Memorandum of Decision Re: Guarantee and Subrogation

FOR THE NORTHERN DISTRICT OF CALIFORNIA In re BRISTOL-AMERICAN HOTEL                                     No. 1-89-00410 MANAGEMENT GROUP, INC.,      Debtor. ___________________________/ JEFFREY D. WOLFERT,      Plaintiff,    v.                                                                                  A.P. No. 1-89-0109 THOMAS NOONAN, et al.,      Defendants. ______________________________/
Memorandum of Decision
     With the rulings announced from the bench at the conclusion of trial, control of the debtor has been transferred to Jeffrey Wolfert. The sole remaining issue is whether Wolfert may now obtain judgment against Thomas Noonan or whether Wolfert must first exhaust his collection possibilities against the debtor.      Where there is a contractual relationship between the guarantor and the creditor, the court can see nothing in the statutes cited which afford protection to the guarantor, especially where the primary debtor is in bankruptcy and immune from prosecution.      Pursuant to the contract between the parties, Noonan's liability on his guarantee became absolute and unconditional when the debtor filed its bankruptcy petition. Action against the debtor is not a prerequisite to action against Noonan under these circumstances. Bank of America v. McRae (1947) 81 Cal.App.2d 1, 7. To the extent that Noonan pays Wolfert pursuant to the guarantee, he is subrogated to Wolfert's bankruptcy rights pursuant to section 509(a) of the Bankruptcy Code.      Judgment shall therefore be entered in favor of Wolfert in all respects as against Noonan. Wolfert shall also recover his costs of suit from Noonan.      Counsel for Wolfert shall submit an appropriate form of judgment, which counsel for Noonan and the debtor shall approve as conforming to the rulings of the court. This memorandum and the statements made on the record shall constitute the court's findings and conclusions pursuant to FRCP 52(a) and Bankruptcy Rule 7052.
Dated: October 16, 1989                                                                                  _______________________                                                                                                                            Alan Jaroslovsky                                                                                                                            U.S. Bankruptcy