Sebastian International, Inc. v. Peck

• Decision Date: 23 October 1987
• Citation: 195 Cal.App.3d 803,240 Cal.Rptr. 911
• Court: California Court of Appeals Court of Appeals
• Parties: SEBASTIAN INTERNATIONAL, INC., Plaintiff and Respondent, v. Kenneth E. PECK, et al., Defendants and Appellants. Civ. B023975.

Page 911

240 Cal.Rptr. 911

195 Cal.App.3d 803

SEBASTIAN INTERNATIONAL, INC., Plaintiff and Respondent, v. Kenneth E. PECK, et al., Defendants and Appellants.

Civ. B023975.

Court of Appeal, Second District, Division 3, California.

Oct. 23, 1987.

Sheppard, Mullin, Richter & Hampton, Don T. Hibner, Jr., Natalie Naftzger Davis, Los Angeles, for plaintiff and respondent.

James R. Tweedy, Van Nuys, for defendants and appellants.

ARABIAN, Associate Justice.

INTRODUCTION

Defendant Kenneth E. Peck (Peck or appellant) appeals from the judgment entered after the granting of a summary judgment motion in favor of plaintiff Sebastian International, Inc. (Sebastian). Peck was found to be personally liable on a lease guaranty. We affirm.

FACTUAL AND PROCEDURAL BACKGROUND

In May 1978, Sebastian entered into a five-year lease for a building in Chatsworth. In September 1980, with the consent of the master lessors, Sebastian sublet the premises to West Valley Blanchard Grinding, Inc. (West Valley). In conjunction with the execution of the sublease, the corporate officers of West Valley, Donald and Patricia Farley and appellant Peck, each signed a guaranty of lease personally assuring payment of West Valley's rental obligations. The terms of the guaranty referred to Peck in his individual capacity; however, on the signature line he was identified as "Kenneth Peck, Vice President." Peck also provided Sebastian with a personal statement of his assets.

The sublease was for a 33-month period ending May 31, 1983. West Valley occupied the premises until approximately May 1981, when it went out of business, leaving 24 months remaining on the sublease for which it paid no rent. After unsuccessful efforts to secure another sublessee, Sebastian Sebastian brought suit against Peck ¹ to recover the unpaid rent as well as other losses it incurred in surrendering the lease. Peck asserted as one affirmative defense that he had executed the guaranty only on behalf of the corporate sublessee. He also contended that Sebastian had failed to mitigate damages by attempting to re-sublet the premises. After conducting discovery, Sebastian moved for summary judgment. Peck's only evidentiary opposition was his own declaration.

surrendered the leasehold back to the master lessors in April 1982.

The trial court granted the motion, finding that Peck had failed to raise a triable issue as to any facts submitted by Sebastian. The court made a further finding that Sebastian's evidence established the submitted facts, which in turn established Peck's liability.

ISSUES PRESENTED

The following issues are raised by this appeal:

(1) Whether as a matter of law appellant is personally liable on the guaranty of lease; and

(2) whether Sebastian discharged its duty to mitigate damages after West Valley's breach.

DISCUSSION

I. Standard of Review

The functions of both the trial court and the reviewing court on a motion for summary judgment are well established. "The matter to be determined by the trial court in considering such a motion is whether the defendant (or the plaintiff) has presented any facts which give rise to a triable issue. The court may not pass upon the issue itself. Summary judgment is proper only if the affidavits in support of the moving party would be sufficient to sustain a judgment in his favor and his opponent does not by affidavit show such facts as may be deemed by the judge hearing the motion sufficient to present a triable issue. The aim of the procedure is to discover, through the media of affidavits, whether the parties possess evidence requiring the weighing procedures of a trial. In examining the sufficiency of affidavits filed in connection with the motion, the affidavits of the moving party are strictly construed and those of his opponent liberally construed, and doubts as to the propriety of granting a motion should be resolved in favor of the party opposing the motion.... [Citations.]" (Stationers Corp. v. Dun & Bradstreet, Inc. (1965) 62 Cal.2d 412, 417, 42 Cal.Rptr. 449, 398 P.2d 785.)

"[I]n reviewing the propriety of a summary judgment, [the appellate] court must resolve all doubts in favor of the party opposing the judgment. [Citation.] As a consequence, the declarations of the moving party must be strictly construed, while those of the opponent are liberally construed. [Citations.] However, the opposing party 'cannot rely on his pleadings, but must make an independent showing that he has "sufficient proof of the matters alleged to raise an issuable question of fact" ' if the moving party's evidence, standing alone, is sufficient to entitle him or her to judgment. [Citation.] Summary judgment is proper if the evidence in support of the moving party would be sufficient to sustain a judgment in his favor and the opposing party has not presented any facts which give rise to a triable issue of material fact. [Citations.]" (Kallen v. Delug (1984) 157 Cal.App.3d 940, 948, 203 Cal.Rptr. 879.)

II. Peck's Liability on the Guaranty

Appellant Peck contends the trial court erroneously granted summary judgment in that a triable issue remains as to the nature of his liability. Because the signature line of the guaranty designated No California court has directly addressed the issue raised in this case. However, courts of several other jurisdictions have dealt with similar facts and consistently resolved the question adversely to Peck. (See Ricker v. B-W Acceptance Corp. (10th Cir.1965) 349 F.2d 892; Shipp v. First Alabama Bank of Gadsden, N.A. (1985) 473 So.2d 1014; Klutts Resort Realty, Inc. v. Down'Round Development Corporation (1977) 268 S.C. 80, 232 S.E.2d 20; American Petrofina Company of Texas v. Bryan (1975) 519 S.W.2d 484.)

him as "Vice President" and he subsequently states he was signing the document in his representative capacity, the ambiguity as to the intentions of the parties must be resolved at trial. We find that as a matter of law the guaranty was personally binding on Peck, and thus summary judgment was proper.

In each of the cases cited, the defendant had signed a guaranty personally binding him to certain obligations principally assumed by a corporation. Each defendant later attempted to avoid his obligation by claiming that the designation "president," "vice president," or "secretary" relieved him of personal liability. The reviewing courts found that these titles served merely as identification and were without legal effect to insulate the defendants.

"A director, officer, or other agent, signing a corporate contract containing a promise in the proper form for an individual, is not relieved from personal liability by the addition to his name of terms such as 'director,' 'president' or the like. These terms are regarded merely as descriptio personae, that is, a term descriptive of the person rather than the relationship in which he signs the agreement. [Citation.]" (Klutts Resort Realty, Inc. v. Down'Round Development Corporation, supra, 232 S.E.2d at p. 24; American Petrofina Company of Texas v. Bryan, supra, at p. 487.)

" ' * * * Where a writing in the nature of a contract is signed by a person, and contains apt words to bind him personally, the fact that to such signature is added such words as "trustee," "agent," "treasurer," "president," and the like does not change the character of the person so signing, but is considered as merely descriptive of him. * * * The mere fact that a person sustains an agency relation to another does not prevent him from becoming personally liable on a contract with a third person, and, if it appears from the contract that he pledged his own credit or bound himself personally, the addition of such words as "president" and the like will be considered as mere descriptio personae. * * * ' " (Ricker v. B-W Acceptance Corp., supra, at p. 894, quoting Ellis v. Stone (1916) 21 N.M. 730, 158 P. 480.)

We find the rationale of these decisions persuasive under the virtually identical facts of this case. Moreover, the principle of descriptio personae is well recognized in California law. In Hobson v. Hassett (1888) 76 Cal. 203, 18 P. 320, the defendant signed a promissory note "A. Hassett, President." When the note became due, he claimed he had signed only in his capacity as president of the corporation to which the amount of the note had been paid.

The California Supreme Court rejected this argument since the note did not reflect that the defendant was acting on behalf of the corporation or in other than an individual capacity. "There is nothing on the face of the note to show that there was any principal back of the defendant. He signed his own name, and wholly failed to indicate, if he had a principal, who or what the principal was. The word 'president,' which he added to his name, must, therefore, be regarded as a mere descriptio personae." (Id., at p. 207, 18 P. 320; see also Estate of Shaw (1926) 198 Cal. 352, 364-365, 246 P. 48; Hall v. Jameson (1907) 151 Cal. 606, 610-612, 91 P. 518; Jones v. Post (1856) 6 Cal. 102, 104; Sayre v. Nichols (1855) 5 Cal. 487, 488.)

The facts of the instant case fall squarely within the analysis of the foregoing cases. Apart from the signature line, the guaranty of lease contains no reference to Peck's relationship to West Valley as a corporate officer or to his signing the guaranty By its terms, the contract expressly describes a personal obligation and thus raises no question as to Peck's individual liability. The words "Vice President" added to the signature line are merely descriptive and as a matter of law under the principle of descriptio personae do not alter his obligation. Moreover, the guaranty would be rendered a nullity if Peck had signed only in his corporate capacity since the corporation was already bound under the terms of the sublease. ³ (American Petrofina Company of Texas v. Bryan, supra, at p. 487; see also Hall v. Jameson, supra, 151 Cal. at pp. 610-611, 91 P. 518.)

                pursuant to such relationship. 2  On the

...