Title: M & M Welding, Inc. v. Pavlicek

State: wyoming

Issuer: Wyoming Supreme Court

Document:

M & M Welding, Inc. v. Pavlicek1986 WY 21713 P.2d 236Case Number: 85-111Decided: 01/28/1986Supreme Court of Wyoming
M & M WELDING, INC., 
APPELLANT (DEFENDANT AND THIRD-PARTY PLAINTIFF),

 
 
v.

 
 
RICHARD PAVLICEK AND 
GLENN DEMING, (THIRD-PARTY DEFENDANTS), v. FIRST WYOMING BANK - CASPER, APPELLEE 
(PLAINTIFF).

 
 
Appeal from the District 
Court, NatronaCounty, Harry E. Leimback, 
J.

 
 
 
 
Representing 
Appellant:

William L. Miller, Holly 
Brown, and John R. Hursh, of Central Wyoming 
Law Associates, P.C., Riverton.

 
 
Representing 
Appellee:

J. Scott Burnworth and 
Cameron S. Walker of Schwartz, Bon, McCrary & Walker, Casper.

 
 
Before THOMAS, C.J., and 
BROWN, CARDINE, URBIGKIT, and ROONEY (Retired), JJ.

 
 

BROWN, 
Justice.

 
 

[¶1.]     This appeal involves an 
action by appellee First Wyoming Bank - Casper (the bank) to collect on a revolving 
credit note executed by appellant M & M Welding, Inc. (M & M). Trial to 
the court resulted in a judgment for the bank. M & M appeals and states the 
following issues:

 
 
"1. Mr. Redding was not 
authorized to borrow money on behalf of M & M Welding, 
Inc.

 
 
"2. The note in this case 
was not properly executed, cannot bind M & M Welding, Inc. and is invalid on 
its face as against M & M Welding."

 
 

[¶2.]     Appellee disagrees with 
appellant's statement of the issues and rewords them 
thusly:

 
 
"1. Was there sufficient 
evidence presented at trial, when viewed in a light most favorable to the 
appellee, which would support the Court's finding that Larry L. Redding had 
authority to bind M & M Welding, Inc. to the loan, and execute a promissory 
note on its behalf?

 
 
"2. Was there sufficient 
evidence produced at trial, when viewed in a light most favorable to the 
appellee, which would support the Court's finding that the promissory note in 
this case was binding upon M & M Welding, Inc.?"

 
 

[¶3.]     M & M, an oilfield 
fabrication business, was started in 1974 by Edward Mudge, his wife Edna F. 
Mudge, Robert Mudge, and his wife Sybil Mudge. On July 31, 1981, the Mudges 
entered into an agreement to sell M & M to Larry Redding for one million 
dollars. Under this agreement, Redding was to make a down payment of $175,000, 
and pay the balance over a period of years. Redding made his down payment under the 
agreement on September 2, 1981, and was placed in control of the 
business.

 
 

[¶4.]     After acquiring control 
of the business, Redding elected himself president and director 
of M & M. To conduct business Redding approached the bank to obtain a 
$100,000 line of credit in the form of a revolving credit note. Before approving 
the loan, the bank required Redding to submit financial statements, asset 
lists, and a list of accounts receivable. The bank also required Redding to submit a certified copy of the corporate 
resolution authorizing Redding to borrow money on behalf of M & M. 
Such was provided and the loan was approved. On September 25, 1981, Mr. Redding 
executed the note on behalf of M & M.

 
 

[¶5.]     Redding failed to make his 
payments to the Mudges under the sales agreement, and the Mudges repossessed M 
& M. The note executed by Redding subsequently went into default. The 
bank instituted action to collect on the loan. The trial court rendered judgment 
in favor of the bank finding M & M liable for the note executed by Redding.

 
 
I

 
 

[¶6.]     In its first issue, 
appellant claims Redding had no authority to borrow money on 
behalf of M & M. In its decision letter the trial court found that Redding had actual 
authority to incur the note in question, thereby obligating M & M: "I find 
that actual authority existed, by implication if not necessarily expressly, and 
that clearly there was apparent authority, to bind the defendant corporation to 
the bank. * * *"1

 
 

[¶7.]     We think the facts 
attendant in the case amply support such conclusion by the court. A special 
meeting of M & M's board of directors was held on August 18, 1981, wherein 
Redding was 
elected chairman and president. The minutes of the meeting reflect that the 
board authorized any officer to borrow up to $200,000:

 
 
"* * 
*

 
 
"Discussion was held 
regarding the amount of money that any officer could loan and the amount they 
could borrow. It appeared that with officer compensation being less and the 
elimination of the pension and profit sharing plans that up to $400,000 could be 
loaned to Larry L. Redding and/or Redding Investments, Inc. It appeared that 
based on the income statement provided by the Mudges for June 30, 1981 and for 
December 31, 1980 that sufficient bonuses and/or dividends could be paid in 
future years to repay the loans.

 
 
"Upon motion duly made, 
seconded and unanimously carried any officer was authorized to borrow up to 
$200,000 and loan to Redding and/or Redding Investments, Inc. a 
total of $400,000.

 
 
"Upon motion duly made, 
seconded and unanimously carried the signing of these minutes constitutes full 
ratification thereof and waiver of notice of the meeting by the 
signatories."

 
 

[¶8.]     On September 14, 1981, 
the board of directors met again. The certified copy of corporate resolutions 
reflects that Redding was again given the express authority 
to borrow money for the corporation:

 
 
"RESOLVED, that the above 
Bank, is hereby authorized to pay any such orders and also to receive the same 
for credit of or in payment from the payee or any other holder without inquiry 
as to the circumstances of issue or the disposition of the proceeds even if 
drawn to the individual order of any signing officer or tendered in payment of 
his individual obligation.

 
 
"RESOLVED, that Larry L. Redding, President be * * * 
authorized to borrow from time to time on behalf of this Corporation from the 
above Bank sums of money for such period or periods of time, and upon such 
terms, rates of interest and amounts as may to them in their discretion seem 
advisable, and to execute notes or agreements in the forms required by said Bank 
in the name of the Corporation for the payment of any sums so borrowed: 
[Emphasis added.]

 
 
"That said officers are 
hereby authorized to pledge or mortgage any of the bonds, stocks or other 
securities, bills receivable, warehouse receipts or other property real or 
personal of the Corporation, for the purpose of securing the payment of any 
monies so borrowed; to endorse said securities and/or to issue the necessary 
powers of attorney and to execute loan, pledge or liability agreements in the 
forms required by said Bank in connection with the same.

 
 
* * * * * 
*

 
 
"RESOLVED, that the 
foregoing powers and authority will continue until written notice of revocation 
has been received by the above Bank, and the above Bank shall have full right to 
rely on all the foregoing resolutions until it has received such written notice 
of revocation. 

 
 
"RESOLVED, that the 
Secretary of this Corporation be and he hereby is authorized to certify to the 
above Bank, the foregoing resolutions and that the provisions thereof are in 
conformity with the charter and By-Laws of this 
Corporation.

 
 
"I FURTHER CERTIFY, that 
there is no provision in the charter or By-Laws of said Corporation limiting the 
power of the Board of Directors to pass the foregoing resolutions and that the 
same are in conformity with the provisions of said charter and 
By-Laws.

 
 
"* * 
*

 
 
"s/ Larry L. Redding President and 
Director"

 
 

[¶9.]     The bank requested and 
received this information before the loan to Redding on behalf of M & M was approved. 
Appellant contends, nevertheless, that Redding was not in actual control of the 
business when he executed the note and therefore had no authority to bind M 
& M. But the facts reveal that both Robert Mudge and Redding agreed it was their intent that Redding would be in control of M & M after September 2, 
1981, when Redding took possession of the business, 
equipment, and all business records. The Mudges resigned as officers and 
directors of M & M on September 4, 1981. Counsel for M & M stipulated 
that Redding was 
in control at least by September 25, 1981, although the facts indicate an 
earlier date.

 
 

[¶10.]  We have often stated our applicable 
standard of review. On appeal we accept the evidence of the prevailing party as 
true, leaving out entirely the consideration of evidence presented in conflict 
therewith, giving every favorable inference which may fairly and reasonably be 
drawn from the evidence of the prevailing party. Shanor v. Engineering, Inc. of Wyoming, Wyo., 705 P.2d 858 (1985); and Matter of Abas, 
Wyo., 701 P.2d 1153 (1985). The trial court's findings of fact are presumed correct, and such 
findings will not be disturbed on appeal unless such findings are inconsistent 
with the evidence, clearly erroneous or contrary to the great weight of the 
evidence. Doenz v. Garber, Wyo., 665 P.2d 932 (1983); and Seeley v. Estate of Seeley, Wyo., 
627 P.2d 1357 (1981).

 
 

[¶11.]  As pointed out above, there is ample 
evidence which supports the trial court's conclusion that Redding was clothed with 
express authority to borrow money on behalf of M & M.

 
 
II

 
 

[¶12.]  The note in question was signed as 
follows: "M & M Welding, Inc., Larry L. Redding." In its second issue, 
appellant contends that the note was improperly executed and was therefore 
invalid on its face under §§ 34-21-340 and 34-21-341, W.S. 1977. Those two 
statutes read:

 
 
"§ 34-21-340. Signature 
by authorized representative.

 
 
"(a) A signature may be 
made by an agent or other representative, and his authority to make it may be 
established as in other cases of representation. No particular form of 
appointment is necessary to establish such authority.

 
 
"(b) An authorized 
representative who signs his own name to an instrument:

 
 
"(i) Is personally 
obligated if the instrument neither names the person represented nor shows that 
the representative signed in a representative capacity;

 
 
"(ii) Except as otherwise 
established between the immediate parties, is personally obligated if the 
instrument names the person represented but does not show that the 
representative signed in a representative capacity or if the instrument does not 
name the person represented but does show that the representative signed in a 
representative capacity.

 
 
"(c) Except as otherwise 
established the name of an organization preceded or followed by the name and 
office of an authorized individual is a signature made in a representative 
capacity.

 
 
"§ 34-21-341. 
Unauthorized signatures. 

 
 
"(a) Any unauthorized 
signature is wholly inoperative as that of the person whose name is signed 
unless he ratifies it or is precluded from denying it; but it operates as the 
signature of the unauthorized signer in favor of any person who in good faith 
pays the instrument or takes it for value.

 
 
"(b) Any unauthorized 
signature may be ratified for all purposes of this article. Such ratification 
does not of itself affect any rights of the person ratifying against the actual 
signer."

 
 

[¶13.]  We have already held that Redding had authority to 
borrow money on behalf of M & M. Therefore, we need only determine if the 
note was properly executed.

 
 

[¶14.]  Section 34-21-340(a) above states that 
the authority of an agent or representative "may be established as in other 
cases of representation." This statute is identical to Uniform Commercial Code 
(U.L.A.) § 3-403. The official comment to § 3-403 states in 
part:

 
 
"The power to sign for 
another may be an express authority, or it may be implied in law or in fact, or 
it may rest merely upon apparent authority. It may be established as in other 
cases of representation, and when relevant parol evidence is admissible to prove 
or deny it."

 
 

[¶15.]  The law is clear that when a signing is 
ambiguous, parol evidence is admissible to prove the intent of the parties to 
establish the character of the signing. Anderson, Uniform Commercial Code § 3-403:34, 
p. 129 (3rd ed. 1984). See also, Amoco 
Production Company v. Stauffer Chemical Company of Wyoming, Wyo., 612 P.2d 463 
(1980). When one signs his name after a corporate name, the signing is deemed 
ambiguous. Anderson, Uniform Commercial Code, § 3-403:35. 
That is precisely how the note at issue here was signed.

 
 

[¶16.]  Indeed the trial court in its decision 
letter stated, "* * * In at least one instance (the note) there was sufficient 
ambiguity to warrant parol [evidence] which clearly tied the bank both to money 
obligation and to the commitment of its security. * * *" We think the trial 
court was correct in its conclusion. Parol evidence then clearly established, as 
set forth infra, that Redding was acting in a representative capacity 
for M & M.

 
 

[¶17.]  Having found no reversible error, the 
judgment of the trial court is affirmed in all respects.

 
 

[¶18.]  Affirmed.

 
 

1 See comment, "Inherent 
Authority of a Corporate President in Wyoming", 
5 Wyo. Law 
Journal 93 (1950):

 
 
"Inherent authority has 
been defined as, `An authority possessed without it being derived from another.' 
The authority of the corporate president is conventionally divided into four 
classes which are as follows: (1) Express authority; (2) Implied authority; (3) 
Apparent authority; (4) Inherent authority. Express authority is that which is 
conferred by the by-laws and resolutions of the board of directors. Implied 
authority is that which is inferred from the express authority. Apparent 
authority is that which arises from the conduct of the corporation or that which 
the corporation allows the officer to assume without objection. Inherent 
authority is that which arises merely by virtue of his 
office."