
    Bank of the State of South Carolina vs. William Knotts.()
    On a continuing guaranty given and accepted in 1847, loans were made from time to time, and there was no default in payment, all previous notes for loans having been met when due, until September, 1852, when default was made in payment of certain notes given for advances made a short time before : — Held, that the statute of limitations did not commence to run in favor of guarantor until default of payment was made.
    Unless neglect to give notice of principal’s failure to pay, produce some loss or prejudice to guarantor, such neglect is no defence to an action on the guaranty.
    BEFORE WHITNER, J., AT ORANGEBURG-, SPRING TERM, L856.
    Tbe report of bis Honor, tbe presiding Judge, is as follows:
    “ This was an action of assumpsit on tbe following letter of guaranty:
    
      To the President and Directors of the Dante of the State of South Carolina:
    
    Tbe subscribers hereby guaranty, jointly and severally, tbe payment of all drafts or notes made, or to be made, by Messrs. Glovers & Davis (Factors) of Charleston, and of all drafts accepted by them which may be discounted by you; and we declare this to be a continuing guaranty, and that it is to remain of force till revoked by written notice to tbe President or Cashier of said Bank; and we waive notice of tbe acceptance of this guaranty. This guaranty to take effect from tbe
    
      date hereof, and onr liability thereunder not to exceed five thousand dollars.
    CHARLES GLOVER, WILLIAM KNOTTS, ■ V. D. V. JAMISON, JAMES GRIMES.
    “ The letter was sent by mail, post marked 28th Sept., 1847, addressed to Sanders Glover, marked in pencil by President of Bank Sept., 1847, and the proof shewed its acceptance by the Bank 28th Oct., 1847.
    “ Glovers & Davis procured extensive accommodations in the Bank from this period until some time shortly preceding their failure in business, which happened in September, 1852.
    “The notes of Glovers & Davis discounted in bank for their benefit, endorsed by A. E. Glover, were regularly protested, and were as follows:
    1. Note bearing date 7th Aug., 1852, at 60 days, for $2,800.
    2. “ “ “ 24th “ “ 30 “ $3,800.
    3. “ 4. " “ “ 13th Sept., “ “ 13th “ “ 10 “ . $3,500. 15 “ $3,500.
    5. 11 “ “ 18th “ 60 “ $6,000.
    “January 17th, 1853, the Cashier of Bank mailed a letter addressed to defendant, at Orangeburg, C. H., communicating the default of Glovers & Davis, reminding defendant of the letter of guaranty, asking his attention thereto, and offering to submit any propositions he might have to make to the Board. To this letter no answer was received, nor did it appear that the defendant had received the letter though he resided in Orangeburg District.
    “July 11th, 1853, a second letter was written by Cashier of Bank, enclosing copy of former communication, and addressed to defendant, at a post-office in his more immediate neighborhood. To this defendant replied under date July 15th, 1853, expressing a desire to avoid tbe payment of costs, and offering to pay Ms part, one-fonrtb, on procuring a full discharge, &c.
    “ Mr. A. E. Glover, tbe endorser of these notes, proved admissions of tbe President that tbe Bank bad taken collaterals as a further security for tbe discounts, which bad run up to thirty-two thousand dollarsbut it did not appear any thing had been, or was likely to be received from them.
    ‘•The statute of limitations was pleaded — the writ was lodged 9th February, 1854 — the declaration set out the guaranty, but alleged no new promise.
    “ I thought the statute a complete bar to plaintiff’s demand, and would have so ruled on circuit; but, as the terms of the guaranty were somewhat peculiar, and there were other grounds on which defendant relied, I thought it better to overrule this as a ground of defence, that the judgment of the jury might be had on any questions of fact to be brought out.
    “ I did not perceive, however, that the testimony presented any matter of defence that might avail the defendant, and so said to the jury. On the subject of the notice to which defendant might be entitled, of default of payment by Glovers & Davis, I said it was not easy to fix definitely the rules which should govern in such a case as this, being less rigid than as-to endorsers; that in this State it had been held notice of nonpayment was not necessary to charge a guarantor of a bond, or of a note absolute in its terms, and definite as to its amount and extent; that the object of all such notice was to enable the party to protect himself against loss, and that although what was the diligence required in giving notice of non-payment was a mixed question of fact and law — yet that in this case, assuming as true what had been proved, I saw no such want of diligence as should discharge the defendant. In finding for the plaintiff, the jury were instructed to allow interest on the sum guaranteed from the time of default, and although the verdict was rendered after I left the court, I am informed it was for tbe plaintiff, for five thousand dollars, with interest from 1st of October, 1852.”
    The defendant appealed and renewed his motion for a non-suit on the ground, that the plaintiffs’ right of action was barred by the Statute of Limitations; and at the same time moved for a new trial on the grounds:
    1. Because, it is respectfully submitted, that his Honor erred in charging the jury, that the Bank was not bound to notify the defendant of the default of payment by Glovers & Davis.
    2. Because the evidence establishes that the plaintiffs were guilty of such laches as discharged the defendant.
    3. Because, it is respectfully submitted that his Honor erred in charging the jury, that interest was recoverable on the cause of action sued on.
    
      Bauskett, for appellant.
    
      Hayne, contra.
    
      
      
        (a) This case was decided at May term, 1856 ; but the opinion was not filed in time for its insertion in the volume which contains the cases of that term. R-
    
   The opinion of the Court was delivered by

MüNro, J.

The ground for a non-suit is, that the plaintiffs’ cause of action was barred by the Statute of Limitations.

To determine this, it is necessary to look, 1. To the character of the instrument sued on; 2. To the time when the plaintiffs’ cause of action accrued.

The instrument sued on is declared upon its face to be a continuing guaranty, and that it is to remain of force till revoked by written notice to the president or cashier of said bank.

It appears, from the circuit report, that the guaranty was accepted by tbe plaintiffs on tbe 28tb of October, 1847, from wbicb time, and upon tbe faitb of which, Glovers & Davis procured from tbe plaintiffs extensive accommodations; all of wbicb appears to bave been promptly met by them up to tbe period of tbeir failure in 1852, when they failed to pay tbe notes, wbicb tbe plaintiffs are now seeking to recover, under tbe defendant’s guaranty. Cbitty, in bis Treatise on Contracts, page 435, defines a contract of guaranty to be, “A collateral engagement to answer for tbe debt, default, or miscarriage of another, as distinguisbed from an original agreement, for tbe party’s own act. It is therefore of tbe essence of this contract, that there must be some one liable as principal, and accordingly, when one party agrees to become responsible for another, tbe former incurs no obligation as surety, if no valid claim ever arises against tbe principal; whilst on tbe other band, tbe liability of tbe surety upon a claim wbicb is good as against tbe principal, ceases so soon as such claim is extinguished.”

It is argued, that tbe Statute of Limitations commenced to run from tbe time tbe guaranty was accepted by tbe plaintiffs. But it is obvious, that such a position can only be sustained by confounding tbe collateral undertaking of a surety for tbe debt, or default of bis principal, with an original undertaking for bis own act; for until tbe plaintiffs were damnified by Glovers & Davis’ failure to meet tbeir engagements at maturity, it is clear that tbe plaintiffs bad no right of action, even as against tbe principals, much less against tbe defendant as tbeir surety, — so that in no point of view can tbe defence of tbe Statute be sustained; for no principle is better established than this — that tbe Statute of Limitations does not begin to operate from tbe time when a contract is actually made, unless a full and complete cause of action instantly accrue thereon ;() and again, “ In case of a contract of indemnity the Statute does not apply, until the lapse of four years from the actual damnification.”()

The ground for a new trial charges error in instructing the jury, that the bank was not bound to notify the defendant of the default in payment by Grlovers & Davis.

The position here assumed is, that the want of notice of default in payment by the principal, is a virtual abandonment of recourse against the surety, upon the principle applicable to negotiable instruments.

But it is clear, that the analogy does not hold good, for in no sense of the term is a guaranty, such as the one in question, a negotiable instrument; on the contrary, the legal relation that is created, between the principal and the maker, by this species of contract, is that of principal and surety; so that the guarantor stands upon the footing of any other surety, and is therefore only entitled to notice, when he may be prejudiced by the want of it; See 3 Kent’s Com. 166, where, in treating of guaranties, the rule is thus stated: "The rule is not so strict as in the case of mere negotiable paper, and the neglect to give notice must have produced some loss, or prejudice to the guarantor;” See also, Chitty on Bills, 324; Story on Bills, 302, 372; 7 Peters, R. 113; Bank vs. Hammond, 1 Rich. 281.

The motions for a non-suit, and for a new trial are therefore dismissed.

O’Neall, Wardlaw and Withers, JJ., concurred.

Motions dismissed. 
      
      (a) Angell on Lim., p. 181; Chitt. on Con., 708 ; 2 Rich., 113.
     
      
      
        (a) Chitt. on Con., 709 ; Burge on Suretyship, 272.
     