International Multifoods Corp. v. Mardian

FOSHEIM, Chief Justice

(dissenting).

I dissent. Under SDCL 56-1-18 “[t]he obligation of a guarantor must be neither larger in amount nor ... more burdensome than that of the principal,.... ” [Emphasis added.] The majority concludes, however, that the guarantor may waive the protections of SDCL 56-1-18. Upon reviewing the authorities cited, I am unable to agree with this broad conclusion since neither case contemplates the effect of a statute similar to SDCL 56-1-18 on the extent of a guarantor’s obligation. Moreover, both cases concern guaranty of deficiencies under mortgage foreclosures, not the waiver of defenses available to a guarantor standing in the shoes of the principal. See cases cited by majority, Federal Deposit Insurance Corp. v. University Anclote, Inc., 764 F.2d 804, 807 (11th Cir.1985); Victory Highway Village, Inc. v. Weaver, 480 F.Supp. 71, 75-76 (D.Minn.1979), aff'd, 634 F.2d 1099 (8th Cir.1980).

In Richter v. Industrial Finance Co., Inc., 88 S.D. 466, 221 N.W.2d 31 (1974), this court held that under SDCL 56-1-18 a guarantor is liable only in the event and to the extent that his principal is liable. “[I]f for any reason the principal debtor is not bound to make payment to the creditor or plaintiff, the plaintiff may not hold the guarantor liable.” Id. at 474-75, 221 N.W.2d at 35-36. The facts and circumstances presented here do not warrant such a hasty departure from our statute or our prior interpretation of it.