Home National Bank v. Estate of Waterman

Citations

• 134 Ill. 461

Syllabus

<p>1. Contract—original or collateral—contract of guaranty. A written agreement on the part of certain stockholders of a private corporation, with a bank, which held the notes of the corporation to the amount of $20,000, secured by certain collaterals, guaranteed the bank that if it would give up such collaterals to the corporation they should be replaced, or if not, the bank should be paid by a day named, which .guaranty was accepted and acted upon : Held, that the contract of the ¡signers of the agreement was that of guarantors, and that such guaranty was collateral to the debt of the corporation, which still subsisted.</p> <p>2. Same—original or collateral contract—the rule for determining. Whether an engagement is original or collateral, is to be determined not alone from the particular words used, but from a consideration of both the terms of the contract and the circumstances of the transaction.</p> <p>3. If the original indebtedness is extinguished, as, when the creditor surrenders his debt or demand against his original debtor and accepts the promise of a third person as a substitute therefor, such new promise is an original and direct undertaking, and binding on the maker in the first instance, and at all events. When there is no continuing liability of the original debtor, there is nothing to which a promise of another can be collateral.</p> <p>4. Same—promiseof stockholder to pay debt of corporation. A corporation and its stockholders are not one and the same, so that a promise by a stockholder to pay a corporation debt isjin every sense, a promise to pay the debt of another.</p> <p>5. Surety—release—extension of time. If a creditor, by a valid and binding agreement, without the assent of a surety, gives further time for payment to the principal debtor, the surety will be discharged.</p> <p>6. Same—surety indemnified■—extension of time no release. A surety who is fully secured by property in his hands is estopped from objecting to any enlargement of the t