Cengage Advantage Books: Law for Business 18th Edition by John Ashcroft ,Janet Ashcroft

Exercise 12

Daniel Manley executed a note for $420,000 secured by a mortgage to Independent National Bank (Independent). Manley's father, Thomas Manley, guaranteed payment of the note. Wachovia Small Business Capital (Wachovia) obtained the note as a result of a merager with Independent. There was default on the note. At trial, Thomas testified that he had taken $375,000 in $100 bills to Wachovia and requested a receipt. He said the Wachovia employee had told him a receipt would be mailed to him after the amount was verified, but he never received one. Three months later, Daniel received the original note in the mail in a Wachovia envelope. The note was stamped "Paid" Wachovia had no record of a $375,000 cash payment or of the normal audit procedures if followed when a note was paid. The Manleys argued that Wachovia's stamping "Paid" on the note and mailing it to Daniel discharged the note. Was it discharged?