First Commercial Corp. v. Geter

• Decision Date: 26 February 1976
• Docket Number: No. 75--452,75--452
• Citation: 37 Colo.App. 391,547 P.2d 1291
• Parties: FIRST COMMERCIAL CORPORATION, Plaintiff-Appellee, v. James C. GETER, Jr., Defendant-Appellant. . II
• Court: Colorado Court of Appeals

Page 1291

547 P.2d 1291

37 Colo.App. 391

FIRST COMMERCIAL CORPORATION, Plaintiff-Appellee, v. James C. GETER, Jr., Defendant-Appellant.

No. 75--452.

Colorado Court of Appeals, Div. II.

Feb. 26, 1976.

Davis, Graham & Stubbs, Thomas S. Nichols, William A. Bianco, Denver, for plaintiff-appellee.

Sobol & Sobol, P.C., Harry Sobol, Denver, for defendant-appellant.

ENOCH, Judge.

James C. Geter, Jr., appeals from a summary judgment entered in favor of First Commercial Corporation (FCC) against him as guarantor. We affirm.

The trial court found the following facts to be uncontroverted. In 1973 agreements were executed between FCC and Nassco of Denver, Inc., including several security agreements. Pursuant to such contracts, FCC advanced to Nassco in the form of a revolving loan the sum of $3,398,891. On the same date that the contracts were executed, Geter and two other individuals executed a personal guaranty with respect to all advances made by FCC to Nassco. Nassco defaulted on its obligations to FCC and was adjudicated a bankrupt on August 26, 1974.

In July 1974, FCC commenced this action against Nassco, Geter, and two other named individuals as guarantors. Multiple claims were asserted against the three individuals. The action against Nassco was stayed by the bankruptcy proceedings; however, the bankruptcy court granted permission to FCC to liquidate its collateral and FCC applied the net proceeds to Nassco's debts and reduce its claims against Geter accordingly. FCC then moved for summary judgment against Geter on one claim only and filed affidavits in support of the motion. Geter did not file any opposing affidavits or factual material. The court ruled in favor of FCC on the motion and entered judgment against Geter in the sum of $1,101,654 plus interest and the sum of $45,478 as expenses recoverable under the guaranty. The court also expressly determined that there was no just reason for delay and directed entry of the judgment under C.R.C.P. 54(b).

Geter argues that because the bankruptcy court had exclusive jurisdiction of the matter the district court had no jurisdiction to determine the amount of the debt, that the district court erred in its findings that the defenses alleged by Geter were not as a matter of law valid defenses to the claim of FCC, and that the court erred in its grant of a C.R.C.P. 54(b) certification.

Geter argues that under Rule 601 of the Rules of Bankruptcy the filing of the petition operated as a stay of the action by FCC against Geter as guarantor. However, the stay provisions, §§ 2a(15) & 11, of the Bankruptcy Act, (11 U.S.C. §§ 11a(15) and 29), and the Rules of Bankruptcy Procedure 401 and 601, relating to stays, apply only to actions brought against the bankrupt and such stay provisions are personal to the bankrupt. 1A Collier on Bankruptcy, 11.02 (J. Moore & L. King 14th ed. 1975.) Since under § 16 of the Bankruptcy Act, 11 U.S.C. § 34, the liability of a person who is a guarantor for a bankrupt is not altered in any way by the discharge of the bankrupt, the stay provisions do not operate on behalf of the guarantor. Moreover, since Nassco was not involved in the proceeding against Geter, a determination of the amount of the debt Nassco owes to FCC and thus the amount of Geter's liability, would not bind Nassco in any other court. See Pomeroy v. Waitkus, 183 Colo. 344, 517 P.2d 396; Murphy v. Northern Colorado Grain Co., Inc., 30 Colo.App. 21, 488 P.2d 103. Thus the district court had jurisdiction in this case to determine Geter's liability to FCC, and this action was not stayed by the filing of a petition in bankruptcy by Nassco.

In his pleadings, Geter raised several defenses to the action of FCC, including (1) a failure on behalf of FCC to mitigate damages and (2) changes detrimental to the guarantor which were made by the creditor without the consent of the guarantor. Geter argues that these defenses raised material issues of fact which were in dispute at the hearing on the motion for summary judgment, and that, as a result, the motion should have been denied.

Geter's argument that FCC failed to mitigate damages is based on the allegation that FCC failed to dispose of the collateral in a 'commercially reasonable' manner as required by the Uniform Commercial Code, §§ 4--9--501 to 4--9--507, C.R.S. 1973. However, the guaranty provided by its terms that Geter unconditionally guaranteed the payment of all indebtedness of Nassco and stated:

'(L)iability of the undersigned hereunder is direct and unconditional and may be enforced without requiring Secured Party first to exercise, enforce, or exhaust, any remedy against Borrower, any other guarantee, or collateral, and shall continue in full force and effect until all indebtedness of Borrower to Secured Party shall have been fully paid and satisfied.'

Thus, by its terms, the document is an absolute guaranty and the obligation of the guarantors may be immediately enforced, without the...