Opinion
No. 70-006 (Supreme Court No. 22573)
Decided January 20, 1970. Rehearing denied February 10, 1970.
Action against corporation and against its officers as individuals to recover final payments due on written contract to pave a parking lot. From judgment against corporation and against officers personally, defendants appealed.
Affirmed
1. CONTRACTS — Clause — Construction — In Favor — Party Protected. If there is doubt as to the construction of a given clause of a contract, it should be construed in favor of that party for whose protection it was inserted.
2. CORPORATIONS — Clear and Unequivocal Clause — Signatures As Corporate Officers — And — As Individuals — Principals — Personally Liable. Where a contract clause clearly and unequivocally states that a party shall sign the contract both as a corporate officer and as an individual, and the party does so, then that party shall be a principal in the contract and personally liable as such, and may not escape liability by calling himself a mere guarantor.
Error to the District Court of Jefferson County, Honorable Martin C. Molholm, Judge.
Ben L. Wright, Jr., for plaintiffs in error.
F. Richard Hite, for defendant in error.
This case was originally filed in the Supreme Court of the State of Colorado and subsequently transferred to the Court of Appeals under authority vested in the Supreme Court.
This is a contract case involving the question of liability of the corporate officers as individuals.
The plaintiffs in error concerned with this appeal are East Tincup, Inc., a Colorado corporation; Peter D. Smythe and Arthur S. Bowman. They were defendants in the trial court and will hereinafter be referred to as defendants or by name.
The defendant in error, Asphalt Paving Co., a Colorado corporation, was the plaintiff in the trial court and will hereinafter be referred to as plaintiff or Paving Co.
The plaintiff, Paving Co., and defendant, East Tincup, entered into a written contract (Plaintiff's Exhibit 1) dated April 30, 1962. The plaintiff agreed to pave a parking lot which was done. In consideration for this work the plaintiff was to be paid the sum of $6,932.50 in 6 specified payments with interest added to the deferred payments. The first 4 payments were made. However, anticipating the inability to make the 5th payment on schedule, plaintiff and defendant East Tincup entered into an extension agreement (Defendants' Exhibit 2) dated September 14, 1962. There was a default on the last two payments under the extension agreement and plaintiff brought suit to recover the amount of the last two payments.
The trial court, based on its findings, entered judgment against East Tincup, Inc., and Peter D. Smythe and Arthur S. Bowman for the amount of the last two payments. In its findings, the trial court held that defendants Smythe and Bowman were guarantors under the contract, and were personally liable. There was no specific finding as the effect of the extension agreement. However, the trial court obviously determined that the extension agreement did not relieve the defendants Smythe and Bowman of personal liability.
The issues before this court are whether defendants Smythe and Bowman were principals or merely guarantors under the original contract (Plaintiff's Exhibit 1) and if they were guarantors, were they relieved of personal liability under the contract by the so-called extension agreement (Defendants' Exhibit 2).
The contract (Plaintiff's Exhibit 1) contained the following words in the last paragraph:
"It is agreed * * * that all of the Principals of East Tincup, Inc., * * * will sign in the name of their respective corporations and as Individuals. Their signatures will appear as Officers of their corporation, and as Individuals, guarantying the faithful performance of this agreement."
The signature clause pertaining to these defendants appeared as follows:
EAST TINCUP, INC.
Attest: By s/ Peter D. Smythe --------------------- President
s/ A. S. Bowman ----------------------------------------- Secretary s/ Peter D. Smythe ---------------------- Peter D. Smythe, Individual
s/ Arthur S. Bowman ---------------------------- Arthur S. Bowman, Individual
The terms of the contract above stated are unambiguous and the manner in which it was executed makes it abundantly clear that defendants Smythe and Bowman were required to sign the contract not only as corporate officers, but also as individuals and they did in fact sign the contract in this form. The phrase "guarantying the faithful performance of this agreement" does not limit or qualify the status of the individuals. It is part of the entire sentence, which when read as a whole, is merely stating that the corporation and the individuals are to guarantee the performance.
If there can be any doubt, which we do not think there is, as to the proper construction of a given clause, it should be construed in favor of him for whose protection it was obviously inserted. Christmas v. Cooley, 158 Colo. 297, 406 P.2d 333. The clause in this case was for the protection of the plaintiff.
If defendants Smythe and Bowman had intended to be only guarantors, they would not have signed also as "individuals" without some qualifying designation. It should be noted that defendant Bowman is an attorney and was the attorney for defendants East Tincup and Smythe. If they had signed as individuals without any further clarifying statement, parol evidence might be admissible to clarify the relationship. However, in this contract the words are clear and unequivocal that they must sign as corporate officers and as Individuals. They cannot now escape their responsibility as principals under the contract by calling themselves guarantors.
We find the defendants Smythe and Bowman to be principals in the contract and as such their liability would not be affected by any extension agreement. It is therefore unnecessary in the determination of this appeal to rule on the effect of the so-called extension agreement.
The judgment of the trial court is affirmed.
JUDGE COYTE and JUDGE DUFFORD concur.