Standard Brands Inc. v. Straile

Plaintiff is the holder of a promissory note given by the corporate defendant and guaranteed by the individual defendant. It appeals from an order denying its motion for summary judgment against the individual guarantor.

The issue is whether the guarantor of a subordinated unsecured obligation may, in an action brought by the subordinated creditor, defend on the ground that the debtor is also in default on its obligation to the senior creditor. It is concluded that although that default may be a defense to the action against the debtor, the subordinated creditor is nevertheless entitled to…