Lowenstein v. Chicago Title & Trust Co.

• Decision Date: 08 March 1950
• Docket Number: Gen. No. 44875
• Citation: 340 Ill.App. 160,91 N.E.2d 96
• Parties: LOWENSTEIN v. CHICAGO TITLE & TRUST CO. et al.
• Court: United States Appellate Court of Illinois

Page 96

91 N.E.2d 96

340 Ill.App. 160

LOWENSTEIN v. CHICAGO TITLE & TRUST CO. et al.

Gen. No. 44875.

Appellate Court of Illinois, First District, Third Division.

March 8, 1950.

Rehearing Denied March 31, 1950.

Aaron Lowenstein, Negaunee, Mich., Joseph Alexander, Chicago, for appellant.

Raymond A. Kinzie, Chicago, for appellees.

KILEY, Justice.

This is a foreclosure suit. It is unusual because plaintiff seeks to subject the mortgaged property to satisfaction of judgments against formal guarantors of the mortgage paper, Seibert, Tompkins and Colomb, hereinafter referred to as defendants. The Chancellor sustained the motion of the defendant Elmore Co. and dismissed the amended and supplemented complaint for want of equity. Plaintiff has appealed.

The mortgage note for $3500.00 was executed by the Stony Island Bank on July 17th, 1928 due August 1, 1931. The Bank executed at the same time six semiannual interest notes. To secure these bearer notes, it conveyed to the Bank of America, as trustee, an unimproved 50' X 100' lot located at 1347 W. 87th Street, Chicago, Illinois. The defendants endorsed the principal and interest notes as 'guarantors', 'guaranteeing prompt payment'. Plaintiff purchased the notes. The first five interest notes were paid. The sixth interest note and the principal note were not paid when due on August 1, 1931.

Plaintiff obtained judgments against the defendants under their endorsed undertaking in February 1932. Executions issued but the judgments were not satisfied. The judgments were revived at plaintiff's suit in January 1941 and August 1948. Defendant Colomb paid $500.00 on the 'indebtedness' before August 1941. The foreclosure suit was begun October 8, 1948. Plaintiff alleged that the revived judgments are secured by the Trust Deed. Lurie, administrator of Cina Halvorson to whom the Stony Island Bank conveyed equitable title, and Elmore Co., which claims through Kinzie purchaser from Lurie, as administrator, filed motions to dismiss and strike respectively, raising the Statute of Limitations. Plaintiff then filed his amendment and Supplement claiming defendants were not mere guarantors but were real parties in interest and that payment by Colomb within ten years tolled the Statute. Elmore Co. moved to strike this pleading.

The question is whether plaintiff's suit is barred by the Statute of Limitations.

Plaintiff agrees that in form defendants' endorsement was an undertaking to pay in default of the maker's payment. We agree with him that the general rules of construction in the cases cited by him are applicable here. It is true that the terms guarantee and guaranty used in the endorsement are not in themselves determinative of the undertaking. The determining factor is what the partners intended and undertook to do by the terms they used. Jones & Laughlin Steel Co. v. Graham, 273 Ill. 377, 112 N.E. 967; Davis v. Patrick, 141 U. S. 479, 12 S.Ct. 58, 35 L.Ed. 826; Indemnity Insurance Co. of North America v. Prairie State Bank, 336 Ill.App. 438, 84 N.E.2d 338. Where there is nothing to limit, qualify, or explain the terms guarantee and guaranty, a reasonable construction is a promise to pay in the event another fails to do so. Vermont Marble Co. v. Bayne, 356 Ill. 127, 133, 190 N.E. 291. In the Graham and Patrick cases the evidence showed original undertakings. In Phillips v. O'Connell, 326 Ill.App. 15, 61 N.E.2d 59, and Everts v. Matteson, 21 Cal.2d 437, 132 P.2d 476, cited by plaintiff, the defendants, in extension agreements, assumed and agreed to pay the mortgage indebtedness.

On February 23, 1928, the Stony Island Bank, as trustee, and defendants, as beneficiaries, entered into a trust agreement establishing what is commonly known as a Land Trust. Defendants' interest as beneficiaries under this agreement is personal property. Chicago Title & Trust Co. v. Mercantile Trust & Savings Bank, 300 Ill.App. 329, 20 N.E.2d 992; Kerr v. Kotz, 218 Ill.App. 654, opinion number 25350; Conkling v. McIntosh, 324 Ill.App. 292, 58 N.E.2d 304; Marshall v. Solomon, 335 Ill.App. 302, 81 N.E.2d 777. Under its provisions the mortgage notes were not personal obligations of the beneficiaries. Conkling v. McIntosh, 324 Ill.App. 292, 58 N.E.2d 304. Receipt by the beneficiaries of notice of due dates of the notes, the payment of interest and payment by Colomb of $500.00 on the principal debt did not change their interests. Under the...