Case Title: Flying J, Inc. v. Booth

Citation: 

Docket Number: 88-265

State: wyoming

Court: Wyoming Supreme Court

Date: 1989-05-08T00:00:00Z

Document:
Flying J, Inc. v. Booth1989 WY 99773 P.2d 144Case Number: 88-265Decided: 05/08/1989Supreme Court of Wyoming
FLYING J, INC., A UTAH 
CORPORATION, APPELLANT (PLAINTIFF),

 
 
v.

 
 
ELVIN L. BOOTH, 
JACQUELINE BOOTH AND JOAN R. GILLETT, APPELLEES 
(DEFENDANTS).

 
 
Appeal from the 
DistrictCourtofNatronaCounty, Dan Spangler, 
J.

 
 
Russell M. Blood of 
Warnick & Blood, P.C., Casper, for appellant.

 
 
Ronald A. Kastanek, 
Casper, for appellees.

 
 
Before CARDINE, C.J., and THOMAS, URBIGKIT, MACY 
and GOLDEN, JJ.

 
 

URBIGKIT, 
Justice.

 
 

[¶1.]     This vendor-creditor 
suit by Flying J, Inc., appellant, pursued an assigned written guaranty executed 
by Elvin L. and Jacqueline Booth, appellees, in favor of assignor, Husky Oil 
Company (Husky).1 Cross motions for summary judgment 
were filed. The district court granted the appellees' motion finding the 
instrument to be a non-assignable "special guaranty" precluding present 
enforcement as a matter of law.

 
 

[¶2.]     Appellant presents as 
issues:

 
 
1. Does the Appellant, as 
successor in interest to the original holder of the guaranty at issue, have the 
legal right to enforce the guaranty.

 
 
2. Did the trial court 
err in granting the Defendants' motion for summary judgment and denying the 
Plaintiff's motion for summary judgment.

 
 

[¶3.]     We 
affirm.

 
 
I. 
FACTS

 
 

[¶4.]     The initiating 
transaction that engendered this dispute occurred in 1974. At that time, 
appellees owned one-half of the outstanding shares of Booth Livestock, Inc. 
(BL), which operated the Husky Super Stop, a truck stop in Mills, Wyoming. 
Before Husky would extend credit to BL on purchases of diesel fuel and other 
products necessary to the operation of that business, Husky required appellees 
personally to guarantee the payment of any obligations that BL might incur with 
respect to those purchases (Booth guaranty). On December 12, 1974, appellees 
executed the guaranty, which provided:

 
 
THE UNDERSIGNED, jointly 
and severally (herein called Guarantor, whether one or more) do hereby guarantee 
and agree to pay any and all indebtedness of any nature whatsoever incurred by 
BOOTH LIVESTOCK, INC. (herein called Debtor) a corporation * * * whose address 
is below, unto HUSKY OIL COMPANY OF DELAWARE (herein called 
Husky).

 
 
The guaranty herein is 
given in consideration of future extension of credit to Debtor by Husky. This 
guaranty covers any indebtedness incurred by Debtor prior to or subsequent to 
the date hereof. Guarantor covenants and agrees that this guaranty is absolute, 
unconditional, and unlimited as to such indebtedness and any charges or interest 
thereon, and any costs of collection, including attorneys' fees and court 
costs.

 
 
This guaranty shall 
continue in full force and effect until written notice of its discontinuance 
shall have been served upon Husky by certified mail and shall continue until any 
and all indebtedness as may then be owed by Debtor to Husky shall be 
paid.

 
 
In the event any such 
indebtedness is not paid when due, Husky may resort to this guaranty without 
first having recourse against Debtor or to any security given to secure said 
indebtedness; and Guarantor agrees to pay in addition to the indebtedness hereby 
guaranteed, any charges and interest thereon, and reasonable costs of collection 
hereunder including attorneys' fees. Until all indebtedness of Debtor is paid in 
full to Husky, Guarantor shall have no rights of subrogation, nor any right to 
enforce any remedy which Husky may have against Debtor.

 
 
This guaranty is binding 
upon Guarantor and his heirs, executors, administrators and personal 
representatives, jointly and severally. In the event of death of Guarantor, or 
any of them, the obligation of the deceased shall continue against his estate as 
to all indebtedness of Debtor incurred prior to the time Husky received written 
notice of such death; and this guaranty shall nevertheless continue as the 
obligation of any surviving Guarantor. [Emphasis in 
original.]

 
 

[¶5.]     Pursuant to a credit 
sales agreement and guaranty, Husky apparently supplied BL with products 
necessary to operate the truck stop by a sales arrangement that continued for 
nearly ten years. In 1983, appellees sold their one-half interest in BL to Paul 
and Joan Gillett (Gillett), who already owned the remaining interest and had 
operated the truck stop for the corporation for a number of years. The Gilletts, 
as the directors, officers, and now only shareholders of BL, were allowed to 
continue to purchase products on credit from both Husky and later RMT based on 
their personal guarantees signed on October 8, 1984. Unfortunately, in early 
1985, BL defaulted on payments due to RMT for product purchases made in December 
1984 and January 1985 which created the account balance of over $27,000 from 
which this lawsuit is derived.

 
 

[¶6.]     Appellant originally 
filed this suit on September 16, 1987 against appellees and Gilletts. Although 
the summonses were initially issued in September, the appellees' summonses were 
never actually served until January 6, 1988 which occurred after it was 
discovered that Paul Gillett had died and Joan Gillett had filed 
bankruptcy.

 
 
II. 
DISCUSSION

 
 
A. Denial of Appellant's 
Motion for Summary Judgment.

 
 

[¶7.]     We address the issues 
in converse order mindful that this case was decided by summary judgment. First, 
appellant asks us to find error in the denial of its reciprocal motion for 
summary judgment. However, it is well-established that the denial of a motion 
for summary judgment is not a final appealable order. Thompson v. State ex rel. 
Wyoming Workers' Compensation Division, 768 P.2d 600 (Wyo. 1989); St. Paul Fire and Marine 
Ins. Co. v. Albany County School Dist. No. 1, 763 P.2d 1255 (Wyo. 1988); Kimbley v. City of 
Green River, 663 P.2d 871 (Wyo. 1983). Therefore, 
there was no error in the district court's denial of appellant's summary 
judgment motion.

 
 
B. Limiting Liability 
From Special Guaranty.

 
 

[¶8.]     Second, appellant 
launches a two-pronged attack with initial contention that summary judgment was 
improperly granted against it because the district court erred in holding this 
instrument to be an unassignable special guaranty. Alternatively, appellant then 
argues that even if we agree that this is a special guaranty, we should follow 
the states that allow a modification of the common law to permit assignment and 
enforcement of any special guaranty where there has been no material change in 
the obligation to the guarantor. We disagree with appellant on both 
bases.

 
 

[¶9.]     A general guaranty is 
drawn to address all potential creditors in general such as "to whom it may 
concern," and effectively promises all those creditors that the principal's 
obligations will be performed. See Annotation, Validity, Effect, and 
Enforceability of General Guaranty Not Naming Specific Creditors, 75 A.L.R. 277 
(1931). By limitation, a special guaranty is drawn with reference to only one 
creditor such as a particular person, firm, or corporation. See Niederer v. 
Ferreira, 189 Cal. App. 3d 1485, 234 Cal. Rptr. 779, 788 (1987); Burkhardt v. Bank 
of America Nat. Trust & 
Savings Ass'n, 127 Colo. 251, 256 P.2d 234 (1953); Brunswick 
Corp. v. Creel, 471 So. 2d 617 (Fla.App. 1985); A. Stearns, The Law of 
Suretyship, §§ 4.3, 4.4 (5th ed. 1951); 38 Am.Jur.2d Guaranty § 20 (1968); and 
38 C.J.S. Guaranty § 41 (1943). The appellees' guaranty in the instant case 
specifically refers to only one creditor, Husky. Therefore, the district court 
did not err in finding a special guaranty intent by the 
parties.

 
 

[¶10.]  Our second inquiry is assignability. At 
common law, a general guaranty is assignable or transferable, but a special 
guaranty is not.2 See Brunswick Corp., 471 So. 2d  at 
618; Greene County v. National Bank of Snow Hill, 193 N.C. 524, 137 S.E. 593 
(1927); King v. Batterson, 13 R.I. 117, 119 (1879); and 38 Am.Jur.2d, supra, § 
35. Cf. Sinclair Marketing, Inc. v. Siepert, 107 Idaho 1000, 695 P.2d 385, 388 (1985), 
recognizing the common law distinction but finding that even with a special 
guaranty, "the parties may have intended it to be assignable within certain 
limits." See also Annotation, Who May Enforce Guaranty, 41 A.L.R.2d 1213 (1955). 
The rationale supporting the common law rule is that when a written instrument 
names only a specific creditor, there is no demonstration of an intent to make 
the instrument enforceable by someone not named within it.

 
 
The question of 
assignability depends largely upon principles developed under contract law. 
Generally, all contract rights which are not "personal" in nature may be 
assigned. Williston on Contracts (3d ed.) § 412. When extending an offer of 
guaranty, the guarantor has relied upon the specific circumstances and terms of 
the agreement between the debtor and the creditor, and their respective 
financial positions. On this basis the law has generally held that a guaranty 
contract with a specific creditor is "personal" to that creditor and may not be 
assigned.

 
 
Sinclair Marketing, Inc., 
695 P.2d  at 387.

 
 

[¶11.]  These general principles have long been 
reflected in the decisions of this court. We have held that a guarantor is bound 
only by the strict letter and precise terms of his contract. Blyth v. Pinkerton, 
10 Wyo. 135, 
67 P. 619, 623 (1902). In that case, we cautioned that courts should not 
unreasonably extend a guarantor's obligation beyond the terms of that agreement 
without some clear manifestation of intent to the contrary because the agreement 
is presumed to reflect the guarantor's regard for his own interests. Id., 67 P.  at 623. As a 
parallel consideration, we have observed that a creditor who wishes to secure 
and enforce a broad guaranty of his obligor's performance, has the 
responsibility to make the scope of that guaranty clear to the prospective 
guarantor. McKenzie v. Neale Construction Co., 75 Wyo. 175, 294 P.2d 355, 
359 (1956). Thus, our past cases have implicitly recognized an obligation on the 
part of creditors to clearly set forth any expansive intent within the expressed 
terms of any guaranty.

 
 

[¶12.]  Essentially, appellant argues that 
appellees' guaranty is ambiguous with respect to assignability because the 
instrument purports to be "absolute, unconditional, and unlimited," and contains 
no provision which expressly forbids assignments. Regarding the absence of terms 
precluding assignments, we remind appellant that the failure of a contract to 
include terms which it seeks to enforce does not render the contract ambiguous. 
See Hensley v. Williams, 726 P.2d 90 (Wyo. 1986). Furthermore, a surety contract is 
construed by the same rules used to construe other contracts. Moorcroft State 
Bank v. Morel, 701 P.2d 1159, 1161 (Wyo. 1985); 
Wyoming Machinery Co. v. U.S. Fidelity & Guaranty Co., 614 P.2d 716, 719 
(Wyo. 1980); Snow v. Duxstad, 23 Wyo. 82, 147 P. 174, 184 (1915); Blyth, 67 P.  at 624; Restatement of Security § 88 (1941). 
The language of a guaranty must be read in its plain and ordinary sense, in 
light of the surrounding circumstances, the situation of the parties, the object 
of the guaranty, and their intended contractual objective. National Union Fire 
Ins. Co. of Pittsburgh, Pa. v. Studer Tractor & Equipment Co., 527 P.2d 820, 
826 (Wyo. 1974); Snow, 147 P.  at 184; Blyth, 67 P.  at 624. However, as in the 
case of other contracts where the language of a guaranty contract is plain and 
unequivocal, no ambiguity arises and the court may construe the contract as a 
matter of law on a motion for summary judgment. Dudley v. East Ridge Development 
Co., 694 P.2d 113, 117 (Wyo. 1985). See also Nelson v. Nelson, 740 P.2d 939, 940 (Wyo. 1987); Ricci v. New Hampshire Ins. Co., 
721 P.2d 1081, 1085 (Wyo. 1986); Cordova v. 
Gosar, 719 P.2d 625 (Wyo. 1986); and Kuehne v. 
Samedan Oil Corp., 626 P.2d 1035, 1039 (Wyo. 1981).

 
 
[S]ummary judgment is an 
inappropriate means of construing a contract only when the contract is ambiguous 
on its face and the extrinsic evidence, admissible as a result of said 
ambiguity, raises a real issue of fact requiring resolution at 
trial.

 
 

Madison v. Marlatt, 619 P.2d 708, 714 (Wyo. 
1980) (emphasis added).

 
 

[¶13.]  There is nothing ambiguous about the 
guaranty executed by appellees. The guaranty was drafted and given "in 
consideration of future extension of credit to Debtor by Husky," the sole and 
specific obligee. That language expressly and clearly indicates that the 
relationship and intent of these parties was rooted in appellees' reliance on 
Husky's ability and willingness to perform its contract with BL. A guaranty 
expressly given in consideration of the extension of future credit by a specific 
individual is generally held to be nontransferable. This is expressly the 
situation here where future sales were anticipated. Even where obligee sells his 
business and his successors continue to extend credit, the guarantor is liable 
only for debts resulting which accrued prior to the transfer of the original 
obligee's assets but not after. See Lee v. Rubin, 117 So. 2d 230 (Fla.App. 1960); 
Kelly-Springfield Tire Co. v. Hamilton, 230 Mo. App. 
430, 91 S.W.2d 193 (1936); A. Stearns, supra, § 4.4; and 38 Am.Jur.2d, supra, § 
35. Unquestionably, in the instant case, all the disputed debts occurred after 
appellees transferred BL wholly to the Gilletts and discontinued their 
participation, which status was recognized by re-execution of a new guaranty by 
the successors.

 
 

[¶14.]  Appellant fares no better when it argues 
that the parties intended to make this guaranty assignable by inclusion of the 
declaration that "this guaranty is absolute, unconditional, and unlimited as to 
such indebtedness." [Emphasis added.] 
That language clearly disavows any conditions upon Husky's exercise of its 
rights to collect debts under the guaranty, and similarly disavows any 
limitations upon the amount of debt covered. However, it clearly does not 
disclaim all limitations with respect to the identity of appellees' prospective 
creditors. Moreover, the parties, in the final paragraph of the instrument, 
clearly and unambiguously agreed that the obligations of the guaranty would run 
to certain successors of the guarantors. No corresponding provision ensures that 
the benefits of appellees' promise would run to Husky's successors. It strains 
credulity to contend that potential ambiguities relative to one party's rights 
could be so easily avoided, yet to also contend that, within this brief and 
simply stated document, the rights of the other party were unaccountably 
condemned to obscurity. The district court correctly found that the document 
unambiguously gave Husky, and not its assignees, a special 
guaranty.

 
 

[¶15.]  At bottom line, appellant asks us to join 
those courts which permit the assignment of special guaranties in the absence of 
actual prejudice to the guarantor. While some courts may have modified the 
common law approach,3 we decline to follow them. In 
Security State Bank of Basin v. Newton, 707 P.2d 173, 175 (Wyo. 
1985), we clearly espoused the common law rule of strict construction of 
guaranties:

 
 
A guarantor's liability 
cannot be extended by construction or by implication beyond the express terms of 
the guaranty. Farmers State Bank v. Doering, 80 Ill. App.3d 959 [36 Ill.Dec. 285] 400 N.E.2d 705 (1980); 
Trego WaKeeney State Bank v. Maier, 214 Kan. 169, 519 P.2d 743 (1974). Unless a given 
transaction is expressly included within the guaranty, the guarantor is not 
liable upon the debtor's default. National Bank of Commerce of Kansas City, Mo. v. Rockefeller, 174 F. 22 (8th Cir. 1909). 
A guarantor is liable only for the payment of debts expressly 
guaranteed.

 
 
Appellant provides no 
compelling reason for us to abandon a position that has existed unchanged in 
nearly eighty-seven years in Wyoming jurisprudence since Blyth, 67 P. 619. 
Consequently, we determine that lacking any genuine issue of material fact or 
error of law, the district court did not err in granting summary judgment.4

 
 

[¶16.]  Affirmed.

 
 
FOOTNOTES

 
 

1 More precisely, the ownership is 
traced from:

 
 
1. May 31, 1984, Husky, the original 
owner, assigned its refining, transportation, and marketing assets (including 
the Booth guaranty) to RMT Properties, Inc. (RMT).

 
 
2. December 31, 1985, all the 
outstanding stock of RMT was acquired by Big West Oil Company (Big West). These 
two companies merged, designating RMT as the surviving corporation but taking 
the name of Big West.

 
 
3. January 2, 1986, Big West, a 
wholly owned subsidiary of Flying J, Inc., assigned its interests (including the 
Booth guaranty) to Flying J, Inc.

 
 

2 Although at common law a special 
guaranty is not assignable, once a right of action on the special guaranty had 
arisen and become fixed it could be assignable. Burkhardt, 256 P.2d  at 236; 
Anchor Inv. Co. v. Kirkpatrick, 59 Minn. 378, 61 N.W. 29, 30 (1894) (special 
guaranty is assignable after default and when cause of action arose); Evansville 
Nat'l Bank v. Kaufmann, 93 N.Y. 273 (1883); Com. Cotton Oil Co. v. Lester, 156 Okla. 93, 9 P.2d 738, 746 (1932) (after breach special guaranty could be 
assignable); Tidioute Sav. Bank v. Libbey, 101 Wis. 193, 77 N.W. 182, 183 (1898); A. Stearns, 
supra, § 4.4.

 
 
In Hecht v. Acme Coal Co., 19 Wyo. 
10, 113 P. 786, reh'g denied, 117 P. 132 (Wyo. 1911), this court drew a 
distinction between an unconditional guaranty of performance and collection 
concerning saloon rent. In that case, the guaranty specifically allowed the 
lessor to assign the performance guaranty which became fixed and assignable upon 
the lessee's failure to perform. Hecht, 113 P.  at 786, 788. However, in the 
instant case, there is no allegation that this special guaranty became fixed so 
that it could be assigned. Conversely, the account balance developed after 
assignment of the guaranty to the new vendor as present 
appellant.

 
 

3 See generally Annotation, Change in 
Name, Location, Composition, or Structure of Obligor Commercial Enterprise 
Subsequent to Execution of Guaranty or Surety Agreement as Affecting Liability 
of Guarantor or Surety to the Obligee, 69 A.L.R.3d 567 
(1976).

 
 

4 A further basis is suggested to 
affirm the summary judgment by application of estoppel by substitution of 
subsequent guaranty. We deem it unnecessary to pursue that alternative 
concept.