Bank of America v. Waters

BURKE, P. J.

Plaintiff Bank of America National Trust and Savings Association (Bank) appeals from a judgment in favor of defendants as guarantors on a continuing guaranty agreement dated August 9, 1957. As filed, the action sought to recover on a promissory note but at the time of trial it was dismissed without prejudice against the makers and pursued solely against the guarantors on the theory that although the written guaranty had been executed nearly two and a half years before the date of the promissory note upon which the action was based, it was a continuing liability.

The continuing guaranty instrument was executed by the defendant guarantors on August 9, 1957. Under this agreement defendants Jack Waters and Patsy Ellen Waters

[637]

guaranteed payment of any and all indebtedness of Bobby D. Waters to the Bank not to exceed at any one time the sum of $4,000. This instrument had been executed at a time when the two Waters brothers were in partnership with one another and loans had been made by the Bank to the partnership. In the latter part of 1959 Bobby D. Waters had discussed with the loan officer of the Bank that he desired to purchase his brother’s interest in the business and to continue operating it on his own; and in order to bring this about he desired to borrow money from the Bank. On January 13, 1960, Bobby D. Waters and his wife executed their promissory note to the Bank in the sum of $6,900 and in connection therewith, as had been the custom in making loans from the Bank, they also executed a business loan agreement bearing the same date.

In two previous business loan agreements executed by the Waters brothers, one on September 24, 1957, and the other on March 6, 1959, there was contained therein a paragraph numbered “9” which provided: “As security for the loan, Borrower will deliver to Bank the following collateral or duly executed instruments of security or guaranty, and will comply with all terms, conditions and provisions set forth in such instruments: ’ ’ In the agreement of September 24, 1957, the additional information was inserted by typewriter: “1. Continuing Guaranty by principals and wives. 2. Assignment of monies by Jack Waters, in amount of $3412.00 from Cook Bros. Truck & Equipment Co. ’ ’ In the agreement of March 6, 1959, there was inserted the language, 1 ‘ Continuing Guaranty by principals and wives.”