Cengage Advantage Books: Business Law 9th Edition by Arnold Goldman ,William Sigismond

Exercise 14

Carl and Beulah Humphrey signed as maker and comaker of a note for a line of credit of $50,000 from the Grand Island Production Credit Association to purchase cattle. When the Humphreys failed to pay the outstanding balance on the line of credit, Grand Island sued Mr. and Mrs. Humphrey to recover the unpaid balance of $13,936. Mrs. Humphrey contended that Carl alone was liable for payment, even though she had signed the note, because she has since divorced Carl. Did Beulah Humphrey have primary liability on the loan along with her ex-husband, or should she be excused from payment? (Grand Island Production Credit Association v. Humpfrey, 388 N.E. 807)