Opinion ID: 1162817
Heading Depth: 1
Heading Rank: 4

Heading: the breadth of the undertaking

Text: The Bank contends the agreement's terms are consistent because the guarantors ensure payment of a fixed percentage of the note's unpaid balance upon default, rather than a percentage of the unpaid judgment after credit for other sources of payment. Oklahoma's guaranty jurisprudence is well established. A guaranty is a promise to answer for the debt, default or miscarriage of another person. [13] The guarantor's obligation is collateral to that of the principal debtor or obliger and independently and separately enforceable. [14] Because the present case deals with private-law guarantors, we must apply the general rule that obligations of a private-law guarantor are purely contractual. [15] The intent of the parties at the time they entered into the agreement controls the meaning of the written contract. [16] The precise terms of the guarantor's undertaking and the extent of the given promise govern the breadth of the obligation. [17] Intent is to be gathered from the entire instrument. [18] Where the language is clear and explicit, there is no need to resort to extrinsic evidence to ascertain its meaning. [19] Where a contract is complete in itself but, as viewed in its entirety is unambiguous, its language is the only legitimate evidence of what the parties intended. [20] Absent illegality parties are free to bargain as they see fit. When the bargained-for agreement is in writing, a court may neither make a new contract to benefit a party nor rewrite the existing one. [21] A guaranty is to be construed in favor of one who has parted with property in reliance on the collateral promisor. [22] Applying these general principles of guaranty, we hold that the agreement in contest was intended to assure a guarantor's payment of a fixed percentage of the note's unpaid balance after crediting the confirmed sheriff's sale proceeds first to that portion of the judgment which is unaffected by the guaranty. This is so because the clause that limits a guarantor's obligation to a fixed percentage of the note's unpaid balance must be considered together with the provision which details the procedure to be followed in case of a lien's foreclosure. We must hence conclude that the latter clarifies the meaning of the term unpaid balance. When the agreement is read as a whole we see no conflict between the terms. Clearly, the parties must have contemplated the amount recovered from the mortgaged property's sale might not be sufficient to satisfy the entire obligation. This is true because the guarantors were asked to stand as security for a fixed percentage of the unsatisfied balance  a balance that must be determined by giving credit for the sheriff's sale proceeds first to that part of the debt which is unaffected by the guaranty. [23] The guarantors assert it is unreasonable to hold them liable for a fixed percentage of the guaranty-debt judgment when the amount owed by the principal will be reduced by the mortgaged property's fair market value. [24] Oklahoma jurisprudence adheres to the principle that even though the result may be harsh, a party will be bound by the unambiguous terms of a contract. [25] Moreover, the legal effectiveness of a guaranty is not dependent on the continued existence of the principal's debt. Rather, it is co-extensive in its breadth and sweep with the terms of the guarantors' enforceable promise. [26] The terms of 15 O.S. 1981 § 334 provide that the obligation of a guarantor must be neither larger in amount nor in other respects more burdensome than that of the principal. This rule relates to conditions at the time of a guaranty's execution. [27] An agreement's original obligation may be fixed to assure the guarantor's does not exceed that of the principal, but the guarantor may further agree that  upon the occurrence of some specified event  his liability will remain the same even though the principal's obligation may be decreased. The mortgaged property's sale was the specified event here and the parties agreed that if that event occurred, the sale proceeds would be used to reduce that portion of the debt which was not subject to the guaranty. Accordingly, the guarantors remain liable for a fixed percentage of the guaranty-debt judgment although the principal's debt may be eligible for reduction by the property's fair market value.