Summary
The Nebraska Supreme Court held that the unconditional release of one joint and several obligor on a promissory note, without the consent of the other obligors, releases all co-obligors under Nebraska common law. The court determined that a stipulation and subsequent performance released Billy E. Claborn from the judgment and therefore released Michael Walker as well. The court reversed the order denying Walker’s motion to discharge the judgment and remanded with directions to grant the discharge.
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Practice areas
Questions Presented
- Whether the district court's order denying Walker's motion to discharge the judgment was a final, appealable order affecting a substantial right.
- Whether Walker timely filed his appeal.
- Whether the stipulation and subsequent satisfaction constituted an unconditional and voluntary release of Claborn.
- Whether the unconditional release of one joint and several obligor on a promissory note operated under Nebraska common law to release the other obligor.
- Whether the Nebraska Supreme Court should abolish the common-law rule releasing all joint obligors when one is unconditionally released without the others' consent.
Holdings
- An order overruling a motion to discharge a judgment is an order made on summary application after judgment that affects a substantial right and is therefore a final, appealable order under Neb. Rev. Stat. § 25-1902.
- The appeal was timely because Walker filed his notice of appeal within 30 days of the order overruling his motion to discharge the judgment.
- Under settled Nebraska contract law, the unconditional release of one of several joint obligors on a joint and several promissory note, without the consent of the other obligors, operates as a release of all.
- The stipulation became an unconditional and voluntary release of Claborn when he satisfied its terms.
- The qualifying language in the satisfaction of judgment stating that Walker's judgment remained unsatisfied did not prevent the stipulation's unconditional release of Claborn from releasing Walker.
- The court declined to abolish the common-law rule, concluding that any amendment or abolition of the settled common law should be undertaken by the Legislature rather than the judiciary.
Key quotations
“Under settled Nebraska contract law, the unconditional release of one of several joint obligors on a promissory note, without the consent of the other obligors, operates as a release of all.” (297 Neb. at 594)
“The qualifying language recited later in the satisfaction of judgment was irrelevant.” (297 Neb. at 592)
“If the settled common law is to be amended or abolished, that action should be undertaken by the Legislature rather than the judiciary.” (297 Neb. at 594)
Factual background
Walker and Claborn were jointly and severally liable on a 2007 promissory note. Cano obtained a judgment against both for $387,433.20, but without Walker's knowledge entered into a stipulation with Claborn requiring specified payments and services in exchange for Cano's agreement to release Claborn completely from the judgment once the stipulation was satisfied. Claborn satisfied the stipulation, and Cano filed a satisfaction of judgment while asserting that Walker remained liable. Walker sought discharge, arguing that the unconditional release of one joint obligor released all joint obligors.
Procedural history
Cano obtained summary judgment against Walker and Claborn for $387,433.20. Cano later entered into a stipulation with Claborn under which Claborn paid and performed specified obligations in exchange for a complete release from the judgment. After Cano filed a satisfaction stating that Claborn had satisfied the judgment while Walker's judgment remained unsatisfied, Walker moved to discharge the judgment against him. The Douglas County District Court denied the motion but reduced the judgment by $40,000, and Walker timely appealed.
Remand instructions
Remand with directions to grant Walker's motion to discharge the judgment against him.