Opinion ID: 880534
Heading Depth: 1
Heading Rank: 1

Heading: the surety and guaranty agreements

Text: Corporation borrowed $293,000 from the Bank on September 30, 1986, and signed a promissory note and security agreement evidencing the debt. Prior to this occasion, the course of dealing between the parties is outlined below: 7-25-83 Loan with $200,000 Guaranty 6-11-84 Loan with Security & $500,000 Surety Agreements 10-30-84 $100,000 Surety Agreement 11-20-84 $150,000 Surety Agreement 6-06-85 $120,000 Loan with Surety Agreement 10-07-85 $300,000 Loan with Security Agreement 9-30-86 $293,000 Loan in Question All of the above loans were repaid prior to the September 1986 loan in question. The October 7, 1985, loan was repaid in September 1986 with proceeds from the loan in question. No surety or guaranty documents were executed contemporaneously with the October 1985 loan or the September 1986 loan. Bank argues that none were necessary because the surety documents that had previously been executed between the parties all expressly stated that they were open and continuing in nature, covering all indebtedness of the principal whenever or however incurred. Meyers contends that each surety was attached to a specific note and should be exonerated as a matter of law when each note was repaid; since no surety agreement was executed at the time of the September 1986 loan, he argues that he is not personally liable for the corporate default. Thus, the legal question becomes, what exonerates a surety under this contract? The specific language relied on by Bank is as follows: