## Facts

- A construction company obtained a $185,000 demand loan from a bank, secured by an assignment of accounts receivable and personal guarantees from its four shareholder-owners.
- At closing, the company delivered three guarantees; the bank credited the loan proceeds to the company’s account despite the missing fourth guarantee.
- Several days later, the fourth shareholder, Bernard Lyon Frishman, executed and delivered his written guaranty.
- The bank later asked Frishman to authenticate his signature because the guaranty had not been signed before a bank officer.
- Frishman replied that he guaranteed only 10% of the loan and only for one year; the bank rejected these terms, and Frishman then authenticated the guaranty without any agreed limitation being added.
- The written guaranty was framed as a continuing guaranty extending to the company’s present and future indebtedness to the bank.
- The company later overdrew its account to meet payroll; the bank honored the overdraft.
- The bank called the note, the company entered bankruptcy, and the bank demanded payment from Frishman under the guaranty for the loan balance, interest, and the overdraft.
- The bank sued Frishman on the guaranty; the district court awarded the bank $12,042 plus interest from October 23, 1963, and costs, and rejected the bank’s claim for the remaining balance sought.
- Both sides appealed.

## Issues

1. Whether Frishman’s written guaranty was enforceable according to its terms, notwithstanding his later letter asserting a “10% for one year” limitation.
2. Whether Frishman’s attempted unilateral limitations could modify or condition an already executed and delivered guaranty absent the bank’s assent.
3. Whether, and to what extent, the guaranty’s “future indebtedness” language supported recovery for later obligations (including the overdraft) and the bank’s broader claimed amount.

## Decision

- The court affirmed the district court’s judgment in substance.
- It held that Frishman was bound by the guaranty as executed and delivered, and his later attempted limitations were ineffective because the bank rejected them and no mutual agreement to modify was shown.
- It upheld the district court’s limitation of the bank’s recovery to $12,042 plus interest and costs, and its denial of the bank’s demand for the full amount claimed.

## Legal Principles

- A guaranty is construed and enforced according to its written terms when executed and delivered; later unilateral statements by the guarantor do not alter the contract without the creditor’s assent.
- A creditor’s prompt rejection of proposed new limits prevents those limits from becoming part of the agreement absent subsequent mutual assent.
- A continuing guaranty may, by its language, extend to future indebtedness, but recovery may still depend on the proven scope of liability and the parties’ dealings as found by the trial court.
- Appellate review generally leaves undisturbed trial-court allocations of liability and damages supported by the record and free of clear legal error.

## Conclusion

The court enforced Frishman’s guaranty as written and rejected his unilateral, post-execution attempt to restrict liability, while affirming the trial court’s factual and contractual basis for limiting the bank’s recovery to a modest portion of the amount demanded.


Frishman v. Canadian Imperial Bank of Commerce, 407 F.2d 299 (D.C. Cir. 1968)