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In Re Estate of Melvin

MAY 17, 1972.

IN RE ESTATE OF CHARLES W. MELVIN, DECEASED — (MARJORIE IRENE FLOOR, CLAIMANT-APPELLANT,

v.

MILDRED B. MELVIN, EXRX. UNDER THE WILL OF CHARLES W. MELVIN, DECEASED, RESPONDENT-APPELLEE.)



APPEAL from the Circuit Court of La Salle County; the Hon. WENDELL THOMPSON, Judge, presiding.

MR. JUSTICE ALLOY DELIVERED THE OPINION OF THE COURT:

The action in the present case was instituted by Marjorie Irene Floor in the Circuit Court of La Salle County to recover money alleged to be due on a promissory note. On motion of defendant Mildred B. Melvin, executrix of the estate of Charles W. Melvin, deceased, an order was entered dismissing the claim for failure to state a cause of action. Claimant, Marjorie Irene Floor, seeks reversal of the order on the theory that the deceased Charles W. Melvin was a guarantor of payment.

On April 14, 1959, Melco, Inc., an Illinois corporation, acting through its president, Charles W. Melvin, made and issued its negotiable promissory note in the principal amount of $12,000.00, payable to the order of Marjorie Irene Floor. On the back of the note the following language appears:

"For and in consideration of funds advanced herein to Melco, Inc., we irrevocably guarantee Marjorie Irene Floor against loss by reason of non-payment of this note."

The signature of Charles W. Melvin, as well as others, appeared below such statement.

The complaint of plaintiff in this case does not allege prosecution of her claim to judgment as against the principal obligor on the note and it, also, does not allege the insolvency of the obligor, Melco, Inc. The only issue, therefore, before the court is whether, with respect to the undertaking on the back of the note, plaintiff is required to prosecute her claim against the maker of the note as a pre-condition to making a valid claim as against the estate of Charles W. Melvin.

Under the negotiable instruments act applicable, Illinois Revised Statutes, Ch. 26, § 3-416, the subsections which are pertinent to the issue in this case read as follows:

"(1) `Payment guaranteed' or equivalent words added to a signature mean that the signer engages that if the instrument is not paid when due he will pay it according to its tenor without resort by the holder to any other party.

(2) `Collection guaranteed' or equivalent words added to a signature mean that the signer engages that if the instrument is not paid when due he will pay it according to its tenor, but only after the holder has reduced his claim against the maker or acceptor to judgment and execution has been returned unsatisfied, or after the maker or acceptor has become insolvent or it is otherwise apparent that it is useless to proceed against him.

(3) Words of guaranty which do not otherwise specify guarantee payment."

The quoted subsection in the portion marked as "(1)" codifies the rule of several Illinois cases including Beebe v. Kirkpatrick, 321 Ill. 612, 152 N.E. 539, and Weger v. Robinson Nash Motor Co., 340 Ill. 81, 172 N.E. 7. In the Weger case referred to, the guaranty contract which had been executed, read (at page 85):

"We, the undersigned directors and stockholders of the Robinson Nash Company, do hereby guarantee the payment of notes of said company given the Robinson State Bank of Robinson, Illinois, and hereby agree to be personally liable therefor and to all the conditions and requirements written in said notes * * *." (Emphasis ours.)

The court in construing said language said, at page 90:

"A contract guaranteeing the payment of a note is an absolute contract, and by it the guarantor undertakes for a valuable consideration to pay the debt at maturity if the principal debtor fails to do so, and upon it, if the debt is not paid at maturity, the guarantor may be sued at once. Guarantors must be regarded as original promisors, who bound themselves to pay the notes when they matured, and their duty was, on their maturity, to go to ...


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