Absolute and Unconditional Guaranties & Assignee Standing Clarified –
Commentary on Henderson State Co. v. Garrelts (319 Neb. 485)

1. Introduction

In Henderson State Company v. Garrelts, 319 Neb. 485 (2025), the Nebraska Supreme Court delivered a wide-ranging opinion that touches on four distinct but interrelated areas of commercial and procedural law:

1. Standing of an assignee of loan documents (§ 25-304).
2. Interpretation and enforcement of absolute and unconditional personal guaranties.
3. The lender’s duty (or lack thereof) to disclose customer financial information to prospective guarantors.
4. The continuing—or rather terminating—powers of a personal representative whose appointment has ended.

The litigation arose after Henderson State Bank (“HSB”) extended a $1.5 million line of credit to Midwest Auger Distributing, L.L.C. (“Midwest Auger”) in 2015, secured by personal guaranties from its members, Todd and Nancy Garrelts, and from entity founder David Lynn and his wife. HSB later assigned the entire loan package to its holding company, Henderson State Company (“HSC”), which sued the Garrelts when Midwest Auger defaulted. The Garrelts responded with counter- and third-party claims alleging fraud, conspiracy, and breach of the implied covenant of good faith and fair dealing, and they also challenged HSC’s standing to sue. After the district court granted summary judgment to HSC, the Supreme Court affirmed in a detailed opinion that now forms an important reference point for Nebraska banking and suretyship practice.

2. Summary of the Judgment

The Supreme Court (Cassel, J.) affirmed the district court on every issue:

• Standing: A written assignment from HSB to HSC satisfied Neb. Rev. Stat. § 25-304, giving HSC standing to sue in its own name.
• Liability under the guaranties: The guaranties were unambiguous, expressly covered the $1.5 million note (and any extensions), were “absolute and unconditional,” and were fully enforceable by the assignee without notice. The Garrelts were therefore personally liable.
• Counterclaims defeated: The Court held there was no genuine issue of material fact on fraudulent concealment, fraudulent misrepresentation, civil conspiracy, or breach of the implied covenant of good faith and fair dealing. Central to this result was the lack of any duty by the Bank to disclose confidential information and the broad waivers contained in the guaranties.
• Estate confession nullified: A post-termination “confession of judgment” filed by the former personal representative of Lynn’s estate was a legal nullity; once a personal representative is discharged, his/her authority ceases absent statutory exceptions.

3. Analysis

3.1 Precedents Cited

The opinion weaves together a fabric of Nebraska precedent. Key citations include:

• Cattle Nat. Bank & Trust Co. v. Watson, 293 Neb. 943 (2016) – Reinforced the principle that guaranties are interpreted under ordinary contract rules and that clear language controls.
• McCormack v. First Westroads Bank, 238 Neb. 881 (1991) and Hastings State Bank v. Misle, 282 Neb. 1 (2011)
• Defined when a creditor has a duty to disclose facts to a surety; deception/ignorance is not presumed.
• Western Ethanol Co. v. Midwest Renewable Energy, 305 Neb. 1 (2020) – Confirmed that a written assignment is sufficient to establish standing under § 25-304.
• Dietzel Enterprises v. J.A. Wever Construction, 312 Neb. 426 (2022) – Outlined the elements of fraudulent misrepresentation and the scope of the implied covenant of good faith.
• Boone River, LLC v. Miles, 314 Neb. 889 (2023) – Articulated the bifurcated review standard for standing (clear-error for facts, de novo for ultimate question).

The Court used these authorities to: (a) uphold summary judgment mechanics; (b) reiterate that unambiguous guaranties are strictly enforced; and (c) cabin lender disclosure duties.

3.2 Legal Reasoning

1. Standing and Evidence Handling
   The Garrelts tried to win summary judgment by saying, “no assignment, no standing.” Faced with a last-minute production of the written assignment, they invoked discovery-abuse and “sham affidavit” doctrines (Kaiser, Momsen). The Court labelled these attacks merit-less because:
   • The assignment had never been explicitly requested in discovery.
   • The affiant’s terminology (“sold,” “transferred,” “assigned”) was not materially inconsistent.
   • Admitting the assignment was within the district court’s discretion on evidentiary relevance.
2. Absolute Guaranties
   The guaranties contained an arsenal of lender-friendly clauses: waiver of defenses, consent to future extensions, revocability only on written notice, survival after any co-guarantor’s death, and benefit to any assignee without notice. Once the Court determined that the language was clear, traditional contract construction did the rest: the guarantor’s liability is “controlled absolutely” by the text.
3. No Duty to Disclose / Fraud Claims Fail
   Relying on McCormack and Misle, the Court reiterated that a lender’s duty to disclose arises only when it knows (or should know) the surety is ignorant or misled and the lender has reason to believe disclosure is necessary. Here:
   • The Garrelts were sophisticated businesspeople (lawyer/farmer).
   • They never sought financial information from HSB.
   • The guaranties expressly denied reliance on any bank representation.
   Without a duty, concealment cannot lie; without reliance, misrepresentation cannot lie; and without an underlying tort, conspiracy cannot lie.
4. Implied Covenant Argument Rebuffed
   The Court confined the covenant of good faith to the “justifiable expectations” created by the contract itself. Expectation: HSB lends $1.5 million; guarantors stand behind it. That happened. Reference to “customary banking practices” could not create new obligations beyond the guaranty’s four corners.
5. Termination of Personal Representative’s Powers
   Section 30-2451 ends the authority of a personal representative once discharged, except for limited asset-protection acts. With the estate probate closed as insolvent, no assets existed to “protect,” making the attempted confession of judgment void. The additional fact that the filer was an out-of-state, non-admitted lawyer cemented the nullity.

3.3 Impact of the Decision

This opinion will resonate in several ways:

• Banking & Finance: Nebraska lenders can rely on carefully drafted guaranty forms that waive lender-information duties and permit assignment without notice. Borrowers and guarantors must conduct their own due diligence.
• Litigation Practice: Parties asserting lack of standing must be prepared to confront late-produced assignments; courts retain discretion to admit them absent clear prejudice.
• Probate & Estate Litigation: Once a personal representative is discharged, any post-termination filing in another court on behalf of the estate will likely be a nullity. Plaintiffs must seek relief before the estate closes or proceed against devisees/heirs.
• Summary-Judgment Strategy: The case is a textbook illustration of the prima-facie / shifting-burden framework (see syllabus ¶10). Parties opposing summary judgment cannot rely on speculative assertions or “banking custom” where the contract language is dispositive.
• Sophisticated Guarantors: The Court’s characterization of the Garrelts as sophisticated underscores that Nebraska law will not casually extend lender disclosure duties when the guarantor is capable of protecting itself.

4. Complex Concepts Simplified

• Guaranty vs. Suretyship: A guaranty is a promise to pay only if the debtor defaults; a surety is jointly liable with the debtor from the outset. Functionally, Nebraska courts use “guarantor” language but apply similar disclosure jurisprudence as surety cases.
• Absolute & Unconditional Guaranty: A document that (a) waives all defenses, (b) covers future loans/extensions, and (c) allows the lender to pursue the guarantor even if collateral or other obligors are ignored. It is the strongest possible form of guaranty in the lender’s favor.
• Standing Under § 25-304: To sue on an assigned claim, the assignee must possess a written assignment. Oral evidence is insufficient, but once a signed document surfaces, standing is generally secure.
• Summary Judgment Prima Facie Burden:
  1. Movant shows “if uncontroverted at trial, we win.”
  2. Burden shifts; non-movant must offer admissible facts creating a genuine dispute.
  3. Allegations, denials, or expert speculation not tied to an element of the claim are insufficient.
• Termination of Personal Representative: When the probate court closes an estate and discharges the PR, all authority ends. Post-discharge, the PR cannot bind the estate, file pleadings, or confess judgment, unless a statute expressly revives that authority for asset preservation.

5. Conclusion

Henderson State Co. v. Garrelts reinforces several bedrock principles of Nebraska commercial jurisprudence. First, unambiguous guaranties mean what they say; attempts to inject industry custom or undisclosed expectations will fail. Second, a written assignment is the golden ticket to standing; without it an assignee cannot sue, but with it challenges evaporate. Third, lenders owe no affirmative duty to educate sophisticated guarantors about the borrower’s finances unless red-flag circumstances exist and the guarantor seeks the information. Fourth, the authority of a personal representative ends with discharge, ensuring finality of probate proceedings.

For practitioners, the decision is a cautionary tale: guarantors must perform real due diligence; banks must maintain well-drafted guaranty forms; litigants cannot rely on mere discovery gaps to defeat standing; and counsel should verify an estate representative’s continuing authority before filing pleadings. The Court’s thorough analysis and reaffirmation of established doctrine provide both clarity and predictability to Nebraska’s lending and surety landscape.