Farmers-Peoples Bank v. Clemmer
| Decision Date | 18 February 1975 |
| Docket Number | FARMERS-PEOPLES |
| Citation | 519 S.W.2d 801 |
| Parties | BANK, Petitioner, v. H. P. CLEMMER and Pauline M. Clemmer, Respondents. |
| Court | Tennessee Supreme Court |
John F. Kizer, Milan, for petitioner.
Lloyd S. Adams, Jr., Adams & Albright, Humboldt, for respondents.
Respondents filed a complaint in the Law and Equity Court of Gibson County, Equity Division, seeking a writ of injunction to require Farmers-Peoples Bank, hereinafter 'Bank', to deliver to complainants certain collateral alleged to have been given to secure two promissory notes, which notes were said to have been paid in full on April 28, 1970, and return of said collateral refused.
Bank filed an answer and counterclaim, admitting that the two notes, totaling $16,000, had been paid, but denying the right of plaintiff to any relief because the collateral sought was subject to secure any other obligation of the Clemmers to the Bank, and alleging that plaintiff H. P. Clemmer was indebted to the Bank in the sum of $87,529.43. The Bank's counterclaim asserted said debt to arise by virtue of a contract of guaranty executed by H. P. Clemmer, and the existence of unpaid debts, in the above-named sum, due the Bank by parties whose obligations were guaranteed by Clemmer.
The guaranty, filed as an exhibit to the counterclaim and introduced at the trial, is in this language:
'I, H. P. Clemmer, M.D. of Milan, Tennessee do hereby agree and guarantee against loss, the Farmers-Peoples Bank of Milan, Tenn., for any debts, overdrafts or any other forms of loss arising out of the accounts or notes of Clemmer Builders Supply, Ridgewood Retirement Inn, Inc. or the notes or accounts of Hubert P. Clemmer, Jr. that are now existing in said Bank up to and through the dates of June 20, 1968. I further guarantee the Farmers-Peoples Bank against Loss of any kind resulting from the operations above described.
Signed this June 20, 1968.
H. P. Clemmer, M.D.
C. B. Harrison
Witness
John McNail
Witness'
Clemmer replied to the counterclaim and, although he admitted signing the guaranty, he asserted that he was not furnished a copy of same and did not recall that it included the second sentence. He denied that the instrument was a continuing guaranty and alleged that it was intended, and should be construed, to apply only to debts owed the bank as of June 20, 1968, by Clemmer Builders Supply, Ridgewood Retirement Inn, Inc., and Hubert P. Clemmer, Jr. He further alleged that all debts, overdrafts, accounts and notes of Clemmer Builders Supply, Ridgewood Retirement Inn and Hubert P. Clemmer, Jr., existing up to and including the date of June 20, 1968, have been paid.
The only issue submitted for the determination of the trial court was whether or not the instrument signed by Clemmer should be construed as a continuing guaranty. It was announced that, because of the bankruptcy of Clemmer Builders Supply and litigation growing out of said bankruptcy, it was not possible at the time of the trial to determine the amount of indebtedness of that corporation to the bank, and that issue was reserved.
The trial court entered an interlocutory decree holding that the instrument executed by Dr. Clemmer was a continuing guaranty, and that he was liable to the Bank for the full amount of the debts due it by Clemmer Builders Supply and Hubert Clemmer, Jr., it having been shown that the indebtedness of Ridgewood Retirement Inn had been liquidated.
The Court of Appeals found that the guaranty was ambiguous because,
The case was remanded to the trial court, where extrinsic evidence on the issue of the intent of the parties in giving and receiving the guaranty was directed to be admitted.
We granted certiorari and have heard oral argument.
Dr. Clemmer testified that he was a practicing physician in Milan; that he and his two sons were the 'shareholders' in the Ridgewood Retirement Inn; that his son Nick ran the Inn, but he participated in its operation, and that his son Hubert was the manager of Clemmers Builders Supply, which the three of them 'had incorporated', and that he had not participated in the management of the Supply corporation.
Dr. Clemmer testified as folows, with respect to the circumstances existing at the time he executed the guaranty:
'Q32. Now, on June 20, 1968, did you sign a guaranty or a document of some nature at the Farmers-Peoples Bank?
A. Yes.
Q33. Because you know that this is the only document that you have signed there?
A. Yes.
Q34. Now, Dr. Clemmer, before June 20, 1968, have you been in conference with anyone at Farmers-Peoples Bank--strike that--before June 20, 1968, were these two corporations--Ridgewood and Clemmer Builders Supply indebted to Farmers-Peoples Bank?
A. No.
Q35. What was the nature of the debt--was it notes or was it overdrafts?
A. Overdrafts.
A. Yes.
Q37. As far as you know there were no promissory notes?
A. No.
Q38. Had there been overdrafts from time to time and the overdrafts had been paid?
A. Yes.
Q39. Before June 20, 1968, did you confer with the Farmers-Peoples Bank or any of the Farmers Peoples bank representatives regarding these overdrafts of Clemmer Builders Supply or Ridgewood or Hubert Clemmer, Jr. or his notes?
A. Yes, sir.
Q40. How many times before June 20 did you confer as you recall?
A. Well, I remember one time in Mr. Haskel's office--Hubert and Nick and I met in there with him and Mr....
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