Court Opinion

ID: 8341549
Source: CourtListenerOpinion
Date Created: 2022-10-17 23:38:21.180599+00
Date Added: 2024-06-11T16:45:41.130854
License: Public Domain

McCauley, J.
The makers of the note for fifteen hundred dollars were liable also on the contract which was held as collateral to it. The collateral contract did not rest on a distinct consideration, but the consideration of the principal note and of the collateral were the same. In the ordinary case of holding one note or contract as collateral to another, each note or contract rests upon a distinct consideration. The extension of time on a principal note or contract, which would release sureties upon it, would not affect a note or contract belonging to the principal debtor upon a distinct and different consideration held as collateral to it. When the principal and collateral contracts are upon separate and different considerations, if the collateral matures after the principal, it survives and may be enforced after the principal has become barred by limitation. In such cases also where the collateral matures before the principal it may be enforced before the principal debt is due. The right of action on the collateral is in no way dependent upon the principal debt, except that the principal must remain unpaid to give the right to enforce the collateral. The consideration to Barnes for the principal and the collateral being the same, and Pow and Hawkins being sureties only, their relation to the principal debt was the same as if they had been sureties on the original note, limited only by the amount for which they undertook. While the payment of the principal might have been extended without affecting the collateral, if the agreement for the extension had reserved the right to proceed on the collateral notwithstanding the extension, where no such right was reserved the extension of time for the payment of the debt extended the time on all notes or contracts held by the creditor for it, which were not supported by a consideration different from the one for which the principal note was given.

Judgment affirmed.