Wednesday, December 18, 2013

Swift & Co. v. Smigel case brief

Swift & Co. v. Smigel case brief summary
115 N.J. Super. 391, 279 A.2d 895 (1972)


CASE SYNOPSIS
Plaintiff corporation sought review of a decision of the Superior Court of New Jersey, which granted defendant executor's motion for summary judgment and dismissed plaintiff's action to recover money for merchandise supplied to decedent on credit.

CASE FACTS
Decedent and his business partner made arrangements for plaintiff corporation to supply their business with certain merchandise on a regular basis. As part of the deal, decedent and his partner entered into a continuing guaranty undertaking to pay at maturity all indebtedness of the business for goods sold and delivered to it by plaintiff. Several years later decedent was adjudged incompetent. Plaintiff sought to recover money for goods delivered after the adjudication of incompetency.

DISCUSSION

  • The court reversed the grant of summary judgment in favor of defendant executor and found that because a continuing guaranty involves a renewal of the offer on each occasion of an acceptance thereof by the offeree it was arguable that the guaranty became invalid once decedent was adjudged incompetent. 
  • The invalidity of the guaranty, however, depended upon the presence or absence of knowledge by plaintiff, actually or reasonably to be imputed, of decedent's incompetency at the time of each advance of credit pursuant to the guaranty.
  • Furthermore, the court found that proof of the fact of adjudication of incompetency was only prima facie evidence of legal incompetency and not conclusive proof.


CONCLUSION
The court reversed the decision of the trial court in favor of defendant executor in plaintiff corporation's action to recover money for merchandise supplied to decedent on credit subject to a continuing guaranty and remanded for further proceedings because the validity of the guaranty after decedent was adjudged incompetent depended upon plaintiff's knowledge of the incompetency at the time of each advance of credit pursuant to the guaranty.

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