Braunger Foods v. Sears
286 Neb. 29
| Neb. | 2013Background
- Braunger Foods sold Hungry's North on open account since 2004; Hungry's later placed on cash-on-delivery status due to delinquencies.
- Sears, owner of Hungry's, signed a guaranty promising to personally pay all Hungry's debts to Braunger Foods; guaranty labeled personal, with some corporate designations informational.
- District court awarded Hungry's unpaid invoices plus interest, totaling $82,307.26, but found the guaranty unenforceable because the credit application was incomplete and lacked Braunger Foods' representative signature.
- Court of Appeals affirmed; Braunger Foods sought further review, arguing the guaranty was enforceable independent of the incomplete credit application.
- Nebraska Supreme Court held the guaranty was complete and enforceable against Sears for all indebtedness Hungry's owed Braunger Foods, independent of the credit application’s completeness.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Is the guaranty enforceable against Sears despite an incomplete credit application? | Braunger Foods contends the guaranty is a separate, complete contract. | Sears asserts the guaranty is unenforceable due to incompleteness of the credit application. | Yes; guaranty enforceable against Sears. |
| Does missing Braunger Foods representative signature defeat the guaranty? | Guaranty stands independently and requires only Sears's signature. | Signature omission by Braunger Foods could impair enforceability. | No; not fatal; guaranty valid with Sears's signature alone. |
| Does guaranty apply only to debt under the terms of the credit application? | Guaranty covers all indebtedness Hungry's incurred to Braunger Foods. | Guaranty limited to terms actually approved in the application. | No; guaranty applies to all indebtedness. |
| Should the contract's terms be construed with the rest of the credit application? | Guaranty should be read as a standalone instrument. | Guaranty interpretation should reflect cross-references to the application. | Guaranty is independent and enforceable on its own terms. |
| Did the Court of Appeals err in its treatment of the guaranty? | Court of Appeals wrongly held the guaranty unenforceable. | Court of Appeals correctly applied contract principles. | Court of Appeals erred; guaranty is enforceable and remand appropriate. |
Key Cases Cited
- Builders Supply Co. v. Czerwinski, 275 Neb. 622 (Nebraska 2008) (guaranty interpreted under general contract rules; independent of other instruments)
- First Nat. Bank of Unadilla v. Betts, 275 Neb. 665 (Nebraska 2008) (guaranty liability defined as payment upon default of principal)
- McCully, Inc. v. Baccaro Ranch, 284 Neb. 160 (Nebraska 2012) (contract terms to be construed by plain meaning; independent analyses of terms)
- Bedore v. Ranch Oil Co., 282 Neb. 553 (Nebraska 2011) (meaning of contract terms; appellate independent review of law)
- National Bank of Commerce Trust & Sav. Assn. v. Katleman, 201 Neb. 165 (Nebraska 1978) (guaranty as independent undertaking; effect of its terms)
- Gerhold Concrete Co. v. St. Paul Fire & Marine Ins., 269 Neb. 692 (Nebraska 2005) (contract and guaranty principles; independent enforceability)