Sharon Regional Physician Services v. Giannini3/28/2001
issue is whether the fact that Mr. Newell had his personal liability for Dr. Sbarro's bill discharged in bankruptcy precludes collection of the debt under the suretyship. Appellant contends that because Mr. Newell's bankruptcy discharged his liability to Dr. Sbarro, there is no debt to collect from him as the surety.
A surety's obligation is derived from that of the debtor. Generally, a surety is not liable unless the debtor is liable. Thus, the surety may plead certain defense available to the debtor. However, the Supreme Court of Ohio has held that a surety can only assert defenses of the bankrupt principal that are "good defenses" to the "original liability" and cannot assert the defense of bankruptcy . Holben v. Interstate Motor Freight Syst. Ins. Co. (1987), 31 Ohio St.3d 152, 156-157; Hopkins, 44 Ohio App.3d 186, 189 (stating that a surety may not assert defenses which are purely personal to a principal, such as infancy, incapacity or bankruptcy).
As the trial court opined, discharge in bankruptcy is personal to the bankrupt and does not inure to benefit a codebtor or surety such as appellant. See, e.g., Ohio Student Loan Comm. v. Rodner (1991), 68 Ohio App.3d 397, 400; Fisher v. Lewis (1988), 57 Ohio App.3d 116, 117; Squires Constr. Co. v. Smith (1982), 8 Ohio App.3d 183, 184; Kutza v. Parker (1962), 115 Ohio App. 313, 316. Specifically, Section 524(a), Title 11, U. S. Code provides that the discharge of a debt of the debtor is personal to the debtor. Furthermore, Section 524(e) states that discharge of a debtor from liability of the debt does not affect the liability of any other entity on such debt. In essence, the debtor's liability for the debt is excused, but the debt is still "due and owing." See Id. See, also, Markle v. Wayne S.& L. Co. (June 29, 1999), Ashland App. No. 98-COA-01274, unreported.
Hence, the liability of a person who is a codebtor with, or a guarantor or a surety for, a bankrupt is not altered by the discharge of such bankrupt. S.Rep. No. 989, 95th Cong., 2d Sess. 80-81 (1978). See, also, Kutza, 115 Ohio App. at 316; Cent. Natl. Bank of Cleveland v. Mills (1939), 62 Ohio App. 413, 427; Gosiger, Inc. v. Collinsworth (Mar. 23, 1989), Greene App. No. 88-CA-79, unreported, 4. Accordingly, appellant's argument, that he owes no debt as a surety because the debtor's debt was discharged in bankruptcy is without merit.
For the foregoing reasons, the judgment of the trial court is hereby affirmed.
Waite, J., concurs.
DeGenaro, J., concurs.
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