30 Ill. App. 535 | Ill. App. Ct. | 1889
Lead Opinion
The main question in this case is, was the agreement executed by J. 8. Waterman, deceased, and others, August 10, 1S82, an original agreement between appellant and the makers thereof, or was it a collateral one holding the relation of a guarantee of the debt of the Sycamore Marsh Harvesting Company to appellant? If the latter, the extension of the time of the payment of the principal debt without the consent of Waterman in his lifetime, or his administrators after his death, would work a release of the said appellee, the executor of Waterman, from liability. The time of payment was extended by the parties thereto by a valid and binding agreement some three different times, without the appellee’s consent and after the death of Waterman.
We have carefully read and considered the able and carefully prepared argument of both the appellant’s and appellee’s counsel, and have also examined some authorities not referred to, and we find the authorities on the question not entirely uniform and not easily reconcilable, but we think the weight of authority, and especially in this State, is in favor of holding that the agreement was collateral and was not an absolute assumption of the original indebtedness of the Sycamore Marsh Harvesting Company as is contended for by appellant’s counsel. We regard the agreement as one of guaranty only, and a mere substitution by the Sycamore Marsh Harvesting Manufacturing Company, of the responsibility of the signers of the agreement for the collateral securities held by the appellant and delivered over to the said company upon the delivery of the agreement to appellant. It will he noticed that the agreement expresses on its face that it is a guaranty, and it has ever been so treated by all the parties since its execution. The principal debt was not surrendered, but renewed from time to time, and finally passed into a judgment in favor of appellant and against the debtor company, and is still in a subsisting judgment.
It is a well recognized rule of law that if there is anything doubtful in the construction of a contract, the conduct of the parties, their manner of treating it, and all the circumstances, may be resorted to for the purpose of ascertaining its true meaning. Burgess v. Rodgers, 124 Ill. 288. It is contended by appellant that, as the agreement speaks of a possibility of renewal, it gave authority to the Sycamore Marsh Harvesting Company and appellant to renew without additional consent of Waterman. Without stopping to inquire what the true interpretation would be if Waterman had been alive when the three last renewals were made, we understand the law to be that any power of that description would be revoked by the death of the party giving it. The death of Waterman worked a revocation of any authority to extend the time oE payment of the original debt that may have existed prior to that time. Risley v. Fellows, 5 Gilm. 531.
In case collateral security is put up by a third party, or a third party becomes security for the payment of principal indebtedness, and the time of payment of such indebtedness is extended by valid agreement by the parties thereto without the consent of the owner of the collaterals or the personal security, such action has the effect in law to release the collaterals or the security, as the case may be. Reed v. Cramb, 22 Ill. App. 34, and some case affirmed by title of Price v. Dime Savings Bank, 124 Ill. 317.
Again, recurring to the question of whether the agreement of August 10, 1882, was in the nature of a.n original agreement, we can say, as we before said, that it is not free from embarrassment. But it appears to be well settled that, in order that the promisor should become principal, there should be some benefit moving between the promisee and promisor, who undertakes to pay the debt of another, and that such consideration should be of some direct advantage to such promisor, in order to make it an original debt and divest it of the character of a mere security, and the original debt must be given up. Borchsenius v. Canutson, 100 Ill. 92; Eddy v. Roberts, 17 Ill. 505; Wilson v. Bevan, 58 Ill. 232; Hardy Bros. v. Warner, 88 Ill. 561; Williams v. Corbitt, 28 Ill. 262; Hughes v. Hughes, 41 Ill. 214; Bunting v. Darbyshire, 75 Ill. 408; Hurto v. McKnight, 29 Ill. App. 238; Ames v. Foster, 106 Mass. 403; Westhumer v. Peacock, 2 Clark, 529. See, for an extreme case, as making the promise assume the character of a new indebtedness, Allen v. Thompson, 10 N. Y. 32.
The collaterals in this case were not delivered to the makers of the agreement nor for their benefit, but to the Sycamore Marsh Harvesting Company, as the receipt shows; hence they received no benefit, directly or indirectly, therefrom, except as stockholders of the corporation, nor was the original debt satisfied or given up. Opposed, however, to the Illinois cases above cited on the question of the extinguishment of the original debt, may be, to some extent, the case of Foley v. Cleveland, 4 Cow. 439.
The appellant raises the question that the appellee is estopped on account of the assignment of old accounts and other assets of the Harvesting Company to Judge Helium for the benefit of the signers of the agreement. This, no doubt, would be a good point, at least to the amount received, but we fail to find from the evidence that anything was ever received or ever will be. The accounts appear to have been uncollectible, at least to any greater extent than they had been previously pledged, and there was nothing left of the other assets.
Taking the case as a whole, we must hold that Waterman, on account of the extensions of the time of payment, and the taking new notes from the Sycamore Marsh Harvesting Company and delivering up the old ones to the original debtor after Waterman’s death and without appellees’ consent, releases the latter, as executor of Waterman’s estate, from the obligation as surety. The judgment of the court below is therefore affirmed.
Judgment affirmed-
Dissenting Opinion
dissenting. I do not agree with either the argument or conclusions of the majority of the court in this case, but hold that the judgment of the court is neither supported by the facts nor the law in the case. I shall not enter upon a general discussion of the case, but content myself with a single observation or two. I hold that, under all the facts disclosed by the evidence in the case, the agreement of March 10, 1882, signed by Waterman and others, was, beyond all doubt, an original undertaking to pay the bank if it would ¡iart with the farmers’ notes which it held as collateral security, notwithstanding it is called a guaranty.
The farmers’ notes were to be delivered to the Marsh Harvester Company for its own benefit, and the Marsh Harvester Company was but another name for the signers of the agreement, including Waterman. They were the chief and principal stockholders and owners of the failing and bankrupt Harvesting Company, and they were carrying on the business under the corporate name almost exclusively for their own use and benefit. It was a private affair, composed very largely of the parties to this agreement, who owned nearly all the stock. They borrowed the money from the bank for their own private benefit; they again induced the bank to give up its col-laterals for their own private benefit and to pay other debts. Three of these very men who signed this agreement—the two Marsh’s and Waterman—are the chief officers of this private corporation, controlling and managing it for themselves and their co-contractors and stockholders for their own private benefit, and these facts abundantly appear from the proof in the case. Instead, therefore, of Waterman and the other makers of this contract of August 10, 1882, being mere sureties or guarantors, they were the direct and almost exclusive beneficiaries of the notes procured from the hank, and the mere fact that they were doing business under the cloak of a private corporation instead of a firm where the stockholders and the partners were the identical same persons, can not deprive the transaction of its real character, nor change the fact that the men who made the contract were also the men who received nearly the entire consideration for its execution. It is a matter of no importance that the several packages of farmers’ notes these men secured from the bank by this contract were not worth their face. They were (on the face) worth more than the amount the Harvesting Company owed the bank, and formed an ample consideration for the execution of the contract. Considering, then, the relation of Waterman and the others (who signed the contract) to the private corporation and the bank, it seems to me to be a perversion of the use of language to say that these men were mere guarantors or volunteers, without valuable considerations and without a direct personal interest in the transaction, so as to entitle them to the consideration and protection which the law justly and wisely throws around those who are sureties and guarantors in fact and in truth, without any consideration for their undertaking. I have no controversy with the majority of the court as to what the law is in the many cases cited, holding that a real guarantor or surety in fact will be released by extensions of the principal debt, without their consent, for a valuable consideration, and especially so after the guarantor is dead, but I hold that such authorities have no relation or application to a case where the proof shows that the relation of guarantor or surety does not exist.
Believing, as I do, that the contract of August 10, 1882, set out in the opinion of the court, is an original and independent undertaking, upon a sufficient and valuable consideration moving to the makers thereof, it is then wholly immaterial how many extensions the bank may have made of the original notes. It would not release a principal maker. The judgment of the court below was wrong, and ought to be reversed.
