Associates Financial Services Co. v. Eisenberg

• Decision Date: 04 May 1971
• Docket Number: No. 104,104
• Citation: 51 Wis.2d 85,186 N.W.2d 272
• Parties: ASSOCIATES FINANCIAL SERVICES COMPANY, Inc., a foreign corporation, Plaintiff-Respondent, v. Donald S. EISENBERG, Defendant-Appellant.
• Court: Wisconsin Supreme Court

Page 272

186 N.W.2d 272

51 Wis.2d 85

ASSOCIATES FINANCIAL SERVICES COMPANY, Inc., a foreign corporation, Plaintiff-Respondent, v. Donald S. EISENBERG, Defendant-Appellant.

No. 104.

Supreme Court of Wisconsin.

May 4, 1971.

This is an action by Associates Financial Services Company, Inc., assignee of Northern Illinois Corporation (Northern) to recover on a written guaranty of the defendant Donald S. Eisenberg. The case was tried to the court which found the guaranty covered three transactions involving loans by Northern to DEC Aviation Corporation (DEC). The first of these loans was in default at the time of the trial in the sum of $31,293.88 and the third was in default to the extent of $2,775.33, less credits for unearned interest plus accrued late charges. The judgment was entered in favor of Associates for the amount of $36,629.93, and from this judgment Eisenberg appeals.

Donald S. Eisenberg, in pro. per.

Grutzner & Jaeckle, Beloit, for plaintiff-respondent.

HALLOWS, Chief Justice.

The facts are not in dispute. On May 27, 1965, Northern loaned DEC $56,605.20. The loan was secured by a chattel mortgage on two used airplanes owned by DEC and by personal guaranty of its president Robert P. Fleming and his wife Barbara L. Fleming. Eisenberg was a director of DEC at the time but was not a party to this transaction. On the following August 10th a second loan was made by Northern to DEC in the sum of $50,000 which was secured by a chattel mortgage on fixtures and equipment of DEC and by a pledge and a mortgage of real estate by P & C Inc., a corporation owned by Eisenberg. The loan was further secured by the promises of Fleming and his wife and Donald S. Eisenberg in their capacity as sureties. Contemporaneously with this loan, Mr. Eisenberg executed a written guaranty which provides in relevant part as follows:

'I, Donald S. Eisenberg, the undersigned, a director of DEC-AVIATION CORPORATION, do hereby request Northern Illinois Corporation of DeKalb, Illinois to grant and give from time to time financial accommodations and credit to DEC-AVIATION CORPORATION and in consideration of such financial accommodations and credit extended, receipt of which is hereby acknowledged, I hereby individually guarantee the payment of any and all obligations of DEC-AVIATION CORPORATION, which may be contracted with or owing to Northern Illinois Corporation of DeKalb, Illinois, to the extent of fifty thousand and no/100 dollars, plus interest and costs of collection. I further guarantee the prompt and faithful performance and discharge by DEC-AVIATION CORPORATION of any and all of its obligations under any notes as present or future agreements of DEC-AVIATION CORPORATION with Northern Illinois Corporation.'

This guaranty is the basis of the present action. The third loan was made February 28, 1966, in the sum of $13,652.16 and was secured by a chattel mortgage on an airplane. Subsequently DEC found itself in financial difficulties and unable to make payments on the three loans. It made an assignment of its assets for the benefit of creditors and the assets were sold to Mr. Eisenberg for sufficient funds to pay the second loan, which was then paid in full to Northern.

Eisenberg contends his written guaranty covers only the second loan with which it was executed and in which it is listed as security. Since this loan was paid in full he maintains he is not responsible for the balances due on other loans.

It is normally true that a guaranty and loan documents executed at the same time between the same contracting parties in the course of a transaction should be construed together. Seaman v. McNamara (1923), 180 Wis. 609, 193 N.W. 377; Milwaukee Acceptance Corp. v. Kuper (1969), 42 Wis.2d 515, 517, 167 N.W.2d 256. This does not mean, however, that the scope of the guaranty must be limited to the amount of the loan. Whether a guaranty is restricted to a contemporaneous loan depends upon its language in the light of the circumstances. While it is true Eisenberg's guaranty is expressly limited to $50,000, the exact amount of the contemporaneous loan, other language in the guaranty makes it clear that future loans were contemplated. We agree with the trial court that to limit the guaranty to the contemporaneous loan would make it superfluous because Eisenberg was primarily liable on that loan as surety.

Some courts have relieved an uninformed guarantor of his promise on equitable grounds when a lending agency has made unreasonable demands for such security. See Indianapolis Morris Plan Corporation v. Sparks (1961), 132 Ind.App. 145, 172 N.E.2d 899. But, that is not the fact here. This case involves sizable commercial loans between a lending agency and a...