Chapter 45. SURETYSHIP AND GUARANTY.
Article 1. Sureties, Guarantors, Indorsers, Bail and Principals.
§1. Demand That Creditor Sue.—The surety, guarantor or indorser (or his committee or personal representative) of any person bound by any contract may, if a right of action has accrued thereon, require the creditor (or his committee or personal representative), by notice in writing, forthwith to institute suit thereon; and if he be bound in a bond with collateral condition or for the performance of some collateral undertaking, he shall also specify in such notice the breach of the condition or undertaking for which he requires suit to be brought.(Code 1849, c. 146, §4; Code 1860, c. 146, §4; Code 1868, c. 101, §1: 1907, c. 37, §1; Code 1923, c. 101, §1.)
Revisers’ Note.—This section is the first part of §1, c. 101, Code 1923, and comprises the whole of the section as it was prior to Acts 1907, c. 37. The latter part of the section is incorporated in §3 of this article. The words “committee or” in the parenthetical provisions are new. See §5774, Code Va. 1919, for a similar provision.
§2. Discharge of Surety, Guarantor or Indorser by Failure of Creditor to Sue.—If such creditor or his committee or representative shall not, within a reasonable time after such notice, institute suit against every party to such contract who is a resident in this State, and not insolvent, and prosecute the same with due diligence to judgment and by execution, he shall forfeit his right to demand of such surety, guarantor or indorser or his estate, and all his cosureties and their estates, the money due by any such contract for the payment of money, or the damages sustained by any breach of the collateral condition or undertaking specified as aforesaid. But the conditions, rights, and remedies against the principal debtor shall remain unimpaired thereby.(Code 1849, c. 146, §5; Code 1860, c. 146, §5; Code 1868, c. 101, § 2; Code 1923, c. 101, §2.)
Revisers’ Note.—The words “committee or,” before the word “representative,” are new. See revisers’ note to the preceding section. The words “guarantor or indorser” are added after the word “surety” in order to conform to the language and intent of the preceding section.
§3. Judgment, Decree or Recovery Not Binding on Surety Not a Party to Proceeding.—Whether the surety, guarantor or indorser (or his committee or personal representative) shall have given notice as provided in the first section of this article or not, no judgment, decree or recovery rendered, entered, or had in any suit, action, prosecution or proceeding, to which the surety, guarantor or indorser (or his committee or personal representative) was not a party regularly served with process, shall be in any wise binding on such surety, guarantor or indorser (or his committee or personal representative), and, notwithstanding such decree, judgment or recovery, the surety, guarantor or indorser (or his committee or personal representative) shall be allowed to make any such defense in any action, suit or proceeding instituted against him, as could have been made in the suit in which such decree, judgment or recovery was had.(1907, c. 37, §1; Code 1923, c. 101, §1.)
Revisers’ Note.—This section contains the latter part of §1, c. 101, Code 1923, which is the portion added to the latter section by Acts 1907, c. 37. The first part is incorporated in §1 of this article. The words “committee or,” in the first three parenthetical provisions, and the entire last parenthetical provision are new. See revisers’ note to §1 of this article. The words “as provided in the first section of this article,” appearing after “notice,” are new.
§4. Remedy of Bail, Surety, Guarantor, Etc., Making Payment.—If any person liable as bail, surety, guarantor, or indorser, or any sheriff liable for not taking sufficient bail, or the committee, heir or personal representative of any so liable, shall pay, in whole or in part, any judgment, decree, or execution rendered or awarded on account of such liability, the person having right of action for the amount so paid may, by motion in the court in which such judgment, decree or execution was rendered or awarded, obtain judgment or decree against any person against whom such right of action exists for the amount so paid, with interest from the time of payment, and five per cent damages on such amount.(Code 1849, c. 146, §6; Code 1860, c. 146, §6; Code 1868, c. 101, §3; Code 1923, c. 101, §3.)
Revisers’ Note.—The word “committee” before “heir” is new. See §5777, Code Va. 1919. The words “court in which such judgment, decree, or execution was rendered or awarded” are substituted for the words “circuit court of the county.” This change, in accord with §5777, Code Va. 1919, is deemed advisable principally because §3, c. 101, Code 1923, did not designate the venue.
§5. Principal’s Right to Same Defense Against Surety as Against Creditor.—If any such surety (other than bail), or his committee, heir or personal representative, shall confess judgment or suffer judgment to go against him by default, without giving notice to his principal (if the principal be a resident of this State), or his committee or personal representative, to defend the suit, and after such principal, his committee or personal representative offers to defend the suit, and tenders counter security, approved by the court in which the suit is pending, such principal, or his committee, heirs or representative, may have the benefit of every defense against the motion or suit of such surety or his committee, representative or heirs, against him, that he might have had against the creditor. And in all cases in which any principal debtor, or his committee, representative or heirs, knowing of the pendency of any suit against his surety or the committee, heir or personal representative of such surety shall not offer to defend such suit, he shall be precluded from making any defense to the claim of the surety which he might have made against the suit of the creditor.(Code 1849, c. 146, §7; Code 1860, c. 146, §7; Code 1868, c. 101, §4; Code 1923, c. 101, §4.)
Revisers’ Note.—The word “committee,” whereever occurring, is new. See revisers’ note to §1 of this article. Near the middle of the first sentence, before the word “offers,” the words “his committee or personal representative” are new.
§6. Contribution Among Cosureties and Coguarantors.—If the principal debtor be in solvent, any surety or guarantor (or his committee, personal representative or heir) against whom a judgment or decree has been rendered on the contract in which he was surety or guarantor, may obtain a judgment or decree by motion, in the court in which such judgment or decree was rendered, against any cosurety or coguarantor (or his committee, personal representative or heir) for his share, in law or equity, of the amount for which the first mentioned judgment or decree may have been rendered; and if the same has been paid, for such share of the amount so paid, with interest thereon from the time of such payment.(Code 1849, c. 146, §8; Code 1860, c. 146, §8; Code 1868, c. 101, §5; Code 1923, c. 101, §5.)
Revisers’ Note.—Section 5, c. 101, Code 1923, is so revised as to bring coguarantors, and also the committees and heirs of cosureties and coguarantors, within the terms of the statute. The words “court in which such judgment or decree was rendered” are substituted for the words “circuit court of the county.” See revisers’ note to §4 of this article.
§7. Deposit on Contract for Use or Rental of Property.—Whenever money shall be deposited or advanced on a contract for the use or rental of personal property thereafter to be delivered, as security for performance of the contract or to be applied to payments upon such contract when due, and such contract is between a citizen of this State and a nonresident thereof, such money, with interest accruing thereon, if any, until repaid or so applied, shall continue to be the money of the person making such deposit or advance and shall be a trust fund in the possession of the person with whom such deposit or advance shall be made and shall be deposited in a bank or trust company located in this State and shall not be mingled with other funds or become an asset of such trustee until such property is delivered : Provided, however, That nothing here in contained shall apply to deposits or advance payment required by public service corporations under the authority of the public service commission.(1921, c. 91, §1; Code 1923, c. 101, §6.)
Revisers’ Note.—This section is the first paragraph of §6, c. 101, Code 1923. The second paragraph is in §8 of this article.
§8. Penalty for Violation of Preceding Section.—Any person violating any provision of the next preceding section shall be guilty of a misdemeanor, and, upon conviction thereof, shall be fined not less than one hundred nor more than one thousand dollars, and, at the discretion of the court, may be confined in jail not more than one year. The officer or agent of any corporation who directly or indirectly participates in any transaction amounting to a violation of said section shall, upon conviction, be punished as aforesaid.(1921, c. 91, §2; Code 1923, c. 101, §6.)
Revisers’ Note.—This section is the second paragraph of §6, c. 101, Code 1923. The first paragraph is in §7 of this article.