INTERN. HARVESTER CREDIT CORP. v. Bowman

316 S.E.2d 619 (1984)

INTERNATIONAL HARVESTER CREDIT CORPORATION v. Harold Roscoe BOWMAN and Barbara J. Bowman.

No. 8326SC856.

Court of Appeals of North Carolina.

June 19, 1984.

*620 C. Eugene McCartha, Charlotte, for plaintiff, appellee.

White & Crumpler by David R. Crawford, Winston-Salem, for defendants, appellants.

HEDRICK, Judge.

We note at the outset that defendants' appeal is from an order "which adjudicates fewer than all the claims or the rights and liabilities of fewer than all the parties" and is thus premature. N.C.Gen.Stat. Sec. 1A-1, Rule 54(b), North Carolina Rules of Civil Procedure. Nevertheless, we choose to exercise our discretion to pass on the merits of defendants' appeal.

The thrust of defendants' argument on appeal is that summary judgment was inappropriate *621 because of the existence of "multiple genuine issues of material fact" raised by the pleadings and supporting documents considered by the trial judge. We will examine each of these alleged "genuine issues" in turn.

Defendants first contend that a genuine issue exists as to whether their execution of the guaranty was procured by the fraudulent acts of plaintiff's agent, and whether "plaintiff breached a duty ... to reveal the material terms of the guaranty." In support of this argument, defendants contend that their subjective understanding of the guaranty was that their obligations extended only to the purchase of one truck, and not to all subsequent purchases made by B & A Transport. They further contend that they communicated this understanding to plaintiff's agent, who assured them that this was accurate. Finally, defendants point to the failure of plaintiff's agent to point out to them provisions of the guaranty directly contrary to this alleged misrepresentation.

We find defendants' argument in this regard entirely unpersuasive. The clear language of the guaranty, which defendants are presumed to have read and which defendants signed, in pertinent part provides:

The Undersigned, for a valuable consideration the receipt of which is hereby acknowledged, hereby guarantees payment, at maturity, of any and all indebtedness or obligations, whether primary or secondary, for which B & A Transport Co., Inc., of Mt. Airy, County of Surry and State of North Carolina, is now or may hereafter become liable or indebted to International Harvester Company or International Harvester Credit Corporation.

(emphasis added).

A person who executes a written instrument is ordinarily charged with knowledge of its contents, Mills v. Lynch, 259 N.C. 359, 130 S.E.2d 541 (1963), and may not base an action for fraud on ignorance of the legal effect of its provisions, Pierce v. Bierman, 202 N.C. 275, 162 S.E. 566 (1932). While these rules do not apply to situations in which the person making the misrepresentations stands in a fiduciary relationship to the signing party, Vail v. Vail, 233 N.C. 109, 63 S.E.2d 202 (1951), the relationship between a creditor and a guarantor is not such a relationship. In short, we hold that defendants' reliance, if any, on alleged misrepresentations made by plaintiff's agent was unreasonable as a matter of law. We further hold that plaintiff's agent had no duty to "disclose" to defendants the clear terms of the guaranty. The case relied on by defendants in support of their contention to the contrary involved a situation in which a creditor was allegedly aware of some fact that materially increased the guarantor's risk and which the creditor knew the guarantor probably would not discover. See Trust Co. v. Akelaitis, 25 N.C.App. 522, 214 S.E.2d 281 (1975). The principles set out in this case have no application to the facts here presented.

Defendants next contend that a genuine issue is presented as to whether the guaranty was supported by valid consideration. In this regard defendants make much of the fact that plaintiff had extended credit to B & A Transport prior to their execution of the guaranty. Because plaintiff's extension of credit was independent of the guaranty, defendants argue, the guaranty was without consideration and was thus unenforceable.

It is true, as defendants assert, that a guaranty executed independently of the main debt must be supported by independent consideration. Supply Co. v. Dudney, 56 N.C.App. 622, 289 S.E.2d 600 (1982). We do not agree, however, that the record discloses a genuine issue of material fact as to the existence of such independent consideration in the instant case. This Court has said that a guaranty of future as well as present indebtedness is supported by adequate consideration, Gillespie v. DeWitt, 53 N.C.App. 252, 280 S.E.2d 736, disc. rev. denied, 304 N.C. 390, 285 S.E.2d 832 (1981). We find Gillespie controlling on the facts before us, where the guaranty *622 extends to all obligations for which B & A Transport "is now or may hereafter become liable." We note in further support of our ruling that plaintiff in fact extended credit to B & A Transport on several occasions after defendants' execution of the guaranty.

Defendants also argue that summary judgment was improper because the amount of their obligation under the guaranty was in dispute. In support of this contention defendants set forth a number of allegations going to the sale of the collateral for the debts that they guaranteed. Specifically, defendants complain that they had no notice of the sale and that the sale was negligently conducted and was thus commercially unreasonable.

We find defendants' argument to be without merit for several reasons. First, we note that the sale of the collateral securing B & A Transport's debt was conducted pursuant to order of the United States Bankruptcy Court. Secondly, we note that defendants have, aside from general allegations, identified no specific flaw or defect in the manner in which the sales were carried out. Next, we note that the actual deficiency yielded by the sale was more than twice the amount awarded by the Bankruptcy Court as a deficiency allowance. Finally, we point out the language of the guaranty:

The Undersigned also agrees that the written acknowledgment of the debtor or the judgment of any court establishing the amount due from the debtor shall be conclusive and binding on the Undersigned....

In regard to defendants' argument that they were entitled to notice of the sale, we point out that defendants have found neither case nor statute in this State that supports their position. Furthermore, we turn once again to the clear language of the contractual agreement entered into by the parties:

The Undersigned hereby waives notice of the acceptance of this guaranty, notice of any and all indebtedness or obligations now existing or which may hereafter exist, notice of default of payment, demand and diligence, and all other notices of any kind whatsoever.

(emphasis added).

Our disposition of this case makes a discussion of defendants' remaining assignment of error unnecessary.

Affirmed.

ARNOLD and PHILLIPS, JJ., concur.