Court Opinion

ID: 5163181
Source: CourtListenerOpinion
Date Created: 2022-01-02 03:07:46.272272+00
Date Added: 2024-06-11T08:25:43.163504
License: Public Domain

RABINOWITZ, Justice,
dissenting.
I cannot agree that the shareholder agreement upon which the court relies created obligations equivalent to the Sellicks’ rejected guarantees. In my view, neither the recital nor the demand clause quoted by the court create such obligations.1

The Demand Provisions.

The shareholder agreement at issue provided a mechanism to “cure or prevent any [ALK] default, deficiency or delinquency” by requiring individual shareholders to contribute in proportion to their investment shares. This demand procedure, however, could be initiated only by ALK’s board of *1347directors. Moreover, failure to meet a demand would create a right of action in the company alone. The demand provisions therefore failed to duplicate the effect of the Sellicks’ allegedly rejected personal guaranties, in failing to create the individual rights of contribution which exist between cosureties.

The Recital.

Neither, in my view, did the Sellicks assume the duties of cosureties by their apparent truthful representation that they “ha[d] been asked to. and ha[d] agreed to personally guarantee the Company’s debt to $600,000.” UBA did indeed ask the Sel-licks for their guarantees, but unilaterally “decided as an internal policy matter not to accept a guaranty [sic] from Hal and Marilyn Sellick.” I cannot agree that the shareholders’ quoted recital somehow freed the principal, UBA, to pick and choose which guarantees it would and would not accept, contrary to UBA’s alleged promise to each investor (made through “insider” Hal Sel-lick or otherwise) to accept personal guarantees from each and every shareholder. See State Bank of East Moline v. Cirivello, 74 Ill.2d 426, 24 Ill.Dec. 839, 386 N.E.2d 43, 46 (1978) (“By representing that the loan would not be advanced without the personal guarantees of all the limited partners, [the bank officer] was also representing that the guaranty would not become effective unless all ... signed.”).

Conclusion.

Viewing the evidence and reasonable inferences therefrom in favor of the nonmov-ant, I conclude that the Estate has alleged facts to establish UBA’s material breach of a condition precedent. The shareholders agreement should not be read to immunize the bank from the consequences of its unilateral decision to breach that condition by rejecting the Sellicks’ guaranties.

.The shareholder agreement provides:
SHAREHOLDER AGREEMENT
This Shareholder Agreement entered into this 19th day of February, 1984 by and among Rayburn L. Hinchey and Peggy Hinchey; William M. Dotson, Jr; E. Donald Arbow; Mitchell H. Pike; Harold L. Sellick and Marilyn Sellick; Ronald W. Petersen; Paul S. Buxton and Carolyn Buxton; Teras Yurashak; Van N. Carrigan; Nancy Cole; Glenda Dodson; Ronald Feigin; and Michael and Lauri Carrigan, shareholders of Alaska Laser Knights, Inc.
RECITALS
1. Shareholders are shareholders of Alaska Laser Knights, Inc. (hereinafter the "Company”).
2. The Company has applied for and obtained certain financing through United Bank Alaska and may apply for and obtain additional financing in the future, in an amount not to exceed $2,150,000 in the aggregate.
3. As a condition of financing, the shareholders have been asked to and have agreed to personally guarantee the Company’s debt to $600,000 and may be asked to and agree to personally guarantee the Company’s debt in the future.
4. The shareholders desire to enter into this agreement to specify their respective obligations among themselves in the event the company defaults on its financing or is otherwise unable to make periodic payments on its financial obligations.
NOW, THEREFORE, the shareholders agree as follows:
1. Percentage Contribution. Should the Company, for any reason, be unable to make payments or default on financial obligations guaranteed by the Company, then, at the election of the Company’s Board of Directors, the shareholders shall cure or prevent any such default, deficiency or delinquency in accordance with the following percentages:
Rayburn L. Hinchey and Peggy Hinchey— 12.1%
William M. Dotson, Jr — 12.1%
E. Donald Arbow — 12.1%
Mitchell H. Pike — 12.1%
Harold L. Sellick and Marilyn Sellick — 6.05%
Ronald W. Petersen — 6.05%
Paul S. Buxton and Carolyn Buxton — 6.05%
Teras Yurashak — 6.05%
Van N. Carrigan — 3.02%
Nancy Cole — 3.02%
Glenda Dodson — 3.02%
Ronald Feigin — 3.02%
Michael and Lauri Carrigan — 15%
2. Procedure for Demand. In the event a default or deficiency appears likely, then the Company’s Board of Directors may call for the shareholders to cure or prevent any such deficiency in accordance with the schedule set forth in Paragraph 1 above. In such event, the Board of Directors shall give each shareholder at least two and not more than seven days’ notice. The shareholders shall have the time stated in the notice in which to meet their respective obligations.
3. Failure to Meet Demand. The obligation to meet any demand made in accordance with this agreement shall be specifically enforceable at law or in equity by the Company. Should any shareholder fail to make any payment required by this agreement, the deficiency shall be made up by the remaining shareholders in accordance with the schedule set forth in Paragraph 1, who shall be entitled to reimbursement from the defaulting shareholder.
IN WITNESS WHEREOF, the undersigned have executed this agreement as of the day and year first hereinabove written.