Fleet Bank-NH v. Christy's Table, Inc.

• Decision Date: 12 August 1996
• Docket Number: BANK--NH,No. 94-687,94-687
• Citation: 681 A.2d 646,141 N.H. 285
• Parties: FLEETv. CHRISTY'S TABLE, INC. and another.
• Court: New Hampshire Supreme Court

Page 646

681 A.2d 646

141 N.H. 285

FLEET BANK--NH v. CHRISTY'S TABLE, INC. and another.

No. 94-687.

Supreme Court of New Hampshire.

Aug. 12, 1996.

McKenney & Perreault, P.C., Amherst (Robert V. McKenney, on the brief and orally), for plaintiff.

Leahy & Denault, Claremont (Albert D. Leahy, Jr., on the brief and orally), for defendants Robert V. and Bertha H. Ferland.

THAYER, Justice.

Defendants Robert V. and Bertha H. Ferland appeal an order of the Superior Court (Groff, J.) holding them liable as guarantors on a loan made by the plaintiff, Fleet Bank--NH (Fleet), to codefendant Christy's Table. We affirm the superior court's ruling that the Ferlands are liable as guarantors but vacate and remand its award of attorney's fees.

The trial court found the following facts. In October 1989, Fleet entered into a commercial term note (the first loan) in the principal amount of $60,000 with Pamela Speck and Richard Shotwell for the purpose of purchasing a restaurant known as Christy's Table in Newport. In conjunction with this loan, the Ferlands, who are Speck's mother and stepfather, executed a written guaranty of payment dated the same day (the first guaranty), the validity of which is not in dispute. Approximately one week later, Speck and Shotwell incorporated Christy's Table. As they remodeled and expanded the restaurant, Speck and Shotwell decided that they needed additional capital. In February 1990, Christy's Table, Inc., entered into a new commercial term note (the second loan) with Fleet in the amount of $69,500. The Ferlands did not participate in negotiations on this second loan. The obligation on the first loan was paid by renewal through the proceeds of the second loan.

Christy's Table, Inc., was listed as the maker on the second loan, for which Speck and Shotwell signed personal guaranties. In addition, a guaranty of payment (the second guaranty), dated the same day as the second loan and signed by the Ferlands, purported to guarantee credit extended by Fleet to Christy's Table, Inc. The corporation fell behind in its payments on the second loan after a few months and eventually defaulted. On December 12, 1991, Fleet notified the Ferlands by registered mail of the default and made a demand for payment in accordance with the terms of the second guaranty. The Ferlands did not pay, and in February 1992, Fleet brought this suit. One month later, Christy's Table, Inc. filed for bankruptcy, resulting in the discharge of its obligations to Fleet under the second loan.

In January 1993, the Superior Court (Goode, J.) denied Fleet's motion for summary judgment, finding a genuine issue of material fact as to whether the Ferlands intended to guarantee the second loan. Following a trial, the Superior Court (Groff, J.) ruled that the Ferlands were liable as guarantors. The court found that the Ferlands "knowingly executed the guaranty of the promissory note, with full knowledge of the consequences of their obligations thereunder." The Ferlands' motion to reconsider was denied, and this appeal followed.

The dispute in this case centers on whether the Ferlands guaranteed the second loan. The Ferlands do not deny that their signatures appear on the second guaranty, but they do deny that they knowingly signed this guaranty. Their argument is that Fleet has failed to meet its burden of establishing a "meeting of the minds" and that the trial court's implicit finding to the contrary was clearly erroneous.

Guaranties are governed by the general law of contracts. See 38 Am.Jur.2d Guaranty § 1, at 995-96 (1996). "In order for a contract to be formed there must be a meeting of the minds as to the terms thereof." Appeal of Sanborn Regional School Bd., 133 N.H. 513, 518, 579 A.2d 282, 284 (1990). The parties must have the same understanding of the terms of the contract and must manifest an intention, supported by adequate consideration, to be bound by the contract. Id. Mere mental assent is not sufficient; a "meeting of the minds" requires that the agreement be manifest. Blais v. Remillard, 138 N.H. 608, 611, 643 A.2d 967, 969 (1994).

The question of whether a "meeting of the minds" occurred is a factual question to be determined by the trier of fact, provided there is some evidence on which to base such a finding. See Tsiatsios v. Tsiatsios, 140 N.H. 173, 177-78, 663 A.2d 1335, 1339 (1995). "This court will not disturb the decision of the trier of fact unless the findings are clearly erroneous." Dimick v. Lewis, 127 N.H. 141, 144, 497 A.2d 1221, 1223 (1985).

The Ferlands claim that the second guaranty is suspect because the purported witness to the Ferlands' signature was Fleet's branch manager, whereas the date and identity of the borrower were completed by Fleet's district branch supervisor. In addition, the branch manager, a public notary, began but failed to complete notarization of the document. In particular, the jurat is unsigned and the acknowledgement of appearance is blank. The Ferlands also place great weight on an internal bank document dated February 14, 1990, setting forth the terms and conditions of the second loan. This "loan offering" identifies the borrower as Christy's Table, Inc., and names the guarantors as Pamela Speck and Richard Shotwell, making no mention of the Ferlands. Finally, the Ferlands assert that Fleet's financing of the restaurant was in general "sloppy and unprofessional," from which we are presumably to infer that the second guaranty was so mishandled that no meeting of the minds could have occurred.

Although the Ferlands have demonstrated that their position at trial was not without support, we uphold the trial court's finding of a binding contract of guaranty because it is supported by the evidence and is not clearly erroneous. See Cushing v. Thomson, 118 N.H. 292, 295, 386 A.2d 805, 806 (1978). To begin with, the second guaranty supports the trial court's conclusion on its face: it is dated February 14, 1990, the same date as the second loan; the borrower is identified as Christy's Table, Inc.; the Ferlands' signatures are on the document; these signatures are witnessed by the branch manager; and the Ferlands do not dispute that the signatures are genuine. Although the Ferlands hint at the possibility that they signed a blank document that was later filled in by Fleet, testimony on this point was conflicting. The branch manager testified that she would not witness an incomplete document, and the district branch supervisor testified that he did not fill in the date and identity of the borrower after signing. Witness credibility is a finding of fact and will not be overturned unless clearly erroneous or unsupported by the evidence. Society Hill at Merrimack Condo. Assoc. v. Town of Merrimack, 139 N.H. 253, 256, 651 A.2d 928, 930 (1994). The defendants have demonstrated no such error or lack of support.

In addition, the Ferlands acknowledged that they received a stream of correspondence from Fleet from December...