CEO 86-40 -- May 15, 1986






To:      (Name withheld at the person's request.)




One's obligation as a guarantor of a loan made to a corporation is not required to be disclosed as a liability when making full and public financial disclosure pursuant to Article II, Section 8(a) and (h), Florida Constitution. Section 112.312(11), Florida Statutes, specifically excludes contingent liabilities from financial disclosure requirements. Contingent liabilities would include the potential liability of a guarantor, surety, or indorser.




Is one's obligation as a guarantor of a loan made to a corporation required to be disclosed as a liability when making full and public financial disclosure pursuant to Article II, Section 8(a) and (h), Florida Constitution?


Your question is answered in the negative.


In your letter of inquiry you advise that .... serves as a member of the Pinellas County Board of County Commissioners. You also advise that the Commissioner is a principal officer of a corporation which received a loan from a bank. In return, the corporation executed a note and mortgage securing the note in favor of the bank. The principal officers of the corporation agreed to guarantee the loan and to repay it in the event that the corporation defaulted in its obligation. The Commissioner signed a contract of guaranty but did not sign the note. The loan was repaid by the corporation, and the Commissioner was not called upon to repay any portion of the loan.

Article II, Section 8(a) and (h), Florida Constitution, provides that full and public disclosure of financial interests means filing a sworn statement "identifying each asset and liability in excess of $1,000 and its value . . . ." When full disclosure was first required in 1977, we published a document entitled "Suggestions to Aid Public Officials in Making Full and Public Disclosure of Financial Interests" in order to assist public officials in complying with the new requirements of the Sunshine Amendment. In that document we indicated that contingent liabilities need not be reported on the disclosure form because of the uncertainty as to their existence and amount, though we encouraged officials to disclose contingent liabilities in a supplemental note to the disclosure statement. We stated that "a contingent liability is one which will become an actual liability only when one or more future events occur or fail to occur," and gave such examples as "guarantee of a loan as a co-signer, pending or threatened litigation, obligations related to product warranties, and agreements to repurchase receivables that have been sold."

Currently, Section 112.312(11), Florida Statutes, defines the term "liability" as follows:


[A]ny monetary debt or obligation owed by the reporting person to another person, except for credit card and retail installment accounts, taxes owed, indebtedness on a life insurance policy owed to the company of issuance, contingent liabilities, or accrued income taxes on net unrealized appreciation. Each liability which is required to be disclosed by s. 8, Art. II of the State Constitution shall identify the name and address of the creditor.


A "guaranty" is a promise to answer for the debt, performance, default, or miscarriage of another; a "guarantor" is not a party to the primary undertaking, as the contract by which he is bound is collateral to the primary or original obligation. A "guarantor," like a "surety," undertakes to protect the promisee against loss or damage through failure of a third person to carry out his obligation to the promisee. 28 Fla. Jur. 2d Guaranty and Suretyship, Sections 1 and 2. Thus, the potential liability of a guarantor or surety is contingent upon the failure of another person to perform his obligation. An indorser also would have a contingent liability on a particular instrument, as an indorser's liability is secondary and conditional upon dishonor and the giving of any necessary notice of dishonor and protest. 6 Fla. Jur. 2d !Bills and Notes, Section 405. On the other hand, two or more persons who signed an instrument as co-makers are jointly and severally liable. 6 Fla. Jur. 2d Bills and Notes, Section 390.

Here, the subject County Commissioner was a guarantor rather than a co-maker on the note, as he did not sign the note but did agree to guarantee the loan to the corporation. Therefore, his liability on the note was a contingent liability.

Accordingly, we find that the subject County Commissioner was not required to disclose his obligation as a guarantor of the corporation's liability when making full and public financial disclosure. As you have noted, it was appropriate for the official to report his ownership interest in the corporation as an asset, assuming its value was greater than $1,000.