Piedmont Bank and Trust Co. v. Stevenson

339 S.E.2d 49 (1986)

PIEDMONT BANK AND TRUST COMPANY v. Obie STEVENSON and Shirley M. Stevenson.

No. 8522DC155.

Court of Appeals of North Carolina.

February 4, 1986.

*52 Clontz & Clontz by Ralph C. Clontz, III, Charlotte, for plaintiff-appellant.

Roger Lee Edwards, Mooresville, for defendant-appellee.

PARKER, Judge.

Plaintiff has brought forward three assignments of error, namely, the trial court's denial of its motion for summary judgment; the trial court's admission of parol evidence which contradicted the terms of the guaranty; and the trial court's granting of Mrs. Stevenson's motion for directed verdict and denial of plaintiff's motion at the close of plaintiff's evidence. We consider the issue raised by the third assignment of error first.

In an action on a contract, the intention of the parties to the contract must be determined from the language of the contract, the purpose and subject matter of the contract and the situation of the parties. Adder v. Holman & Moody, Inc., 288 N.C. 484, 219 S.E.2d 190 (1975). When the language of the contract is clear and unambiguous, construction of the agreement is a matter of law for the court. Brokers, Inc. v. High Point City Board of Education, 33 N.C.App. 24, 234 S.E.2d 56, disc. rev. denied, 293 N.C. 159, 236 S.E.2d 702 (1977), and the court cannot look beyond the terms of the contract to determine the intentions of the parties. Renfro v. Meacham, 50 N.C.App. 491, 274 S.E.2d 377 (1981). However, when there is ambiguity in the language used, the intent of the parties is a question for the jury and parol evidence is admissible to ascertain that intent. Root v. Allstate Insurance Co., 272 N.C. 580, 158 S.E.2d 829 (1968).

Whether or not the language of a contract is ambiguous or unambiguous is a question for the court to determine. Applying the rules of construction that words are to be given their usual and ordinary meaning and all the terms of the agreement are to be reconciled if possible, we find that the guaranty agreement in the instant case is not clear and unambiguous. Certain language such as "continuing unconditional guaranty" and "all Obligations of Customer" indicates that the guaranty was intended to cover future loans to Stevenson, but the phrase "arising hereunder" could be interpreted to limit the guaranty to loans given contemporaneously with the execution of the guaranty. The language "this Guaranty is being given in order to induce PB & T ... to purchase or discount Acceptances, Accounts, Chattel Paper, Checks, Contracts, Contract Rights ... or any other instruments of indebtedness ... upon which Customer is or may be liable...," is consistent with future advances or extension of a line of credit, but the limitation of the maximum amount of liability to exactly $5,642.67 implies an intention to guarantee only a single loan transaction. Limitations as to amount beyond which a guarantor will not be liable are held to indicate a continuing guaranty where that amount is left blank in the instrument, or where the amount is some arbitrary figure. See generally 38 Am.Jur.2d Guaranty § 25 (1968), and cases cited therein.

In the instant case, Mrs. Stevenson's defense raises two questions. First, was the guaranty intended to be a specific guaranty guaranteeing only the $5,642.67 loan or was it intended to be a continuing guaranty covering future loans. Second, was the Bank estopped by Mrs. Stevenson's conversation with Beaver and his response. If the answer to the first question is that the guaranty was a specific guaranty, that answer is outcome determinative, and the estoppel question need not be decided.

On a motion for directed verdict, the evidence must be viewed in the light most favorable to the party opposing the motion and the opponent is entitled to every reasonable inference which may be legitimately drawn from the evidence and all conflicts in the evidence resolved in favor of the opponent. Potts v. Burnette, 301 N.C. 663, 273 S.E.2d 285 (1981).

We are not unmindful of the rule that a contract is to be construed against the party drafting the document. Similarly, we recognize that there is authority that construction of contracts of adhesion, such *53 as the one at issue in this case, is for the court when the underlying facts are not in dispute. See 3 Corbin on Contracts §§ 554, 559 (C. Kaufman Supp.1984). However, our research discloses that in this jurisdiction, except in construing insurance contracts, our courts have submitted the question of intent in an ambiguous contract to the jury. As stated in Hite v. Aydlett, 192 N.C. 166, 170, 134 S.E. 419, 421 (1926):

`It is a well-established general rule that if the parties reduce their entire contract or agreement to writing, whether under seal or not, the court will not hear parol evidence to vary or change it, unless for fraud, mistake or the like; but ... if the writing itself leaves it doubtful or uncertain as to what the agreement was, parol evidence is competent, not to contradict, but to show and make certain what was the real agreement between the parties; and in such a case what was meant, is for the jury, under proper instructions from the court.' Davis, J., in Cumming v. Barber, 99 N.C., 332 [5 S.E. 903].

See also Root, supra; Silver v. Board of Transportation, 47 N.C.App. 261, 267 S.E.2d 49 (1980). In view of the foregoing, the question of the parties' intent, i.e., whether the guaranty covered only the one loan or future loans to Stevenson was for the jury. The directed verdict was, therefore, improvidently granted.

For purposes of the new trial, we note that with respect to the estoppel issue, the evidence as to whether Mrs. Stevenson had her conversation with Beaver before or after the loan at issue was made raised a question of fact for the jury. As our ruling on the third assignment of error has also disposed of plaintiff's arguments in its first and second assignments of error, these assignments are overruled.

New Trial.

BECTON, J., concurs in the result.

HEDRICK, C.J., dissents.

BECTON, Judge, concurring in the result.

Hesitantly, I concur in the result. Although the facts and equities tend to favor the defendant, it is not our task, considering the facts of this case, to determine the intent of the parties, to resolve the estoppel issue, or, in any way, to weigh the facts. Those matters are for a jury which may very well rule for the defendant.

HEDRICK, Chief Judge, dissenting.

This case was heard in the Court of Appeals on 23 September 1985. I received the majority opinion authored by Judge Parker and concurred in by Judge Becton on 30 January 1986. My analysis of the majority opinion together with the record in this case compels me to the conclusion that the directed verdict for the defendant Shirley Stevenson was proper. The guaranty agreement, bearing no date, in my opinion, clearly and unambiguously obligated the defendant to pay only $5,642.67, the amount of the indebtedness written into the agreement. Furthermore, I believe that the evidence that the defendant obtained from the bank manager the amount due on all of her husband's notes and obligations, borrowed that amount of money from the bank, secured that obligation on a second deed of trust on her home and paid all of her husband's obligations, such evidence being uncontroverted and said facts being admitted by the bank's manager, is sufficient to discharge the defendant from any obligations under the "so called" guaranty agreement. It is inconceivable to me that the bank is not estopped to collect more from this defendant as a matter of law.

I vote to affirm.