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parties. The question as to whether a contract is one of original promise or of guaranty merely is one of fact to be determined from the circumstances surrounding the transaction."

Judge Freeman, in the annotation appended to Pearsell Mfg. Co. v. Jeffreys, 105 Am. St. Rep. 502, says: "A guaranty is an independent contract, by which the guarantor undertakes, in writing, upon a sufficient undertaking, to be answerable for the debt, or for the performance of some duty, in case of the failure of some other person who is primarily liable to pay or perform."

In delivering the opinion of the court in Welsh v. Ebersole, 75 Va. 656, Judge Staples said: "A guaranty is not an absolute undertaking as in case of suretyship, but a conditional one to answer for the debt, default or miscarriage of another.'

Counsel for plaintiffs concede without hesitation the effect and legal consequences of a guaranty and agree the law to be that “a guarantor is often discharged by the indulgence of the creditor to the principal, and is usually not responsible unless notified of the default of the principal." Piedmont Guano & Mfg. Co. v. Morris, 86 Va. 941, 11 S. E. 883.

If, therefore, the defendants occupied the position of guarantors only, there is no doubt the court erred in overruling the two grounds of demurrer relied on, as it was essential to allege in the notice of motion for judgment that the plain

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the other hand, the law is that the
renewal or extension of a principal
note does not release
or discharge the col- of collateral
lateral deposited as renewal of
security for its pay-

Pledge-release

note.

ment, and without dispute is this true where the stipulation is contained therein "that the bond is to also secure the payment of" any note given in extension or renewal of the original note. National Bank v. Farmers' Bank, 139 Va. 227, 123 S. E. 522. The great weight of authority is to this effect.

In the case of Holland Trust Co. v. Waldell, 75 Hun, 104, 26 N. Y. Supp. 980, the following language is employed: "The principle is too well settled to need the citation of authorities that the renewing of notes from time to time in no way extinguishes the original debt. It is simply an extension of the time of payment, and a change as to the evidence of the debt, and all collaterals pledged for the payment would remain as security, notwithstanding the extension of the time of payment."

In First Nat. Bank v. Gunhus, 133 Iowa, 409, 9 L.R.A. (N.S.) 471, 110 N. W. 611, it is said: "That the mere renewal of an obligation to pay money does not have the effect to release or discharge securities deposited as collateral thereto is too well settled to require the citation of authorities."

In Colebrooke on Collateral Securities [2d ed. § 14] the rule is stated thus: "The renewal of a negotiable bill or note representing the principal indebtedness, for the payment of which collateral securities have been deposited, does not affect the right of the creditor to retain or enforce the collaterals. is equally entitled to the benefit of the collateral securities as a means of obtaining payment of the note or bill given in renewal as in the case of the original evidence of indebtedness."

He

In § 541, in his work on Collateral Securities, Judge Leonard A.

(141 Va. 100, 126 S. E. 77.)

Jones states the law as follows: "A renewal of a note secured by a pledge merely extending the time of payment does not extinguish the debt, and is not a payment of it which will discharge the creditor's claim upon the collateral security. Upon payment of a part of the original note, and the execution of a new note in renewal of the remainder of the debt not paid, a pledge taken as security for the original note will stand as security for such new note, in the absence of any agreement to the contrary."

To the same effect are the cases of Dayton Nat. Bank v. Merchants' Nat. Bank, 37 Ohio St. 208 (1881); Citizens' Bank & T. Co. v. Thornton, 98 C. C. A. 478, 174 Fed. 752; Williams v. National Bank, 72 Md. 441, 20 Atl. 191.

In the instant case the defendants did not become sureties or indorsers on the principal note; their signatures were attached to a separate and distinct paper which was delivered to the plaintiff simultaneously by the president of the bank with the note of the Farmers' Bank. The circumstances under which the note was executed are detailed by Gen. C. C. Vaughan, Jr., and in no particular is he contradicted. In his examination as a witness he testified as follows: "This (i. e., the bond) was executed by these people (i. e., the nine directors) in my presence, and it was then delivered later on by the president of the Farmers' Bank when he turned over to me the note for $110,000 of the Farmers' Bank and also a copy of the agreement."

At the time of the execution of the note, the defendants were facing a financial crisis, if not a more serious contingency. By the delivery of their note to the plaintiffs, this crisis was averted. For the time being, at least, they were ensconced in sanctuary.

Were the defendants put on notice that a renewal of the original note. was contemplated? We think they were. The bond executed by them

Principal and

renew note.

is payable one year after date, while the note for which their bond was de- surety-notice posited as collateral of intention to bears the same date, and is payable 60 days after date; thus denoting that curtailments were expected, and a decrease in the interest charges anticipated, and not that the affairs of the defunct bank would be wound up on a satisfactory basis in the short period of 60 days.

Again, it will be observed that the last renewal note, dated July 18, 1921, fell due on August 17, 1921, five months after the date of the original note and seven months before the bond in question became due. In addition thereto, the original bond of which defendants undoubtedly had knowledge stipulates that it is deposited "as collateral security for the payment of this note (i. e., Farmers' Bank of Franklin note) or any note given in extension or renewal thereof, as well as for the payment of any other liabilities of the undersigned to the said bank, due or to become due, whether now existing or hereafter." Upon these express terms the evidence also shows that the bond was deposited and held by plaintiffs. Why would the plaintiffs under the circumstances pledge their property to secure the debt to some one else? No answer can be found to the question.

In view of the surrounding circumstances, the stipulations contained in the bond executed by the defendants; the benefits accruing to the defendants at the time of the execution thereof; the positive testimony of Gen. Vaughan as to the execution and purpose of the bond; the failure of the defendants to testify as to their intention in executing the bond-we are clearly of the opinion that a proper construction of the bond upon Guarantywhich judgment promise to pay was rendered is that moneythe same is not a contract of guaranty, but that the

character.

same is a definite, unconditional promise, under seal, to pay $110,000 one year after its date, to Vaughan & Co., Bankers.

This conclusion disposes of all the assignments of error, except the additional grounds further relied upon by I. Q. Wiggins.

The first assignment of error is to the action of the court in rejecting a plea of duress, which is as follows: "One of the defendants, I. Q. Wiggins, by his attorney, comes and says, that before the making of the supposed writing obligatory in the notice of motion for judgment in this action mentioned, to wit, on the 21st day of March, 1921, one F. Briggs Richardson, a state bank examiner, whose duty it was to examine the banks of the state of Virginia, as agent of the State Corporation Commission, stated to the defendant and others, that he was responsible for any amounts which might be due to the depositors of the Farmers' Bank of Franklin, Franklin, Va., of which he was a director, whether he signed any written obligation or not, regardless of whether there was any fraud or gross negligence; and that the said F. Briggs Richardson further intimated and stated that unless the defendant and others signed the said supposed obligation, or writing obligatory, that he could be, and might be, prosecuted and imprisoned for the mismanagement of the affairs of the Farmers' Bank of Franklin, Franklin, Va., unless the said defendant would raise money by making and sealing, and as his act and deed, delivering the said writing to the said plaintiffs, in the said notice of motion mentioned; and the said defendant did, then and there, by reason and in consequence of said statements, menaces, and threats, and in fear and apprehension thereof, make and seal, and, as his act and deed, delivered the writing obligatory aforesaid to the plaintiffs, the said Vaughan & Co., Bankers, who had knowledge of the said statements made by the said F. Briggs Richardson, and the threats

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examiners.

While the plea does contain the language, "said defendant did, then and there, by reason and in consequence of said statements, menaces and threats, and in fear and apprehension thereof, make and seal . . and deliver the writing obligatory," etc., yet when we Duress-stateexamine the plea ment of bank to ascertain what acts were committed and statements made by the bank examiner, that overcame the mind of the defendant, the nearest approach thereto is found in the language: "That the said F. Briggs Richardson further intimated and stated that unless the defendant, and others signed the said supposed obligation, or writing obligatory, that he could be and might be prosecuted and imprisoned for the mismanagement of the affairs of the said Farmers' Bank of Franklin, Franklin, Va." etc.

These statements were mere expressions of opinion as to the law governing the actions of a director of a mismanaged bank-whether correct or incorrect is immaterial. There is no intimation that the defendant would be prosecuted and imprisoned if he refused to sign the bond. The plea does not allege that unless the defendant sign, etc., he could or might be prosecuted. Its language is that-"unless the defendant and others signed the said supposed obligation . . . he could be and might be prosecuted and imprisoned."

-sufficiency

of illegal act.

It is also true that the plea alleges that the plaintiffs had knowledge of the statements made by the bank examiner. Knowledge that a third person, who is not alleged to be the of knowledge agent of the party to be benefited, has done a certain illegal act, is not sufficient. The plea must allege that the party to be benefited is responsible in some way for the illegal acts done or the illegal statements made.

(141 Va. 100, 126 S. E. 77.)

The remaining assignments of error relate to the action of the trial court in (1) refusing to sustain a motion to dismiss the amended notice; (2) in overruling a motion for a continuance of the case; (3) in overruling the demurrer to the original and amended notice of motion. After a careful consideration of these assignments of error, we are of the opinion that the trial

court was plainly right in its rulings thereon.

As these assignments do not involve any new propositions of law, we do not deem a further discussion necessary.

Upon a consideration of the whole case, we are satisfied that not only has substantial, but that complete, justice has been done, and that the judgment of the trial court should be affirmed.

ANNOTATION.

Note or bond purporting to be given as collateral security for obligation of third person as guaranty or unconditional obligation.

[Guaranty, § 3.]

In the reported case (COBB V. VAUGHAN, ante, 177) it appears that the directors of a bank which had borrowed money from the plaintiff gave the plaintiff their joint and several bond for, as the bond stated on its face, collateral security for the bank's obligation to the plaintiff. The court nevertheless holds that under the surrounding circumstances, including the benefits accruing to the makers, and their failure to testify as to their intentions in executing the bond, the bond was a definite, unconditional promise on which the signers were liable, rather than a contract of guaranty on which they were liable only after the plaintiff had exercised all due diligence in an attempt to collect from the bank.

There does not appear to be any other case on all fours with the reported case (COBB V. VAUGHAN) as to a note or bond which purports on its face to be collateral security for the obligation of a third person, the question involved being whether such bond or note is a guaranty or an unconditional warranty.

While it is not within the scope of this annotation to discuss the distinction between contracts of guaranty and of suretyship, a few cases bearing on that question, and having some resemblance to the reported case, are here presented.

In Assets Realization Co. v. Roth

case

(1919) 226 N. Y. 370, 123 N. E. 743, reversing (1917) 179 App. Div. 324, 166 N. Y. Supp. 388, the facts were very similar to those in the reported case, although the bond given by the directors and stockholders of the debtor bank to protect the creditor stated that it was a "guaranty" rather than "collateral security," as in the reported case. Also, the signers bound themselves severally, rather than severally and jointly, as in the reported (COBB V. VAUGHAN). It was held that the bond was not a contract of guaranty, but was instead one of indemnity, and that the liability assumed was primary, not secondary, the court saying: "We so held in Assets Realization Co. v. Howard (1914) 211 N. Y. 430, 105 N. E. 680. There an action was brought against this defendant and others to charge them as stockholders of the Metropolitan Bank, with the statutory liability for debts. We held that the liquidator's advances did not constitute a debt; that the stockholders were not liable under the statute; and that the liquidator, having exhausted the assets, had no security for the deficit except the contract of indemnity. The defendant helped to induce that ruling when the result was to his advantage. We will not change it at his instance now when the result is to his detriment. This is no case, therefore, for the application of the strict rules

that are enforced at times for the relief of voluntary guarantors."

In Westinghouse Electric & Mfg. Co. v. Wilson (1916) 63 Pa. Super. Ct. 294, it appeared that a company placed an order with the plaintiff for electric supplies. The plaintiff refused to fill it unless the defendant, the president of the company, guaranteed the obligation, and the defendant executed a bond guaranteeing payment. It was held that the bond was one of suretyship, notwithstanding that it was executed subsequently to and independently of the obligation of the third person. Not being a guaranty, it was not necessary, the court held, for the

plaintiff to use first all due diligence to collect from the company.

In Cooke v. Mesmer (1912) 164 Cal. 332, 128 Pac. 917, it appeared that a corporation borrowed money from a bank, and that the president of the corporation deposited with the bank as collateral security several promissory notes payable to himself and indorsed by him with a guaranty of payment. It was said by the court that, since the president was clearly acting in his individual capacity in pledging his notes as collateral security for the loan to the corporation, he was liable on the notes to the bank as one unconditionally bound. W. Q. F.

C. H. MCNISH

V.

N. D. BURCH et al., Judges of the Circuit Court in and for Lyman

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Garnishment of a judgment in a district other than the one in which it was rendered is not authorized by a statute permitting any creditor to proceed by garnishment in any court having jurisdiction of the subject of the action against any person indebted to the debtor, and providing that no execution shall be issued upon a garnished judgment until termination of the garnishment action, except that the court may permit the issuing of execution if the legislature points out no steps to be taken to make such garnishment effective.

[See annotation on this question beginning on page 190.]

APPLICATION for a writ of prohibition to prohibit defendants from proceeding with garnishment of a judgment. Writ granted. The facts are stated in the opinion of the court. Messrs. Alan Bogue and E. E. Wagner, for plaintiff:

A judgment debtor is not subject to garnishment by process from a court other than that in which the judgment was rendered.

Hamill v. Peck, 11 Colo. App. 1, 52 Pac. 216; Menees v. Matthews (D. C.) 197 Fed. 633; Wallace v. M'Connell, 13 Pet. 136, 10 L. ed. 95; Lowenstein v. Levy, 129 C. C. A. 59, 212 Fed. 383; Wabash R. Co. v. Tourville, 179

U. S. 322, 45 L. ed. 210, 21 Sup. Ct. Rep. 113; Missouri, K. & T. R. Co. v. Bradshaw, 37 Okla. 317, L.R.A.1917F, 1013, 132 Pac. 327; Scott v. Rohman, 43 Neb. 618, 47 Am. St. Rep. 767, 62 N. W. 46; Sievers v. Woodburn Sarven Wheel Co. 43 Mich. 275, 5 N. W. 311.

When a court of competent jurisdiction has become possessed of a case, its authority continues, subject only to the appellate authority, until the

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