Opinion ID: 1970245
Heading Depth: 2
Heading Rank: 2

Heading: Incapacity Defense

Text: Appellant contends the trial court erred in granting summary judgment as to his defense that Stephen Tytel lacked the mental capacity and corporate authority to make the Note. More specifically, appellant asserts that the affidavit he submitted to the trial court provided evidence that, based on appellant's personal observations, Stephen Tytel was virtually insane when he executed the Note and that appellant, in his capacity as Opton's secretary, did not perform the required corporate acts necessary to confer on Stephen Tytel the corporate authority to make the Note. The trial court ruled that Stephen Tytel's mental incapacity is irrelevant on the question of summary judgment against Howard Tytel [appellant], and that whether Stephen Tytel technically had the corporate authority to sign the underlying [Note] of Opton, Inc. is a defense that can only be asserted by [Opton]. We agree. A guarantor does not enjoy the same limitations on liability as the maker of the underlying note has available. While the extent of a guarantor's liability certainly does not exceed the maker's underlying obligation, the actual liability of the guarantor may exist even when the maker himself [or herself] is not liable on the note. United States v. Little Joe Trawlers, Inc., 776 F.2d 1249, 1252 (5th Cir.1985). If the underlying obligation is not void e.g., for illegalitybut is unenforceable against the debtor only because of a defense that is personal to the debtor, the guarantor may not successfully set up this [defense] to defeat an action by the creditor or obligee seeking to hold the guarantor liable on the contract of guaranty. 38 AM.JUR.2D Guaranty § 52 (1966); see also Little Joe Trawlers, 776 F.2d at 1252 (Generally, an unconditional guarantor is liable for payment even though the holder of the note cannot enforce the claim against the principal obligor (the maker), unless the claim against the principal obligor is void for illegality.); 38 C.J.S. Guaranty § 88 (1943) (guarantor cannot assert as a defense matters affecting the liability of the principal which are personal to the principal). The following personal defenses of the principal obligor ... cannot be raised by [the guarantor]: Usury, Breach of warranty, Incapacity of principal, Statute of limitations, Defective goods, Forgery of maker's signature, Carelessness of bank in issuing loan, Claim of sham agreement, Mistake, impossibility, or frustration of purpose. Continental Illinois Nat'l Bank and Trust Co. v. Windham, 668 F.Supp. 578, 584-85 (E.D.Tex. 1987) (citations omitted); see also Little Joe Trawlers, 776 F.2d at 1252 (personal defenses of debtor unavailable to guarantor include forgery of maker's signature, usury, ultra vires, statute of limitations). We conclude that Stephen Tytel's, i.e., the maker's, alleged mental incapacity and lack of corporate authority to execute the Note are defenses personal to Stephen Tytel and to Opton that appellant cannot assert to escape liability on his facially unconditional guaranty. [4] Appellant does not contend that the underlying Note was void, and appellant, therefore, is not entitled to use the maker's personal defenses against the obligee. We therefore affirm summary judgment in FDIC's favor on the issues of appellant's alleged mental incapacity and lack of corporate authority. [5]