Opinion ID: 2140462
Heading Depth: 1
Heading Rank: 7

Heading: liability of jack as guarantor

Text: Having determined that Brad and Elizabeth were creditworthy at the time they signed Note #9224, we proceed to consider whether the note released Jack from all liability. When Note #9224 was signed, $5,636.74 remained on Note #8026, which was subject to Jack's guaranty. If Brad and Elizabeth were not creditworthy when Note #9224 was executed, Jack's liability on the guaranty would have increased to the guaranty's limit of $11,951.71 principal, plus all interest that accrued thereon. The county court determined that Jack's liability had been increased to $11,951.71 by Note #9224, and it entered judgment accordingly. The question is whether Note #9224, which included $5,636.74 of existing indebtedness covered by the guaranty, extinguished Jack's liability because all new indebtedness was based upon Brad and Elizabeth's creditworthiness. The guaranty provided that if Brad entered into subsequent obligations for which he was creditworthy, then such obligations were not included as indebtedness of the guaranty. We conclude that Note #9224 did not relieve Jack of liability for the $5,636.74 which existed under the guaranty at the time Note #9224 was executed. Any new indebtedness would not be Jack's responsibility under the guaranty because Brad and Elizabeth were creditworthy. The guaranty was not subject to any subsequent indebtedness for which Brad met the Bank's standard of creditworthiness. However, the guaranty also provided that no act except full payment and discharge of all indebtedness shall release Jack's liability under the guaranty. At the time Note #9224 was executedcuted, existing indebtedness of $5,636.74 had not been paid. Thus, although no new indebtedness was subject to the guaranty, Note #9224 did not discharge the existing liability. If we were to conclude that Note #9224 eliminated all liability under the guaranty, as the district court so determined, we would have to ignore the provision of the guaranty stating that no act except full payment and discharge of all indebtedness shall release the liability of the guarantor. The indebtedness of $5,636.74 has not been paid, and Jack remains liable for this amount plus accrued interest on such principal amount. Note #9224 did not increase the amount of the existing indebtedness, but $5,636.74 is still subject to the guaranty, and as to this part of the debt, the Bank may look to Jack for payment.