Summary
discussing the evidence required to prove a party ratified a personal guaranty
Summary of this case from GreatAmerica Fin. Servs. Corp. v. Ride Now Auto Parts LLCOpinion
No. 4-320 / 03-1256.
June 23, 2004.
Appeal from the Iowa District Court for Polk County, Joel D. Novak, Judge.
Frontier Leasing Corporation appeals the dismissal of its breach of contract action against Imran Hassan. AFFIRMED.
Edward McConnell of Edward N. McConnell, P.L.C., West Des Moines, for appellant.
Imran Hassan, Astoria, New York, appellee pro se.
Heard by Sackett, C.J., and Huitink and Miller, JJ.
I. Background Facts and Proceedings
Frontier Leasing sued Barisal, Inc.; Barisal's president, Imran Hassan; and Barisal's manager, Syed Habibur Rahman, to recover delinquent payments on a leased ATM terminal. Frontier's claims were based on a written lease executed by Barisal. Frontier alleged that Hassan and Rahman were liable as personal guarantors of Barisal's lease obligation.
Neither Barisal nor Rahman appeared or otherwise defended against Frontier's breach of contract or guaranty theories. Hassan denied liability, claiming his signature on the personal guaranty of Barisal's lease obligation was a forgery.
At trial, Frontier argued that notwithstanding any claimed forgery, Hassan's post default conduct ratified his obligation under the guaranty. Frontier specifically cited checks received from Barisal after the notice of default was sent to Barisal, one of which was signed by Hassan. Frontier additionally cited Hassan's failure to timely disavow the signatures on the guaranty or deny liability as a guarantor. Frontier also cites post default meetings between Hassan and Rahman on Barisal's business premises.
The trial court, acting as the finder of fact, reached the following conclusions:
The Court does not find that Defendant Hassan neither authorized or ratified in any manner his signature on the questioned documents. . . .
Frontier's claim against Hassan was accordingly dismissed, resulting in this appeal.
II. Standard of Review
Our scope of review in this action is for the correction of errors at law. Iowa R. App. P. 6.4. The findings of fact in a law action are binding upon us if they are supported by substantial evidence. Iowa R. App. P. 6.14(6)( a). Evidence is substantial if a reasonable mind would accept it as adequate to reach the same findings. Frontier Props. Corp. v. Swanberg, 488 N.W.2d 146, 147 (Iowa 1992). When the trial court in a law action tried to the court denies recovery because of a party's failure to carry that party's burden of proof, we will not interfere on appeal unless we find the party met that burden as a matter of law. Roland A. Wilson Assocs. v. Forty — O-Four Grand Corp., 246 N.W.2d 922, 925 (Iowa 1976).
III. The Merits
As noted earlier, Frontier's theory of recovery against Hassan is premised on the notion that someone forged Hassan's signature on a personal guaranty and that Hassan's post default conduct served to ratify his obligations under the guaranty. The elements of proof for Frontier's ratification theory are:
(1) existence of a principal;
(2) an act done as agent;
(3) principal's knowledge of material facts; and
(4) intent of the principal to ratify the agent's act which can be either express or implied.
Abodeely v. Cavras, 221 N.W.2d 494, 502 (Iowa 1974).
It its brief, Frontier acknowledges "it appears that a third party signed Hassan's [name]" as the guarantor. In the absence of evidence identifying the third party, there is no proof that the personal guaranty was forged by anyone in a principal-agent relationship with Hassan. Moreover, the evidence that Hassan's post default conduct demonstrates his implied intention to ratify the guaranty must be considered in light of his testimony expressly denying that intent. The trial court resolved the resulting conflict in the evidence against Frontier and concluded Frontier failed in its burden to demonstrate Hassan intended to ratify any obligations under the guaranty. Because the record does not establish Frontier met its burden to establish the foregoing elements of its ratification theory as a matter of law, we are obliged to affirm.
We decline to consider Frontier's estoppel theory of recovery due to its failure to raise it before the trial court. See Shill v. Careage Corp., 353 N.W.2d 416, 420 (Iowa 1984) ("The theory under which a case was tried in the trial court will be the theory upon which an appeal is based.").