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December 7, 1984


The opinion of the court was delivered by: NEAHER



 This case is before the Court upon cross-motions for summary judgment. The motions concern the liability of defendant as an asserted guarantor for the balance plus interest of a demand promissory note which plaintiff obtained as the receiver of the insolvent Franklin National Bank (FNB).

 The following facts are not in dispute. Defendant and her husband, Willy Schuhmacher, were employees of H & S Restaurants, Inc. (H & S), a catering enterprise located in Nassau County. Their boss was Carl Hoppl. On November 28, 1972, defendant and her husband executed and delivered a guarantee to FNB. In paragraph 1 they absolutely guaranteed the obligations of H & S to the bank, "whether now existing or hereafter incurred." Exh. A to Affidavit of Simon Levy, Liquidation Assistant for FDIC. On April 8, 1974, Carl Hoppl, as president of H & S, signed a secured promissory note for $ 195,000. FNB held the note until October 8, 1974, when the Comptroller of the Currency declared the bank insolvent and appointed plaintiff as receiver. As receiver, plaintiff transferred the note and the guarantee to itself in its corporate capacity.

 Plaintiff commenced this action on February 25, 1980, against defendant and her husband. Subsequently, Willy obtained a discharge of his liability on the guarantee in bankruptcy and was dismissed from the suit.

 Because defendant's motion for summary judgment relies entirely upon the affirmative defenses of the statute of limitations and laches, the Court will turn first to plaintiff's motion, which addresses the merits of its prima facie case to establish defendant's liability on the guarantee. Essentially, to establish liability, plaintiff relies upon the language of the guarantee and the documentary evidence of the April 4, 1974 loan.

"Where the language of a guaranty is unambiguous, no need exists to resort to other means of interpretation, and effect must be given to the parties' intent as indicated by the language itself. E.g., Western Union Tel. Co. v. American Communications Assoc., 299 N.Y. 177, 86 N.E.2d 162 (1949). The meaning to be given such an instrument is an issue of law, for the court's determination. Salzman v. Bowyer Productions, Inc., 42 A.D.2d 531, 344 N.Y.S.2d 755 (1st Dept. 1973)."

 Leslie Fay, Inc. v. Rich, 478 F. Supp. 1109, 1113 (S.D.N.Y. 1979).

 Defendant responds that a document obtained from plaintiff suggests that FNB may not have relied upon her guarantee when it loaned money to H & S on April 8, 1974. Assertedly, this document creates an issue of fact concerning FNB's reliance on the guarantee. Premised on this document, defendant requests further discovery of FNB's records concerning the exact circumstances of the April 8, 1974 transaction. Significantly, Carl Hoppl, a principal to the transaction, is deceased; however, there is nothing in the parties' papers concerning the identity or availability of an individual(s) from FNB who handled the transaction for the bank.

 Defendant's contention stems from a document entitled: "Description of 'Additional Assets' rejected by European-American Bank & Trust Company (Assuming Bank): Right, Title and Interest in which Remain with FDIC, Receiver of Franklin National Bank." Exh. A to Ryan Affidavit. It lists the note of April 8, 1974, and describes the same collateral which appear on the face of the note. It also contains the following:

 "Endorser(s) or Guarantor(s) None."

 In response, Levy, Reply Affidavit para. 6, states that someone has told him that this form was prepared by European-American Bank. "It was not intended to be -- and is not -- a binding or conclusive description of the obligations of H & S Restaurants, Inc. and of any underlying guarantees." Id. Levy attributes the absence of the guarantee from this form to oversight arising from the time constraints of the FNB insolvency. Within 180 days European-American had to accept or reject thousands of FNB's loans.

"It is, of course, elementary that a creditor's right to enforce a contract of guaranty must be based upon knowledge of the existence of the guaranty and that the credit must be extended in reliance thereof, 24 Am. Jur., pp. 884-885, * * *"

 Calcot Association Ltd. v. Coast Cotton Mills, 140 Cal. App. 2d 268, 295 P.2d 1, 4 (1956). This rule applies to a "general" guarantee, J.C. Wattenbarger & Sons v. Sanders, 216 Cal. App. 2d 495, 30 Cal. Rptr. 910, 915 (1963); Joe Balestrieri & Co. v. Commissioner of Internal Revenue, 177 F.2d 867, 873 (9th Cir. 1949); ...

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