Illinois Official Reports 

Appellate Court

Private Bank & Trust Co. v. EMS Investors, LLC, 2015 IL App (1st) 141689

Appellate Court 

Caption

THE PRIVATE BANK AND TRUST COMPANY, 

Plaintiff-Appellee, v. EMS INVESTORS, LLC, HERBERT P. 

EMMERMAN, and EQUITY MARKETING SERVICES, INC., 

Defendants-Appellants.

District & No. First District, Third Division

Docket No. 1-14-1689

Filed May 27, 2015

Decision Under 

Review

Appeal from the Circuit Court of Cook County, No. 12-L-9313; the 

Hon. Raymond Mitchell, Judge, presiding.

Judgment Affirmed.

Counsel on

Appeal

William T. Dwyer, Jr., of O’Rourke, Hogan, Fowler & Dwyer, of 

Chicago, for appellants.

Jason M. Metnick and Monica J. Paine, both of Meltzer, Purtill & 

Stelle, LLC, of Chicago, for appellee.

Panel JUSTICE HYMAN delivered the judgment of the court, with opinion.

Presiding Justice Pucinski and Justice Lavin concurred in the 

judgment and opinion.
- 2 - 

 OPINION 

¶ 1 In the absence of a reservation of rights, co-borrowers contend that a lender’s release and 

discharge of a third co-borrower regarding mortgages secured by property of the third 

co-borrower and others released and discharged them as well. 

¶ 2 Herbert P. Emmerman and Cheryl Bancroft formed EMS Investors, LLC (Investors), to 

convert an apartment building in downtown Chicago into condominiums. To finance the 

project, Emmerman, Bancroft, and Investors borrowed $1.62 million from The Private Bank 

and Trust Company (Private Bank). Equity Marketing Services, Inc. (EMS), another entity 

Bancroft and Emmerman owned, guaranteed the loan. Bancroft and her husband also had 

several mortgages with Private Bank on property they owned individually, together and 

through Bancroft Group LP (BGLP). When the housing bubble collapsed in late 2008, 

Bancroft, Emmerman, and Investors slid into financial difficulties. Sales of condominium 

units stalled, making repayment of the $1.62 million loan difficult. Before the note became 

due, Bancroft filed for chapter 11 bankruptcy (11 U.S.C. § 101 et seq. (2006)), and she and 

her husband entered into a settlement agreement with Private Bank. The settlement 

agreement, which only mentioned the Bancrofts’ personal real estate and not the $1.62 

million loan, released and discharged them “from any and all claims, demands, actions, 

causes of action, suits, costs, damages, expenses and liabilities of every kind, character and 

description, either direct or consequential, at law or in equity.” Emmerman was not a party to 

the release or aware of it at that time. 

¶ 3 When the note matured, Emmerman asked for an extension or modification. Private Bank 

refused and filed a breach of contract action against Emmerman and Investors on the loan 

and EMS on its guaranty. The parties filed cross-motions for summary judgment. Emmerman 

and Investors contended that Private Bank’s release of Bancroft also released them from 

liability as co-obligors under the note. The trial court disagreed, granting Private Bank’s 

motion for summary judgment and denying defendants’ motion. The court also entered 

judgment in Private Bank’s favor for the amount owed on the loan, interest, and attorney 

fees. 

¶ 4 Emmerman and Investors argue the trial court erred in finding that the Private Bank’s 

settlement agreement with Bancroft did not release all of them from liability on the note in 

the absence of a reservation of rights. We affirm. The language of the release between the 

Bancrofts and Private Bank and the circumstances under which it arose present enough 

evidence to demonstrate that Private Bank did not intend to release defendants from liability 

on the note. Thus, the trial court did not err in granting Private Bank’s motion for summary 

judgment and entering judgment in the bank’s favor. 

¶ 5 BACKGROUND 

¶ 6 The facts are not in dispute. EMS Investors, LLC, is an Illinois limited liability company, 

with two members, Herbert C. Emmerman and Cheryl Bancroft. On January 29, 2008, 

Private Bank loaned $1.62 million to Investors, Emmerman and Bancroft, which was 

documented by a promissory note and a first amended promissory note. Emmerman and 

Bancroft were co-makers on the promissory note and agreed to be “jointly and severally”
- 3 - 

liable under it. Defendant Equity Marketing Services, Inc., guaranteed repayment of the loan. 

Defendants defaulted under the terms of the note and amended note by failing to make 

payment due on the maturity date, January 1, 2012. EMS also defaulted by failing to make 

payments after defendants defaulted. 

¶ 7 On November 22, 2011, a few months before the note became due, Private Bank entered 

into a settlement agreement with Cheryl Bancroft, Stephen Bancroft, and BGLP. The 

settlement agreement noted that Private Bank had mortgages on several residential properties 

owned together and separately by Cheryl and Stephen, and that “disputes exist among the 

Parties with respect to various claims and issues relating to” the residential real estate, and 

they want to “settle any and all claims and disputes by, among and against each other under 

this Agreement.” The agreement also noted that Cheryl filed for bankruptcy under chapter 11 

on January 14, 2011, and that the bank had begun legal action against Stephen on property he 

owned separately and with BGLP. The settlement agreement then stated, in relevant part: 

“10) Release of Cheryl, Stephen and BGLP. Except as expressly set forth in this 

Agreement, the Bank, and each of its respective successors, affiliates, assigns, 

shareholders/members, directors, officers, agents, servants, employees, heirs, 

executors, administrators and assigns, does hereby forever release and discharge 

Cheryl, Stephen, and BGLP, and their respective parents, successors, affiliates, 

assigns, directors, officers, agents, servants, and employees from any and all claims, 

demands, actions, causes of action, suits, costs, damages, expenses and liabilities of 

every kind, character and description, either direct or consequential, at law or in 

equity, which they may now, may have had at any time heretofore, or in any manner 

whatsoever, provided, however, that such released claims shall not include any claims 

asserted by any Party arising solely out of any obligation specifically set forth in this 

Agreement. 

 * * * 

 26) Parties in Interest. Nothing herein shall be construed to be to the benefit of 

any third party, nor is it intended that any provision shall be [for] the benefit of any 

third party.”

¶ 8 The settlement agreement does not specifically mention the note or the amended note 

with Emmerman or Investors and does not mention Emmerman or Investors by name. 

¶ 9 On August 16, 2012, Private Bank filed a two-count complaint in the circuit court of 

Cook County alleging breach of contract claim against Emmerman and Investors, as obligors 

of the loan (count I), and against EMS, as guarantor of the loan (count II). Defendants filed 

an answer admitting the note was in default and raising as an affirmative defense that Private 

Bank’s unconditional release of Bancroft’s liability under the note, without a reservation of 

rights, also released Emmerman and Investors from liability under the note and EMS from 

liability under the guaranty. 

¶ 10 Private Bank moved to strike EMS’s affirmative defense as to its liability on the 

guaranty, which the trial court granted, with prejudice. Private Bank then moved for 

summary judgment. Defendants filed a combined motion for summary judgment and a 

response to Private Bank’s motion for summary judgment. Among the exhibits attached to 

Private Bank’s motion was an affidavit from Kimberly Kourelis, a Private Bank managing 

director, stating that the bank’s settlement agreement with Bancroft was unrelated to the note, 

amended note, and guaranty and was not intended to apply to Emmerman, Investors, or EMS. 
- 4 - 

Private Bank also attached deposition testimony from Emmerman stating that at the time the 

settlement agreement was executed, he had no knowledge of it and had not been asked to 

review it at any time. Emmerman also stated that after the loan matured in January 2012, he 

spoke with Alan Fine, another Private Bank managing director, about how Emmerman was 

going to repay the loan. Emmerman stated, “I was looking for a modification of the loan. 

None of that was forthcoming. They were interested in me paying or else.”

¶ 11 On May 1, 2014, the trial court granted Private Bank’s motion for summary judgment 

and denied defendants’ motion. The court also entered judgment in Private Bank’s favor in 

the amount of $1,704,718.79, which included the principal due on the loan, plus interest, 

attorney fees, and costs. The court found that defendants’ liability under the note was joint 

and several, and thus, “a plaintiff is entitled to pursue distinct remedies upon the same 

instrument, treating it as a joint contract and as a several contract, until satisfaction is fully 

obtained. [Citation.]” Further, citing Diamond Headache Clinic, Ltd. v. Loeber, 172 Ill. App. 

3d 364, 369 (1988), the trial court stated that joint and several liability permits the plaintiff to 

sue until payment in full from one or more of the defendants, with the limitation that the 

plaintiff may not collect more than what is owed by the defendants jointly. This prevents 

multiple recoveries for a single injury. 

¶ 12 Addressing the settlement agreement, the court stated, “an obligor is not released when it 

is apparent from the circumstances that the settling parties did not intend the release of one to 

act as a release of all.” The court found that the evidence, including Kourelis’s affidavit, 

Emmerman’s deposition testimony, and a third-party beneficiary clause in the release 

(“[n]othing herein shall be construed to be to the benefit of any third party”) demonstrates 

that Private Bank always intended to enforce its rights against defendants. 

¶ 13 ANALYSIS 

¶ 14 Defendants’ primary contention is that the trial court erred in entering summary judgment 

and a monetary judgment in Private Bank’s favor, because the release of one joint and 

several co-obligor releases all other joint and several co-obligors absent a reservation of 

rights. Defendants also contend the trial court erred by: (i) referring to Bancroft as a 

guarantor rather than as a co-obligor and (ii) relying on section 294 of the Restatement 

(Second) of Contracts (Restatement (Second) of Contracts § 294 (1981)), which has not been 

enacted in Illinois. Defendants ask us to reverse the summary judgment in plaintiff’s favor 

and enter summary judgment in their favor and vacate the monetary judgment. 

¶ 15 Summary judgment is proper where the pleadings, depositions, admissions and affidavits 

on file, when viewed in the light most favorable to the nonmoving party, reveal no genuine 

issue of material fact and the moving party is entitled to judgment as a matter of law. 735 

ILCS 5/2-1005(c) (West 2012); Home Insurance Co. v. Cincinnati Insurance Co., 213 Ill. 2d 

307, 315 (2004). We review the entry of summary judgment de novo and may affirm on any 

ground appearing in the record. Id. 

¶ 16 Release of a Joint and Several Co-Obligor 

¶ 17 Defendants primarily argue that the trial court erred in finding that Private Bank’s release 

of Cheryl Bancroft did not release defendants from liability on the note. But we first address 

defendants’ contention that the trial court erred when, in its order, it referred to Cheryl 

Bancroft, who is not a party, as a guarantor rather than as a co-obligor on the note. We agree 
- 5 - 

the trial court erred when it stated that “Cheryl Bancroft also guaranteed the obligations 

brought about by the loan documents” and “Private Bank *** released Cheryl Bancroft from 

any obligations she had arising under the guaranty.” But the court then proceeded to whether 

Private Bank’s release of Bancroft also released defendants, who were jointly and severally 

liable under the note or whether they were not released because the circumstances indicated 

that Private Bank did not intend for their release of Bancroft to also release defendants. Thus, 

because in making its decision the trial court addressed whether joint and several co-obligors 

on a note are released after release of one of a co-obligor, any error in describing Bancroft as 

a guarantor rather than a co-obligor did not affect the outcome and was harmless. 

¶ 18 Turning to the liabilities of joint and several co-obligors on a loan, under Illinois law, a 

joint and several contract has been deemed “equivalent to independent contracts, founded 

upon one consideration, for performance severally, and also for performance jointly, and 

distinct remedies upon the same instrument, treating it as a joint contract and as a several 

contract, may be pursued until satisfaction is fully obtained.” Moore v. Rogers, 19 Ill. 347, 

348 (1857); see also People v. Harrison, 82 Ill. 84, 86 (1876) (“Contracts which are joint and 

several may be regarded as furnishing two distinct remedies: one by a joint action against all 

the obligors, the other by a several action against each.”); 735 ILCS 5/2-410 (West 2012) 

(“All parties to a joint obligation, including a partnership obligation, may be sued jointly, or 

separate actions may be brought against one or more of them. A judgment against fewer than 

all the parties to a joint or partnership obligation does not bar an action against those not 

included in the judgment or not sued. Nothing herein permits more than one satisfaction.”). 

Each of the obligors “may be liable for the entire damages resulting from the failure to 

perform.” Brokerage Resources, Inc. v. Jordan, 80 Ill. App. 3d 605, 608 (1980). 

¶ 19 Despite the general rule holding joint and several co-obligors separately liable, a release 

of one co-obligor may also release the other co-obligor. Under Illinois common law, the full 

release of one co-obligor released all “even if the release contained an express reservation of 

rights against the others.” Porter v. Ford Motor Co., 96 Ill. 2d 190, 193 (1983). As observed 

by the supreme court in Porter, it “rejected the strict common law rule ‘in favor of the more 

reasonable rule, that where the release of one of several obligors shows upon its face, and in 

connection with the surrounding circumstances, that it was the intention of the parties not to 

release the co-obligors,’ ” the agreement shall be construed as a covenant not to sue, rather 

than a release. (Emphasis omitted.) Id. at 194-95 (quoting Parmelee v. Lawrence, 44 Ill. 405, 

413-14 (1867)). In other words, the entry of one co-obligor into an unconditional release will 

release all co-obligors except when a contrary intent appears from the face of the document 

with the release. Id.; see also Cherney v. Soldinger, 299 Ill. App. 3d 1066, 1070 (1998). 

¶ 20 In Parmelee four partners, Bigelow, Parmelee, Gage, and Johnson, borrowed $50,000 

from Lawrence and conveyed real estate to Lawrence as security. The partners agreed to 

repay the loan in five annual installments with 10% interest, after which Lawrence agreed to 

reconvey the property to the partners. Parmelee, 44 Ill. at 406-07. After they stopped 

repaying the loan, the partners argued that a release executed in favor of one of the partners, 

Bigelow, served to release them all. Id. at 408. The release read, in relevant part: 

“ ‘I release and discharge *** Bigelow, his property and estate, from all claims on 

account of the same. 

 If the property mentioned in the above articles has to be sold under any order of 

the court at Chicago, the interest of said Bigelow in it is to be protected according to 
- 6 - 

this settlement. Nothing herein shall in anywise affect my rights or demand against 

said Parmelee, Gage or Johnson, or their interest in said property.’ ” Id. 

¶ 21 In examining the effect of the release on the liability of Bigelow’s partners, the Illinois 

Supreme Court held that a “release, like every other written instrument, must be so construed 

as to carry out the intention of the parties. This intention is to be sought in the language of the 

instrument itself when read in light of the circumstance which surrounded the transaction.”

Id. at 410. The court further stated that “where the release of one of several obligors shows 

upon its face, and in connection with the surrounding circumstances, that it was the intention 

of the parties not to release the [co-obligors], such intention, as in the case of other written 

contracts, shall be carried out, and to that end the instrument shall be construed as a covenant 

not to sue.” Id. at 414. 

¶ 22 Accordingly, a court must assess whether the parties intended the agreement to serve as 

an “absolute and unconditional” release of the co-obligor executing the agreement. Id. The 

purpose of this doctrine is to prevent a claimant from receiving multiple recoveries for a 

single claim (Diamond Headache Clinic, 172 Ill. App. 3d at 369), and not to release a 

co-obligor when a claim has been only partially settled if the claimant’s intent is not to 

release the other obligor but to hold him or her responsible for the balance (id.).

¶ 23 In ruling in Lawrence’s favor, the Parmelee court had “no hesitation or doubt” finding 

that Lawrence executed the release “for the purpose of saving Bigelow from further legal 

liability so far, and only so far, as this could be done without affecting [his claim] against the 

[co-obligors].” Parmelee, 44 Ill. at 411. The court noted the release contained an express 

reservation of rights and that Lawrence had refused to sign other releases Bigelow presented 

to him lacking a reservation of rights out of concern that it might jeopardize his rights against 

the co-obligors. Id. 

¶ 24 To determine Private Bank’s intent in releasing Bancroft from liability, we examine the 

language of the release and the circumstances leading to its execution. In finding that Private 

Bank’s release of Bancroft did not release defendants from liability under the note, the trial 

court cited the affidavit of Kimberly Kourelis of Private Bank, the deposition testimony of 

Herbert Emmerman, and the third-party beneficiary language of the settlement agreement 

(“Nothing herein shall be construed to be to the benefit of any third party, nor is it intended 

that any provision shall be [for] the benefit of any third party.”).

¶ 25 Addressing the last item first, defendants assert that the trial court erred in relying on the 

third-party beneficiary language in paragraph 26 of the settlement agreement as evidence that 

Private Bank reserved its rights against Emmerman and Investors. Defendants note that in 

Holland v. United States, 621 F.3d 1366 (Fed. Cir. 2010), a case from the Federal Circuit 

Court of Appeals interpreting Illinois law, the court stated that “the general ‘Third Party 

Beneficiaries’ clause in the Settlement Agreement is not sufficient to show that the parties 

intended the release to be less than an absolute release of the FDIC as a manager of the FRF 

and thus, under Illinois law, fails to establish that the agreement should be construed as 

merely a covenant not to sue the FDIC as manager of the FRF.” Id. at 1381. Defendants 

contend that because the third-party beneficiary clause is not sufficient to reserve rights 

against them and the settlement agreement contained no reservation of rights clause, the 

agreement contains no evidence that Private Bank intended to reserve its rights against 

Emmerman and Investors. 
- 7 - 

¶ 26 State courts are not bound to follow decisions of the federal district courts or circuit 

courts of appeal. Hinterlong v. Baldwin, 308 Ill. App. 3d 441, 452 (1999) (except for the 

United States Supreme Court, federal courts exercise no appellate jurisdiction over state 

courts and their opinions are not binding on state courts). Federal decisions may, however, be 

considered persuasive authority. Wilson v. County of Cook, 2012 IL 112026, ¶ 30. In the 

absence of Illinois precedent on whether a general third-party beneficiary clause shows an 

intent to reserve rights against other co-obligors, we may be inclined to follow Holland and 

find that the third-party beneficiary clause in the release failed to expressly reserve Private 

Bank’s rights against defendants. But we need not address that issue, because even absent 

that clause, the remainder of the settlement agreement, the circumstances surrounding its 

execution, and the stated intent and understanding of both Private Bank and Emmerman as to 

the effect of the release establish that Private Bank did not intend to release Emmerman or 

Investors from liability under the note. 

¶ 27 We start with the fact that the release refers to mortgages on several parcels of residential 

real estate Cheryl Bancroft and her husband own individually, together, and through BGLP. 

Private Bank and the Bancrofts entered into the settlement 10 months after Cheryl Bancroft 

filed for chapter 11 bankruptcy and while Private Bank had pending litigation against 

Stephen Bancroft and BGLP involving property referred to in the release. The note, the 

amended note, or the co-obligors here are not mentioned at all. In her affidavit, Kourelis 

states that the settlement agreement was unrelated to the note, the amended note, or the 

obligations of Emmerman, Investors, and EMS and was not intended to apply to them. 

Emmerman’s deposition testimony likewise indicates he did not think that in releasing 

Bancroft, Private Bank also intended to release him or Investors from their obligations under 

the note. 

¶ 28 Emmerman testified that he was unaware of the release just before and after it was 

signed, that when the note became due in January 2012, three months after the release was 

executed, he spoke with Alan Fine from Private Bank about a modification but none was 

forthcoming and that he knew that the bank was “interested in me paying or else.” Private 

Bank’s actions in attempting to obtain payment from Emmerman and Investors, as the only 

remaining liable co-obligors, show it intended to continue to hold them liable despite the 

release of Bancroft. 

¶ 29 Further, we reject defendants’ contention that the mere absence of a reservation of rights 

clause in the note and amended note means that Private Bank did not intend to reserve its 

rights against defendants. Specifically, defendants assert that because all other notes and loan 

modifications they or Bancroft executed included a reservation of rights clause and because 

Private Bank almost always included that provision in their notes and loan agreements, the 

absence of that clause in this note and amended note is evidence that Private Bank did not 

intend to preserve its rights against co-obligors. As noted, Illinois case law holds that it is the 

intent of the parties to the release and the language of the release that controls its scope and 

effect. Defendants offer no cases to support their argument that the language of the note 

alone controls whether a later release of one co-obligor also releases the other co-obligors. 

¶ 30 Thus, even in the absence of an express reservation of rights in the release, the 

circumstances, which we must consider, show that Private Bank did not intend to release 

defendants from their liability under the note when they entered into a settlement agreement 

with defendants’ co-obligor, Cheryl Bancroft. Therefore, the trial court did not err in granting 
- 8 - 

Private Bank’s motion for summary judgment and entering a judgment in the bank’s favor. 

¶ 31 Section 294 of Restatement of Contracts 

¶ 32 Defendants contend the trial court erred in relying on section 294 of the Restatement 

(Second) of Contracts (Restatement (Second) of Contracts § 294 (1981)), because it has not 

been enacted as law in Illinois. Nothing in the record or the order granting summary 

judgment shows that the trial court relied on the Restatement in reaching its decision. 

Defendants note that in its order, the trial court cited El Funding Partnership v. Voegel, 2012 

IL App (1st) 113712-U. In El Funding, the appellate court found that the trial court’s reliance 

on section 294 of the Restatement (Second) of Contracts was irrelevant, because Illinois 

courts have modified the common law rule to find that intent is the determining factor in 

whether the release of a co-obligor releases the remaining obligors. El Funding, 2012 IL App 

(1st) 113712-U, ¶ 27. This does not amount to evidence that the trial court improperly relied 

on the Restatement (Second) of Contracts in reaching its decision. 

¶ 33 CONCLUSION 

¶ 34 The trial court did not err in granting plaintiff’s motion for summary judgment or 

entering judgment in plaintiff’s favor. 

¶ 35 Affirmed.