Appellate Court Upholds Personal Guarantee

YELLOW BOOK SALES AND DISTRIBUTION COMPANY, INC. v. Feldman, Ill: Appellate Court, 1st Dist., 4th Div. 2012 - Google Scholar:


This case, which is a dispute over $13,178.01, contains a lengthy discussion of the contract principles relevant to the enforcement of personal guarantees. The key question was whether the contract's terms were clear enough to the reader.


The contract is quoted by the court as follows:


"THIS IS AN ADVERTISING CONTRACT BETWEEN YELLOW BOOKS SALES AND DISTRIBUTION COMPANY, INC. OR YP TEL. AND _________________________ and Print Customer Name X______________________________ Authorized Signature individually and for the Customer. (Read Paragraph 14G on the reverse hereof).





¶ 4 Each of the four contracts contain "Glassworks, Inc." above the "Print Customer Name" line. Feldman's signature appears on the second line of each contract and his name is followed by either "Pres." or "President." Feldman's name is printed on the following line.


¶ 5 Paragraph 14G of the form contracts, referred to in the signature block and found on the back side, is written in fine print and states:


"The signer agrees that he/she has the authority and is signing this agreement (1) in his/her individual capacity, (2) as a representative of the Customer, and (3) as a representative of the entity identified in the advertisement or for whose benefit the advertisement is being purchased (if the entity identified in the advertisement is not the same as the Customer or the signer). By his/her execution of this agreement, the signer personally and individually undertakes and assumes, jointly and severally with the Customer, the full performance of this agreement, including payment of amounts due hereunder."

The trial court found this language ambiguous and ordered a trial to determine the parties' intent. After hearing evidence the court found that Feldman was sophisticated (he was a lawyer) and must have understood what he was signing. Paragraph 39.


The appellate court found that the verdict was not against the manifest weight of the evidence. It noted that Feldman had signed four similar such contracts, and must have understood what the language meant.


One issue the case does not discuss is whether the trial court was correct to deny Yellow Book's motion for summary judgment and order a trial. The language seems clear. The word "individually" is easy to understand. In sum, I believe the case can be resolved on the plain meaning of the contract. Someone who signs individually knows he is agreeing to pay the balance if the company cannot pay it. The word "individually" signals a personal guarantee to the signer.


Edward X. Clinton, Jr.


www.clintonlaw.net

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