In the

United States Court of Appeals

For the Seventh Circuit

No. 98-3373

Agco Corporation,

Plaintiff-Appellee,

v.

Max Anglin, et al.,

Defendants-Appellants.

Appeal from the United States District Court

for the Southern District of Indiana, Indianapolis Division.

No. IP98-0050-C-T/G--John Daniel Tinder, Judge.

Argued March 2, 1999--Decided June 9, 2000

 Before Cudahy, Eschbach, and Coffey, Circuit Judges.

 Cudahy, Circuit Judge. A farm equipment

dealership, Silver Lake Farm Service, Inc., and

its owners appeal from a district court order

denying their motion to vacate an arbitration

award and confirming an award for the farm

equipment manufacturer AGCO. This appeal presents

the question whether the arbitrators acted with

the authority conferred upon them by the parties’

agreement, or instead decided issues beyond those

which the parties had agreed to submit to

arbitration. Concluding that the arbitrators

exceeded their authority, we reverse.

I.

 Max and Gary Anglin own Silver Lake Farm

Service, Inc., a farm implement store in Silver

Lake, Indiana. In 1987 Silver Lake became a

dealer of farm equipment for the Deutz-Allis

Corporation. Silver Lake bought inventory from

Deutz-Allis and sold it to farmers. In 1990 AGCO

acquired Deutz-Allis and assumed the dealership

agreement with Silver Lake.

 In building its business, Silver Lake entered into

a series of financing agreements. First, to help

its customers obtain credit, it signed a Retail

Financing Agreement in 1989 with Agricredit

Acceptance Company, an equipment lease finance

company. At the same time, Agricredit required the
Anglins to execute separate personal guaranties of

Silver Lake’s liabilities under the Retail Finance

Agreement. Significantly, neither these personal

guaranties nor the Retail Finance Agreement

provides for arbitration.

 On June 3, 1992, Silver Lake entered into a

Wholesale Financing Agreement with AGCO to obtain

financing to purchase inventory from AGCO. A

binding arbitration provision required the

Anglins and AGCO to arbitrate all disputes

arising under the Agreement. On the same day, Max

and Gary Anglin and their wives executed personal

guaranties (the "Guaranties") of Silver Lake’s

indebtedness to AGCO. Each of the Guaranties

(pre-printed, tiny-print forms drafted by AGCO)

contained the broad arbitration provision at

issue in this appeal:

 BINDING ARBITRATION. Except as otherwise

specifically provided below, all actions,

disputes, claims and controversies heretofore or

hereafter arising out of or directly or

indirectly relating to (a) this Guaranty . . . ,

(b) any subsequent agreement entered into between

the parties hereto, (c) any previous agreement

entered into between the parties hereto, (d) any

relationship or business dealings between the

parties hereto, and/or (e) the transactions

contemplated by this Guaranty or any previous or

subsequent agreement between the parties hereto

. . . will be subject to and resolved by binding

arbitration . . . and judgment upon the award

rendered by the arbitrator may be entered in any

court having jurisdiction.

(Emphasis added.) As will become apparent, the

elusive meaning of the "directly or indirectly"

clause is what has given rise to this litigation.

 The scope of the Guaranties is set forth in a

separate provision, which also incorporates the

"direct or indirect" wording:

In consideration of financing provided or to be

provided by you [AGCO] to Silver Lake Farm

Service, Inc. ("Dealer"), . . . we [the Anglins]

. . . guaranty to you [AGCO] . . . the immediate

payment of all current and future liabilities

owed by Dealer to you when due, whether such

liabilities are direct or indirect.

(Emphasis added.)

 By late 1992 AGCO was forging a close

relationship with Agricredit. In November,

unknown to the Anglins, AGCO entered into an

Operating Agreement with Agricredit, under which

AGCO agreed to purchase any retail finance

contract on which the purchase price warranty had
been breached. Soon thereafter (the precise time

is not clear from the record), AGCO acquired

Agricredit./1

 Some time in 1994, Silver Lake began receiving

complaints of irregularities in a number of

retail contracts with customers. Although the

record is sketchy, the circumstances surrounding

six contracts--all of which were signed between

1992 and 1994 and then assigned to Agricredit--

have given rise to charges of fraud against

Silver Lake. These charges are not before us in

this appeal. What is before us--according to

AGCO--are Silver Lake’s retail obligations to

Agricredit (the "Retail Obligations"), which AGCO

insists are covered by the broad arbitration

clause in the Guaranties. AGCO took assignment of

these Retail Obligations from Agricredit in July

and August 1995, several months after Silver

Lake’s default led AGCO to terminate the

dealership agreement and the Wholesale Finance

Agreement.

 In October 1995 AGCO sought arbitration against

Silver Lake and the Anglins based upon the

arbitration provision contained in the

Guaranties. Asserting fraud and breach of

contract claims against a Silver Lake manager

(who the Anglins assert in their brief "has since

disappeared"), AGCO complained about the six

contracts executed by Silver Lake customers that

involved Agricredit financing. In its written

demand for arbitration, AGCO somewhat diffusely

characterized the nature of its dispute as a

"Claim under Dealer Contract for defaults/fraud

under recourse consumer financing agreements and

for unpaid wholegood sales; claims against

guarantors for payment of principal obligor’s

liabilities." The matter was submitted to an

arbitration panel of the American Arbitration

Association, which conducted a three-day hearing

in September 1997. No transcript was created.

 In November 1997 the arbitration panel issued

its ruling. Although the arbitrators submitted no

findings of fact or law, they apparently

determined that the arbitration clause in the

Guaranties authorized them to consider the

disputed retail contracts, even though those

contracts involved not AGCO but Agricredit, a

nonsignatory to the Guaranties. The arbitrators

declared Silver Lake liable to AGCO for the debts

arising from five contracts; denied Silver Lake’s

counterclaim for wrongful termination of its

dealership; and awarded AGCO damages of $148,517

plus attorney’s fees.

 In January 1998 AGCO petitioned the district

court under the Federal Arbitration Act, 9 U.S.C.

sec. 1 et seq., to confirm the award. The Anglins

promptly moved to vacate or modify the award
largely on the basis that the arbitrators

exceeded their powers by considering issues

outside the scope of the arbitration agreement.

The district court denied the Anglins’ motion and

confirmed the award. It held that the arbitration

provision in the Guaranties authorized AGCO to

arbitrate a dispute with the Anglins over Silver

Lake’s Retail Obligations to Agricredit because

that dispute directly or indirectly related to

the Anglins’ Guaranties:

[A] direct liability would be a liability of

Silver Lake to AGCO under the Wholesale Financing

Agreement or under the Dealer Agreement. An

indirect liability would be a liability of Silver

Lake to AGCO through a liability of Silver Lake

to Agricredit, AGCO’s wholly owned subsidiary,

under the Retail Financing Agreement.

(Dist. Ct. Order of 8/25/98, at 14.) This appeal

followed.

II.

 We first consider whether the Anglins waived

any objection to the arbitrability of the Retail

Obligations when they consented to arbitration

and agreed to participate in the arbitration

hearing. If a party willingly and without

reservation allows an issue to be submitted to

arbitration, he cannot await the outcome and then

later argue that the arbitrator lacked authority

to decide the matter. See Jones Dairy Farm v.

Local No. P-1236, United Food & Commercial

Workers Int’l Union, AFL-CIO, 760 F.2d 173, 175-

76 (7th Cir. 1985). If, however, a party clearly

and explicitly reserves the right to object to

arbitrability, his participation in the

arbitration does not preclude him from

challenging the arbitrator’s authority in court.

International Ass’n of Machinists & Aerospace

Workers, Lodge No. 1777 v. Fansteel, Inc., 900

F.2d 1005, 1009 (7th Cir. 1990). The record

suggests that the Anglins have followed the

latter course.

 Although no transcript was made of the

arbitration proceedings, it is undisputed that

counsel for the Anglins objected to arbitration

of the Retail Obligations. In the district court,

counsel recounted that he registered his

objections once the parties "discovered" on the

"first or second day of arbitration" that the

Anglins had also executed personal guaranties of

the Retail Financing Agreement:

At that point, on behalf of the Anglins, I moved

for one of two things: Either that the

arbitration be dismissed because there was no

basis for it under the retail guaranties; or,

that if AGCO wanted to proceed with the
[arbitration], they do so solely under the

Wholesale Guaranties and stipulate to no claim

based on the retail guaranties. [AGCO] stipulated

they were making absolutely no claim under the

retail guaranties and that those retail

guaranties were not to be considered by the

arbitrators.

(Tr. of Dist. Ct. Hearing of 3/6/98, at 26-27.)

Like the defendant in Fansteel, counsel for the

Anglins "carefully and explicitly, in unambiguous

language, made known to the arbitrator[s] and

[AGCO their] clear intention" to preserve their

objection to the arbitrability of the Retail

Obligations, even though they agreed to proceed

with the arbitration hearing. Fansteel, 900 F.2d

at 1009. The Anglins therefore did not waive

their right to object to the scope of the

arbitration.

 We turn to the question whether the arbitrators

went beyond the scope of the authority conferred

upon them by the parties. Arbitrators have the

authority to decide only those issues actually

submitted by the parties. American Postal Workers

Union, AFL-CIO, Milwaukee Local v. Runyon, 185

F.3d 832, 835 (7th Cir. 1999). "[A]rbitration is

simply a matter of contract between the parties;

it is a way to resolve those disputes--but only

those disputes-- that the parties have agreed to

submit to arbitration." First Options of Chicago,

Inc. v. Kaplan, 514 U.S. 938, 943 (1995). Thus,

although the Federal Arbitration Act embodies a

clear federal policy favoring arbitration

agreements, Moses H. Cone Mem’l Hosp. v. Mercury

Constr. Corp., 460 U.S. 1, 24-25 (1983), such

agreements must not be so broadly construed as to

encompass claims that were not intended to be

arbitrated under the original contract. As with

any contract, the touchstone for interpreting an

arbitration clause must be the intention of the

parties. Grundstad v. Ritt, 106 F.3d 201, 204

(7th Cir. 1997); Matteson v. Ryder Sys. Inc., 99

F.3d 108, 114 (3d Cir. 1996). Therefore, while

keeping in mind the federal policy favoring

arbitration, we must consider whether the Anglins

and AGCO intended for their dispute over the

Retail Obligations to be arbitrated. Our review

is extremely limited: we may vacate an

arbitration award only in narrowly defined cases,

such as when "the arbitrators exceeded their

power." 9 U.S.C. sec. 10(a)(4). Further, we

review findings of fact for clear error and

decide questions of law de novo. Publicis

Communication v. True North Communications, Inc.,

206 F.3d 725, 728 (7th Cir. 2000).

 In considering the circumstances surrounding the

signing of the Guaranties, we conclude that there

is strong evidence that the Anglins never
intended to have the arbitration clause cover the

present controversy. In reaching this conclusion,

we rely on essentially three factors. First, the

arbitration clause did not seek to incorporate by

reference any provisions of the Retail Financing

Agreement; it expressly limited itself to

disputes concerning either the Guaranties or

other transactions between the two parties.

Second, at the time the Anglins entered into the

Guaranties, on June 3, 1992, AGCO had not yet

agreed to repurchase Agricredit’s debt--such a

repurchasing agreement was not signed until five

months later, in November 1992. Third, the

Anglins signed their Guaranties before AGCO

acquired Agricredit as a subsidiary; because the

two companies shared no corporate identity as of

June 3, 1992, the Anglins had no reason to

suspect that their arbitration agreement with

AGCO would expand to encompass a dispute with

Agricredit, a nonsignatory. See, e.g., Kissun v.

Humana, 479 S.E.2d 751, 753 (Ga. 1997)

("[P]iercing the corporate veil results in

disregard for the separate existence of parent

and subsidiary.").

 This case resembles Eljer Mfg., Inc. v. Kowin

Dev. Corp., 14 F.3d 1250 (7th Cir. 1994), in

which we held that an arbitrator exceeded his

power by arbitrating a dispute involving a third

party not a signatory to the arbitration

agreement. Eljer Manufacturing, Inc. was the

parent corporation of the Simonds Division, a

producer of metal files. Simonds entered into an

agreement with Kowin Development, Inc. to form a

company called Kowin-Simonds, Inc. that would

participate in a Chinese joint venture to

manufacture files in China. Both Kowin and

Simonds agreed to arbitrate "any dispute" arising

under their agreement. Id. at 1252 n.1. Some time

later, Simonds--to aid the joint venture project-

-sold equipment to the Bank of China, which in

turn leased the equipment back to the joint

venture. The joint venture subsequently failed,

and Kowin sued Eljer and Simonds for fraudulently

misrepresenting facts about the equipment they

sold. After Eljer successfully moved to compel

arbitration, an arbitrator awarded Kowin damages,

including the sum that Eljer recovered from the

Bank of China for the purchase of Simonds’

equipment. We held that the arbitrator exceeded

his powers because the arbitration clause did not

authorize him to arbitrate disputes between Eljer

and a third party, the Bank of China. Id. at

1257.

 Like Eljer, the Anglins’ dispute involves a

third party, Agricredit, which is not a signatory

to the arbitration agreement. The arbitration

agreement contained in the Guaranties limited the

arbitrators’ authority to issues arising from

transactions between either AGCO and Silver Lake
or AGCO and the Anglins. Eljer demonstrates that,

despite the Guaranties’ broad arbitration

provision, the arbitrators were not authorized to

consider issues arising out of the Retail

Financing Agreement between Silver Lake and

Agricredit. The arbitrators exceeded their

authority when they considered the rights of

Agricredit asserted by AGCO as a result of

assignment. These rights, as the Anglins

correctly point out, are nothing more than "those

of a stranger to the arbitration agreement." 

 Moreover, it is a well-established principle of

Georgia law that an assignee of a contract

"stands in the shoes" of the assignor, has no

more rights under the contract than the assignor,

and is subject to all defenses which could have

been raised against the assignor. See Paulsen St.

Investors v. EBCO Gen. Agencies, 514 S.E.2d 904,

905 (Ga. Ct. App. 1999). Because AGCO acquired

its interests in the Retail Obligations through

assignment from Agricredit, it may assert claims

only to the extent of Agricredit’s rights. The

Retail Obligations do not provide for

arbitration. As an assignee of the Retail

Obligations, AGCO is subject to the Retail

Obligations’ limitations-- which include the

absence of an arbitration provision. AGCO may not

invoke the arbitration clause under the

Guaranties to arbitrate Retail Obligations that

are otherwise not arbitrable.

 Besides addressing the contractual underpinnings

of arbitration and the nature of assignments, the

Anglins also express skepticism about the

expansive reach of the arbitration provision.

They liken the arbitration provision to an

unenforceable "dragnet" clause in a mortgage or

security agreement that secures an extensive

range of unanticipated debts, including those

that will arise in the future. The Anglins argue

that the arbitration provision, like an improper

dragnet clause, is unenforceable because it fails

to apprise them that it could encompass a dispute

over their subsequently assigned Retail

Obligations.

 Georgia law, which expressly governs the

Guaranties, has long recognized and enforced

dragnet clauses. See, e.g., Hill v. Perkins, 127

S.E.2d 909 (Ga. 1962); Rose City Foods, Inc. v.

Bank of Thomas County, 62 S.E.2d 145 (Ga. 1950).

Unlike many jurisdictions that construe such

clauses narrowly, see Milton Roberts, Annotation,

Debts Included in Provision of Mortgage

Purporting to Cover All Future and Existing Debts

(Dragnet Clause)--Modern Status, 3 A.L.R. 4th 690

(1981 and Supp. 1999), Georgia is a "creditor’s

state" that has given dragnet clauses their

fullest effect. In Rose City Foods, for instance,
the Georgia Supreme Court broadly construed a

dragnet clause to reach preexisting obligations

that the creditor had obtained from a third

party. Dragnet clauses, the court observed, are

a "matter of private contract" that "courts

should always guard with jealous care" and "give

. . . full effect when it is possible to do so."

62 S.E.2d at 148. Significantly, however, the

Georgia legislature later enacted a mortgage

statute to restrict the reach of dragnet clauses

to "obligations arising . . . between the

original parties to the security instrument." Ga.

Code Ann. sec. 44-14-1(b) (formerly sec. 67-1316).

This restriction thus limits Rose City Foods, see

Commercial Bank v. Readd, 242 S.E.2d 25, 28 n.1

(Ga. 1978) (Hill, J., concurring); Bowen v.

Kicklighter, 183 S.E.2d 10, 12 (Ga. Ct. App.

1971); Federal Deposit Ins. Corp. v. Willis, 497

F. Supp. 272, 281 (S.D. Ga. 1980), and calls into

question the enforceability of the dragnet clause

in this case, in which AGCO obtained the Retail

Obligations through assignment after the

Guaranties were signed. Indeed, other courts have

disapproved of dragnet clauses encompassing debts

that were originally owed by the mortgagor to

third parties and subsequently assigned to the

mortgagee. See, e.g., Hudson v. Bank of

Leakesville, 249 So.2d 371, 374 (Miss. 1971);

Wood v. Parker Square State Bank, 400 S.W.2d 898,

902 (Tex. 1966); Matter of E.A. Fretz Co., Inc.,

565 F.2d 366, 372 (5th Cir. 1978); Grant S.

Nelson & Dale A.Whitman, Real Estate Finance Law, sec.

12.8 at 900-902 (2d ed. 1985); 2 Grant Gilmore,

Security Interests in Personal Property 918 (1965).

 Further, we are mindful that the Guaranties’

terms are construed against AGCO, which prepared

the document. Under Georgia law any ambiguity in

a guaranty is construed against the maker. See

Enterprise Fin. Corp. v. Ross White Enters.,

Inc., 441 S.E.2d 805, 806 (Ga. Ct. App. 1994);

St. Charles Foods, Inc. v. America’s Favorite

Chicken Co., 198 F.3d 815, 821 (11th Cir. 1999)

(applying Georgia law). Although the Guaranties

here speak opaquely of the debtor’s "direct or

indirect" liabilities, they do not mention

subsequent debts that have been obtained by

assignment from a third party. Like other

contracts, the arbitration clause in question

should be interpreted to reflect the parties’

actual expectations. Because AGCO did not obtain

assignment of the Retail Obligations until after

the signing of the Guaranties, we doubt that the

Anglins ever contemplated that their dispute with

Agricredit would find its way to the arbitration

table.

III.

 Because the Anglins could not have contemplated
that their arbitration clause with AGCO would

encompass a dispute with a nonsignatory party, we

conclude that the arbitrators exceeded their

authority by arbitrating the Anglins’ Retail

Obligations to Agricredit. We REVERSE the district

court’s confirmation of the arbitration award,

and REMAND the case to the district court for

further proceedings consistent with this order.

/1 The parties’ briefs gloss over the timing of this

acquisition, and the record offers no

elaboration. The ambiguous chronology apparently

confused the district court, which traced

Agricredit’s subsidiary status as far back as

1989: "In 1989, Agricredit, a wholly owned

subsidiary of AGCO . . . and Silver Lake entered

into a Retail Finance Agreement, dated July 31,

1989." According to AGCO’s own website, however,

AGCO did not acquire Agricredit until 1993 and it

did not make Agricredit a wholly-owned subsidiary

until the following year. See

<http://www.agcocorp. com/>. The wholly-owned

subsidiary status was short lived. In late 1996

AGCO sold a majority stake in Agricredit to the

Dutch lending company Rabobank Nederland. See

id.; AGCO Completes Global Retail Finance Joint

Venture Agreement with Rabobank; Agricredit

Subsidiary Forms Global Alliance with AAA-Rated

Bank, PR Newswire, Nov. 4, 1996, available in

LEXIS database.