Court Opinion

ID: 3135577
Source: CourtListenerOpinion
Date Created: 2015-10-22 17:39:13.28138+00
Date Added: 2024-06-11T12:09:19.817302
License: Public Domain

Docket No. 107682.

                             IN THE
                     SUPREME COURT
                                OF
                THE STATE OF ILLINOIS

JPMORGAN CHASE BANK, N.A., Appellant, v. EARTH FOODS,
       INC., et al. (Leonard S. DeFranco, Appellee).

                 Opinion filed October 21, 2010.

   JUSTICE KILBRIDE delivered the judgment of the court, with
opinion.
   Chief Justice Fitzgerald and Justices Freeman, Thomas, Garman,
Karmeier, and Burke concurred in the judgment and opinion.

                            OPINION

    In this appeal, we address whether section 1 of the Sureties Act
(740 ILCS 155/1 (West 2000)) is applicable to guarantors. JPMorgan
Chase Bank (Bank) filed suit against Earth Foods, Inc., for breach of
contract, and against Michael Jarvis, Theodore L. Petrovich, and
Leonard S. DeFranco as guarantors of a defaulted loan. DeFranco
sought protection under section 1 of the Sureties Act.
    The circuit court of Kane County granted summary judgment in
favor of the Bank on the ground that DeFranco was a guarantor, not
a surety, concluding that the Sureties Act was inapplicable. The
appellate court affirmed in part, reversed in part, and remanded,
finding that the term “surety,” as used in the Sureties Act,
encompasses both a surety and a guarantor. 386 Ill. App. 3d 316.
   We allowed the Bank’s petition for leave to appeal. 210 Ill. 2d R.
315. We now affirm in part and reverse in part the judgment of the
appellate court and remand the cause to the trial court for further
proceedings.

                          I. BACKGROUND
     In 2001, the Bank extended a line of credit to Earth Foods, Inc.
The three co-owners of Earth Foods, Michael Jarvis, Theodore
Petrowich, and Leonard DeFranco, all personally guaranteed the loan.
DeFranco was then vice president of Earth Foods. On April 3, 2003,
DeFranco sent the Bank a letter warning that Earth Foods was
depleting the inventory that was to serve as collateral for the loan and
demanding the Bank take action. Earth Foods stopped making
payments to the Bank in February 2004. On April 23, 2004, the Bank
sent a notice of default and demand for payment.
     On June 9, 2004, the Bank filed suit against Earth Foods and the
three co-owners who guaranteed the note. DeFranco moved to
dismiss the claim against him but did not dispute that he had agreed,
as “guarantor,” to pay all amounts owed by Earth Foods in the event
of Earth Foods’ default. Nonetheless, DeFranco’s answer claimed an
affirmative defense on the ground he was protected under section 1 of
the Sureties Act (740 ILCS 155/1 (West 2000)). DeFranco claimed
his guaranty obligation was discharged under the Sureties Act because
the Sureties Act “applies to guarantors as well as sureties” and “[t]he
law places no distinction” between guarantors and sureties. DeFranco
maintained that the Bank was estopped from seeking payment from
him because he notified the Bank that Earth Foods was operating at
a financial loss.
     On May 4, 2006, the Bank filed a motion for summary judgment
against DeFranco. In his response to the Bank’s motion for summary
judgment, DeFranco stated, “The issue is not whether or not Mr.
DeFranco understood the guaranty at the time that he signed it. The
real issue is whether the bank is precluded from collecting on the
guarantee.” (Emphasis omitted.) The circuit court granted the Bank’s
motion for summary judgment, holding that the Sureties Act does not
extend to guarantors.
     The appellate court reversed, holding that guarantors may seek

                                  -2-
protection under the Sureties Act. 386 Ill. App. 3d 316. The appellate
court recognized that the relevant question here is the meaning of the
word “surety” in section 1 of the Sureties Act. The appellate court
acknowledged that the term “surety” has two meanings. The court
explained that “surety” “is sometimes used to refer to any situation in
which a person agrees to be liable for the debt of another, whether the
liability is primary as a surety or secondary as a guaranty, and it is
sometimes used to refer strictly to a surety who is primarily liable.”
386 Ill. App. 3d at 321. The court further acknowledged that the
terms “surety” and “guarantor” have distinct meanings but found,
however, that the distinction appears largely academic. 386 Ill. App.
3d at 321-22. The court also relied on the policy it discerned as
underlying the Act–to compel diligence by a creditor to make certain
a surety is protected against loss–applies equally to sureties and to
guarantors and on its belief that the word “surety” is used in the Act
without any words of limitation or explanation. 386 Ill. App. 3d at
322-23. The court ultimately determined that the legislature’s use of
the word “surety” was intended “in its general sense.” 386 Ill. App. 3d
at 323. In reaching its decision, the appellate court relied on a case
from the United States Court of Appeals for the First Circuit,
Continental & Commercial Nat. Bank of Chicago v. Cobb, 200 F.
511 (1st Cir. 1912), interpreting section 1 of the Sureties Act as
applying to guarantors. The appellate court therefore remanded the
cause for further proceedings to determine whether DeFranco could
benefit from the Act, given the facts of this case. 386 Ill. App. 3d at
324.

                          II. ANALYSIS
    We review the appellate court’s reversal of the circuit court’s
grant of summary judgment in favor of the Bank. Summary judgment
is appropriate only when “the pleadings, depositions, and admissions
on file, together with the affidavits, if any, show that there is no
genuine issue as to any material fact and that the moving party is
entitled to a judgment as a matter of law.” 735 ILCS 5/2–1005(c)
(West 2000). We review de novo the propriety of a circuit court’s
grant of summary judgment. Williams v. Manchester, 228 Ill. 2d 404,
417 (2008).
    Whether the circuit court properly granted summary judgment in

                                 -3-
favor of the Bank turns on the interpretation of section 1 of the
Sureties Act (740 ILCS 155/1 (West 2000)). We review de novo an
issue of statutory construction. Boaden v. Department of Law
Enforcement, 171 Ill. 2d 230, 237 (1996).

      A. Statutory Construction of Section 1 of the Sureties Act
     Our primary objective in construing a statute is to ascertain and
give effect to the intent of the legislature. MidAmerica Bank, FSB v.
Charter One Bank, FSB, 232 Ill. 2d 560, 565 (2009). The plain
language of a statute is the most reliable indication of legislative
intent. DeLuna v. Burciaga, 223 Ill. 2d 49, 59 (2006). “[W]hen the
language of the statute is clear, it must be applied as written without
resort to aids or tools of interpretation.” DeLuna, 223 Ill. 2d at 59.
The statute should be read as a whole and construed “so that no term
is rendered superfluous or meaningless.” In re Marriage of Kates, 198
Ill. 2d 156, 163 (2001). We do not depart from the plain language of
a statute by reading into it exceptions, limitations, or conditions that
conflict with the legislative intent. Harrisonville Telephone Co. v.
Illinois Commerce Comm’n, 212 Ill. 2d 237, 251 (2004).
     The Bank contends that the appellate court erred in looking to the
“popularly understood” meaning of “surety,” as opposed to its
meaning in 1874, when the Sureties Act was enacted. Conversely,
DeFranco contends that the Bank has waived or forfeited its argument
that the term “surety” must be interpreted in light of its meaning at the
time the Sureties Act was enacted in 1874.
     The Bank’s argument that the term “surety” must be interpreted
in light of its meaning at the time the Sureties Act was enacted
involves canons of statutory construction. Canons of statutory
construction cannot be forfeited because they are not arguments. They
are the principles that guide this court’s construction of statutes.
Canons of statutory construction are utilized in every statutory
construction case whether a party raises them or not. To hold that
canons of statutory construction are subject to forfeiture would mean
that this court’s construction of a particular statute could change from
case to case depending on whether a party cited a particular cannon.
This obviously cannot be so. Accordingly, we reject DeFranco’s
argument that the Bank waived or forfeited its contention that the

                                  -4-
term “surety” must be interpreted in light of its meaning at the time
the Sureties Act was enacted in 1874.
     This court has long recognized the fundamental rule of statutory
construction that “ ‘[s]tatutes are to be construed as they were
intended to be construed when they were passed.’ ” O’Casek v.
Children’s Home & Aid Society of Illinois, 229 Ill. 2d 421, 441
(2008), quoting People v. Boreman, 401 Ill. 566, 572 (1948).
Additionally, we look to the well-known meaning of statutory terms
at the time the law was passed. People v. Bailey, 232 Ill. 2d 285, 290
(2009), citing Case v. Los Angeles Lumber Products Co., 308 U.S.
106, 115, 84 L. Ed. 110, 119, 60 S. Ct. 1, 7 (1939). See also 2A N.
Singer, Sutherland on Statutory Construction §46:04, at 152-53 (6th
ed. 2000) (“if the term utilized [in a statute] has a settled legal
meaning, the courts will normally infer that the legislature intended to
incorporate the established meaning”). Moreover, “statutes in
derogation of common law are to be strictly construed and nothing is
to be read into such statutes by intendment or implication.” Summers
v. Summers, 40 Ill. 2d 338, 342 (1968). “Even if a statute has remedial
features but is in derogation of the common law, it will be strictly
construed when determining what persons come within its operation.”
In re W.W., 97 Ill. 2d 53, 57 (1983), citing Cedar Park Cemetery
Ass’n, Inc. v. Cooper, 408 Ill. 79, 82-83 (1951); Lites v. Jackson, 70
Ill. App. 3d 374, 376 (1979).
     We begin by examining the history of the Sureties Act. On March
24, 1819, the legislature passed “AN ACT providing for the relief of
securities in a summary way in certain cases” (hereafter, Securities
Act) Ill. Laws 1819, at 243. In 1819, section 1 of the Securities Act
provided:
         “That when any person or persons shall hereafter become
         bound as security or securities by bond, bill or note, for the
         payment of money or other property, shall apprehend that his
         or their principal debtor or debtors is or are likely to become
         insolvent, or to migrate from this state, without previously
         discharging such bond, bill, or note, so that it will be
         impossible or extremely difficult for such security or securities,
         after being compelled to pay the money or other property due
         by such bond, bill or note, to recover the same back from such
         principal debtor or debtors, it shall and may be lawful for such

                                   -5-
        security or securities in every such case, provided an action
        shall have accrued on such bond, bill, or note, to require by
        notice in writing of his, her, or their creditor or creditors or his
        or their assignee, forthwith to put the bond, bill, or note, by
        which he, she, or they may be bound as security or securities,
        as aforesaid, in suit; and unless such creditor or creditors or
        assignee, so required, to put such bond, bill, or note in suit,
        shall in a reasonable time, commence action on such bond, bill
        or note, and proceed with due diligence in the ordinary course
        of law, to recover a judgment for and by execution, to make
        the amount due by such bond, bill or note, the creditor or
        creditors, or assignee so failing to comply with the requisitions
        of such security or securities, shall thereby forfeit the right
        which he or they otherwise have to demand and receive of
        such security or securities, the amount which be due by such
        bond, bill or note.” Ill. Laws 1819, at 243-44, §1.
The Securities Act was amended in 1829, 1833, and 1845. See Ill.
Laws 1829, at 155, §1; Ill. Laws 1833, at 570, §1; Ill. Laws 1845, at
493, §1. The substance of section 1 of the Securities Act, however,
remained the same in the 1845 version and in the 1819 version.
    On February 27, 1874, the legislature passed “An Act to revise the
law in relation [to] sureties” (hereafter, the Sureties Act). Ill. Rev.
Stat. 1874, ch. 132, par. 1. In 1874, section 1 of the Sureties Act
read:
            “That when any person bound as surety for another for the
        payment of money, or the performance of any other contract
        in writing, apprehends that his principal is likely to become
        insolvent or to remove from the state, without discharging the
        contract, if a right of action has accrued on the contract, he
        may, by writing, require the creditor forthwith to sue upon the
        same; and unless such creditor shall within a reasonable time,
        and with due diligence, commence suit thereon, and prosecute
        the same to final judgment and execution, the surety shall be
        discharged; but no such discharge shall in any case affect the
        rights of the creditor against the principal debtor.” Ill. Rev.
        Stat. 1874, ch. 132, par. 1.
The 1874 version of the Sureties Act changed the term “securities” to
“sureties” and updated the language of the Act. The substance of the

                                    -6-
Act, however, remained the same, that is, providing that a surety may,
by notice in writing, require the creditor to sue the principal, and if the
creditor fails to sue, the creditor forfeits the right of action against the
surety.
    The language of the Sureties Act was updated in 1985, to provide
as follows:
             “When any person is bound, in writing, as surety for
        another for the payment of money, or the performance of any
        other contract, apprehends that his principal is likely to
        become insolvent or to remove himself from the state, without
        discharging the contract, if a right of action has accrued on the
        contract, he may, in writing, require the creditor to sue
        forthwith upon the same; and unless such creditor, within a
        reasonable time and with due diligence, commences an action
        thereon, and prosecutes the same to final judgment and
        proceeds with the enforcement thereof, the surety shall be
        discharged; but such discharge shall not in any case affect the
        rights of the creditor against the principal debtor.” Ill. Rev.
        Stat. 1985, ch. 132, par. 1.
Although the language of section 1 of the Sureties Act and its
predecessor was updated in 1874 and in 1985, the substance of the
Act has remained the same since 1819. We now consider whether the
General Assembly intended that the Act provide relief to guarantors.
    This court has recognized that dictionary definitions are reliable
indicators of the meaning of an undefined statutory term. Price v.
Philip Morris, Inc., 219 Ill. 2d 182, 243 (2005). Legal dictionaries
during the relevant time articulated a distinction between a
“guarantor” and a “surety.” One pre-1900 dictionary defined
“guaranty” as “to undertake collaterally to answer for the payment of
another’s debt or the performance of another’s duty, liability, or
obligation,” and a “surety” as “one who *** becomes responsible for
the performance [of the principal] of some act.” (Emphasis added.) H.
Black, A Law Dictionary Containing Definitions of the Terms &
Phrases of American & English Jurisprudence 550, 1127 (1891). A
1901 edition of a relevant dictionary defined “guaranty” as “a
collateral undertaking to pay the debt of another,” and a “contract of
suretyship” as a “direct liability for the act to be performed by the
debtor.” (Emphases added.) W. Shumaker & G. Longsdorf, The

                                    -7-
Cyclopedic Dictionary of Law Comprising the Terms and Phrases of
American Jurisprudence 423 (1901).
    Nevertheless, most treatises have recognized a guaranty as a form
of suretyship. One such treatise explained:
        “The term suretyship is frequently employed in a narrow,
        technical or specific sense, usually to distinguish it from that
        particular form of suretyship in its broad sense known as
        guaranty. Frequently this distinction is not important to be
        made, as the same rules often govern the relations of the
        parties whether a given transaction is strictly and technically
        a suretyship or a guarantee, and courts and text writers
        frequently use either term to describe the same contract with
        little or no regard to any technical differences or distinctions
        between them.” E. Spencer, The General Law of Suretyship
        §3, at 3-4 (1913).
Another, more recent, treatise defined suretyship broadly, as “a
contractual relation whereby one person engages to be answerable for
the debt or default of another. Within this broad definition fall
contracts of guarantors and indorsers, as well as those of sureties in
the restricted sense.” J. Elder, Stearns Law of Suretyship 1 (1951).
    These treatises, however, also articulated a clear distinction
between a “guarantor” and a “surety.” One treatise, remarking on the
distinction between sureties and guarantors, stated: “the two classes
of contracts should not be confounded, and that the rules of law
applicable to only one, should not be applied indiscriminately to
either.” E. Baylies, A Treatise on the Rights, Remedies & Liabilities
of Sureties & Guarantors 5 (1881). See also G. Brandt, The Law of
Suretyship and Guaranty §2, at 9 (1905) (“The words surety and
guarantor are often used indiscriminately as synonymous terms; but
while a surety and a guarantor have this in common, that they are both
bound for another person, yet there are points of difference between
them which should be carefully noted”).
    While these treatises recognized a guaranty as a form of
suretyship, all of these treatises drew a clear distinction between the
terms “surety” and a “guaranty” in the technical sense when describing
the specific undertakings. As one treatise explained in distinguishing
suretyship in its narrow or specific sense from guaranty:

                                  -8-
       “Still, a distinction between suretyship and guaranty must
       often be drawn as the same principles do not always apply to
       both undertakings. A surety, strictly speaking, is one who is
       bound with the principal, usually jointly or jointly and
       severally, by or upon the same contract or instrument. While
       both guaranty and suretyship are undertakings for the debt or
       default of another and hence accessory, a strict suretyship is
       a primary and direct undertaking, while a guaranty is
       secondary and collateral.” (Emphases added.) E. Spencer,
       The General Law of Suretyship §3, at 3-4 (1913).
G. Brandt, The Law of Suretyship and Guaranty §2, at 9-10 (1905),
explained the difference between surety and guarantor as follows:
       “A surety is usually bound with his principal by the same
       instrument, executed at the same time and on the same
       consideration. He is an original promisor and debtor from the
       beginning, and is held ordinarily to know every default of his
       principal. Usually the surety will not be discharged, either by
       the mere indulgence of the creditor to the principal, or by want
       of notice of the default of the principal, no matter how he may
       be injured thereby. On the other hand, the contract of the
       guarantor is his own separate undertaking, in which the
       principal does not join. It is usually entered into before or after
       that of the principal, and is often founded on a separate
       consideration from that supporting the contract of the
       principal. The original contract of the principal is not the
       guarantor’s contract, and the guarantor is not bound to take
       notice of its non-performance. The guarantor is often
       discharged by the mere indulgence of the creditor to the
       principal, and is usually not liable unless notified of the default
       of the principal.”
    Another treatise described the distinction between the obligation
suretyship and guarantee as:
       “the surety undertakes to pay if the principal does not; while
       the guarantor undertakes to pay if the principal cannot; that is,
       if he is insolvent and unable to pay. The surety is directly liable
       to the creditor for the act to be performed, while the guarantor
       is liable only for the ability of another to perform the act. The
       undertaking under suretyship is immediate and direct that the

                                   -9-
       act shall be done; if not done, the surety becomes at once
       responsible. In the case of guaranty, nonliability of the debtor,
       that is, his insolvency, must first be shown before the
       guarantor becomes liable.” D. Pingrey, A Treatise on the Law
       of Suretyship and Guaranty §4, at 3 (1901).
   This clear distinction between the obligations of sureties and
guarantors continued to exist even in 1922, when Corpus Juris stated:
       “A guaranty is like a suretyship in the sense that it is an
       engagement to answer for the debt, default, or miscarriage of
       another, and for this reason the terms ‘surety’ and ‘guarantor’
       or ‘guaranty’ are often confounded and used interchangeably.
       The two subjects, however, have some important
       distinguishing features ***.
           *** While each is, as to the principal, collaterally liable as
       to the creditor or obligee the surety is primarily and directly
       liable on his contract from the beginning, whereas the
       liability of the guarantor is secondary and is fixed only by the
       happening of the prescribed condition at a time after the
       contract itself is made. A surety is bound with the principal on
       the identical contract under which the liability of the principal
       accrues; a guarantor becomes bound for the performance of a
       prior or collateral contract upon which the principal alone is
       obligated. The contract of the surety is made at the same time
       and usually jointly with that of his principal; while that of the
       guarantor is a contract separate and distinct from that of his
       principal, it may be made at the same time and upon the same
       consideration, but it usually is made later and upon a separate
       consideration. The contract of the surety is a direct original
       agreement with the obligee that the very thing contracted for
       shall be done, whereas a guarantor enters into a cumulative
       collateral engagement, by which he agrees, that his principal
       is able to and will perform a contract which he has made or is
       about to make, and that if he defaults the guarantor will, upon
       being notified thereof, pay the resulting damages. A surety is
       an insurer of the debt or obligation, while a guarantor is an
       insurer of the ability or solvency of the principal.” (Emphases
       added.) 28 C.J. §§ 4, 5, at 890-91 (1922).
   Moreover, this court has reinforced this acknowledged distinction

                                  -10-
between guarantors and sureties. In Gridley v. Capen, 72 Ill. 11
(1874), this court recognized the distinction between guarantors and
sureties:
              “The definition of a guaranty, by text-writers, is, an
         undertaking by one person that another shall perform his
         contract or fulfil his obligation, or that, if he does not, the
         guarantor will do it for him. A guarantor of a bill or note is
         said to be one who engages that the note shall be paid, but is
         not an indorser or surety.” (Emphases added.) Gridley, 72 Ill.
         at 13.
     Similarly, in Vermont Marble Co. v. Bayne, 356 Ill. 127 (1934),
this court recognized:
         “ ‘The terms “suretyship” and “guaranty” are often
         confounded from the fact that the guarantor is in common
         acceptation a surety for another. The true distinction seems to
         be that a surety is in the first instance answerable for the debt
         for which he makes himself responsible, while a guarantor is
         only liable where default is made by the party whose
         undertaking is guaranteed.’ ” (Emphasis added.) Vermont
         Marble Co., 356 Ill. at 132, quoting 27 Am. & Eng. Ency. of
         Law 432, 433 (2d ed.).
     Additionally, we note that many treatises shed light on statutory
provisions giving sureties the right to compel the creditor to sue the
principal. As one treatise explained:
         “At common law the surety generally had no right to compel
         the creditor to take action against the principal after the
         maturity of the obligation. Accordingly, the surety was not
         discharged because of the creditor’s neglect or failure to sue
         the principal when requested to do so by the surety.” J. Elder,
         The Law of Suretyship §6.38, at 165.
This treatise then states that many jurisdictions passed statutes similar
to Illinois’ Sureties Act and that it was generally held the statute must
be strictly followed, because the statute was in derogation of the
common law. J. Elder, The Law of Suretyship §6.38, at 168.
     Another, even older, treatise recognized that such statutes have
only applied to sureties, in the limited definition of that term, and that
such statutes did not contemplate indorsers or accommodation

                                  -11-
indorsers as sureties. G. Brandt, The Law of Suretyship and Guaranty
§771, at 1350 (1905). In fact, this treatise notes one of our own cases
that held a party could not avail himself of the statute when the note
did not indicate the fact of suretyship. G. Brandt, The Law of
Suretyship and Guaranty §771, at 1350 (1905), citing Payne v.
Webster, 19 Ill. 102 (1857). This treatise cites another Illinois case in
stating that such “[s]tatutes for the acceleration of suits against
principals apply only to conventional suretyship.” G. Brandt, The Law
of Suretyship and Guaranty §202, at 518 (1905), citing Fish v.
Glover, 154 Ill. 86 (1894). In Fish, this court held that the statute had
no application to cases when the relation of the principal and surety
arises by implication, and specifically stated that this statute “refers to
contracts in writing binding sureties, and not to contracts of suretyship
arising by implication.” Fish, 154 Ill. at 94.
    Thus, the legal dictionaries, treatises, and court decisions have
recognized a clear legal distinction between guarantors and sureties
for nearly two centuries. The weight of relevant authority on this
question is highly instructive in our consideration of the legislature’s
intent in passing the Act.
    When discerning legislative intent, it is also proper to compare
statutes relating to the same subject matter as well as statutes “upon
related subjects though not strictly in pari materia” because “statutes
are to be read in the light of attendant conditions and the state of the
law existent at the time of their enactment.” Boreman, 401 Ill. at 571-
72. In 1895, the General Assembly added “guarantors” but not
“sureties” in the existing Actions to Enforce Payment Act:
             “Whenever the drawer or endorser of an accepted bill of
         exchange, or the endorser or guarantor of a promissory note
         shall have been joined with the acceptor of said bill or the
         maker of said note in a suit to enforce the collection thereof,
         and judgment has been recovered against any such drawer,
         endorser or guarantor who shall thereafter pay the same, the
         person so paying shall be entitled to have the judgment
         released as to him, but the same shall, at his option, stand and
         may be enforced by execution under the order of the court
         against any other party thereto who remains liable to the party
         paying as upon said bill or note, for the reimbursement of the
         party so paying.” (Emphases added.) 1895 Ill. Laws 263, §4,

                                   -12-
          codified at 815 ILCS 115/4.
Our appellate court subsequently held that the Actions to Enforce
Payment Act protected only guarantors and not sureties. See Harris
v. Harris, 92 Ill. App. 455, 457 (1900). Thus, the distinction between
sureties and guarantors is well established in Illinois jurisprudence. We
note that decisions of our sister states issued prior to 1900 also
recognized the legal and practical distinction between guarantors and
sureties. See, e.g., Gaff v. Sims, 45 Ind. 262, 264-65 (1873) (“[t]here
are important differences between the contract of suretyship and that
of guaranty”); Reigart v. White, 52 Pa. 438, 440 (1866) (“the best
solution of the difference [between a surety and guarantor is]; a
contract of suretyship being a direct liability *** and a guaranty being
a liability only for his ability to perform this act”); Allen v. Herrick, 81
Mass. 274, 285 (1860) (“The liability of a guarantor is not fixed and
absolute until the party primarily liable on the contract has failed to
perform it,” and “[u]ntil such failure, the obligation of the guarantor
is strictly collateral and contingent, and this constitutes the chief
distinction between a contract of guaranty simply and that of principal
and surety”); Perry v. Barret, 18 Mo. 140, 146 (1853) (holding that
the trial court erred in its instructions, treating the case as one of
suretyship, and not as one of guarantee).
     We also note that even more recent decisions of other states
interpreting similar pre-1900 statutory provisions have held that
guarantors cannot seek protection under provisions intended to
protect only sureties. See State Bank of Burleigh County v. Porter,
167 N.W.2d 527 (N.D. 1969) (interpreting statute enacted in 1877
and holding that guarantor cannot seek protection under sureties
provision); Bishop v. Currie-McGraw Co., 97 So. 886, 888-89 (Miss.
1923) (interpreting statute enacted in 1857 and holding that the term
“surety” does not encompass guarantors). While these authorities are
not binding on this court, we find them highly instructive on the
generally understood differences between a guarantor and a surety at
the time our legislature enacted the Sureties Act. Based on these and
our earlier cited authorities, we are compelled to conclude that our
legislature meant to include only sureties, meaning those who are
primarily and directly liable for a debt, not guarantors, those who are
only liable when the principal defaults on the debt, in the Act’s
protections.

                                   -13-
    Nonetheless, the appellate court relied on Cobb, 200 F. 511, in
determining that the legislature intended the term “surety” in its most
general sense of that term. In Cobb, the First Circuit noted that the
term “surety” had both a special sense and a general sense but
disagreed with the plaintiff’s argument that the legislature intended the
special sense:
        “This is altogether too narrow a construction of a remedial
        statute to meet the approval of any court of justice. The word
        ‘surety’ is a generic word, while ‘guaranty’ is specific.
        Guarantors have certain specific protected rights which other
        sureties do not have; but they are entitled to every equitable
        right of protection which any surety has.” Cobb, 200 F. at
        515.
    The problem with the Cobb court’s analysis is that the Sureties
Act does not specifically give guarantors any protected rights.
Additionally, while guarantors may be entitled to equitable rights of
protection, as noted in Cobb, the Sureties Act provides a statutory
right.
    Moreover, the Cobb court glossed over the decision in Ross v.
Jones, Brown & Co., 89 U.S. (Wall.) 576, 22 L. Ed. 730 (1875). In
Ross, the United States Supreme Court held that an indorser of a note
is not a “person bound as security,” within the meaning of an
Arkansas statute strikingly similar to the Sureties Act. The Arkansas
statute provided:
            “SECTION 1. Any person bound as security for another
        in any bond, bill, or note, for the payment of money, or the
        delivery of property, may, at any time after action hath
        accrued thereon, by notice in writing, require the person
        having such right of action forthwith to commence suit against
        the principal debtor and other party liable.
            SECTION 2. If such suit be not commenced within thirty
        days after the service of such notice, and proceeded in with
        due diligence, in the ordinary course of law, to judgment and
        execution, such security shall be exonerated from liability to
        the person notified.” Gould’s Digest, 1015.
    In holding that the indorser of a note or bill is not a surety within
the meaning of the Arkansas statute, the Supreme Court reasoned:

                                  -14-
              “Indorsers, it is sometimes said, are sureties, but their
         contract, which is a new one as compared with the maker of
         the note, differs in some important respects from that of the
         surety, who is a joint promisor with the principal, as the holder
         of such an instrument is under no obligation to use diligence
         to enforce payment against the maker in order to hold the
         indorser.” Ross, 89 U.S. (Wall.) at 588, 22 L. Ed. at 734.
The Supreme Court further explained:
              “Evidently the statute contemplates that the cause of
         action will accrue against the principal and surety at the same
         time, which is never the case with the indorser and maker.
         Such a notice may unquestionably be given by a surety proper,
         whether his contract is expressed in a bond, bill, or note, as
         soon as the instrument falls due; but it would be unreasonable
         to suppose that an indorser would give such a notice before
         his liability had become fixed, as it may be that such a demand
         to sue would operate as waiver of the right to notice of the
         dishonor of the note. Nor is it necessary to extend the
         operation of the statute so as to include an indorser, in order
         to satisfy the literal scope of the language employed. ‘Persons,
         bound as security for another,’ are the words of the statute,
         which undoubtedly includes sureties proper in a bond, bill, or
         note, but it would be extending the words of the statute
         beyond their reasonable meaning, to hold that it includes an
         indorser whose liability is fixed by the required notice of the
         dishonor of the bill or note.” Ross, 89 U.S. (Wall.) at 591, 22
         L. Ed. at 735.
     The Supreme Court then recognized that the Arkansas statute was
passed in derogation of the common law and should be construed
strictly. Ross, 89 U.S. (Wall.) at 591-92, 22 L. Ed. at 735.
Accordingly, the Court held that an indorser is not a surety within the
meaning of the Arkansas statute. Ross, 89 U.S. (Wall.) at 594, 22 L.
Ed. at 736. Our construction of the Sureties Act is consistent with
Ross.
     We acknowledge that the appellate court gave two other bases for
its holding: (1) that the policy behind the Act–to compel diligence by
a creditor to make certain a surety is protected against loss–applies
equally to sureties and to guarantors; and (2) that the word “surety”

                                  -15-
is used in the Act without any words of limitation or explanation.
However, given the clear weight of authority that drew a distinction
between guarantors and sureties at the relevant time, these reasons are
not sufficient to convince us that the legislature meant to use the term
“surety” in its general sense.
     In sum, a suretyship differs from a guaranty in that a suretyship is
a primary obligation to see that the debt is paid, while a guaranty is a
collateral undertaking, an obligation in the alternative to pay the debt
if the principal does not. We hold that the General Assembly did not
intend the term “surety” to include guarantors and, therefore, the
protections afforded under this plain language chosen by the
legislature in the Sureties Act are not applicable to guarantors.
Accordingly, we reverse that part of the appellate court judgment
holding that the Sureties Act applies to guarantors.

  B. Whether the Trial Court Properly Entered Summary Judgment
     We next consider whether the trial court properly entered
summary judgment in favor of the Bank. We reiterate that summary
judgment is appropriate only when “the pleadings, depositions, and
admissions on file, together with the affidavits, if any, show that there
is no genuine issue as to any material fact and that the moving party
is entitled to a judgment as a matter of law.” 735 ILCS 5/2–1005(c)
(West 2000).
     DeFranco contends, for the first time in his brief to this court, that
he is a surety and not a guarantor or, “at the very least, a dispute
remains over whether DeFranco stands as a surety or guarantor.” The
Bank contends that DeFranco “forfeited this argument by judicial
admission” by repeatedly referring to himself as a “guarantor” in the
trial court pleadings. This is not a true forfeiture argument. Forfeiture
is the failure to comply timely with procedural requirements in
preserving an issue for appeal. See Gallagher v. Lenart, 226 Ill. 2d
208, 229 (2007). Likewise, we reject the judicial admission argument
because the issue of whether DeFranco is a guarantor or a surety is a
mixed question of law and fact. Judicial admissions are “deliberate,
clear, unequivocal statements by a party about a concrete fact within
that party’s knowledge.” In re Estate of Rennick, 181 Ill. 2d 395, 406
(1998). A party is not bound by admissions regarding conclusions of
law because the courts determine the legal effect of the facts adduced.

                                   -16-
People ex rel. Department of Public Health v. Wiley, 218 Ill. 2d 207,
223 (2006) (holding a party not bound by a statement in a complaint
that an installment agreement was a settlement agreement). Moreover,
DeFranco has contended that a guarantor and a surety are the same
under the Act, making his choice of label irrelevant to a determination
of his true status.
    DeFranco contends that the circuit court erred in entering
summary judgment in favor of the Bank because the contract language
of the signed instrument made him a surety and, therefore, the Sureties
Act is applicable, despite the use of the word “guarantee” in the
instrument. We agree with DeFranco that the use of the terms
“guarantee” or “surety” in an instrument “does not necessarily
determine whether the liability intended to be created was that of a
guarantor or a surety.” Vermont Marble Co., 356 Ill. at 131. Rather,
when viewed as a whole along with any other evidence of the parties’
intentions and the circumstances, a written instrument such as the one
DeFranco signed may be construed to create a suretyship despite its
use of the term “guarantee.”
    Indeed, this court has expressly recognized that parol evidence
may be used to determine whether a suretyship exists, even when a
party “ ‘insists upon a strict construction of the word “guarantee,”
contained in its contract.’ ” Vermont Marble Co., 356 Ill. at 133,
quoting with approval Border Nat. Bank of Eagle Pass v. American
Nat. Bank of San Francisco, 282 F. 73, 78 (5th Cir. 1922). As this
court explained,
         “ ‘to ignore the circumstances in which [the word
         “guarantee”] was used is to attach too much importance to
         it. It is a word which is frequently employed in business
         transactions which do not provide for securing the promise or
         debt of another, to express an original primary obligation. The
         promise in which the word appears is to be construed in the
         light of the evidence and as a whole.’ ” (Emphases added.)
         Vermont Marble Co., 356 Ill. at 133, quoting Border Nat.
         Bank, 282 F. at 78.
Thus, “[t]he question is one of [the parties’] intention[s] and depends
upon the circumstances,” permitting the court to consider factual
matters outside the language of the document to determine the true
nature of the relationship intended between the parties. (Emphasis
added.) Vermont Marble Co., 356 Ill. at 133. See also E. Spencer,

                                 -17-
The General Law of Suretyship §92, at 123 (“Where the language of
a contract of guarantee or suretyship is ambiguous and susceptible of
more than one interpretation, parol evidence will be freely admitted as
in the case of other written contracts”).
    In Tinker v. Catlin, 205 Ill. 108, 118-19 (1903), this court
considered whether the appellants fell within the protections of a
statute releasing sureties from liability if the creditors did not timely
raise a debt. In analyzing that issue, this court comprehensively
reviewed the relevant parol evidence, including the facts leading up to
the creation of the documents that allegedly formed a suretyship with
an appellant. Tinker, 205 Ill. at 121 (“[n]or do we think appellant ***
has established, by the evidence, any such contract as would create the
relation of principal maker and surety between him and [another
party]” (emphasis added)). Thus, the more general meaning of the
word “guarantee” often used in business contexts may require courts
to consider evidence outside the language used in the document to
determine whether the parties intended to create a guaranty or surety.
    Here the case was decided on summary judgment, denying both
the parties and trial court the benefit of the full development of
DeFranco’s argument about whether the parties intended him to be a
surety even though the written agreement referred only to a
“guarantee.” In the absence of the full development of DeFranco’s
current argument, the trial court never had the opportunity to rule on
the merits of this position.
    Because genuine issues of material fact remain over whether the
parties intended that DeFranco stand as a surety or guarantor under
his agreement with the Bank, we hold that the circuit court
erroneously entered summary judgment in favor of the Bank. We
therefore affirm that part of the appellate court judgment holding that
the trial court erred in entering summary judgment in favor of the
Bank. We remand the cause to the trial court for further proceedings
to determine the intent of the parties from the language and
circumstances of the agreement.

                         III. CONCLUSION
    For the foregoing reasons, we affirm in part and reverse in part the
judgment of the appellate court, reverse the judgment of the circuit
court, and remand the cause to the circuit court for further
proceedings.

                                  -18-
Appellate court judgment affirmed in part
                    and reversed in part;
         circuit court judgment reversed;
                         cause remanded.

      -19-