olstein (1955) 11 P.D. 257.