Lakemore Plaza, Inc. v. Shoenterprise Corp.

188 N.E.2d 203, 91 Ohio Law. Abs. 140, 22 Ohio Op. 2d 469, 1962 Ohio Misc. LEXIS 217
CourtTuscarawas County Court of Common Pleas
DecidedJanuary 5, 1962
DocketNo. 35374
StatusPublished
Cited by4 cases

This text of 188 N.E.2d 203 (Lakemore Plaza, Inc. v. Shoenterprise Corp.) is published on Counsel Stack Legal Research, covering Tuscarawas County Court of Common Pleas primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Lakemore Plaza, Inc. v. Shoenterprise Corp., 188 N.E.2d 203, 91 Ohio Law. Abs. 140, 22 Ohio Op. 2d 469, 1962 Ohio Misc. LEXIS 217 (Ohio Super. Ct. 1962).

Opinion

Lamneck, J.

The plaintiff in this action seeks to recover the sum of $70,000 from the defendant, alleged to be due under a real estate lease and a “Guarantee of Lease,” because of the refusal of a lessee to perform the eonvenants and conditions of said lease which the plaintiff claims in its petition that the defendant guaranteed.

It is alleged in the petition that the plaintiff corporation leased certain premises described in the petition to one Elmer Klopper for a period of ten years on February 20, 1959; that on or about February 20, 1959, he assigned said lease to the Lakemore Shoe Corporation; that on or about September 3, 1959, the plaintiff consented to said assignment; that on or about March 18, 1959, the defendant executed and delivered to the plaintiff a certain written instrument styled a “Guarantee of Lease” in which it promised and agreed “to pay unto the within named lessor (Plaintiff), its successors or assigns such sum or sums of money as will be sufficient to make up such deficiencies, and all damage that may accrue to lessor by reason of the violation or non-performance of any of the covenants of this lease” by the lessee.

[142]*142In the instrument styled ‘ ‘ Guarantee of Lease ” it is stipulated :

“provided, however, that Shoenterprise Corporation shall be given twenty (20) days prior written notice by registered mail of Lessor’s intention to declare a default in said lease and if action has been taken to remedy the condition complained of within the twenty (20) day period no default shall be declared in said lease, and provided further that in the event default is declared in said lease or in the event Shoenterprise Corporation is requested to make any payments or do anything under the terms of this guarantee that Shoenterprise Corporation shall have the right at its option to be considered as and recognized as Lessee and shall have the right and privilege of assigning this lease under the same terms and conditions to its nominee for any lawful purpose approved by Lessor such approval not to be unreasonably withheld.

“This Guarantee shall be a continuing one and shall not be affected in any way by the bankruptcy or insolvency of the Lessee or its successors and assigns or by a disaffirmance or abandonment by a Trustee of such Lessee, its successors or assigns.”

The defendant filed a demurrer to the plaintiff’s petition on the ground that the petition does not state a cause of action.

The defendant claims that the guaranty is conditional and that it is not liable until the plaintiff has exhausted his remedies, against the lessee. There is no allegation in the petition that the plaintff exhausted his remedies against the lessee, The Lake-more Shoe Corporation.

Under Section 1303.41, Eevised Code, it is provided that “the person primarily liable on an instrument is the person who by its terms is absolutely required to pay it. All other persons are secondarily liable. ’ ’

The defendant further claims that the plaintiff failed to comply with the condition contained in the guaranty that the defendant guarantor “be given twenty (20) days written notice by registered mail of Lessor’s intention to declare a default in said lease.”

Where a guaranty is absolute, the creditor may proceed against a guarantor without first exhausing his remedies against the principal debtor. Where the guaranty is conditional, the [143]*143guarantor is not liable to a suit by a creditor until tbe creditor has first exhausted his remedies against the principal debtor.

Is the guaranty alleged in this case absolute or conditional?

In determining whether a guaranty is absolute or not, the weight of authority seems to be that a guaranty is absolute:

(1) If it is an absolute guaranty instead of a “guarantee,” and

(2) If it is not dependent upon any condition expressed or implied, and

(3) If the guaranty of payment is part of the instrument of the original obligation for the same consideration and at the same time, and not in a separate instrument for a different consideration executed at a different time.

In Madison National Bank v. Webster, 117 Ohio St., 290, 158 N. E., 543, the instrument read “we jointly and severally hereby guarantee the payment of all money and credit,” etc. In that case the court held that the instrument was a conditional guaranty and not absolute.

In Liquidating Midland Bank v. Stecker, 40 Ohio App., 510, 179 N. E., 504, the instrument on which the action was based read:—

“The undersigned . . . guarantee to The Midland Bank . . . the full and prompt payment of the principal of and interest on said temporary bonds,” etc. This was held to be conditional guaranty.

In the instant petition, the instrument executed separate from the lease, for a different consideration, and at a subsequent time, is styled “Guarantee of Lease.” In the body of the instrument it is provided, “that in the event default is declared in said lease or in the event Shoenterprise Corp. is requested to make any payments or do anything under the terms of this guarantee” etc. In the last paragraph of the instrument it is stated, ‘ ‘ This Guarantee shall be a continuing one and shall not be affected by the bankruptcy,” etc.

An absolute guaranty is one “not dependent upon any condition or contingency expressed in or implied from the contract.” See 26 Ohio Jurisprudence (2d), 307, Section 9.

Under the terms of the instrument styled “Guarantee of Lease,” the defendant is liable thereunder if there is;

[144]*1441. A default on tbe part of tbe lessee or its successors, and

2. Only for “sucb sum or sums of money as will be sufficient to make up such deficiencies,” and

3. If tbe defendant is “given twenty (20) days prior written notice by registered mail of Lessor’s intention to declare a default in said lease.”

Tbe use of tbe word ‘ ‘ guarantee ’ ’ three times in tbe instrument itself and tbe foregoing provisions seem to indicate that tbe instrument in controversy was intended to be a conditional guaranty.

In Liquidating Midland Bank v. Stecker, supra, on page 521, tbe following appears:—

“It appears clear to us that tbe courts distinguish a guaranty of payment, which is made upon tbe instrument of tbe original obligation, for tbe same consideration and at tbe same time, from a contract of guaranty which is embodied in a separate instrument for a different consideration and executed at a different time. Tbe former contract is held by many courts to be simply a contract of surety, where tbe obligation of tbe surety arises upon tbe failure of tbe principal to pay,- whereas, tbe latter contract is a guaranty with tbe obligation of a guarantor to pay only if it is proven that a principal cannot or is unable to pay.”

Also in Madison National v. Weber, supra, on page 293, tbe court said:—

“A surety is primarily and jointly liable with tbe principal debtor. His obligation is created concurrently with that of the principal debtor. An action can be maintained against both jointly, even without statutory authority so to do.

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Cite This Page — Counsel Stack

Bluebook (online)
188 N.E.2d 203, 91 Ohio Law. Abs. 140, 22 Ohio Op. 2d 469, 1962 Ohio Misc. LEXIS 217, Counsel Stack Legal Research, https://law.counselstack.com/opinion/lakemore-plaza-inc-v-shoenterprise-corp-ohctcompltuscar-1962.