Chemical Bank v. Pic Motors Corp.
Supreme Court of New York, Appellate Division
452 N.Y.S.2d 41 (1982)
Pic Motors (defendant) financed vehicle inventory through Chemical Bank (plaintiff), with Aaron Siegel, Pic's president and principal stockholder, personally guaranteeing the loans. Siegel's guarantee provided that his consent was not required for the bank to release or exchange collateral or to extend, waive, or release Pic's obligations. Siegel later sold his interest in Pic but remained personally liable under the guarantee. Chemical discovered more than half of the financed vehicles missing from inventory; Siegel arranged an inventory sale and partially repaid the loan with the proceeds. Chemical sued Siegel and Pic for the remaining balance; the trial court granted summary judgment for Chemical, and Siegel appealed, blaming Chemical's own employees for the missing collateral.
Whether a creditor's release of security under a financing agreement discharges a surety's guarantee obligations when the surety has expressly consented in advance to such releases.