Jacob Feldstein v. United States

Feldstein is the guarantor of a loan of $125,000 made by the Small Business Administration to the now bankrupt Ace Offset Printing Co., Inc. Bankruptcy was a condition maturing the note and the guaranty.

The guaranty was about as unconditional as one could make it. In pertinent part, it reads as follows:

In due time, the government sought judgment against Feldstein, and a motion for summary judgment was granted against him.

Before summary judgment was granted Feldstein sought to amend his answer to assert defenses:

1. Unilateral mistake.

a. In that when Feldstein executed the guaranty of the loan from SBA to Ace he was acting under the mistaken belief that the principal obligation was validly secured by Ace’s fixtures and equipment worth over $200,000;

b. That the SBA knew or should have known that the principal obligation was not validly secured;

c. That the principal obligation was not validly secured and that Feldstein would not have executed the guaranty had he known that the loan was in fact unsecured.

2. Mutual mistake in that both parties thought the machinery and equipment secured the principal obligation when, in fact, the obligation was not so secured.

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