Court Opinion

ID: 6948319
Source: CourtListenerOpinion
Date Created: 2022-07-24 01:28:16.089031+00
Date Added: 2024-06-11T16:07:59.706758
License: Public Domain

Catón, J. A bill was filed by the predecessor of the present complainant, to enforce the guarantee or mortgage, to which a demurrer was sustained by the circuit court, and its decision affirmed by this court. That case is reported in 14 Ill. 24. The averments of this bill aro much more explicit than in that, and as is supposed by complainant, a new and a sufficient case is presented. A demurrer to this bill has also been sustained by the circuit court, and again must the decision below be affirmed here. This bill shows that a meeting of the stockholders of the bank was held on the 29th of July, 1837, at which a resolution was adopted, authorizing the board of directors to loan to the trustees of Shawneetown, in their corporate capacity, for the term of ten years, the sum of twenty thousand dollars, at an interest of six per cent, per annum, payable annually, with ten per cent, of the principal, upon satisfactory security being given, etc. Accordingly the mortgage was prepared and executed on the 27th of August following, reciting the substance of the resolution of the stockholders, and creating a guarantee for the repayment of the loan and interest. This mortgage is set forth in the reported case referred to. Nothing further was done till the eighteenth of January, 1838. On that day the trustees of Shawneetown presented to the board of directors, their note or bond of that date, for twenty thousand dollars, payable on the first of January, 1839, together with the mortgage. The board of directors passed an order reciting that the trustees of Shawneetown had, in pursuance of the resolution of the stockholders, passed on the twenty-ninth of July, 1837, presented their note, stating the substance of it, which note they say is in accordance with a mortgage executed by sundry citizens of Shawneetown, to the bank, dated the twenty-third of August, 1837, as collateral security for the punctual payment of the interest and principal of said note of twenty thousand dollars, they order that the said note be discounted. The only question which needs to be discussed is whether this loan was in' fact made in pursuance of the terms of the mortgage ? Whether the mortgagors ever undertook to guarantee such a loan as was made to the trustees of Shawneetown ? The note presented was ordered to be discounted, and the order recites that the mortgage was presented as collateral security for the punctual payment of the interest and principal of the note. The note then expresses the terms of the loan, and that there might be no mistake as to the intention of the parties, the order of the board recites its substance, stating that it is for twenty thousand dollars, and is payable on the first of January, 1839. By presenting a note payable on the first of January, 1839, the trustees asked a credit only till that time, and the order of the board shows unequivocally that they intended to give a credit only till that time. The note expressed the contract between the parties, and a suit against the trustees to collect the debt would have been brought upon the note and not upon the mortgage. The town was debtor to the bank and not the mortgagors. They never agreed to assume any personal liability for any loan to the town, but pledged their property as collateral security for a loan to be made on a credit extending from one to ten years. No such loan was ever made, for no such credit was ever given. The note was discounted and the loan was made on the eighteenth of January, 1838, and in less than one year from that time the whole amount became due, and the bank had a perfect right to sue the town upon the note and enforce the payment. -No defense, at least so far as is shown by the bill, could have been set up to defeat the action upon the note. It is not even pretended that any mistake was made in drawing up the note by the trustees, or by the board of directors in reading it. On the contrary, the recitals in the order of the board of directors show conclusively that they perfectly understood the note according to its tenor. The mortgage was the instrument which was misunderstood. Its provisions were evidently misapprehended, and that too in its most important particulars, and to such an extent as almost to induce the belief that it could never have been read by the directors. But the guarantors are not responsible for any misapprehension of the terms of the guarantee by the bank. They made their mortgage and prescribed the terms of the loan, the re-payment of which it was to guarantee. They had a right to prescribe the terms, which no other parties had a right to change. No such loan as they agreed to guarantee was ever made, and they never agreed to guarantee the loan which was made. They were as much strangers to that transaction, as if they had never executed the mortgage. In the case of Ryan v. Trustees of Shawneetown, already referred to, this question was sufficiently examined, and it is quite unnecessary to go over the ground again. It was there held that in order to create a liability upon the mortgage, it was necessary to make a loan such as was recited in the mortgage, and to guarantee which, it was executed. This bill does not show that any such loan was ever made, but, on the contrary, it shows a loan of an entirely different character. It was, however, insisted that the mortgage must be held good for one instalment of ten per cent, due on the first day of January, 1839. By reference to the mortgage it will be seen that none of .the principal of the loan was to become due till one year from that time. The words of the mortgage are, “ and paying the principal of said loan actually drawn in instalments of ten per cent, per annum, after the first day of January, 1839.” They were to make annual payments of ten per cent, after the first of January, 1839, and not before. But even admitting that one instalment of the principal or some of the interest had happened ■ to become due at the maturity of the note, still it would not make such a loan of money as the mortgagors agreed to guarantee. Without examining any other question raised upon the argument, we think the decree sustaining the demurrer should be affirmed. Decree affirmed.