Court Opinion

ID: 9767777
Source: CourtListenerOpinion
Date Created: 2023-08-29 05:26:40.455041+00
Date Added: 2024-06-11T07:30:32.929933
License: Public Domain

Tom Glaze, Justice, dissenting. The factual issue is whether the appellee, Richard E. Griffin, could testify concerning the meaning of the term “outstanding debt’ as used in a guaranty given him to sign by the appellant, First National Bank of Crossett (Bank). Griffin and three other men were shareholders of Bearhouse, Inc., which secured a loan from the Bank. These four shareholders guaranteed payment of Bearhouse’s note to the Bank. The primary legal issue in this appeal is well-framed by Special Associate Justice Jerry D. Pinson in his dissent, viz., whether the trial court abused its discretion in allowing Griffin to testify. Special Justice Pinson points out that Griffin’s guaranty form as written and furnished by the Bank was ambiguous. He emphasizes the obvious, stating the term “outstanding indebtedness” employed in Griffin’s guaranty differs from the wording “total indebtedness” used in the guaranties signed by the other three shareholders. This difference alone raises the question, what did the parties intend by using these dissimilar terms? As the majority correctly mentions in its opinion, the term “outstanding indebtedness” in Griffin’s guaranty also conflicts with another provision contained in the same guaranty. That provision authorizes the Bank to demand Griffin to honor his guaranty without the Bank first attempting to satisfy the Bearhouse debt from other sources. Clearly, the term “outstanding indebtedness” suggests (as Griffin testified) that Griffin would be liable for any remaining Bearhouse debt after the Bank sought its other available legal remedies. Obviously, because of these conflicting terms, confusion exists concerning which provision controls — the “outstanding indebtedness” restriction that limited Griffin’s liability to a deficiency amount determined after the Bank pursued its other remedies or the guaranty provision allowing the Bank to go directly against Griffin. Instead of recognizing the Bank’s and Griffin’s right to explain why they used these terms and provisions in Griffin’s guaranty, the majority summarily concludes the term “outstanding indebtedness” had to mean “total indebtedness” or else the guaranty provision providing the Bank did not have to first resort to other remedies would be rendered “totally ineffectual.” I suggest such a conclusion strains logic. Such rationale could just as easily be used to support Griffin’s position — the term “outstanding indebtedness” should control or else its meaning would be rendered “totally ineffectual” by the provision permitting the Bank to hold Griffin liable without first seeking its other collection remedies. The majority opinion simply ignores the issue as to whether the trial court had the discretion to allow the parties to testify regarding what the they intended by using the terms they did in the Griffin guaranty instrument. While parol evidence is not admissible to vary the terms of a written contract, it is admissible to show what the parties intended by the language adopted. Jackson County Gin Co. v. McQuistion, 177 Ark. 60, 5 S.W.2d 729 (1928). Here, Griffin’s testimony did not vary the term “outstanding indebtedness,” but instead explained why that term was used rather than “total indebtedness.” In support of its decision, the majority court cites the case of Fowler v. Unionaid Life Ins., 180 Ark. 140, 20 S.W.2d 611 (1929), for the rule that, in construing a contract, the intention of the parties is to be gathered, not from particular words and phrases, but from the whole court of the agreement. The rule relied upon by the court concludes as follows: Seeming contradictions must be harmonized, if that course is possible. Each of its provisions must be considered in connection with the others and, if possible, effect must be given to all. A construction which entirely neutralizes one provision should not be adopted if the contract is susceptible of another which gives effect to all of its provisions. At the risk of being repetitious, the majority court recognized the common meaning of “outstanding indebtedness,” which would require the Bank to seek its other legal collection remedies before it looked to Griffin for payment. Nevertheless, it declined to give effect to the true meaning of “outstanding indebtedness” and instead, like Houdini, the majority magically construes that term to mean “total indebtedness” because that latter term is more consistent with the guaranty provision allowing the Bank to go directly against Griffin for payment of the Bearhouse note. By such tortured logic, the majority purports to give effect to all of the provisions of Griffin’s guaranty, yet such a construction altogether eradicates from the guaranty the important term “outstanding indebtedness,” which term’s common sense meaning limited Griffin’s liability to the Bank in this matter. In other words, the majority court’s construction of the Griffin guaranty gives no effect or substance to this term which was specifically inserted by the parties into the Bank’s guaranty form. Such a construction is certainly inconsistent with the precedent cited in the majority opinion. In conclusion, the trial court did not abuse its discretion when confronted with these facts. Griffin signed his guaranty form at a different time and place than the other three shareholders, and as Special Justice Pinson point out, Griffin’s interest in Bearhouse’s day-to-day operation was limited. As a consequence, Griffin had good reason to limit his liability as he tried to do. The trial court had every right to hear testimony bearing on the parties’ intent when they signed these instruments. In doing so, the court determined the parties limited Griffin’s liability to the outstanding debt or deficiency amount remaining after the Bank otherwise exhausted its other remedies and sources of payment. Because I believe the trial court did not abuse its discretion in allowing Griffin’s testimony concerning the parties’ intent, I would affirm.