Court Opinion

ID: 9648761
Source: CourtListenerOpinion
Date Created: 2023-08-23 14:34:16.484766+00
Date Added: 2024-06-11T18:12:05.276067
License: Public Domain

*396KAUFFMAN, Justice,
dissenting.
The majority concludes that the letter supplied by Buyer’s bank (“the May 8 letter”) was so ambiguous that Seller was under no obligation to accept it as a bank guaranty.1 I disagree.
In January, 1974, Buyer agreed to purchase meat from Seller for a price of $19,000. In response to Seller’s request for a bank guaranty covering the transaction, Buyer’s bank sent Seller a letter on February 20, 1974 (“the February 20 letter”).2 Buyer’s bank thereafter orally confirmed to Seller that its letter was in fact a guaranty. The meat was delivered to Buyer on March 20, 1974 and paid for six days later.
On February 22,1974, Buyer and Seller orally entered into the transaction before us for the purchase and sale of meat for a price of approximately $33,000. In a written confirmation of the sale dated February 26, 1974, Seller included the phrase “bank guaranty due prior to delivery.” Because this *397confirmation was misaddressed, Buyer did not receive it until this litigation commenced, and did not know Seller required a guaranty until May 8, 1974, when it was orally requested by Seller. At that time Buyer gave Seller a copy of its latest financial statement and bank balance, and referred Seller to its bank for the guaranty. When Seller arrived at the bank, however, it demanded a letter of credit rather than a guaranty. This demand was rejected, but Seller was given the May 8 letter. Despite the fact that the May 8 letter was identical to the February 20 letter in all material respects, Seller arbitrarily rejected it as a bank guaranty, sold the meat to another customer at a loss of $7,621.48, and commenced this action.
In light of the prior transaction between the parties and the circumstances surrounding the preparation and delivery of the May 8 letter, I conclude that Buyer intended to, and in fact did, deliver a bank guaranty to Seller. See Restatement (Second) of Contracts § 249 (1973); A. Corbin, 3 Corbin on Contracts, § 542, at 100-102 (1960); S. Williston, 5 Williston on Contracts, § 649 at 16.
This Court repeatedly has held that an agreement may be interpreted by reference to surrounding actions and words between the contracting parties. See Gloeckner v. Baldwin Township School District, 405 Pa. 197, 175 A.2d 73 (1961); Cerbo v. Carabello, 376 Pa. 571, 103 A.2d 908 (1954); Furjanick Estate, 375 Pa. 484, 100 A.2d 85 (1953). Accord Arndt, Preston, Chapin, Lamb & Keen, Inc. v. L-M Mfg. Co., 163 F.Supp. 406 (E.D.Pa.1958), affirmed 262 F.2d 343 (3d Cir. 1958).
It is undisputed that: (1) Buyer’s bank confirmed to Seller that the February 20 letter, identical in substance to the May 8 letter, constituted a guaranty; (2) Seller delivered the meat in the virtually simultaneous transaction and was paid promptly; (3) the May 8 letter was given by Buyer’s bank in response to Seller’s request for a guaranty in a transaction entered into on February 22, 1974; (4) in the May 8 letter, the Bank expressly recognizes that it is in response to Seller’s request for “a guarantee.”
*398In these circumstances, the May 8 letter was a bank guaranty which Seller could have enforced in the event of default by Buyer. See Land Bank & Trust Co. v. Baron, 341 Pa. 241, 247, 19 A.2d 62, 65 (1941) (Holding that ambiguity in a written instrument will be resolved against the party that drafted the instrument.)
Accordingly, I would hold that Buyer did not breach the contract and would reinstate the trial court’s judgment.

. The May 8 letter, written on bank stationery, provided:
May 8, 1974
Atalanta Corporation
1725 Varick Street
New York, NY 10013
Attention: Credit Manager
Gentlemen:
One of our valued customers, Ohio Valley Provision Company has placed an order with your company in the amount of approximately $33,000.00 and we understand that you want a guarantee before releasing the meat products to them.
You may be assured that this amount will be paid by the above mentioned company within 10 days. This company has been a customer of ours since their organization and maintains substantial balances with us.
Very truly yours,
(s) E. R. Miller
E. R. Miller
President
(Emphasis added)

. The February 20 letter is identical in substance to the May 8 letter which is quoted in note 1, supra.