Texas Causes of Action & Affirmative Defenses

Texas Causes of Action & Affirmative Defenses

Need a little legal ammo? Search for caselaw on legal theories and defenses here:

Thursday, June 23, 2011

Suit on personal guaranty: Elements a creditor has to prove to recover from guarantor

LAW OF GUARANTY IN TEXAS 
  
When can a creditor sue the guarantor of a promissory note or contract? 
  
ELEMENT OF SUIT AGAINST GUARANTOR

To recover for breach of the guaranty agreement, [ Plaintiff ] had to establish (1) the existence and ownership of the guaranty agreement, (2) the terms of the underlying contract by the holder, (3) the occurrence of the conditions upon which liability is based, and (4) the failure or refusal to perform the promise by the guarantor. Escalante v. Luckie, 77 S.W.3d 410, 416 (Tex. App.—Eastland 2002, pet. denied). A secured party is not required to dispose of the collateral through foreclosure before suing on the underlying obligation. Christian v. Univ. Fed. Sav. Ass’n, 792 S.W.2d 533, 535 (Tex. App.—Houston [1st Dist.] 1990, no writ). Where a guaranty agreement so provides, a lender need not liquidate its collateral before obtaining judgment against a guarantor. Fed. Deposit Ins. Corp. v. Coleman, 795 S.W.2d 706, 709-710 (Tex. 1990).

SOURCE: Eastland Court of Appeals - 11-09-00196-CV - 6/16/11
 
CITES AND CASELAW SNIPPETS ON ELEMENTS OF ACTION AGAINST GUARANTORS FROM OTHER TEXAS COURTS OF APPEALS 
   
Wiman v. Tomaszewicz, 877 S.W.2d 1, 8 (Tex. App.-Dallas 1994, no writ) (to recover on the guaranty of a note, a party must show proof of the existence and ownership of the guaranty contract, the terms of the underlying contract by the holder, the occurrence of the conditions upon which liability is based, and the failure or refusal to perform by the guarantor). In order to recover on a breach of guaranty agreement, the plaintiff must prove: (1) the existence and ownership of the guaranty agreement; (2) the terms of the underlying contract by the holder; (3) the occurrence of the conditions upon which liability is based; and (4) the failure or refusal to perform the promise by the guarantor. Marshall v. Ford Motor Company, 878 S.W.2d 629, 631 (Tex.App.-Dallas 1994, no writ). 
   
A guaranty agreement is a person's promise to perform the same act that another person is contractually bound to perform. Simmons v. Compania Financiera Libano, S.A., 830 S.W.2d 789, 792 (Tex. App.-Houston [1st Dist.] 1992, writ denied). A guaranty creates a secondary obligation under which the guarantor promises to answer for the debt of the primary obligor if the primary obligor fails to perform. Garner v. Corpus Christi Nat'l Bank, 944 S.W.2d 469, 475 (Tex. App.-Corpus Christi 1997, writ denied). 
  
To recover under a guaranty agreement, a plaintiff must show (1) the existence and ownership of the guaranty agreement, (2) the terms of the underlying contract by the holder, (3) the occurrence of the conditions upon which liability is based, and (4) the failure or the refusal to perform the promise by the guarantor. Byrd v. Estate of Nelms, 154 S.W.3d 149, 157 (Tex. App.-Waco 2004, pet. denied); Roye Enter., Inc. v. Roper, No. 02-04-00132-CV, 2005 WL 1791964, at *3 (Tex. App.-Fort Worth July 28, 2005, no pet.) (mem. op.); see also Simpson v. MBank Dallas, N.A., 724 S.W.2d 102, 107 (Tex. App.-Dallas 1987, writ ref'd n.r.e.) (stating that when a guaranty is in writing and signed by the guarantor, the guaranty's existence presumes consideration). 
  
 "To obtain summary judgment on a guaranty agreement, a party must conclusively prove: (1) the existence and ownership of the guaranty contract, (2) the performance of the terms of the contract by plaintiff, (3) the occurrence of the condition on which liability is based, and (4) guarantor's failure or refusal to perform the promise." Corona v. Pilgrim's Pride Corp., 245 S.W.3d 75, 80 (Tex.App.-Texarkana 2008, pet. denied). Barclay v. Waxahachie Bank & Trust Co., 568 S.W.2d 721, 723 (Tex.Civ. App.-Waco 1978, no writ). 
   
Recovery on a Promissory Note and Guaranty 
   
To recover for a debt on a promissory note, a party must establish that it is the legal holder of the note, the debtor's execution of the note, and that an outstanding balance is due and owing. Austin v. Countrywide Homes, 261 S.W.3d 68, 72 (Tex. App.-Houston [1st Dist.] 2008, pet. denied). To recover on the guaranty of a note, a party must show proof of the existence and ownership of the guaranty contract, the terms of the underlying contract by the holder, the occurrence of the conditions upon which liability is based, and the failure or refusal to perform by the guarantor. Wiman v. Tomaszewicz, 877 S.W.2d 1, 8 (Tex.App.-Dallas 1994, no writ). 

RELATED CAUSES OF ACTION

Suit for breach of note, default under promissory note, breach of contract, breach of residential or commercial lease agreement, personal guaranty agreement, corporate guaranty [not guarantee], suit for judicial forclosure of security interest in collateral, suit for deficiency judgment

No comments:

Post a Comment