Looney v. Belcher

• Citation: 169 Va. 160
• Court: Supreme Court of Virginia
• Decision Date: 23 September 1937
• Parties: THEODORE LOONEY AND CARL E. LOONEY v. BARTLEY BELCHER.

Page 160

169 Va. 160

THEODORE LOONEY AND CARL E. LOONEY v. BARTLEY BELCHER.

Supreme Court of Virginia, Staunton.

September 23, 1937.

Present, All the Justices.

1. CONTRACTS — Consideration — What Constitutes. — Any act done at the defendant's request, and for his convenience, or at the inconvenience of the plaintiff, constitutes sufficient consideration.

2. CONTRACTS — Consideration — What Constitutes — Abandonment of Legal Right. — Consideration means, not so much that one is profiting, as that the other abandons some legal right in the present, and the abandonment need not be for a time certain, as it may be for a reasonable time only and yet be sufficient consideration for a promise.

3. GUARANTY — Essential Elements — Consideration — Forbearance of Bank Depositor to Remove Deposit — Case at Bar. — In the instant case, a suit for contribution between sureties on a guaranty bond, a depositor in a bank contemplated transferring his deposit to a rival bank, and officers of the bank of deposit gave him their bond securing and guaranteeing any loss which might accrue to him from the relinquishment of his plan to remove his deposit. The bank failed, a compromise payment was made on the guaranty bond and appellants, heirs of one of the original guarantors, were called upon to pay a portion of the sum. They declined to pay on the ground that there was no valuable consideration in law for the execution of the bond.

Held: That in view of the forbearance on the part of the depositor to insist upon a scheme of greater safety and the unquestionable advantage and benefit accruing to the officers of the bank, there could be no question about the presence of consideration sufficient to support the guaranty bond.

4. GUARANTY — Discharge of Guarantor — Extension of Time. — Where there is nothing to show when the principal debt matures, there can be no such extension of time as to discharge the guarantor.

5. GUARANTY — Discharge of Guarantor — Extension of Time — Where Guaranty Is of a Continuing Nature. — Where the guaranty is of a continuing nature and does not limit or restrict the period of credit, any reasonable change as to the length of the credit will not relieve the guarantor from his liability thereunder, unless the extended period materially changes the contract of guaranty.

6. GUARANTY — Discharge of Guarantor — Extension of Time — When Guaranty Construed as Continuing. — Where it is apparent from the language of the guaranty in connection with the surrounding circumstances existing at the time it was executed that it was the guarantor's intention to leave the time and amount open to cover a series of transactions, the guaranty will be construed as a continuing one; but the time and amount must be reasonable under the circumstances of the particular case.

7. GUARANTY — Necessity for Demand and Notice of Default — When Guaranty Is Absolute. — Where the guaranty is absolute, demand of payment on the principal and notice of non-payment to the guarantor are not necessary.

8. GUARANTY — Suretyship — Discharge of Guarantor or Surety — Laches. — Mere delay to pursue the principal and collect the money of him does not discharge a surety or guarantor provided such delay be unaccompanied by fraud, or an agreement not to prosecute the principal, made without the assent of such surety.

9. GUARANTY — Discharge of Guarantor — Laches — Case at Bar. — In the instant case, a suit for contribution between sureties on a guaranty bond, a depositor in a bank contemplated transferring his deposit to a rival bank, and officers of the bank of deposit gave him their bond securing and guaranteeing any loss which might accrue to him from the relinquishment of his plan to remove his deposit. The bank failed in 1931, and thereafter the bond became misplaced or lost. It was found some two years afterwards, and in 1934 a demand for payment was made. Appellants, heirs of one of the guarantors, declined to pay a portion of the sum paid to the depositor, setting up laches as a defense.

Held: That there was no merit in the defense of laches.

10. GUARANTY — Death of Guarantor — Liability of Heirs — Section 5762 of the Code of 1936 — Case at Bar. — In the instant case, an action for contribution between sureties on a guaranty bond, appellants, heirs of one of the original sureties, claimed that any liability that might have attached to their ancestor during his lifetime was ended by his death and that the burdens of the bond must be discharged by the surviving sureties and that such burdens did not descend as a charge upon the estate of the original surety or his heirs.

Held: In view of section 5762 of the Code of 1936, making the estate liable on the death of a person jointly bound for payment of a debt, there was no merit in this contention.

11. EXECUTORS AND ADMINISTRATORS — Liabilities — Liability on Contracts of Decedent. — It is a presumption of law that the parties to a contract bind not only themselves but their personal representatives. Executors, therefore, are held to be liable on all contracts of the testator which are broken in his life-time, and, with the exception of contracts in which personal skill or taste is required, on all contracts broken after his death.

12. GUARANTY — Construction and Interpretation of Bond. — In the construction and interpretation of a bond of warranty or other paper executed for the same purpose, it is important to consider in each particular case the circumstances and the parties and the natural and normal reasons which impel them.

13. GUARANTY — Construction of Contract — General Rule. — The modern and more reasonable practice is to give the language of a guaranty contract its just sense, and to search for the precise meaning, and one which will give due and fair effect to the contract, without adopting either the rule of a rigid or of an indulgent construction. The true principle of sound ethics is to give the contract the sense in which the person making the promise believed the other party to have accepted it, if he, in fact, did so understand and accept it.

14. GUARANTY — Construction of Contract — Supreme Court of Appeals Cannot Add to Contract. — The Supreme Court of Appeals cannot insert in a guaranty bond plain words of limitation and condition that were not used by the parties and cannot, by construction and interpretation, import words and effect a significance which the parties did not elect to consummate. In other words, the court cannot make the contract for the parties.

Appeal from a decree of the Circuit Court of Buchanan county. Hon. A. G. Lively, judge presiding. Decree for complainants. Defendants appeal.

The opinion states the case.

S.H. & George C. Sutherland, for the appellants.

H. Claude Pobst and F. H. Combs, for the appellees.

BROWNING, J., delivered the opinion of the court.

The facts of this case are, in brief, these: In April, 1921, there were two banks operating in the town of Grundy, Virginia. One was the Bank of Grundy, Incorporated, a State bank; the other was the First National Bank of Grundy. Prior to April 9, 1921, a customer of the Bank of Grundy, Fred Vandyke, had on deposit in that bank, $43,760, represented by six certificates of deposit. Three of these certificates were for the sum of $10,000 each and one for $10,200. The others were for lesser amounts.

It appears that the Bank of Grundy was doing business in an old and unimpressive building, without the modern safety appliances and conveniences. Its rival, the First National Bank, was operating in a more modern building, with superior vault facilities.

Officials of the latter bank made an effort to induce Vandyke to place a portion of his money on deposit in their bank, emphasizing its physical safety advantages. This effort succeeded to the extent of Vandyke's assignment of two of his $10,000 certificates to the First National Bank, which issued its certificates to him for like amounts. The Bank of Grundy certificates were presented to it on the following day for payment, in due course, which would have resulted in the transfer of $20,000 from the one bank to the other. The cashier of the Bank of Grundy and H. Claude Pobst, one of its directors, went posthaste to the home of Mr. Vandyke and persuaded him to abandon the transfer that he had in mind and leave his deposits, intact, in their bank. As an inducement for him to do this, and to create in him a feeling of security in continuing his deposits in the Bank of Grundy, the officers of this bank agreed to give him their bond securing and guaranteeing any loss which might accrue to him on account of these deposits.

This method of making Vandyke safe apparently satisfied him for he made no further efforts to withdraw his money until some eighteen months thereafter he withdrew $35,000 for the purpose of paying for a farm which he had bought in Ohio upon his removal from Virginia to that State, in 1922 or 1923.

The bank renewed his certificates of deposit annually and sometimes semi-annually, paying or adding in the accrued interest which had been earned. Vandyke, though residing in Ohio after 1923, retained property interests in Buchanan county, Virginia, Grundy being the county seat, and he returned there each year, and sometimes oftener, to collect his rents, pay taxes, etc. Thus he continued to do business with the bank, and when it failed, in May, 1931, he had on deposit with it the sum of $10,000, represented by a certificate of deposit dated November 1, 1930, which was a part of the original deposit made in 1921. He had kept, through the intervening years, the bond of guaranty before referred to. Just after the bank closed he sought the advice of his attorney, in connection with the bond, for what purpose does not appear in the record, but supposedly for information as to its validity. Thereafter, it became misplaced or lost and was found some two years afterward.

In 1934, Vandyke went to Grundy with the bond and demanded...