ROBERT C. ROY, SR., APPELLANT,
v.
DAVIDSON EQUIPMENT, INC., APPELLEE
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Robert C. Roy was held personally liable on a guaranty agreement for his corporation's equipment rental debt despite signing in a representative capacity. The court affirmed his personal liability but reversed the damages award, finding the trial court failed to account for a lease provision that terminated the corporation's rental obligations upon equipment repossession.
Roy signed the guaranty in a personal capacity and is personally liable. The guaranty language—requiring joint and several obligation of "the undersigned" and explicitly stating liability would not be affected by discharge of the corporation's obligations—negates any representative-only characterization. However, Roy's personal obligation is limited to the corporate debt that actually accrued, and the trial court erred in not accounting for how the lease's repossession provision affected the total amount owed.
[1] A signature on a guaranty agreement, even if appearing to be in a representative capacity, can create personal liability when the context of the agreement renders a repre…
[2] A corporation guaranteeing its own debt is a meaningless act, suggesting that an individual signing such a guaranty is doing so in a personal capacity.
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Join FLexlaw to unlock all legal intelligence“For a corporation to guarantee its own debt would add nothing to its existing obligation and would be meaningless.”
Establishes the logical principle that compels the conclusion Roy signed personally, not representatively, since the guaranty cannot be of the corporation's own debt.
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Join FLexlaw to unlock all legal intelligenceRoy Energy Corporation entered into an equipment rental agreement with Davidson Equipment, Inc. for earth-moving equipment used in coal mining operati…
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OWEN, WILLIAM C., Jr., Associate Judge.
Appellant, Robert C. Roy, suffered a money judgment in a suit on a guaranty agreement, which agreement appellant contends here (as he did at trial) was executed by him solely in a representative capacity. We affirm the trial court’s judgment on its determination of appellant’s personal liability, but reverse for a new trial on the issue of damages.
Roy Energy Corporation signed an equipment rental agreement with Davidson Equipment, Inc., for the lease of earth-moving equipment to be used in the corporation’s coal mining operation. The signature read:
LESSEE: Roy Energy Corporation By: Robert C. Roy , Pres.
The following words were typed under the “Remarks” section of the agreement:
$204,000.00 rental to be guaranteed personally by Mr. Robert Roy ....
At the same time a guaranty agreement was executed, which agreement included the following language:
The undersigned, jointly and severally, absolutely guarantee the full and prompt payment of any and every indebtedness, liability or obligation of Roy Energy Corporation arising out of such Contract.... In the event of default in payment of any amount due thereunder ... by Roy Energy Corporation ... the undersigned promise to pay the full amount of such indebtedness ....
The liability of the undersigned shall not be affected by ... the discharge or release of the indebtedness, liability or obligation of Roy Energy Corporation ....
This document, upon which appellant’s liability was based, was signed as follows:
ROY ENERGY CORPORATION. GUARANTOR
BY Robert C. Rov_President (Signature) (Title)
The manner in which the guaranty was signed, standing alone and without more, would be the classic example of a corporate officer signing in a representative capacity only.1 But here there is much more. The instrument to which the signature was affixed was a guarantee of the corporate indebtedness of Roy Energy Corporation. For a corporation to guarantee its own debt would add nothing to its existing obligation and would be meaningless. Ricker v. B-W Acceptance Corporation, 349 F. 2d 892 (10th Cir.1965). Furthermore, the guarantee was the joint and several obligation of the undersigned, which obligation was “not to be affected by ... the discharge or release of the indebtedness, liability or obligation of Roy Energy Corporation,” an obvious paradox if Roy Energy Corporation were the guarantor. This language specifically negates the signature as having been made in a representative capacity. Cf., Manufacturers’ Leasing, Ltd. v. Florida Development & Attractions, Inc., 330 So. 2d 171 (Fla. 4th DCA 1976). Under the facts of this case appellant was personally obligated on the guaranty agreement.
Appellant’s obligation, to guarantee payment of the corporate debt to appellee, was limited to the amount of that corporate debt. It appears from the record that the trial court, in computing the extent of appellant’s obligation, looked to the amount which the rental agreement stated appellant would guarantee, i.e., $204,000, without considering the effect, if any, of the lease provision which terminated the corporation’s obligation for further rental upon repossession of the equipment, an event which did occur. That part of the judgment holding appellant personally liable on the guarantee is affirmed; the award of damages is reversed and this cause remanded for a new trial on damages only.
AFFIRMED, in part; REVERSED, in part, and REMANDED.
LETTS, C.J., and DELL, J., concur. . If the guaranty were a negotiable instrument, a signature in this manner would fall under Section 673.403(3), Florida Statutes (1981).
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Citator
Cited By (15 total)
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Eli Plotch and Philip Berkley v. August Gregory, Jr., 463 So. 2d 432 (Fla. 4th DCA 1985)…payable on demand or at a definite time. Thus, the letter is not a “negotiable instrument,” and the corporate officers are not personally obligated thereunder pursuant to section 673.403, Florida Statutes (1984). Cf Roy v. Davidson Equipment, Inc., 423 So. 2d 496 (Fla. 4th DCA 1982). Moreover, the letter is devoid of any language which would lead a reasonable person to conclude that the corporate officers were providing a personal guarantee for a preexisting corporate debt. Thus, the trial court correctly gr…
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Lab. Corp. OF Am. v. McKOWN, 829 So. 2d 311 (Fla. 5th DCA 2002)…ecause the word president was added to [the] signature would result in the guaranty being meaningless and add nothing to the existing obligation of the corporation.” Summit, 568 So. 2d at 1292 (citing Muskat Corp. Inc.; Roy v. Davidson Equip., Inc., 423 So. 2d 496 (Fla. 4th DCA 1982)). Here, the discussion would benefit from replication of the pertinent part of the letter that constitutes McKown’s personal guarantee: “7 hereby give you my personal guarantee that $250,000.00 will be paid to Laboratory Corpora…
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Cent. Nat'l Bank OF Miami v. Muskat Corp. OF Am., Inc., 430 So. 2d 957 (Fla. 3d DCA 1983)…estroyed by the individual adding the word president after his signature, when the document as a whole clearly indicates that it was to be an individual responsibility. See in this connection the following authority: Roy v. Davidson Equipment, Inc., 423 So. 2d 496 (Fla. 4th DCA 1982); Stein v. Miss Fraine’s, Inc. 417 So. 2d 726 (Fla. 1st DCA 1982); Sabin v. Lowe’s of Florida, Inc., 404 So. 2d 772 (Fla. 5th DCA 1981); Vacation, Inc. v. Southeast First Leasing, Inc., 358 So. 2d 105 (Fla. 3d DCA 1978); Manufactu…
Previewing 3 of 15 citing cases — full citator treatment, depth of discussion, and citing context are member features.
Join FLexlaw to unlock all legal intelligenceAuthorities Cited
- Mfrs'. Leasing, Ltd. v. Fla. Dev. & Attractions, Inc., 330 So. 2d 171 (Fla. 4th DCA 1976)
- Ricker v. B-W Acceptance Corp., 349 F.2d 892 (10th Cir. 1965)