Will H. Hall & Son v. Capitol Indemnity Corp.

Will H. Hall & Son (Hall) (plaintiff), a general contractor, hired subcontractor Ace Masonry (defendant), whose performance was backed by a performance bond from Capitol Indemnity (defendant). Ace failed to perform, and Hall sued Ace for breach and Capitol on the bond. The trial court first directed a verdict for Capitol; afterward, Hall and Ace stipulated to release and dismiss all claims against each other. That directed verdict was reversed on appeal, but on remand the trial court granted Capitol summary disposition, reasoning that Hall's release of Ace (the principal) also discharged Capitol (the surety). Hall appealed.

Whether the obligee's release of the principal obligor also discharges the surety when nothing in the release preserves the surety's recourse or shows an intent to retain the claim against the surety.