Material Partnerships, Inc. v. Ventura, Jorge Lopez ( 2003 )

Reversed in part, and Rendered and Majority and Concurring Opinions filed March 6, 2003

  

Reversed in part, and Rendered and Majority and Concurring Opinions filed March   6, 2003.

In The

Fourteenth Court of Appeals

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NO. 14-01-01068-CV

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MATERIAL PARTNERSHIPS, INC., Appellant

V.

JORGE LOPEZ VENTURA, Appellee

On Appeal from the 55th District Court

Harris County, Texas

Trial Court Cause No. 99-35432

C O N C U R R I N G   O P I N I O N

I respectfully concur in the court=s disposition of the case.  I write separately to address the first and third issues raised by appellant Material Partnerships, Inc. (AMPI@) challenging the judgment in favor of appellee Jorge Lopez Ventura (ALopez@).

The court correctly finds, as to MPI=s first issue, that the language of the September 25th letter is unambiguous and creates personal liability for Lopez as guarantor of the debt of his employer, Sacos Tubalares del Centro, S.A. de C. V. (ASacos@). The reason this finding is correct is that any other interpretation or construction would render the agreement meaningless.

MPI claims the September 25th letter from Lopez creates an individual obligation for Lopez to pay Sacos=s debt because he Apersonally guaranteed@ it. Lopez characterizes the letter as a Acorporate guaranty@^[1] and claims it is ambiguous because he signed it in his representative capacity C as AGeneral Manager@ of Sacos. 

In construing agreements, courts must examine and consider the entire writing in an effort to harmonize and give effect to all the provisions of the contract so that none of the provisions will be rendered meaningless.  Coker v. Coker, 650 S.W.2d 391, 393 (Tex. 1983).  If this court adopted Lopez=s construction of the September 25th letter, the agreement would be meaningless.  It simply makes no sense for Sacos to be both the account debtor and the Acorporate guarantor@ because a guarantor is one who stands for the debt of another. MPI would have no reason to request or obtain a guaranty from Sacos for Sacos=s own debt.  Thus, if we were to hold that the September 25th letter did not create an individual obligation for Lopez, then we would have to hold that it did not create an obligation at all.  See, e.g.,  American Petrofina Co. of Tex. v. Bryan, 519 S.W.2d 484, 486B87 (Tex. Civ. App.CEl Paso 1975, no writ) (holding that letter C signed by officers with their corporate office shown under signature C clearly intended guaranty of corporate debt and if court were to hold that letter was not personal guaranty by the officers in their individual capacities, then court would have to hold that letter created no obligation, contrary to intent of language in letter).  We must avoid any construction that would render the agreement meaningless or negate the purpose of the guaranty.  See Coker, 650 S.W.2d at 393. Holding that Lopez signed in his individual capacity is the only construction that gives the September 25th letter meaning.  See Austin Hardwoods, Inc. v. Vanden Berghe, 917 S.W.2d 320, 322B23 (Tex. App.CEl Paso 1995, no writ); Eubank v. First Nat. Bank of Bellville, 814 S.W.2d 130, 133 (Tex. App.CCorpus Christi 1991, no writ); Dann v. Team Bank, 788 S.W.2d 182, 183B84 (Tex. App.CDallas 1990, no writ);  American Petrofina Co. of Tex., 519 S.W.2d at 486B87; see also Roy v. Davidson Equip., Inc., 423 So.2d 496, 497 (Fla. Dist. Ct. App. 1982).

Though Lopez claims the letter was intended to serve only as an acknowledgment that Sacos accepted the transactions and obligation to pay, the words he chose did not convey that meaning. In both legal terminology and common usage, the verb Aguaranty@ means to answer for the payment of a debt of another.  See Southwest Sav. Ass=n v. Dunagan, 392 S.W.2d 761, 766 (Tex. Civ. App.CCorpus Christi 1965, writ ref=d n.r.e.) (stating that a guaranty is a promise of one person to perform an act of the same kind as another person is contractually bound to the promisee to perform, or a promise to pay compensation for the other=s nonperformance, the promise being conditioned on the latter=s nonfulfillment of his duty); Webster=s Third New International Dictionary 1007 (1993 ed.) (defining the verb guaranty as Ato . . . undertake to answer for the debt, default, or miscarriage of [another]: become responsible for the fulfillment of [the agreement of another]@). By adding the modifier Apersonally@ to that verb, Lopez took that obligation on himself.  He effectively removed his hat as AGeneral Manager@ of Sacos and individually undertook to answer for the debt of the corporation.  The words Apersonally guaranty,@ when used in combination and in reference to outstanding debt, are not susceptible of any other meaning.^[2]  See Austin Hardwoods, Inc., 917 S.W.2d at 322B23; Eubank, 814 S.W.2d at 133; Dann, 788 S.W.2d at 183B84; American Petrofina Co. of Tex., 519 S.W.2d at 486B87.  Therefore, the September 25th letter is not ambiguous, and this court correctly construes it as a personal guaranty by Lopez as a matter of law. See Coker, 650 S.W.2d at 393. 

In response to MPI=s third issue, Lopez claims the guaranty is unenforceable because it is missing Aessential terms,@ such as the time of payment, the necessity of first making demand on Sacos, and whether there is joint and several liability. The majority observes that Lopez provides no case law to support his claim that these terms are essential to the formation of a guaranty agreement.  The failure of the parties to explicitly address these issues in the September 25th letter does not render the guaranty unenforceable because the common law fills in the gaps when parties fail to address these issues in a guaranty agreement.  See Ford v. Darwin, 767 S.W.2d 851, 854B55 (Tex. App.CDallas 1989, writ denied); Houston Furniture Distribs., Inc. v. Bank of Woodlake, N.A., 562 S.W.2d 880, 884 (Tex. Civ. App.CHouston [1st Dist.] 1978, no writ).  The right of recovery against an absolute guarantor depends upon the condition that the principal obligor has defaulted in the performance of his duty.  A guarantor=s liability on a debt is measured by the principal=s liability unless a more extensive or more limited liability is expressly set forth in the guaranty agreement.  Houston Furniture Distrib., Inc., 562 S.W.2d at 884.  

Our jurisprudence has long recognized a distinction between a Aguaranty of payment@ and a Aguaranty of collection.@ See Ford, 767 S.W.2d at 854.  The former is the equivalent of the term Aabsolute guaranty@ in reference to the payment of a debt and the guarantor can be sued without joining the principal debtor.  See id. A Aguaranty of collection@ is an undertaking by the guarantor to pay the promisee if the debt cannot be collected by the use of reasonable diligence to collect the debt from the principal obligor.  See id.  Unless the guaranty agreement specifies otherwise, a guaranty is deemed a guaranty of payment, which means the guarantor is jointly and severally liable on the debt and may be sued under the same terms as the principal obligor.  See Cox v. Lerman, 949 S.W.2d 527, 530 (Tex. App.CHouston [14th Dist.] 1997, no pet.); Ford, 767 S.W.2d at 854B55; Houston Furniture Distribs., Inc., 562 S.W.2d at 884B85; see also Tex. Bus. & Com. Code ' 3.419.  Even though the September 25th letter is silent on the issue, under common-law principles,  it constitutes a guaranty of payment by Lopez.  See Cox, 949 S.W.2d at 530; Ford, 767 S.W.2d at 854B55; Houston Furniture Distribs., Inc., 562 S.W.2d at 884B85.  Therefore, the trial court should have held Lopez jointly and severally liable as a guarantor of payment for  Sacos=s debt to MPI.  Because the trial court failed to do so, its judgment in favor of Lopez must be reversed and judgment rendered in favor of MPI.

/s/        Kem Thompson Frost

Justice

Judgment rendered and Majority and Concurring Opinions filed March 6, 2003.

Panel consists of Justices Yates, Anderson, and Frost.

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^[1]  Lopez=s characterization of the September 25th letter as a Acorporate guaranty@ of Sacos is a non sequitur in this factual context.  The only way there could be a corporate guaranty of the Sacos debt is if another corporation had guaranteed the debt.

^[2]  While the majority is correct in noting that section 3.402 of the Texas Business and Commerce Code applies only to negotiable instruments and thus does not apply to the September 25th letter, the common law principles on which that statute is based are applicable to guaranty agreements. See Lassiter v. Rotogravure Committee, Inc., 727 S.W.2d 8, 9B10 (Tex. App.CDallas 1986, writ ref=d n.r.e.) (stating section 3.403 [predecessor statute to current section 3.402] of the Texas Business and Commerce Code reflects common law principles of agency); Byrd v. Southwest Multi‑Copy Inc., 693 S.W.2d 704, 706 (Tex. App.CHouston [14th Dist.] 1985, no writ) (noting Athe general scheme of Sec. 3.403 [predecessor statute to current section 3.402] follows the common law as applied to negotiable and non‑negotiable instruments@).  Under these principles, however, the letter, as worded, is unambiguously a personal guaranty by Lopez.