Case Name: The Belleville Savings Bank v. James A. Bornman et al.
Court: Illinois Supreme Court
Jurisdiction: Illinois
Decision Date: 1888-03-27
Citations: 124 Ill. 200
Docket Number: 
Parties: The Belleville Savings Bank v. James A. Bornman et al.
Judges: 
Reporter: Illinois Reports
Volume: 124
Pages: 200–218

Head Matter:
The Belleville Savings Bank v. James A. Bornman et al.
Filed at Mt. Vernon March 27, 1888
GrUABANTY—upon condition that (mother shall join therein. A party signing a guaranty of the payment of a draft or bill has the right to impose, as a condition to its' acceptance and binding force on him, that a certain other person named shall become his co-guarantor, and its acceptance by Paye® with notice of the condition will create no liability on such guararL^or if the condition is not performed.
2. A private corporation drew its draft on its treasurer in favor of a bank, which the treasurer accepted. The president of the corporation, before its delivery to the bank, wrote his name across the back of the draft, and handed it to the treasurer, with instructions to inform the bank that the draft was not to be taken unless one A. also placed his name on the back of it, of which the bank was duly notified before acceptance. A. did not indorse his name as a co-guarantor, but signed a guaranty on a separate-paper guaranteeing payment in case the draft was not paid by the corporation or its president: Held, that the first guarantor was not liable for want of performance of the condition.
3. Pabol evidence—to show a failure'of condition to validity of an obligation. Parol evidence is competent to show that the guarantor of the payment of a draft or note signed the same on the condition it was not to be taken unless another named person also signed the same guaranty, and that such condition was not complied with. Such evidence does not tend to vary or alter the contract of guaranty, but is admissible to show no delivery to the payee, and that no contract was in fact made.
4. ¡Renewal note ob bill—whether in satisfaction of a prior note or bill—presumption. Where a note or draft is taken in renewal of a former one, the presumption of law will be that the new note is not a payment of the old one, as between the parties thereto, in the absence of anything showing a contrary intention.
5. The weight of authority is, that the intention with which the new note is accepted will control as to whether the original note or draft is paid and discharged by the acceptance of another in renewal of it, or not; and this may be shown by proof of an express agreement of the parties as to-the effect of the renewal upon the indebtedness evidenced by the former note or bill, or by proof of the attendant circumstances from which the intentions of the parties can be inferred.
6. Where a subsequent promissory note is given for the same consideration as a former one, it is a question of fact, for the determination of the jury, whether the former note is thereby satisfied. If the subsequent note is executed and accepted by the parties for that purpose, the satisfaction is complete.
7. Presumption—in support of a judgment. The presumption of law is in favor of the correctness of the judgment of the trial or lower court, and it will be presumed that the law was properly applied to the facts by the jury, or the court, sitting as a jury, unless the record affirmatively shows-.error in that regard.
Writ of Error to the Appellate Court for the Fourth District ;—heard in that court on appeal from the Circuit Court of St. Clair county; the Hon. W. H. Snyder, Judge, presiding.
This is an appeal from the judgment of the Appellate Court, for the Fourth District, affirming the judgment of the St. Clair circuit court, disallowing a claim presented by the Belleville Savings Bank against the estate of Conrad Bornman, deceased, which was heard in that court, by the court, without a jury, on appeal from the probate court of that county. The claim filed in the probate court was evidenced by the following instrument i
“$10,000. Office of Belleville Nail Mill Co.,
Belleville, III., December 12, 1878.
“Ninety days after date, pay to the order of Belleville Savings-Bank ten thousand dollars, value received, and charge same to account of Belleville Nail Mill Company.
Conrad Bornman, Pres’t.
James C. Waugh, Sec’y.
To F. H. Pieper, Treas., Belleville, 111.”
It was shown upon the trial in the circuit court, that after the foregoing draft was executed by the Belleville. Nail Mill Company, Bornman wrote his name across the back of it, and handed it to F. H. Pieper, treasurer of said company, with instructions to inform the bank that it was not to be taken by the bank unless Edward Abend also placed his name upon the back of it. This Mr. Pieper did, and the bank, through its cashier, was fully notified of the condition interposed by Born-man to its acceptance by the bank, prior to such acceptance. It also appears that Mr. Edward Abend, the" person referred to by Bornman, was president of the bank, and, with two of its directors, composed the discount committee of plaintiff’s bank, to whom this draft, in the regular course of business, would pass from the hands of the cashier before it wras discounted. Shortly after the draft was delivered by Mr. Pieper to its cashier, the nail mill company, through Mr. Pieper, paid to the bank four months’ interest in advance, which was received by the bank. At the time of the making of this draft, the bank held the draft of the Belleville Nail Mill Company for a like amount, dated March 14, 1874, payable to the bank " four months after its date, and guaranteed on the back thereof by Conrad Bornman, James Waugh and Edward Abend. Mr. Pieper testifies, and is substantially uncontradicted, that when he went to pay the discount, he asked the cashier if the draft was taken on the conditions imposed by Mr. Bornman, and the cashier replied it was. He testifies: “Mr. Bornman was •particular in telling me, after it passed the discount board, to •ask him (the cashier) if the note had been so guaranteed with Mr. Abend’s name on the back of it; ” that he did so inquire •of the cashier. At the time of paying the discount before mentioned, the draft of March 14, 1874, was stamped by the bank “paid,” across its face, and delivered to Mr. Pieper, who, •it appears, was treasurer of the drawer. Edward Abend did not, however, place his name on the back of the draft of July 17, 1874, but executed a separate paper, as follows:
"July 17, 1874.
“For value received,. I hereby guarantee the payment, at maturity, of the draft drawn by Belleville Nail Mill Company, upon F. H. Pieper, treasurer, accepted by him, dated July lY, 1874, payable four months after date, for the sum of ten thousand dollars, to the Belleville Savings Bank, if the same is not paid by said Belleville Nail Mill Company or Conrad Bornraa-n. Edward Abend.”
The draft not having been paid' by the makers, was presented against the estate of Conrad Bornman, who died subsequent to the making of said draft, and his liability as indorser thereon insisted upon.
Mr. Charles W. Thomas, for the plaintiff in error:
When a dealer at a bank pays off a note by renewal, the debt is the same,—the debt remains unpaid,—the credit is extended. As a general rule, the surrender of the pre-existing note does not discharge it. Daniel on Neg. Inst. see. 205; Edwards on Bills, see. 290, *207.
But it should be shown that it was expressly agreed that -the old one should be extinguished, in order to have the effect ■of extinguishment; and the delivery of the old note without such agreement does not itself operate as a presumption of ■extinguishment, not even when the new note has been sued on .and judgment obtained. Daniel on Neg. Inst. sec. 1266.
In this case, the drawer of the draft being insolvent, the ■debt would be lost if the renewal was to be held a payment, .and the principle that a renewal is not a payment, applies with .additional force. Daniel on Neg. Inst. secs. 1266, 1267. See, .also, upon the point that a renewal is never held to be a payment where a security would thereby be lost, Daniel on Neg. Inst. sec. 1266 a, note 1, to 1266; Dodge v. Emerson, 131 Mass. 467.
In this case the draft given in renewal was actually delivered' to the bank by Pieper, with Bormnan’s guaranty written on it, and no parol evidence is admissible to show that the contract was other' than it was written. Mason v. Burton, 54 Ill. 349; Beattie v. Browne, 64 id. 360; Courtney v. Hogan, 93 id. 101; Martin’s Exr. v. Lewis’ Exr. 32 Am. Rep. 682.
If the draft had been in escrow, perhaps some modification, of the rule might be made; but a note or paper must be delivered to a third person, if in escrow. Edwards on Bills, sec. 243; Millet v. Parker, 2 Metc. 608.
It may well be doubted whether, under all the circumstances, Abend is not'in fact, as between him and Bornman, bound to-contribute, and if this is so, there is no pretense of a defenceto this claim. There is nothing in the point that Abend’swriting was on a separate piece of paper. 1 Wait’s Actions- and Defences, 594; Edwards on Bills, 314, *220.
Messrs. Wilderman & Hamill, for the defendants in error:
In cases where the Appellate Court finds the facts the same-way as the trial court did, and there are no disputed questions of law, the judgment of the Appellate Court is conclusive.. Laws of 1877, p. 153, sec. 89; Tenney v. Foote, 95 Ill. 99;: Bridge Co. v. Commissioners of Highivays, 101 id. 518; Fitzsimmons v. Cassell, 104 id. 352; Edgerton v. Weaver, 105 id. 47; Stock Yards v. Ferry Co. 102 id. 514.
Where a trial is had in a trial court, before the court, without a jury, on the evidence offered by both the opposing parties, and no propositions of law are submitted to the trial court for its decision, and the judgment of that court is affirmed by the Appellate Court, the record presents no questions of law for the decision of this court. Fitch v. Johnson, 104 Ill. 118; Edgerton v. Weaver, 105 id. 48; Steinman v. Steinman, 105 id. 348; Leonard v. Patton, 106 id. 99; Paddon v. People’s Ins. Co. 107 id. 196; Casner v. Preston, 109 id. 531; Miller v. Life Ins. Co. 110 id. 102.

Opinion:
Mr. Justice Shope
delivered the opinion of the Court:
When Conrad Bornman wrote his name, as guarantor, upon the draft of the Belleville Nail Mill Company, of the date of •July 17,1874, he imposed, as a condition to its acceptance by the plaintiff hank, that Edward Abend should become his co-.guarantor thereon, of which the bank had actual notice prior to its acceptance of the draft. Bornman had the right to impose this condition, and the delivery of the instrument being conditional, created no liability until tbe condition was performed. It was competent to prove such condition and noncompliance therewith by parol, not as tending to vary or alter the contract of guaranty, but for the purpose of showing that there had been no delivery thereof to plaintiff in error. The condition materially affecting, as it did, the liability of Born-man, and the draft not having been guaranteed by Abend, so that he would become Bornman's co-guarantor thereon and liable to contribute in payment of the draft, as required by the conditions thus imposed, the delivery of Bornman's contract •of guaranty never became complete, and he was not, therefore, liable, as guarantor, upon the draft of July 17, 1874. Stricklin v. Cunningham, 58 Ill. 293; Knight v. Hurlbut, 74 id. 133; Rhode v. McLean, 101 id. 467; Lovell v. Adams, 5 Humph. 133; Hull v. Parker, 37 Mich. 590; Benton v. Martin, 52 N. Y. 570; Fletcher v. Austin, 11 Vt. 447; Edwards on Bills, 186.
It is, however-, insisted, that if Bornman was not liable as guarantor upon the draft of July 17, that draft having been given in renewal of a like draft in all respects, except date, dated March 14,1874, upon which Bornman was a guarantor, •the acceptance by the bank of the last draft, with Bornman's -.incomplete contract of guaranty thereof, did not extinguish his liability upon the former draft, and that plaintiff in error should, in the county court, have recovered upon that liability. "The insistence is, that by the guaranty of Bornman of the .March draft, he became liable to pay that draft if the drawer failed to pay at maturity; and the draft of July 17, 1874, being in renewal of the March draft, that such renewal was not a payment of the former draft, and his liability as guarantor thereon was therefore not extinguished.
The authorities are not uniform upon the question as to' whether the acceptance' of a new note or bill in renewal of another, upon the same consideration, without proof of the intention of the parties in making or accepting the same, should be held to be a payment of the original note or bill, or not. Plaintiff in error contends, the presumption of law is, that a. note or draft taken in renewal of a former one is not a payment of the original note or draft, as between the parties, and in this is sustained by what is said to be the weight of authority. (Edwards on Notes and Bills, 291; 2 Parsons on Notes and Bills, 203.) Mr. Parsons, however, says: "The general custom and understanding of the mercantile world would seem to demand that a new note given in renewal of an old one, which is taken up, as it is termed, should pay and cancel the old note for which it is given." He seems to find support, more or less direct, in many adjudicated cases. Nichol v. Bates, 10 Yerg. 429; Hill v. Bostick, 10 Humph. 410; Huse v. Alexander, 2 Metc. 157; Cornwall v. Gould, 4 Pick. 444; Slaymaker v. Gumbacker, 10 S. & R. 75; Alford v. Baker, 53 Ind. 279; Holmes v. Smith, 16 Me. 177; Skenkel v. Taylor, 12 La. Ann. 773; Smith v. Hamper, 5 Cal. 330.
It will not be profitable to review the authorities relating to that question, or necessary to re-state the rule of law upon that subject in this State. The decision of that question is not at all necessary to the solution of the questions involved in this case, nor does it necessarily arise in its determination, for while there are decisions holding that the legal presumption arising from the renewal can be rebutted only by proof of a contrary express agreement of the parties, the decided weight of authority is, regardless of what the legal presumption arising from the mere fact of renewal is held to be, that, it being the proper subject matter of contract, the intention with which the new note is accepted will control as to whether the original note or draft is paid and discharged by the acceptance of another in renewal of it, or not, and that this may be shown by proof of an express agreement of the parties as to the effect of the renewal upon the indebtedness evidenced by the former note or bill, or by proof of the attendant circumstances, from which the intention of the parties can be inferred.
Daniel, in his work on Negotiable Instruments, after referring to the authorities relating to the legal presumptions arising from the renewal of negotiable instruments, says, section 1267: "The presumptions of law which we have referred to, are universally held to be open to rebuttal; and it is competent for the parties to show that the bill or note was, by express agreement, received in absolute payment and discharge of the precedent debt, or the contrary, or that there are facts and circumstances attendant upon the transaction from which an understanding and agreement might be inferred." So in Pennsylvania, where it was held that the taking of a renewal note was not a satisfaction of the former bill or note, "unless it was so intended and accepted by the creditor," it is said: "But if so accepted, it is a satisfaction. The quo animo in which it was accepted is a matter of fact, which the court can not take to itself and exclude the jury from a decision of it. The intent may often be deduced from circumstances, though nothing positive was expressed." (Hart v. Bollar, 15 S. & R. 162.) This, undoubtedly, is the rule of law in this State, where the holding is in harmony with the rulings elsewhere. In Yates v. Valentine, 71 Ill. 644, it is said: "Where a subsequent promissory note is - given for the same consideration as a former one, it is a question of fact, for the determination of the'jury, whether the former note is thereby satisfied. If the subsequent note was executed and accepted by the respective parties for that purpose, the satisfaction is complete." See, also, Morrison v. Smith, 81 Ill. 221; Hough v. Ætna Life Ins. Co. 57 id. 318; White v. Jones et al. 38 id. 159; Strong et al. v. King, 35 id. 19; Varner v. Nobleborough, 2 Greenlf. 121; Ward v. Borne, 56 Me. 161; Crane v. McDonald, 45 Barb. 354; Brewer v. Branch Bank, 24 Ala. 440; 1 Edwards on Notes and Bills, sec. 289; Parsons on Notes and Bills, 203 ; Flower v. Elwood, 66 Ill. 438; Conway v. Case, 22 id. 127; Archibald v. Argall, 53 id. 307; 2 Greenleaf on Evidence, sec. 527.
It is true, as stated by counsel, that in Yates v. Valentine, the note given and accepted in renewal was made payable to a third person; but that was simply a circumstance from which the inference of fact might arise that the parties intended the renewal note to be a satisfaction of the precedent indebtedness, and it was so treated in the consideration of that case. That fact, therefore, in no way militates against the authority of that case in establishing the rule announced.
The question of whether it was intended or understood that the prior draft was paid by the acceptance of the new draft, is, therefore, both upon authority and principle, a question of fact, not of law, and it was competent for the jury,—or, in this case, the court, sitting as a jury,—to consider all the attending circumstances proved, and deduce therefrom the understanding or intention of the parties in respect thereto. Waiving the question as to whether plaintiff in error should be required to confine its proof to the claim filed in the probate court, it is evident that the question of the liability of Bornman's estate on the draft of March 14, 1874, necessarily depended upon the finding of fact as to whether that draft had been paid, and his liability as guarantor thereby discharged, by the acceptance, by the plaintiff bank, of the draft of the nail mill company, of July 17, and that the determination of that question would depend upon the fact of intention of the parties in respect thereof.
It may be conceded, that an extension of time to the principal debtor, if made after the liability of the guarantor be comes fixed by non-payment at maturity, (Hayes v. Wells, 34 Md. 512,) will not discharge the guarantor upon the original obligation; yet if the debt is paid, the liability of the guarantor is forever gone, and can not be revived without his consent. Those cases which seem to hold that the liability of the guarantor or surety will revive on the former or original debt, will be found to relate to a state of facts where there has been a suspension of the right of action, simply, by reason of the extension of time to the principal debtor, the original liability of the guarantor remaining, in the meantime, undischarged.
The trial in the circuit court in this cause was by the court, without a jury, by the consent of parties. The circuit court, upon proof of the attendant circumstances, from which the acceptance of the new draft for and in payment of the former might be inferred, found for the defendant, and entered its judgment accordingly. That judgment has been affirmed by the Appellate Court. No propositions of law were presented by either party, to be held or refused by the court, as it is provided by statute may be done, thus preserving the rulings of the court upon questions of law. No error in the rulings of the court in the admission or exclusion of evidence has been qiointed out or urged in this court, nor is any perceived by us. We are not permitted to review, on appeal from or writ of error to the Appellate Court, controverted questions of fact. The judgment of the Appellate Court, affirming the judgment below, • must, in the absence of a finding of the facts by the Appellate Court, be treated in this court as conclusively determining all controverted questions of fact necessary to the maintenance of the judgment adversely to the appellant or plaintiff in error. It therefore follows that plaintiff in error can not be heard in this court to say that error has intervened upon questions of. fact. The finding of the Appellate Court is, as we have said, conclusive and final as to all such questions.
It is, however, sought by counsel for plaintiff in error to parry the force of this position, by accepting, in their argument filed in this court, the statement of fact made in the brief of counsel for defendant in error filed in the Appellate Court. Counsel do not concede, however, the vital fact insisted upon by the defendant's counsel, that it was the intention of the parties, in the acceptance of the renewal draft of July 17, 1874, that the former draft should be paid and satisfied. It is manifest that a material question of fact was, whether the last draft was accepted by the bank in payment and discharge of the prior draft, or not, and the intention with which it was given and accepted became an important and controlling matter of inquiry. It is apparent the draft of July 17, as to the nail mill company, the drawers, was a complete instrument. No condition was attached by the drawer to its acceptance or delivery. Plaintiff in error had the undoubted right to accept it with or without security, or with the guaranty of Abend, in payment and satisfaction of the precedent indebtedness. Whether it did so or not, was, as we have seen, a question of fact, to be deduced from proof of the attending circumstances.
The statute (Practice act, sec. 42,) has made ample provisions for preserving in the record the rulings of the court upon questions of law arising in the case. It may be as efficiently and conveniently done by submitting to the court written propositions, to be held as law in the decision of the case, as it can by instructions to a jury. It is made the duty of the court to pass upon all questions of law thus submitted, and to hold, refuse or modify the same, as the trial court shall deem right, and either party may except to such ruling. As we have said, the presumption of law is in favor of the correctness of the judgment of the inferior court, and it will be presumed that the law was correctly applied to the facts by the jury, or the court sitting as a jury, unless the record affirmatively shows error in that regard. This precise question has been passed upon by this court in the eases of Tibballs et al. v. Libby, 97 Ill. 552, Hobbs v. Ferguson's Estate, 100 id. 232, Steinman v. Steinman, 105 id. 349, and Montgomery et al. v. Black et al. ante, p. 57, and we do not deem it necessary to further elaborate the question here.
Plaintiff in error having failed to preserve in the record, in the only mode by which it can be done in eases of this kind, the rulings of the trial court, and the presumption being that the law was correctly applied, no error can be assigned as to such rulings. The questions of fact having been settled by the judgment of the Appellate Court to be sufficient to maintain the judgment of the court below, and there being no error of law, the judgment of the Appellate Court must be affirmed, which is accordingly done.
Judgment affirmed,.