First South Farm Credit v. Gailliard Farms

• Decision Date: 18 August 2004
• Docket Number: No. 38,731-CA.,38,731-CA.
• Parties: FIRST SOUTH FARM CREDIT, ACA, Plaintiff-Appellee v. GAILLIARD FARMS, INC. and Joseph Patten Brown, Jr., Defendants-Appellants.
• Court: Louisiana Supreme Court

880 So.2d 223

FIRST SOUTH FARM CREDIT, ACA, Plaintiff-Appellee v. GAILLIARD FARMS, INC. and Joseph Patten Brown, Jr., Defendants-Appellants.

No. 38,731-CA.

Court of Appeal of Louisiana, Second Circuit.

August 18, 2004.

Appeal from the Sixth Judicial District Court, Parish of East Carroll, No. 19641, Michael E. Lancaster, J James Willis Berry, for Appellants.

Thomas Wayne Bishop, for Appellee.

Before BROWN, GASKINS, and PEATROSS, JJ.

BROWN, C.J.

Defendant, Joseph Patten Brown, Jr., appeals a judgment finding that he was personally liable, in solido, with Gailliard Farms, Inc. on a promissory note executed on February 24, 2000. We affirm.

Facts

Plaintiff, First South Farm Credit, ACA ("First South"), is the holder of a promissory note dated February 24, 2000, in the sum of $104,200 executed by defendants, Gailliard Farms, Inc. ("Gailliard"), and Joseph Patten Brown, Jr. ("Brown"). Defendants were engaged in farming in East Carroll Parish. Brown is the president of Gailliard. Mike Scott was a loan officer for the First South branch servicing loans made to Gailliard and Brown. Scott is Brown's son-in-law. Scott's wife, who is Brown's daughter, owns 50 percent of Gailliard's stock.

The Gailliard-Brown loan history with First South began in 1994. During this period of time, Scott prepared all of the loan documents and did all of the credit work on the Gailliard-Brown loans, but, because Brown was his father-in-law, Scott's supervisor, Mike Castello, signed all of the loan instruments on behalf of First South. Each year, the parties restructured the indebtedness. As security for the loan, Gailliard granted liens over its farm tools, including tractors and other implements; however, First South failed to reinscribe its security and lost its position to other creditors. Thus, in restructuring the loan in February 2000, First South requested and obtained from Gailliard additional collateral in the form of an assignment of government subsidies, which equaled $20,000 per year.

Brown claims that in return for the subsidies assignment, he was released from personal liability. Brown offered into evidence a copy of a handwritten document dated December 21, 1999, and signed by Brown and Scott which states "assignment of FSA payments and new mortgage on equipment in return for release of personal liability." This was handwritten on plain letter-sized paper. Only Brown and Scott signed. Castello denied any knowledge of the document or such agreement and the loan records at First South contain no such document.

On February 24, 2000, the Gailliard-Brown loan was again restructured. Brown signed the loan documents as president of Gailliard and in an individual capacity. Gailliard defaulted on the loan, and First South sued. At trial, the parties stipulated the indebtedness of Gailliard. The sole issue at trial was the personal liability of Brown. The trial court found that neither Scott nor Castello had the authority to release Brown from liability, and that the February 24, 2000, loan package personally obligated Brown. Defendants appeal the trial court's rulings.

Discussion

Brown claims that he was released from personal liability on December 21, 1999, when he and Scott executed a release and contends that he had no reluctance or reservations about signing the February 24, 2000, loan documents because of this prior agreement to eliminate his personal liability.

Courts are bound to give legal effect to all written contracts according to the true intent of the parties. This intent is to be...