Court Opinion

ID: 9457932
Source: CourtListenerOpinion
Date Created: 2023-08-04 20:38:30.492281+00
Date Added: 2024-06-11T17:35:34.840674
License: Public Domain

STEVENS, Circuit Judge
(dissenting).
Defendants Corey and Hebble were partners doing business as “Hebble and Associates” when they made their first purchase from plaintiff in October of 1966.1 A few months later, a third party, Rodney Francis, joined the firm, and on March 9, 1967, Corey, Hebble and Francis executed a guarantee of the obligations of “Hebble & Associates (hereinafter called Purchaser).” 2
*184Although his name does not appear on the document, Merle W. Greene, plaintiff’s Regional Sales Manager, witnessed the execution of the guarantee.3 Greene appears to have been well acquainted with defendants’ business. On November 16, 1967, the corporation “Hebble and Associates, Inc.” was organized.4 In the “winter of 1967” Greene knew the corporation had been formed.5 With his knowledge, invoices continued to be submitted to “Hebble and Associates,” apparently without the addition of “Inc.” 6 Bills were regularly paid with corporate checks, and no attempt to conceal the corporate form of the business was made.7 The total volume of business between the parties amounted to approximately $570,800.8 In April of 1969 Greene employed Francis to work for the plaintiff.9 Francis, as a guarantor, was named as a defendant, but has not appealed.
Quite clearly the guarantee does not in terms apply to the obligations of the corporation.10 Not unreasonably, however, in view of the possibility of confusion between “Hebble and Associates” and “Hebble and Associates, Inc.,” the court holds that defendants’ failure to revoke the guarantee or to give formal notice of the incorporation estops them from denying liability. I would place the burden of making sure that the documentation was in proper form on the other side of the bargain.
Since the knowledge of its Regional Sales Manager is imputed to plaintiff, it knew that it was doing a substantial volume of business with a corporate customer. Since the guarantee was prepared by its own credit department, in my judgment plaintiff should be charged with the knowledge that it was inapplicable to purchases by the corporation.11 Since the uncollectable receivable amounts to less than 3% of the customer’s purchases, I think plaintiff’s credit', department should charge the loss to poor communication with its sales department. In short, since both parties appear to have acted in good faith, I regard this as a rather ordinary business transaction which should not bring the equitable doctrine of estoppel into play. I would therefore give the guarantee no greater effect than its plain language imports.

. A.26.

. A.20-22. An affidavit filed by Corey and Hebble in opposition to the motion for summary judgment stated in part:
“At the time the guarantee was executed we were told by Plaintiff that this was necessary simply so that Rodney P. Francis’ checks could be accepted.” A.50.

. A.27.

. A.31.

. A.50.

. At least this is true with respect to the invoice in question. See A.30.

. A.50.

. A.28.

. A.26-28.

. I base this conclusion on the language of the instrument itself, as well as the fact that the corporation was not organized until eight months after the guarantee was executed. In March of 1967 none of the parties contemplated that the corporation would later be formed. See A.50.

. Moreover, since plaintiff’s credit department ignored its own rules which call for periodic financial statements from its open account customers, see A.34-35, it. does not seem inequitable to infer that the continued extension of credit in 1969 was attributable more to the fact that defendants had bought and paid for over a half a million dollars worth of merchandise than to the fact that plaintiff had a 1967 guarantee in its files.