Bank of Newman v. Monterey County Gas & Electric Co.

is an appeal from* a judgment in favor of plaintiff in an action to recover upon a certain written agreement executed by the defendant whereby it undertook to guarantee the payment of certain bonds issued by the Monterey and Pacific Grove Railway Co., a corporation, upon which bonds default in payment had been made by said last-named corporation. The guaranty in question was indorsed upon each of the bonds issued and sold by the Monterey and Pacific Grove Railway Co., and was in the following form:

The trial court rendered its judgment in plaintiff’s favor for the amount due upon the bonds held by it bearing this guaranty. [1] The defendant has appealed from said judgment, the only contention which the appellant makes upon this appeal being that the guaranty of the said bonds of the Monterey and Pacific Grove Railway Co., by the appellant was an attempt to increase the bonded indebtedness of the guarantor; and, since said guaranty was not founded upon the proceedings required to be taken by corporations under section 359 of the Civil Code relating to the creation or increase of a bonded indebtedness,' said guaranty was void.

We are unable to agree with the position taken by the…