Capital Color Printing, Inc. v. Ahern
Full Opinion (html_with_citations)
Capital Color Printing, Inc. (âCCPâ) brought this action against Quality Printing 4 Less, LLP and its successor in interest, Martin
On appeal from a grant of summary judgment, we conduct a de novo review of the evidence to determine if there exists a genuine issue of material fact and whether the undisputed facts, viewed in the light most favorable to the nonmoving party, entitle the movant to judgment as a matter of law. [Cit.]
Wachovia Bank v. Moody Bible Institute of Chicago, 283 Ga. App. 488, 489 (642 SE2d 118) (2007).
So viewed, the evidence shows that Quality Printing is a printing broker, meaning that it sells printing services to customers but subcontracts with third parties, such as CCL to actually perform those services. In February 2004, Ahern, acting on behalf of Quality Printing, contacted CCP about performing printing work. Elaine Tennant, CCPâs credit manager, explained to Ahern that he and Heflin would have to execute personal guaranties before CCP could perform work for Quality Printing.
On March 17, 2004, Quality Printing forwarded to CCP a one-page credit application, which contained the guaranty at issue (the âGuarantyâ). On the front side of that application, a box captioned âCUSTOMERâ appears at the top, and contains blanks labeled âYour Nameâ and âCompany Name.â The names âTodd M. Heflin and Jason Ahernâ are written on the line next to âYour Name,â and âQuality Printing 4 Lessâ is written on the line provided for âCompany Name.â Quality Printingâs corporate address, telephone and fax numbers, and Federal Employer Identification Number are also listed in the âcustomerâ box. Immediately below this box are several other questions relating to the âcustomer,â and the responses indicate that Quality Printing is a partnership, owned by Ahern and Heflin. Toward the bottom of the front side of the application is the sentence, âThe undersigned has read the terms and conditions of sale on the reverse side of this
Just below the customer signature line is the statement:
The undersigned guarantees payment of any and all invoices for services rendered to customer including the payment of all interest and attorneyâs fees. Guarantor(s) has read the terms and conditions of sale on the reverse side of this agreement and agrees to be bound thereby.
Immediately below that statement is a blank line for the insertion of the guarantorâs name and signature. On that line appear the printed names of Ahern and Heflin, as well as what appear to be the signatures of each.
The reverse side of the application lists the âTerms and Conditionsâ of the agreement, and contains 28 separate, numbered paragraphs. Paragraph 27 provides, in relevant part:
GUARANTOR(S): In consideration of and to induce [CCP] to extend credit to the Purchaser as indicated on the front of this credit application, the Guarantor(s) agrees to be . . . jointly, severally, and directly liable to the Printer for the due performance of all such Obligations. The Guarantor(s) jointly and severally also agree to pay in addition thereto, all costs, expenses and reasonable attorneyâs fees at any time paid or incurred in endeavoring to collect said indebtedness, liabilities and obligations, or any part thereof, and in and about enforcing this instrument.
That page defines the term âPrinterâ as meaning CCF but does not define the term âPurchaser.â
Heflin moved for summary judgment as to CCPâs claims against him individually, claiming that the Guaranty failed to specifically identify the principal debtor and was therefore unenforceable as a matter of law. Ahern filed a similar motion for summary judgment as to CCPâs claims against him individually, and further asserted that the Guaranty was unenforceable against him because his purported signature thereon was a forgery. CCP filed cross-motions for summary judgment on its claims against Ahern and H'eflin, arguing that the Guaranty satisfied the Statute of Frauds and was therefore enforceable. It also claimed that there existed a material question of fact on the issue of whether Ahern had authorized Heflin, either implicitly or explicitly, to sign the Guaranty on his behalf.
The trial court entered an order granting Ahern and Heflinâs motions for summary judgment, and denying CCPâs motions for
1. The Statute of Frauds requires that, to be enforceable, a promise to answer for anotherâs debt âmust be in writing and signed by the party to be charged therewith.â OCGA § 13-5-30 (2). âThis requirement has been interpreted to mandate further that a guaranty identify the debt, the principal debtor, the promisor, and the promisee.â (Citations omitted.) John Deere Co. v. Haralson, 278 Ga. 192, 193 (599 SE2d 164) (2004).
Here, the trial court found that the Guaranty failed to satisfy the Statute of Frauds because it âomitted the nameâ of the principal debtor. Ahern and Heflin assert that this finding must be affirmed because the Guaranty neither defined Quality Printing as the âprincipal debtorâ nor contained an express statement that Ahern and Heflin were guaranteeing the debt of Quality Printing, specifically. Put another way, Ahern and Heflin claim that the Guarantyâs use of the terms âcustomerâ and âPurchaserâ to identify the principal debtor fails to satisfy the Statute of Frauds, because it does not sufficiently identify Quality Printing, by name, as the customer or the Purchaser. We disagree.
The majority of cases relied on by Ahern and Heflin have found a guaranty unenforceable for failure to identify the principal debtor where the name of the principal debtor was omitted entirely from the guaranty â i.e., the principal debtorâs name appeared nowhere in that document. See Industrial Mechanical v. Siemens Energy & Automation, 230 Ga. App. 1, 2-3 (495 SE2d 103) (1997) (alleged guaranty failed to identify any third party whose debts the purported guarantor would be guaranteeing); Ellis v. Curtis-Toledo, Inc., 204 Ga. App. 704, 705 (2) (420 SE2d 756) (1992) (noting that the guaranty agreement âleft blankâ the name of the principal debtor); Northside Bldg. Supply Co. v. Foures, 201 Ga. App. 259, 259-260 (411 SE2d 87) (1991) (same); Builderâs Supply Corp. v. Taylor, 164 Ga. App. 127 (296 SE2d 417) (1982) (affirming a directed verdict in favor of defendants where âthe name of the principal debtor to whom plaintiff extended credit was entirely omitted from the contract of guarantyâ) (punctuation omitted). None of these cases, however, requires that a guaranty specifically denominate a party as the âprincipal debtor,â and we decline to create such a requirement.
As the Supreme Court of Georgia has explained, the Statute of Frauds does not mandate âthat [a written guaranty] must be of a certain type or form.â John Deere Co. v. Haralson, supra, 278 Ga. at 194 (holding that a guarantorâs signature is sufficient to identify him as such for the purpose of the Statute of Frauds, and that he need not be identified separately in the document as the âguarantorâ). See
Ahern and Heflin argue that the Guaranty is ambiguous because the term âcustomerâ could refer to either Quality Printing or to Ahern and Heflin individually. We disagree.
As a threshold matter, we note that any ambiguity as to whom the term âcustomerâ refers is resolved by the admissions of Ahern, Heflin, and Quality Printing that Quality Printing was the customer to whom CCP was extending credit, and therefore the party whose debts Ahern and Heflin were guaranteeing.
As Ahern and Heflin acknowledge, the customer whose debts are being guaranteed can only be either Quality Printing or Ahern and Heflin individually, based on the appearance of their names in the box captioned âCUSTOMER.â Logically, it would be unnecessary for Ahern and Heflin to personally guarantee their own debt. The only reasonable interpretation of the Guaranty, therefore, is that the term âcustomerâ refers to Quality Printing, thereby identifying that entity as the principal debtor. See L. Henry Enterprises v. Verifone, supra, 273 Ga. App. at 198; Cohen v. Capco Sportswear, 225 Ga. App. 211, 212 (1) (483 SE2d 634) (1997).
This conclusion is reinforced by the fact that Quality Printingâs corporate address, telephone and fax numbers, and Federal Employer Identification Number are listed in response to the questions contained in the âcustomerâ box found on the front side of the credit application. The credit application also required the âcustomerâ to identify itself as either a corporation, partnership, sole proprietorship, or an LLC, and to list the names of its âofficers or owners.â In response, the âcustomerâ identified itself as a partnership and listed Ahern and Heflin as the sole owners thereof.
Ahern and Heflin argue, however, that even if no ambiguity exists as to the identity of the âcustomer,â such an ambiguity is created by the Guarantyâs incorporation by reference of paragraph 27 of the âTerms and Conditionsâ found on the reverse side of the credit application, under which the guarantors agree to be jointly and severally liable with the âPurchaser as indicated on the front of this application.â Ahern and Heflin reason that there is no indication in the credit application that the âPurchaserâ referenced in paragraph 27 is the âcustomerâ referred to in the Guaranty. Affording the words âcustomerâ and âpurchaserâ their âusual and com
This Court has long recognized that âdictionaries may supply the plain and ordinary [meaning] of a word.â (Citation omitted.) Megel v. Donaldson, 288 Ga. App. 510, 513 (1) (654 SE2d 656) (2007). The Oxford English Dictionary defines âcustomerâ as âone who purchases from a particular tradesman; a buyer, purchaser,â and defines âpurchaserâ as âone who purchases for money; a buyer.â The Compact Oxford English Dictionary, 379, 1471 (2d ed. 1991). Given that a customer is, by definition, synonymous with a purchaser, the only logical interpretation of the Guaranty is that the phrase âPurchaser as indicated on the front of this applicationâ refers to the âcustomerâ identified thereon â i.e., to Quality Printing.
Ahern and Heflin nevertheless attempt to avoid this conclusion by arguing that guaranties are somehow exempt from the normal rules of contract construction. They base this argument on OCGA § 10-7-3 and cases citing that statutory provision, which provides that â[t]he contract of suretyship is one of strict law; and the suretyâs liability will not be extended by implication or interpretation.â This language, however, addresses the scope of a guarantorâs obligation, rather than the question of whether that obligation exists. In other words, it requires a court to honor the limits placed on a suretyâs obligation by the partiesâ contract, and prohibits a court from expanding the suretyâs liability by âimplication or interpretation.â See, e.g., Roswell Festival, LLLP v. Athens Intl., Inc., 259 Ga. App. 445, 448 (576 SE2d 908) (2003) (court could not interpret the prerequisites to the suretyâs liability, listed in the guaranty, so as to expand that liability). The statute has never been employed, however, to bar courts from applying the normal rules of contract construction in determining whether a contract satisfies the Statute of Frauds. See Growth Properties of Florida, Ltd., IV v. Wallace, 168 Ga. App. 893, 896 (1) (310 SE2d 715) (1983) (a guaranty is valid if the essential elements of the contract can be found by applying the ordinary rules of contract construction to interpret its contents); see also John Deere Co., supra, 278 Ga. at 194; L. Henry Enterprises, supra, 273 Ga. App. at 198.
In light of the foregoing, we find that the Guaranty adequately identifies the principal debtor and satisfies thfe Statute of Frauds, and that the trial court erred in holding otherwise.
2. The trial court also found that Ahernâs signature on the credit application was a forgery, thereby making the Guaranty unenforceable against him, even if it was otherwise valid and that Ahern had not authorized anyone to sign his name. This holding, however, ignores evidence which demonstrates the existence of a jury question
The evidence supporting the contention that it was Heflin who signed Ahernâs name to the credit application includes the document itself, which the jury could examine for similarities between Heflinâs signature and the signature purporting to be Ahernâs. Even to the untrained eye, those signatures appear to be quite similar. The circumstances under which the credit application was received also support the conclusion that Heflin placed Ahernâs signature thereon. Elaine Tennant, CCPâs credit manager, averred that she spoke directfy to Heflin regarding the need for both partners to sign the personal guaranty, faxed Heflin a second credit application, and Heflin faxed back the completed form. Finally, Ahern stated in his affidavit that: âWhen I learned of the forgery of my name and the unauthorized use of my signature stamp in September of 2005, I moved to end all business association with Todd Heflin.â This testimony indicates that Ahern doubts Heflinâs veracity and believes that Heflin signed his name to the application. Based on the foregoing, a jury question exists as to whether Heflin signed Ahernâs name to the credit application.
We also find that there exists a factual question as to whether the doctrine of apparent agency should apply to bar Ahern from denying liability on the personal guaranty. Before analyzing this question, however, we first address the dissentâs eleventh hour assertion that the issue of apparent agency was not raised on appeal. The mere fact that the words âapparent agencyâ were not specifically mentioned in a separate enumeration of error, however, does not prohibit us from considering the question in determining whether the trial court erred in granting summary judgment to Ahern. See, e.g., Mills v. Norfolk Southern R. Co., 242 Ga. App. 324, 331 (526 SE2d 585) (2000). Rather, â[w]here it is apparent from the notice of appeal, the record, the enumeration of errors, or any combination of the foregoing, what judgment or judgments were appealed from or what errors are sought to be asserted upon appeal, the appeal shall be considered in accordance therewith. . . .â (Emphasis supplied.) OCGA § 5-6-48 (f). See also Felix v. State, 271 Ga. 534, 534-535 (523 SE2d 1) (1999) (Noting that the purpose of OCGA § 5-6-48 (f) was âto secure speedy and uniform justice in a uniform and well-ordered manner; not to set traps and pitfalls by way of technicalities for unwary litigants.â) (citation and punctuation omitted).
â[T]he doctrine of apparent agency is predicated on principles of estoppelâ (Brown v. Coastal Emergency Svcs., 181 Ga. App. 893, 897 (3) (354 SE2d 632) (1987)), and its applicability, therefore, is determined by examining both the conduct of the alleged principal and the detrimental reliance on that conduct by the third party asserting the doctrine. See R. W. Holdco, Inc. v. Johnson, 267 Ga. App. 859, 864 (1) (a) (601 SE2d 177) (2004) (âApparent authority is that which the principalâs conduct leads a third party reasonably to believe the agent has; it creates an estoppel allowing third parties to bind a principal to the agentâs acts on account of the principalâs conduct, reasonably construed by third parties acting in innocent reliance thereon.â) (citation and punctuation omitted). The acts of the agent which create apparent authority may include âwritten or spoken words or any other conduct of the principal which, reasonably interpreted, causes the third person to believe that the principal consents to have the act done on his behalf by the person purporting to act for him.â (Citations and puntuation omitted.) Inti. Indem. Co. v. Odom, 174 Ga. App. 6, 7 (2) (329 SE2d 307) (1985). While a finding of apparent agency âcannot be based upon the assumption that an agency relationship existsâ (Ashburn Health Care Center v. Poole, 286 Ga. App. 24, 25-26 (648 SE2d 430) (2007) (citations omitted)), the conduct giving rise to apparent agency âmay be proved, as any other fact, by circumstantial evidence . . . [including] proof of circumstances, apparent relations, and the conduct of the parties.â (Citations and punctuation omitted.) Arrington & Blount Ford, Inc. v. Jinks, 154 Ga. App. 785, 786-787 (1) (270 SE2d 27) (1980). Such evidence must show that the principal either âintend[ed] to cause the third person to believe that the agent [was] authorized to act for him, or he should [have] realize[d] that his conduct [was] likely to create such belief.â Restatement 2d Agency § 27 (2004), comment c. See also id. at § 8B (noting that a principal may be estopped from denying agency where his intentional or careless conduct causes a third party to believe that âthe transaction was entered into by or for himâ).
The dissent finds no such conduct, concluding as a matter of law that CCP merely assumed that Heflin had the authority to sign Ahernâs name to the guaranty. The record, however, demonstrates the existence of a jury question as to whether any such âassumptionâ by CCP was caused by Ahernâs own actions.
The issue of Ahernâs liability turns on several factual questions. The first is whether Ahern was aware that CCP would not perform services for Quality Printing unless and until it had received a personal guaranty from both partners. The evidence presented demonstrates a genuine factual dispute as to whether Ahern had such knowledge. Specifically, there is evidence which contradicts Ahernâs affidavit testimony that he was unaware of the personal guaranty requirement, including: (1) the February 18 e-mail between Ahern and an employee of CCFJ in which Ahern states that âElaine [Tennant] is faxing me the credit application right nowâ and in which he confirms a quote of approximately $76,000 for services to be performed by Capital Color for Quality Printing; (2) the affidavit testimony of Tennant, that she spoke with Ahern on that same day regarding the credit application, and explained to him that both he and Heflin would have to sign the personal guaranty on that application before the requested work could be performed; and (3) the fact that Tennant placed a handwritten note on the credit application which she faxed to Ahern, that pointed to both the signature line for âcustomerâ and the signature line for âguarantor,â and stated âmust sign both places.â
Should a jury conclude that Ahern was aware of the personal guaranty requirement, it would also need to determine whether, in light of this knowledge, Ahern acted in such a way as to lead CCP to reasonably believe that Heflin had the authority to execute that guaranty on his behalf. Again, we find that CCP is entitled to have this question decided by a jury.
Additionally, the record shows that Ahern admitted that he knew that CCP began performing work for Quality Printing after CCP had allegedly made him aware that CCP required his personal guaranty as a condition precedent of rendering such services. Despite this knowledge, there is no evidence that Ahern made any effort to contact CCfl either to inquire as to whether it had waived the requirement or to inform it that he had neither signed the guaranty nor authorized someone to sign for him.
This evidence raises a jury question as to whether CCP acted reasonably in interpreting Ahernâs conduct as granting Heflin the authority to complete and execute the credit application on his behalf, including the personal guaranty. In reaching this conclusion, we note that the result in this case depends almost entirely upon the credibility of the witnesses, and is therefore best evaluated by a jury. âIn motions for summary judgment, this court cannot consider the credibility of witnesses or their affidavits and a jury must resolve the question and the conflicts in the evidence which it produces. [Cit.]â Miller v. Douglas, 235 Ga. 222, 223 (219 SE2d 144) (1975). We also emphasize our obligation to afford CCP the benefit of all reasonable doubt, and note that all of the evidence, and any inferences and conclusions that can be drawn therefrom, must be construed most favorably toward CCP and against Ahern. Goobich v. Waters, 283 Ga. App. 53, 58 (640 SE2d 606) (2006).
The dissent places great emphasis on the fact that the alleged forgery by Heflin was on a personal guaranty, as opposed to one for the partnership. We note, however, that the doctrine of apparent agency applies âeven though the agent, in contracting, acts in his own interests and adversely to his principal,â the rationale being that â[t]he principal, having selected the representative and vested him with apparent authority, should be the loser in such case, and not the innocent party who relied thereon.â (Citation omitted.) Speed v. Muhanna, 21A Ga. App. 899, 903 (1) (619 SE2d 324) (2005). Accordingly, courts have applied the doctrine to render a principal liable on a personal guaranty executed by an apparent agent. See Leasetec Corp. v. Orient Systems, 85 FSupp.2d 1310, 1319 (S.D.
In light of the foregoing, the strident tone of the dissentâs closing paragraph is, at best, puzzling. We fail to see how a fact-intensive case such as this, which hinges almost entirely on the credibility of witnesses, will open the âfloodgates of litigationâ to cases asserting apparent authority. Nor do we understand how granting a litigant the fundamental, constitutional right to a jury trial on this issue undermines the current law on apparent authority â law which our analysis applies. Finally, the dissentâs hyperbolic assertion that our decision will âautomatically subject business partners to individual liabilityâ any time their partner forges their signature is simply untrue. Indeed, even Ahern has not yet been subjected to such liability, and he very well might not be. Moreover, any such liability of Ahern would not be based on Heflinâs forgery of his signature, but rather on the conduct of Ahern himself in dealing with CCE
For the reasons set forth above, we reverse the trial courtâs order granting summary judgment in favor of Ahern and Heflin and find that CCP is entitled to summary judgment against Heflin on the issue of his liability to CCP for printing services rendered to Quality Printing.
Judgment reversed.
Indeed, Ahern and Heflinâs Statute of Frauds defense is premised entirely on the presumption that Quality Printing was the customer whose debts they were guaranteeing; the Statute of Frauds would be inapplicable to Ahern and Heflinâs promise to pay their own debts.