For reversal -- Chief Justice Weintraub and Justices Jacobs, Francis, Proctor, Hall, Schettino and Haneman. For affirmance -- None. The opinion of the court was delivered by Haneman, J.
This appeal requires a determination of the duties and liabilities existing between co-guarantors of a promissory note.
The record discloses that D'Ippolito attempted to establish his own carton manufacturing corporation in 1962. When a credit commitment failed, D'Ippolito sought working capital from other sources. He contacted Castoro, an experienced businessman who, after several meetings, began to advance money to the corporation.
The financial condition of the corporation worsened and it became necessary to obtain loans from the Trenton Trust Company. The loans were secured by notes which were personally endorsed by both Castoro and D'Ippolito. The necessity of endorsing each note periodically became burdensome and on September 20, 1963 a guaranty agreement was signed by Castoro, D'Ippolito and D'Ippolito's wife. The last signature was necessary because D'Ippolito's only asset was a house held by himself and his wife as tenants by the entirety. Castoro, on the other hand, had substantial assets.
The testimony diverges as to the existence and nature of an agreement between Castoro and D'Ippolito as to their liability. The latter testified that they had both discussed their responsibilities and that Castoro felt that since he was the only one with assets he would be responsible but they agreed that "our liability was 50-50. In other words we both had liability". Castoro, on the other hand, testified that there was no agreement as to respective liability except
that D'Ippolito had given assurances that any claim would be satisfied solely by D'Ippolito. The court found that each was to bear a one-half responsibility.
The notes secured by the guaranty agreement fell into default; the corporation became bankrupt; and Trenton Trust secured a default judgment against D'Ippolito, Castoro, and the corporation in the amount of $16,189.89. Apparently under threat of a levy upon his house D'Ippolito agreed with the bank to satisfy the judgment by making an initial payment of $4,000 and twelve monthly installments of $1,000 each. The trial court found that this agreement was consummated not as a voluntary assumption of all payments, but as a means to prevent the sale of D'Ippolito's house.
After $8,000 had been paid, D'Ippolito had exhausted his cash assets and called upon Castoro for help. Castoro, although fully apprised of the impending loss of the D'Ippolito home, refused financial aid even to the extent of payment to the bank of his share of the debt. The bank proceeded to levy upon and sell the D'Ippolito house at a sheriff's sale. Castoro, who had had previous dealings with the bank in an individual capacity, had been kept abreast of developments by the bank's attorney and was present at the sale.
At the sale a bid of $20,000 was made by some unidentified third person but later withdrawn, apparently at the request of the bank's attorney who then advised Castoro to submit a bid of $9,372.30 which represented the amount due to the bank plus costs and interest. Castoro's bid closed the auction. The uncontradicted testimony was that the house had a value of $47,000 of which $22,000 represented D'Ippolito's equity. The remainder represented the unpaid balance of a mortgage and various arrearages.
Having obtained the sheriff's deed, Castoro began an action in the Law Division for eviction. D'Ippolito began an action in the Chancery Division for a reconveyance of the house or alternatively for a money judgment of one-half the amount
paid in satisfaction of the original debt. The two cases were ...