Bank of America v. Jorjorian

• Decision Date: 22 January 1940
• Docket Number: Gen. No. 40747.
• Citation: 303 Ill.App. 184,24 N.E.2d 896
• Parties: BANK OF AMERICA ET AL. v. JORJORIAN ET AL.
• Court: United States Appellate Court of Illinois

303 Ill.App. 184

24 N.E.2d 896

BANK OF AMERICA ET AL.

v.JORJORIAN ET AL.

Gen. No. 40747.

Appellate Court of Illinois, First District, First Division.

Jan. 22, 1940.

Appeal from Circuit Court, Cook County; Daniel P. Trude, Judge.

Action on a note by the Bank of America and others against Grace S. Jorjorian and Samuel K. Jorjorian. From a judgment for plaintiffs, defendants appeal.

Reversed.

Max Murdock, of Chicago, for appellants.

Teller, Levit, Silvertrust & Levi, of Chicago (H. J. Goldberger, of Chicago, of counsel), for appellees.

McSURELY, Justice.

Defendants appeal from a judgment of $9,326.25 entered against them upon trial by the court of a claim of plaintiffs on a promissory note executed by defendants on which there was an alleged deficiency in a non-judicial foreclosure. Many of the facts were presented by defendants' answer but the trial court struck paragraphs 3, 4 and 5 of this answer. We are of the opinion this was error, but as both sides have discussed all of the facts in the case we shall disregard this action of the trial court.

Prior to April, 1928, defendants owned certain real estate in California subject to a $10,000 mortgage held by plaintiffs' predecessor bank; February 25, 1937, the mortgage securing the note and the payment of the note were extended and defendants signed the note on which this suit is brought.

April 4, 1928, defendants sold the land to J. H. Cardwell and Verna L. Cardwell, who signed an indorsement on the note which reads: “The undersigned successors in interest of the makers of this note and the deed of trust securing same, hereby and herewith assume and agree to pay the within note and indebtedness evidenced thereby.” Plaintiff bank agreed to this and accepted the note so indorsed. Defendants allege, and plaintiffs admit, that by reason of this indorsement defendants were liable as sureties, if at all, and not as principal. This was admitted on the trial and in the brief on behalf of plaintiffs.

For approximately nine years thereafter plaintiffs treated the Cardwells as the debtors while defendants remained all the time at their residence at Evanston, Illinois, receiving no demands, notices or information of any of the dealings or proceedings between plaintiffs and the Cardwells.

September 11, 1933, over three years after the maturity of the note, the mortgaged premises were sold in California at a trustee's sale without court proceedings and without knowledge of these defendants. November 13, 1933, plaintiff brought suit on the note in the California court, naming as defendants the Cardwells and the Jorjorians, the present defendants; the Jorjorians were not served and had no notice or knowledge of this suit except as later informed when this Illinois suit was begun on November 9, 1937; later plaintiff filed in the California suit an affidavit for attachment, which writ was levied on the title of the Cardwells on the tract of land secured by the instant mortgage and also other land in California.

December, 1935, plaintiff received from Cardwell $1,000 on account of this note and at the same time filed in the California suit an order of “dismissal with prejudice as to the defendant J. H. Cardwell only.” The present defendants had no knowledge of that dismissal or of the attachment or of the suit itself, except when they were informed by their attorney at the commencement of the present suit.

The defense is that the legal effect of this dismissal of the suit against Caldwell “with prejudice” was an absolute release of Caldwell's personal liability on the note and hence, under well known decisions of the courts, defendants were exonerated as sureties. Plaintiffs in this court say this dismissal “with prejudice” was merely a covenant not to sue, plaintiffs still retaining its rights to bring an action on the note against defendants. This depends upon the meaning of the words “with prejudice” as defined by the courts. In Union Indemnity Co. v. Benton County Lumber Co., 179 Ark. 752, 761, 18 S.W.2d 327, 330, the court held that these...