Opinion ID: 6503
Heading Depth: 3
Heading Rank: 2

Heading: The Issue of Intent

Text: 15 Morrison raises a compelling argument that the court below erred in disregarding a jury finding that it was not the mutual intent of the parties that the Morrison guaranty apply to the $750,000 Triple M Company note. There is ample support in the record for the jury's conclusion. Nonetheless, the district court concluded that the jury question on intent was warranted only if Morrison had pled and proved that the guaranty agreement was ambiguous. Because it considered the guaranty to apply unambiguously to the debt at issue, the court below regarded the jury's intent finding as irrelevant and entered judgment in favor of Bank One. We are not so persuaded. As Morrison correctly points out, contract interpretation principles are irrelevant where, as here, there is a dispute over whether the guaranty was even in existence as to the $750,000 note. Preston Farm & Ranch Supply, Inc. v. Bio-Zyme Enter., 625 S.W.2d 295, 298 (Tex.1981) (The question of whether an agreement was reached by the parties is generally a question of fact where the existence of the agreement is disputed.). The question of whether the parties intended the guaranty to be in effect was both clearly relevant and appropriate for jury resolution. It went directly to Morrison's pled (and evidently proven) defense of cancellation or release. 2 In disregarding this jury finding and refusing to submit a question asking whether MBank released Morrison from the guaranty (which refusal, as noted below, is also asserted as error), the district court held--essentially as a matter of law--that the guaranty could not have been released by MBank, primarily because Morrison never sent any written notice as required under the guaranty. However, the provision which allows Morrison to cancel his guaranty obligation unilaterally does not render the intent question irrelevant because that clause does not speak to, or prohibit, a mutual cancellation or novation of the guaranty agreement. E.g., Knight v. Wirotzious, 495 F.2d 543, 545 (5th Cir.1974) (holding that a guaranty can be waived or surrendered by the bank without regard to the means prescribed for cancellation by a guarantor). 3 Therefore, a fact issue existed as to whether the parties agreed to cancel the guaranty--or at the very least modify the contract to exclude the obligation at issue. This issue was properly submitted to the jury in the form of the intent question. 16 The loan applications and supporting MBank documents show that Morrison did not guarantee the $750,000 obligation. The indispensable, component loan documents reflect that the parties specifically agreed that the $750,000 obligation was not guaranteed, presumably because the guaranty contract was either cancelled or modified to exclude that note. See, e.g., 3 A. CORBIN, CORBIN ON CONTRACTS Sec. 574, at 371 (1960) (Any contract, however made or evidenced, can be discharged or modified by subsequent agreement of the parties.). MBank's own internal memos specifically recite that Morrison was to have no personal liability on the notes. For example, when Triple M's financial condition began to deteriorate, Kathryn Seider (Seider), the MBank officer who replaced Baldwin, requested that Morrison execute a new guaranty for the $750,000 credit line. Seider's own credit analyses which carefully discuss sources of repayment do not mention Morrison as a potential resource. MBank's objective actions and inactions--specifically, its failure to make demand upon or otherwise pursue Morrison as a guarantor though its own records estimated his net worth to exceed $4,000,000--further reflect an understanding that Morrison had not guaranteed the $750,000 line of credit. Indeed, Bank One's own actions in seeking relief from the Triple M bankruptcy court by representing that Triple M's secured assets were virtually the only assets from which satisfaction could be made 4 support the view that the guaranty was likely unearthed after the fact from deep within the MBank dead files where it maintained cancelled instruments. We thus conclude that the jury properly determined that the parties did not intend the guaranty to cover the line of credit at issue. The trial court's disregard of this finding was in error.