Kordick v. Merchants Nat. Bank and Trust Co. of Indianapolis, 4-385A66

Decision Date07 August 1986
Docket NumberNo. 4-385A66,4-385A66
Citation496 N.E.2d 119
Parties1 UCC Rep.Serv.2d 1558 Nicholas F. KORDICK and Nicholas F. Kordick as Personal Representative of the Estate of Linda Kordick, Deceased, Appellants (Defendants Below), v. MERCHANTS NATIONAL BANK AND TRUST COMPANY OF INDIANAPOLIS, Appellees (Plaintiffs Below).
CourtIndiana Appellate Court

William W. Knowles, Raymond L. Faust, Baker, Orgison, Bales & Knowles, Carmel, for appellants.

Gary A. Schiffli, James G. Lauck, Kroger, Gardis & Regas, Indianapolis, for appellees.

MILLER, Judge.

Nicholas Kordick appeals from the granting of a partial summary judgment against him on Merchant's claim that he was personally liable on a guaranty he signed for the debt his corporation owed Merchants. He alleges the signature was made in his representative capacity and did not personally obligate him to pay. He also questions whether this was an issue of law or fact.

We affirm.


Kordick was the president, chief executive officer, and sole stockholder of the F-O-R-T-U-N-E Personnel Agency of Indianapolis, Inc., a corporation for the placement of middle management executives. On July 16, 1979, Fortune obtained a loan from Merchants National Bank which was secured by the corporate savings account. After several renewals, Fortune executed a secured promissory note and security agreement, dated September 29, 1980 which gave Merchants a security interest in Fortune's accounts, accounts receivable, and funds on deposit at Merchants. At the same time, a continuing guaranty was executed by Kordick. This guaranty was signed by Kordick with the title "President" added by him, and it stated:

"In consideration of credit which MERCHANTS NATIONAL BANK & TRUST COMPANY OF INDIANAPOLIS, a national banking association ("Merchants"), may from time to time extend to F-O-R-T-U-N-E Personnel Agency of Indianapolis Merchants may from time to time without notice to the undersigned: (a) release any collateral which is security for the indebtedness or obligations of Borrower or any other obligor or substitute or exchange any such collateral, (b) release any maker, co-maker, endorser or guarantor of the indebtedness or obligations of Borrower, (c) release, modify or compromise any liability of Borrower or any other obligor, including any of the undersigned, or the terms thereof, and (d) apply any amounts paid to it in such order of application and with such marshalling of security as it may, in its sole discretion, determine appropriate; all without the consent of or notice to the undersigned. The liability of each of the undersigned shall not be released in part or in whole by reason of the foregoing, the addition of co-makers, endorsers, guarantors or sureties, or a failure to perfect any security interest or lien in any collateral securing indebtedness or obligations of Borrower or any other obligor.

Inc. ("Borrower"), the undersigned hereby individually, jointly and severally, and unconditionally guarantee to Merchants, its successors and assigns, the payment when due, whether by acceleration or otherwise, without presentment or demand, protest, notice of dishonor, or diligence in collection and with a right of set-off against the undersigned, together with costs of collection and reasonable attorneys' fees and without relief from valuation or appraisement laws, of the principal of and interest on all present and future indebtedness or obligations incurred by Borrower to Merchants in accordance with the terms and conditions of such indebtedness or obligations and all extensions or renewals thereof, whether direct or indirect, absolute or contingent, and evidenced by promissory notes, checks, drafts, letters of credit, bills, overdrafts, open accounts or otherwise.

This Guaranty is secured by any funds of the undersigned on deposit with Merchants and the following:

Notice of the acceptance of this Guaranty by Merchants and notice to the undersigned by Merchants as to the existence or creation of indebtedness or obligations by Borrower to Merchants are hereby waived by each of the undersigned. This Guaranty may be terminated by the undersigned only as to future indebtedness or obligations of Borrower to Merchants after the date of receipt by Merchants at its principal banking office of a written notice to such effect. The undersigned shall have no right of subrogation or contribution with respect to Borrower or any security for indebtedness or obligations of Borrower unless and until Merchants shall have received payment in full of all indebtedness or obligations of Borrower or of any of the undersigned under this Guaranty.

This Guaranty is executed under and shall be construed in accordance with the laws of the State of Indiana, and shall inure to the benefit of Merchants and its successors or assigns and shall be binding upon each of the undersigned and their respective heirs, successors, assigns and legal representatives.

IN WITNESS WHEREOF, the undersigned have executed this Guaranty on this 29th day of September, 1980.

Nicholas Kordick


Record, p. 230. Fortune defaulted on the corporate note in February of 1982 and on March 10, 1982, Fortune filed Chapter 7 bankruptcy.

On August 4, 1982, Merchants filed suit against Kordick based upon his unconditional guaranty to pay the principal and interest on all indebtedness incurred by Fortune. 1 Both Kordick and Merchants Kordick appeals, 2 raising two issues:

moved for partial summary judgment as to Kordick's liability on the continuing guaranty. The trial court granted partial summary judgment in favor of Merchants, concluding that Kordick was personally liable on the guaranty because he signed it in an individual capacity.

(1) Was the continuing guaranty signed by Kordick a personal or corporate obligation; and

(2) Was this issue properly a question of law for the court or of fact for the jury.


The test for granting a summary judgment, as stated by our supreme court, is as follows:

"If pleadings, depositions, answers to interrogatories, admissions on file and testimony show that there is no genuine issue as to any material fact and that the moving party is entitled to a judgment as a matter of law, a Motion for Summary Judgment shall be granted. Woodward Ins., Inc. v. White, (1982) Ind., 437 N.E.2d 59. The motion should be resolved in favor of the party opposing the Motion for Summary Judgment if there is any doubt as to the existence of a material factual issue. Woodward Ins., Inc., supra; Klinger v. Caylor, (1971) 148 Ind.App. 508, 267 N.E.2d 848. The contents of all pleadings, affidavits and testimony are liberally construed in the light most favorable to the non-moving party. Woodward Ins., Inc., supra. Summary judgment is not an appropriate vehicle for the resolution of questions of credibility or weight of the evidence, or conflicting inferences which may be drawn from undisputed facts. English Coal Co., Inc. v. Durcholz, (1981) Ind.App., 422 N.E.2d 302."

Bell v. Northside Finance Corp. (1983), Ind., 452 N.E.2d 951, 953. Kordick contends that he--and not Merchants--was entitled to judgment as a matter of law because the continuing guaranty was an obligation only of Fortune and not him personally. In addition, Kordick argues the guaranty was ambiguous and involved material issues of fact so that the question was properly one for the jury and not the trial court.

In determining the legal effect of Kordick's signature on the continuing guaranty, Kordick and Merchants agree that the interpretation of a guaranty is governed by the same rules applicable to other contracts. McEntire v. Indiana National Bank (1984), Ind.App., 471 N.E.2d 1216. Kordick, contends, however, that this area of the law has been codified by the Indiana Uniform Commercial Code, IND. CODE 26-1-3-403. This section provides:

"(1) A signature may be made by an agent or other representative, and his authority to make it may be established as in other cases of representation. No particular form of appointment is necessary to establish such authority.

(2) An authorized representative who signs his own name to an instrument

(a) is personally obligated if the instrument neither names the person represented nor shows that the representative signed in a representative capacity (b) except as otherwise established between the immediate parties, is personally obligated if the instrument names the person represented but does not show that the representative signed in a representative capacity, or if the instrument does not name the person represented but does show that the representative signed in a representative capacity.

(3) Except as otherwise established the name of an organization preceded or followed by the name and office of an authorized individual is a signature made in a representative capacity."

Id. Kordick reasons that because the guaranty in question contains both the corporation's and Kordick's name followed by the word "President," Kordick's signature complies with I.C. 26-1-3-403(3) and the guaranty is a corporate obligation and Kordick is not personally liable.

The flaw in Kordick's argument, however, is the Indiana Uniform Commercial Code only governs negotiable instruments. I.C. 26-1-3-104 states:

"(1) Any writing to be a negotiable instrument within IC 26-1-3 must:

(a) be signed by the maker or drawer, and

(b) contain an unconditional promise or order to pay a sum certain in money and no other promise, order, obligation, or power given by the maker or drawer except as authorized by IC 26-1-3; and

(c) be payable on demand or at a definite time; and

(d) be payable to order or to bearer.

(2) A writing which complies with the requirements of this section is:

(a) a "draft" ("bill of exchange") if it is an order;

(b) a "check" if it is a draft drawn on a bank and payable on demand;

(c) a "certificate of deposit" if it is an acknowledgement by a bank of receipt of money with an engagement to...

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