American Bank & Trust Co. v. Blue Bird Restaurant & Lounge, Inc., 53790

CourtSupreme Court of Louisiana
Citation290 So.2d 302
Decision Date18 February 1974
Docket NumberNo. 53790,53790
PartiesAMERICAN BANK & TRUST COMPANY v. BLUE BIRD RESTAURANT & LOUNGE, INC., et al.

Warren L. Mengis, Mengis, Durant & Carpenter, Baton Rouge, for defendant-applicant.

Frederick Kroenke, Jr., McCollister, Belcher, McCleary & Fazio, Baton Rouge, for plaintiffs-respondents.

BARHAM, Justice.

This is a suit on a 90-day promissory note in the amount of $91,207.89 by the American Bank & Trust Company (hereinafter referred to as bank) against Charles E. Courtney, Sr., Blue Bird Restaurant & Lounge, Inc., Blue Bird Drive-In, Inc., and Blue Bird of Nicholson, Inc., as makers of the note, and against Herbert E. Courtney, relator here, on a guaranty in the sum of $20,000.00. That portion of the trial court's judgment affecting relator, which held him liable in solido with Charles E. Courtney, Sr. and Blue Bird Drive-In, Inc., in the sum of $20,000.00, was appealed to the Court of Appeal, First Circuit, and was affirmed. 279 So.2d 720 (1973). We granted certiorari to review the Court of Appeal's judgment. 281 So.2d 752 (La.1973).

An examination of the background out of which this suit arose reveals that in May of 1969 relator's brother, Charles E. Courtney, Sr., executed a personal demand note in the amount of $30,000.00 in favor of respondent bank. Relator endorsed this note and the note was subsequently set up on a payment schedule of $1,000.00 per month. On March 8, 1971, Charles E. Courtney, Sr. negotiated a consolidation note with the bank in the amount of $91,207.89; included in the consolidation was the amount of $20,000.00 still outstanding on the May, 1969 personal note endorsed by relator and other outstanding indebtedness of Charles E. Courtney, Sr. and the three Blue Bird corporations.

Subsequent to the consolidation, the bank contacted relator and requested that he execute a continuing guaranty for the $20,000.00 amount outstanding on the note he had earlier endorsed for his brother. Relator refused to sign the guaranty form as printed, indicating that he wished assurance that his liability would extend only to the first $20,000.00 of debt owed the bank by his brother and the Blue Bird corporations. Accordingly, a typewritten paragraph setting forth a limitation of relator's liability to the first $20,000.00 of the indebtedness of Charles E. Courtney, Sr. and Blue Bird Drive-In, Inc. was added and realtor executed the guaranty.* In June of 1971, upon default of the principal debtors on the note, the bank instituted this suit and the judgment rendered in its favor held relator liable as set forth hereinabove. Relator contends that the Court of Appeal, in affirming the trial court's judgment, erred in concluding that: (1) a valid contract of guaranty existed between him and the bank; (2) his liability thereon was solidary; and (3) the bank's failure to require the principal debtors to make monthly payments in accordance with a reference to same in a typewritten addendum to the printed guaranty form did not release the relator from liability under the contract. These conclusions of law present the issues which we must resolve upon our review.

Relator's first claim is that the continuing guaranty form which he executed is not a valid contract, there being no meeting of the minds on the object of the contract. The language added to the guaranty form contained, in addition to the liability limitation referred to above, the following language: '* * * Monthly payments are to be approximately $1,700.00 monthly interest included. Upon reduction of the principal balance, through payment of these monthly payments, the Continuing Guaranty will become null and void.'

The note accepted by the bank in the consolidation agreement was a 90-day note. Testimony of the bank's commercial loan officer and Charles E. Courtney, Sr. established that it was their intention to evaluate the financial position of Charles E. Courtney, Sr. and the corporate makers at the time of the note's maturity and then set up a monthly repayment schedule if it was warranted.

Relator argues that there was no agreement between himself and the bank as to how the $91,207.89 note was to be paid, that this lack of agreement between them evidences that these was no meeting of the minds on the object of the contract, and that the contract of guaranty is therefore invalid. However, relator's testimony at trial reveals that he was not concerned with the monthly payments of the loan and that his principal concern was that his liability be limited to the first $20,000.00 owed on the note. Relator's trial testimony further reveals that he did not know what the system of repayment for the consolidation note would be and that the monthly payments were not discussed with him.

In brief, it is stated that relator was concerned not only with restricting his liability to the first $20,000.00 owed on the consolidation loan, but with wanting monthly payments as the method of repayment. This allegation, however, is not borne out by the record.

Civil Code Article 1826 provides:

'No error in the motive can invalidate a contract, unless the other party was apprised that it was the principal cause of the agreement, or unless from the nature of the transaction is must be presumed that he knew it.'

Relator's argument that the absence of agreement between himself and the bank on the issue of repayment of Charles E. Courtney, Sr.'s loan vitiates the contract is clearly untenable. Even if relator had testified that this was his primary concern, failure to communicate this to the bank at the time that the guaranty was being executed would have precluded an attack on the validity of the contract after execution. Art. 1826, supra; 1 S. Litvinoff, Louisiana Civil Law Treatise, § 220 (1969). Moreover, Civil Code Article 1825...

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16 cases
  • U.S. v. Bellard
    • United States
    • U.S. Court of Appeals — Fifth Circuit
    • April 23, 1982
    ...277 n.4 (La.1975); American Bank & Trust Co. v. Blue Bird Restaurant & Lounge, Inc., 279 So.2d 720, 722 (La.App.1973), affirmed, 290 So.2d 302 (La.1974). 7 Just such an agreement was made by the United States with respect to Bellard's student loan. The Government's participation was evident......
  • Placid Refining Co. v. Privette
    • United States
    • Court of Appeal of Louisiana — District of US
    • January 15, 1988
    ...in general; citing American Bank & Trust Co. v. Blue Bird Restaurant & Lounge, Inc., 279 So.2d 720 (La.App. 1st Cir.1973), aff'd, 290 So.2d 302 (La.1974). Agreements legally entered into have the effect of laws on those who formed them and must be performed with good faith. Former La.Civ.Co......
  • Bellard v. American Cent. Ins. Co.
    • United States
    • Louisiana Supreme Court
    • April 18, 2008
    ...that parties may be solidarily liable although their liability is in different amounts. American Bank and Trust Company v. Blue Bird Restaurant & Lounge, Inc., 290 So.2d 302, 306 (La.1974); Narcise, 427 So.2d at 1195. As we explained in The fact of different defenses, different prescriptive......
  • Carona v. State Farm Ins. Co.
    • United States
    • Louisiana Supreme Court
    • November 26, 1984
    ...indicated that parties may be solidarily liable although their liability is in different amounts. American Bank and Trust Co. v. Blue Bird Restaurant & Lounge, Inc., 290 So.2d 302 (La.1974) (before Hoefly ); Narcise v. Illinois Central Gulf R. Co., 427 So.2d 1192 (La.1983) (after Hoefly ); ......
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