84 Lumber Co. v. Smith
356 S.W.3d 380
| Tenn. | 2011Background
- 84 Lumber extended credit to Allstates Building Systems, LLC, with Allstates identified as the applicant and R. Bryan Smith as its president.
- The credit application included a clause above Smith's signature certifying his ownership/position and unconditional personal guaranty of the account.
- Smith signed as “R. Bryan Smith, President,” and 84 Lumber extended credit.
- The application also contained language stating that the signer personally guaranteed the credit and payments of any amounts due by Allstates.
- 84 Lumber sued Allstates and Smith; the trial court granted summary judgment against both; the Court of Appeals reversed, ruling Smith signed only in a representative capacity.
- The Tennessee Supreme Court held that the application’s language unambiguously bound Smith personally as a guarantor and reinstated the trial court’s judgment against him.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether the signature binds Smith personally. | 84 Lumber contends the guaranty language on the signature line shows clear intent to bind Smith personally. | Smith argues he signed only in a representative capacity and is not personally liable. | Yes; the contract language binds Smith personally. |
| Whether the contract’s language requires a second signature to bind personally. | 84 Lumber argues the explicit guaranty language suffices without a second signature. | Smith contends only a representative signature is present. | No second signature required; explicit guaranty language binds personally. |
| What is the proper interpretation standard for whether Smith is personally liable? | 84 Lumber relies on ordinary-meaning interpretation showing clear intent to bind personally. | Smith asserts contract should be read to reflect only representative capacity unless clearly stated otherwise. | Contract language unambiguous; Smith personally liable. |
Key Cases Cited
- Lazarov v. Klyce, 195 Tenn. 27, 255 S.W.2d 11 (1953) (clear intent controls capacity and personal liability)
- Dominion Bank of Middle Tenn. v. Crane, 843 S.W.2d 14 (Tenn. Ct. App. 1992) (representative signs may still be personally bound when intent is clear)
- Giles v. Allstate Ins. Co., 871 S.W.2d 154 (Tenn. Ct. App. 1993) (contractual read and binding effect on signer)
- Beasley v. Metro. Life Ins. Co., 229 S.W.2d 146 (1950) (signer presumed to read and be bound by contract)
- Planters Gin Co. v. Fed. Compress & Warehouse Co., 78 S.W.3d 885 (Tenn. 2002) (interpretation based on ordinary language and intent)
- Guiliano v. Cleo, Inc., 995 S.W.2d 88 (Tenn. 1999) (contract interpretation and intent analysis)
- Riser v. Wolfe, 353 S.W.3d 741 (Tenn. 2011) (contract interpretation framework and de novo review)