Opinion ID: 2406543
Heading Depth: 2
Heading Rank: 2

Heading: impairment of collateral defense

Text: Griffin argued successfully in the trial court that the Bank's negligence caused a two-year delay in the sale of the collateral during which it declined in value, and that, pursuant to Section 85-3-606, his obligation under the guaranty is discharged. We held in Myers v. First State Bank of Sherwood, 293 Ark. 82, 732 S.W.2d 459 (1987), that this statutory provision has no application where one executes a separate guaranty. Additionally, the guaranty here provides that, This guaranty shall be a continuing, absolute and unconditional guaranty.... In Lindell Square Ltd. Partnership v. Savers Fed. Sav. & Loan Ass'n, 27 Ark.App. 66, 76, 766 S.W.2d 41, 47 (1989), the Court of Appeals was called upon to determine whether the parties to a guaranty intended that the guarantor would be liable for the amount due on bonds at the time of default or for only the deficiency remaining after resorting to other security. The guaranty there likewise provided that the guarantor's obligations were unconditional and absolute. In holding that the guarantor's liability was intended to be in addition to and independent of other security, the court noted our decision in Bank of Morrilton v. Skipper, Tucker & Co., 165 Ark. 49, 263 S.W. 54 (1924), in which we said, Under an absolute guaranty, the liability of the guarantor becomes fixed upon the debtor's default. The guaranty agreement here also contains the following provisions: All diligence in collection or protection, and all presentment, demand, protest and/or notice, as to any and everyone, of dishonor and of default and of non-payment and of the creation and existence of any and all of said indebtedness, obligations and liabilities, and of any security and collateral therefor, and of the acceptance of this guaranty, and of any and all extensions of credit and indulgence hereunder, are hereby expressly waived. .... No act of commission or omission of any kind, or at any time, upon the part of said Bank in respect to any matter whatsoever, shall in any way affect or impair this guaranty. The clear language of the guaranty agreement indicates that the guarantor's liability was intended to be absolute and unconditionalthe guaranty agreement so provides. Any recourse against collateral was clearly intended to be in addition to rights against the guarantor who expressly waived any defense based upon impairment of collateral.