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I am a stockholder in a very small corporation. A bank, as a
condition of making loans to the corporation, requred me several years
ago to sign a guaranty in which I guaranteed "any note now existing or
any note hereafter arising." I understand that I am on the hook for
all loans the bank has made to this corporation. How do I release
myself from liability for future loans? Can I merely notify the bank
that I will no longer be liable? Do I need to get a written release
from the bank? (I am in Texas.)
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In article <mm4fu3liee2hqaf4ag97reffh711upn614@4ax.com>,
<NOSPAM@joinme.com> wrote:
I am a stockholder in a very small corporation. A bank, as a
condition of making loans to the corporation, requred me several years
ago to sign a guaranty in which I guaranteed "any note now existing or
any note hereafter arising." I understand that I am on the hook for
all loans the bank has made to this corporation. How do I release
myself from liability for future loans? Can I merely notify the bank
that I will no longer be liable?
Give them advance notice of 'intent to breach' a valid contract? *NOT*
a good idea. <grin>
`
Do I need to get a written release
from the bank? (I am in Texas.)
Bingo.
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NOSPAM@joinme.com wrote:
[guaranteed current and all future loans]
How do I release
myself from liability for future loans? Can I merely notify the bank
that I will no longer be liable? Do I need to get a written release
from the bank? (I am in Texas.)
Since you guaranteed all future loans, you'll need a release from the
bank unless the guarantee document you executed has an escape clause
allowing you to unilaterally withdraw.
I would suppose the bank would permit this but it may also mean that it
won't agree to any new notes unless they have another guarantor.
-paul
ianal
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On Mon, 24 Mar 2008 07:39:40 -0400, NOSPAM@joinme.com wrote:
I am a stockholder in a very small corporation. A bank, as a
condition of making loans to the corporation, requred me several years
ago to sign a guaranty in which I guaranteed "any note now existing or
any note hereafter arising." I understand that I am on the hook for
all loans the bank has made to this corporation. How do I release
myself from liability for future loans? Can I merely notify the bank
that I will no longer be liable? Do I need to get a written release
from the bank? (I am in Texas.)
Of course a recent release from the bank would be best. But what if
you don't get it? Will you go further and further into hock because
of that thing you signed?
Were you the majority stock holder when you signed the guaranty? Or
you and your family had more than 50%? If not, why did you do it?
Can't the company borrow millions and then lose it, or hide it, or
just not pay it back and you'll be on the hook for all that?
IANAL but despite the first two answers you got, I can't believe that
you can't withdraw your guaranty on future loans.
They relied on your guaranty presumably to make the loans they've made
so far, but it will be hard for them to argue reliance after you tell
them you won't do it anymore.
Or would they argue they wouldn't have made the first two loans if
they hadn't relied on your promise to guaranty all future loans. That
argument just doesn't ring true to me. I would have thought the
reference to future loans was just so they didn't have to go though
the effort to get you and them to sign every time, so things could
proceed quickly. I think that should be your position.
I presume I have promised to pay for every oil delivery I get, in the
future, but I surely can call them and tell them to stop delivering
oil.
Does the paper you signed address what happens if you change your
mind? What does it say? Who drew the contract? If they did and if
it doesn't address that, I would argue that it should be interpreted
in your favor. I forget what that principle is called.
I'll bet they drew the contract and that there is nothing in the
contract about your changing your minnd, because if you had read that
you have no right to change your mind, even you wouldn't have signed
the contract. That's one reason WHY it should be interpreted in your
favor.
What consideration did you get for signing the guaranty? Just the
fact that they made the loan? Is that adequate consideration, since
the loan goes to the company and not to you? I suppose they might
argue that whatever consideration you got applied to every loan to be
made because it is all one contract.
What would happen if you lost all your money and in practice, couldn't
guaranty anything? Wouldn't they want to know about that, so they
could stop lending money?
I guess you should talk to a lawyer in your state. I can't believe,
despite what you signed, the law would hold you responsible for
transactions that haven't taken place yet, if you notify the other
party before it does take place. Just like you're planning to do.
I'm not sure it's in your interest to call it a release. Maybe you
should speak as if it's would be an obligation that you have not yet
incurred. The use of "release myself" also sounds bad. Loads of
people would like to release themselves from their obligations but it
generally sounds impossible, dishonest, and self-centered. I would
stick to things like notifying them that you will not guaranty future
loans. That sounds fair.
Faced with notification that you won't guaranty future loans, would
they actually make more loans? Who else is guaranteeing these loans
and/or how likely is it that the company itself will have the ability
to repay them? If you are their best recourse and you say you won't
pay, then they'd be fools to make more loans, even if they might in
the future win in court and be able to force you to pay. And if there
are no future loans, there is no debt for you to pay, whether you are
forced or not.
Have the earlier loans been repaid, or is the company sinking deeper
and deeper into debt?
If you are inclined to email me
for some reason, remove NOPSAM :-)
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On Mar 24, 7:39=A0am, NOS...@joinme.com wrote that he'd signed with a
bank that he guaranteed for a corporation in which he held stock "any
note now existing or any note hereafter arising." He wants to stop.
Is this an occasion where he could publish a legal notice in the
newspaper, as those getting divorced used to, "not responsible for
debts other than my own"?
--
- David Chesler <chesler@post.harvard.edu>
Free Cory Maye
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David Chesler <chesler@post.harvard.edu> wrote:
NOS...@joinme.com wrote that he'd signed with a
bank that he guaranteed for a corporation in which he held stock "any
note now existing or any note hereafter arising." He wants to stop.
Is this an occasion where he could publish a legal notice in the
newspaper, as those getting divorced used to, "not responsible for
debts other than my own"?
Doubtful it would do any good. At common law a guarantor could
prospectively cancel his guarantee at any time. OP needs to read his
guarantee agreement to see exactly what it says on this issue.
Stu
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