Capital Bank & Trust Co. v. Automotive Const. and Testing, Inc.
Decision Date | 28 June 1983 |
Docket Number | No. 82,82 |
Citation | 434 So.2d 1191 |
Court | Court of Appeal of Louisiana — District of US |
Parties | 36 UCC Rep.Serv. 1650 CAPITAL BANK & TRUST COMPANY v. AUTOMOTIVE CONSTRUCTION AND TESTING, INC., Charlene M. Bishop, Richard Fitzgerald, and Steven Walker. CA 0947. |
Paul S. West, Baton Rouge, for plaintiff-appellee Capital Bank & Trust Co., Inc.
James D. Partin, Baton Rouge, for defendant-appellee Automotive Const. & Testing, Inc.
John W. Porterfield, Jeanerette, for defendant-appellant Charlene M. Bishop.
Before LOTTINGER, COLE and CARTER, JJ.
The plaintiff, Capital Bank & Trust Company, Inc. (Capital), brought suit against defendants, Automotive Construction and Testing, Inc. (Automotive), Charlene M. Bishop, and Richard Fitzgerald to collect on two promissory notes held by the plaintiff. Defendants Bishop and Fitzgerald were sued for their signing of a "Continuing Guaranty," whose terms bound them to pay any debts owed by Automotive to Capital. From a trial court judgment finding defendants liable in solido for the payment of the notes, only Charlene M. Bishop appeals.
Defendant-appellant, Charlene Bishop, was the original incorporator, president, and sole stockholder of Automotive at its inception in 1978. She has remained the company's president to the present.
In September of 1980, John Morrison bought 750 shares of Automotive's stock, making him owner of 75% of the company. He did not then or ever become an officer of Automotive.
In early 1981 it was decided that a "line of credit" should be opened with Capital. According to Bishop, Morrison brought to her a printed form from Capital entitled "Resolution for Borrowing of Money, Signing of Notes and Security Devices, etc." Bishop signed the form which she said contained no other signatures at that time. The form, as it reads now, bears the typewritten (in brown type) names of Bishop as president, Morrison as vice president, and Fitzgerald as secretary; it is signed at the bottom by those three in that order. The form resolution authorized the above-named persons to borrow from Capital, to sign notes and secure and sign various security devices required by Capital to secure the debt. The resolution is dated March 10, 1981.
Also dated March 10, 1981 is a "Continuing Guaranty" signed by Bishop, again brought to her by Morrison. The signee guarantees the payment of any indebtedness of Automotive to Capital whether existing then or arising later, up to $25,000.00. Automotive's name and the amount of the guaranty are typed in with the same brown type referred to above. Bishop testified that the spaces for the debtor's name and the amount guaranteed were blank when she signed it.
Two promissory notes, dated also March 10, 1981, evidence debts of $15,000.00 and $7,500.00 owed by Automotive to Capital; the first note is signed by Morrison and the second by Richard Fitzgerald, then secretary of Automotive.
Morrison has since died and his estate was not joined in this proceeding.
The notes then became due and this suit to collect on them resulted.
The trial court found that the corporate resolution naming Morrison (along with Bishop and Fitzgerald) as authorized to borrow money and secure debts with Capital was valid. Automotive was thus found liable for payment of the notes signed by Morrison and Fitzgerald.
Bishop was held liable because of her guaranty of Automotive's debts to Capital. The trial court discounted her protests of ignorance as to what amount Capital (through Morrison's directions) had filled in on the agreement as the dollar limit she would guarantee. The court also failed to accord any weight to Bishop's professed agreement with Morrison: that her signing of the continuing guaranty was only to establish "a line of credit" with Capital, and was not a prelude to getting loans from Capital.
The sole issue presented is whether the "Continuing Guaranty" signed by Bishop binds her to pay Automotive's debt to Capital.
Defendant-appellant argues that since this contract of continuing guaranty is equivalent to a contract of suretyship, and such a contract requires mutual consent of the parties, then this guaranty is not...
To continue reading
Request your trial-
Gregoire v. Lowndes Bank
...565 (Ky.Ct.App.1984); Brooks v. United Kentucky Bank, 659 S.W.2d 213, 215 (Ky.Ct.App.1983); Capital Bank & Trust Co. v. Automotive Construction & Testing, Inc., 434 So.2d 1191, 1193 (La.Ct.App.1983); National Bank of Detroit v. Alford, 65 Mich.App. 634, 637, 237 N.W.2d 592, 593 (1975); Aetn......
-
Baker v. First American Nat. Bank
...agreement did not meet definition of negotiable instrument; Article 3 did not apply) and Capital Bank & Trust Co. v. Automotive Construction & Testing, Inc., 434 So.2d 1191, 1193 (La.App. 1st Cir.1983) (continuing guaranty was not a negotiable instrument so was not governed by Article The A......