Allied Plywood Co. v. Pearson

• Court: Rhode Island Supreme Court
• Writing for the Court: KELLEHER
• Citation: Allied Plywood Co. v. Pearson, 121 R.I. 72, 395 A.2d 716 (R.I. 1978)
• Decision Date: 20 December 1978
• Docket Number: No. 76-288-A,76-288-A
• Parties: ALLIED PLYWOOD COMPANY v. Clinton J. PEARSON. ppeal.

Page 716

395 A.2d 716

121 R.I. 72

ALLIED PLYWOOD COMPANY v. Clinton J. PEARSON.

No. 76-288-Appeal.

Supreme Court of Rhode Island.

Dec. 20, 1978.

[121 R.I. 77] Richard R. Ackerman, Inc., Woonsocket, for plaintiff.

Henry M. Swan, Providence, for defendant.

OPINION

KELLEHER, Justice.

This is a civil action in which the plaintiff seeks to recover from the defendant debts incurred by the C. J. Pearson Company, the payment of which the plaintiff claims was guaranteed by the defendant. The case was tried before a justice of the Superior Court sitting without a jury and resulted in a judgment for the plaintiff in the amount of $15,690.82 with interest and costs. ¹ Hereinafter we shall refer to the plaintiff as "Allied," the defendant as "Pearson," and the C. J. Pearson Company as "the corporation."

At the time of this suit, Pearson was president, treasurer, and a stockholder of the corporation, whose specialty was the construction of boats. Apparently, as the corporation built boats, it would purchase goods and merchandise from Allied. On August 31, 1966, Pearson signed a document addressed to Allied which, in pertinent part, provided:

"For value received and the further consideration of any credit that may hereafter from time to time extend to C. J. Pearson, the undersigned does hereby guarantee the full and prompt payment to you of all indebtedness which the said C. J. Pearson has heretofore incurred and does hereafter incur for the purchase of merchandise from you without deduction by reason of any set-off, defense, or counter-claim of the said buyer against you." (Emphasis added.)

The agreement, which was set forth on stationery bearing the corporation's letterhead, was witnessed by Alfred P. Viviani, then manager of Allied's Providence office.

Pearson argues that the trial court erred in finding that the guarantee referred to the debts incurred by the corporation when the document identified the obligor as "C. J. Pearson." The trial justice cited Bailey & Gallup v. Larchar, 5 R.I. 530 (1858), where, over a century ago, this court said:

"(I)f the guarantor, by the use of ambiguous language in his guaranty, renders it susceptible of two or more equally reasonable interpretations, that is to be adopted which makes most strongly against him." Id. at 534.

In construing the guarantee, we look to the guarantee's language while giving due consideration to its subject matter, the relative conditions of the parties, and their probable intent. 5 R.I. at 534. Pearson's use of "C. J. Pearson" in the guarantee raises only one "reasonable interpretation." There is no evidence indicating that Allied was doing business with an entity known as "C. J. Pearson" or with Pearson personally. It would be unreasonable for us to assume that Allied required Pearson to guarantee his own indebtedness before agreeing to extend credit to him personally.

One of the witnesses at the Superior Court hearing was Dean Hodgdon. He became manager of Allied's Providence office in 1968. Hodgdon testified that he personally approved the extension of credit to the corporation on several occasions and would not have done so without Pearson's guarantee. In addition, approximately 6 weeks after signing the guarantee, Pearson asked his and the corporation's accountant, Albert O. Putnam, to submit a personal balance sheet to Allied's credit manager. These facts, along with the use of the corporation's stationery to draft the guarantee, point unerringly to but one "reasonable" conclusion, namely, that the "C. J. Pearson" alluded to in the guarantee was intended to refer to the corporation and not Pearson.

A second issue raised by Pearson is that the trial justice erred in admitting into evidence a statement of the corporation's account with Allied. In passing on this question, the trial justice ruled that the statement was a "fair and accurate document fairly representing the orders" filled by Allied for the material charged to the corporate account. Pearson argues that since the office manager did not prepare the statement, his testimony alone is insufficient to authenticate its accuracy. Thus, Pearson claims that the statement...