Molasky Enterprises, Inc. v. Carps, Inc.

Carps, Inc. (defendant) directors Herbert and Emile Carp, who owed money to the company, sought a personal loan from a bank to pay off that debt before the company's annual financial statement was released; Molasky personally guaranteed the note and assigned it to Molasky Enterprises (plaintiff). Herbert signed the note as Carps's president, purporting to make the corporation itself a guarantor, with the informal blessing of other family-member directors, but two directors were never told about the note and the board never formally approved it. When Herbert and Emile defaulted, Molasky paid the note and sued Carps to recover, and the trial court ruled for Carps.