Court Opinion

ID: 9781205
Source: CourtListenerOpinion
Date Created: 2023-08-30 16:22:43.928058+00
Date Added: 2024-06-11T07:34:21.372229
License: Public Domain

GEER, Judge
dissenting.
As the majority opinion points out, when a case involves a promise to guarantee an existing debt, in order for that promise to be enforceable, there must be some new consideration for that promise other than the original debt. Because I do not believe that plaintiff has pled consideration for defendant Theodore R. Reynolds’ promise to pay the debt of 301 Hillsborough Street Partners (“301 Partners”), I would hold that the trial court properly granted defendant’s motion to dismiss. I, therefore, respectfully dissent.
The consideration for the guaranty promise must exist at the time that the promise is made. In Standard Supply Co. v. Person, 154 N.C. 456, 461, 70 S.E. 745, 747 (1911), the Supreme Court indicated that there are two ways that “forbearance” by the promisee can result in an enforceable guaranty contract as to the promisor. First, there can be an express agreement: “[I]t is very generally held that a binding contract to forbear suit on a valid claim, for a definite time, or expressed in language that the law would interpret as a reasonable time, constitutes a sufficient consideration for a guaranty. And an agreement with the promisor to forbear, followed by forbearance, for such time, would uphold the contract.” Id. Second, however, there can be something less than an express agreement: “[B]y the weight of authority actual forbearance for such time without express agreement, but at the instance or request of the promisor is sufficient.” Id.
Plaintiff does not allege an express agreement. Instead, plaintiff seems to be relying on the second approach. There is no question that plaintiff alleges actual forbearance. The issue is whether the complaint alleges that the plaintiff’s forbearance was at the request of defendant Reynolds.
*264In ¶ 16 of the complaint, plaintiff alleges that in two letters, identified in the complaint as Exhibits A and B to the complaint, defendant Reynolds “admitted to his personal liability for the amount owed” — -or, in other words, Reynolds promised to pay the existing debt of defendant 301 Partners. In ¶ 17, plaintiff alleges that “[i]n reliance on the requests by defendant Reynolds and his promises to be personally liable for the amounts owing to plaintiff, the plaintiff delayed collection action against 301 Partners for over one year.”
¶ 17 is the only paragraph including any reference to “requests” by Reynolds. While ¶ 17 does not specifically indicate what Reynolds was requesting, the paragraph can be construed as alleging that Reynolds requested that plaintiff delay any collection action on 301 Partners’ debt. On the other hand, however, ¶¶ 16 and 17 allege that the only representations made by Reynolds are contained in Exhibits A and B to the complaint; the complaint references no other representations by Reynolds. This Court has held: “When reviewing pleadings with documentary attachments on a Rule 12(b)(6) motion, the actual content of the documents controls, not the allegations contained in the pleadings.” Schlieper v. Johnson, 195 N.C. App. 257, 263, 672 S.E.2d 548, 552 (2009).
Based on Schlieper, therefore, the issue is whether Exhibits A and B reflect a request by Reynolds that plaintiff forbear from pursuing collection action or other legal redress against 301 Partners. After reviewing the two exhibits, I see nothing in either letter that could possibly be construed as the necessary request. All that the letters do is state Reynolds’ intent to pay plaintiff.
The first letter, dated 27 May 2009, notes that the events leading to the 301 Partners’ project being stopped “were totally uncontrollable by me and by you,” but asserts that “these facts by no means are an indication of my intentions regarding my financial obligations to you.” The letter continues: “Throughout my career in this city I have answered all of my obligations and it is my sincere intent to do the same with regards to this one.” Reynolds then stated that he “will make every effort” to pay plaintiff by the end of the year, but promises that even if the payment is not made by the end of the year, the indebtedness will be paid. Nothing in the first letter makes any request that plaintiff take or refrain from taking any action or even references anything that plaintiff might or might not do. The letter contains not the slightest allusion to collection action. I believe that the letter contains only a promise to pay.
*265The second letter dated 8 December 2009 does not seem to add anything more. It describes the May letter as “stating my intention regarding our account with your firm” (emphasis added) and promises that while financial conditions have worsened, “[t]he one thing that has not changed is my commitment to honor this obligation.” The letter acknowledges that “we, like most others, are struggling” and expresses “regret” at not being able to pay by the projected end-of-the-year date. It still asserts that “the obligation will [b]e honored,” although it provides no anticipated time frame. Again, I do not see even an implicit request that plaintiff do anything or refrain from doing anything.
I cannot see how the letters — which control over the reference in the complaint to unspecified “requests” — can be read as providing the consideration necessary to render Reynolds’ promise to pay an enforceable guaranty. I am concerned that reversing the order below that granted the motion to dismiss would allow a party to rely upon a bare promise to pay as an enforceable guaranty.
With respect to Standard Supply Co. v. Person, discussed by the majority, I believe it is important to look at the Court’s earlier opinion in that same case: Standard Supply Co. v. Finch, 147 N.C. 106, 60 S.E. 904 (1908). The Supreme Court, in its first opinion, considered whether evidence of (1) a letter setting out a promise by a third party to pay a partnership’s existing account as soon as the partnership’s dry kiln was in operation when combined with (2) a letter from the plaintiff to the third party suggesting that delay was acceptable was sufficient to prove an enforceable guaranty. The Court concluded that the letters did not, standing alone, establish the consideration necessary to make the promise to pay an enforceable guaranty. Id. at 110, 60 S.E. at 905 (“The defendant is not responsible for the former portion of the account, for the lack of any valuable consideration for his promise.”).
The Court, however, awarded plaintiff a new trial because of concerns about the accuracy of the “case on appeal,” which had been “made up by agreement of counsel.” Id. In the appeal from the subsequent re-trial, the Court explained that, in the first appeal, because of uncertainty about the trial court’s instructions to the jury and concerns about “the true and proper interpretation of the testimony of’ plaintiff’s main witness, “the Court decided that it was safer to award a new trial, that the facts might be more fully developed.” Standard Supply Co., 154 N.C. at 459, 70 S.E. at 746. It appears, therefore, that there was a dispute in the first appeal regarding what plaintiff’s wit*266ness had actually said at trial. The first opinion had, therefore, only addressed the sufficiency of the written correspondence to establish a guaranty.
' In contrast to the majority opinion, I do not believe that the Supreme Court, in its second opinion, concluded that there was adequate consideration based on the parties’ letters standing alone. The first opinion established that the letters did not amount to an enforceable guaranty, and nothing in the second opinion revisits that holding. Instead, in the second opinion, the Court wrote: “While the record in the former appeal left the matter in such uncertainty that the Court did not feel justified in making a final decision of the case, and while there is some doubt even now as to whether the letter of plaintiff of date 11 May amounts to a distinct and definite agreement not to sue, there is no longer room for construction that the correspondence, taken in connection with the full and definite statements of the witness Burr, establishes the proposition that there was actual forbearance to sue the debtors, and that this was at the instance and request of the [defendant].” Id. at 461-62, 70 S.E. at 747 (emphasis added). It thus appears from the Supreme Court’s second opinion that the testimony of Burr was critical in finding a request as well as actual forbearance — elements necessary for an enforceable guaranty.
Plaintiff, in this case, could have included additional allegations in the complaint setting out any actual requests for forbearance— analogous to the Burr testimony in Standard Supply — but chose not to do so. The complaint contains no mention of any oral or other written representations by Reynolds relating to the promise to pay. We are, therefore, left only with the letters, which — like the letters in Standard Supply — cannot be construed as even implicitly seeking forbearance. If a letter promising to pay when a dry kiln was operational did not constitute an enforceable guaranty, then I do not see how letters promising to pay at the end of the year or at some unspecified later date could be sufficient. Accordingly, I would hold that the complaint failed to sufficiently allege consideration for Reynolds’ promise to pay. I would, therefore, affirm.