Home National Bank v. Estate of Waterman

Lacey, P. J. The main question in this case is, was the agreement executed by J. 8. Waterman, deceased, and others, August 10, 1S82, an original agreement between appellant and the makers thereof, or was it a collateral one holding the relation of a guarantee of the debt of the Sycamore Marsh Harvesting Company to appellant? If the latter, the extension of the time of the payment of the principal debt without the consent of Waterman in his lifetime, or his administrators after his death, would work a release of the said appellee, the executor of Waterman, from liability. The time of payment was extended by the parties thereto by a valid and binding agreement some three different times, without the appellee’s consent and after the death of Waterman. We have carefully read and considered the able and carefully prepared argument of both the appellant’s and appellee’s counsel, and have also examined some authorities not referred to, and we find the authorities on the question not entirely uniform and not easily reconcilable, but we think the weight of authority, and especially in this State, is in favor of holding that the agreement was collateral and was not an absolute assumption of the original indebtedness of the Sycamore Marsh Harvesting Company as is contended for by appellant’s counsel. We regard the agreement as one of guaranty only, and a mere substitution by the Sycamore Marsh Harvesting Manufacturing Company, of the responsibility of the signers of the agreement for the collateral securities held by the appellant and delivered over to the said company upon the delivery of the agreement to appellant. It will he noticed that the agreement expresses on its face that it is a guaranty, and it has ever been so treated by all the parties since its execution. The principal debt was not surrendered, but renewed from time to time, and finally passed into a judgment in favor of appellant and against the debtor company, and is still in a subsisting judgment. It is a well recognized rule of law that if there is anything doubtful in the construction of a contract, the conduct of the parties, their manner of treating it, and all the circumstances, may be resorted to for the purpose of ascertaining its true meaning. Burgess v. Rodgers, 124 Ill. 288. It is contended by appellant that, as the agreement speaks of a possibility of renewal, it gave authority to the Sycamore Marsh Harvesting Company and appellant to renew without additional consent of Waterman. Without stopping to inquire what the true interpretation would be if Waterman had been alive when the three last renewals were made, we understand the law to be that any power of that description would be revoked by the death of the party giving it. The death of Waterman worked a revocation of any authority to extend the time oE payment of the original debt that may have existed prior to that time. Risley v. Fellows, 5 Gilm. 531. In case collateral security is put up by a third party, or a third party becomes security for the payment of principal indebtedness, and the time of payment of such indebtedness is extended by valid agreement by the parties thereto without the consent of the owner of the collaterals or the personal security, such action has the effect in law to release the collaterals or the security, as the case may be. Reed v. Cramb, 22 Ill. App. 34, and some case affirmed by title of Price v. Dime Savings Bank, 124 Ill. 317. Again, recurring to the question of whether the agreement of August 10, 1882, was in the nature of a.n original agreement, we can say, as we before said, that it is not free from embarrassment. But it appears to be well settled that, in order that the promisor should become principal, there should be some benefit moving between the promisee and promisor, who undertakes to pay the debt of another, and that such consideration should be of some direct advantage to such promisor, in order to make it an original debt and divest it of the character of a mere security, and the original debt must be given up. Borchsenius v. Canutson, 100 Ill. 92; Eddy v. Roberts, 17 Ill. 505; Wilson v. Bevan, 58 Ill. 232; Hardy Bros. v. Warner, 88 Ill. 561; Williams v. Corbitt, 28 Ill. 262; Hughes v. Hughes, 41 Ill. 214; Bunting v. Darbyshire, 75 Ill. 408; Hurto v. McKnight, 29 Ill. App. 238; Ames v. Foster, 106 Mass. 403; Westhumer v. Peacock, 2 Clark, 529. See, for an extreme case, as making the promise assume the character of a new indebtedness, Allen v. Thompson, 10 N. Y. 32. The collaterals in this case were not delivered to the makers of the agreement nor for their benefit, but to the Sycamore Marsh Harvesting Company, as the receipt shows; hence they received no benefit, directly or indirectly, therefrom, except as stockholders of the corporation, nor was the original debt satisfied or given up. Opposed, however, to the Illinois cases above cited on the question of the extinguishment of the original debt, may be, to some extent, the case of Foley v. Cleveland, 4 Cow. 439. The appellant raises the question that the appellee is estopped on account of the assignment of old accounts and other assets of the Harvesting Company to Judge Helium for the benefit of the signers of the agreement. This, no doubt, would be a good point, at least to the amount received, but we fail to find from the evidence that anything was ever received or ever will be. The accounts appear to have been uncollectible, at least to any greater extent than they had been previously pledged, and there was nothing left of the other assets. Taking the case as a whole, we must hold that Waterman, on account of the extensions of the time of payment, and the taking new notes from the Sycamore Marsh Harvesting Company and delivering up the old ones to the original debtor after Waterman’s death and without appellees’ consent, releases the latter, as executor of Waterman’s estate, from the obligation as surety. The judgment of the court below is therefore affirmed. Judgment affirmed-