Case Name: Adams & al. v. Logan & als.
Court: Supreme Court of Appeals of Virginia
Jurisdiction: Virginia
Decision Date: 1876-01
Citations: 27 Gratt. 201
Docket Number: 
Parties: *Adams & al. v. Logan & als.
Judges: 
Reporter: Virginia Reports
Volume: 68
Pages: 444–447

Head Matter:
*Adams & al. v. Logan & als.
January Term, 1876,
Richmond.
I. Principal and Surety — Deeds of Trust — Extension of Time, — A and B are sureties of W in a bond to L for $3,000, executed in 1858. In May 1862 L lent to W $7,500 of Confederate money, and took Ms bond payable in two years with interest; and W executed a deed, by which he conveyed to S real and personal estate in trust to secure both debts; and it provided that upon the prompt payment annually, of the interest upon the two bonds, W should keep quiet possession of the property for two years. W did not pay the interest. Held;
1. Same — Same—Same—Effect of Such Agreement.— W not having paid the interest, the parties were left in the same situation, and with the same rights and obligations, as if the agreement to extend the time had not been made.
2. Same — Same—Same—Same.—The agreement only operated to postpone a sale of the property under the deed of trust. It did not tie up the hands of L from pursuing his debtor W at law.
3. Same — Same—Same—Same.—If L had sued W at law and recovered judgment and levied an execution on the personal property embraced in the deed, he might thereby have forfeited the benefit of that security, or subjected himself to an action for damages; but a court of equity would not interfere to prevent a sale of the property under the execution, upon the mere contract to pay interest on the debt.
4. Same — Same—Same— Same — “Stay Law.” — But if the agreement operated as an extension of the time of payment of the debt, as the act of the 29th of March 1862, known as the stay law, forbade the issue of execution upon a judgment, and L was under no obligation to the sureties to raise the question of its constitutionality, the agreement did not have the slightest effect upon the rights and remedies or obligations of any of the parties.
5. Same — Same—Same—When a Discharge oi Surety. — The principle upon which an agreement for an extension of *time dischargesa surety is, that the creditor thereby deprives the surety of the means of relieving himself, by paying the debt and proceeding immediately against the principal; or by his filing his bill quia timet to compel the debtor to pay the debt; or by notice to the creditor under the statute. The sureties cannot be discharged by an act which in no manner affected their rights, or impaired the remedies of the creditor.
II. Same — Same—Compromise—Confederate Money— Scaling. — W having been declared a bankrupt in tlie united States court, L, and the assignees of W, t>y compromise agreed that the debt of I. for $7.500 should be scaled to $3,500, with interest from date, and D should retain the benefit of the deed of trust; and that L should not object to the exemption in favor of W, or to the allowance of 200 acres of land to his wife, in commutation of her contingent right of dower; and this agreementwas confirmed by the Bankrupt court. S sold the balance of the trust fund, and apportioned the net proceeds between the two debts of W to L. Head:
1. Same — Same—Same—Same—Same.—A and 13 cannot complain of the scale applied to the debt of $7,500, which seems reasonable in itself, and was agreed to by I. and the assignees of W, and approved and confirmed by the court.
2. Same — Same—Same—Acts of Bankrupt Court. — If there was error in the decree of the Bankrupt court in allowing W the exemption claimed by him, or in assigning to his wife the 200 acres of land, they are acts of a court of competent jurisdiction, and cannot be questioned elsewhere.
3. Same — Judgment against Principal. —A judgment having been rendered in favor of L against W for two years’ interest on the bond for $3,000, upon an insufficient notice, and execution levied on his property, W gives L notice that he will move to have it set aside; and L being aware of the insufficiency of the notice, releases the property. The sureties are not entitled to a credit for the amount of the judgment.
This was a suit in equity in the Circuit court of Pittsylvania, brought in January 1871, by James M. Adams and David Barber, to enjoin a judgment recovered against them and A. B. Womack, by William Bogan, for $3,000, with interest from the 2d of August 1858, subject to credits endorsed thereon. It appears that A. B. Womack, the principal, and the ^plaintiffs and J. C. Thompson, since deceased, as his sureties, executed a bond for $3,000, to William Bogan, payable one year after date. That in 1862 Barber becoming uneasy on the subject of his securityship for Womack, gave notice to Bogan to sue upon the bond; but he was induced to withdraw the notice for the time, and shortly afterwards, viz: on the 23d of May 1862, Bogan lent to Womack, in Confederate money, $7,500, for which he took Womack’s bond payable two years after date, with interest from the date, in lawful money of Virginia; and Womack at the same time, executed a deed by which he conveyed to Richard Bogan and Beverly Sydnor, two tracts of land, twenty-three slaves, and their future increase, all his stock of horses, cattle, hogs, his plantation tools and his household and kitchen furniture, in trust to secure the said two bonds; and it was provided that upon the prompt payment annually of the interest accruing upon the said bonds at the rate of six per cent, per annum, Womack should keep quiet possession of the property for the term of two years, unless he should determine otherwise.
It appears further that in 1867 Bogan gave a notice to Womack that he would move for a judgment against him for one year’s interest due upon the debt for $7,500; that a judgment was rendered on this notice for $450, and execution was issued and levied on the property of Womack; and proceedings were stopped for a time by order of the plaintiff. The explanation of this given by Bogan in his answer, in response to the charge in the bill, is, that at the court to which the notice was given his counsel ascertained that the notice was not served on Womack twenty days before, as the law required, and therefore declined to apply for a judgment thereon; that after said counsel had *left the court, some friend of his happened to see the notice, and supposing it to have been overlooked applied for a judgment, which was entered in the absence of any defence to the motion; that the execution was issued and levied, and that Womack through his counsel gave Bogan notice that he would move to set aside said judgment on the ground that it was improperly granted, and requested that proceedings on said execution should be stayed for a short time; which Bogan acceded to, he being satisfied that the judgment should not have been entered, and that Womack was entitled to the stay. Very shortly afterward, and before said motion could be heard, Womack filed his petition, and was adjudged a bankrupt.
Soon after Womack became a bankrupt, Sydnor the surviving trustee, was about to sell the property of Womack to satisfy the two debts mentioned therein, when he was stopped by an injunction from the judge of the United States District court; and in that court the assignees of Womack claimed that the debt of $7,500 should be scaled as of May 1864. This question was argued before the District judge, who postponed the decision of it until he could consult Judge Chase; and whilst it was pending, viz: in January 1869, the assignees and Bogan entered into an agreement of compromise, by which the debt of $7,500 was to be settled at $3,500 with interest from that date, and Bogan was to have the benefit of the deed of trust. This agreement was to be subject to the future ratification of the District court; and in the event of its ratification, Bogan agreed to make no opposition to the exemption set apart to said Womack, by said assignees, nor to the assignment of two hundred acres of land made by said assignees and the trustee to the wife of Womack in commutation of Blower. This agreement seems to have been confirmed by the District court. And upon the sale of Womack’s property embraced in the deed of trust, the debt of $3,000 for which the plaintiffs were bound, was credited by $1,677.95 as its proportionate part of the net proceeds of the property.
The cause came on to be heard on the 1st of June 1872, when the court made a decree dissolving the injunction which had been granted, with costs. And thereupon Adams and Barber applied to this court for an appeal; which was allowed.
Jones & Bouldin, for the appellants.
Ould & Carrington and Bogan, for the appellees.
Principal and Surety — When Agreement for Extension of Time Discharges Surety. — The principal case is cited and the doctrine in the fifth headnote followed in Bank v. Parsons, 45 W. Va. 699, 32 S. E. Rep. 275. See also, Shannon v. McMullin, 25 Gratt. 229; Harrison v. Price, 25 Gratt. 553; wells v. Hughes, 89 Va. 543, 16 S. E. Rep. 689; Norris v. Crummey, 2 Rand. 323; Hunter v. Jett, 4 Rand. 104.
Acts of Bankrupt Courts. — For tbe proposition that the act of a bankrupt court cannot be elsewhere questioned, see Brengle v. Richardson, 78 Va. 410, where the principal case is cited and quoted from.

Opinion:
Staples J.
delivered the opinion of the court.
The court is of opinion that the deed of trust executed by Womack, the principal debtor, on the 29th May 1862, did not discharge the appellants from their liability as sureties upon the bond due the appellee Bogan. By the terms of the deed Womack was permitted to retain possession of the property for two years, upon condition of paying the interest annually upon the debts secured. 'The effect of this arrangement was, that upon performance of the condition, no sale of the property could be made under the deed until after the expiration of two years. The debtor having failed to pay the interest, the parties were left in the same situation and with the same rights and obligations, as if the agreement to extend the time had never been made. Norris v. Crummy, 2 Rand. 234.
It was argued, however, that although the debtor *failed to comply with the terms upon which indulgence was granted, he was nevertheless entitled to one whole year to make the first payment of interest; and as he was in no default till the end of the year, the appellee Bogan during the intervening period was prevented from enforcing the collection of his debt. It will be observed, however, that the agreement operated only to postpone a sale of the property under the deed of trust — the deed being a mere collateral security for the debt. It did not tie up the hands of the creditor for a single moment from pursuing the debtor at law. The appellee might have sued and recovered judgment notwithstanding the deed. If the appellee had sued out and levied an execution upon the property embraced in the deed, he might thereby have forfeited the benefit of that security or subjected himself to an action for damages; but a court of equity would not interfere to prevent a sale1 of personal property under an execution, upon a mere contract to pay interest, as stipulated in the deed; more especially if the effect of such interference would be to release the sureties from all liability.
But if it be conceded that the agreement operated as an extension of the time of payment of the debt, still it did not have the slightest effect upon the rights and remedies or obligations of any of the parties. Under the provisions of the act of 29th March 1862, generally known as the stay law, no writ of elegit, fieri facias or venditioni exponas could be issued while that act remained in force. Whatever may now be said in respect to the constitutionality of this law, the creditor was under no obligation to the sureties to raise that question. Had they notified him to institute suit against the principal, and prosecute it with due diligence to judgment and by execution, the appellee *might have recovered judgment; but no one can doubt what would have been the result of an effort to enforce the collection of the debt by execution. The appellee was therefore as effectually precluded by the statute from making his money by legal process as he would have been had the courts been closed during the existence of the war. The principle upon which an agreement for an extension of time discharges the surety is, that the creditor thereby deprives the surety of the means of relieving himself by paying the debt and proceeding immediately against the principal, or by filing his bill 'quia timet to compel the debtor to pay the debt, or by notice to the creditor under the statute. Neither of these remedies would have been available, even though the deed of trust had never been executed. It would be a grievous injustice to hold the sureties discharged by an act which in no manner affected their rights or impaired the remedies of the creditor. If authority on this point is necessary, it may be found in the case of Price v. Edmunds, 10 Barn. & Cress. 578; Harnsberger's ex'or v. Geiger's adm'r, 3 Gratt. 144.
The court is further of opinion that the appellants, whose liability as sureties is confined to the three thousand dollar bond, have no just cause of complaint with the scale of depreciation applied to the seven thousand and five hundred dollar bond, for which they are not bound. The adjustment seems to have been just and fair in itself: it received the sanction of the debtor and the assignees in bankruptcy, and was approved and confirmed by the District court of the United States.
The appellee, in receiving the amount thus ascertained to be due, has not lost, or in any manner impaired, *his remedies upon the bond for which the appellants are bound as sureties.
The court is further of opinion, that the appellee cannot be held liable for any error, if such there be, in the decree of the Bankrupt court, allowing Womack the exemption, claimed by him, or assigning to his wife two hundred arces of land by way of compensation for her contingent right of dower. These were acts of a court of competent jurisdiction, having cognizance of the parties and the subject-matter. It must be presumed, at least until the contrary appears, that the decrees and orders were fairly made with due regard for the interests of all parties. The extent of the ap-pellee's participation in the arrangement, allowing the exemption and assignment, was the withdrawal of his opposition to the decree of the court sanctioning the same. If any injustice has been done the appellants, or others interested in thie estate of Womack, the remedy is not in the state courts.
The court is further of opinion, that the appellees are not entitled to any abatement or deduction by reason of anything done by the appellee in respect to the supposed judg- merit for three hundred dollars. All that appears in the record in regard 1 o that judgment, beyond the averments of the bill, is what is found in the answer of the appellee. It is there stated that a judgment was recovered against Womack for two years' interest on the three thousand dollar bond; but no execution was ever levied on his property, he having previously gone into bankruptcy: the amount of the judgment was however paid by the appellants, and credit given accordingly. This statement being responsive to the bill must be taken as true.
It seems, however, that a judgment was recovered ^against Womack for four hundred and fifty dollars, interest upon the seven thousand and five hundred dollar bond, execution issued and levied upon his property. This property was released by order of the appellee. The reason he assigns, and it is sustained by the evidence, is that the judgment was rendered upon an insufficient notice, and the defendant was taking steps to vacate the judgment and quash the execution. The appellee being satisfied that such would be the result, released the lien of the execution. This he had the right to do. He was under no obligation to persist in a hopeless controversy, because the effect of the release might ultimately be to withdraw a part of the trust fund pledged to the security debt. If the appellants have sustained any loss from this cause, the appellee cannot be made liable for it.
Upon the whole there is no error in the decree, and it must be affirmed.
Decree affirmed.