Wilson Leasing Co. v. Seaway Pharmacal Corp.

220 N.W.2d 83, 53 Mich. App. 359, 14 U.C.C. Rep. Serv. (West) 1483, 1974 Mich. App. LEXIS 1148

• Court: Michigan Court of Appeals
• Decided: May 29, 1974
• Docket: Docket 15250
• Status: Published

Opinions

O’Hara, J.

This case was originally assigned to Judge R. B. Burns for the preparation of the Court’s opinion. He has fully set forth the necessary facts and we agree with his opinion except as to the holding concerning the application of the funds paid over by the individual guarantors of corporate debts.

We do not read Chris Nelsen & Son, Inc v Shubow, 374 Mich 403; 132 NW2d 122 (1965), as does our colleague. True, there is language in Shubow which tends to obscure its basic decisional holding.

The fact situation in the case at bar is so essentially different from that in Shubow that the difference renders the case inapposite — whatever the legal effect of the opinion may be.

In this case the corporate officers personally guaranteed two specific leases. They made certain payments to Wilson pursuant to that guaranty. Wilson applied, as Judge Burns correctly notes, the bulk of these payments to the two guaranteed leases. For some inexplicable reason Wilson applied $777.70 to the balance due on two leases which were not guaranteed. This was totally impermissible. Whatever Shubow says about crediting payments made, the application of which is unspecified, it certainly does not say the guarantors can become liable for a payment they did not guarantee. Thus we hold that on remand the trial judge is to credit the $777.70 to the amount due on the two leases which were individually guaranteed.

Subject to the foregoing exception we join in the reversal and remand, and the award of no costs.

Danhof, J., concurred.