## Facts

- Harvey E. Hall, Inc. operated an appliance store that acquired inventory under a floor-plan financing arrangement involving Sylvania Electric Products, Inc. and a financing company, John P. Maguire & Co., Inc.
- As additional security, Harvey E. Hall and his wife, Anna Belle Hall, executed a written “Guaranty of Past and Future Indebtedness” on July 29, 1966, guaranteeing the corporation’s indebtedness up to $25,000 to Sylvania and/or Maguire.
- About two years later, Maguire assigned its rights in the financing plan, including the guaranty, to FinanceAmerica Private Brands, Inc.
- In 1976, GTE Sylvania (successor to Sylvania Electric Products, Inc.) also assigned its rights in the guaranty to FinanceAmerica.
- FinanceAmerica financed inventory purchases under substantially the same procedures that had existed before the assignment.
- Harvey E. Hall died in early 1971; the business later closed in 1975.
- The suit concerned a default for inventory sold between August 31, 1974 and November 26, 1974, leaving an unpaid balance of $6,823.61; the corporation’s debt was not disputed.
- The consolidated actions proceeded on whether Anna Belle Hall was personally liable under the guaranty; she moved for summary judgment arguing the guaranty, addressed to Sylvania and Maguire, could not be enforced by FinanceAmerica as assignee.

## Issues

1. Whether a continuing guaranty of “past and future indebtedness” addressed to named creditors is assignable to a successor creditor absent an express anti-assignment term.
2. Whether assignment to FinanceAmerica materially altered the guarantor’s risk such that the guaranty could not be enforced by the assignee.
3. Whether the guaranty remained effective as to Anna Belle Hall for post-assignment corporate indebtedness incurred after Harvey Hall’s death.

## Decision

- The court denied Anna Belle Hall’s motion for summary judgment.
- The court held the guaranty was assignable and could be enforced by FinanceAmerica as assignee.
- The court concluded the assignment did not materially increase or change Anna Belle Hall’s obligations or risk under the guaranty.
- FinanceAmerica was permitted to proceed against Anna Belle Hall for the unpaid corporate balance, subject to the guaranty’s $25,000 limit.

## Legal Principles

- Contract rights, including rights under a continuing guaranty, are generally assignable unless the contract forbids assignment, the assignment materially changes the obligor’s duty or risk, or the obligation is strictly personal.
- A guaranty’s identification of particular obligees, without an express restriction, does not by itself bar assignment of the creditor’s rights.
- An assignee enforcing a guaranty steps into the assignor’s position and may enforce the guaranty to the same extent, so long as the guaranteed obligation and the guarantor’s exposure are not materially altered.
- A continuing guaranty remains effective for covered indebtedness until revoked in a legally effective manner or terminated by its terms; the death of a co-guarantor does not, by itself, discharge the remaining guarantor.

## Conclusion

The court held that a continuing guaranty securing a commercial floor-plan arrangement may be assigned with the underlying creditor rights absent an express limitation, and that FinanceAmerica, as assignee, could enforce Anna Belle Hall’s guaranty for the corporation’s unpaid debt because the assignment did not materially change her risk or obligations.


FinanceAmerica Private Brands, Inc. v. Harvey E. Hall, Inc., 380 A.2d 1377 (Del. Super. Ct. 1977)