Opinion ID: 427030
Heading Depth: 1
Heading Rank: 3

Heading: Vahlco's Defenses

Text: 17 Vahlco's sole defense is that the SBA unjustifiably impaired loan collateral, and that to the extent that the SBA did so, Vahlco is discharged from its obligations under the note by Tex.Bus. & Comm.Code Sec. 3.606 (Vernon 1968). 7 However, the collateral impairment defense under Sec. 3.606 is available only to parties who are in the position of a surety with respect to the instrument. See U.C.C. Sec. 3-606, comment 1. Both the Texas courts and this Court have held the defense unavailable to the maker of a note. Hooper v. Ryan, 581 S.W.2d 237, 238-39 (Tex.Civ.App.1979); United States v. Unum, Inc., 658 F.2d 300, 304-05 (5th Cir.1981) (applying Texas law). 8 Since Vahlco's sole defense is inadequate as a matter of law, the trial court did not err in preventing Vahlco from presenting evidence on this issue. 9