United States Fidelity & Guaranty Co. v. Connors

222 Ill. App. 1, 1921 Ill. App. LEXIS 88

• Court: Appellate Court of Illinois
• Decided: October 4, 1921
• Docket: Gen. No. 26,311
• Status: Published

Opinion

Mr. Presiding Justice Gridley

delivered the opinion of the court.

The principal error assigned by defendant, Connors, is that the trial court erred in striking his said amended affidavit of merits from the files.

Counsel for defendant first contend (as contended in the trial court as disclosed from paragraph 2 of defendant’s said affidavit of merits) that the contracts between the Board of Education and defendant are lacking in mutuality and therefore incapable of enforcement by said Board, and for the reason that, although defendant is bound to deliver coal to said Board as therein specified, said Board is not bound to order or accept any quantity of coal whatsoever. Counsel seem to place considerable reliance on two clauses in the contracts, viz.: “That the quantities of coal stated having been estimated for the needs of the Board during the duration of this contract, as a basis for submitting and comparing bids, the contractor will be required to furnish and deliver coal as herein specified in greater or less quantity as ordered by the Board;” and “that the coal herein specified shall be delivered in the coal bins as required and ordered by the Board.” In support of their contention they cite the cases, among others, of Vogel v. Pekoc, 157 Ill. 339; Higbie v. Rust, 211 Ill. 333, and Joliet Bottling Co. v. Joliet Citizens’ Brewing Co., 254 Ill. 215. In the Higbie case, supra (p. 337), it is said: “Where there is no consideration for the promise of one party to furnish or sell so much of the commodity as the other may want, except the promise of the other to take and pay for so much of the commodity as he may want, and there is no agreement that he shall want any quantity whatever, and no method exists by which it can be determined, whether he will want any of the commodity, or, what quantity he will want, the contract is void for lack of mutuality.” We do not regard the decisions in the cases above cited as applicable to the provisions of the contracts before us. The cases of National Furnace Co. v. Keystone Mfg. Co., 110 Ill. 427; Minnesota Lumber Co. v. White-breast Coal Co., 160 Ill. 85, 93; Hunter W. Finch & Co. v. Zenith Furnace Co., 245 Ill. 586, 592, and Lincoln Mining Co. v. Board of Education, 212 Ill. App. 586, 591, we regard as being more in point. In the National Furnace Co. case, supra, the undertaking was, substantially, that appellant agreed to deliver in cars at Sterling, Illinois, all the iron that appellee needed in its business during the then ensuing year at an agreed price per ton, and appellee on its part agreed to take its year’s supply of iron of appellant and pay said price therefor, and the court held that the contract was a valid one, saying (p. 433):

“It is true that appellee was only bound by the contract to accept of appellant the amount of iron it needed for use in its business; but a reasonable construction must be placed upon this part of the contract, in view of the situation of the parties. Appellee was engaged in a large manufacturing business, necessarily using a large quantity of iron in the transaction of its business. It is not to be presumed that appellee would close its business and need no iron, but, on the contrary, the reasonable presumption would be that the business would' be continued, and appellee would necessarily need the quantity of' iron which it had been in the habit of using during previous years. * * * It had no right to purchase iron elsewhere for use in its business. If it had done so, appellant might have maintained an action for a breach of the contract. It was bound by the contract to take of appellant, at the price named, its entire supply of iron for the year,—that is, such a quantity of iron, in view of the situation and business of appellee, as was reasonably required and necessary in its manufacturing business. Such contracts are not unusual. A foundry may purchase its supply of coal for the season, of the coal dealer. A hotel may do the same. A city, for the use of the public schools, may engage its supply of coal for the winter, at a specified price. Such contracts are not uncommon, and we have never understood that they were void.”

In the Higbie case, supra, relied upon by counsel, the court, in commenting on said National Furnace Co. case, says (p. 337): “In that case, there was something by which to measure the needs of the purchaser and fix the amount of the commodity to be delivered under the contract, viz., such quantity as should be needed during the year in the manufacturing business which the purchaser" was then conducting, and in which it was certain some quantity would be needed.”

In the Zenith Furnace Co. case, supra, it was contended that the contract there in question was wanting in mutuality because there was no obligation to deliver any fixed quantity of coal at any fixed time or price, but the court overruled the contention, saying (p. 592): “The defendant agreed to sell, and the plaintiff agreed to buy, estimated tonnage of 50,000 tons of Ella coal, which meant 50,000 tons by estimation, and might be more or less but would be approximately that amount. The contract was an agreement for practically a definite amount of coal to be delivered by the defendant to the plaintiff and which the plaintiff was bound to take.” From the contracts in the present case it appears that the Board of Education, on May 1, 1916, advertised for sealed proposals for furnishing and delivering coal to the schools and other buildings of the Board in the City of Chicago for the ensuing school year ending June 30, 1917, in accordance with certain specifications on file; that in said advertisement it was stated that the city was divided for convenience into 14 districts' and that a separate proposal should be made for each district; that attached to said advertisement was a table showing the “approximate tonnage of coal required” in each district, viz., for District No. 1, 279 tons of anthracite and 12,350 tons of bituminous coal; for District No. 3, 117 tons of anthracite and 10,870 tons of bituminous; for District No. 4, 291 tons of anthracite and 10,235 tons of bituminous; and that in the “tables of delivery” in said specifications said approximate tonnage required in each district was further itemized as to the kinds of anthracite and bituminous coals required and in what particular school buildings. It further appears that defendant’s proposals for said three districts were accepted by the' Board, the contracts executed and some deliveries made thereunder. Construing the contracts in their entirety, and in view of the decisions last above cited, we are of the opinion that said contracts are not lacking in mutuality and not void on that ground.

Counsel for defendant also contend that the Surety Company, by suffering a judgment by default to go against it in the suit brought against it as surety by the Board- of Education in said municipal- court, No. S'50429, and in which suit the defendant Connors, as principal, was not made a codefendant, violated the provisions of section 4 of chapter 132 of the Revised Statutes of this State (Cahill’s Ill. St. ch. 132, ¶ 4). • The section of the statute is as follows: “No surety, his heir, executors or administrators, shall be allowed to confess judgment or suffer judgment to go by default, so as to distress his principal, if the principal will enter himself as defendant to the suit, and tender to the surety, his heirs, executors or administrators, sufficient counter security, to be approved by the court before which the suit is pending. ’ ’ Our attention has not been called to, and we have not found, any decision by any of the courts of review in this State construing the provisions of this section. It will be noticed that the prohibition of the statute against a surety suffering a judgment to go by default is subject to two conditions, viz., that such action “distress his principal,” and that the principal will “enter himself as defendant to the suit and tender to the surety * * * sufficient counter security,” etc. In paragraph 3 of defendant’s affidavit of merits, he alleges, in substance, that the Surety Company did not notify him or cause him to be informed of the pendency of said suit, No. 850429; that the Surety Company did not move to strike from the files the statement of claim filed by the Board of Education in that suit or in any manner challenge the sufficiency thereof; that the Surety Company suffered judgment to go against it by default in said suit “so as to distress its principal, to wit: this defendant,” and precluded this defendant from his fight to enter himself as defendant in said suit and to tender to the Surety Company “sufficient counter security to be approved by the court before which the said suit was pending”; that defendant never requested the Surety Company to pay said judgment or any part of the demand upon which it is based; and that “wherefore this defendant says that plaintiff (Surety Company) made voluntarily whatever payment (if any payment it did make) and is not entitled to recover any part thereof from the defendant in this suit. ’ ’ It will be noticed that in said paragraph 3 of said affidavit of merits the defendant does not state that he was not advised of the pendency of said suit before the said judgment was entered; he only states that the Surety Company did not notify him or cause him to be informed of its pendency. Nor does he state that he at any time tendered to the Surety Company any “counter security.” Nor does he state any facts to sustain his conclusion, as stated, that the Surety Company suffered the said judgment to go against it by default “so as to distress” him. Nowhere in said affidavit of merits does he state any facts showing that the judgment rendered against the Surety Company was not a proper or just one. And nowhere in said affidavit does he state any facts negativing the allegations contained in the statement of claim of the Board of Education in said suit, No. 850429, to the effect that Connors had not on his part kept and performed the contracts, in that he had failed to deliver large quantities of coal, that said Board had been compelled to and had purchased large quantities of the coal contracted for in the open market, and that the cost thereof over and above the contract prices amounted to the sums as stated in said statement of claim and in the Exhibits Gr, H and I, thereto attached. We are of the opinion that the trial court did not err in striking said amended affidavit of merits from the files, because of any of the averments contained in paragraphs 3 and 4 thereof. And we do not think that any facts are stated in paragraph 5 of said affidavit of merits showing any right of recoupment in defendant to the full amount of the demand of the Surety Company, or any part thereof.

Counsel for defendant further contend that a surety has no right of recovery against his principal for a payment made by the surety in discharge and satisfaction of a judgment rendered against it, to which judgment the principal is not a party. We fail to find that this defense was raised in defendant’s affidavit of merits filed in the trial court. ' Furthermore, it is the law that “a surety, who pays the debt of his principal, acquires a right of action against his principal, and may enforce it by the appropriate remedy at law.” (Simpson v. McPhail, 17 Ill. App. 499, 500; Ridgeway v. Potter, 114 Ill. 457, 461.) “Upon this implied obligation the surety, after discharging the indebtedness, would have his action over against his principal. * * * It is a familiar rule, that the surety" can maintain no action against his principal unless he pays the debt.” (Resseter v. Waterman, 151 Ill. 169, 177.) Furthermore, at the time the Surety Company signed the bonds in question, the "defendant in consideration thereof signed the written agreements with the Surety Company, which are set forth in its statement of claim in this suit, and therein the defendant agreed that “the vouchers or other evidence of payments made” by the Surety Company “under its obligations • of suretyship shall be conclusive against me, of the fact and the extent of my liability to the said Company under said obligation, whether said payments were made to discharge a penalty thereunder, incurred in the investigation of a claim made thereon, adjusting a loss or claim in connection therewith, or in completing the work covered by said contract, or whether voluntarily made or paid after suit and judgment against said company.”

Counsel for defendant further contend that the provision, last above mentioned and contained in defendant’s said written agreements with the Surety Company, is against public policy and therefore void. In the case of Leeds v. Townsend, 228 Ill. 451, it was insisted that where it appeared that a contract was void as being contrary to law or opposed to sound public policy the question might be raised at any time, or that a reviewing court would sua sponte take cognizance of the illegality in a contract and refuse to lend its aid to its enforcement, and the Supreme Court said (p. 457): “If it could be said that the contract in question was clearly against the public policy of this State,—that is, that it had a tendency to be injurious to the public or against the" public good,—or if it were in violation of a statute or some rule of the common law, it is true that the courts of this State would refuse their aid to compel an enforcement of such contract and would leave the parties without relief, and this course would be pursued whether the question had been raised by the parties or not.” And the court further said: “Before a court will declare contracts void on the ground of public policy, it must be established to the satisfaction of the court, beyond a doubt, that the contract violates the public policy of the State. Courts know nothing of public policy except from the constitution and laws and the course of administration and decision.” Counsel for defendant say that they have been unable to find á ease decided by any court of review in this State wherein it had been held that such a provision in a contract as above mentioned, or one similar thereto,.is against the public policy of this State. They, however, cite several cases in other States where somewhat similar provisions have been held void on that ground, among them, Fidelity & Casualty Co. v. Eickhoff, 63 Minn. 170; Fidelity & Casualty Co. v. Crays, 76 Minn. 450, and Fidelity & Deposit Co. v. Nordmarken, 32 N. D. 19. In the Eickhoff ease, supra, it appeared that the plaintiff was á guaranty insurance company and that the defendant, Eickhoff, was an employee of the Red River Elevator Company; that the. action was broug'ht to recover money alleged to have been paid by plaintiff to the elevator company upon a bond by which the plaintiff obligated itself to make good and reimburse to the elevator company such pecuniary loss as it might sustain by reason of the infidelity of defendant as its receiving agent in one of its grain elevators; that it was alleged in the complaint that defendant, in consideration of plaintiff’s becoming a guarantor for Turn by executing the bond, agreed to indemnify it against any losses, damages or expenses it might sustain or become liable for in consequence of executing the bond, and further agreed “to admit the voucher or other proper evidence of such payment by plaintiff as conclusive evidence against himself as to the fact and extent of his liability to this plaintiff”; and that it was further alleged that the elevator company presented its claim on account of defendant’s shortage to the plaintiff, that the latter was compelled to pay the same and now held the elevator company’s voucher for the same, but that defendant refused to indemnify plaintiff for the money thus paid out in his behalf. The court said (p. 179):

“In the present case the attempt is to provide that, after the alleged cause of action has accrued, the plaintiff shall be the sole and exclusive judge of both its existence and extent. Such an agreement is clearly against public policy. If the provision had been that the voucher, or other evidence of payment, should be merely prima facie evidence of the fact and extent of defendant’s liability,—thus merely shifting the burden of proof, but leaving the defendant at liberty to rebut this prima facie evidence,—although even then a somewhat drastic provision, we do not think that it could be held to contravene public policy. To that extent, we think this provision is valid, but, in so far as it assumes to make the voucher of payment by plaintiff: conclusive of defendant’s liability, it is void.”

We are not inclined to hold in the present case that that portion of .the provision of defendant’s written agreement, viz., that the vouchers or other evidences of payments made by the Surety Company under its obligations of suretyship should be conclusive evidence against him of the fact and extent of his liability to said company under said obligation when made “after suit and judgment against said company,” is against public policy and void. But even if it could be so held, how would it benefit the defendant in the present case 1 Under the decisions cited by his counsel such a provision at least makes the voucher or other evidence of payment prima, facie evidence of the fact, and extent of defendant’s liability, thus shifting the burden upon defendant to rebut that prima facie evidence. And, as above stated, defendant in the present case does not allege in his said affidavit of merits any facts tending to rebut that prima facie evidence. No issue is therein raised as to the extent of defendant’s liability. o

Our conclusion is that the trial court did not err in striking from the files defendant’s affidavit of merits and, upon defendant electing to stand thereon, in entering the judgment sought to be reversed. The judgment of the municipal court is affirmed.

Affirmed,

• Barnes and Morrill, JJ., concur.