Court Opinion

ID: 6961694
Source: CourtListenerOpinion
Date Created: 2022-07-24 01:46:43.110655+00
Date Added: 2024-06-11T16:08:27.681610
License: Public Domain

Mr. Chief Justice Scott delivered the opinion of the Court: The claim which the Workingmen’s Banking Company seek to have established against the estate of Charles Rautenberg, deceased, is based on a note made by A. B. Pope, dated February 8, 1876, and is payable to the order of the Workingmen’s Banking Company, nine months after date, for the sum of $2000, with interest after maturity at ten per cent per annum. Payment of the note is guaranteed by A. B. Pope and by the intestate. No proceedings seem to have been had against A. B. Pope, either as maker or guarantor of the note. So far as this record discloses, the only effort to enforce payment of the note is this proceeding against the estate of the deceased guarantor, and which was commenced in the usual way in the county court where his estate is being administered. In all the courts in which the case was tried the finding was in favor of the estate, and the case comes to this court on the appeal of the banking company from the Appellate Court for the Fourth District, where the judgment of the circuit court was affirmed. Proof of the execution of the note and guaranty being waived, claimant gave the note, with the guaranty of the intestate and maker written on the back, in evidence, and rested its case. The administratrix, defending for the estate, then gave in evidence a section of the charter of the bank, as follows: “No director of said corporation shall be indebted to said corporation, either'directly or indirectly, at any time, to an amount greater than seventy-five per centum of the amount of the capital stock held by such director in good faith as his own. ” It was proved by the cashier of the bank, that at the time of making the loan, and of the execution of the note and guaranty to secure the same, A. B. Pope, to whom the money was loaned, was a director and stockholder in the bank, and so continued until after the note became due, and was at the time, and so continued to be, indebted to the bank in a sum, exclusive of that mentioned in the note guaranteed by the intestate, in excess of seventy-five per centum of the capital stock held by the maker. The circuit court found for the estate, on the ground the lending of the money to Pope, and taking his note therefor, was prohibited by statute, and hence illegal, and as the guaranty was in aid and furtherance of such illegal contract, no recovery could be had on it against the estate of the guarantor. That finding is warranted both by the law and the evidence. It is clear the loan'-made to Pope by the bank was prohibited by the provisions of its charter, and was made in open violation of the limitations on its powers, and whatever may be the decisions elsewhere, no recovery can be had on the note in this State. The case of Penn v. Bornman, 102 Ill. 523, in this respect is an analogous case, and is conclusive as to this point in this case. ' But another consideration is pressed on the attention of the court. It is, conceding the section of the charter cited can be interposed as a defence to the note, it is a privilege personal to the maker, and is a defence that can not bb availed of by the guarantor, with whom the law did not forbid the bank to contract. No principle is suggested upon which the position taken can be maintained. The bank, which is the claimant here, was a party to an illegal contract understandingly entered into. It was- not lawful to loan the money to the maker of the note, who was a director of the corporation, and who was already owing the bank a sum in excess of the amount it was lawful for him to become indebted 'to it. The bank will not be permitted to do indirectly that which it is unlawful for it to do directly. The inhibition of its charter in this respect is absolute and positive. Should the bank be allowed to enforce payment of the note against the guarantor, who was not one of its directors nor the owner of any of its stock, it would be to the advantage of the party most guilty, and the only party innocent in the illegal transaction would be made to suffer. The law will sanction no such wrong. The rule is well settled, at least in this State, the court will not assist either party to an illegal transaction in any respect, but will leave them where they have chosen to place themselves. Here, claimant participated in a transaction forbidden by statute, with the expectation to make gain, and it will not be listened to when it asks the aid. of a court to assert rights growing out of such transaction as if it were a legal contract. It is a case where the familiar maxim of the law “ex turpi causa non oritur actio,” has its appropriate application. Arter v. Byington, 44 Ill. 468; Neustadt v. Hall, 58 id. 172; Harris v. Hatfield, 71 id. 298. The judgment of the Appellate Court will be affirmed. Judgment affirmed.