Issue: Are the obligations for which each guarantor is liable equal under Minnesota law?
|Area of Law:||Banking & Finance Law, Litigation & Procedure|
|Keywords:||Guarantor; Obligation; Equally Liable|
|Cited Cases:||57 N.Y. 331|
|Cited Statutes:||38A C.J.S. Guaranty § 162; 72 C.J.S. Principal and Surety § 293|
See Estate of Frantz v. Page, 426 N.W.2d 894, 902 (Minn. Ct. App. 1988). A guarantor is entitled to pro rata contribution from other guarantors, regardless of whether the guarantors signed a single or separate documents, as long as the underlying obligation is the same. See also Kafka v. Pope, 533 N.W.2d 491, 495 n.7 (Wis. 1995) (citing cases from many jurisdictions for this proposition).
Although separate guarantors may be liable for contribution even though their respective guaranties are by separate instrument, “they are liable for contribution only if the debt for which they are liable is the same; if the guaranties are of separate obligations, although arising out of the same transaction, the guarantors are not co-sureties and have no right of contribution.” (citing Gen. Mills, Inc. v. Wallner, 628 F. Supp. 1573, 1575 (D. Minn. 1986); see 38A C.J.S. Guaranty § 162 (2012).
In determining whether the obligations for which each guarantor is liable are the same, the rule is that “[o]bligations are separate where the guarantors are bound for different portions of the same debt.” Gen. Mills, 628 F. Supp. at 1575 (emphasis added) (citing State of Arkansas v. Pufahl, 52 F.2d 116, 120 (8th Cir. 1931)).
Co-guarantors or co-sureties are liable for contribution, and
there is no difference whether the parties are bound by the same or different instruments, provided they are co-sureties for the same principal and the same engagement; […]