Opinion ID: 2141846
Heading Depth: 1
Heading Rank: 7

Heading: the district court erred in determining czerwinski was never liable for more than $525,000 under the guarantee

Text: Integral to our resolution of this appeal is a determination of the amount of debt to which Czerwinski was exposed under the Guarantee. For completeness, we note that given the posture and evidence in this case, we need not and do not comment on the potential contribution, if any, to which Czerwinski may be entitled relative to her indebtedness to Builders. On appeal, Builders claims that the district court erred when it determined that Czerwinski was never obligated for more than $525,000.00 under the Guarantee. We agree with Builders that the district court erred in this determination. Builders notes that the Guarantee provides as follows: Czerwinski [and Jack] absolutely and unconditionally guarantee ... prompt repayment when due of all amounts advanced in the past ... and of all amounts advanced in the future by Builders to Benchmark for use in Benchmark's conduct of its business. If Benchmark defaults in the payment of Such indebtedness, Czerwinski [and Jack] will pay to Builders ... the amount then due. Builders claims that neither this nor any other language in the Guarantee, nor, to the extent applicable, any other document, limits Czerwinski's liability under the Guarantee and that as a result, Czerwinski is liable to Builders for all sums advanced by Builders to Benchmark under the Agreement. Czerwinski claims that notwithstanding the absolute[ ] and unconditional[ ] language contained in the Guarantee, she does not owe money to Builders in general and that in particular, she does not owe the full amount that Builders advanced to Benchmark. Czerwinski asserts that the Agreement, the Guarantee, and the deeds of trust were made as part of one transaction and should be construed together for purposes of interpretation. Czerwinski relies on cases similar to Gary's Implement v. Bridgeport Tractor Parts, 270 Neb. 286, 702 N.W.2d 355 (2005), in which we stated that when documents are related and part of one transaction, their substance will be read together. Construing the documents together, Czerwinski asserts and the district court agreed that the Guarantee is subject to the language in the Agreement that stated that [t]he maximum amount of credit to be extended to Benchmark shall be ... $525,000.00. Czerwinski claims that the district court was correct when it determined that $525,000 was the maximum sum for which she was ever exposed as guarantor under the Guarantee. We conclude as a matter of law that the Guarantee is unambiguous and that its meaning is to be determined by the language of the Guarantee itself. The Guarantee contains no limits on Czerwinski's liability to Builders, and the district court erred as a matter of law in limiting Czerwinski's potential liability under the Guarantee at $525,000. We begin our analysis by noting the rules regarding the interpretation of guaranty agreements. A guaranty is a contract and is a collateral undertaking by one or more persons to answer for the payment of a debt or the performance of some contract or duty in case of the default of another person who is liable for such payment or performance in the first instance. See Rodehorst v. Gartner, 266 Neb. 842, 669 N.W.2d 679 (2003). A guaranty is interpreted using the same general rules as are used for other contracts. State ex rel. Wagner v. Amwest Surety Ins. Co., 274 Neb. 110, 738 N.W.2d 805 (2007). We have stated that Nebraska adheres to the rule of strict construction of guaranty contracts.... `When the meaning of the contract [guaranty] is ascertained, or its terms are clearly defined, the liability of the guarantor is controlled absolutely by such meaning and limited to the precise terms.' Federal Deposit Ins. Corp. v. Heyne, 227 Neb. 291, 293, 417 N.W.2d 162, 163 (1987) (quoting Hunter v. Huffman, 108 Neb. 729, 189 N.W. 166 (1922) (syllabus of court)). The meaning of a contract is a question of law, in connection with which an appellate court has an obligation to reach its conclusions independently of the determinations made by the court below. Hogelin v. City of Columbus, 274 Neb. 453, 741 N.W.2d 617 (2007). Czerwinski urges us to construe the Guarantee with the Agreement and thereby limit the terms of the Guarantee. When, as here, the Guarantee is unambiguous, we do not vary its terms by construing it with another instrument. In this regard, we have stated: The statement that contemporaneous instruments may be treated and interpreted as one means only that this will be done when it will effectuate the intention and if the provisions of the two instruments if put together will not be incompatible. The court may not do violence to a complete, unambiguous contract by consolidating it with another writing if the effect of doing so would be to avoid an essential part of the contract. If contracts or writings are in effect independent they should not be construed together even though the same parties and the same subject matter may be concerned. Gerdes v. Omaha Home for Boys, 166 Neb. 574, 585-86, 89 N.W.2d 849, 856 (1958). Ambiguity exists in an instrument when a word, phrase, or provision in the instrument has, or is susceptible of, at least two reasonable but conflicting interpretations or meanings. Plambeck v. Union Pacific RR. Co., 244 Neb. 780, 509 N.W.2d 17 (1993). See, also, Kluver v. Deaver, 271 Neb. 595, 714 N.W.2d 1 (2006). Any ambiguity in a guaranty should arise in the first instance from the guaranty itself, and neither a court nor the parties will be permitted to create an ambiguity when none exists. See Knox v. Cook, 233 Neb. 387, 446 N.W.2d 1 (1989) (stating that fact that parties to guaranty suggest opposing interpretations to document does not by itself compel conclusion that guaranty is ambiguous). The language of the Guarantee is unambiguous. Czerwinski, as a coguarantor, absolutely and unconditionally guarantee[d] prompt repayment when due of all amounts advanced. No other language in the Guarantee amounts to a meaningful limitation on this provision of the Guarantee. No language in the Guarantee limits Czerwinski's liability, and Czerwinski did not contract with Builders in the Guarantee to a limit on Builders' credit to Benchmark. We recognize that the Agreement contains language relative to the $525,000 upon which Czerwinski relies. However, a guaranty is an independent contract that imposes responsibilities different from those imposed in an agreement to which it is collateral. See National Bank of Commerce Trust & Sav. Assn. v. Katleman, 201 Neb. 165, 266 N.W.2d 736 (1978). It is the guaranty agreement that contains the express condition on the guarantor's liability and that defines the obligations and rights of both guarantor and guarantee. Id. The language relied upon by Czerwinski in the Agreement relative to the $525,000 merely described Builders' obligation to extend credit to Benchmark to a specific amount. Other courts have observed, and we agree, that in the absence of a limit in a guaranty, the presence of a credit limit in a separate credit agreement does not create a limit in the corresponding guaranty. See, e.g., Fertig v. Bartles, 78 F. 866 (D.N.J.1897) (stating that clause in separate contract limiting credit amount to be extended to borrower did not restrict guarantor's liability because clause was not inserted for guarantor's benefit, and there was no similar clause in contract with guarantor limiting liability); Clark v. Walker-Kurth Lumber Co., 689 S.W.2d 275, 279 (Tex.App.1985) (stating that when the contract between the creditor and principal debtor limits the obligation of the former to extend credit to the latter up to a specified amount, such limitation does not condition the contract by which the guarantor agrees to guaranty the payment of all credit extended to the debtor); Bay Oil Co. v. Vilas, 237 Wis. 603, 605, 296 N.W. 595, 597 (1941) (stating that credit limit in contract between creditor and principal was not for the benefit of the... guarantor but for that of the creditor, and it does not modify or condition the separate contract of guaranty which contains no specific limitation or condition). The fact that the Agreement in this case refers to $525,000 does not restrict the liability of the guarantors to that amount in view of the breadth of the language of the Guarantee itself. See Missouri Farmers Ass'n, Inc. v. Coleman, 676 S.W.2d 855 (Mo.App.1984). Furthermore, the liability of the guarantor is not discharged by the extension of more credit than the amount specified in the separate credit agreement. Clark v. Walker-Kurth Lumber Co., supra . The meaning of a contract is a question of law, in connection with which an appellate court has an obligation to reach its conclusions independently of the determination made by the court below. Hogelin v. City of Columbus, 274 Neb. 453, 741 N.W.2d 617 (2007). Czerwinski executed a Guarantee in which, as a matter of law, we conclude that she unambiguously guaranteed the payment of all amounts advanced by Builders to Benchmark. We conclude that the district court erred as a matter of law when it determined by reference to the Agreement that Czerwinski was never liable for more than $525,000 under the Guarantee. We reverse that portion of the district court's order.