Wired Music, Inc. of the Great Midwest v. Great River Steamboat Co.

• Decision Date: 14 June 1977
• Docket Number: Nos. 37386 and 37873,s. 37386 and 37873
• Citation: 554 S.W.2d 466
• Parties: WIRED MUSIC, INC. OF THE GREAT MIDWEST, a corporation, Plaintiff-Appellant, v. The GREAT RIVER STEAMBOAT COMPANY, a corporation, Defendant, and Frank C. Pierson, Defendant-Respondent. . Louis District
• Court: Missouri Court of Appeals

Page 466

554 S.W.2d 466

WIRED MUSIC, INC. OF THE GREAT MIDWEST, a corporation, Plaintiff-Appellant, v. The GREAT RIVER STEAMBOAT COMPANY, a corporation, Defendant, and Frank C. Pierson, Defendant-Respondent.

Nos. 37386 and 37873.

Missouri Court of Appeals, St. Louis District.

June 14, 1977.

Motions for Rehearing and/or Transfer Denied July 21, 1977.

Applications to Transfer Denied Sept. 12, 1977.

W. W. Sleater, Clayton, for plaintiff-appellant.

Lewis, Rice, Tucker, Allen & Chubb, St. Louis, for defendant-respondent.

GUNN, Judge.

Plaintiff-appellant, Wired Music, Inc., appeals from a judgment notwithstanding a jury verdict in favor of defendant-respondent, Pierson, on a suit for breach of contract. The central issue is whether Pierson is personally liable under a guaranty clause contained in a contract which he executed as president of the Great River Steamboat Co. We hold that Pierson was not personally liable under the contract and affirm the judgment.

We first indite the rather basic legal rubric that in reviewing a trial court's granting of a motion for directed verdict we must consider the evidence and all reasonable inferences which may be derived therefrom in the light most favorable to the party against whom the verdict was directed. Jurcich v. General Motors Corp., 539 S.W.2d 595 (Mo.App.1976); Boyle v. Colonial Life Ins. Co., 525 S.W.2d 811 (Mo.App.1975). We are to determine here whether Wired Music Inc. made a submissible case.

The facts leading to this dispute are undisputed. Pierson was president of the Great River Steamboat Co., a corporation owning and operating the "Becky Thatcher" riverboat and restaurant. A sales representative for Wired Music, Inc. contacted Pierson concerning the continuance of wired in music service on the "Becky Thatcher" which had been used by the previous owner. It was agreed that the music service would be continued, and Pierson, as President of the Great River Steamboat Co., signed the service agreement. Under the terms of the contract drafted by Wired Music Inc., a daily "Muzak Program Service" was to be provided to the "Subscriber" for a term of five years at a monthly charge of $58.50. The contract was executed by Pierson in the following manner:

In signing, Pierson crossed out "Port of St. Louis Investments, Inc." which had been incorrectly listed as the name of the corporation and inserted the proper name.

The Great River Steamboat Co. made payments under the contract totaling $234.15 and then breached the contract by making no further payments. It was stipulated that the breach of contract damages were $3,500. Wired Music, Inc. obtained a magistrate court judgment for $3,500 against both Pierson and the Great River Steamboat Co., which was appealed to the St. Louis Circuit Court. Prior to trial on the magistrate appeal, the Great River Steamboat Co. consented to a judgment against it. The circuit court trial resulting in this appeal, therefore, involved only Pierson as a defendant.

Wired Music, Inc. has sought to hold Pierson personally liable for the failure of the Great River Steamboat Co. to make payment under the contract. It relies on a provision in the service contract which reads:

"The individual signing this agreement for the subscriber guarantees that all of the above provisions shall be complied with."

Pierson testified that he had not been informed of any personal guaranty clause and that he had signed the contract without reading it. He further testified that he signed the agreement only in his capacity as president of the Great River Steamboat Co. Jury verdict was for Wired Music, Inc., but the trial court granted Pierson's motion for directed verdict, set aside the jury verdict and entered judgment for Pierson.

On this appeal, Wired Music, Inc. importunes us to view a single clause in a contract between two corporate entities as sufficient ligature to bind a corporate official (Pierson) to a personal guaranty of his corporation's obligations under the contract. We refuse to do so under the circumstances before us in this case. We are impelled to view with suspicion the so called guaranty provision in Wired Music, Inc.'s contract, especially where there is a patent absence of bargaining over the provision and no apparent consideration for it. See National Refining Co. v. McDowell, 201 S.W.2d 342 (Mo.1947).

The general rule regarding liability incurred by an individual who signs an instrument on behalf of another party is: where the principal is disclosed and the capacity in which the individual signs is evident, e. g., president, secretary, agent, the liability is the principal's and not the individual signing for the principal. ¹ Receivables Finance Corp. v. Hamilton, 408 S.W.2d 44 (Mo.1966); Reifeiss v. Barnes, 166 S.W.2d 225 (Mo.App.1942). "The presumption, in such cases, is, that it was the agent's intention to bind his principal and not to incur personal liability, and an agent will not be bound personally, except upon clear and explicit evidence of an intention to be bound." Bridges v. Rice, 99 S.W.2d 531, 534 (Mo.App.1936). Of course, where the circumstances surrounding the transaction disclose a mutual intention to impose personal responsibility on the individual executing the agreement, the individual may be personally liable even though the form of the signature is that of the agent. Kalberg v. Gilpin Co., 279 S.W.2d 177 (Mo.App.1955). But that is not the situation here.

In this case, the form of the signature was clearly that of an officer in his representative capacity for a corporate entity. Pierson took special care to designate the proper corporate name by crossing out the incorrect name before signing. He made it palpable that the contract was between Wired Music, Inc. and the Great River Steamboat Co. Hence, we are particularly attracted to the following statement in Wired Music, Inc. v. Wiemann, 468 S.W.2d 668, 670 (Mo.App.1971).

" . . . the contract prepared by plaintiff clearly shows on its face that it was the intention of the parties to enter into a contract between the plaintiff on the one hand and the corporate entity on the other . . . . It is equally apparent, from the face of the contract, that Wiemann (individual defendant) signed the agreement, in his capacity as president of the corporate entity whatever its precise name, and not in his individual capacity, for as appears he signed as 'Pres.' and 'For the Corporation.' Furthermore, defendant's testimony was that he signed only as president of the corporation, for the sole purpose of consummating the agreement between plaintiff and the corporation of which he was chief officer . . . ."

The manner of executing the contract in Wired Music, Inc. v. Wiemann, supra, is uniquely similar to this case.

The determinative issue here is whether, in view of the form of the signature to the agreement, the language of the so called guaranty clause is sufficient to manifest a clear and explicit intent by Pierson to assume a personal guaranty contract. See Ogilvie v. Ogilvie, 487 S.W.2d 40 (Mo.App.1972). We hold that standing alone it does not. Furthermore, the contract language imposing a personal obligation is inconsistent with the form of execution which positively interdicted Pierson's participation to his official corporate capacity and not as an individual. Such inconsistency creates at least a latent ambiguity which permits the admission of parol evidence to explain the true intent of the parties. Receivables Finance Corp. v. Hamilton, supra; Reifeiss v. Barnes, supra; Finch v. Heeb, 131 S.W.2d 146 (Mo.App.1939); Finch v. Heeb, 231 Mo.App. 591, 107 S.W.2d 962 (1937); Puget Sound Nat'l Bank v. Selivanoff, 9 Wash.App. 676, 514 P.2d 175 (1973); Brasher Motor and Finance Co. v. Anderson, 20 Utah 2d 104, 433 P.2d 608 (1967). See generally, Annot., 70 A.L.R.3d 1276 (1976).

Pierson has stressed the fact that he neglected to read the contract prior to its signing. The law is well settled that one who signs a contract is presumed to have known its contents and accepted its terms. Sanger v. Yellow Cab Co., Inc., 486 S.W.2d 477 (Mo.banc 1972); Wallach v. Joseph, 420 S.W.2d 289 (Mo.1967). Thus, Pierson's failure to examine the terms of the instrument would afford no defense to the corporation regarding its obligations under the contract, as his signature was sufficient to bind the corporation. Such neglect is a relevant circumstance, however, in ascertaining Pierson's intent to assume personal liability, as his personal signature appeared nowhere on the instrument. ² Without knowledge of the guaranty clause he could not have possessed the requisite intent to assume obligations under it. The record is destitute of any indication that Pierson was ever made aware of his potential personal liability under the "guaranty clause," and he steadfastly denied any such knowledge. Wired Music, Inc. drafted the contract, and its agents procured Pierson's corporate signature without explanation of or bargaining over its terms. Under these...