Ace Elec. Supply Co. v. Terra Nova Elec., Inc.

• Decision Date: 18 December 1973
• Docket Number: No. S--455,S--455
• Citation: 288 So.2d 544
• Parties: ACE ELECTRIC SUPPLY COMPANY, a Florida corporation, Appellant, v. TERRA NOVA ELECTRIC, INC., a Florida corporation, et al., Appellee.
• Court: Florida District Court of Appeals

Page 544

288 So.2d 544

ACE ELECTRIC SUPPLY COMPANY, a Florida corporation, Appellant, v.TERRA NOVA ELECTRIC, INC., a Florida corporation, et al., Appellee.

No. S--455.

District Court of Appeal of Florida, First District.

Dec. 18, 1973.

Rehearig Denied Feb. 15, 1974.

Thomas C. Dearing and Joseph M. Glickstein, Jr., of Glickstein, Crenshaw, Glickstein, Fay & Block, Jacksonville, for appellant.

John Paul Howard, Jacksonville, for appellees.

CARROLL, Associate Judge.

The appellantAce Electric Supply Company filed an action in the Circuit Court of Duval County against Terra Nova Electric Inc., D. H. McSwain and John E. Gentry.Plaintiff alleged it had sold goods to Terra Nova Electric, Inc. on open account over a period of time, in reliance upon a written guaranty by the individual defendants, and that $14,359.01 was due and unpaid thereon, for which judgment against the defendants was sought.

The guaranty instrument was attached to the complaint.Thereby McSwain and Gentry, both of whom signed the document, guaranteed payment of indebtednesses to Ace Electric so incurred.Following that undertaking in the guaranty instrument, which was a printed form, there was inserted a typed statement as follows: 'Purchases to be made by numbered purchase orders authorized by the undersigned only.'

No defensive pleading was filed by the defendant corporation.Gentry answered denying the material allegations of the complaint.McSwain answered, admitting the guaranty, but denying liability thereunder 'for the reason that the purchases sued upon by the Plaintiff were not made by numbered purchase orders authorized by said Defendant(McSwain) as required by the terms of said personal guaranty.'

The plaintiff Ace Electric moved for a summary judgment against the defendants on the grounds that there were no genuine issues of material fact and that it was entitled to judgment as a matter of law.The defendant McSwain moved for summary judgment on the ground pleaded in his answer.

Before the trial court on the hearing on the motions for summary judgment were affidavits by the president and the treasurer of Ace Electric in support of its motion.They confirmed the amount claimed to be due for the purchase of goods on open account, and stated the extension of credit was made on reliance of the guaranty by McSwain and Gentry, and that such dealings had proceeded over the period of time involved with no contention or notice by the guarantors 'that said Defendants considered said personal guaranty ineffective as to any sales made.'

Also before the court were depositions of McSwain and Gentry.Thereby it was shown that McSwain and Gentry were stockholders of Terra Nova Electric, Inc., and between them owned a majority of the stock; that Gentry was the president, and that McSwain, who was the secretary-treasurer, did not take part in the operation of the business, his activity therefor being limited principally to preparation of the corporation's tax returns.

McSwain testified it was his Understanding that it was the purpose and intent of the typed clause in the guaranty that all such purchase orders were to be authorized by both of the guarantors, and that he would incur liability thereunder only for purchase made on written purchase orders bearing his signed approval, and that he had not so approved any of the purchases.

Gentry's deposition disclosed he participated in the business of the corporation, and as a master electrician took part in the performance of the corporation's contract jobs; that during the period in question the purchases made from plaintiff were on numbered orders or invoices with his approval being given for such purchases.

The trial court entered two judgments bearing the same date.By one, summary judgment was granted in favor of the plaintiff against the defendant corporation and against Gentry for the amount claimed, with an additional amount against Gentry for attorney fees as provided for in the guaranty instrument.In that judgment the plaintiff's motion for summary judgment against the defendant McSwain was denied.By the other judgment, after reciting consideration by the court of the 'motions, the depositions and affidavits filed in support of the same,' summary judgment was entered in favor of the defendant McSwain.

The problem presented was one of interpretation of the guaranty as to whether, for liability of the guarantors, it was intended and required that the purchase orders be approved by both guarantors, or whether it was intended to be and was sufficient thereunder for the purchase orders to be approved by one of the guarantors, the latter being the basis upon which the parties proceeded and which appeared to be the interpretation which the parties placed thereon during the course of such dealings.

With regard thereto the guaranty instrument presented an ambiguity.There is a question here as to whether the ambiguity was latent or patent.Extrinsic evidence is admissible to explain a latent ambiguity (Whitfield v. Webb, 100 Fla. 1619, 131 So. 786, 788(1931)), but is not admissible in the case of a patent ambiguity (Carson v. Palmer, 139 Fla. 570, 190 So. 720, 722(1939)).As stated in Black's Law Dictionary, an ambiguity may be either latent or patent.It is the former, where the language employed is clear and intelligible and suggests but a single meaning, but some extrinsic fact or extraneous evidence creates a necessity for interpretation or a choice among two or more possible meanings.But a patent ambiguity is that which appears on the face of the instrument, and arises from the defective, obscure, or insensible language used.

It can be argued the ambiguity is patent.This is so because the lack of meaning noted above can be said to appear on the face of the instrument, which calls for approval of purchase orders by 'the undersigned,' and there are two signers, but without expressly providing for approval of purchase orders by both signers, or that approval by one of the signers will suffice.

Also, it can be argued the ambiguity is latent, and that the uncertainty arises from extrinsic evidence showing credit was extended on faith of the guaranty on purchases made upon the approval of one of the guarantors, and that the other, who did not take part in the approval thereof, made no disclaimer of liability while the purchases were being made on that basis.

In this instance the equivocation presented appears to fall into the third category known as an intermediate ambiguity, which it is recommended in law should be treated as a latent ambiguity, permitting admission of extrinsic evidence for its resolution.In 22 C.J., Evidence§ 1596, it is said: 'It has been suggested that those cases in which the words all are sensible and have a settled meaning, but at the same...