530 P.2d 841 | Or. | 1975
This is a suit by plaintiff creditor to foreclose a mortgage and obtain a deficiency judgment against defendant Pioneer Investment Company (PICO) and its guarantors, defendants Matott,
The only question before us is whether the pleadings reveal a cause of suit against defendants Clark and Babcock as guarantors. The complaint alleged a mortgage in 1967 which covered a note of the same date and also future advances, a guarantee by defendants in 1968 guaranteeing the past and future indebtedness of PICO to plaintiff. The complaint alleged that in 1973 PICO executed a note payable to plaintiff which is unpaid and that plaintiff relied on the guarantee in making the 1973 loan.
Defendants Babcock answered, denying plaintiff’s reliance on the guarantee, but admitting all other relevant allegations of the complaint. In addition they alleged that the guarantee sued upon was given on the strength of plaintiff’s representations that it would be applied only to credit extended PICO to finance completion of a particular contract with a named third party and that all loans for that purpose have been repaid. The Babcocks’ answer also alleged that plaintiff continued to represent to defendants that it did not rely on the personal guarantees as security for other notes issued by PICO, that it considered the guarantee no longer to be binding after the repayment of the particular loans which it was intended to cover, and that defendants relied on those representations in failing to notify plaintiff to stop making advances to PICO.
Plaintiff did not reply to the allegations of new
We find that the demurrer was improperly sustained. The complaint, which incorporated a copy of the guarantee, clearly states that defendants Matott, Babcock and Clark personally guaranteed payment to plaintiff of “all liabilities * * * [of PICO], until * * * notice” to stop advances, “in consideration of financial accommodations given or to be given * * * and in consideration of the Bank’s agreeing to deal with the Customer [PICO] * * In addition, the complaint alleges that plaintiff advanced money to PICO after the guarantee and in reliance on it and that defendants had not notified plaintiff to stop making advances. As recognized in Balfour, Guthrie & Co. v. Knight,
Defendants argue that the future advances can not serve as consideration for their guarantee in this case because plaintiff has not sued on the note repre
Defendants also argue that the order of dismissal should be affirmed even if the complaint is sufficient, because a demurrer “searches the record” and the answer by defendants Babcock alleges a good defense effectively admitted by plaintiff through its failure to reply.
Reversed and remanded for further proceedings consistent with this opinion.
Defendants Matott were not served and have played no part in this litigation.
Defendants Martin and the United States of America hold liens against the corporate defendant. Neither is involved in this appeal.
Defendant Clark also demurred on the ground of misjoinder of parties. This demurrer was properly overruled and is not a subject of this appeal.
86 Or 165, 171, 167 P 484 (1917).
Defendants’ reliance on Tomihiro v. United Hotel Corp., 145 Or 629, 28 P2d 880 (1934) is misplaced. In that case it was held that a guarantee of a past obligation of the debtor required new and independent consideration. In the present case the complaint alleges new consideration in the form of an agreement to extend future credit.
See ORS 16.620.
Clark on Code Pleading § 83, P. 525 (2d ed 1947).
ORS 16.130.
See ORS 16.050. Even if it is determined that plaintiff should not be allowed to reply to the answer, this would not benefit defendant Clark who has not yet answered.