Patek & Co. v. Vineberg

HERNDON, J.—

This appeal is taken by one of two co-defendants from a judgment for plaintiff following a non-jury trial in an action to enforce a written guaranty of an open book account.

The evidence is essentially without conflict. Appellant and his codefendant owned all the stock in a corporation known

[22]

as Plaza Cleaners, Inc. On September 29, 1959, this corporation was indebted to respondent for supplies in an amount in excess of $7,100. Respondent, through its Southern California manager, advised appellant that it could no longer carry said corporation on this basis and would continue to do so only if appellant and his coowner would sign a continuing guaranty. Appellant concedes that the business certainly would have had to close its doors forthwith had it been required to pay up this indebtedness before receiving further supplies from respondent. Accordingly, appellant and his coowner signed the guaranty.

This guaranty provided,

inter alia,

“Fob Value Received, and in consideration of your extending credit for any goods which you may at any time supply to Plaza Cleaners, Incorporated . . . , we hereby guarantee the payment of such sums of money, not exceeding at any one time $7,500.00,

as are now,

or at anytime hereafter may be, owing to you from it for goods so supplied and for which amount this shall be a continuing guarantee. ... In case the collection of the amount due to you by virtue of the credit you extend to said Plaza Cleaners Inc., in reliance on this letter of credit,

ihclicding any credit heretofore extended,

is enforced by suit, we agree to pay all court costs and reasonable attorney’s fees. . . .” (Emphasis added.)

Thereafter, until the corporation declared bankruptcy in May 1960, respondent continued to furnish it with supplies. However, when each new order was taken, respondent sought, and generally obtained, a cheek in an amount in excess of any such order, so that the large existing balance would be gradually reduced. In this fashion, new supplies in an amount in excess of $9,000 were furnished, but the existing balance was reduced to $4,888.34 at the time the corporation went into bankruptcy.