Opinion ID: 1403026
Heading Depth: 3
Heading Rank: 6

Heading: Alternative Grounds for AffirmanceSegelhorst Appellees

Text: Through 1987 the Segelhorsts made contribution payments of $61,000 on their two limited partnership units. In July of 1988 they conveyed their units to BPF using an Assignment in Lieu of Default Remedies. In exchange, BPF released them from their obligation to make future contributions. The assignment was signed by Pace as general partner of BPF and as Attorney-in-Fact for all Limited Partners. An amended certificate was filed in 1988, showing that the Segelhorsts were no longer limited partners. The Segelhorsts claim that the waiver that they obtained from BPF discharges them from any liability to International. Alternatively, they argue that the modification of the note after the amended certificate was filed released them from any liability. Although these claims were not ruled upon by the superior court, the Segelhorsts are correct in asserting that this court may affirm on grounds which were not relied on by the superior court. [17]
Subsection .160(c) provides that a waiver of the liabilities of a limited partner by the partnership does not affect the right of a creditor to enforce such liabilities if the creditor extended credit ... after the filing and before a cancellation or amendment of the certificate.... The Segelhorsts contend that the January 1988 modification of the note was not an extension of credit by International since no new money was lent. They also argue that the 1988 modification was simply an extension of the time for payment as contemplated under the original terms of the note. They argue that a clause in the note prevents the 1988 modification from being considered an extension of credit within the meaning of subsection .160(c). The clause provides: The undersigned, whether principal, surety, guarantor, endorser, or other party hereto, ... agree that this note or any payment thereunder may be extended from time to time ... without in any way affecting the liability of such parties.  (Emphasis added.) Finally, the Segelhorsts argue that even if the 1988 modification were to be considered an extension of credit, the only credit extended was the amount of the arrearage, not the whole amount of the note. The arrearage was eventually paid and therefore any extension of credit has been satisfied. We believe that the modification agreement of January 1988 was an extension of credit. While no case law construing the meaning of the term extended credit in the context of ULPA has been found, the term is commonly understood to encompass agreements which defer payment or enforcement of an existing debt. A federal criminal statute, 18 U.S.C. § 891(1), defines to extend credit to mean to make or renew any loan, or to enter into any agreement, tacit or express, whereby the repayment or satisfaction of any debt or claim, whether acknowledged or disputed, valid or invalid, and however arising, may or will be deferred. Similarly, a number of cases construe terms similar to extended credit to include deferral of debt or forbearance from debt collection. [18] We believe that these authorities reflect a general consensus as to what constitutes an extension of credit which is applicable to ULPA 1976 and the January 1988 agreement. The clause in the note stating that the time for payment can be extended without affecting the liability of makers or guarantors is intended to negate the possibility that an extension might release parties from liability. [19] If this clause actually resulted in the release of otherwise liable parties, as the Segelhorsts argue, this would be directly opposite to what was intended. In our view, the clause cannot reasonably be read as negating the effect of the term extended credit in subsection .160(c). The Segelhorsts' third argument, that the effect of the extension of credit terminated when the 1988 arrearages were paid, also lacks merit. No authority is cited to support this point. Subsection .160(c) requires only an extension of credit. It does not suggest that the effect of an extension of credit which takes the form of forbearance can later be eliminated by partial payments while the overall debt remains unpaid.
Here the Segelhorsts argue that they were discharged because the note was twice modified after the amended certificate was filed eliminating them as limited partners. They contend that the obligation in place when the Segelhorsts were part of the limited partnership ... has been replaced. We reject this argument as well. The obligation in place when the Segelhorsts were limited partners was the 1981 note. The latter two modifications to the note made clear that they were merely amendments and did not constitute either a new debt or a new deed of trust note. The note was thus not replaced, and it expressly provided that it could be amended without releasing parties liable on it.