Boatmen's First Nat. Bank of Kansas City v. Roofco Systems, Inc.

• Decision Date: 04 May 1993
• Docket Number: No. WD,WD
• Parties: BOATMEN'S FIRST NATIONAL BANK OF KANSAS CITY, Respondent, v. ROOFCO SYSTEMS, INC., et al., Defendant, Kenneth E. Stine, Jr., Appellant. 45779.
• Court: Missouri Court of Appeals

Page 402

852 S.W.2d 402

BOATMEN'S FIRST NATIONAL BANK OF KANSAS CITY, Respondent, v. ROOFCO SYSTEMS, INC., et al., Defendant Kenneth E. Stine, Jr., Appellant.

No. WD 45779.

Missouri Court of Appeals Western District.

May 4, 1993.

Edward J. Essay, Jr., Kansas City, for appellant.

Frank P. Barker, III, and David A. Clark, Kansas City, for respondent.

Before BRECKENRIDGE, P.J., and SHANGLER and KENNEDY, JJ.

SHANGLER, Judge.

The plaintiff Boatmen's First National Bank of Kansas City had judgment for $77,565.84 against defendants Roofco Systems, Inc. and Kenneth E. Stine, Jr., jointly and severally, on the obligations of two promissory notes. The principal amount of the notes were $24,000 and $29,000 respectively, each bore interest at the rate of 11.5% per annum at maturity and 13.5% after maturity. The notes also provided for the payment of the costs of collection and for an attorney's fee. Roofco was the maker of the notes, and Stine was a guarantor. The amounts due under the notes are not disputed. Stine appeals from the judgment.

The judgment entered against Stine is under a writing of continuing guarantee executed by Stine on November 6, 1987. The loans to Roofco were made on October 18, 1988, and October 19, 1988.

Stine argues that the judgment against him on his writing of guarantee was erroneous because there was no evidence before the court that Boatmen's relied on the guarantee to make the loans to Roofco. The argument cites Bethany Trust Co. v. Harker, 780 S.W.2d 151 (Mo.App.1989). In Bethany, the guarantee was given in April, 1974 and the promissory note guaranteed was given in March 1984, ten years later. The maker of the note defaulted and the bank sued the guarantor for recovery. The bank pleaded that it had made the loan in reliance upon the guarantee, but at the trial, the bank officer testified he could not say that he did. Bethany cited § 88 of the RESTATEMENT (SECOND) OF CONTRACTS, to the effect that a promise to be surety for the performance of a contractual obligation, made to the obligee, is binding if (1) the promise is in writing, signed by the promisor and recites a supported consideration; or (2) the promise is made binding by statute; or (3) the promisor should reasonably expect the promise to induce action or forbearance on the part of the promisee or third person, and the promise does induce such forbearance. The guarantee in Bethany did not recite a consideration and no statute made it binding; thus, in the absence of proof that the promisee bank relied upon the guarantee to make the loan, a cause of action on the guarantee was not proven.

Here, the promise to guarantee was in writing, signed by the promisor and recites a supported consideration:

GUARANTEE

In consideration of Boatmen's Raytown Bank, ¹ (hereinafter "Bank") making advances of money or otherwise giving credit to Roofco Systems, Inc. (hereinafter "Borrower"), the undersigned does hereby guarantee the full and prompt payment to said Bank of all indebtedness, obligations and liabilities of said Borrower to said Bank now existing or hereafter created or arising. This is a continuing, absolute and unconditional guarantee and shall continue in force with respect to all indebtedness of the Borrower until terminated as to the undersigned upon receipt of written notice by the Bank from such undersigned to that effect ...

A guarantee is a contract and so must be supported by consideration. Mercantile Trust Co. v. Carp, 648 S.W.2d 920, 923[5-7] (Mo.App.1983). However, the consideration need not move only between the creditor and guarantor. Rather, benefit to the debtor primarily liable, or detriment to the creditor suffices as consideration to support a contract of guarantee. Nor is it necessary that the guarantor derive any benefit from either the principal contract or the contract of guarantee. Id. A continuing guarantee, as here, is simply a divisible offer for a series of separate unilateral contracts. And each loan advanced is the acceptance of the divisible offer to guarantee each loan as well as the consideration that supports each resultant unilateral contract. Boatmen's Bank v. Community Interiors, Inc., 721 S.W.2d 72, 79[15, 16] (Mo.App.1986); Mercantile Trust Co. v. Carp, 648 S.W.2d at 923[5-7].

The contention that reliance on the guarantee is a necessary element of an action on such a contract is more aptly understood to assert that the extension of credit was not in consideration for execution of the guarantee. Riberglass, Inc. v. Giesler, 720 S.W.2d 37, 39 (Mo.App.1986). Failure of consideration, however, is an affirmative defense and must be pleaded. Rules 55.01 and 55.08. That defense was not pleaded and was not before the trial court, nor now before us on appeal.

The point is denied.

The defendant poses as other points on appeal that the judgment was erroneous because (1) the plaintiff Boatmen's First National Bank of Kansas City was without standing to sue defendant Stine; (2) the evidence failed to...