Kennedy v. Evans

• Decision Date: 30 April 1863
• Citation: 1863 WL 3105,31 Ill. 258
• Parties: GEORGE M. KENNEDY et al., EXECUTORS, ETC.v.JOHN EVANS.
• Court: Illinois Supreme Court

31 Ill. 258

1863 WL 3105 (Ill.)

GEORGE M. KENNEDY et al., EXECUTORS, ETC.

v.JOHN EVANS.

Supreme Court of Illinois.

April Term, 1863.

OPINION TEXT STARTS HERE

WRIT OF ERROR to the Superior Court of Chicago.

John Evans exhibited his bill in chancery in the court below, on the 9th day of February, 1860, against George M. Kennedy, Alfred A. Hallett, and Willard H. Downer, executors of the last will and testament of John D. Norton, deceased, and Edmund Aiken, John W. Waughop, George W. Lay and John Gray.

The bill set forth, substantially, that Waughop, desiring to borrow money from Edmund Aiken and John D. Norton, who were, at the time, doing business in Chicago under the name of Aiken & Norton, the latter requested the complainant, Evans, to sign a note with Waughop, as security; that in pursuance of such request, the complainant did sign with Waughop, a note for $1,000, dated September 4, 1858, payable to the order of said Aiken & Norton, thirty days after its date. That at the same time the complainant, with Waughop, executed a letter of attorney in the usual form, authorizing a judgment to be confessed upon said note at any time after its maturity; and that the note and letter of attorney were at once delivered to Aiken & Norton, who thereon paid to Waughop, as a loan, the sum of $1,000, less the interest on that amount, for thirty days, at two per cent. per month; but that the note, as far as the complainant was concerned, was an accommodation note, and no part of the money advanced thereon was ever received by him, or designed to come into his hands.

The bill alleged that at the maturity of the note, it remaining unpaid, Aiken & Norton agreed with Waughop to extend the time of payment for thirty days, in consideration that Waughop would pay up the interest on the amount of the note in advance for thirty days, at two per cent. per month, which was done, and the note allowed by Aiken & Norton to lie over for said thirty days. That from time to time, further extensions were agreed upon between Aiken & Norton and Waughop, upon similar consideration, until about the third day of February, 1860, when Aiken & Norton caused a judgment to be entered upon the note in the Superior Court of Chicago, upon confession under the said letter of attorney.

The complainant alleged that the several extensions of the time of payment of the note, and the entry of the judgment thereon, were without his knowledge or assent.

That an execution had been sued out upon said judgment, and was then in the hands of the sheriff of Cook county, who threatened to levy it upon the property of the complainant.

The complainant charged that by reason of the extensions before stated, the judgment was void as to him; and if valid, it ought to be reduced by the sums paid by Waughop for extensions, and he be required to pay only the principal with legal interest.

That Aiken & Norton had full knowledge, at the time they received the note, that complainant had signed it as security only. It was also set forth in the bill, that in October, 1859, Waughop made an assignment to Lay for the benefit of his creditors, and by the assignment this note was placed in the class of preferred indebtedness; and alleging that the property assigned was sufficient to pay all the preferred debts, including the note; and the complainant claimed that Aiken & Norton ought to be compelled first to exhaust said assets; or, if he be liable on said judgment, and he thought otherwise, he should be subrogated to Aiken & Norton's rights under the assignment.

The complainant prayed for an injunction against any further proceedings under the judgment or execution--that the judgment be canceled as to him, etc.

An injunction was granted according to the prayer of the bill. A demurrer to the bill being overruled, the defendants answered.

The tenor of the answers was such as to put the complainant upon the proof of his allegations, except as to the fact of the entering of the judgment at law, which was admitted.

Upon the hearing, the complainant read in evidence the deposition of Waughop, the principal maker of the note upon which the judgment at law was entered, subject to the defendant's objections as to the competency of the witness, and the admissibility of his evidence.

On the part of the defense, the deposition of the defendant, Edmund Aiken, was read, but as he was held not to be a competent witness, on the ground of interest, it is not important to consider his testimony, except that portion of it having reference to the question of competency. Touching that question his testimony was as follows:

I have no interest in this suit. In April, 1860, previous to taking in a new partner, Mr. Norton and I divided certain claims of the firm which were in litigation, and for that reason we did not wish to transfer to the new firm. In that division, Mr. Norton took this claim, and I took another of equal amount. He gave me an indemnifying bond, and I think I gave him one. The firm of Aiken & Norton consisted of John D. Norton and myself, until May, 1860, when Jonathan Beers came into the firm. (The indemnifying bond given by Norton to Aiken, was dated May 1, 1860, conditioned to save harmless Aiken from all costs, charges, loss, damages or injury of any kind, arising or accruing from or out of these proceedings, or anything connected therewith, or from the said judgment, or anything connected therewith.)

Upon cross-examination:

By interest in this suit I understand, being entitled to receive any moneys collected of Evans or Waughop, or being liable for costs without indemnification. I don't recollect who first proposed the assigning of my interest in this suit. This claim, and another of equal amount, were in litigation. Mr. Norton and I thought fit to divide them, and that Mr. Norton might, if he desired, avail himself of my testimony, if necessary, in establishing the facts. The transfer was made the day it bears date. I had made Mr. Norton acquainted with the facts in the case. I think he also knew the statements of complainant's bill. I think I had told him they were not true.

I should feel bound in honor to do what was just to Mr. Norton's estate, if it should appear that I had misrepresented the facts, to his injury.

The direct examination being resumed, the witness continued:

Norton took an assignment of the judgment at his own risk, and I took the assignment of the other claims in the same manner. There was no choice between the two claims as to value.

The evidence introduced was quite voluminous, and established the material allegation in the bill to be true, and as the court below found, that complainant signed the notes as surety for Waughop; that this fact was known to Aiken & Norton when they received said notes; that upon the receipt of the notes, Aiken & Norton, made a loan to Waughop of $1,000, reserving usurious interest at two per cent. per month for thirty and sixty days; that the money was paid to Waughop, and used by him for his own purposes, no part being used by or for complainant; that at the maturity of the thirty-day note, Aiken & Norton, without the knowledge or consent of complainant, in consideration of $20 paid by Waughop for interest for the twenty days then next following, extended the time of payment of said note for thirty days. And thereupon it was ordered and decreed, that the judgment rendered upon said note in said bill specified, as against complainant, be and was thereby vacated and annulled, and that defendants Aiken, Kennedy, Hallet, and Downer, executors, etc., be perpetually enjoined from collecting, or attempting to collect the same, by execution or otherwise, against complainant. Further ordered, that Aiken, Kennedy, Hallett and Downer pay the costs of this suit.

The power of attorney by virtue of which the judgment at law was confessed, contained a clause authorizing the attorney to file a cognovit for the amount that might be due upon the notes therein mentioned, with an agreement therein, that no writ of error or appeal should be prosecuted upon the judgment entered by virtue thereof, nor any bill in equity filed to interfere in any manner with the operation of said judgment.

The executors of John D. Norton, deceased, upon the rendition of the decree, sued out this writ of error. The questions presented upon the record are:

First. Whether the fact of the suretyship of Evans, not appearing on the face of the notes, could be shown by evidence aliunde;

Second. Whether the material allegations in the bill were proven;

Third. Whether the extensions of time of payment to the principal, operated to release the surety;

Fourth. Whether the surety can make such defense available in equity;

Fifth. As to the competency of Waughop as a witness; and

Sixth. As to the competency of Aiken.

Messrs. WALKER & THOMAS, for the plaintiffs in error.

First. The demurrer to the bill should have been sustained.

I. Complainant signing the note as principal, cannot now claim the benefit of suretyship. The question is not, what were the facts as between him and Waughop, but what position did he assume toward the payees? 19 Conn. 105; 22 Ill. 333; 1 Scam. 494; 3 Scam. 566; 2 Gilm. 266; 5 Taunt. 192; 2 Peters' U. S. 180; 2 Dutcher, 452; 21 E. C. L. 247.

II. He is estopped by the warrant of attorney under seal, which expressly admits joint liability, authorizes a joint judgment, and waives all defenses, legal or equitable, and agrees that no bill in equity shall be filed to interfere with the judgment. 1 McLean R. 389, 392; 10 Vermont, 585.

III. The warrant of attorney, as alleged, authorizes defendants to enter judgment “ any time after the note became due.” The time was left optional with them, and delay could not discharge surety--it was no departure from his express contract. 4 M. & W. 519; 1 McLean R. 392, 393; 6 Madd. Ch. R. 85; 5 Ohio R. 124; 8 Wheat. R. 211.

IV. The alleged extension was for a limited time, and could not have been pleaded in bar to suit on the note,...