Eva bought a GMC Sierra 1500 pickup. To finance the purchase, she signed a note and an agreement to pay the note with Ranch & Farm Credit Union. After she had made half of the sixty payments on the loan, she received the agreement and the note with “Paid”

stamped on the face of each document. The documents had been returned due to a clerical error in Ranch &

Farm’s office. The lender had not intended to discharge the note. Eva stopped making payments. Ranch & Farm filed a suit to collect.

Was Ranch & Farm entitled to the unpaid amount of the note? Yes. The holder of a note can discharge the obligation by surrendering the note to the person to be discharged if the holder ______________ to eliminate the obligation. In this problem, Ranch & Farm delivered the agreement and the note stamped “Paid” to Eva. But the lender did not ______________ to discharge the obligation.

The documents were returned due to a clerical error. The surrender thus did not constitute a valid discharge of the note.