                   IN THE COURT OF APPEALS OF TENNESSEE
                                AT KNOXVILLE
                           September 13, 2005 Session

IN RE: ESTATE OF MILLER S. PRICE, DECEASED, GREENE COUNTY
                   BANK, v. MARK F. PRICE

                 Direct Appeal from the Probate Court for Hamblen County
                       No. 18-266     Hon. Herbert M. Bacon, Judge



              No. E2004-02670-COA-R3-CV - FILED NOVEMBER 28, 2005



Deceased had executed loan guaranties to claimant. Claimant filed claim in Estate based on the
guaranties. The Estate excepted on the grounds that the underlying loans were not due and payable
because claimant had not accelerated the indebtednesses. The Trial Court upheld the claims. We
affirm.


Tenn. R. App. P.3 Appeal as of Right; Judgment of the Probate Court Affirmed.


HERSCHEL PICKENS FRANKS, P.J., delivered the opinion of the court, in which CHARLES D. SUSANO ,
JR., J., and WILLIAM H. INMAN , SR. J., joined.

Mark A. Cowan, Morristown, Tennessee, for appellant.

Kenneth Clark Hood, Greeneville, Tennessee, for appellee.



                                           OPINION


                In this action, the Trial Court sustained the claim of Greene County Bank (“GCB”),
against the estate of Miller S. Price. The Executor of the Estate, Mark F. Price, has appealed.

                                         The Evidence

               Miller S. Price died on January 10, 2004, and GCB filed three claims against the
Estate on February 18, 2004. All of the claims stated that they were currently due, and were based
on three guaranties (the “Guaranties”) signed by the Deceased.

               The 1999 Guaranty and the 2001 Guaranty employed identical language. The most
relevant language is as follows:

                      . . . [T]he Undersigned hereby absolutely and unconditionally guarantees to
              Lender the full and prompt payment when due, whether at maturity or earlier by
              reason of acceleration or otherwise, of the debts, liabilities and obligations described
              as follows . . . .

                      1. No act or thing need occur to establish the liability of the Undersigned
              hereunder, and no act or thing, except full payment and discharge of all
              indebtedness, shall in any way exonerate the Undersigned or modify, reduce,
              limit or release the liability of the Undersigned hereunder.

                      2. This is an absolute, unconditional and continuing guaranty of payment of
              the Indebtedness and shall continue to be in force and be binding upon the
              Undersigned, whether or not all Indebtedness is paid in full, until this guaranty is
              revoked by written notice actually received by the Lender, and such revocation shall
              not be effective as to Indebtedness existing or committed for at the time of actual
              receipt of such notice by the Lender, or as to any renewals, extensions and
              refinancings thereof. . . . The death or incompetence of the Undersigned shall not
              revoke this guaranty, except upon actual receipt of written notice thereof by
              Lender and then only as to the decedent or the incompetent and only
              prospectively, as to future transactions, as herein set forth.

                     3. If the Undersigned shall . . . die, . . . then the Lender shall have the
              right to declare immediately due and payable, and the Undersigned will
              forthwith pay to the Lender, the full amount of all Indebtedness, whether due
              and payable or unmatured. . . .

              ...

                       6. . . . Lender may, but shall not be obligated to, enter into transactions
              resulting in the creation or continuance of Indebtedness, without any consent or
              approval by the Undersigned and without any notice to the Undersigned. The
              liability of the Undersigned shall not be affected or impaired by any of the following
              acts or things (which Lender is expressly authorized to do, omit or suffer from time
              to time, both before and after revocation of this guaranty, without notice to or
              approval by the Undersigned): . . . (ii) any one or more extensions or renewals of
              Indebtedness (whether or not for longer than the original period) or any modification
              of the interest rates, maturities or other contractual terms applicable to any
              Indebtedness; (iii) any . . . indulgence granted to Borrower, any delay or lack of


                                                -2-
              diligence in the enforcement of Indebtedness . . . .

              ...

                     11. . . . Lender shall not be required first to resort for payment of the
              Indebtedness to Borrower or other persons or their properties, or first to
              enforce, realize upon or exhaust any collateral security for Indebtedness, before
              enforcing this guaranty.

(emphasis added).

               The Deceased signed the third guaranty on June 7, 2002 to induce GCB to make a
loan to Ovalformer LLC, a North Carolina LLC. This guaranty formed the basis for a claim filed
against the Estate in the amount of $801,081.95. Relevant language of the 2002 Guaranty is as
follows:

                      . . . [T]he undersigned Miller Price . . . hereby jointly and severally . . .
              for themselves, their heirs, executors, administrators and successors absolutely
              and unconditionally guarantee(s) the full and prompt payment to the Bank
              [GCB], at maturity (whether by acceleration or otherwise) and at all times
              thereafter, of any and all indebtedness, obligations and liabilities of every kind and
              nature, however created, arising or evidenced, of the Debtor [Ovalformer, LLC] to
              the Bank . . . together with all expenses, legal and/or otherwise (including court costs
              and attorney’s fees) incurred by the Bank in collecting or endeavoring to collect such
              indebtedness . . . .

(emphasis added).

                      THIS GUARANTY SHALL BE A CONTINUING, ABSOLUTE AND
              UNCONDITIONAL GUARANTY, and shall remain in full force and effect until the
              Indebtedness (and interest thereon and expenses in connection therewith), and all
              renewals, modifications, or extensions thereof, in whole or in part, shall have been
              fully paid and satisfied . . . . The death . . . of the Guarantor . . . shall not
              terminate this Guaranty until notice of any such death . . . shall have actually
              been received by the Bank, and until all of the said Indebtedness, or any
              extensions or renewals thereof, existing before receipt of such notice shall be
              fully paid.

(emphasis added).

                      The Banks is hereby expressly authorized to make from time to time, without
              notice to anyone: any renewals, modifications or extensions, whether such renewals,
              modifications or extensions be in whole or in part and without limit as to the number


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               of such extensions or of the renewal periods thereof, and without notice to or further
               assent from the undersigned . . . and the liability of the Guarantor . . . shall not be in
               any manner affected, diminished or impaired thereby, or by any lack of diligence,
               failure, neglect or omission on the part of the Bank to make any demand or protest,
               or give any notice of dishonor or default, or to realize upon or protect any of said
               Indebtedness . . . . The Bank . . . shall be under no obligation, at any time, to first
               resort to, make demand on, file a claim against, or exhaust its remedies against
               the Debtor, . . . or other persons or corporations, their properties or estates, or
               to resort to or exhaust its remedies against, any collateral, security, . . .or other
               rights whatsoever. It is expressly agreed that the Bank may at any time make
               demand for payment on, or bring suit against the Guarantor . . . .

(emphasis added).

                Additional terms governing the 2002 Guaranty are set forth in the underlying loan
agreement, which was signed by the Deceased as guarantor. These provisions state that the death of
a guarantor is an event of default. The loan agreement further provides that “[u]pon the occurrence
of any Event of Default . . . the Bank may, at its option, declare the entire unpaid principal balance
of the Note, all interest accrued and unpaid thereon and all other amounts payable under this Loan
Agreement to be immediately due and payable for all purposes . . . .”

               Mark F. Price (the “Executor”), duly filed exceptions to these claims.

                At the hearing on the exceptions, the parties stipulated that the Ovalformer loan went
into default on January 29, 2004, the Price Family Limited Partnership loan went into default on
January 25, 2004, and the MED loan was current at the time of the hearing. The parties further
stipulated that GCB extended the Ovalformer loan on March 4, 2004 and again on May 28, 2004.

                  At the hearing, a Senior Vice President for GCB testified that the bank’s usual
procedure for accelerating a loan is to “give notice by form of a letter, that we intend to accelerate,
and then we turn it over to counsel.” Regarding how many days the bank usually gives a borrower
to bring its balance current, the witness testified, “That can be dependent upon what the language
of the notes has, of course. Some notes have different time limits. But, as a general rule, we give
seven to ten days.” The witness testified that the first letter, requesting that the borrower bring its
balance current, was sent to Ovalformer, LLC and the Price Family Limited Partnership in December
2003, and that around August 4, 2004, the Price Family Limited Partnership was sent a demand letter
stating that its loan had been accelerated. The witness testified, however, that the bank sends such
notices only as a courtesy to its customers, not because the bank believes it is necessarily required
to do so.

               Regarding the Ovalformer loan, the witness testified that after the bank requested that
the borrower bring its balance current, the bank and Ovalformer, LLC entered into an agreement, on
March 4, 2004, agreeing that Ovalformer, LLC had until April 28, 2004 to bring its balance current.


                                                  -4-
After the agreement, the bank and Ovalformer, LLC entered into a second agreement on May 28,
2004, which gave Ovalformer, LLC until August 26, 2004 to bring its balance current.

              Following the hearings on the claims, the Trial Court stated, regarding the 1999 and
2001 Guaranties:

               Under the provisions of both these guaranties [GCB] was not required to accelerate
               either of the loans in order for liability to attach to the guarantor. Upon the death of
               the guarantor [GCB] had an immediate right of payment against the estate simply by
               filing its claim and making a demand for payment in full.

As to the 2002 Guaranty, the Court stated “[t]he only thing required of the lender was to file a timely
claim in the Probate Court making demand for payment of said loan in full, and this [GCB] complied
with.” The Executor of the Estate has appealed to this Court, and we restate the issues raised on
appeal, thusly:

               1.      Whether the 1999 Guaranty is void for vagueness.

               2.      Whether the Probate Court erred in overruling the Executor’s exceptions to
                       the claims filed by Green County Bank.

               The Supreme Court has described the standard of review in probate cases such as this
as:

               This case was tried in the probate court without a jury. Accordingly, the standard of
               review is de novo upon the record with a presumption of correctness as to the
               findings of fact, unless the preponderance of the evidence is otherwise. . . .
               Questions of law are reviewed de novo with no presumption of correctness.

Bowden v. Ward, 27 S.W.3d 913, 916 (Tenn. 2000) (citations omitted).

              As to the 1999 Guaranty signed by Guarantor to induce GCB to make a loan to Price
Family Limited Partnership, the Executor argues:

               In this guarantee, the debt to be guaranteed is never described. Consequently, it can’t
               be enforced and is void for vagueness. To be valid, a guaranty must contain all the
               material facts on its face. If it doesn’t, it will be void under the statute of frauds, and
               can’t be aided by parol evidence.

The Executor’s exception to the 1999 guaranty did not argue that the 1999 guaranty was void for
vagueness under the Statute of Frauds, but did make this argument during the Probate Court’s
August 30, 2004 hearing. Afterwards, GCB had the opportunity to rebut, and stated:

               It is true that on the [2001 Guaranty], there was a box checked that says this relates

                                                  -5-
               to a specific note. And then you’ll notice down under paragraph four it says that
               there is no limit on the liability in that particular guarantee. On the [1999 Guaranty],
               no box was checked, but down [under paragraph four] it says the liability of the
               undersigned shall be limited to a principal amount of a million seven hundred
               thousand. So [the 1999 Guaranty] says your’re guaranteeing debts up to a million
               seven. [The 2001 Guaranty] says we’re guaranteeing whatever the indebtedness is
               on promissory note dated December 20th, 1998 for two hundred and eighty
               thousand dollars. You know, perhaps it would’ve been nice for one of those boxes
               [on the 1999 Guaranty] to have been checked, but it’s clear that there’s a limitation
               of debt of a million seven hundred thousand, and Miller Price signed that. So I think
               it would be a travesty for them to be able to escape the responsibility of Miller Price
               based upon that technicality.

The foregoing demonstrates that GCB had fair notice of the void for vagueness defense and an
opportunity to rebut it. Thus, the Executor did not waive this issue. See Sands v. State, 903 S.W.2d
297, 299 (Tenn. 1995).

                 Guaranty agreements fall under the statute of frauds. Tenn. Code Ann. § 29-2-
101(a)(2) (2005). “[T]o be enforceable under the statute of frauds a signed writing must express
the essential terms of the agreement with a degree of certainty such that the agreement of the parties
can be determined without recourse to parol evidence.” Cunningham v. Lester, 138 S.W.3d 877,
880 (Tenn. Ct. App. 2003). The statute of frauds, however, may be satisfied by multiple writings
if (1) the party to be charged signed at least one of them, (2) the court can determine from the face
of the writings that they are related, and (3) the court can determine with certainty the essential
terms of the contract without the use of parol evidence. Id. at 881; Brandel v. Moore Mortgage &
Inv. Co., 774 S.W.2d 600, 605 (Tenn. Ct. App. 1989). Also see, Williams v. Buntin, 4 Tenn. App.
340, 1927 WL 2073, at *6 (Tenn. Ct. App. 1927). Their connection will be implied where the
writings “relate to the same parties, subject-matter and transaction.” Id.

                 The 1999 Guaranty includes two optional paragraphs which provide alternate
descriptions of the guaranty’s extent. If paragraph A is checked, the guaranty applies only to a
specific debt, and if paragraph B is checked, the guaranty applies to all obligations owed by the
borrower to the lender. Neither of these options is checked in the Guaranty. The Guaranty does
clearly state that its purpose is to induce GCB to loan funds to the Price Family Limited Partnership.
It also provides that “[t]he liability of the Undersigned hereunder shall be limited to a principal
amount of $1,700,000.00 . . . plus accrued interest thereon and all attorneys’ fees, collection costs
and enforcement expenses referable thereto.” The 1999 Guaranty is dated May 27, 1999 and is
signed by the Deceased. Yet, the face of the Guaranty does not specifically identify what debt is
guaranteed.

                The record, however, includes a loan document which appears on its face to be
related to the 1999 Guaranty. In this loan document, the borrower is the Price Family Limited
Partnership and the lender is GCB. The loan document is dated May 27, 1999, and the principal
amount of the loan is $1,700,000.00. In addition, the Price Family Limited Partnership signed this

                                                 -6-
document through its general manager, Miller Price. This loan document and the 1999 Guaranty
have identical parties, an identical principal amount, and they were executed on the same day.
Thus, the documents are clearly related, and considering these two documents together leads to the
conclusion that the purpose of the 1999 Guaranty was to guarantee this specific loan agreement.
Accordingly, these documents provide the essential terms of the contract with sufficient certainty
to satisfy the statute of frauds.

                The Executor argues that the guaranties gave GCB the right to accelerate the
respective notes and collect the full amounts of the guaranty from the guarantor, but that GCB failed
to exercise these rights prior to the expiration of the claims period.

               The extent of the guarantor’s liability is determined from the individual guaranties
and their respective underlying loan agreements. Galleria Assoc., L.P. v. Mogk, 34 S.W.3d 874,
876 (Tenn. Ct. App. 2000); see also Farmers-Peoples Bank v. Clemmer, 519 S.W.2d 801, 804-05
(Tenn. 1975). “Contracts of guaranty are to be construed according to the ordinary meaning of the
wordage used and with the view to carry out the intent as therein expressed.” First Nat’l Bank v.
Foster, 451 S.W.2d 434, 436 (Tenn. Ct. App. 1969); “In order to facilitate the extension of credit,
Tennessee does not favor guarantors and will construe a guaranty against the guarantor as strongly
as the language will permit.” Suntrust Bank v. Dorrough, 59 S.W.3d 153, 156 (Tenn. Ct. App.
2001).

                 The 1999 and 2001 Guaranties share the same contractual language and describe the
liability of the guarantor as follows:

                      . . . [T]he Undersigned hereby absolutely and unconditionally guarantees
               to Lender the full and prompt payment when due, whether at maturity or earlier
               by reason of acceleration or otherwise

                       1. No act or thing need occur to establish the liability of the Undersigned
               hereunder, and no act or thing, except full payment and discharge of all
               indebtedness, shall in any way exonerate the Undersigned or modify, reduce, limit
               or release the liability of the Undersigned hereunder.

                      2. This is an absolute, unconditional and continuing guaranty of
               payment of the Indebtedness and shall continue to be in force and be binding upon
               the Undersigned

               ...

                       11. . . . Lender shall not be required first to resort for payment of the
               Indebtedness to Borrower or other persons or their properties, or first to enforce,
               realize upon or exhaust any collateral security for Indebtedness, before enforcing
               this guaranty.


                                                -7-
(emphasis added). The foregoing language establishes that the Guaranties are absolute,
guaranteeing the payment of their underlying obligations when those obligations become due. The
liability is contingent only upon default by the principal debtor. The 2002 Guaranty is also clearly
an absolute guaranty from the following language:

                      . . . [T]he undersigned Miller Price . . . hereby jointly and severally . . . for
               themselves, their heirs, executors, administrators and successors absolutely and
               unconditionally guarantee(s) the full and prompt payment to the Bank [GCB],
               at maturity (whether by acceleration or otherwise)

               ...

                      . . . The Bank . . . shall be under no obligation, at any time, to first resort
               to, make demand on, file a claim against, or exhaust its remedies against the
               Debtor, . . . or other persons or corporations, their properties or estates, or to resort
               to or exhaust its remedies against, any collateral, security, . . .or other rights
               whatsoever. It is expressly agreed that the Bank may at any time make demand
               for payment on, or bring suit against the Guarantor . . . .

(emphasis added). The result of this language is the same as that in the 1999 and 2001 Guaranties.
Thus, the guarantor’s liability under one of the Guaranties becomes due and payable when the
underlying obligation comes due and the principal debtor defaults.

               In the loan agreements underlying all three Guaranties, there are acceleration clauses
that give GCB the right to accelerate a loan if an instalment on that loan is not paid. Thus, one event
giving GCB an immediate right to payment against the guarantor for the entire balance of a loan
would be default by the principal debtor followed by GCB’s exercise of its acceleration rights.

                In addition to default by the borrower, the death of the guarantor makes the
guarantor’s liability due and payable. Each of the three guaranties at issue include an acceleration
clause that gives the lender the option of accelerating the balance of the underlying debt in the event
of the guarantor’s death. While the 2002 Guaranty does not include such a provision and in the
guaranty agreement itself, the provision of the underlying loan agreement does, and this agreement
was signed by the deceased guarantor. Thus, the guarantor’s liability under the Guaranties would
become due and payable, not only if the underlying loans became due and the principal debtors
defaulted, but also if GCB exercised these acceleration rights arising from the guarantor’s death.

               The Estate succeeded to the role of guarantor of the underlying obligation upon the
deceased’s death. See, In re: Estate of Darwin, 503 S.W.2d 511, 514 (Tenn. 1973); Wright v.
Universal Tire, Inc., 577 S.W.2d 194, 196 (Tenn. Ct. App. 1978).

              The principal argument by the Executor in this case is that the claims were improper
because they were not yet due and payable when filed. He further argues that the claims are now
barred because GCB failed to exercise its acceleration rights prior to the expiration of the claim

                                                 -8-
period on May 16, 2004. However, regardless of when GCB exercised its acceleration rights, the
claims are valid. If filing the claims constituted acceleration of the underlying liabilities, the claims
would be for matured liabilities of the Estate. If filing the claims did not constitute acceleration,
the claims would be for unmatured contingent liabilities of the Estate.

                 Claims for both matured and unmatured claims must be filed against an estate within
four months from the date that the notice required by Tenn. Code Ann. § 30-2-306(c) is first
published. Tenn. Code Ann. §§ 30-2-307(a)(1), 30-2-306(c). This includes claims for contingent
liabilities as well. See Tenn. Code Ann. § 30-2-307(a)(1) (stating that “all claims” must be filed
within the four month period as described in Tenn. Code Ann. § 30-2-306(c)); See, In re Estate of
Minton, 625 S.W.2d 260, 262 (Tenn. 1981). When unmatured claims have been filed “[t]he
personal representative shall hold aside sufficient funds or other assets to pay each . . . unmatured
claim . . . with interest (if the claim be one bearing interest), . . . until such unmatured claim has
reached maturity.” Tenn. Code Ann. § 30-2-317(d) (2005). When acceleration or some other event
causes a claim to mature, even if this occurred after the claims period, the Estate is required to pay
the claim using the reserved funds. Therefore, regardless of whether GCB’s claims were
immediately due and payable when they were filed, they are valid. The issue is not whether the
Estate is liable under the Guaranties, but whether the liability is matured and currently due and
payable. The issue thus becomes whether GCB has an immediate right to payment under the
Guaranties.

                GCB acquired the right to accelerate the maturities of the obligations underlying all
three Guaranties when the Deceased died on January 10, 2004, as acceleration clauses are “enforced
according to their terms.” Lively v. Drake, 629 S.W.2d 900, 902 (Tenn. 1982). Under the terms
of all of the acceleration clauses in the Guaranties and their underlying loan agreements, none of
the acceleration clauses is automatic. Unless the terms of the guaranty states otherwise, there is no
rule requiring the holder of an indebtedness to notify the debtor of his intention to exercise his
acceleration right before he actually exercises that right. See Lively, 629 S.W.2d at 903. The
acceleration clauses present in the Guaranties and their underlying loan agreements do not expressly
require GCB to give prior notice to the guarantor or the principal debtor of its intention to accelerate
the underlying obligations.

               The Executor argues that after these claims were filed the GCB engaged in conduct
inconsistent with acceleration, as it continued to accept monthly payments from the principal
debtors on the loan agreements underlying the 2001 and 2002 Guaranties.

                 When the Deceased died on January 10, 2004, GCB acquired the right to make the
Estate’s liability under the Guaranties immediately due and payable. GCB exercised this option
when it filed the claims at issue against the Estate. At that moment, GCB’s right to payment under
the terms of the Guaranties became immediately due and payable, and the Estate’s liability under
the Guaranties became matured. All of the Guaranties include language stating that the lender’s
conduct may not be interpreted as affecting or diminishing the guarantor’s liability. This language
must be construed strongly against the guarantor. Suntrust Bank v. Dorrough, 59 S.W.3d 153, 156
(Tenn. Ct. App. 2001). Additionally, all of the conduct mentioned by the Executor had the effect

                                                  -9-
of reducing the Estate’s liability by allowing GCB to collect additional payments from the principal
debtors. Such conduct does not prejudice the rights of GCB. See Hardeman County Bank v.
Stallings, 917 S.W.2d 695, 699 (Tenn. Ct. App. 1995). Accordingly, GCB’s post-claim relations
with the borrowers did not affect the Estate’s liability, and GCB’s right to payment under the
Guaranties.

               For the foregoing reasons, we affirm the Judgment of the Trial Court, and remand,
with the cost of the appeal assessed to the Estate of Miller S. Price.




                                                      ______________________________
                                                      HERSCHEL PICKENS FRANKS, P.J.




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