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
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
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
(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
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 ...