Opinion ID: 2096235
Heading Depth: 1
Heading Rank: 1

Heading: The Guaranty

Text: The Orkins contend that [t]he personal guarantee made by [them] applied only to the amended and extended lease period beginning November 1, 1972 and was not in effect during the period of default; therefore [they] are not personally liable for the rent due on the broken lease. Jacobson contends that Maryland Rule 886 is applicable and that the trial judge was not clearly in error in finding that on July 1, 1972, the [Orkins] were guarantors of a lease, and amendment and extension thereto, between Crest Enterprises, Inc. and [Jacobson]. We have adopted the objective law of contracts as enunciated by Chief Judge Brune for the Court in Slice v. Carozza Properties, Inc., 215 Md. 357, 137 A.2d 687 (1958): As we turn to the authorities, we may note first that the theory of `objective law' of contracts has been almost universally adopted by this time. The written language embodying the terms of an agreement will govern the rights and liabilities of the parties, irrespective of the intent of the parties at the time they entered into the contract, unless the written language is not susceptible of a clear and definite understanding, or unless there is fraud, duress or mutual mistake. Ray v. Eurice, 201 Md. 115, 93 A.2d 272. Id. at 368. See also Monticello v. Monticello, 271 Md. 168, 173, 315 A.2d 520 (1974), and Kasten Constr. v. Rod Enterprises, 268 Md. 318, 328, 301 A.2d 12 (1973). In Kasten, after quoting from Slice, Judge Levine said for the Court: The cardinal rule in the construction and interpretation of contracts is that effect must be given to the intention of the parties, unless it is inconsistent with some established principle of law, Hardy v. Brookhart, 259 Md. 317, 270 A.2d 119 (1970); Cadem v. Nanna, 243 Md. 536, 221 A.2d 703 (1966); Schapiro v. Jefferson, 203 Md. 372, 100 A.2d 794 (1953). But, where a contract is plain and unambiguous, there is no room for construction, and it must be presumed that the parties meant what they expressed, Little v. First Federated Life, 267 Md. 1, 296 A.2d 372 (1972); Kermisch v. Savings Bank, 266 Md. 557, 295 A.2d 776 (1972); Devereux v. Berger, 253 Md. 264, 252 A.2d 469 (1969). And, when the language of a contract is clear, the true test of what is meant is not what the parties to the contract intended it to mean, but what a reasonable person in the position of the parties would have thought it meant, U.S.I.F. Triangle v. Rockwood Dev. Co., [261 Md. 379, 275 A.2d 487 (1971)]; Seldeen v. Canby, 259 Md. 526, 270 A.2d 485 (1970); Katz v. Pratt Street Realty, 257 Md. 103, 262 A.2d 540 (1970). In addition to excluding Rod's `understanding' or `interpretation' as the test of what was intended under the contract, adherence to the latter principle also means that neither the `understanding' of Annapolis Federal nor that of the scrivener is a proper standard. Id. at 328-29. (Emphasis added.) Put in a slightly different way, as was said in Devereux v. Berger, 253 Md. 264, 269, 252 A.2d 469 (1969), Maryland contract law is to the effect that where a contract is plain as to its meaning, there is no room for construction and it must be presumed that the parties meant what they expressed, citing Lawless, Adm'x v. Merrick, 227 Md. 65, 71, 175 A.2d 27 (1961); Weber v. Crown, etc., Corp., 214 Md. 115, 121, 132 A.2d 857 (1957); Strickler Eng. Corp. v. Seminar, 210 Md. 93, 100, 122 A.2d 563 (1956). Our predecessors in Waters v. Griffith, 2 Md. 326, 333, said that [w]e must give, if we can, some distinct meaning to every word employed in the contract.... To like effect see 17 Am.Jur.2d Contracts § 259 (1964), citing, among other cases, Nat. Fire Ins. Co. v. Crane, 16 Md. 260 (1860): § 259. Giving effect to entire contract, and all its parts and language. It is a fundamental rule of contract construction that the entire contract, and each and all of its parts and provisions, must be given meaning, and force and effect, if that can consistently and reasonably be done. An interpretation which gives reasonable meaning to all its provisions will be preferred to one which leaves a portion of the writing useless or inexplicable. So far as reasonably possible, effect will be given to all the language and to every word, expression, phrase, and clause of the agreement. No word or clause should be rejected as mere surplusage if the court can discover any reasonable purpose thereof which can be gathered from the whole instrument. A construction will not be given to one part of a contract which will annul another part, unless such a result is fairly inescapable. Comparatively unimportant parts or provisions which may be severed from the agreement without impairing its effect or changing its character will be suppressed or subordinated if in that way, and only in that way, the agreement can be sustained and enforced. Id. at 660-62. By analogy, in our construction of statutes we have consistently adhered to the proposition that all parts of a statute are to be read together to find the intention as to any one part and that all parts are to be reconciled and harmonized if possible; also, that if there is no clear indication to the contrary and it is reasonably possible, a statute is to be read so that no word, clause, sentence or phrase shall be rendered surplusage, superfluous, meaningless or nugatory. See, e.g., Thomas v. Police Commissioner, 211 Md. 357, 361, 127 A.2d 625 (1956), and the many cases citing that decision since then including County Council for Montgomery County v. Supervisor of Assessments of Montgomery County, 274 Md. 116, 332 A.2d 897 (1975). The Orkins guaranteed that Crest would perform all obligations required of it under said lease, as [t]hereby extended and amended, during said extension period.  (Emphasis added.) The contract is not ambiguous. The only way that meaning can be given to each word used is to conclude that the Orkins assumed liability only for the extended term which was to begin November 1, 1972. To hold them liable for a default in the summer of 1972 gives no meaning to the words during said extension period. If it were the intent of the parties that the Orkins' guaranty extend from its date in 1969, then the last mentioned words should not have been added because the performance of all obligations required ... under said lease, as hereby extended and amended would have covered the situation. Accordingly, the trial judge erred in holding the Orkins liable under their personal guarantee.