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507 S.W.3d 183
Tenn.
2016
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Background

  • Landlord (MLG) and Tenant (Mobile Master Manufacturing LLC) executed a commercial lease dated October 1, 2007; the Lease included paragraph 37: a clear personal-liability clause stating Richard L. Johnson “hereby agrees that he shall be personally liable for all of Tenant’s obligations.”
  • The signature block on the same page contained three signature lines: landlord (Michael L. Griffith), tenant (Richard L. Johnson, signed “By: … (C.E.O.)”), and a separate line signed “Richard L. Johnson” followed by the handwriting “for Mobile Master Mfg. LLC.”
  • Landlord sued the Tenant and Johnson after the tenant vacated the premises; Landlord obtained default judgment against the tenant and proceeded against Johnson for breach of the guaranty provision.
  • The trial court granted an involuntary dismissal as to Johnson, finding his second signature (followed by the word “for” and the company name) was representative only; the Court of Appeals affirmed (majority), with a dissent.
  • The Tennessee Supreme Court granted review to decide whether Johnson’s second signature, in context, bound him personally despite the handwritten “for Mobile Master Mfg. LLC,” and reversed: the Court held the second signature bound Johnson personally under paragraph 37.

Issues

Issue Plaintiff's Argument Defendant's Argument Held
Whether Johnson’s second signature bound him personally as guarantor Paragraph 37 unambiguously made Johnson personally liable; his second signature immediately after that provision effectuated the guaranty despite any handwritten notation The second signature followed by “for Mobile Master Mfg. LLC” presumed a representative signature and the presumption was unrebutted The Court held the second signature bound Johnson personally; the handwritten “for …” did not override the explicit guaranty clause

Key Cases Cited

  • 84 Lumber Co. v. Smith, 356 S.W.3d 380 (Tenn. 2011) (an individual who signs may be personally bound where contract language unambiguously creates a personal guaranty despite representative-form signature)
  • Cone Oil Co. v. Green, 669 S.W.2d 662 (Tenn. Ct. App. 1983) (recognizes a presumption that corporate officers who sign with indicia like "by" or "per" sign in representative capacity)
  • Lazarov v. Klyce, 255 S.W.2d 11 (Tenn. 1953) (party’s capacity—individual or representative—must be determined from the contract itself)
  • Standard Meat Co. v. Taco Kid of Springfield, Inc., 554 S.W.2d 592 (Mo. Ct. App. 1977) (construing a guaranty as the corporation’s own guaranty would be redundant and absurd)
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Case Details

Case Name: MLG Enterprises, LLC v. Richard Johnson
Court Name: Tennessee Supreme Court
Date Published: Sep 2, 2016
Citations: 507 S.W.3d 183; 2016 WL 4582174; 2016 Tenn. LEXIS 629; M2014-01205-SC-R11-CV
Docket Number: M2014-01205-SC-R11-CV
Court Abbreviation: Tenn.
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    MLG Enterprises, LLC v. Richard Johnson, 507 S.W.3d 183