Hanley v. Bank of America National Trust & Savings Ass'n

WOOD, P. J.

In her second amended complaint against the defendants Bank of America and George E. McCullen (a manager of bank), Carmalita T. Hanley, as executrix of the will of Raymond J. Hanley, deceased, sought declaratory relief with reference to a “continuing guaranty” which the decedent had executed in favor of the bank, and sought recovery of bonds which had been pledged with the bank as security for the guaranty. In a cross-complaint against the executrix, the bank sought declaratory relief and recovery of the balance ($8,019.80) due on a debt allegedly covered by the guaranty. Judgment was that the bank recover $8,019.80, and that the bank is entitled to possession of the bonds. Plaintiff (and cross-defendant) executrix appeals from the judgment.

Appellant contends that the bank’s acceptance of a note from a third person discharged the original debt, thereby relieving the guarantor of liability.

[437]

On December 17,1963, Raymond J. Hanley executed a continuing guaranty whereby he guaranteed and promised to pay to the bank any and all indebtedness, then or thereafter made, of John Catalano and Leo Catalano, not to exceed $10,000 “at any one time.” To secure the payment of indebtedness incurred under the guaranty, Mr. Hanley pledged and delivered to the bank certain bearer bonds.

On December 18, 1963, the bank, through its manager, defendant McCullen, loaned $10,000 to John and Leo Catalano, in reliance upon the guaranty and bonds. Concurrently with the making of the loan, John and Leo made and delivered to the bank a note, dated December 18, 1963, in the amount of $10,000, payable to the bank in 90 days from the date of the note. Also concurrently with the making of the loan, the bank made an entry of the loan on a “Loan Liability Ledger” maintained in the names of John Catalano and Leo Catalano.

Thereafter, Henry Catalano, a brother of John and Leo, made three payments on the loan, after which the balance on the loan was $8,019.80. When Henry made the first payment ($750) on January 27, 1964, Henry executed a renewal note for the unpaid balance. At that time, the note which had been made by John and Leo was marked “Renewed,” and was returned by the bank to John and Leo because banking regulations preclude a bank from having two notes in a loan file. When Henry made the second and third payments, he executed similar renewal notes for the unpaid balance then existing. All of the payments were entered on the loan liability ledger maintained by the bank in the names of John Catalano and Leo Catalano, and no liability ledger was maintained in the name of Henry Catalano.