Joe Heaston Tractor & Imp. Co. v. Securities Accept. Corp.
| Citation | 243 F.2d 196 |
| Decision Date | 25 May 1957 |
| Docket Number | No. 5493.,5493. |
| Parties | JOE HEASTON TRACTOR & IMPLEMENT COMPANY, a New Mexico Corporation, Appellant, v. SECURITIES ACCEPTANCE CORPORATION, a Delaware Corporation, Appellee. |
| Court | United States Courts of Appeals. United States Court of Appeals (10th Circuit) |
Owen B. Marron, Albuquerque, N. M., for appellant.
William P. Kelley (of Matthews, Kelley & Delephant), Omaha, Neb., and W. Peter McAtee (of McAtee, Toulouse & Marchiondo), Albuquerque, N. M., for appellee.
Before BRATTON, Chief Judge, and HUXMAN and PICKETT, Circuit Judges.
The appellee, Securities Acceptance Corporation, a Delaware Corporation, hereinafter called "Finance Company", sued appellant, Joe Heaston Tractor & Implement Company, a New Mexico Corporation, hereinafter called "Guarantor", upon a contract which guaranteed payments due to the Finance Company from R. L. Claussen, d/b/a Dick Claussen Appliance, hereinafter called the "Debtor", and recovered judgment in the amount of $38,031.45, plus interest and costs. From this judgment the Guarantor appeals.
The facts are not in dispute. The Guarantor sold an appliance store to the Debtor, who took over the store, along with certain indebtedness of the Guarantor to the Finance Company. The Debtor needed financing in order to complete this transaction. To induce the Finance Company to furnish the necessary financing, the Guarantor "unconditionally guaranteed" the payment of all accounts then owed by the Debtor to the Finance Company and those to be incurred in the future.1 The Finance Company made loans to the Debtor and took back chattel mortgages from the Debtor covering appliances for the purchase of which the advance was made. None of these chattel mortgages were filed or recorded as permitted by law, until May 5, 1953, at which time the Finance Company discovered the impending insolvency of the Debtor. On June 8, 1953, an involuntary petition in bankruptcy was filed against the Debtor and he was adjudicated a bankrupt. The parties appear to agree that only $5,912.17 of the total amount loaned was secured by mortgages which were filed in time to prevent them from becoming preferences under the provisions of the Bankruptcy Act, 11 U.S.C.A. § 96. There remained $38,031.45 secured by chattel mortgages which did not meet the twenty-one day filing requirement of the aforesaid section of the Bankruptcy Act.
The complaint alleged the bankruptcy, the default of the Debtor and a demand upon the Guarantor for payment in accordance with the provisions of the guaranty agreement. One of the defenses pleaded by the Guarantor was that the Finance Company took chattel mortgages from the Debtor covering merchandise for the purchase of which it advanced money, but failed to perfect the lien thereof by filing as required by law, and by reason thereof the loans made by the Finance Company were not "under what is commonly known as the floor plan of wholesale type of financing"; that by reason of such failure the subrogation rights of the Guarantor were lost and the Guarantor was released from its obligation. The validity of this defense is the only question presented by this appeal.
The contract of guaranty makes reference to secured loans but it does not specifically require the taking of mortgages or that the same, if taken, be recorded. Relying upon the law of suretyship as propounded in Stearns on Law of Suretyship, 5th Ed., 188, § 6.49, and 50 Am. Jur., Suretyship, § 118,2 the Guarantor contends that the contract contemplates that security for loans will be taken and that in such cases there is an implied agreement that the lien of the security will be preserved by proper filing or recording, a failure of which relieves a guarantor to the extent of the loss sustained. We are of the opinion that the guaranty agreement is an absolute and unconditional guaranty and the foregoing rule of law has no application.
It is quite clear that the agreement covered every kind of retail sales upon which the Finance Company advanced money. It specifically guarantees, without limitation or condition, the prompt performance by the Debtor of all obligations and commitments to the Finance Company with respect to all retail paper by endorsement, or otherwise. Full power was granted to the Finance Company to modify or change the terms of any of the liabilities and to release any collateral thereto. Under the broad terms of this guaranty agreement, the Debtor and the Finance Company were free to handle their commercial paper as they saw fit. We think the guaranty was intended to cover, without condition, all good-faith loans made to the Debtor by the Finance Company in connection with the Debtor's appliance business in which commercial paper was taken. Otherwise there would have been no reason to include in the contract the provision that the Guarantor "unconditionally guarantees * * *, the due and punctual payment" of all notes evidencing floor plan financing transactions and "further guarantees the prompt performance" of all obligations and commitments of the Debtor under any "endorsement to or repurchase agreement executed by the Dealer to the Finance Company with respect to any retail paper. * * *" The record does not disclose what the security requirements are or what the custom is under general floor plan arrangements. Presumably they would differ in individual cases.3
The law is settled that a guaranty is a collateral agreement to pay a debt or perform a duty for another in case of default which may be enforced separately from the primary obligation. It is not necessary to proceed against the primary debtor. An unconditional guaranty is one whereby the guarantor agrees to pay or perform a contract upon default of the principal without limitation. It is an absolute undertaking to pay a debt at maturity or perform an agreement if the principal does not pay or perform. 38 C.J.S. Gu...
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...(10th Cir.1937) 89 F.2d 203, 206; United States v. Willis, (6th Cir.1979) 593 F.2d 247; Joe Heaston Tractor & Implement Co. v. Securities Acceptance Corp., (10th Cir.1957) 243 F.2d 196; U.S.A., Etc. v. Chatlin's Department Store, Inc., (E.D.Pa.1980) 506 F.Supp. 108. The practical ramificati......
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...” [Century 21 Prods., Inc. v. Glacier Sales , 129 Wash.2d 406, 414, 918 P.2d 168 (1996) (quoting Joe Heaston Tractor & Implement Co. v. Sec. Acceptance Corp. , 243 F.2d 196 (10th Cir. 1957) ); see also Grayson v. Platis , 95 Wash.App. 824, 826, 978 P.2d 1105 (1999).] “An absolute and uncond......