Dreier, J.d.c., Temporarily Assigned.
Plaintiff has moved for summary judgment against two signers of unconditional and continuing guaranties of the obligations of F.L.M. Business Machines, Inc. (hereinafter referred to as F.L.M.). Although there were several parties who executed the guaranty form, the issues in this case involve only defendants John D. MacMahon and estate of Horace Goodenough (the late Mr. Goodenough having been one of the endorsers).
The parties have submitted this case on an agreed statement of facts, the pertinent portions of which are as follows: The $37,500 promissory note upon which the bank bases its claim was executed by F.L.M. and delivered to the bank on September 27, 1971. It was signed on behalf of the corporation by Robert G. Walker and Richard Froumi, who are also guarantors and against whom judgment has already been entered. The note was due on October 27, 1971.
The history of F.L.M.'s relationship with the bank as a borrowing customer extends back to February 1967. On July 31, 1970 defendant MacMahon, decedent Horace Goodenough and other officers and directors of F.L.M. executed and delivered to the bank an unconditional and continuing guaranty of the obligations of F.L.M. Four days later, on August 4, 1970, the bank advanced the sum of $45,000 to F.L.M., evidenced by the corporation's note. This transaction consisted of a renewal by the bank of $12,500 of prior F.L.M. obligations and a new loan of $32,500. The $45,000 would not have been advanced if the guaranty were not executed and delivered. (In addition, although it is deemed by this court not to be pertinent to the present inquiry, the note was personally endorsed by Horace Goodenough and one other defendant).
The original note had a 90-day maturity to November 2, 1970. Ten days after the due date the note was replaced by a note dated November 12, 1970 in the same amount, and thereafter was successively renewed, although on February 18, 1971 F.L.M. made a principal payment of $7,000, thereby reducing the principal amount to $37,500. Renewals were made on February 18, 1971, March 19, 1971, and June 3, 1971. These notes are not available and the parties have no indication as to whether these notes had been marked "paid," "paid by renewal," or "renewed." Each time the note was renewed interest was discounted in advance.
Horace Goodenough died on June 11, 1971, and within one day plaintiff's branch manager was notified of his death. The bank's credit department received immediate notification by the branch manager.
On July 14, 1971 the bank accepted another new promissory note from F.L.M. and returned the note of June 3, 1971. There was no notification by the bank to the estate of this transaction. The procedure was repeated on August 13, 1971, again with no notice to the estate.
On September 8, 1971 defendant MacMahon (whose employment had been terminated May 19, 1971) resigned as an officer and director of F.L.M. and gave formal notice to the bank that he terminated and revoked his obligations under the guaranty. This notification was received by the bank on September 13, 1971.
On September 27, 1971 the bank again renewed the corporate obligation, and it is this note of September 27, 1971 that is the basis of plaintiff's suit. After the application of the value of corporate collateral, the balance due is $27,406.74 plus interest and costs.
The guaranty in question is the usual complicated, small-print type of banker's guaranty, in general use throughout the State, and is entitled "Guarantee [ sic ] of all Liability." The pertinent parts read as follows:
In order to induce the First State Bank of Union, Union, N.J., (hereinafter called the "Bank"), its successors, subsidiaries, endorsees
or assigns to make such advances, loans, discounts or extensions of credit as it may deem advisable directly or indirectly to or for the account of
F.L.M. BUSINESS MACHINES INC.
for any one or more of them jointly and/or severally (each, any and all of whom are hereinafter called "Borrowers") and/or to grant to or for the account of Borrower such renewals, extensions, forbearances, releases of collateral or other relinquishments of legal rights as Bank may deem advisable, and in consideration of advances, loans, discounts or extensions of credit, due or to become due, heretofore made to Borrower and for other valuable consideration, receipt of which is hereby duly acknowledged, the undersigned (each, any and all of whom are hereinafter called "Guarantor", and who, if two or more in number, shall be jointly and severally bound hereunder) hereby guarantee to the Bank its successors, subsidiaries, endorsees, and assigns, the prompt and unconditional payment of each and every obligation of Borrower to Bank, its successors, subsidiaries, endorsees, or assigns whether or not represented by negotiable instruments or other writings, whether direct or indirect, absolute or contingent, due or not due, secured or unsecured, original, renewed or extended, now in existence or hereafter incurred, originally contracted with Bank or with another or others and assigned or transferred to or otherwise acquired by Bank, and whether contracted by Borrower alone or jointly and/or severally with another or others (all of the aforementioned being hereinafter referred to as "Obligations").
Guarantor consents that, without notice to or further assent by Guarantor, the liability of Borrower or of any co-guarantor or of any other party for or upon any of the aforesaid Obligations may from time to time, in whole or in part, be renewed, extended, modified, prematured, compromised or released by Bank, as it may deem advisable, that any collateral and/or lien or liens for any of the aforesaid Obligations, or for this guarantee, may from time to time, in whole or in part, be exchanged, sold, or surrendered by Bank, as it may deem advisable and that any deposit balance or balances to the credit of Borrower or any party liable for or upon any of the aforesaid Obligations may from time ...