Home Nat. Bank of Chicago v. Waterman's Estate

• Decision Date: 31 October 1890
• Citation: 29 N.E. 503,134 Ill. 461
• Parties: HOME NAT. BANK OF CHICAGO v. WATERMAN'S ESTATE.
• Court: Illinois Supreme Court

134 Ill. 461

29 N.E. 503

HOME NAT. BANK OF CHICAGO

v.WATERMAN'S ESTATE.¹

Supreme Court of Illinois.

Oct. 31, 1890.

Appeal from appellate court, second district.

MAGRUDER, J., dissenting.Charles D. F. Smith and William Brown, for appellant.

Carnes & Denton and Wilson & Moore, for appellees.

The facts fully appear in the following statement by BAKER, J.:

On the 10th day of August, 1882, the Sycamore Marsh Harvester Manufacturing Company was indebted to the Home National Bank of Chicago for money loaned, to the amount of $20,000, evidenced by two promissory notes, each for the sum of $10,000 made by said Sycamore Marsh Harvester Manufacturing Company, one dated June 5, 1882, and the other dated June 26, 1882, both payable in 90 days after date.On said 10th day of August, 1882, said bank held, by pledge of said manufacturing company, and as collateral security to said claim of said bank against said manufacturing company, nine packages of ‘farmers' notes,’ so called, being notes originally taken by said manufacturing company for goods sold by it to farmers and others about the country; said nine packages being numbered, respectively, 0302, 0413, 0568, 0653, 0654, 0655, 0659, 0662, 0663; the total amount of which notes, at their face value, was $21,116.71.On said 10th day of August, 1882, C. W. Marsh, W. W. Marsh, William Loomis, James S. Waterman, Charles Brown, Charles Kellum, and O. M. Bryan, being stockholders of said Sycamore Marsh Harvester Manufacturing Company, and owning a large majority of the stock of said company, executed and delivered to said bank their written agreement, of which the following is a copy: ‘GEO. W. FULLER, ESQ., CHASHIER HOME NAT. banK, chiCAGO, ill.-deaR sir: we, the subscribers, stockholders of the Sycamore Marsh Harvester Manufacturing Company, hereby guaranty, if you will deliver to C. W. Marsb, Pres't, or to A. M. Stark, See., of said company, the farmers' notes now held by your bank as collateral to its claims against our said company (said notes being contained in packages 0302, 0413, 0568, 0653, 0654, 0655, 0659, 0662, 0663,-total, $21,116.71) for the purpose of collection, that said collaterals shall be replaced by others equally acceptable to you in character and amount, during the month of February, or, if not, that you shall be paid, on or before March 1, 1883, such proportion of our company's debt, or any extension thereof made in the mean time, in cash, as said farmers' notes are held to secure.For the faithful performance of these conditions we hereby bind ourselves to and with you as the cashier of said bank.’Thereupon, in consideration of the delivery of said paper to said bank, and of the undertaking of the signers thereof therein expressed, the bank delivered to C. W. Marsh, president of the company, for the company, said nine packages of farmers' notes, and said Marsh receipted for the same in the name of the company.The notes were sent to a bank at Lincoln, Neb., for collection, and were paid, and the money received by the manufacturing company.No dividends were declared by the company to its stockholders after said 10th day of August, 1882, nor did Waterman, or any of the signers of the writing, receive any money from it after that date.Said collaterals-the farmers' notes mentioned-were not replaced by others during the month of February. 1883, as contemplated and provided in and by said contract, nor were they at any time either returned or replaced by others.The bank was not paid its said indebtedness referred to in said contract on or before March 1, 1883, as therein provided, nor has it ever been paid said indebtedness in full.James S. Waterman, one of the signers of the agreement of August 10, 1882, died testate on the 19th day of july, 1883.Said indebtedness of the harvester manufacturing company to the bank was extended from time to time, upon the application of the company, until the 30th day of June, 1884.Four of the renewals of said indebtedness were made prior to July 19, 1883, and three thereafter.At the several times when such extensions were made, the old notes of the Sycamore Marsh Harvester Manufacturing Company were surrendered, and new notes were executed by said company for the indebtedness.On the 30th day of June, 1884, the Home National Bank recovered judgment in the superior court of Cook county against said Sycamore Marsh Harvester Manufacturing Company for the sum of $15,925.49, that being the amount of said indebtedness then remaining unpaid, and said judgment has never been paid or satisfied.On the 1st day of July, 1884, the Home National Bank filed a claim in the county court of De Kalb county against the estate of said James S. Waterman for the sum of $15,932.99, based upon the aforesaid agreement dated August 10, 1882.The claim was then determined adversely to the bank, and upon an appeal to the circuit court the venue was changed to Kane county.A trial in the circuit court of Kane county resulted in a judgment in favor of the executors of Waterman, and that judgment was affirmed in the appellate court for the second district.A further appeal brought the record here.

BAKER, J., ( after stating the facts as above.)

One principal contention of appellant is that the agreement dated August 10, 1882, became and constituted an original and direct engagement or undertaking by Waterman and his associates signing such paper, as distinguished from a guaranty or collateral engagement to an owner for the debt of another.We will assume the correctness of this claim of appellant, but we do not...