Preston Ridge Financial Services Corp. v. Tyler

Decision Date30 July 1990
Docket NumberNo. 05-89-01232-CV,05-89-01232-CV
Citation796 S.W.2d 772
PartiesPRESTON RIDGE FINANCIAL SERVICES CORPORATION, Appellant, v. O. Jan TYLER, Appellee.
CourtTexas Court of Appeals

Melissa Webb Essary, Dallas, for appellant.

Lawrence R. Maxwell, Jr., Dallas, for appellee.

Before STEWART, LAGARDE and BURNETT, JJ.

OPINION

STEWART, Justice.

Preston Ridge Financial Services Corporation ("Preston Ridge") appeals the trial court's overruling of its motion for summary judgment against appellee, O. Jan Tyler, and the trial court's granting of Tyler's motion for summary judgment in Preston Ridge's suit against Tyler for damages under a guaranty agreement executed by Tyler. In two points of error, Preston Ridge complains that the trial court erred in overruling its motion for summary judgment and its motion for reconsideration because the guaranty agreement unambiguously spells out the parties' intentions that foreclosure proceeds are to be applied first to the unguaranteed portion of the indebtedness and, therefore, Tyler's liability under the guaranty was not extinguished by the recovery of foreclosure proceeds in an amount less than the total indebtedness. In its third point, Preston Ridge contends the trial court erred in granting Tyler's motion for summary judgment because the trial court erroneously construed the guaranty agreement to provide that foreclosure proceeds should be applied so as to extinguish Tyler's liability as guarantor. We agree. Accordingly, we reverse the judgment of the trial court and render judgment in favor of Preston Ridge.

FACTS

Preston Ridge is the owner and holder of a promissory note dated August 22, 1975, in the original principal amount of $1.5 million (the "note") executed by Tyler in his capacity as president of Diamond C Land & Cattle Company ("Diamond C"). Diamond C, acting through Tyler, simultaneously executed and delivered a deed of trust/security agreement (the "deed of trust"), conveying certain real property as security for the debt owed pursuant to the note. On August 22, 1975, Tyler also executed a guaranty under which he unconditionally guaranteed to pay "when due" to the owner and holder of the note all interest on the note and "that amount of principal indebtedness equal to the amount by which the sum of the outstanding principal balance of the indebtedness evidenced by the Note ... exceeds $735,000" (this amount referred to as the "guaranteed indebtedness").

The note went into default and, on or about October 11, 1988, Preston Ridge accelerated the entire indebtedness of $1,103,555.99. When Diamond C failed to pay the accelerated demand, a substitute trustee sold the property secured by the deed of trust to Preston Ridge at a nonjudicial foreclosure sale for $735,000, the highest bid. 1 Preston Ridge credited the proceeds of the foreclosure sale ($735,000) against the total outstanding indebtedness and demanded that Tyler pay the alleged guaranteed indebtedness of $368,555.99, which was the amount of the principal indebtedness in excess of $735,000 at the time of acceleration. Tyler refused to pay any amount because the outstanding indebtedness at the time Preston Ridge demanded payment from him was less than $735,000.

Preston Ridge sued Tyler to collect the alleged guaranteed indebtedness due under the guaranty. Each party filed a motion for summary judgment. Preston Ridge's motion for summary judgment alleged that Tyler's liability was fixed at the time of acceleration, when the outstanding indebtedness on the note totalled $1,103,555.99. Thus, argued Preston Ridge, Tyler was liable for $368,555.99, the amount of principal in excess of $735,000 due at that time. Tyler's motion for summary judgment alleged that his liability under his guaranty agreement had been extinguished because Preston Ridge had foreclosed on the collateral pursuant to the deed of trust and had credited the proceeds from that sale against the outstanding indebtedness before making demand on him to perform under the guaranty agreement and that, at the time Preston Ridge made demand upon him, the total outstanding principle indebtedness was $368,555.99, a sum less than $735,000. The trial court overruled Preston Ridge's motion for summary judgment and granted Tyler's motion; the trial court also overruled Preston Ridge's motion for reconsideration. Because our disposition of Preston Ridge's three points depends upon whether application of the foreclosure proceeds to the total outstanding indebtedness extinguished Tyler's obligations pursuant to the guaranty, we will discuss all three points together.

STANDARDS FOR REVIEWING SUMMARY JUDGMENT

Both parties may move for summary judgment under rule 166a of the Texas Rules of Civil Procedure. When both parties move for summary judgment, each party must carry his own burden, and neither can prevail because of the failure of the other to discharge his burden. The Atrium v. Kenwin Shops of Crockett, 666 S.W.2d 315, 318 (Tex.App.--Houston [14th Dist.] 1984, writ ref'd n.r.e.). An order denying a motion for summary judgment is not appealable except, as here, when both parties have filed a motion for summary judgment and the court granted one of the motions and overruled the other. Garcia v. City of Lubbock, 634 S.W.2d 776, 780 (Tex.App.--Amarillo 1982, writ ref'd n.r.e.).

The Texas Supreme Court has established the following standards for reviewing a motion for summary judgment:

1. The movant for summary judgment has the burden of showing that there is no genuine issue of material fact and that it is entitled to judgment as a matter of law.

2. In deciding whether there is a disputed material fact issue precluding summary judgment, evidence favorable to the nonmovant will be taken as true.

3. Every reasonable inference must be indulged in favor of the nonmovant and any doubts resolved in his favor.

Nixon v. Mr. Property Management Co., 690 S.W.2d 546, 549 (Tex.1985); Montgomery v. Kennedy, 669 S.W.2d 309, 310-11 (Tex.1984); Wilcox v. St. Mary's Univ., 531 S.W.2d 589, 592-93 (Tex.1975).

To establish a right to recover as a matter of law, the movant must prove conclusively all elements of his cause of action. Plano Indep. School Dist. v. Oake, 682 S.W.2d 359, 364 (Tex.App.--Dallas 1984), rev'd on other grounds, 692 S.W.2d 454 (Tex.1985). A matter is conclusively established if ordinary minds cannot differ as to the conclusion to be drawn from the evidence. Triton Oil & Gas Corp v. Marine Contractors & Supply, Inc., 644 S.W.2d 443, 446 (Tex.1982). In a summary judgment case, the question on appeal is not whether the summary judgment proof raises a fact issue with reference to the essential elements of a cause of action, but whether the summary judgment proof establishes as a matter of law that there is no genuine issue of fact as to one or more of the essential elements of the cause of action. Gibbs v. General Motors Corp., 450 S.W.2d 827, 828 (Tex.1970). Summary judgment is proper in cases involving the interpretation of a writing when the writing is found to be unambiguous. RGS, Cardox Recovery, Inc. v. Dorchester Enhanced Recovery Co., 700 S.W.2d 635, 638 (Tex.App.--Corpus Christi 1985, writ ref'd n.r.e.).

RULES OF CONTRACT CONSTRUCTION

In construing a written contract, the primary concern of the court is to ascertain the true intentions of the parties as expressed in the instrument. Coker v. Coker, 650 S.W.2d 391, 393 (Tex.1983); R & P Enters. v. La Guarta, Gavrel & Kirk, Inc., 596 S.W.2d 517, 518 (Tex.1980). This cardinal rule of construction applies to guaranty contracts as it does to other types of contracts. Southwest Sav. Ass'n. v. Dunagan, 392 S.W.2d 761, 767 (Tex.Civ.App.--Dallas 1965, writ ref'd n.r.e.). The intention of the parties is discovered primarily by reference to the words used in the contract. Id. Further, to determine the parties' actual intent, courts should examine and consider the entire writing in an effort to harmonize and give effect to all the provisions of the contract so that none will be rendered meaningless. Coker, 650 S.W.2d at 393. No single provision taken alone will be given controlling effect; rather, all the provisions must be considered with reference to the whole instrument. Id.

Whether a contract is ambiguous is a question of law for the court to decide by looking at the contract as a whole in light of the circumstances present when the contract was entered. R & P Enters., 596 S.W.2d at 518. If the written instrument is so worded that it can be given a certain or definite legal meaning or interpretation, then it is not ambiguous and the court will construe the contract as a matter of law. Coker, 650 S.W.2d at 393; R & P Enters., 596 S.W.2d at 519. In construing an unambiguous contract, evidence of circumstances surrounding its execution may be considered. Sun Oil Co. (Delaware) v. Madeley, 626 S.W.2d 726, 731 (Tex.1981). A contract is ambiguous only when, after the application of pertinent rules of interpretation to the face of the instrument, the contract remains reasonably susceptible to more than one meaning. Universal C.I.T. Credit Corp. v. Daniel, 243 S.W.2d 154, 157 (Tex.1951). It is with these general principles in mind that we examine the guaranty at issue here.

RELEVANT PROVISIONS OF THE GUARANTY

The guaranty at issue provides in pertinent part as follows:

For value received and in order to induce JONES & INLOW, INC.[ 2 ("Lender") to loan up to $1,500,000 to DIAMOND C LAND & CATTLE COMPANY, a Texas corporation, ("Borrower"), which loan is evidenced by that certain Installment Note of even date herewith in the original principal amount of $1,500,000 executed by Borrower to the order of Lender ..., and secured by that certain Deed of Trust/Security Agreement of even date herewith executed by Borrower to Robert F. Inlow as Trustee ... it being understood that Lender would not be willing to make such loan without the execution of this Guaranty by the...

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