15-4-5 - Release of co-obligor -- Effect of knowledge of obligee.
15-4-5. Release of co-obligor -- Effect of knowledge of obligee.
If an obligee releasing or discharging an obligor without express reservation of rightsagainst a co-obligor then knows or has reason to know that the obligor released or discharged didnot pay as much of the claim as he was bound by his contract or relation with that co-obligor topay, the obligee's claim against that co-obligor shall be satisfied to the amount which the obligeeknew or had reason to know that the released or discharged obligor was bound to such co-obligorto pay.
If an obligee so releasing or discharging an obligor has not then such knowledge or reasonto know, the obligee's claim against the co-obligor shall be satisfied to the extent of the lesser oftwo amounts, namely: (a) the amount of the fractional share of the obligor released or discharged,or (b) the amount that such obligor was bound by his contract or relation with the co-obligor topay.
No Change Since 1953