Mercantitle Trust Co. of Illinois v. Kastor

• Decision Date: 12 April 1916
• Docket Number: No. 10063.,10063.
• Citation: 273 Ill. 332,112 N.E. 988
• Parties: MERCANTITLE TRUST CO. OF ILLINOIS v. KASTOR.
• Court: Illinois Supreme Court

273 Ill. 332

112 N.E. 988

MERCANTITLE TRUST CO. OF ILLINOIS

v.KASTOR.

No. 10063.

Supreme Court of Illinois.

Feb. 16, 1916.

Rehearing Denied April 12, 1916.

Error to Branch B. Appellate Court, First District, on Appeal from Municipal Court of Chicago; Joseph Sabath, Judge.

Action by the Mercantile Trust Company of Illinois against E. H. Kastor. Judgment for plaintiff was reversed by the Appellate Court, First District (191 Ill. App. 219), and plaintiff brings certiorari. Judgment of the Appellate Court affirmed.

Farmer, C. J., and Duncan, J., dissenting.Ringer, Wilhartz, Louer & Concannon, of Chicago, for plaintiff in error.

Harris F. Williams, of Chicago (W. S. Hodges and E. M. Votaw, both of Chicago, of counsel), for defendant in error.

DUNN, J.

The plaintiff in error recovered against the defendant in error, in the municipal court of Chicago, a judgment for $3,140.12, which the Appellate Court for the First District reversed without remanding the cause, and by writ of certiorari the record has been brought to this court for review.

The plaintiff in error, the Mercantile Trust Company of Illinois, an Illinois corporation, and the United States Kellastone Company, an Oklahoma corporation, on September 2, 1913, entered into a written agreement the material parts of which are as follows, the Kellastone Company being designatedthe first party and the Trust Company the second party:

‘Whereas, first party is desirous of selling to second party, contracts, accounts receivable and choses in action, hereinafter designated as accounts, evidencing shipments of personal property: Now, therefore, in consideration of the premises the parties agree as follows:

‘First-Second party agrees to buy the accounts belonging to first party which are acceptable to it, and to pay therefor ninety-nine per cent. of the face value thereof on accounts that are paid within fifteen days from date of purchase by second party, and ninety-eight per cent. of the face value thereof on accounts that are paid within thirty days from date of purchase by second party, and for each thirty days thereafter that said accounts are not paid the purchase price shall be reduced one per cent. Payment to be made by second party as follows: Seventy-seven per cent. of the face value thereof upon acceptance by second party, the remainder, less all deductions, to be paid to first party immediately upon payment of any such accounts to second party: Provided, however, that if at the time of any settlement between the parties hereto any of the accounts purchased hereunder shall be in default, payment of such remainder while any of the accounts are in default shall be discretionary with second party.

‘Second-The term ‘default’ or ‘loss,’ as used in this contract, is construed to mean the nonpayment of an account to second party at maturity, insolvency of the debtor, failure or refusal of a debtor to accept, receive or retain the property evidenced by such account. First party agrees to pay to second party all expenses, attorney's fees and losses incurred by second party in and about any account in default.

‘Third-It is agreed that contemporaneously with the purchase of accounts first party shall assign and set over to second party such accounts purchased by it, to the end that second party shall be and become subrogated to all of the rights possessed by first party in respect thereto. Second party shall have the right to endorse the name of first party on all evidences of shipment or payment pertaining to accounts purchased hereunder. First party shall make entries upon its books disclosing the sale to second party of accounts purchased hereunder, and all records pertaining thereto shall at all times be open to the inspection of the second party.

‘Fourth-It is expressly understood that the purchase of accounts by the second party is made upon representations in writing concerning the financial responsibility of the first party, statementsof which are to be furnished the second party once every calendar year.

‘Fifth-First party is hereby given the right to make collections of accounts purchased by second party, and to that extent first party shall act as the agent of second party. The agency hereby created may be terminated by either party upon written notice. During this agency first party agrees to transmit and deliver to second party at its offices in Chicago, Illinois, on the day of receipt thereof, all evidences of payment of accounts purchased hereunder, in the original form received.

‘Sixth-This agreement and all its provisions shall inure to and become binding upon the heirs, executors, administrators, successors and assigns of the parties hereto.’

The following writing was indorsed on this agreement and signed by E. H. Kastor, the defendant in error, and two others, the three being stockholders in the Kellastone Company:

‘In consideration of the sum of one ($1.00) dollar and other valuable considerations paid by Mercantile Trust Company of Illinois to each of the undersigned, receipt of which is hereby acknowledged, they and each of them do hereby jointly and severally guarantee to Mercantile Trust Company of Illinois, its successors or assigns, the full, prompt, and faithful payment, performance and discharge by United States Kellastone Company of each of the provisions and conditions of the agreement on reverse side hereof, or any other instrument given or executed in pursuance thereof.

‘The undersigned hereby jointly and severally waive all notice of default by first party, and waive notice of acceptance of this guaranty by Mercantile Trust Company of Illinois, its successors or assigns.’

The plaintiff's statement of claim was for $5,000 due the plaintiff from Kastor as guarantor of the contract between the United States Kellastone Company and the plaintiff, under which the Kellastone Company assigned and sold to the plaintiff accounts which remain unpaid by the debtors and which the Kellastone Company has failed to repay pursuant to the terms of the agreement, after due demand, wherefore the defendant, as guarantor, is liable to pay the amount of said accounts to the plaintiff. The accounts were stated to be for merchandise sold by the Kellastone Company on the dates, to the persons, for the amounts, and on terms of payment as follows:

+-------------------------------------------------+
                ¦H. A. Jones      ¦July 26,¦1913¦$1240.50¦60¦days.¦
                +-----------------+--------+----+--------+--+-----¦
                ¦H. A. Jones      ¦Aug. 28,¦“   ¦885.00  ¦30¦“    ¦
                +-----------------+--------+----+--------+--+-----¦
                ¦J. O. Davis      ¦Aug. 27,¦“   ¦708.07  ¦30¦“    ¦
                +-----------------+--------+----+--------+--+-----¦
                ¦Wolverine Bldg. &¦        ¦    ¦        ¦  ¦     ¦
                +-----------------+--------+----+--------+--+-----¦
                ¦Supply Co        ¦Aug. 21,¦“   ¦810.00  ¦30¦“    ¦
                +-----------------+--------+----+--------+--+-----¦
                ¦Wolverine Bldg. &¦        ¦    ¦        ¦  ¦     ¦
                +-----------------+--------+----+--------+--+-----¦
                ¦Supply Co        ¦Sept. 2,¦“   ¦640.00  ¦30¦“    ¦
                +-----------------+--------+----+--------+--+-----¦
                ¦Wolverine Bldg. &¦        ¦    ¦        ¦  ¦     ¦
                +-----------------+--------+----+--------+--+-----¦
                ¦Supply Co        ¦Sept. 4,¦“   ¦637.50  ¦30¦“    ¦
                +-------------------------------------------------+
                

Credit was given for various items of cash, amounting to $510.75, leaving an amount due of $4,410.32. Suit was begun on October 8, 1913. The assignment of accounts was by means of a written instrument called a certificate of indebtedness, in the following form:

‘This is to certify that the persons named below are indebted to the undersigned for merchandise sold and delivered in the sums set opposite their respective names:

+-----------------------------------------------------------------------------+
                ¦Date of    ¦Debtor                       ¦Address         ¦Amount    ¦Terms  ¦
                ¦Bill       ¦                             ¦                ¦          ¦       ¦
                +-----------+-----------------------------+----------------+----------+-------¦
                ¦7 ¦18      ¦W. L. Macatee & Son, car     ¦Houston, Tex.   ¦$ 920.00  ¦60 days¦
                ¦  ¦        ¦25844                        ¦                ¦          ¦       ¦
                +--+--------+-----------------------------+----------------+----------+-------¦
                ¦7 ¦25      ¦W. L. Macatee & Son, car     ¦Houston, Tex.   ¦1,030.00  ¦60 days¦
                ¦  ¦        ¦19088                        ¦                ¦          ¦       ¦
                +--+--------+-----------------------------+----------------+----------+-------¦
                ¦7 ¦26      ¦H. A. Jones, car 62651       ¦Los Angeles,    ¦1,240.50  ¦60 days¦
                ¦  ¦        ¦                             ¦Cal.            ¦          ¦       ¦
                +--+--------+-----------------------------+----------------+----------+-------¦
                ¦8 ¦6       ¦W. L. Macatee & Son, car 4092¦Houston, Tex.   ¦920.00    ¦60 days¦
                +--+--------+-----------------------------+----------------+----------+-------¦
                ¦8 ¦7       ¦Jos. T. Blair, car 14015     ¦Cincinnati, O.  ¦810.00    ¦30 days¦
                +--+--------+-----------------------------+----------------+----------+-------¦
                ¦8 ¦21      ¦Wolverine Bldg. & Supply Co.,¦                ¦          ¦       ¦
                +--+--------+-----------------------------+----------------+----------+-------¦
                ¦  ¦        ¦car 95868                    ¦Detroit, Mich.  ¦810.00    ¦30 days¦
                +--+--------+-----------------------------+----------------+----------+-------¦
                ¦8 ¦22      ¦N. A. Richards, car 46258    ¦Mobile, Ala.    ¦885.00    ¦30 days¦
                +--+--------+-----------------------------+----------------+----------+-------¦
                ¦8 ¦23      ¦Beckman Supply Co., car      ¦Hammond, Ind.   ¦405.00    ¦30 days¦
                ¦  ¦        ¦151173                       ¦                ¦          ¦       ¦
                +--+--------+-----------------------------+----------------+----------+-------¦
                ¦8 ¦23      ¦N. A. Richards, car 91780    ¦Mobile, Ala.    ¦810.00    ¦30 days¦
                +--+--------+-----------------------------+----------------+----------+-------¦
                ¦8 ¦26

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