Eubank v. First Nat. Bank of Bellville

• Decision Date: 27 June 1991
• Docket Number: No. 13-90-456-CV,13-90-456-CV
• Citation: 814 S.W.2d 130
• Court: Texas Court of Appeals
• Parties: Lindsey EUBANK, Appellant, v. FIRST NATIONAL BANK OF BELLVILLE, Appellee.

Page 130

814 S.W.2d 130

Lindsey EUBANK, Appellant, v. FIRST NATIONAL BANK OF BELLVILLE, Appellee.

No. 13-90-456-CV.

Court of Appeals of Texas Corpus Christi.

June 27, 1991.

Rehearing Overruled Aug. 29, 1991.

Thomas White, Corpus Christi, for appellant.

L. Timothy Perrin, Corpus Christi, for appellee.

Before NYE, C.J., and KENNEDY and SEERDEN, JJ.

OPINION

NYE, Chief Justice.

Lindsey Eubank appeals the trial court's granting of summary judgment in favor of appellee, First National Bank of Bellville (the Bank). By his sole point of error, Lindsey asserts that the trial court erred in granting the summary judgment. We affirm.

The Bank filed suit against Lindsey and Michael Eubank to collect the past-due amounts on a promissory note which Segundo Corporation, Inc. (Segundo) executed on May 27, 1988, and which Lindsey and Michael subsequently guaranteed. By the terms of the note, Segundo promised to pay $62,306.45, plus interest on or before October 25, 1988. On August 25, 1988, Michael executed and delivered to the Bank a Loan Guaranty Agreement guaranteeing all Segundo's debts, liabilities and obligations. On October 25, 1988, Segundo defaulted by failing and refusing to repay the note. On October 27, 1988, Lindsey executed and delivered to the Bank a Loan Guaranty Agreement guaranteeing the same. Lindsey and Michael subsequently failed to honor their obligations under the guaranty agreements. The Bank sought payment of the $62,306.45 principal and over $11,457.55 in interest alleging that, because of the guaranty agreements, both Lindsey and Michael were individually liable for the amount of the note.

At the hearing on the motion for summary judgment, the trial court ruled in favor of the Bank, ordering that it recover a total of $84,822.00 owed jointly and severally by Michael and Lindsey. Only Lindsey appeals. By his sole point of error, Lindsey asserts that the evidence presented in his affidavit in response to the Bank's motion for summary judgment raises a fact issue regarding fraud in the inducement of his execution of the guaranty agreement and that he was not personally liable under the agreement.

The purpose of a summary judgment is to eliminate patently unmeritorious claims or untenable defenses. Swilley v. Hughes, 488 S.W.2d 64, 68 (Tex.1972); Barrow v. Jack's Catfish Inn, 641 S.W.2d 624, 625 (Tex.App.--Corpus Christi 1982, writ ref'd n.r.e.). A summary judgment is proper only when the movant establishes that there is no genuine issue of material fact and that he is entitled to judgment as a matter of law. Continental Casing Corp. v. Samedan Oil Corp., 751 S.W.2d 499, 501 (Tex.1988); Flores v. H.E. Butt Stores, Inc., 791 S.W.2d 160, 162 (Tex.App.--Corpus Christi 1990, writ denied); R.I.O. Syss., Inc. v. Union Carbide Corp., 780 S.W.2d 489, 490 (Tex.App.--Corpus Christi 1989, writ denied); Tex.R.Civ.P. 166a(c).

The party seeking summary judgment has the burden of proof, and all doubts regarding the existence of a genuine issue of fact are to be resolved against the movant. Accordingly, all evidence favorable to the non-movant will be accepted as true, and every reasonable inference must be indulged in favor of the non-movant and any doubts be resolved in the non-movant's favor. Nixon v. Mr. Property Management Co., 690 S.W.2d 546, 548-49 (Tex.1985); Rath v. State, 788 S.W.2d 48, 50 (Tex.App.--Corpus Christi 1990, writ denied); R.I.O. Syss., 780 S.W.2d at 490.

The Bank's summary judgment evidence consists of copies of the promissory note, the guaranty agreement signed by Michael, the guaranty agreement signed by Lindsey, and the demand letter sent to Lindsey and Michael by the Bank's counsel, and affidavits from Lance Granberry, the Bank's executive vice-president, and Russell Manning, the Bank's legal counsel. Manning's affidavit sets forth a list of the legal services rendered the Bank in this matter and the cost of those services. Granberry's affidavit states that he personally dealt with Lindsey and Michael in the execution of the guaranties. The affidavit details the notes' basic provisions and states that Segundo failed and refused to make payment on the note on October 25, 1988, the due date. Granberry was present two days later, on October 27, 1988, when Lindsey executed the guaranty agreement in question. Granberry states that he told Lindsey that he [Lindsey] was signing the guaranty in his individual capacity to guarantee Segundo's obligation under the note. While Lindsey was present and to clarify the fact that a guaranty agreement secures or guarantees the obligation of another, Granberry wrote the word "INDIVIDUALLY" under the signature line on the guaranty document.

The Loan Guaranty Agreement executed by Lindsey states, in pertinent part:

For Value Received and to enable Segundo Corp. Inc. of Sinton, Texas, hereinafter designated as "Debtor," to obtain credit, from time to time, of First National Bank of Bellville, we hereby request said Creditor to extend to said Debtor such credit as said Creditor may deem proper, and we hereby jointly and severally guarantee the full and prompt payment to Creditor at maturity, and at all times thereafter, and also at the time hereinafter provided, of any and all indebtedness, liabilities, and obligations of every nature and kind of said Debtor to said Creditor.... [emphasis added]

This guaranty shall be binding upon the undersigned jointly and severally, and upon the heirs, legal representatives and assigns of the undersigned, and each of them, respectively, and shall inure to the benefit of said Creditor, its successors, legal representatives and assigns.

Signed and Sealed by the undersigned, at Bellville, Texas this October 27th day of, 1988.

Lindsey Eubank [signature]

Secretary-Treasurer [handwritten]

Segundo Corp., Individually [handwritten]

Lindsey filed a personal affidavit in response to the Bank's motion for summary judgment. The affidavit states that Lindsey did not sign the guaranty in an individual capacity; rather, he executed the document at the request of Granberry, then a Bank executive and the person with whom Segundo dealt when negotiating its loan. Lindsey agreed to sign the guaranty only for the corporation, but not in an individual capacity. He states that he never gave Granberry or anyone else permission, authority or instructions to write "individually" or any other words indicating his individual responsibility for the note on the guaranty agreement or any other instrument. He also states that it was his "understanding" with Granberry and the Bank that he would not be individually responsible or liable for the note and that the note was wrongfully altered to include "Individually" after he signed the guaranty agreement.

Lindsey's affidavit fails to raise an issue of material fact regarding irregularities in the execution of the guaranty agreement. A guaranty creates a secondary obligation whereby the guarantor promises to answer for the debt of another and may be called upon to perform once the primary obligor has failed to perform. Republic Nat'l Bank v. Northwest Nat'l Bank, 578 S.W.2d 109, 114 (Tex.1978); Dann v. Team Bank, 788 S.W.2d 182, 183 (Tex.App.--Dallas 1990, no writ). By definition, it is an undertaking by a third person to another to answer for the payment of a debt, incurred by a named person, in the event that the named person fails to pay. Dann, 788 S.W.2d at 183-84; Pittinger v. Southwestern Paper Co., 151 S.W.2d 922, 924 (Tex.Civ.App.--Fort Worth 1941, no writ). In other words, by creating a secondary obligation to the creditor, the third person guarantees the performance of a primary obligation created by another. Dann, 788 S.W.2d at 183-84; see also Republic Nat'l, 578 S.W.2d at 114.

Under normal circumstances, a written collateral undertaking given to secure a corporate debt will be rendered meaningless if the primary debtor is found to be the only party liable under it. Dann, 788 S.W.2d at 184; American Petrofina Co. v. Bryan, 519 S.W.2d 484, 487 (Tex.Civ.App.--El Paso 1975, no writ). To circumvent this result, the corporate designations appearing after signatures on documents of this type are considered only to be descriptio personae, that is, the use of a word or phrase to identify or point out the person intended and not as an intimation that the language in connection with which it occurs is to apply to him only in the technical character which might appear to be indicated by the word. See American Petrofina, 519 S.W.2d at 487; Neeley v. Intercity Management Corp., 623 S.W.2d 942, 948 (Tex.App.--Houston [1st Dist.] 1981, no writ).

In the instant case, the primary obligation created between Segundo and the Bank was guaranteed by the secondary...