Title: St. Regis Paper Co. v. Wicklund
Citation: 610 P.2d 903, 93 Wash. 2d 497
Docket Number: 46687
State: Washington
Issuer: Washington Supreme Court
Date: May 8, 1980

93 Wn.2d 497 (1980) 610 P.2d 903 ST. REGIS PAPER COMPANY, Respondent, v. VERNON WICKLUND, ET AL, Petitioners. No. 46687. The Supreme Court of Washington, En Banc. May 8, 1980. Newton, Newton &amp; Kight, by R. Michael Kight, for petitioners. Eisenhower, Carlson, Newlands, Reha, Henriot &amp; Quinn, by Richard A. Jessup, for respondent. DOLLIVER, J. Wicklund Builders, Inc., and its president, defendant Vernon Wicklund, had done business with plaintiff St. Regis Paper Company for several years on an open account basis. Wicklund agreed with Ralph Munger, credit manager of St. Regis, to sign a promissory note for certain past due amounts. Munger filled in the blank spaces of the standard form note and wrote "personal guaranty" in a blank space in a paragraph referring to security for the note. He later crossed out these words, initialed the change, and substituted the word "none". Wicklund signed the note without designating that he was signing it in a representative or corporate capacity. *499 St. Regis sued Wicklund individually on the note. Wicklund counterclaimed for reformation alleging a mutual mistake and that the parties intended only the corporation to be bound rather than Wicklund as an individual. Over the objection of St. Regis, Wicklund testified he had discussed the note with Munger and that both parties understood only the corporation would be liable on the promissory note. The trial court allowed the parol evidence: Wicklund further testified that he objected to the words "personal guaranty" and had Munger cross them out as he did not want to be personally bound on the note. On the other hand, Munger's testimony by deposition stated that he understood the note was to be a personal obligation; that he wrote the words "personal guaranty" in by mistake and that he crossed them out and initialed them on his own initiative. The trial court held in favor of Wicklund. In its findings of fact the court said that, "the inclusion of the words `personal guaranty' and the subsequent striking of those words by Mr. Munger, is confusing and raises a question as to the parties' intentions at the time." The court also found there was no reasonable explanation for the inclusion and subsequent striking of the words "personal guaranty" other than the fact that the question of Wicklund's personal liability on the note arose, was discussed, and the parties agreed he was not to be personally liable. The court further stated that clear, cogent and convincing evidence existed that the note did not embody the intent of the parties and that a mutual mistake was made in failing to indicate Wicklund's representative capacity. On the basis of its findings of fact, the court concluded that as a result of the mutual mistake the note should be reformed to provide that Wicklund signed the note for the corporation and not as an individual. The court entered *500 judgment reflecting this conclusion. Judgment was also entered against Wicklund Builders, Inc., in the amount of $21,492.98, plus interest and costs. St. Regis first sought review in this court, contending in part that the Uniform Commercial Code, and specifically RCW 62 A. 3-403, prohibits the admission of parol evidence to vary the capacity in which an individual signs an instrument, even where a party is attempting to obtain reformation due to mutual mistake, unless some apparent ambiguity exists on the face of the note with respect to the capacity in which the person signed the note. The case was transferred to the Court of Appeals which reversed the trial court in a decision filed on May 29, 1979, and later amended on October 18, 1979. St. Regis Paper Co. v. Wicklund, 24 Wn. App. 552, 562, 597 P.2d 926 (1979). The Court of Appeals stated at the end of its opinion: "We conclude that the plaintiff's objection to parol evidence to vary and explain the terms of the unambiguous promissory note should have been sustained." Two issues are presented: (1) Did the trial court err in allowing parol evidence to establish that the parties intended only the corporation to be liable on the promissory note? and (2) Did the trial court err in reforming the note to indicate that Wicklund signed only as an agent of Wicklund Builders, Inc.? As to the first issue, St. Regis contends the admission of parol evidence is prohibited by the Uniform Commercial Code, specifically RCW 62 A. 3-403. This section provides: St. Regis also cites the official comments to section 2(a) which states "A signature [of the agent alone] ... personally obligates the agent and parol evidence is inadmissible under subsection (2)(a) to disestablish his obligation." U.C.C. § 3-403, Comment 3. Wicklund, however, contends reformation because of mutual mistake is available regardless of RCW 62 A. 3-403. In Akers v. Sinclair, 37 Wn.2d 693, 226 P.2d 225 (1950), we stated the rule on reformation for mutual mistake: Akers, at 702. In Leonard v. Washington Employers, Inc., 77 Wn.2d 271, 278, 461 P.2d 538 (1969), we said: Does RCW 62 A. 3-403 eliminate the equitable remedy of reformation because of mutual mistake and prohibit the admission of parol evidence to prove mutual mistake? We hold it does not. RCW 62 A. 1-103 states: (Italics ours.) The official comments to this section state: (Italics ours.) U.C.C. § 1-103, Comment 1. [1] There is nothing in RCW 62 A. 3-403 which explicitly or indeed even by reference states the equitable remedy of reformation because of mutual mistake is no longer available. Neither by case law nor by the statutes of this state has reformation because of mutual mistake been eliminated. The defense was raised properly by defendant and parol evidence as to mutual mistake was properly admitted by the trial court. See J. White &amp; R. Summers, Uniform Commercial Code § 2-11, p. 75-76 (1972). The Court of Appeals was correct in its contention the signature on the note was unambiguous and thus not subject to explanation by parol evidence. However, it is not the contention of defendant that the signature is ambiguous but rather that it was a mutual mistake that the note itself was signed by Wicklund in his individual capacity. *503 The Court of Appeals reexamined the evidence and came to the conclusion it did not establish by clear, cogent and convincing evidence that there had been a mutual mistake. Initially, it should be pointed out that, contrary to the contention of the Court of Appeals, the trial court did make findings establishing reformation. In finding of fact No. 11, the trial court stated: Similar references were made by the trial court in its conclusions of law, oral decision and judgment. [2] An appellate court will sustain findings of fact which are supported by substantial evidence. Grayson v. Nordic Constr. Co., 92 Wn.2d 548, 599 P.2d 1271 (1979); Thorndike v. Hesperian Orchards, Inc., 54 Wn.2d 570, 343 P.2d 183 (1959). This well established doctrine was ignored by the Court of Appeals. While it may well be the Court of Appeals would have weighed the evidence differently and given greater or lesser credence to certain witnesses, the proper function of an appellate court is to consider whether there was substantial evidence to support the findings of the trial court. We have carefully reviewed the report of proceedings and find there was substantial evidence to support the findings of the trial court. The Court of Appeals is reversed and the judgment of the trial court is reinstated. UTTER, C.J., and ROSELLINI, STAFFORD, WRIGHT, BRACHTENBACH, HOROWITZ, HICKS, and WILLIAMS, JJ., concur.