Opinion ID: 654607
Heading Depth: 3
Heading Rank: 1

Heading: Main Purpose Doctrine and Primary Obligor.

Text: 27 Under Texas law, an oral guaranty may be enforced if it falls within the main purpose doctrine. An oral guaranty falls within this doctrine if: 28 1) The promisor intended to become primarily liable for the debt, in effect making it his original obligation, rather than to become a surety for another; 29 2) There was consideration for the promise; and 30 3) Receipt of the consideration was the promisor's main purpose or leading object in making the promise; that is, the consideration given for the promise was primarily for the promisor's own use and benefit. 17 31 In the instant case, the bankruptcy court found that Fairchild was not primarily liable on the debt--thus rendering the main purpose doctrine inapplicable. The district court concluded that this finding was not clearly erroneous. 32 Like the district court, we review the bankruptcy court's finding on this issue only for clear error. 18 A finding of fact is clearly erroneous 'when although there is evidence to support it, the reviewing court on the entire evidence is left with the definite and firm conviction that a mistake has been committed.'  19 And the clearly erroneous rule should be strictly applied when, as here, a district court has affirmed factual findings of a bankruptcy court. 20 33 We too conclude that the bankruptcy court did not clearly err in finding that Fairchild was not the primary obligor on the fuel contract with Butler, even though the evidence on this issue is equivocal at best. For example, although Butler's president, Comeau, testified that Fairchild was primarily responsible for the debt, several of Butler's internal documents indicate that payments were to be made by Air Kentucky. George Williamson, the Chief Financial Officer of Fairchild, testified that a letter stating that Butler is looking for reimbursement from Air Kentucky reflected his understanding of the agreement between Fairchild and Butler; he also testified that there was never any question in his mind that Air Kentucky was the account debtor. In contrast, the record discloses that the fuel bills were sent directly to Fairchild for payment. Finally, we must note (as did the bankruptcy court) that the direct consideration received for the oral guaranty was fuel delivered to Air Kentucky for its use, not Fairchild's use--a fact that, under standard commercial practices, militates against finding Fairchild as the primary obligor. When considered in toto, though, we find that there was sufficient evidence to immunize the fact finding of the bankruptcy court from reversal as clear error. 34