Austin Hardwoods, Inc. v. Vanden Berghe

In Austin Hardwoods, Inc. v. Vanden Berghe, 917 S.W.2d 320 (Tex. App.--El Paso 1995, writ denied), immediately above the signature line of the credit application was recited: "If a corporation, the undersigned personally guarantees the payment of this account in his individual capacity." Id. at 323. The corporate officer signed the application in his capacity as vice-president. Id. Thereafter the corporation went into bankruptcy and the creditor company made demand on the officer for payment. Id. at 322. The officer denied being a guarantor; claimed that the agreement lacked consideration and was ambiguous; and claimed that the suit was barred by the statute of frauds. Id. at 322. The trial court agreed, found the guaranty agreement ambiguous and unenforceable, and rendered judgment in favor of the corporate officer. Id. In light of the signature under the "personal guaranty" language, the El Paso Court of Appeals "failed to see how the above-cited guaranty clause rendered the agreement susceptible to more than one meaning." Id. at 323. The Court noted, "The language of the agreement is not unclear or indefinite. Rather it clearly evidences application for credit by a corporation guaranteed by the individual signing the application." Id. That the officer signed in his corporate capacity also did not persuade the El Paso Court. To create a corporate obligation, the officer necessarily had to sign in his corporate capacity. Id. "However, as the guaranty paragraph stipulates, in addition to the creation of a corporate liability the signing individual further covenants to be individually liable for the debt, again the very essence of a guaranty agreement." Id. Having found the agreement unambiguous, the Court construed the contract as a matter of law and found that the corporate officer was individually liable as a guarantor for his corporation's debt. Id.