Skrypek v. St. Joseph Valley Bank

• Decision Date: 25 October 1984
• Docket Number: No. 3-284A41,3-284A41
• Citation: 469 N.E.2d 774
• Parties: Edward K. SKRYPEK, Appellant (Defendant Below), v. ST. JOSEPH VALLEY BANK (now Midwest Commerce Banking Company), Appellee (Plaintiff Below).
• Court: Indiana Appellate Court

Page 774

469 N.E.2d 774

Edward K. SKRYPEK, Appellant (Defendant Below), v. ST. JOSEPH VALLEY BANK (now Midwest Commerce Banking

Company), Appellee (Plaintiff Below).

No. 3-284A41.

Court of Appeals of Indiana,

Third District.

Oct. 25, 1984.

Mary E. Davis, Davis & Davis, P.C., Elkhart, for appellant.

Geoffrey K. Church, Church & Nilsson, Elkhart, for appellee.

STATON, Presiding Judge.

Edward Skrypek appeals from summary judgment in favor of St. Joseph Valley Bank on a guaranty to answer for the indebtedness of RBS Industries, Inc. Skrypek claims there were material questions of fact raised which precluded disposition of the matter by summary judgment. Skrypek also claims errors of law in the trial court's determination of the rights and liabilities of the parties under the guaranty agreement.

Though Skrypek's Statement of Issues in his brief is not entirely consistent with the Motion to Correct Error, not particularly consistent with the Argument section of the brief, by indulging Skrypek with a liberal reading of both the Motion to Correct Error and the brief, we are able to identify and restate the issues as follows: ¹

I. Whether the terms of the guaranty are ambiguous and therefore create genuine issues of material fact which cannot be resolved by summary judgment;

II. Whether Skrypek, by the terms of the agreement, expressly waived notice of future loans, default by RBS, or the defense of impairment of collateral III. Whether there were genuine issues of material fact regarding fraud or misrepresentation in the execution of the guaranty.

Affirmed.

On review of a grant of summary judgment we will affirm if there exists no genuine issue of material fact and the moving party is entitled to judgment as a matter of law. Integrity Insurance Co. v. Lindsey (1983), Ind.App., 444 N.E.2d 345, 347. The trial court may consider the pleadings, exhibits, depositions, affidavits and testimony on file but may not resolve conflicting facts. A genuine issue exists if the trial court would be required to resolve disputed facts. McKenna v. City of Fort Wayne (1982), Ind.App., 429 N.E.2d 662, 664. Any doubt as to a fact, or an inference to be drawn therefrom, is resolved in favor of the party opposing the motion for summary judgment. Poxon v. General Motors Acceptance Corp., (1980), Ind.App., 407 N.E.2d 1181, 1184.

The record shows that in January, 1976 Edward Skrypek was an officer, director and shareholder of RBS Industries, Inc. when the company obtained a loan of Twenty-five Thousand Dollars ($25,000.00) from St. Joseph Valley Bank (SJVB). The bank required security for the note, including guaranties of Skrypek and Peter C. Ruch, President of RBS, so on January 30, 1976 Skrypek executed a document captioned "Continuing Guaranty."

At an RBS Directors Meeting held June 28, 1976, at which Skrypek was present, the Board voted to increase the loan from $25,000.00 to $38,000.00. The loan was made on August 18, 1976 and renewed on November 2, 1978 at a higher rate of interest. ²

In December of 1976 Skrypek sold his stock in RBS and resigned as an officer and director of the company. Through his firm, Mobil Office, Inc., Skrypek transacted business with RBS through 1978, paying RBS more than $800,000.00 for the purchase of mobile offices manufactured and sold by RBS. The monies were deposited in an RBS account at St. Joseph Valley Bank.

RBS subsequently defaulted on the loan. After making demand on the note for payment from RBS and later, making a demand on Ruch and Skrypek under the guaranties, SJVB filed suit.

I. Ambiguity of the Guaranty

Skrypek argues that the trial court erred in finding the terms of the guaranty agreement unambiguous with regard to the parties' intent as to the scope of the guaranty. Skrypek asserts that it was never his intent to guaranty any debt of RBS beyond the initial loan made in January, 1976 and that ambiguities in the guaranty on this issue raise questions of material fact which preclude summary judgment.

His claim of ambiguity focuses entirely on the construction and definition of the word "accrue" contained in the following phrase which is repeated several times in the document, whereby he agrees to pay

"any and all indebtedness which now exists and/or which may hereafter accrue...."

from RBS to the Bank. Skrypek argues that "accrue" could reasonably be interpreted to mean expenses and interest arising from the original loan as opposed to additional or new indebtedness. Since the term is ambiguous, argues Skrypek, the intent of the parties cannot be ascertained as a matter of law from the document and requires a trial of the issue. We disagree.

The contract of a guarantor is to be construed like any other contract, that is, according to the intent of the parties. The intention of the parties is to be ascertained from the instrument itself read in the light of the surrounding circumstances. Merchants National Bank v. Winston (1959), 129 Ind.App. 588, 159 N.E.2d 296, 302. A guaranty contract may be either continuing or limited and the rule is that unless the words in which the guaranty is expressed fairly imply that the liability of the guarantor is to be limited, it continues until it is revoked. Wright v. Griffith (1890), 121 Ind. 478, 23 N.E. 281, 282. A continuing guaranty is one which is not limited to a single transaction but contemplates a future course of dealing, covering a series of transactions. Vidimos, Inc. v. Vidimos (1983), Ind.App., 456 N.E.2d 455, 458 (reh. denied ). Language similar to that in Skrypek's guaranty is used in 38 Corpus Juris Secundum, "Guaranty", Sec. 7, at 1142, in which a continuing guaranty is said to contemplate "a succession of liabilities, for which, as they accrue, the guarantor becomes liable." (Emphasis supplied.).

When the entire guaranty document is read as a whole it is clear that, in addition to recitations in more than the one place that it is a continuing guaranty, the language expresses the possibility of additional loan transactions. For example, paragraph two of the document reads:

"This is a continuing guaranty and by this instrument the Guarantors guarantee the prompt payment of any and all indebtedness which may now exist and/or may hereafter accrue at any time or times from said Debtor to said Bank until the Guarantors have delivered to said Bank a notice signed by them of their election not to guarantee any new indebtedness from said Debtor to said Bank which may thereafter accrue, but such notice shall not in any way affect the promise of the Guarantors hereunder to pay any and all indebtedness from said Debtor to said Bank existing at the time such notice is given."

(Emphasis supplied.). Paragraph three of the guaranty waives notice of "the extension of credit from time to time given by said Bank to said Debtor...." In spite of Skrypek's strenuous assertions to the contrary, we find this language and the document as a whole, to be an unambiguous expression of the parties' intent to guaranty any and all indebtedness of RBS to SJVB.

Where there is no ambiguity in the language of the contract, the construction of the guaranty is a question of law. Loudermilk v. Casey (1982), Ind.App., 441 N.E.2d 1379, 1383. Under the "Four Corners rule" followed in Indiana for the construction of written instruments, determination of the intent of the parties is limited to the express language found within the instrument. Parol evidence is inadmissible where there is no ambiguity in the language. American Fletcher National Bank v. Pavilion, Inc., (1982), Ind.App., 434 N.E.2d 896, 904 (vacated on other grounds, Ind., 453 N.E.2d 156); Hauck v. Second National Bank of Richmond (1972), 153 Ind.App. 245, 286 N.E.2d 852, 861. The trial court was correct, therefore, in rejecting Skrypek's extrinsic evidence regarding his intentions, and holding that there was no genuine issue of material fact.

II. Consent and Waiver

Notwithstanding the scope of his liability under the guaranty agreement, Skrypek contends that he should be discharged from the guaranty because the Bank permitted material changes in the loan agreement with RBS without Skrypek's consent; the Bank failed to notify Skrypek that RBS was in default; and the Bank failed to protect the loans by availing itself of a right of set-off against RBS deposits, thereby impairing the collateral securing the note.

Skrypek correctly cites authority for the proposition that any binding change in the principal's contract to which the guarantor or surety does not consent will discharge the surety from liability. Indiana University v. Indiana Bonding & Surety Co., (1981), Ind.App., 416 N.E.2d 1275, 1280; Orange-Co, Inc. v. Brown (1979), 181 Ind.App. 536, 393 N.E.2d 192, 197. He maintains that when SJVB agreed to renew the August, 1976 note at a higher rate of interest without his knowledge or consent it agreed to a material alteration of the contract which discharged Skrypek as a matter of law. Skrypek acknowledges that the guarantor may give such consent prospectively in the guaranty instrument, citing Carney v. Central National Bank of Greencastle (1983), Ind.App., 450 N.E.2d 1034, but denies that he gave such consent in his guaranty agreement to SJVB. He appears to distinguish the consent language in Carney, supra, at 1035, in which the guarantor consented

"to any change, release or surrender of securities for said indebtedness and that said indebtedness may be compromised or renewed or extended from time to time at an increased rate of interest without notice to me, and I hereby waive all rights to any property mortgaged or otherwise pledged under the instruments of indebtedness described herein....

"I hereby waive notice of the acceptance of this guaranty and of credit given or to be given under the instruments herein described, and I waive notice of non-payment of any and every note and/or other obligation covered by this...