Court Opinion

ID: 9785749
Source: CourtListenerOpinion
Date Created: 2023-08-30 22:19:28.321005+00
Date Added: 2024-06-11T07:36:32.831413
License: Public Domain

WILKINS, Associate Chief Justice,
dissenting:
1 25 The legal import of the district court's determination that the guaranty is a nullity is to prevent either party from collecting attorney fees from the other based upon the *1048guaranty. I therefore agree with the result reached by the court of appeals and would affirm.
126 Mr. Bilanzich brought suit seeking a declaration from the district court that he had no liability under the guaranty. It is the guaranty alone that determines his fate. He alleged, and the district court found, that the guaranty had been placed in escrow and was not to be delivered to the Lonettis until and unless preconditions were met. He also alleged, and the district court found, that the relevant precondition was not met, but that the guaranty was mistakenly sent to the Lonettis anyway.
127 Mr. Bilanzich prevailed on his motion for summary judgment before the district court because the guaranty never took effect. To be of any legal consequence, the guaranty had to have been "delivered" to the Lonettis in the legal sense. Delivery of a document held in escrow upon conditions is not legally delivered unless done with the authorization of the guarantor. Mr. Bilanzich, as the guarantor on the document, had restricted the authority of the escrow agent to deliver the document on his behalf. The agent had no authority to deliver the document as was done. The district court said as much. The acquisition of the necessary loan was not a condition precedent to the legal effectiveness of the guaranty, it was an unmet condition precedent to the authority of the escrow agent to deliver the guaranty to the Lonettis. The guaranty, had it been properly delivered, contained no limitations relating to the loan acquisition. On its face it is unconditional. The limitation appears only in the escrow arrangement between the parties (the "term sheet" upon which both rely), and addresses not the obligation accruing to Bilanzich upon delivery of the guaranty, but rather, the circumstances under which the unconditional guaranty was to be delivered.
1 28 The facts in this case are more akin to a failure to agree than a failure of bargained consideration expressed as a condition precedent. It is as if the Lonettis found the guaranty in the parking lot, and knowing the loan had not been acquired as agreed, elected to keep the guaranty and treat it as binding on Bilanzich anyway.
129 Both parties, at one time or another in these proceedings, have claimed that the guaranty authorizes the recovery of attorney fees by the Lonettis incurred in collecting on the promissory note and deed of trust. By extension, Mr. Bilanzich also claims that the guaranty itself provides for attorney fees to the Lonettis. I do not agree. But even if it did, it is of no consequence in this case.1
1 30 Having never been lawfully delivered, as is required for a guaranty to be binding, any claimed benefit from the attorney fees language in the guaranty never, as a matter of law, accrued to the benefit of the Lonettis. The statutory basis upon which Bilanzich relies for equitable award of his attorney fees is thereby defeated as well, inasmuch as the guaranty must grant fees to the Lonettis (if successful) in order for the statute to extend the same to Bilanzich.
31 Utah Code section 78-27-56.5, as ably described in the lead opinion, requires both "a civil action based upon" a "promissory note, written contract, or other writing" and that the document "allow at least one party to recover attorney's fees." Given the dignity accorded promissory notes and written contracts in the law, one might safely presume that not just any old "writing" qualifies as an "other writing" worthy of the statutory intervention. A writing of legal dignity in the nature of promissory notes and written contracts must certainly have been contemplated. The guaranty signed by Mr. Bilan-zich in this case is clearly of sufficient consequence to qualify.
1 32 However, for any "writing," including a promissory note or a written contract, to be of any legal consequence, it must be given to the party claiming the benefit. Just as a guaranty intended for one but mistakenly given to another cannot be enforced by the recipient, a guaranty intended to be given only after the occurrence of an event that is *1049given prematurely cannot be enforced by anyone. To be legally effective delivery, the delivery must have been intended by the executing party. Authorizing another to deliver the document is sufficient. However, when no such authorization has been given, a delivery has not been effected. Factual circumstances may ameliorate this result, as in, for example, when the recipient of the guaranty is not aware of any defect in the delivery or authority and acts in reliance thereon. Such is not the case here.
133 Just as a stolen promissory note cannot be enforced by the thief, neither can a guaranty be enforced by one aware of legally deficient delivery.
\ 34 Had the Lonettis been unaware of the limitations on the escrow agent's authority to deliver the guaranty, or had they been unaware of the condition regarding the loan set forth in the "term sheet," or had they been unaware the loan had not been arranged at the time of closing as contemplated by the parties, the result might well be different. If those were unresolved issues of fact, a remand to resolve them would be in order. However, there appears to be no dispute regarding these critical facts.
$35 Equity cannot revive that which has never lived. The obligations of the guaranty executed by Mr. Bilanzich never commenced legal life. As the district court correctly put it, the guaranty is (and always was) a "nullity." Neither party is entitled to any benefit, or burden, from its stillborn terms. The legislature did not address the question, and the existing rule of law, as expressed in BLT Investment Co. v. Snow, 586 P.2d 456, 458 (Utah 1978), has not changed: One who sue-cessfully establishes that no agreement exists between the parties cannot then claim a purported benefit from it. Just as the attorney fees provisions work both ways, so does the effect of nullification.
136 At least, that is my opinion. Consequently, I would affirm the court of appeals.
T37 Justice NEHRING concurs in Associate Chief Justice WILKINS dissenting opinion.

. The same may be said for the dispute regarding the nature and impact of the settlement between the parties prior to the effort by Bilanzich to recover attorney fees and costs. That is, even if the settlement between the parties did not prevent the claim for fees and costs, the absence of benefit under the guaranty and the statute accomplishes the same end.