Mercantile Trust Co. v. Carp, s. 43976-43979

• Decision Date: 22 March 1983
• Docket Number: Nos. 43976-43979,s. 43976-43979
• Citation: 648 S.W.2d 920
• Parties: MERCANTILE TRUST COMPANY, National Association, Respondent, v. H.M. CARP, Emile S. Carp and Elaine D. Carp, Appellants.
• Court: Missouri Court of Appeals

Page 920

648 S.W.2d 920

MERCANTILE TRUST COMPANY, National Association, Respondent, v. H.M. CARP, Emile S. Carp and Elaine D. Carp, Appellants.

Nos. 43976-43979.

Missouri Court of Appeals,

Eastern District,

Division Four.

March 22, 1983.

London, Greenberg & Fleming by Burton M. Greenberg, St. Louis, for appellants.

Thompson & Mitchell by William R. Bay, St. Louis, for respondent.

SATZ, Acting Presiding Judge.

Defendants, Herbert Carp, Emile Carp and Elaine Carp, appeal from a summary judgment entered against them, jointly and severally, and in favor of plaintiff, Mercantile Trust Company National Association (Mercantile), in the amount of $1,026,652.39 plus interest. We affirm.

Mercantile as the holder-payee of promissory notes sued defendants as guarantors of those notes. Mercantile moved for summary judgment on a record which included requests for admissions, interrogatories, depositions and affidavits. Each defendant filed a counter-affidavit.

The record reveals that Elaine Carp is the wife of Herbert Carp. Herbert was employed by a corporation named Carp's, Inc. in 1942 as assistant store manager. Emile began with the corporation in 1948 as a shoe buyer. By 1951, Herbert was a director of Carp's, Inc. In 1953, Emile became assistant treasurer of the company, while Herbert became vice-president. In 1957, Emile became a director and, in 1963, also began serving as executive vice-president. Herbert became president in 1963, and continued in that position until 1973. From the record, it appears that Carp's, Inc. is no longer in existence.

In 1953, the board of directors of Carp's, Inc. passed a resolution permitting any two designated corporate officers to borrow money or obtain credit on behalf of the corporation from Mercantile in such sums and upon such terms as the officers, in their discretion, deemed desirable. In their answer to Mercantile's request for admissions, Herbert and Emile admitted that a copy of this resolution was genuine. In her answer to Mercantile's request for admissions, Elaine denied that this resolution was genuine.

By resolution passed in September, 1967, the shareholders and directors of Carp's, Inc. authorized the corporation to borrow $1,200,000.00 from Mercantile. In their answer to Mercantile's request for admissions, both Herbert and Emile admitted the copy of the resolution was genuine, and, in their depositions, both testified that they signed the authorization. At that time, Herbert was president and Emile was executive vice-president of the corporation. Their signatures appear twice, once as a shareholder and the other as a director.

On October 30, 1970, all three defendants signed a "Continuing Guaranty" which stated: "FOR VALUE RECEIVED", the guarantors unconditionally guarantee to Mercantile "the prompt payment when due ... of any and all indebtedness ... now or hereafter existing, of Carp's, Inc. (Borrower) to" Mercantile. The document also stated: "This guaranty shall be continuing ...." Both Herbert and Emile admitted that the Continuing Guaranty was genuine and that their signatures appeared on the document. Elaine acknowledged that she signed the Guaranty at the request of her husband but that she did not read what she was signing.

On December 31, 1970, Carp's, Inc., through its president, Herbert, entered into a term loan agreement with Mercantile for $1,300,000.00. Both Herbert and Emile admitted that this agreement was genuine, and Herbert acknowledged that he signed it. Herbert was president of Carp's, Inc. when he signed the term loan agreement and he was authorized by the board of directors to sign it. Elaine denied that this agreement was genuine.

On December 31, 1970, Carp's, Inc., through its president, Herbert, executed a promissory note for $1,300,000.00 to Mercantile. Subsequently, two other promissory notes were executed by Carp's, Inc. in the amount of $200,000.00 each. Note 75002 for $200,000.00 is dated December, 1972. Note 75548 for $200,000.00 is dated November 19, 1972. Both Herbert and Emile admitted that each note was genuine. In his deposition, Herbert testified that he signed all three notes and, in his deposition, Emile testified that he signed notes 75002 and 75548. At the time each note was executed, Herbert was president, and he was authorized by the Board of Directors of Carp's, Inc. to execute each one. Emile did not know if he had written authorization but testified that a "document was given to me, I had a certain job, it was acceptable to whomever my signature was acceptable if I signed it."

By affidavit, Mercantile's "manager of discount department" set out in detail the computation of the principal and interest due and owing from Carp's, Inc. on the notes after credits were made. The aggregate amount was $1,026,652.39.

Mercantile's motion for summary judgment was granted, and judgment was entered against the defendants, jointly and severally. Each defendant appealed from that judgment and the appeals were consolidated.

To determine the propriety of a summary judgment, we view the record in the light most favorable to the parties against whom the judgment was entered. E.g., Phegley v. Porter--DeWitt Construction Company, 501 S.W.2d 859, 863 (Mo.App.1973). A summary judgment may be rendered only where it is made manifest by the record, including pleadings, depositions, admissions and affidavits, that there is no genuine issue of material fact. Rule 74.04(c); Stanturf v. Sipes, 447 S.W.2d 558, 560 (Mo.1969). A genuine issue of material fact exists whenever there is the slightest doubt about the facts. E.g., Maddock v. Lewis, 386 S.W.2d 406, 409 (Mo.1965), cert. den., 381 U.S. 929, 85 S.Ct. 1569, 14 L.Ed.2d 688 (1965). The burden is upon the movant, Mercantile here, to show by "unassailable proof" that there is no genuine issue of fact. Rule 74.04(h); Phegley v. Porter-DeWitt Construction Company, supra 501 S.W.2d at 863.

Defendants raise three basic issues which, they contend, warrant reversal of the summary judgment. First Elaine, alone, complains there was no consideration for her execution of the guaranty. Second, each of the defendants now questions the corporate authority of Carp's, Inc. to execute the notes and they also question the authenticity of the 1953 resolution of the board of directors of Carp's, Inc. Finally, each of them now questions the amount of principal and interest owing and they also question whether Mercantile improperly liquidated certain assets. ¹

As we perceive Elaine's complaint of lack of consideration, it is two pronged. The record shows her only connection with Carp's, Inc. was through her husband Herbert. She was not and had never been a stockholder, director, officer or employee of Carp's, Inc. Because of this absence of relationship with Carp's, Inc., she apparently first argues, she received no benefit from the guaranty and, therefore, she apparently reasons, she received no consideration for her executing the guaranty. This argument is misdirected and, thus, misses the mark.

A guaranty is a contract, and, like all contracts, a guaranty must be supported by consideration. Edwards v. Heidelbaugh, 574 S.W.2d 25, 27 (Mo.App.1978). However, the consideration need not move only between the creditor and guarantor. Kurtz v. Fischer, 600 S.W.2d 642, 646 (Mo.App.1980); Don L. Tullis & Associates, Inc. v. Gover, 577 S.W.2d 891, 896 (Mo.App.1979). Benefit to the debtor, the party primarily liable, or detriment to the creditor is sufficient consideration to support a guaranty, e.g., Kurtz v. Fischer, supra 600 S.W.2d 646, and "it is not necessary that the guarantor derive any benefit from either the principal contract or the guaranty." Don L. Tullis & Associates Inc. v. Gover, supra 577 S.W.2d at 896. Accord, Industrial Bank & Trust Co. v. Hesselberg, 195 S.W.2d 470, 474 (Mo.1946). Thus, even though Elaine received no "benefit" for her guaranty, consideration could be supplied by a benefit to Carp's, Inc. or a detriment to Mercantile.

Stripped of its redundant verbiage and legal jargon, the "Continuing Guaranty" here is simply a divisible offer for a series of separate unilateral contracts. See Restatement of Contracts, Second, § 31, Comment (b). By her guaranty, Elaine was simply offering to guarantee the payment by Carp's, Inc. of each loan advanced by Mercantile, and Mercantile's act of advancing each loan would be the acceptance of the divisible offer and the consideration supporting each separate unilateral contract. Ralston Purina Co. v. Nabisco Inc., 541 F.2d 679, 684 (8th Cir.1976); Restatement of Contracts, supra, § 31; see also Industrial Bank & Trust Co. v. Hesselberg, 195 S.W.2d 470, 474 (Mo.1946) and Miner v. Bennett, 556 S.W.2d 692, 695 (Mo.App.1977). "The distinguishing feature of such an offer is that, when it has been accepted and has thus become a contract, it still remains an offer as to future loans and renewals." Security State Bank v. Gray, 224 Mo.App. 980, 25 S.W.2d 512, 515 (Mo.App.1929). The present record discloses that Mercantile advanced the $1.7 million to Carp's, Inc. in three separate loans, each evidenced by a promissory note. Thus, the record does disclose adequate consideration for Elaine's guaranty.

Elaine next argues that because she had no interest or office in Carp's, Inc. and because she did not read the "Continuing Guaranty" before signing it, she should not be held liable based upon "principles of fairness and equity." Elaine cites no authority supporting this argument, because there is none. A guarantor's liability for a corporation's debt is not dependent upon the guarantor's interest in the corporation. 38 Am.Jur.2d Guaranty, § 42 et seq. (1968). Thus, Elaine's lack of interest...