Cengage Advantage Books: Law for Business 18th Edition by John Ashcroft ,Janet Ashcroft

Exercise 14

Donald Schaffer owned Grafton Janitorial Service Inc. (GJS) and got a line of credit for the company from FirstMerit Bank, N.A. (Merit) by signing a note, Donald Schaffer, president, and Donald Schaffer, cosigner. The note provided, "Upon any change in the terms of this Note, and unless otherwise expressly stated in writing, no party who signs this Note, whether as maker, [or] accommodation maker, …, shall be released from liability." Three amendments were later executed, which all stated, "[T]his Amendment to Note does not change any other terms or conditions of said note not specifically amended herein." The third amendment stated the note was signed by GJS by Donald Schaffer, president. It identified Merit as the holder of the note signed by GJS by Schaffer, president, and deleted the line of credit and put in a maturity data and payment schedule. There was default in the note, and Merit debited Schaffer's personal bank account the amount due. In the ansuing lawsuit, the court had to decide whether Schaffer was personally liable on the note. Was he?