735 S.E.2d 559
W. Va.2012Background
- Beverly and Thompson were co-guarantors on a March 24, 2001 bank loan for B & T Services, Inc. (Precision Automotive); respondents paid $48,161.88 from personal funds.
- Beverly never owned stock; Sue owned 50 shares and, after divorce, the stock transfer back to the corporation did not occur.
- The corporation failed; assets were liquidated, and taxes were owed; some prior loans were repaid.
- The circuit court held Beverly liable for half of the respondents’ payments ($24,080.94) as a co-guarantor; Sue’s claim was dismissed.
- The WV Supreme Court reviewed a denial of Beverly’s motion for new trial; the court affirmed, relying on equity principles in contribution.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Can a non-defaulted guarantor seek contribution from a co-guarantor? | Thompson: Beverly’s involvement and joint guaranty justify contribution. | Beverly: no contribution without principal default and a judgment on the contract. | Yes; contribution available despite no default and no judgment on the contract. |
| What is Beverly’s proper contribution share among three guarantors? | Thompson: unequal benefits justify half-share against Beverly. | Beverly: should be one-third of $48,161.88. | Court upheld half-share (1/2) as permissible under discretion. |
| Does equity permit contribution against a non-shareholding guarantor? | Thompson: equity supports contribution among co-guarantors. | Beverly: equity cannot rewrite guaranty absent default. | Equity supports Beverly’s contribution obligation. |
Key Cases Cited
- Public Citizen, Inc. v. First National Bank in Fairmont, 198 W.Va. 329, 480 S.E.2d 538 (1996) (two-pronged standard for bench-trial reviews; abuse of discretion and clearly erroneous findings; de novo legal questions)
- Heitz v. Clovis, 213 W.Va. 197, 578 S.E.2d 391 (2003) (standard of review for bench-trial rulings; de novo on questions of law)
- Waddy v. Riggleman, 216 W.Va. 250, 606 S.E.2d 222 (2004) (appellate review of judgments following bench trial)
- Tennant v. Marion Health Care Foundation, Inc., 194 W.Va. 97, 459 S.E.2d 374 (1995) (abuse of discretion standard; underlying factual findings reviewed for clear error; de novo on questions of law)
- Stevenson v. Independence Coal Company, Inc., 227 W.Va. 368, 709 S.E.2d 723 (2011) (same standard of review as Tennant)
- Sanders v. Roselawn Memorial Gardens, 152 W.Va. 91, 159 S.E.2d 784 (1968) (corporate form piercing and equitable considerations)
- Bayliss v. Lee, 173 W.Va. 299, 315 S.E.2d 406 (1984) (contribution where two parties co-obligors; equity-based recovery)
- McKown v. Silver, 99 W.Va. 78, 128 S.E. 134 (1925) (contribution right where payor discharges joint obligation)
- Sydenstricker v. Unipunch Products, Inc., 169 W.Va. 440, 288 S.E.2d 511 (1982) (doctrine of contribution rooted in equity)
- Parker v. Knowlton Construction Company, 158 W.Va. 314, 210 S.E.2d 918 (1975) (sound-discretion limits on contribution awards)