Frishman v. Canadian Imperial Bank Of Commerce

Facts

Abel Construction Co., Ltd. got a loan in the amount of $185,000 from the Canadian Imperial Bank of Commerce (P). P demanded assignment of the Company's accounts receivable and the personal guarantees of its four shareholders. The Company signed a demand promissory note and made an assignment of its receivables, but it delivered only three of the four required guarantees. P credited the Company's account with the face amount of the loan. Thereafter (a few days later), the guarantee of the fourth stockholder, Mr. Bernard Frishman (D), was signed and delivered to the Bank. Two months later, in June, P wrote D requesting him to place his signature on a copy of the guarantee to assure that he had indeed signed the original personally and understood its import. D replied that he guaranteed only ten percent of the loan and that amount for a period of only one year. P responded with a rejection of these conditions, and D then authenticated a copy of the guarantee. Eventually, P called the note. The Company took bankruptcy. P then made a demand on D for $198,273.99 upon his guarantee, which figure represented the original loan of $185,000 with interest, plus the overdraft. D declined payment, and P sued. Judgment was entered against him in the District Court in the sum of $12,042.00 (the overdraft), plus interest on that amount from October 23, 1963, plus costs, and in his favor on the balance of the claim. P appealed. D argued that his guarantee, having been executed after the loan had been made, was without consideration and therefore of no binding effect upon him. P claims that the document had been executed under seal, which purported consideration, and that therefore no independent consideration was needed. P says its forbearance to call the note of the Company, it being a demand note, constituted a valid consideration for the guarantee bond.

Issues

Rule of Law

Holding and Decision

Legal Analysis

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