Mollenhour v. State First Nat. Bank of Texarkana, CA

Decision Date19 April 1989
Docket NumberNo. CA,CA
Citation27 Ark.App. 176,769 S.W.2d 28
Parties, 8 UCC Rep.Serv.2d 759 Paul David MOLLENHOUR, Appellant, v. The STATE FIRST NATIONAL BANK OF TEXARKANA, Appellee. 88-309.
CourtArkansas Court of Appeals

Matt Keil, Texarkana, for appellant.

Winford L. Dunn, Jr., Texarkana, for appellee.

COOPER, Judge.

This appeal follows the entry of a judgment for the appellee, State First National Bank of Texarkana, against the appellant, Paul David Mollenhour, on a promissory note and two revolving credit notes. On appeal, the appellant argues that the chancellor erred in holding him individually liable on the two revolving credit notes. We affirm.

In 1983, M.J. Rogers and the appellant agreed to go into business together. Rogers apparently sought Mollenhour's involvement in the business, Arkansas Parts and Equipment Company, Inc., so that Mollenhour could obtain financing for the business from the appellee. A substantial portion of the financing provided by the appellee to Arkansas Parts and Equipment was evidenced by the two revolving credit notes dated April 1, 1986, in the amount of $33,000.00, and February 19, 1986, in the amount of $150,000.00. The April 1, 1986, note was signed as follows:

ARKANSAS PARTS & EQUIPMENT CO., INC.

                    by:  /s/ Mike Rogers
                    Mike Rogers, President
                    /s/ Mike Rogers
                    Mike Rogers, Individually
                    by:  /s/ Dave Mollenhour V. Pres
                    Dave Mollenhour, Vice
                    President & Secretary
                    /s/ Dave Mollenhour V. Pres
                    Dave Mollenhour, Individually
                

The signatures on the February 19, 1986, note appeared as follows:

                  /s/ Mike Rogers              ARKANSAS PARTS & EQUIPMENT CO., INC
                -----------------------------  ------------------------------------------------
                Mike Rogers, Individually      by:             /s/  Mike Rogers Pres.  President
                                                    -------------------------------------------
                /s/ Dave Mollenhour V. Pres.                                       Mike Rogers
                -----------------------------
                Dave Mollenhour, Individually  by:             /s/     Dave Mollenhour V. Pres.
                                                    -------------------------------------------
                                                    Dave Mollenhour, Vice President & Secretary
                

Both notes stated that the signing parties were obligated "jointly and severally" to the appellee. The notes were not fully repaid, and the appellee sued Arkansas Parts and Equipment, Rogers, and the appellant for the balance due, alleging that Rogers and the appellant cosigned and guaranteed the notes. The appellee sought judgment against Arkansas Parts and Equipment, Rogers, and the appellant, jointly and severally. In his original answer, the appellant admitted that he had cosigned and guaranteed the notes, but he affirmatively stated that he was fraudulently induced to execute the instruments by the appellee. The appellant did not deny that he was individually liable on the notes, nor did he assert that he had signed the notes only in a representative capacity as vice president of Arkansas Parts and Equipment. The appellant filed a counterclaim alleging that he was fraudulently induced into executing the notes. He later filed an amended answer, but again he did not raise the issue of individual capacity.

At trial, the appellant attempted to raise the issue of lack of individual capacity in the execution of the notes through the testimony of the appellee's witness, John Dalby, assistant vice president and commercial loan officer of the appellee, and through the testimony of Mike Rogers and Nell Nassoy. Each time the appellant sought to introduce evidence through these witnesses regarding his intent to sign the notes only in a representative capacity, the appellee objected, and the chancellor sustained the objection. The appellant made a proffer of evidence through the testimony of Mike Rogers. The substance of the proffer was that the appellant informed him, prior to the execution of the notes, that he did not intend to sign them in an individual capacity. The appellant also made a proffer of evidence through Nell Nassoy to the same effect.

The appellant, over the appellee's objection, testified in a proffer of evidence that he only signed the notes in his capacity as vice president and that he did not intend to sign them in an individual capacity. The chancellor, however, continued to rule that the evidence regarding the appellant's capacity in executing the notes was inadmissible. The chancellor later reversed his ruling with respect to the appellant's testimony regarding his signatures, and allowed the presentation of further testimony on the issue. At that time, the appellee offered into evidence a portion of the appellant's deposition, dated May 2, 1987, in which he was asked whether it was his understanding that he was personally responsible for each of the loans. He responded that he "assumed they would probably be." The appellee also introduced the bank's loan renewal documents maintained by the bank regarding the loans, which indicated that the notes were signed by the appellant in his corporate and individual capacities.

On June 2, 1988, the chancellor entered judgment for the appellee against Arkansas Parts and Equipment and the appellant for $33,000.00 and $150,000.00, plus attorney's fees and costs, and denied the appellant's counterclaim. In the judgment, the chancellor found that the appellant signed the notes in his corporate and individual capacities and that his designations of his corporate capacity, which he placed after his signatures on the individual signature lines, were merely descriptive designations or terms, because he had already signed in his corporate capacity on the appropriate lines. The chancellor also found that the appellant, having failed to affirmatively deny his individual liability by pleadings, conduct, or testimony, was estopped from denying his individual liability. From those decisions comes this appeal.

For his first point on appeal, the appellant argues that the chancellor erred in holding him individually liable on the two revolving credit notes; for his second point, he argues that the chancellor erred in holding that he failed to raise the issue of lack of individual liability. Because the view we take of the case makes it unnecessary to reach the second point, and because we do not find the chancellor's decision on the first point to be clearly erroneous or against the preponderance of the evidence, we affirm the judgment.

As to the second point raised on appeal, it is true that, until trial, the appellant did not raise his defense of lack of individual capacity in the execution of the notes. As noted earlier, the chancellor first denied the appellant's attempts to present evidence on this issue at several points throughout the trial. Later in the trial, however, the chancellor reversed his ruling excluding the proffered testimony and allowed the appellant to introduce additional evidence on this issue. It does not appear that any of the appellant's proffered evidence was excluded from the record. It is, therefore, arguable that the chancellor considered, at least at trial, that the pleadings had been amended to conform to the proof on this issue. See Mercer v. Nelson, 293 Ark. 430, 738 S.W.2d 417 (1987); Miller v. Jasinski, 17 Ark.App. 131, 705 S.W.2d 442 (1986); Hegg v. Dickens, 270 Ark. 641, 606 S.W.2d 106 (App.1980); Ark.R.Civ.P. 15(b). The confusion arises from the holding in the judgment that the appellant was estopped from denying his individual liability. We cannot tell whether the chancellor, after trial, reversed his ruling concerning the originally excluded evidence and did not consider it, or whether, even if he considered it, he found, on all the evidence, that the appellant was individually liable. Accordingly, we have reviewed the record de novo, and we have considered all of the evidence proffered by the appellant, including that originally excluded by the chancellor. Even when all of the appellant's proffered evidence is considered, however, we hold that the chancellor's decision on the merits was correct.

Turning to the merits, the appellant argues that the chancellor erred in holding him individually liable on the notes because, he asserts, under Ark.Code Ann. Section 4-3-403 (1987), adding the term "V. Pres." after his signature on the line for his individual signature on the notes, established that he only signed the notes in his representative capacity. We do not agree.

In Cleveland Chemical Co. of Arkansas, Inc. v. Keller, 19 Ark.App. 7, 716 S.W.2d 204 (1986), an action was brought against the appellee based on a guaranty signed by the appellee to secure a corporate line of credit. The lower court dismissed the...

To continue reading

Request your trial
3 cases
  • Johninson v. State
    • United States
    • Arkansas Supreme Court
    • October 30, 1997
  • Billingsley v. Smith
    • United States
    • Arkansas Court of Appeals
    • February 18, 2004
    ...286 Ark. 202, 691 S.W.2d 126 (1985); Fanning v. Hembree Oil Co., 245 Ark. 825, 434 S.W.2d 822 (1968); Mollenhour v. State First Nat'l Bank, 27 Ark.App. 176, 769 S.W.2d 28 (1989). Not only were these cases decided under prior law, they are concerned with notes, not a check as in the present ......
  • Anglin v. Chrysler Credit Corp., CA88-374
    • United States
    • Arkansas Court of Appeals
    • April 19, 1989
    ... ... They rely on First State Bank of Morrilton v. Hallett, 291 Ark. 37, ... to when that liability is determined." First Nat'l Bank v. Hess, 23 Ark.App. 129, 134, 743 S.W.2d ... ...

VLEX uses login cookies to provide you with a better browsing experience. If you click on 'Accept' or continue browsing this site we consider that you accept our cookie policy. ACCEPT