Defendant (Frank Scozzafave) appeals from judgments finding him liable, as the personal guarantor of a lease, for breach of the lease contract. We affirm.
This appeal arises from the interpretation of a lease signed 12 November 1997. The first sentence of the lease states:
This lease agreement, made and entered into this the 12th of November, 1997, by and between Tripps Restaurants of North Carolina, . . . hereinafter called the “Lessor,” and Showtime Enterprises, . . . hereinafter called the “Lessee” and Frank Scozzafave . . . and Michael A. Scozzafave . . . hereinafter called the “Guarantors.”
The text of the lease follows this introductory sentence, setting out the obligations of the lessor and lessee. At the conclusion of the lease are the signatures of the parties. Defendant signed on the line labeled “guarantor.”
On 22 May 2001 plaintiff filed suit against defendants Showtime Enterprises, Inc., Dueling Pianos of North Carolina, Inc., 1 Frank Scozzafave, and Michael Scozzafave. The complaint alleged that the defendants had defaulted on the terms of the lease by failing to pay rent, property taxes, or insurance, and that they were liable for payment of back rent, taxes, insurance, and attorney’s fees. Plaintiff also alleged that defendant Frank Scozzafave “guaranteed the payment of the rent and all other contractual obligations of Showtime due under the lease.” Following a bench trial, the trial court entered judgment for plaintiff. The court’s order noted that default judgment “had previously been entered against the corporate defendants”; that “Michael Scozzafave has been discharged of any debt in this matter in bankruptcy”; and, thus, that “this order and judgment concern only the plaintiff’s claims against defendant Frank Scozzafave.” The court entered judgments against defendant for $256,753.00 in damages and $35,630.44 in interest. From these judgments, defendant appeals.
Defendant argues first that the trial court erred by concluding that he was a guarantor on the lease. “In reviewing a judgment resulting from a bench trial, the question before this Court is whether competent evidence exists to support the trial court’s findings of fact and whether those findings support the trial court’s conclusions of law.”
Beneficial Mortgage Co. v. Peterson,
A personal guaranty is “a contract, obligation or liability . . . whereby the promisor, or guarantor, undertakes to answer for the payment of some debt, or the performance of some duty, in case of the failure of another person who is himself . . . liable to such payment or performance.”
Trust Co. v. Clifton,
Thus, “to hold a guarantor liable under a guaranty agreement, plaintiff must first establish the existence of the agreement.”
Carolina Mills Lumber Co. v. Huffman,
It is true, as defendant states, that in our determination of whether a guaranty contract exists the labels given to contract terms are not necessarily
determinative
of the issue. However, this only means that “ [i]t is appropriate to regard the substance, not the form, of a transaction as controlling, and we are not bound by the labels which have been appended to the episode by the parties.”
Trust Co. v. Creasy,
§ 15. Interpretation of the Secondary Obligation — Use of Particular Terms: Unless indicated to the contrary by applicable law, the language employed by the parties, agreement of the parties, or the context:
(a) if the parties to a contract identify one party as a “guarantor” or the contract as a “guaranty,” the party so identified is a secondary obligor and the secondary obligation is, upon default of the principal obligor on the underlying obligation, to satisfy the obligee’s claim with respect to the underlying obligation].]
In the instant case, the first sentence of the lease identifies defendant as a “guarantor,” and defendant’s signature appears at the end, above the word guarantor. The lease was executed by defendant Showtime Enterprises, Inc. as lessee, and by defendant individually as a guarantor. The lease would have been binding on Showtime even without the signatures of the individual defendants as guarantors. Thus, defendant’s signature serves no other function except to acknowledge his agreement to guarantee the lease. The preamble of the lease further demonstrates that Showtime was the lessee, and that defendant was a guarantor. The only reasonable interpretation of defendant’s signature is that he was a guarantor on the lease. We conclude that the contract establishes the parties’ intention to create a separate guaranty contract contingent upon the default of the primary obligor (Showtime), and that the trial court did not err by concluding that defendant was a guarantor on the lease. This assignment of error is overruled.
Defendant Frank Scozzafave’s second assignment of error asserts that the trial court erred in not finding that plaintiff failed to mitigate its damages. “Typically, in a leasing context, the duty to mitigate means that a landlord must use reasonable efforts to relet the premises to anew tenant.”
Strader v. Sunstates Corp.,
We hold that the trial court did not err. Accordingly, the trial court’s judgment in favor of plaintiff is
Affirmed.
Notes
. The lease was assigned to Dueling Pianos of North Carolina, Inc., on 9 December 1997.