International Multifoods v. D & M FEED & PRODUCE

• Decision Date: 15 May 1979
• Docket Number: Civ. No. 78-0-215.
• Citation: 470 F. Supp. 654
• Parties: INTERNATIONAL MULTIFOODS CORPORATION, a corporation, Plaintiff, v. D & M FEED & PRODUCE, INC., a corporation, Roger Moerer, Jo Ann Moerer and H. Elmer Meyer, Defendants.
• Court: U.S. District Court — District of Nebraska

470 F. Supp. 654

INTERNATIONAL MULTIFOODS CORPORATION, a corporation, Plaintiff, v. D & M FEED & PRODUCE, INC., a corporation, Roger Moerer, Jo Ann Moerer and H. Elmer Meyer, Defendants.

Civ. No. 78-0-215.

United States District Court, D. Nebraska.

May 15, 1979.

Thomas F. Hoarty, Jr., Omaha, Neb., for plaintiff.

James B. Cavanagh, Omaha, Neb., for defendants, D & M Feed, Roger Moerer and Jo Ann Moerer.

Kirk S. Blecha, Omaha, Neb., for defendant, H. Elmer Meyer.

MEMORANDUM

DENNEY, District Judge.

This is an action brought by International Multifoods Corporation hereinafter referred to as Multifoods to recover certain sums of money due from D & M Feed & Produce, Inc. hereinafter referred to as D & M on open account and on two promissory notes, from Roger and Jo Ann Moerer hereinafter referred to as the Moerers on one of the promissory notes and on a guaranty of D & M's indebtedness, and from H. Elmer Meyer on a guaranty of Roger Moerer's indebtedness.

The matter was tried to the Court sitting without a jury. This Memorandum Opinion shall constitute the Court's findings of fact and conclusions of law in accordance with Rule 52(a) of the Federal Rules of Civil Procedure.

Background

On September 20, 1973, D & M and the Moerers executed their promissory note Plaintiff's Exhibit # 1 to Multifoods, upon which $3,500.00, plus interest, is now due and unpaid. That same day, the Moerers executed their personal guaranty Plaintiff's Exhibit # 2 of D & M's indebtedness to Multifoods. Subsequently, on April 6, 1976, H. Elmer Meyer executed his personal guaranty Plaintiff's Exhibit # 3 of Roger Moerer's indebtedness to Multifoods. Thereafter, on April 20, 1976, D & M executed and delivered to Multifoods a promissory note Plaintiff's Exhibit # 4 upon which the sum of $35,000.00 is now due and unpaid. When D & M ceased operations, it had an open account balance since April of 1976, with Multifoods in the amount of $14,564.13 Plaintiff's Exhibit #'s 5, 6, 7, which amount is presently due and unpaid.

The defendants do not contest the fact that these amounts are due and owing. Nor do they contest the execution of these documents. However, they do dispute the legal effect of the documents.

The 1973 Guaranty

Plaintiff's Exhibit # 2, executed by the Moerers on September 20, 1973, states in pertinent part as follows:

In consideration of credit to be extended by INTERNATIONAL MULTIFOODS CORPORATION, 1200 Multifoods Building, Minneapolis, Minnesota 55402 ("IM") to D & M Feed & Produce, Inc., Auburn, Nebraska ("Debtor") the undersigned jointly and severally guarantee to IM the prompt payment at maturity, without deduction for any claim of setoff or counterclaim of Debtor or loss of contribution from any other guarantors, the full amount of all indebtedness, direct or indirect, absolute or contingent, secured or unsecured, which may now or hereafter exist or be owing from Debtor to IM, including interest thereof and any expenses of collection thereof, including court costs and attorneys' fees.

The plaintiff contends that it is clearly evident from the face of the guaranty, that the document covers "all indebtedness" of D & M, both then owing and thereafter incurred. The Moerers take the position that their guaranty covered only the $10,000.00 promissory note executed the same day. Thus, the Court must determine the extent of the Moerers' liability by virtue of the execution of their guaranty on September 20, 1973.

At trial, the Moerers attempted to introduce various exhibits to explain the import of the guaranty and demonstrate that it was limited to the $10,000.00 note. Plaintiff objected to the introduction of this evidence, contending that such evidence varied the express terms of the guaranty, and was inadmissible because of the parol evidence rule. Crucial to the determination of this issue, therefore, lies in a consideration of the parol evidence rule.

The well-established general rule is that where the parties to a contract have deliberately put their engagement in writing in such terms as import a legal obligation without any uncertainty as to the object or extent of such engagement, it is conclusively presumed that the entire engagement of the parties, and the extent and manner of their undertaking, have been reduced to writing, and all parol evidence of prior or contemporaneous conversations or declarations tending to substitute a new and different contract for the one evidenced by the writing is incompetent. Ford v. Luria Steel & Trading Corp., 192 F.2d 880, 883-84 (8th Cir. 1952); Burhoop v. Pegram, 194 Neb. 606, 612, 234 N.W.2d 828, 832 (1975). In the absence of fraud, mistake or ambiguity, the writing itself is the only competent evidence of the agreement. Frank McGill, Inc. v. Nucor Corp., 195 Neb. 448, 453-54, 238 N.W.2d 894, 899 (1976).

Before the parol evidence rule comes into play, the writing must be examined to determine whether it is a complete expression of the agreement. Gerdes v. Omaha Home for Boys, 166 Neb. 574, 582, 89 N.W.2d 849, 854-55 (1958); see also Traudt v. Nebraska Public Power Dist., 197 Neb. 765, 769, 251 N.W.2d 148, 151 (1977). A review of the guaranty clearly shows that it imports a complete legal obligation without any uncertainty as to the object or extent of the engagement. Thus, the parol evidence rule is applicable to the subject matter of this action.

The Moerers offered the extrinsic evidence in an attempt to show that their guaranty was intended to be confined to the $10,000.00 note. However, the guaranty clearly covers "all indebtedness . . . which may now or hereafter exist or be owing" from D & M to Multifoods. It is unambiguous and certain as to its object and extent. Clearly, the extrinsic evidence attempts to vary or add to the express language of the document. Consequently, in accordance with the parol evidence rule, the evidence is inadmissible. "`Parol evidence cannot be admitted to add another term to the agreement, although the writing contains nothing on the particular feature to which the parol evidence is directed'." Bitler v. Terri Lee, Inc., 163 Neb. 833, 841, 81 N.W.2d 318, 323 (1957).

The Moerers do not seriously dispute the complete and unambiguous nature of the guaranty. Instead, they take the position, in reliance on the decision in First Trust Co. v. Airedale Ranch & Cattle Co., 136 Neb. 521, 286 N.W. 766 (1939), that "when a guarantee is executed contemporaneously with other documents, it must be viewed as a single transaction and the documents must be construed together." Final Argument of the defendants, Roger and Jo Ann Moerer at 2.

In Gerdes v. Omaha Home for Boys, supra, the Nebraska Supreme Court was faced with a similar contention and wrote as follows:

Appellants speak of interpreting contemporaneous instruments as though they were one. The correct doctrine in this regard means that if there is a provision in one instrument affecting a provision of another, they will be given effect as between the parties and all who are charged with notice so that the whole agreement actually made may be determined and effectuated. It does not mean that a provision of one document is imported bodily into another contrary to the intent of the parties or the express provision of the latter. They may be intended to be separate writings though made at the identical time by the same parties and to provide for entirely different things. The statement that contemporaneous instruments may be treated and interpreted as one means only that this will be done when it will effectuate the intention and if the provisions of the two instruments if put together will not be incompatible. The court may not do violence to a complete, unambiguous contract by consolidating it with another writing if the effect of doing so would be to avoid an essential part of the contract. If contracts or writings are in effect independent they should not be construed together even though the same parties and the same subject matter may be concerned. Two instruments relating to distinct subjects or things should not be construed together to determine the intent and transaction of the parties though made at the same time and though they relate to the same transaction because both must have the same object in order to be taken together as evidencing the same thing.

Gerdes v. Omaha Home for Boys, supra, 166 Neb. at 585-86, 89 N.W.2d at 856.

Applying the reasoning of the court in Gerdes, it is clear that First Trust Co. is inapposite. In First Trust Co., as security for a loan, the defendants executed bonds, a real estate mortgage and a guaranty, all on the same date. The guaranty specifically referred to the loan involved and the real estate mortgage constituting the primary security. Thus, in First Trust Co., the court did not construe a broad guaranty to be confined to a particular transaction; rather, it was presented at the outset with a very limited guaranty.

In the present case, there is no reference in the guaranty to the promissory notes or to any other documents. The guaranty is incompatible with the other documents. Its object is different and it provides for different things. As the Court noted earlier, the language of the guaranty clearly includes items beyond the $10,000.00 promissory note and broadly extends the obligations of the guarantor. See, e. g., Associates Fin. Services Co. v. Eisenberg, 51 Wis.2d 85, 186 N.W.2d 272 (1971). This Court will not "do violence" to a complete and unambiguous document by construing it with other incompatible and distinct documents. See Gerdes v. Omaha Home for Boys, supra, 166 Neb. at 585-87, 89 N.W.2d at 856-57.

Moreover, assuming arguendo that the testimony and exhibits presented by the Moerers are admissible for some purpose, the evidence indicates that the guaranty was not intended to be limited to the $10,000.00 note.

Significantly, the promissory note was cosigned by Roger and Jo Ann Moerer, thereby establishing their personal...