B-120
ALTERNATE CASE PROBLEM ANSWERS
CHAPTER 28
CREDITORS’ RIGHTS AND REMEDIES
28-1A. Rights of the guarantor
(Chapter 28—Page 553)
The trial court ruled in favor of the defendants on the ground, in part, that the changes Bear Park and
the Brunsons made in the amounts of the payments constituted a material change in the terms of the
note. Kirkland appealed. The court of appeals affirmed the decision of the trial court, holding that the
without the consent of Defendants, thereby extinguishing any guarantor liability of Defendants.”
28-2A. Writ of attachment
(Chapter 28—Pages 547–548)
28-3A. Guaranty
(Chapter 28—Pages 550–553)
The court granted the McClintocks’ motion for summary judgment, and Jamieson-Chippewa appealed to
a state intermediate appellate court, which affirmed the decision of the lower court. The appellate
court held that a guaranty “must expressly indicate the intention of the parties that the guaranty
continue in order to hold the guarantor liable” for a lease renewal term. The court defined a continuing
guaranty as “one that contemplates guaranteeing a series of possible transactions between the debtor
and creditor, rather than only a single such transaction.” The court pointed out that “Ii]t is the guaranty
28-4A. Guaranty
(Chapter 28—Pages 550–552)
28-5A. Garnishment
(Chapter 28—Pages 548–549)
The federal district court denied Trail Creek’s motion to dismiss the complaint. Federal law provides
B-122 APPENDIX B: ALTERNATE CASE PROBLEM ANSWERS—CHAPTER 28
28-6A. Garnishment
(Chapter 28—Pages 548–549)
The conveyance from John to his mother appears to have been fraudulent, but fraud is very difficult to
prove. There are, however, a number of elements that tend to prove fraud, and some of those elements
are present in this case. First, the transaction occurred between close relatives. Second, John lacked
28-7A. Rights of the guarantor
(Chapter 28—Page 553)
Edward Peevy prevailed in court. The trial court granted Peevy’s motion for summary judgment, holding
that notice to a guarantor of the sale of collateral was a necessary prerequisite to seeking a deficiency
28-8A. Guaranty
(Chapter 28—Pages 550–552)
The court issued a summary judgment in favor of the Wards in the amount of $46,252.98. Both parties
28-9A. Right of subrogation
(Chapter 28—Page 553)
No. American Thermex had no legal right of subrogation. The right of subrogation is extended only to
28-10A. A QUESTION OF ETHICS
1. To obtain a foreclosure order, a creditor has to prove that it is the owner of the note and
mortgage and that the debtor has defaulted on the note. The most effective defenses to such an action
are payment, discharge, release, satisfaction, or the invalidity of the alleged obligation.
2. The court acknowledged that Ryder had breached the settlement and stated that the bank
could have sought relief based on this breach. The court interpreted the bank’s motion to reopen the
case, however, as the bank’s seeking to enforce both some of Ryder’s original obligations under the note
and mortgage and some of his obligations under the settlement. The court found this to be