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Case Citations [1] (Spring 2024)

handle is hein.ali/retsgy0596 and id is 1 raw text is: THE AMERICAN LAW INSTITUTE Spring 2024 Citations SURETYSHIP AND GUARANTY 3D CHAPTER 2. FORMATION, ENFORCEMENT, AND INTERPRETATION OF THE SECONDARY OBLIGATION TOPIC 2. ENFORCEMENT OF THE SECONDARY OBLIGATION § 12. When Secondary Obligation Is Voidable Due to Misrepresentation U.S.2023. Cit. in sup. Judgment creditor filed an adversary complaint against Chapter 7 debtors, seeking determination that the underlying state-court judgment against debtors was nondischargeable, because they were found jointly responsible for failing to disclose material defects of property sold to creditor. After bench trial, the trial court entered judgment for plaintiff, finding that, although only one debtor oversaw the renovations, the discharge exception applied to both debtors, because they formed a legal partnership to renovate and sell the property. The bankruptcy appellate court reversed. The Court of Appeals reversed. Affirming, this court held that, under the federal Bankruptcy Code, discharge exceptions for debt applied to both debtors' regardless of culpability, because debtors' debt was obtained by fraud. The court cited Restatement Third of Suretyship and Guaranty § 12 in illustrating examples of faultless individuals being absolved of responsibility for another's action when the two had a special relationship, such as when sureties were duped into assuming secondary liability. Bartenwerfer v. Buckley, 143 S.Ct. 665, 676. § 13. Assignment of Obligee's Rights Ill.App.2023. Cit. in sup., com. (f) cit. and quot. in sup. Assignee of borrower's second promissory note sued guarantor who executed a guaranty in favor of lender as a security on borrower's original note, alleging that guarantor owed assignee payments under the guaranty, because borrower defaulted on the second note. The trial court granted assignee's motion for summary judgment. This court affirmed, holding that the guaranty executed by guarantor was a continuing guaranty for all indebtedness incurred by borrower. The court explained that no explicit assignment of the guaranty was necessary for assignee to enforce the second note, because, under Restatement Third of Suretyship and Guaranty § 13, the guaranty followed the note; here, the guaranty provided no agreement prohibiting the guaranty's COPYRIGHT (2024 By THE AMERICAN LAW INSTITUTE All rights reserved Printed in the United States of America For earlier citations, see the Appendices, Supplements, or Pocket Parts, if any, that correspond to the subject matter under examination.

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