CLAUDE DORSY ET AL., APPELLANTS,
v.
MARYLAND NATIONAL BANK, A NATIONAL BANKING CORPORATION, APPELLEE
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Defendants who guaranteed a corporate loan sued by the bank for the guaranteed debt filed a counterclaim alleging the bank improperly took control of the debtor company and mishandled collateral, causing its failure. The court reversed the dismissal of the counterclaim, holding that guarantors have a legal right to sue creditors who breach their duty not to harm the guarantor's interests.
Guarantors have a cause of action against the creditor when the creditor breaches its legal duty not to deal with the debtor or security in a manner that harms the guarantor's interests. The counterclaim stated sufficient facts to support such a claim and should not have been dismissed.
[1] A guarantor's rights against a creditor are determined by the terms of the guaranty contract.
[2] A creditor owes an obligation to the guarantor not to deal with the debtor or any security for the debt in a manner that harms the guarantor's interests.
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Join FLexlaw to unlock all legal intelligence“the law imposes on the creditor an obligation not to deal with the debtor or any security for the debt in such a manner as to harm the interest of the guarantor”
Establishes the legal duty owed by creditors to guarantors independent of the guaranty contract terms
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Join FLexlaw to unlock all legal intelligenceIn August 1973, Maryland National Bank extended credit to Concorde Yachts, Inc. secured by personal guarantees from the defendants and a first lien on…
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[*274] PER CURIAM.
Defendants seek reversal of an order dismissing with prejudice their amended counterclaim in this action on a contract of guaranty.
On August 14, 1973, plaintiff, Maryland National Bank, extended credit to Concorde Yachts, Inc. on the basis of personal guarantees executed by the defendants. The extension of credit was secured by a first lien on all inventories, accounts and contracts receivable existing or thereafter acquired.
In April 1975 plaintiff filed against the defendant guarantors the present action seeking $431,767.78, the sum for which Concorde Yachts allegedly is indebted to the plaintiff and which it has failed to pay. Defendants filed a counterclaim and an amended counterclaim for damages which in essence contended that in 1974 plaintiff took control of Concorde Yachts, Inc. (for the benefit of itself and not Concorde Yachts) leading to the financial failure of Concorde Yachts. The amended counterclaim further alleged that plaintiff seized possession of the inventories, accounts and contracts and improperly conducted a sale of the inventory resulting in a substantial loss causing insufficient funds to pay the obligations due plaintiff. Plaintiff filed a motion to dismiss the counterclaim on the ground that the guarantors by virtue of law have no actionable claim. The motion was granted and defendants appeal the order of dismissal.
We reverse.
The guarantor and the creditor are parties to the contract of guaranty and consequently any rights of the guarantor as against the creditor are determined in the first instance by the terms of the guaranty contract. Beyond these rights, however, the law imposes on the creditor an obligation not to deal with the debtor or any security for the debt in such a manner as to harm the interest of the guarantor. 38 Am.Jur.2d Guaranty § 126 (1968). Reviewing defendants’ counterclaim in light of the above principle of law, we conclude it states a cause of action against the plaintiff. Accordingly, the order of dismissal is reversed and the cause remanded to the trial court for further proceedings not inconsistent herewith.
Reversed and remanded.
Cases With Similar Vibessemantic neighbors from the corpus
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Warner v. Caldwell, 354 So. 2d 91 (Fla. 3d DCA 1977)…nd the duties imposed in the contract of guaranty, the law imposes on the creditor an obligation not to deal with the debtor, or any security for the debt, in such a manner as to harm the interest of the guarantors. Dorsey v. Maryland National Bank, 334 So. 2d 273 (Fla. 3d DCA 1976). With the above in mind, we cannot say as a matter of law, that a jury could not relieve the guarantors of their responsibility on the guaranty by virtue of the aforementioned acts of appellants. Notwithstanding the facts as inte…
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Schaeffer v. Gilmer, 353 So. 2d 847 (Fla. 1st DCA 1977)…e creditor are determined by reading the two instruments together. The law imposes on the creditor an obligation not to deal with the debtor or the security in such a manner as to harm the interest of the guarantors. Dorsy v. Maryland National Bank, 334 So. 2d 273 (Fla. 3rd DCA 1976). It is with the foregoing principles of law in mind that we undertake the task of analyzing the multitudinous proffered affirmative defenses, a substantial portion of which in days of old would have been characterized as “speakin…
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Gartner v. Atl. Nat'l Bank OF Jacksonville, 350 So. 2d 495 (Fla. 1st DCA 1977)…ment of the construction loan fund and whether such conduct on its part materially affected the Appellant’s liability under their guaranty agreement, all such as to forestall the entry of summary judgment. See Dorsy et al. v. Maryland National Bank, 334 So. 2d 273 (Fla. 3 DCA 1976); Davis v. 7-Eleven Food Stores, Inc., 294 So. 2d 111 (Fla. 1 DCA 1974); Jenkins v. Graham, 237 So. 2d 330 (Fla. 4 DCA 1970). Our Supreme Court has held that the constitutional right to jury trial demands that particular care be ac…1 / 2
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