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Note: Applicant, Midwest Markets, a wholesale supplier, applied to Issuer, Branch Banking & Trust Co., for a standby LC not to exceed US$ 200,000 which could be drawn upon if Applicant failed to pay for the purchase of grocery products within ten days of the issuance of an invoice. Guarantor, Roger Camp, a majority interest holder in Applicant, executed a guaranty agreement that covered all "notes, drafts, debts, obligations, and liabilities" of Applicant as an inducement to Issuer to extend credit to Applicant.

When Beneficiary, Roundy's, a grocery products supplier, demanded payment under the LC from Issuer for US$ 122,030.84 in overdue and unpaid invoices to Applicant, Issuer paid full amount demanded and took an assignment of Beneficiary's invoices unpaid by Applicant. Applicant refused to reimburse Issuer and Guarantor refused to honor the guaranty. Applicant filed for bankruptcy protection and Issuer subsequently sued Guarantor. Four days prior to the trial, the U.S. Bankruptcy Court for the Northern District of Indiana entered an Order Allowing Claim in the amount of US$ 122,030.84. The order was endorsed as 'agreed' by bankruptcy counsel for Applicant.

Issuer asserted at trial that it was entitled to judgment against Guarantor for US$ 122,030.84 plus interest, costs, and attorneys' fees. The U.S. District Court for the Eastern District of Virginia, Miller, Mag., ruled that the guaranty was limited to debts incurred pursuant to the LC and found Guarantor not liable to Issuer under the guaranty. On appeal, U.S. Court of Appeals for the Fourth Circuit, Lutting, King, and Gregory, JJ., reversed and remanded.

The Per Curiam opinion stated: "Underlying a large portion of [Issuer's] appeal is its assertion that the magistrate judge erred when he ruled that the guaranty is limited to debts incurred pursuant to the letter of credit. [Issuer] is correct. The magistrate judge erred in his interpretation of the guaranty because the guaranty was unlimited. ... The assignment of the invoices created a debt of [Applicant] held by [Issuer]. We find that the guaranty, which clearly states that [Guarantor] guarantees to [Issuer] all debts of [Applicant] held by [Issuer], was broad enough to cover the assigned debt." Without considering the obligations under the LC, the appellate court concluded that Guarantor was liable on the invoices assigned to Issuer by Beneficiary.

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