Beulah C. Humphrey, husband and wife, entered into a loan arrangement with Grand Island for a $50,000 line of credit. Mr. and Mrs. Humphrey signed a line of credit promissory note that provided, in part, "As long as the Borrower is not in default, the Association will lend to the Borrower, and the Borrower may borrow and repay and reborrow at any time from date of said 'Line of Credit' Promissory Note in accordance with the terms thereof up to an aggregate maximum amount of principal at any one time outstanding of $50,000."

Mr. Humphrey borrowed money against the line of credit to purchase cattle. Two months later, Mrs. Humphrey went to Grand Island's office and told the loan officer that she had left Mr. Humphrey and filed for divorce. She told the loan officer not to advance any more money to Mr. Humphrey for his cattle purchases. When the Humphreys failed to pay the outstanding balance on the line of credit, Grand Island sued Mr. and Mrs. Humphrey to recover the unpaid balance of $13,936.71.

Questions:

1. Is Mrs. Humphrey a co-maker of the line of credit promissory note and, therefore, primarily liable for the outstanding principal balance of the note, plus interest? Why or why not?
2. Is it ethical for Mrs. Humphrey to deny liability on the promissory note in this case? Why or why not?
3. When the Humphrey's entered into the loan agreement, could Mrs. Humphrey have done anything to protect herself from primary liability for the note? Explain.
4. What are the social and ethical issues ?