Summary:
A commercial guarantee and Deed of Trust in the amount of $250,000.00 was executed by Prudential Investors, L.L.C., of which the Male Debtor was 50% owner. The commercial guarantee defined the "guarantor" as the Male Debtor, but the Female Debtor also signed under the word "Guarantor." At the same time, the Male Debtor also signed two $100,000.00 notes that included the words "personal guaranty" under the signature line on an addenda to the notes.
The Male Debtor alleged that he had, in fact, forged his wife’s name to the commercial guarantee. The Court found that the creditor had the burden of both producing persuasive evidence that the Female Debtor had signed the guarantee. Based on the creditor’s failure to produce any evidence, coupled with the definition of "guarantor" in the contract to be only the Male Debtor, the Court found that this was not a joint obligation.
Next the Debtors argued that the words "personal guaranty" were insufficient under the statute of frauds to establish personal liability. Citing to Marvel Lamp Co. v. Capel, 45 N.C. App. 105, 108 (1980), the Court held that a personal guarantee must at least "establish the amount the defendant was to pay, the payment date, or the event determining when payment was due." As the addenda did not include any of such terms, neither satisfied the "writing" requirement of the Statute of Frauds. Accordingly, the two $100,000.00 notes were disallowed.
The creditor’s motion to dismiss or convert the case to Chapter 7 was deferred, pending investigation by the Bankruptcy Administrator.
Comments:
The deadline to file an Objection to Discharge was May 9, 2011, and none has been filed.
In re Sisler- Burden of Proof in Forgery; Requirements in establishing personal guarantee.PDF
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