That's a drum brake master cylinder. It has a residual valve in each port that prevents drum brake wheel cylinders from retracting too far and disengaging from the shoes.

If used with disc brakes, you experience exactly what you are experiencing. The calipers cannot release as the valve holds pressure in the line.

Change your master cylinder for one designed for front disc brake, or remove the seat and residual valve from the port connected to the front wheels.