Sinclair Marketing, Inc. v. Siepert

• Court: Idaho Supreme Court
• Writing for the Court: BAKES; DONALDSON, C.J., SHEPARD and HUNTLEY, JJ., and OLIVER
• Citation: Sinclair Marketing, Inc. v. Siepert, 107 Idaho 1000, 695 P.2d 385 (Idaho 1985)
• Decision Date: 30 January 1985
• Docket Number: No. 14959,14959
• Parties: SINCLAIR MARKETING, INC., a corporation, Plaintiff-Appellant, v. Larry A. SIEPERT and Fay Siepert, husband and wife; and Don L. Siepert and Neta Siepert, husband and wife, Defendants-Respondents.

Page 385

695 P.2d 385

107 Idaho 1000

SINCLAIR MARKETING, INC., a corporation, Plaintiff-Appellant, v. Larry A. SIEPERT and Fay Siepert, husband and wife; and Don L. Siepert and Neta Siepert, husband and wife, Defendants-Respondents.

No. 14959.

Supreme Court of Idaho.

Jan. 30, 1985.

Robert M. Tyler, Jr., of Elam, Burke & Boyd, Boise, for plaintiff-appellant.

Gregory P. Meacham, of Petersen, Moss & Olsen, Idaho Falls, for defendants-respondents.

BAKES, Justice.

Appellant Sinclair sued to recover on defendants' personal guaranties given to secure payment on an open account to Little America Refining Company, which was allegedly assigned to Sinclair. The district court granted summary judgment to the individual defendants. We reverse and remand, holding that material issues of fact remain which preclude summary judgment.

Siepert's Distributing, Inc., is a closely held corporation whose principals ¹ are Larry and Fay Siepert, husband and wife. On July 1, 1978, Siepert's Distributing began buying petroleum products from Little America Refining Company. The principals executed personal guaranties to assure payment on the open account with Little America. The guaranty contracts state:

"This is a continuing and unconditional Guaranty and shall ... be binding upon the undersigned, the heirs, executors, administrators, successors and assigns of the undersigned, and shall inure to the benefit of, and be enforceable by you, your successors, transferees and assigns ...."

Siepert's picked up the products with their own tanker at a Pocatello pipeline terminal which is also used by other oil companies in supplying petroleum products.

In June of 1979, Mr. Bruggeman, vice-president and stockholder of Little America, told Larry Siepert that Sinclair Marketing, Inc., wanted to furnish petroleum products to Siepert's at the same price, terms and delivery point. Sinclair Marketing, Inc., is the "grandchild" corporation to Little America. ² Larry Siepert agreed to the change in suppliers, and Siepert's Distributing was issued a new charge plate from Sinclair Marketing to be used at the same Pocatello terminal. Siepert's Distributing was billed for subsequent purchases by Sinclair from Englewood, Colorado. All of the products purchased prior to the change were billed by and paid to Little America in Salt Lake City, Utah.

By 1982, Siepert's became seriously delinquent on the open account with Sinclair. On February 23, 1982, Sinclair's credit manager told Larry and Fay Siepert that unless new personal guaranties were executed the open account would be terminated. Larry and Fay Siepert did not execute the personal guaranty forms furnished by Sinclair, and the Siepert account was terminated.

Sinclair Marketing sued Siepert's Distributing, Inc., for the balance due on the open account. The individual Sieperts were also joined as defendants. Sinclair claims that all rights to enforce the personal guaranties previously given to Little America were assigned to Sinclair at the time Sinclair began supplying products. Both parties filed motions for summary judgment supported by affidavits. The district court granted partial summary judgment in favor of the individual defendants by ruling that the personal guaranties executed in favor of Little America could not be enforced by Sinclair.

The district court certified the partial summary judgment for appeal according to I.R.C.P. 54(b) but denied timely motions to alter or amend the judgment. At the same time, the district court also denied Sinclair's motion to amend the complaint which was made subsequent to the partial summary judgment. The proposed amended complaint included new theories of estoppel and piercing the corporate veil in an attempt to establish other bases for the personal liability of the individual Sieperts.

Sinclair has appealed the summary judgment and the denial of its motion to amend its complaint. ³

I

We must first consider whether the guaranty contracts are assignable. The question of assignability depends largely upon principles developed under contract law. Generally, all contract rights which are not "personal" in nature may be assigned. Williston on Contracts (3d ed.) § 412. When extending an offer of guaranty, the guarantor has relied upon the specific circumstances and terms of the agreement between the debtor and the creditor, and their respective financial positions. On this basis the law has generally held that a guaranty contract with a specific creditor is "personal" to that creditor and may not be assigned. A guarantor "has been held to be a favorite of the law and his liability is not extended by implication beyond the express limits or terms of the instrument, or its plain intent." Industrial Investment Corp. v. Rocca, 100 Idaho 228, 233, 596 P.2d 100, 105 (1979). Contracts of guaranty have been described in two broad categories: (1) "special" guaranties which are addressed to a specific party; and (2) "general" guaranties which are addressed to the general public. Burkhardt v. Bank of America Natl. Trust & Savings Assn., 127 Colo. 251, 256 P.2d 234 (1953). The rule of law has been simplistically stated that "a special guaranty is not assignable while a general guaranty may be assigned or transferred." 38 Am.Jur.2d Guaranty § 35, p. 1033 (1968). This statement seems to ignore the possibility that a guarantor may have freely contracted and intended the guaranty to be assigned within certain limits to a successor in interest, but yet not intended for the guaranty to be enforced by others within the general public. The rule has been mechanically applied to summarily designate a guaranty as "special" and non-assignable without any discussion as to the language of the contract and/or intentions of the parties. E.g., Kelly-Springfield Tire Co. v. Hamilton, 230 Mo.App. 430, 91 S.W.2d 193 (1936) (enforcement of an assigned guaranty was barred even though contract stated it "shall inure to the benefit of the company [creditor], its successors and assigns"); Lee v. Rubin, 117 So.2d 230 (Fla.D.C.App.1960) (assignee of accounts receivable could not enforce a guaranty assigned with the accounts).

The case cited most often for the rule of non-assignability for special guaranties is Burkhardt v. Bank of America Natl. Trust & Savings Assn., 127 Colo. 251, 256 P.2d 234 (1953). However, Burkhardt did not merely resolve the issue based upon the recitation of the rule against assignability. It went further and discussed the language of the contract and the circumstances surrounding the execution of the contract to determine that the guaranty was intended "to run to the [lessor-creditor] for his personal benefit," and was therefore non-assignable. The analysis in Burkhardt implied that under a different set of circumstances evidencing an intent by the parties to allow assignment, such an assignment would have been enforceable. We agree with the inference in Burkhardt that, even though a guaranty may be classified as special, the parties may have intended it to be assignable within certain limits. The guaranty in the present case contains some language contemplating assignment by Little America. "The generally applicable principle that the use in the agreement of the term 'assigns' indicates (without being conclusive), that the parties intended that the contract rights should be assignable is applicable to contracts of guarant[y]." Targa Intl. Corp. v. Gross, 112 Misc.2d 688, 447 N.Y.S.2d 384, 385 (1982). Therefore, we cannot say as a matter of law that the guaranty was non-assignable.

We next consider whether it can be enforced to collect debts which accrued subsequent to the assignment. There is no question that the assignment of a principal obligation also operates as an assignment of the guaranty of the obligation, and the guaranty is effective to collect this obligation which existed at the time of the assignment. See 38 Am.Jur.2d Guaranty § 36 (1968). However, in the present case the principal debt, Little America's account receivable, was not assigned to Sinclair. Siepert's Distributing fully satisfied the account receivable to Little America, and Sinclair is only seeking payment for credit extended subsequent to the alleged assignment. The case of Kelly-Springfield Tire Co. v. Hamilton, 230 Mo.App. 430, 91 S.W.2d 193 (Mo.App.1936), held that "[t]he assignment of the guaranty does not carry with it obligations of the performance of new and yet unexecuted obligations." Id. at 195. However, the more recent case of Essex Intl., Inc. v. Clamage, 440 F.2d 547 (7th Cir.1971), without specifically addressing the question, allowed a guaranty assigned as a part of an asset purchase to be enforced for new credit extended subsequent to the assignment so long as the guarantor was not materially injured or prejudiced by the assignment.

The guaranties in the present case state that they are "continuing and unconditional" guaranties in order to induce the extension of future credit on the sale of fungible petroleum products. Whether this contractual right could be assigned and enforced for credit extended subsequent to the assignment would be a factual question to be resolved based upon the intentions of the parties. Viewing the record most favorably to Sinclair, the non-moving party on the summary judgment being considered, the contractual language and affidavits support a legitimate inference that an assignee could enforce the guaranty for future credit. Therefore, we cannot say as a matter of law that these particular guaranties are non-assignable or non-enforceable for credit extended subsequent to the alleged assignment. We agree with the conclusion expressed in Essex Intl., Inc. v. Clamage, 440 F.2d 547 (1971), which held that the rules against assignment of a special guaranty should not be applied mechanically, but that courts should "examine the factual setting in each case to determine whether the policy underlying the rule is applicable." Id. at 550. The...