Bradley v. Romeo, 16228

• Decision Date: 25 March 1986
• Docket Number: No. 16228,16228
• Parties: , 1 UCC Rep.Serv.2d 129 Martha BRADLEY, Appellant, v. Donald J. ROMEO, M.D., United Pacific Ventures, Inc., d/b/a American Ambulance, Respondents.
• Court: Nevada Supreme Court

Page 227

716 P.2d 227

102 Nev. 103, 1 UCC Rep.Serv.2d 129

Martha BRADLEY, Appellant, v. Donald J. ROMEO, M.D., United Pacific Ventures, Inc., d/b/a

American Ambulance, Respondents.

No. 16228.

Supreme Court of Nevada.

March 25, 1986.

Rehearing Denied May 28, 1986.

Burris & Thomas, Las Vegas, for appellant.

Dennis M. Sabbath and Kevin B. Christensen, Las Vegas, for respondent Donald J. Romeo, M.D.

Brown, Wells, Beller & Kravitz and Harry P. Marquis, Las Vegas, for United Pacific Ventures, Inc., d/b/a American Ambulance.

OPINION

PER CURIAM:

The issue presented is whether one who individually signs a promissory note to guarantee a preexisting corporate debt is personally liable on that note. Our examination of the relevant statutes reveals that there is liability. Accordingly, we reverse.

On February 14, 1980, Chester Ham ¹ loaned $15,000 to United Pacific Ventures, Inc. dba American Ambulance (American). Although the check was made out to Donald Romeo (a shareholder in American), the trial court found that the loan was made to American rather than to Romeo personally. ² Several months later Romeo and Ryan Johnson, who is the president and principal shareholder of American, signed a promissory note in the amount of $15,000, plus interest, in favor of Ham. The note does not indicate that either of the signatures was made in a representative capacity, and no company or corporate name appears on the face of the note. Both American and Johnson subsequently filed for bankruptcy, and Ham brought this action against Romeo to enforce the note.

The district court denied enforcement based on a finding that Romeo received no consideration for the note. This result is contrary to NRS 104.3408 (UCC 3-408).

NRS 104.3408 provides, in relevant part:

Consideration. Want or failure of consideration is a defense as against any person not having the rights of a holder in due course (NRS 104.3305), except that no consideration is necessary for an instrument or obligation thereon given in payment of or as security for an antecedent obligation of any kind.

(Emphasis added.)

Under that statute, antecedent debt flowing to a third party is sufficient consideration to support liability on a promissory note. See, e.g., UCC 3-408, comment 2; ³ Farmers & Merch. Ntl. Bank of Hatton v. Lee, 333 N.W.2d 792 (N.D.1983).

Romeo urges this court to disregard NRS 104.3408 because the question of its applicability was raised for the first time by this court. The ability of this court to consider relevant issues sua sponte in order to prevent plain error is well established. See, e.g., Western Indus., Inc. v. General Ins. Co., 91 Nev. 222, 230, 533 P.2d 473, 478 (1975). Such is the case where a statute which is clearly controlling was not applied by the trial court.

Romeo requests a new trial to present additional defenses to enforcement of the note. However, an examination of the defenses relied upon reveals that they either lack merit as a matter of law or have been waived due to Romeo's failure to pursue them at trial.

The contention that Romeo did not intend to be personally liable on the note can be dispensed with by examining NRS 104.3403 (UCC 3-403). That statute provides, in relevant part:

2. An authorized representative who signs his own name to an instrument:

(a) Is personally obligated if the instrument neither names the person represented nor shows that the representative signed in a representative capacity.

(b) Except as otherwise established between the immediate parties, is personally obligated if the instrument names the person represented but does not show that the representative signed in a representative capacity, or if the instrument does not name the person represented but does show that the representative signed in a representative capacity.

Romeo argues that since this action involves the immediate parties, he is entitled under 3-403(2)(b) to demonstrate his intent to sign in a representative capacity only. However, 3-403(2)(b) applies only where the instrument names the person represented or shows that the signature is in a representative capacity. Since the note neither names American nor indicates that Romeo signed on behalf of American, Romeo is personally obligated by virtue of 3-403(2)(a) and parol evidence of representative capacity is not admissible, even between the immediate parties. E.g., Schwartz v. Disneyland Vista Records, 383 So.2d 1117, 1119-20 (Fla.App.1980) (no parol evidence even though payee intended obligation from corporation); Bostwick Banking Company v. Arnold, 227 Ga. 18, 178 S.E.2d 890, 893 (1970) ("One who executes a note in his own name with nothing on the face of the note showing his agency cannot introduce parol evidence to show that he executed it for a principal, or that the payee knew that he intended to execute it as an agent."); K-Ross Bldg. Sup. Ctr. v. Winnipesaukee Chalets, 121 N.H. 575, 432 A.2d 8, 11 (N.H.1981); Mid-America Real Estate & Inv. Corp. v. Lund, 353 N.W.2d 286, 288-89 (N.D.1984). See also J. White & R. Summers, Handbook of the Law Under the Uniform Commercial Code § 13-4, at 493 (2d ed. 1980) ("Even if the person taking the instrument knows that the agent is signing in a representative capacity, the agent cannot introduce...