Capitol Grp., Inc. v. Collier

• Decision Date: 09 May 2012
• Docket Number: No. ED 97135.,ED 97135.
• Citation: 365 S.W.3d 644
• Parties: CAPITOL GROUP, INC., Appellant, v. Donald G. COLLIER, Jr., Respondent.
• Court: Missouri Court of Appeals

365 S.W.3d 644

CAPITOL GROUP, INC., Appellant,

v.Donald G. COLLIER, Jr., Respondent.

No. ED 97135.

Missouri Court of Appeals,

Eastern District,

Division Four.

May 9, 2012.

Philip J. Christofferson, St. Louis, MO, for appellant.

Timothy R. Huff, St. Charles, MO, for respondent.

PATRICIA L. COHEN, Presiding Judge.

Introduction

Capitol Group, Inc. (Plaintiff) appeals the judgment of the Circuit Court of St. Charles County sustaining Donald Collier's (Defendant) motion to dismiss Plaintiff's action for breach of a personal guaranty. Plaintiff claims the trial court erred in dismissing Plaintiff's action against Defendant because: (1) the language of the parties' agreement is sufficient, as a matter of law, to constitute a personal guaranty; and (2) when construed according to the rules of contract interpretation, the agreement constitutes a personal guaranty. In the alternative, Plaintiff contends that the language of the agreement is ambiguous and the case should be remanded for the admission of parol evidence. We affirm.

Factual and Procedural Background

Plaintiff, a distributor of cabinets and plumbing materials, filed a petition against Triad Development Co. (Triad) for breach of contract and against Defendant, Triad's president, for breach of a personal guaranty. Plaintiff alleged that on October 6, 2005, Triad submitted to Plaintiff a credit application (“Credit Application”), seeking to purchase goods from Plaintiff on credit. Plaintiff accepted the Credit Application, and, at Triad's request, supplied cabinetry and plumbing materials to Triad on a credit basis. Plaintiff alleged that Triad failed or refused to pay its account, causing Plaintiff to suffer damages of $23,796.92.

Plaintiff attached to its petition a copy of the Credit Application, a two-page form document drafted by Plaintiff and executed by Triad. At the top of the first page, the Credit Application states: “FOR THE PURPOSE OF ESTABLISHING CREDIT ACCOMMODATIONS WITH YOU, THE FOLLOWING INFORMATION IS PROVIDED.” Below this heading, there is a blank space for the “Business Name,” where the name Triad Development is handwritten, along with Triad's address. The next section, entitled “Invoice Terms and Conditions,” states, inter alia, that “[a]ttorney and collection fees and costs, if necessary, and service charges of 2% per month will be applied to all past due amounts.” Directly underneath, in blank spaces labeled “Principals,” Triad supplied the names: Don Collier, President, and Cindy Collier, Secretary. At the bottom of the first page, there is a blank space for “Name of Bank,” where Triad provided the name of its bank and its commercial account number.

On the second page of the Credit Application, below the language, “AUTHORIZE REFERENCES INDICATED TO RELEASE INFORMATION RELATIVE TO OUR CREDIT ARRANGEMENTS TO [PLAINTIFF],” Triad provided the names and contact information of three references. The references are followed by a section entitled “Terms of Sale,” which provides, in part:

In consideration of credit being extended to the above named business by Capitol Group, Inc.[,] we the undersigned, agree to be jointly, severally, and individually responsible for the payment of any and all goods and/or services furnished by Capitol Group to or for our business or to us individually within the terms and conditions as stated on the Capitol Group Invoice, a form of which appears above. All accounts are due and payable to the remittance address shown on the invoice. In the event the account becomes past due, a charge of 2% per month (24% per annum) shall be due and payable on all past due amounts. The undersigned agrees to pay all costs of collection, including attorney fees and court costs in addition to all other sums due.

At the bottom of the second-page, there is a signature block, which Defendant signed and dated.

On March 17, 2010, Plaintiff filed a motion for default judgment against Triad as to its action for breach of contract. On March 29, 2010, the trial court entered a default judgment in favor of Plaintiff and against Triad in the amount of $32,751.04. The trial court stated that the judgment was final as to Triad, but “d[id] not resolve [Plaintiff's] claims against defendant Donald G. Collier, Jr.”

On April 21, 2011, Defendant filed a Rule 55.27(a)(6) motion to dismiss Plaintiff's claim for breach of personal guaranty for failure to state a claim upon which relief can be granted. In his motion to dismiss, Defendant asserted that Plaintiff's claim was barred by the statute of frauds because: (1) if Defendant signed the Credit Application in his capacity as president of Triad, the personal guaranty was not signed by the party to be charged as required by Section 432.010; or (2) in the alternative, if Defendant signed the Credit Application in his individual capacity, there is no enforceable contract for the sale of goods upon which Defendant's alleged personal guaranty is based.

The trial court heard arguments on May 20, 2011, after which the parties filed additional briefings. On July 6, 2011, the trial court granted Defendant's motion to dismiss, stating:

[Defendant's] motion to dismiss for failure to state a claim for which relief can be granted is now ordered sustained for the reason the contract which forms the basis of the claim against Defendant individually as a personal guarantor of a debt incurred by Triad Development Company does not show there was a personal guaranty executed by [Defendant].

Plaintiff filed a motion to reconsider, arguing that the trial court erred in sustaining Defendant's motion to dismiss because “the plain language of the Terms of Sale in the document clearly show that [Defendant] is signing the agreement in his personal capacity, and is thereby guaranteeing repayment of debts incurred by his business (Triad) under the agreement ....” (emphasis omitted). After hearing arguments on Plaintiff's motion to reconsider, the trial court denied the motion “on the basis that the language in the [Credit Application] is insufficient to constitute a personal guaranty as a matter of law.” Plaintiff appeals.

Standard of Review

Rule 55.27(a)(6) allows a defendant to file a motion to dismiss a plaintiff's petition for failure to state a claim upon which relief can be granted. Rule 55.27(a)(6); see also Town & Country Appraisals, LLC v. Hart, 244 S.W.3d 187, 189 (Mo.App. E.D.2007). “This rule encourages early resolutions in order to avoid the expense and delay of baseless claims and to promote judicial efficiency.” Town & Country, 244 S.W.3d at 189. “Consequently,a trial court may dismiss a claim when a party fails to state a cause of action or fails to state facts entitling him to relief.” Id. We review the trial court's grant of a motion to dismiss de novo. Lynch v. Lynch, 260 S.W.3d 834, 836 (Mo. banc 2008).

Discussion

In its first and second points on appeal, Plaintiff claims that the trial court erred in dismissing its action against Defendant for breach of personal guaranty because: (1) the language in the Credit Application was sufficient as a matter of law to constitute a personal guaranty; or (2) “basic contract interpretation principles dictate that the [Credit Application] contains a personal guaranty.” We consider these two points together.¹

A guaranty is a contract in which a guarantor agrees to become secondarily liable for the obligation of a debtor in the event the debtor does not perform the primary obligation. Jamieson–Chippewa Inv. Co., Inc. v. McClintock, 996 S.W.2d 84, 87 (Mo.App. E.D.1999). The rules governing construction of contracts generally apply to the construction of a guaranty. Dunn Indus. Group, Inc. v. City of Sugar Creek, 112 S.W.3d 421, 434 (Mo. banc 2003). “However, the liability of a guarantor is to be strictly construed according to the terms of the guaranty agreement and may not be extended by implication beyond the strict letter of the obligation.” Id.

The general rule regarding liability incurred by an individual who signs an instrument on behalf of a principal is that the principal is liable, and not the individual, where the principal is disclosed and the capacity in which the individual signs the contract is evident. Headrick Outdoor, Inc. v. Middendorf, 907 S.W.2d 297, 300 (Mo.App. W.D.1995) ( citing Wired Music, Inc. v. Great River Steamboat Co., 554 S.W.2d 466, 468 (Mo.App.1977)). We presume “that it was the agent's intention to bind his principal and not to incur personal liability, and an agent will not be bound personally, except upon clear and explicit evidence of an intention to be bound.” Wired Music, 554 S.W.2d at 468.

When considering whether a signatory to a contract intended to sign the agreement in his corporate or individual capacity, the determinative question is whether, “in view of the form of the signature to the agreement, the language of the so called guaranty clause is sufficient to manifest a clear and explicit intent by [the signatory] to assume a personal guaranty contract.” Wired Music, 554 S.W.2d at 468;see also Cardinal Health 110, Inc. v. Cyrus Pharmaceutical, LLC, 560 F.3d 894, 899 (8th Cir.2009) (applying Missouri law). Accordingly, our courts have adopted the policy that “in order to hold a corporate officer individually liable in signing a contract of guaranty ... the officer should sign the contract twice [,] once in his corporate capacity and once in his individual capacity.” Wired Music, 554 S.W.2d at 470–71. By signing the contract twice, the officer executing the contract for his corporation clearly manifests his intent to assume personal liability. Id.

In the instant case, Plaintiff asserts that Defendant is personally liable for Triad's failure to pay its account because the Credit Application provides: “[W]e the undersigned, agree to be jointly, severally, and individually responsible for the payment of any and all goods and/or services furnished by [Plaintiff] to or for our business....” Plaintiff contends that “[t]here...