Furness v. Union Nat. Bank of Chicago

• Decision Date: 26 October 1893
• Citation: 35 N.E. 624,147 Ill. 570
• Parties: FURNESS et al. v. UNION NAT. BANK OF CHICAGO.
• Court: Illinois Supreme Court

147 Ill. 570

35 N.E. 624

FURNESS et al.

v.UNION NAT. BANK OF CHICAGO.¹

Supreme Court of Illinois.

Oct. 26, 1893.

Error to appellate court, first district.

Proceedings by the Union National Bank of Chicago to enforce a claim against the estate of James M. Gamble, deceased. Claimant obtained judgment, which was affirmed by the appellate court. William E. Furness and Anna M. G. Carlisle, administrators of the estate, bring error. Affirmed.David Fales, for plaintiffs in error.

Willits, Robbins & Case, for defendant in error.

MAGRUDER, J.

On November 11, 1890, the defendant in error filed in the probate court of Cook county, against the estate of James M. Gamble, deceased, proof of a claim held by it against said estate, consisting of two notes executed to it by said Gamble in his lifetime, and secured by a certain collateral. The plaintiffs in error, as administrators of the estate, objected to the allowance of the claim. It came up for trial before the probate court on February 6, 1891, and was then held and taken under advisement by that court. It was held under advisement until November 2, 1891, on which day it was allowed for the amount hereinafter stated. It is conceded that the estate is insolvent, and unable to pay more than a small percentage upon the amount of its indebtedness. In August, 1891, the bank, defendant in error, disposed of the collateral held by it as security, realizing therefrom an amount which was a little more than one-third of the amount due to it, for principal and interest, upon its notes. The allowance made by the probate court was for the balance of the claim as filed and proved upon the hearing, after deducting therefrom the net amount realized from the collateral. Upon appeal to the circuit court the latter court gave judgment for the full amount due upon the claim, but with a proviso that whatever the bank should receive in dividend from the estate, added to the amount realized by it from its collateral, should not exceed the amount actually due to it upon its claim. The judgment of the circuit court has been affirmed by the appellate court, and such judgment of affirmance is brought here for review by writ of error.

The question presented is this: Where a creditor, holding a claim secured by collaterals against the insolvent estate of a deceased person, files and proves his claim for the full amount in the probate court, and has a trial of it before the court upon its merits, and, after it has been so filed and proved and tried, realizes from his collaterals a sum which is less than the amount of his claim, is he entitled to a dividend upon the whole amount of his claim was proven, or only to a dividend upon the difference between such amount and the sum realized from his collateral security? In Re Bates, 118 Ill. 524, 9 N. E. 257, we decided that the assignee under an assignment for the benefit of creditors should pay the secured creditor a dividend upon the whole amount of his claim as proved and reported, and not a dividend merely upon the excess of the claim over the value of the security, or over the amount realized from the security after the filing and proving of the claim. We see no reason why the same principle is not applicable in the distribution of pro rata dividends upon claims filed and proved in the probate court against the estates of deceased insolvents. Mason v. Bogg, 2 Mylne & C. 443; Kellock's Case and Ex parte Alliance Bank, 3 Ch. App. 769, 771; West v. Bank, 19 Vt. 403. A creditor secured by collaterals is permitted to prove his claim for the full amount, because he has the double right of suing the debtor personally on the debt itself, and also of realizing from the property pledged as security. He may sue on the principal debt before resorting to the security. Cushman v. Hayes, 46 Ill. 145;Archibald v. Argall, 53 Ill. 307;Wilhelm v. Schmidt, 84 Ill. 183;Darst v. Bates, 95 Ill. 493. The right to sue on the debt and the right to enforce the security are concurrent rights, and proceedings to enforce both of them may be pursued until the debt is paid in full. These rights remain the same if ‘the debtor dies, and dies insolvent.’ Mason v. Bogg, supra; Ex parte Alliance Bank, supra. The creditor has a right to prosecute his claim for the full amount against the estate of the deceased debtor in the hands of the administrator, as he had a right to prosecute it for the full amount against the debtor when alive. Of course, this right is subject to the condition that the whole amount of his claim is due him when he files and proves it. If he has...