Second National Bank v. Diefendorf

Citations

• 90 Ill. 396

Syllabus

<p>1. Guaranty—guarantor liable only to person to whom he makes the guaranty. Where a party draws a draft on one for the price of grain bought for him, in favor of one who is to advance the money with which to pay for the grain, and the payee requires a guaranty of protection before advancing the money, and the drawee procures a third person to make the guaranty, which is made to the payee, to protect the draft upon condition that the bills of lading, transfer, insurance and amount drawn for are all right, and the draft is protested for non-acceptance, so that the drawer is compelled to take it up from the payee, the drawer can not maintain an action on the guaranty, there being no privity of contract between him and the guarantor. The payee alone can maintain an action for any loss he may sustain.</p> <p>2. Same—undertaking not extended by implication. A surety or guarantor can only be charged when the case is brought within the very terms of his contract. Therefore, a guaranty or promise to the payee to protect him against loss by advancing money on a draft drawn in his favor on a third person, can not protect the drawer against loss from non-acceptance by the drawee, and the guarantor is liable to the payee alone, and such an undertaking is not negotiable.</p> <p>3. Same—extent of undertaking. A bank guaranteeing the payee of a draft drawn on another that the same will be protected on certain conditions, which are complied with, is not liable as an acceptor, nor, as between the drawer and drawee, is it liable as a guarantor of acceptance and payment.</p> <p>4. Same—who are primarily liable. Where a guaranty of a draft is made by a third person to the payee before it is drawn, and upon the faith of which the payee makes advances to the drawer, and the drawee has agreed to pay the same before it is drawn, the drawer and drawee will be primarily liable to the payee as principal debtors, while the liability of the guarantor will be only secondary as surety.</p> <p>5.