BUILDERS KITCHEN AND SUPPLY CO., Plaintiff-Appellee, vs. FRANK MOYER, Defendant-Appellant.
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IN THE COURT OF APPEALS OF IOWA
No. 9-655 / 09-0194
Filed September 2, 2009
BUILDERS KITCHEN AND SUPPLY CO.,
Plaintiff-Appellee,
vs.
FRANK MOYER,
Defendant-Appellant.
________________________________________________________________
Appeal from the Iowa District Court for Polk County, Eliza J. Ovrom,
Judge.
Frank Moyer appeals from the district court’s order granting summary
judgment to Builders Kitchen and Supply Co. and holding Moyer personally liable
as a guarantor. AFFIRMED.
David Wetsch and Timothy Van Vliet, Des Moines, for appellant.
Louis Hockenberg, West Des Moines, for appellee.
Considered by Vaitheswaran, P.J., Mansfield, J., and Zimmer, S.J.*
*Senior judge assigned by order pursuant to Iowa Code section 602.9206 (2009).
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MANSFIELD, J.
This case presents the question whether a company’s application for
credit, which includes a clause that the signer “personally guarantee[s]” payment,
can be used to hold the signer personally liable for the company’s debts even
though the signer included his corporate title when signing the form. We agree
with the district court’s ruling that the signer is personally liable under these
circumstances, and therefore affirm its grant of summary judgment.
I. Background Facts and Proceedings.
The relevant facts are undisputed. On July 17, 1998, Builders Kitchen &
Supply Co. (Builders) presented its form “Application for Credit” to Frank Moyer,
President of Crystal Creek Development Company (Crystal Creek).
The application form consisted of two pages. The first page had Builders’
name, address, and phone number printed and centered at the top. Beneath that
appeared the title, “Application for Credit.” The form then included blanks where
the name and address of the business requesting credit could be filled in.
Additional blanks were provided for the names, addresses, and phone numbers
of the business’s “owners, officers, or partners,” the names, addresses, and
phone numbers of the business’s “trade references,” and the bank and checking
account number for the business.
The form also requested the “Type of
Business” to be checked as either “Individual,” “Partnership,” or “Corporation.”
The second page was titled “Terms of Sale” and provided:
The information provided is true to the best of my
knowledge. I/we hereby authorize Builders Kitchen & Supply Co. to
investigate my credit record and references.
All accounts are due in full the 10th of the month following
purchase. I/we agree to pay a finance charge on our account that
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is 30 days past due. The finance charge is computed at a periodic
rate of 1 ½ % per month or an annual percentage rate of 18%.
In consideration of extension of credit by Builders Kitchen &
Supply Co., I hereby personally guarantee to pay on demand any
and all sums due that my/our company shall fail to pay.
If account becomes more than 5 days past due, a prelien
notice will be sent.
Spaces for two signatures followed this text.
On the first page, Moyer filled in “Crystal Creek Development” as the
name of the business. He also provided Crystal Creek’s address. However,
Moyer did not complete any other parts of the form. In particular, Moyer did not
indicate whether Crystal Creek was a proprietorship, a partnership, or a
corporation. Crystal Creek is, in fact, an Iowa corporation.
On the second page, Moyer signed the form once as “Frank Moyer. Pres.”
That was the only signature on the two-page agreement.
Pursuant to this agreement, during 2008, Builders provided and installed
kitchen cabinets and countertops in eight separate properties for Crystal Creek.
However, Crystal Creek failed to pay the sums owed to Builders. On October 31,
2008, Builders filed suit naming Crystal Creek and Frank Moyer, personally, as
defendants.
Builders moved for summary judgment against both defendants. Crystal
Creek did not dispute its liability. Moyer, however, resisted summary judgment,
asserting he was not personally liable. He maintained that the credit application
was signed only in his capacity as a representative of Crystal Creek, not in his
individual capacity.
On January 16, 2009, the district court granted summary judgment in favor
of Builders and against both Crystal Creek and Moyer. As Crystal Creek did not
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contest liability, the only issue was whether Moyer was personally liable. The
district court found the contract was not ambiguous and thus, extrinsic evidence
was not relevant to its interpretation. The court further found:
The agreement clearly states that Moyer personally guarantees any
money his company fails to pay. If the court were to accept
Moyer’s argument that he signed only in his capacity as president
of [Crystal Creek], it would negate the language in the agreement.
Consequently, the district court entered summary judgment against Moyer as
well. Moyer appeals.
II. Analysis.
We review a district court’s grant of summary judgment for correction of
errors at law.
Iowa R. App. P. 6.907 (2009).
Summary judgment shall be
granted when the entire record demonstrates there is no genuine issue as to any
material fact and the moving party is entitled to judgment as a matter of law.
Iowa R. Civ. P. 1.981(3); Kragnes v. City of Des Moines, 714 N.W.2d 632, 637
(Iowa 2006). The moving party bears the burden to establish there is no genuine
issue of material fact, and the facts must be viewed in the light most favorable to
the moving party. Crippen v. City of Cedar Rapids, 618 N.W.2d 562, 565 (Iowa
2000).
The district court found the agreement in question was unambiguous.
Furthermore, both parties take the position that the agreement is unambiguous.
They just disagree as to what it says. “[T]he construction of an unambiguous
written agreement is ordinarily a question of law for a court . . . .” Daggett v.
Nebraska-Eastern Express, Inc., 107 N.W.2d 102, 108 (Iowa 1961).
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Even if the “Application for Credit” were ambiguous, we believe the issue
before us would be for the court to decide. In the present case, there is no
helpful extrinsic evidence to consider. Each party submitted its own affidavit as
to what it subjectively “intended” back in 1998. However, neither party relies on
any facts and circumstances to aid in interpreting the contract, apart from the
document itself.
When the parties disagree as to the meaning of contractual terms and
there is no extrinsic evidence, the construction and interpretation of the contract
are questions of law for the court. Swainston v. Am. Family Mut. Ins. Co., ___
N.W.2d ___, ___ (Iowa 2009); see Restatement (Second) Contracts § 212, at
125 (1981) (stating that if there is no extrinsic evidence, “a question of
interpretation of an integrated agreement is to be determined as a question of
law”).
Against this backdrop, we review the district court’s decision that the
contract imposed personal liability on Moyer.
Generally, when an agent or
corporate officer contracts with a third party on behalf of a corporation, the agent
or corporate officer has no liability. See Kuehl v. Freeman Bros. Agency, Inc.,
521 N.W.2d 714, 720 (Iowa 1994) (“[I]f the name of the principal and the relation
of agency be stated in the writing, and the agent is authorized to make the
contract or obligation, the principal alone is bound, unless the intention is clearly
expressed to bind the agent personally.”). However, personal liability is imposed
if the parties expressly agree the agent or corporate officer shall be personally
liable.
Id.; see also 6 Mathew G. Dore, Iowa Practice Series, Business
Organizations § 29:17, at 173 (2008) (“[A] corporate representative may be held
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personally liable on a corporate contract if he signs it in other than a
representative capacity.”); Restatement (Third) Agency § 6.01, at 3 (2006)
(“When an agent acting with actual or apparent authority makes a contract on
behalf of a disclosed principal . . . the agent is not a party to the contract unless
the agent and third party agree otherwise.”).
We turn to the language of the contract to determine whether the parties
intended to impose personal liability on Moyer. The relevant term provides, “In
consideration of extension of credit by Builders Kitchen & Supply Co., I hereby
personally guarantee to pay on demand any and all sums due that my/our
company shall fail to pay.” This term clearly states that Moyer agrees to be
personally liable if Crystal Creek fails to pay. Moyer argues that because he
included the designation of president following his name, he cannot be personally
liable. We disagree. Where a contract term imposes personal liability, one is not
relieved of this liability simply by including a designation following his or her
signature. See Moody v. Schloss & Kahn, Inc., 600 So.2d 1045, 1046-47 (Ala.
Civ. App. 1992) (holding that where a contract contained a personal guarantee
provision, a defendant was personally liable where he signed the contract and
included the designation of president following his signature); Beck v. Haines
Terminal & Highway Co., 843 P.2d 1229, 1231 (Alaska 1992) (same).
Moyer argues that this case is different because one signature is being
asked to fulfill two roles.
Moyer must have signed the agreement in a
representative capacity on behalf of Crystal Creek.
After all, it was Crystal
Creek’s credit application. How, Moyer wonders, can the same signature also be
deemed to have been made in his individual capacity?
Moyer notes that in
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Kessel v. Murray, 196 N.W. 591 (Iowa 1924), the defendant signed a personal
guarantee as “Director, Iowa Oil & Gas Co.,” and was found personally liable, but
there was a separate signature elsewhere in the document binding the
corporation.
However, Robert C. Malt & Co. v. Carpet World Distributors, Inc., 763
So.2d 508, 510-11 (Fla. Dist. Ct. App. 2000), cited by the district court, presents
the same fact pattern as this case. There, the individual defendant signed a
lease (once). The signature included the full name of the corporation, including
the words “Inc.,” and his title and role with that corporation. Nevertheless, the
appellate court held the individual defendant was personally liable on the
personal guarantee clause in the contract. As the court explained:
Susco appears to have signed a writing containing a guaranty
provision. Although Susco’s signature appears to be in his
representative capacity only, that single signature, when
considered with the language of paragraph nine, is sufficient to
enforce the guaranty provision against him in his personal capacity.
Robert C. Malt & Co., 763 So.2d at 510. We agree with that reasoning. In this
case the “Application for Credit” expressly bound Moyer in both his
representative and his individual capacities. Moyer does not claim he failed to
see the personal guarantee language, which was in close proximity to his
signature, or that he was told to disregard it.
Furthermore, as the district court stated, “If the court were to accept
Moyer’s argument that he signed only in his capacity as president of Crystal
Creek Development Co., it would negate this language in the agreement.” See
Kerndt v. Rolling Hills Nat’l Bank, 558 N.W.2d 410, 416 (Iowa 1997) (stating an
interpretation that gives a reasonable meaning to all terms is preferred to one
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that renders a term superfluous or of no effect); see also Robert C. Malt & Co.,
763 So.2d at 510-11 (“It would nullify the specific language of paragraph nine to
conclude that the Plaintiff could not, as a matter of law, enforce the obligations of
paragraph nine against Susco in his personal capacity.”).
The recent Restatement (Third) of Agency (2006) also approves this
result. In section 6.01, the drafters provided the following illustration based on
Robert C. Malt:
14. A, the president of P Corporation, executes a lease on behalf of
P Corporation as lessee with T as lessor. The body of the
agreement states that “in the event the net worth of P Corporation
is reduced in excess of ten percent, it is agreed that A shall
guarantee P Corporation’s obligations hereunder to the extent of
the shortfall.” The lease is signed “P Corporation, by A, President.”
A is individually liable as a guarantor to the extent of the shortfall.
Although A’s signature indicates that A signs in a representative
capacity only, limiting the effect of A’s signature would nullify the
effect of the language in the body of the lease stating that A
individually guarantees P Corporation’s net worth.
See Restatement (Third) of Agency § 6.01 illust. 14, at 14, 27 (2006).
Finally, the present case is, if anything, an easier case for personal liability
than Robert C. Malt. The “Application for Credit,” on its face, does not even
indicate Crystal Creek was a corporation.
Moyer now seeks to assert a
corporate shield for an entity whose corporate-ness he did not disclose on the
“Application for Credit” back in 1998.
For the foregoing reasons, we affirm the well-reasoned judgment of district
court.
AFFIRMED.
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