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INTERNATIONAL PAPER CO. v. GROSSMAN

June 18, 1982

INTERNATIONAL PAPER COMPANY, PLAINTIFF,
v.
JEFFREY GROSSMAN, DEFENDANT.



The opinion of the court was delivered by: Shadur, District Judge.

FINDINGS OF FACT AND CONCLUSIONS OF LAW

This action has been tried upon the facts without a jury. After considering all the evidence and the briefs and arguments of counsel, in accordance with Fed.R.Civ.P. 52(a) the Court finds the facts and states its conclusions of law as follows:

Findings of Fact ("Findings")

1. International Paper Company ("IPC") is a New York corporation with its principal place of business in the State of New York. Jeffrey Grossman is a citizen of the State of Illinois. More than $10,000 is in controversy between IPC and Grossman.

2. Both before June 1976 and continuously thereafter until just before June 1, 1978 Emisco Industries, Inc. ("Emisco") was a warehouser, broker, distributor and (to a minor extent) fabricator of corrugated paper products. It was a privately-held corporation with the following shareholders and officers:

    (a) Grossman was its President, a director and
  an 88% shareholder.
    (b) William G. Bailes ("Bailes") was its Vice
  President, a director and a 6% shareholder.
    (c) John Taglianetti ("Taglianetti") was a
  director and a 6% shareholder.

3. In 1976 Emisco had been purchasing products from IPC on a limited credit basis. Bailes requested that IPC substantially increase Emisco's line of credit

4. At a meeting in New York Neil Collins of IPC's New York Credit Department informed Bailes additional credit could not be granted to Emisco without Grossman's personal guaranty. Shortly thereafter Bailes arranged a New York meeting attended by Grossman and Collins to discuss the subject, and IPC insisted on Grossman's personal guaranty as a condition of increased credit.

5. About June 9, 1976 Grossman executed a written document whereby he personally guaranteed Emisco's existing and future debts to IPC. That document (the "Guaranty," Pl. Ex. 3) was in the form of a letter from Grossman to IPC and followed verbatim the IPC "standard guaranty" form, except for the inclusion of a provision requested by Grossman (on advice from his lawyer), agreed to by IPC and not material to this litigation. In relevant part the Guaranty provided:

  This guaranty shall be deemed to be effective as
  of the date hereof upon receipt by you and shall
  be binding upon the heirs and assigns of the
  undersigned and shall enure to the benefit of
  your successors and assigns.
  The undersigned further agrees that the terms and
  conditions of this guaranty shall apply not only
  to amounts falling due in respect of future sales
  but also to amounts owing to you from
  transactions entered into between you and the
  Purchaser prior to the date of this guaranty.

Following receipt of the Guaranty, IPC substantially increased the credit it extended to Emisco and internally established a credit limit of $100,000 for Emisco.

6. After delivery of the Guaranty, Grossman did not personally deal with any representative of IPC in any respect, nor did he personally take any action to limit the amount of Emisco's indebtedness to be covered by the Guaranty. Bailes was responsible for Emisco's credit and financial dealings with IPC both before and after delivery of the Guaranty.

7. There is a dispute between IPC and Grossman as to whether Grossman sent a February 13, 1978 letter to IPC revoking the Guaranty either in strict accordance with its terms or in a commercially reasonable manner. Various aspects of Grossman's testimony in that respect, as well as that of Grossman's supporting witnesses, tax this Court's credulity. It is unnecessary however to resolve the disputed issue, for it is clear in any event that none of the relevant IPC executives or other personnel was aware of the ...


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