AI Generated Opinion Summaries

This summary was computer-generated without any editorial revision. It is not official, has not been checked for accuracy, and is NOT citable.

Facts

The Defendants borrowed $165,000 from a bank (predecessor to the Plaintiff) in 1982 for their corporation, Kennedy, Inc., which operated a car dealership. The Defendants signed personal guarantees for the loan. After selling their interest in the corporation in 1984, the new owners also signed guarantees. In 1985, the bank modified the loan terms and released one guarantor without notifying the Defendants. The loan later defaulted, leaving $104,730.30 unpaid (paras 2-5).

Procedural History

• District Court of San Juan County: Granted summary judgment in favor of the Plaintiff, Sunwest Bank, holding the Defendants liable for the unpaid loan amount.

Parties' Submissions

• Defendants (Appellants): Argued that the bank's release of a co-guarantor and extension of the loan terms without their consent discharged their liability. They also contended that the new owners of the corporation became co-makers of the loan, which should have affected their obligations (paras 6, 8-10, 13, 15).
• Plaintiff (Appellee): Asserted that the Defendants remained liable as makers of the loan and that the release of a subsequent guarantor and loan modifications did not affect their obligations. The Plaintiff emphasized that the Defendants had agreed to remain personally liable (paras 11-14, 16).

Legal Issues

• Did the release of a co-guarantor and the extension of the loan terms without notice to the Defendants discharge their liability?
• Did the new owners of the corporation become co-makers of the loan, thereby affecting the Defendants' obligations?

Disposition

• The Supreme Court of New Mexico affirmed the District Court's decision, holding the Defendants liable for the unpaid loan amount (para 18).

Reasons

Per Baca J. (Sosa C.J. and Wilson J. concurring):

• The Defendants' argument that the new owners became co-makers of the loan was rejected. The Court found that the new owners were subsequent guarantors, not co-makers, and their release did not affect the Defendants' liability (paras 10-12).
• The Defendants, as makers of the loan, remained primarily liable. Their personal guarantees explicitly allowed for modifications or extensions of the loan without notice, and they had agreed to remain personally liable even after transferring the debt to the corporation (paras 13-16).
• The Court distinguished this case from precedent involving material alterations to obligations, noting that the Defendants had consented to modifications and extensions in their agreements. The Defendants' liability was absolute, and they had no valid defense against the Plaintiff's claim (paras 16-18).