Author Question: In SEC v. Howey, the Supreme Court announced that securities covered by the federal securities laws ... (Read 112 times)

Arii_bell · **on:** Jun 24, 2018

In SEC v. Howey, the Supreme Court announced that securities covered by the federal securities laws are all listed in the Securities Act of 1933.
a. True
b. False
Indicate whether the statement is true or false

Question 2

Guaranty. In 1988, Jamieson Chippewa Investment Co entered into a five year commercial lease with TDM Pharmacy, Inc, for certain premises in Ellisville, Missouri, on which TDM intended to operate a small drugstore. Dennis and Teresa McClintock ran the pharmacy business. The lease granted TDM three additional five year options to renew. The lease was signed by TDM and by the McClintocks individually as guarantors. The lease did not state that the guaranty was continuing; in fact, there were no words of guaranty in the lease other than the single word Guarantors on the signature page. In 1993, Dennis McClintock, acting as the president of TDM, exercised TDM's option to renew the lease for one term. Three years later, when the pharmacy failed, TDM defaulted on the lease. Jamieson-Chippewa filed a suit in a Missouri state court against the McClintocks for the rent for the rest of the term, based on their guaranty. The McClintocks filed a motion for summary judgment, contending that they had not guaranteed any rent payments beyond the initial five-year term. How should the court rule? Why?

jojobee318 · **Reply #1 on:** Jun 24, 2018

Answer to Question 1

FALSE

Answer to Question 2

Guaranty
The court granted the McClintocks' motion for summary judgment, and Jamieson-Chippewa appealed to a state intermediate appellate court, which affirmed the decision of the lower court. The appellate court held that a guaranty must expressly indicate the intention of the parties that the guaranty continue in order to hold the guarantor liable for a lease renewal term. The court defined a continuing guaranty as one that contemplates guaranteeing a series of possible transactions between the debtor and creditor, rather than only a single such transaction. The court pointed out that Iit is the guaranty contract itself which defines the obligations and rights of both the guarantor and guarantee and a guarantor's obligation is to be strictly construed, and may not be extended by implication beyond its strict letter. . . . In this case, no words anywhere in the guaranty or the underlying lease agreement expressly indicate that Guarantors are obliged to guarantee any rent payments of Lessee beyond the initial five year lease term. . . . The written guaranty itself consists only of the single word Guarantors' next to the signature line at the end of the lease. Under these circumstances, the strict letter' of the guaranty contract can reasonably be defined to encompass only that which is necessarily required by the use of that single word in conjunction with the lease agreement: namely, the guarantee of rent payments during the initial five year lease term only.