Park v. Stanford
2011 UT 41
Utah2011Background
- In 1994, Stanford and Buckway agreed Snowmass, L.C. would buy Parks' commercial property; Snowmass later substituted as purchaser.
- Stanford and Buckway as guarantors executed a personal guaranty limited to $500,000 on the Note; Snowmass was borrower.
- After amendments, notices of default could be sent to Stanford as guarantor; Buckway later ceased involvement and Stanford became sole member of Snowmass.
- Parks sued Stanford in 2002 to recover on his personal guaranty after Snowmass defaulted on the Note.
- Parks sought summary judgment arguing payments to the Parks were not to be credited toward Stanford’s guaranty.
- Stanford contended he paid over $750,000 as guarantor and intended those payments to satisfy the guaranty; he offered numerous notices and various checks as evidence.
- Court of Appeals adopted a rule requiring a prior agreement or contract to credit guaranty payments; the Utah Supreme Court granted certiorari to adopt a different rule.
- The Supreme Court adopts a reasonable-basis rule: a guarantor’s payments may be credited toward the guaranty if the recipient has a reasonable basis to know the payments were made in satisfaction of the guaranty; remands for record development.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether guarantor payments can be credited absent a prior agreement | Parks lack of agreement should not bar credit. | Stanford argues payments should be credited under practice or intent. | Reasonable-basis rule adopted; no preclusion by absence of agreement. |
| Whether genuine issues of material fact preclude summary judgment | Record shows notices, remitters, and post-suit payments suggest credit toward guaranty. | Record insufficient to prove reasonable basis; summary judgment appropriate. | Genuine issues of material fact exist; remand for record development. |
| What form of notice or remitter evidence suffices to show intent to pay guaranty | Past notices and remittance entries indicate intention to satisfy guaranty. | Ambiguity in remittance and notices; not clearly tied to guaranty. | Court adopts flexible, fact-based reasonable-basis test rather than rigid notice rule. |
Key Cases Cited
- Bayer v. Lugar, 106 A.D. 522, 94 N.Y.S. 802 (N.Y. 1905) (credit if creditor has knowledge payments are guarantor-contributed)
- Ivers & Pond Piano Co. v. Peckham, 29 Wis. 2d 364, 139 N.W.2d 57 (Wis. 1966) (credit when creditor knows source and purpose of payment)
- Warrior Constructors, Inc. v. Small Bus. Inv. Co. of Houston, 536 S.W.2d 382 (Tex.Civ.App.1976) (credit when creditor accepts payment knowing it originates from guarantor)
- Monmouth Plumbing Supply Co. v. McDonald, 106 N.J.L. 1, 147 A. 627 (N.J.1929) (discussion of notice to discharge guaranty; not always controlling)
- Lee v. Yano, 93 Hawai`i 142, 997 P.2d 68 (Haw.Ct.App.2000) (guarantor cannot necessarily control application absent guidance; inapplicable here)