Opinion ID: 1722999
Heading Depth: 1
Heading Rank: 2

Heading: ted smith guaranty

Text: In its Third Amended and Supplemental Judgment, the trial court determined that the written guaranty dated May 11, 1976, and executed by Ted Smith in favor of Mcllroy absolutely and unconditionally guaranteeing the payment of any and all indebtedness from Shiloh to Mcllroy was valid. The trial court also determined that the guaranty was in effect on March 8, 1978. On this basis, the trial court held Mr. Smith liable for the balance of debts owed to Mcllroy from Shiloh remaining unpaid on the March 8, 1978, promissory note executed by Shiloh as general partner for Benton Farm and the March 8, 1978, note executed by Shiloh as general partner for Washington Farm. Mr. Smith contends the trial court erred in finding the guaranty valid. Mr. Smith gave notice to Mcllroy on March 16, 1979, that Shiloh had been removed as general partner and that Shiloh and Ted Smith wished to have no further responsibility for Benton Farm or Washington Farm. Mr. Smith contends that after he gave notice of his and Shiloh's desire to be relieved of responsibility for Benton Farm and Washington Farm, Mcllroy was equitably obligated to obtain his approval before releasing any collateral or other obligers, allowing any extensions, delaying enforcement action or commingling collateral. As a result of Mcllroy's failure to obtain Mr. Smith's approval before taking or failing to take these actions, Mr. Smith contends he was relieved from his obligations as guarantor. It is the law in Arkansas that a material alteration in an obligation, made without the assent of the guarantor, may discharge the guarantor. Germer v. Missouri Portland Cement Co., 301 Ark. 277, 279, 783 S.W.2d 359, 360 (1990). An alteration is not material unless the guarantor is placed in the position of being required to do more than his original undertaking. Continental Ozark, Inc. v. Lair, 29 Ark. App. 25, 29, 779 S.W.2d 187, 189 (1989). Provisions included in a guaranty will be honored. Germer, 301 Ark. 277, 279, 783 S.W.2d 359, 360. Mr. Smith contends his agreement was materially altered because Mcllroy made no effort to account for the cattle existing on the farm at the time Mr. Smith gave notice of discontinuance of the guaranty; subsequently extended additional loans to the farm for the purchase of additional cattle that were commingled with the existing cattle, making it impossible to determine which cattle secured which loan; extended the loans on several occasions without Mr. Smith's approval as guarantor; did not accelerate the loans even though the limited partnership was consistently late with its loan payments; allowed its perfected security interest to lapse; and did not apply the proceeds from the sale of the cattle when they were finally sold to the outstanding balance of the 1978 loans. The guaranty signed by Ted Smith provided in pertinent part: [T]he undersigned hereby guarantee(s) absolutely and unconditionally the prompt payment when due, whether at maturity, by declaration, demand or otherwise of any and all indebtedness from [Shiloh] to [Mcllroy] plus such interest as may accrue thereon, whether such indebtedness is incurred as principal, guarantor or indorser, is direct or indirect, absolute or contingent, due or to become due or whether such indebtedness is now existing or arises hereafter and in addition, the undersigned agree(s) to pay all costs of collection, legal expenses and attorney's fees paid or incurred by [Mcllrroy] in collecting and/or in enforcing such indebtedness and in enforcing this guaranty (all such indebtedness, interest, cost, fees and expenses being hereinafter called the indebtedness). No renewal or extension of time of payment of the indebtedness, no relief or surrender of any security for the indebtedness or this guaranty, no release of any person primarily or secondarily liable on the indebtedness (including any maker, indorser or guarantor), no delay in enforcement of payment of the indebtedness of this guaranty and no delay or omission in exercising any right or power with respect to the indebtedness, or this guaranty, shall affect the liability of any of the undersigned hereunder. Each of the undersigned waives presentment, protest, demand, notice of dishonor or default, notice of acceptance of this guaranty, notice of any loans made, extensions granted, or other action taken in reliance hereon and all demands and notices of any kind in connection with this guaranty or the indebtedness. This guaranty shall remain in full force and binding upon the undersigned until written notice of the discontinuance hereof shall be received by [Mcllroy], notwithstanding the death of one or more of the undersigned and until any and all indebtedness accepted before receiving notice of revocation shall have been fully paid. [Emphasis added.] Time extensions are not material alterations if they are expressly provided for in the guaranty as they were here. Germer, 301 Ark. 277, 279, 783 S.W.2d 359, 360. Nor are any other terms expressly provided for in the guaranty material alterations. Id. We have recently held that an absolute and unconditional guaranty which contains a term providing that omission of the holder does not affect the liability of the guarantor waives any defense based on impairment of collateral. First Nat'l Bank of Crossett v. Griffin, 310 Ark. 164, 832 S.W.2d 816 (1992). The guaranty signed by Mr. Smith specifically provides that Mr. Smith shall remain liable for all indebtedness accepted before Mcllroy received notice of discontinuance of the guaranty until it is fully paid. Ted Smith was not released from liability for the loans Mcllroy made on March 8, 1978, by reason of Shiloh's removal as general partner. Only payment of the loans after Mr. Smith gave notice of revocation of the guaranty would discharge his liability. Nor were any of the actions or inactions alleged by Mr. Smith sufficient to materially alter his obligations under the guaranty and release Mr. Smith from liability thereon. The guaranty is absolute and unconditional and specifically provides neither extensions of time of payment, relief or surrender of security, delay in enforcement of payment, or delay or omission in exercising any right or power with respect to the indebtedness shall affect the liability of Mr. Smith. Griffin, 310 Ark. 164, 832 S.W.2d 816. Therefore, the trial court properly determined Ted Smith was responsible for payment of the outstanding amount of the debt due Mcllroy from Shiloh. Affirmed in part; reversed in part. BROWN, J., concurs.