Opinion ID: 1350624
Heading Depth: 1
Heading Rank: 3

Heading: the breadth of pepsico's guaranty measured solely by the principles of guaranty law

Text: The guarantor's obligation under § 61(d) of the Workers' Compensation Act bears the earmarks of a statutory undertaking and some private contractual characteristics. Considering the former aspects alone, we hold that the challenged guaranty was intended to operate retrospectively. A guaranty is a promise to answer for the debt, default or miscarriage of another person. [7] A guarantor has a collateral obligation which is independently and separately enforceable from that of the principal debtor or obligor. [8] Under Oklahoma law a guarantor is secondarily liable. His obligation is conditioned upon default by the principal debtor or obligor. [9] A guaranty is deemed continuing (a) if it contemplates a future course of dealing, not limited to a single transaction, for an indefinite period of time or (b) until it is revoked. [10] Liability under a continuing guaranty is deemed continuing until it is revoked where there are no express terms in the instrument specifically limiting the duration of the guarantor's responsibility. [11] Nevertheless, a continuing guaranty may be revoked and future liability ended when the guaranty contract has no definite time to run. [12] A guaranty is deemed unconditional unless its terms import some condition precedent to the guarantor's liability. [13] There is no dispute that the PepsiCo guaranty was continuing and capable of being revoked by the guarantor so that claims arising after its revocation would not be within its terms. The pivotal question here is whether the guaranty had a retrospective sweep that embraced within its ambit benefits awarded before the execution of the instrument and its filing in the Workers' Compensation Court. The obligation of a private-law guarantor is purely contractual. The meaning of the written contract is controlled by the intent of the parties at the time they entered into the agreement. To determine that intent an inquiry must focus on the precise terms of the guarantor's undertaking and the extent of his promise. [14] Intent is to be collected from the whole instrument. Where the language is clear and explicit, its purpose and meaning must be ascertained from the face of the instrument without resorting to extrinsic evidence. [15] If the guaranty's language is ambiguous, the court must place itself, as far as possible, in the position of the parties when they contracted and must consider the circumstances surrounding the transaction and its purposes in addition to the instrument as drawn. [16] Whether a contract is ambiguous so as to require extrinsic evidence or whether the language is ambiguous and hence permits consideration of surrounding circumstances are questions of law for the court. [17] Claimant argues that the plain language of the guaranty stating that PepsiCo ... guarantees the payment of any and all awards and judgments granted by the Workers' Compensation Court of Oklahoma to any Lee Way employee covered by the terms of the Oklahoma Workers' Compensation Act (85 O.S.A. § 1, et seq. ) or the amounts ordered by the said Oklahoma Workers' Compensation Court to any other person, firm or corporation arising out of any Workers' Compensation claim made by any such Lee Way employee.    unconditionally guarantees payment of all compensation awards made before the revocation of the guaranty. Claimant contends that the guaranty is continuing and unconditional since there are no express conditions precedent in the instrument. Claimant concludes that PepsiCo must be held liable retrospectively. PepsiCo calls our attention to the same language. It argues that the text operates prospectively and guarantees only payment of compensation benefits awarded after the guaranty was executed and before it was revoked. According to PepsiCo, the guaranty indicates that the scope of PepsiCo's liability under its guaranty is governed by the provisions of the Workers' Compensation Act which should be read into, and become part of, the guaranty. PepsiCo also asserts that liability under the Act is accident-based, with its key coverage provisions triggered by the point in time when the harmful event takes place. PepsiCo's position is that it guaranteed only awards arising from injuries sustained within the period during which the guaranty was on file and remained unrevoked. This is also, PepsiCo urges, what the trial tribunal intended by its June 8, 1984 letter that requested PepsiCo to assume responsibility for liability Lee Way may incur while the sale was being completed. In case of doubt, a guaranty is to be construed most strongly against the guarantor. [18] The undertaking of a surety for hire or a guarantor who has a personal interest in the matter out of which the obligation arose must be construed against the promisor. [19] Clearly, PepsiCo was under no obligation, statutory or otherwise, to file its guaranty in the trial tribunal. The guaranty was actuated by PepsiCo's personal interest in preserving Lee Way's self-insured status until divestiture could be completed. Nevertheless, one's burden may not be judicially enlarged by imposing on the obligor a sweep of liability which cannot be fairly said to have been assumed under a permissible interpretation of the contractual promise. [20] Given these general principles of private-law guaranty, we conclude and hold that the PepsiCo guaranty was intended to have a retrospective as well as prospective effect. This is so because PepsiCo's undertaking must be deemed to have assumed liability for the payment of benefits adjudged during the continued life of Lee Way's own-risk permit, including compensation awarded before the execution date of the guaranty.