Farmers' Bank of Virginia v. Groves - 53 U.S. 51 (1851)
U.S. Supreme Court
Farmers' Bank of Virginia v. Groves, 53 U.S. 12 How. 51 51 (1851)
Farmers' Bank of Virginia v. Groves
53 U.S. (12 How.) 51
The principles of law decided in this case are so dependent upon the facts that a succinct statement of the latter becomes necessary.
Collier was in possession of two drafts drawn by King upon Groves and accepted by him for the accommodation of King. Collier pledged these drafts to the Farmers' Bank of Virginia as collateral security for a debt which he owed the bank.
The drafts not being paid at maturity, the bank sued both Groves and King and recovered judgments against them, which were liens upon their property.
Collier and King then agreed that if Collier were to purchase King's property at a certain sum, he would return his drafts to him and free him from the bank. To this agreement Groves was a witness, and the purchase was accordingly made.
Collier and the bank then agreed that the bank should give him time and he should
give additional collateral security to the bank and mortgage his property, first reducing the liens of prior mortgages down to a certain sum. The bank was moreover to surrender the collateral securities previously received. The mortgage was made by Collier and the collateral securities surrendered to him by the bank.
After this the bank had no right to prosecute the judgment which it had obtained against Groves.
By the first agreement made between King and Collier, to which Groves was privy, Collier exonerated Groves, as far as it was in his power, and in consequence of the second agreement between Collier and the bank, Collier became reinvested with the whole control of the matter and his previous exoneration of Groves became immediately operative. Groves was therefore entirely discharged from all responsibility.
The failure of Collier to comply with his contract with the bank did not prevent this exoneration of Groves from being effectual.
The facts in the case are set forth in the opinion of the Court, to which the reader is referred.