Opinion
No. HHD CV 09-6003820-S
July 23, 2010
MEMORANDUM OF DECISION
The plaintiff, Yellow Book Sales Distribution Company, Inc., brings this action seeking to hold the defendant, David Valle, personally liable on an advertising sales contract entered into between the plaintiff and Move America of CT, Inc. ("Moving America"), a dissolved corporation that is not a party to this action. In its complaint, the plaintiff alleges that from December 2004 to January 2006, the plaintiff rendered services to Moving America pursuant to several signed contracts. The defendant, as an agent of Moving America, signed the contracts and, in so doing, individually and personally agreed to be responsible for payment of all amounts due in accordance with Paragraph 15.F, which he failed and neglected to pay.
On September 29, 2009, the defendant filed his answer and asserted the statute of frauds, General Statutes § 52-550(a)(2), as a special defense. On February 1, 2010, the defendant filed a motion for summary judgment on the special defense and a memorandum of law in support wherein he argued that the plaintiff's action is barred by the statute of frauds. The very next day, the plaintiff filed a request for extension of time to respond to the defendant's motion pursuant to Practice Book § 17-45. Shortly thereafter, at the February 3, 2010 pretrial conference, the court, Graham, J., issued a scheduling order setting a trial date for July 26, 2010, which has recently been continued to September 27, 2010. Notice of the trial date was sent to the parties on February 4, 2010. Without obtaining permission of the court, the plaintiff filed its own motion for summary judgment on April 19, 2010. The motion was accompanied by a memorandum of law that was intended both as a memorandum of law in opposition to the defendant's motion and a memorandum of law in support of the plaintiff's motion. The court heard oral argument at the short calendar on June 22, 2010.
General Statutes § 52-550(a)(2) provides in relevant part: "No civil action may be maintained in the following cases unless the agreement, or a memorandum of the agreement, is made in writing and signed by the party, or the agent of the party, to be charged: . . . (2) against any person upon any special promise to answer for the debt, default or miscarriage of another."
No objection was filed to the plaintiff's request. See Practice Book § 11-1. Nevertheless, this court issued an order granting the request on February 2, 2010.
I STANDARD FOR A MOTION FOR SUMMARY JUDGMENT CT Page 15214
"Summary judgment is a method of resolving litigation when pleadings, affidavits, and any other proof submitted show that there is no genuine issue as to any material fact and that the moving party is entitled to judgment as a matter of law . . . The motion for summary judgment is designed to eliminate the delay and expense of litigating an issue when there is no real issue to be tried." (Citation omitted.) Wilson v. New Haven, 213 Conn. 277, 279, 567 A.2d 829 (1989). Our Supreme Court has indicated that summary judgment on a special defense is properly granted "if the defendant in its motion raises at least one legally sufficient defense that would bar the plaintiff's claim and involves no triable issue of fact." (Internal quotation marks omitted.) Serrano v. Burns, 248 Conn. 419, 424, 727 A.2d 1276 (1999)."Practice Book § 17-49 provides that summary judgment shall be rendered forthwith if the pleadings, affidavits and any other proof submitted show that there is no genuine issue as to any material fact and that the moving party is entitled to judgment as a matter of law. In deciding a motion for summary judgment, the trial court must view the evidence in the light most favorable to the nonmoving party." (Internal quotation marks omitted.) Provencher v. Enfield, 284 Conn. 772, 790-91, 936 A.2d 625 (2007). "A material fact has been defined adequately and simply as a fact which will make a difference in the result of the case." (Internal quotation marks omitted.) Buell Industries, Inc. v. Greater New York Mutual Ins. Co., 259 Conn. 527, 556, 791 A.2d 489 (2002). Where the defendant moves for summary judgment on a special defense, the material facts relate thereto. Accordingly, the material facts at issue for purposes of this motion relate to whether the statute of frauds is satisfied.
II THE AGREEMENT
Based on the evidence submitted by the parties, the following undisputed facts are material for purposes of the defendant's motion for summary judgment. All negotiations and discussions concerning the agreements occurred between the defendant, as President of Moving America, and William Dest, the sales representative for the plaintiff. The plaintiff and Moving America executed several written agreements for advertising services containing identical terms. The relevant terms of the agreements provide that "[the] Customer agrees to pay the amounts listed on the reverse side of this agreement . . . If Customer fails to pay any bill . . . within thirty (30) days of the due date, Publisher will have the following rights: 1. Publisher may require full and immediate payment of all amounts due under this agreement; 2. Publisher may cancel publication of Customer's print advertisements in any as then unpublished Directories, and 3. Publisher may suspend or cancel the Internet Services." ¶¶ 6.A, 6.D. Paragraph 14 provides that "The sales representative of Publisher has no authority to make any changes in this agreement or to commit Publisher in any manner whatsoever in contradiction to the provisions expressly set forth in this agreement." The agreement further provided that "The individual signing this agreement on behalf of Customer represents and warrants that he or she is authorized to sign as an owner, officer, partner or employee of Customer and that he or she is empowered to bind Customer to the terms and conditions contained herein." Lastly, the very last clause of the last paragraph states "The signer of this agreement does by his execution personally and individually undertake and assume the full performance hereof including payments of amounts due hereunder." ¶ 15.F.
The front of the agreement lists Yellow Book as the Publisher, Dest as the Sales Representative, and Moving America as the Customer. The signature portion of the agreements state, "This is an advertising contract between Yellow Book and Moving America." Under this statement, there are two lines: One for the Customer's Signature, and one for the Signer to print his name. Both lines contain the following language, either signed or printed: "David Valle, President."
Underneath the line for the Customer's signature, the following language appears: "Authorized Signature Individually and for the Company."
The agreement dated July 20, 2005 is blank on the Customer's Signature line, but is signed on the line "Print Signer's Name."
III STATUTE OF FRAUDS
Because the court is bound to consider the four corners of the agreement when the statute of frauds is implicated, the defendant is entitled to summary judgment in this case if he can establish that the agreements executed between the plaintiff and Moving America are insufficient to satisfy the statute of frauds as a matter of law. General Statutes § 52-550(a)(2), known as the statute of frauds, provides in relevant part: "(a) No civil action may be maintained in the following cases unless the agreement, or a memorandum of the agreement, is made in writing and signed by the party, or the agent of the party, to be charged: . . . (2) against any person upon any special promise to answer for the debt, default or miscarriage of another." A promise by the defendant to answer for the debt of Moving America falls squarely within this section. Accordingly, to survive, the agreement must be memorialized in a sufficient writing signed by the defendant.
Since both parties submitted identical copies of the agreement, there is no genuine issue as to any material fact with regard to the four corners of the agreement.
The plaintiff first argues that because there exists a written agreement signed by the defendant in any capacity, the statute of frauds is satisfied regardless of whether the signature appears in a corporate or individual capacity. Accepting this argument would, however, thwart the purposes behind both the statute of frauds and the law of business entities. As articulated above, the statute of frauds requires that the writing be "signed by the party . . . to be charged"; see General Statutes § 52-550(a)(2); and identify with certainty the parties to it. See Breen v. Phelps, 186 Conn. 86, 92, 439 A.2d 1066 (1982). It is well established that "[a]n agent, by making a contract only on behalf of a competent disclosed or partially disclosed principal whom he has power so to bind, does not thereby become liable for its nonperformance . . . If a contract is made with a known agent acting within the scope of his authority for a disclosed principal, the contract is that of the principal alone, unless credit has been given expressly and exclusively to the agent, and it appears that it was clearly his intention to assume the obligation as a personal liability and that he has been informed that credit has been extended to him alone." (Citations omitted; internal quotation marks omitted.) Whitlock's, Inc. v. Manley, 123 Conn. 434, 437, 196 A. 149 (1937). When these two principles are read together, the law presumes that where a writing contains the signature of a duly authorized agent, the "party to be charged" is the principal and not the agent because the agent individually is not a party to the agreement. See Warren-Connolly Co. v. Saphin, 283 App.Div. 391, 393, 128 N.Y.S.2d 272 (1958). Instead, the principal is the party to the agreement. Cf. Tolk v. Williams, 75 Conn.App. 546, 555, 817 A.2d 142 (2003), quoting 1 Restatement (Second) Agency § 157, p. 373 (1958). Otherwise, every agreement signed by an agent on behalf of his principal would be admissible as a promise by the agent individually to answer for the debt of his principal.
This rule is codified in section 42a-3-402(b) of our General Statutes with regard to negotiable instruments.
In the present case, the signature on the written agreement is that of "David Valle, President." But before the court can reach the issue of whether the signature was sufficient to charge the defendant individually, it first must determine whether the defendant was a party to the agreement. In order for a writing to be sufficient for purposes of the statute of frauds, "[it] must state the contract with such certainty that its essentials can be known from the memorandum itself, without the aid of parol proof, or from a reference contained therein to some other writing or thing certain; and these essentials must at least consist of the subject of the sale, the terms of it and the parties to it, so as to furnish evidence of a complete agreement." (Emphasis added; internal quotation marks omitted.) Breen v. Phelps, supra, 186 Conn. 92. Our Appellate Court has noted that, in interpreting the agreement, "[n]o part of a document is necessarily more important than any other part for purposes of determining the parties thereto and, therefore, the entire document, including the heading, body, and signature is considered . . ." (Internal quotation marks omitted.) Tolk v. Williams, supra, 75 Conn.App. 555 n. 6, quoting 1 Restatement (Second), supra, § 155, comment (a). In the absence of a reference contained somewhere in the writing itself, summary judgment based on the statute of frauds is appropriate where the essential terms of the agreement are ambiguous. See Carta v. Marino, 13 Conn.App. 677, 681, 538 A.2d 1091 (1988). Put another way, the defendant is entitled to judgment as a matter of law if the writing is ambiguous with respect to the subject, terms, or parties, and the writing contains no reference to extrinsic evidence that would provide a basis for precise identification. Cf. Olson v. Bristol, Superior Court, judicial district of Hartford, Docket No. 0336666 (August 1, 1990, Maloney, J.) ( 2 Conn. L. Rptr. 222, 224) (although agreement was ambiguous as to the identification of the property, summary judgment was inappropriate where agreement contained sufficient references to extrinsic evidence that would provide a basis for precise identification).
Whether the memorandum sufficiently provides evidence of a complete agreement as to the parties is a question of contract interpretation subject to the rules of contract construction. "Ordinarily the parties' intent is a question of fact . . . Where a party's intent is expressed clearly and unambiguously in writing, however, the determination of what the parties intended . . . is a question of law . . . The intent of the parties as expressed in [writing] is determined from the language used interpreted in the light of the situation of the parties and the circumstances connected with the transaction . . . [T]he intent of the parties is to be ascertained by a fair and reasonable construction of the written words and . . . the language used must be accorded its common, natural, and ordinary meaning and usage where it can be sensibly applied to the subject matter of the [writing] . . . Where the language of the [writing] is clear and unambiguous, the [writing] is to be given effect according to its terms. A court will not torture words to import ambiguity where the ordinary meaning leaves no room for ambiguity . . . Similarly, any ambiguity in a [written instrument] must emanate from the language used in the [writing] rather than from one party's subjective perception of the terms . . . If the language of [a] contract is susceptible to more than one reasonable interpretation, [however] the contract is ambiguous." (Citations omitted; emphasis added; internal quotation marks omitted.) 19 Perry Street, LLC v. Unionville Water Co., 294 Conn. 611, 622-23, 987 A.2d 1009 (2010). Instead of providing the parties with an opportunity to present extrinsic evidence as to the conduct of the parties, however, ambiguity is fatal where an agreement is subject to the statute of frauds. See Carta v. Marino, supra, 13 Conn.App. 681 (summary judgment appropriate where agreement for the sale of real property was ambiguous as to whether the monthly payments included principal).
In Warren-Connolly Company, Inc. v. Saphin, 283 App. Div. 391, 128 N.Y.S.2d 272 (1958), the Appellate Division of the Supreme Court of New York, faced with facts very similar to those in the present case, found a written agreement insufficient to satisfy the statute of frauds on the basis that the defendant was not a party to the agreement despite a paragraph purporting to bind the defendant personally. The plaintiff sued the defendant claiming that the defendant had personally guaranteed payment of all merchandise pursuant to the terms of a signed contract. The parties to the contract were listed as the plaintiff, who was known as the seller, and Monarch-Saphin Co., Inc., known as the dealer. Id., 392. The entire sixteen paragraphs of the agreement, except for paragraph six, referred to the respective rights, duties, and obligations of the seller and the dealer. Id. Paragraph six, however, provided that "the undersigned, officer of the dealer corporation, personally and individually guarantees payment of all obligations incurred by the dealer corporation pursuant to this agreement." Id. At the bottom of the agreement, in the space for the execution, the defendant signed and printed his name as "Albert Saphin, Pres." Id. The court concluded that "the contract was made between the plaintiff and the dealer corporation. The defendant was not stated to be a party thereto." Id., 393. With cautionary language, the court explained that "[t]he procedure [followed by the plaintiff] would in effect thwart the purpose of the statute [of frauds]." Id.
In the present case, when looking at the document as a whole, the agreement is ambiguous as to whether the defendant was individually a party thereto. On the one hand, paragraph 15.F attempts to make the Signer a party to the agreement by requiring the Signer to undertake a personal obligation to secure the debts of the principal. Nevertheless, the rest of the agreement excludes the Signer entirely and specifically provides that the agreement is between Yellow Book and Moving America. In other words, all of its provisions except for paragraph 15.F relate exclusively to the duties and obligations of Moving America and Yellow Book. The parties' signature also indicates that the agreement is between Yellow Book and Moving America because it is signed by the defendant in his capacity as President of Moving America. This interpretation is also bolstered by paragraph 15.A of the agreement, which provides that "[t]he individual signing this agreement on behalf of Customer represents and warrants that he or she is authorized to sign as owner, partner or employee of Customer and that he or she is empowered to bind Customer to the terms and conditions stated therein." This provision suggests that the individual signing the agreement is not a party to the agreement, but merely an agent of Moving America. This makes the agreement clearly susceptible to at least two interpretations. At least one interpretation supports the proposition that, like the agreement at issue in Warren-Connolly Co., Inc., the agreement in the present case is between the plaintiff and the corporation only such that the statute of frauds bars any claim against the defendant since he is not a party to the agreement.
The plaintiff argues that paragraph 15.F and the notice under the signature provision unambiguously obligate the defendant to undertake individual liability for the Customer's performance. As explained above, however, the substance of paragraph 15.F only matters if the defendant is a party to the agreement. Because this court concludes that the agreement is ambiguous as to whether the defendant is a party to the agreement, it need not reach the issue of whether paragraph 15.F would be sufficient to impose liability on a party to the agreement.
It is also worth noting the vast public policy arguments against allowing the defendant's corporate signature and a single provision in a long contract to serve as an individual personal guarantee sufficient to satisfy the statute of frauds. This is especially true where the defendant is neither named in the agreement as a party, nor signs as such. "In modern times most commercial business is done between corporations, everyone in business knows that an individual stockholder or officer is not liable for his corporation's engagements unless he signs individually, and where individual responsibility is demanded the nearly universal practice is that the officer signs twice — once as an officer and again as an individual. There is great danger in allowing a single sentence in a long contract to bind individually a person who signs only as a corporate officer." Salzman Sign Co. v. Beck, 10 N.Y.2d 63, 67, 176 N.E.2d 74, 217 N.Y.S.2d 55 (1961). "If the parties have mutually agreed and intended that the officer executing the contract for his corporation is to assume personal obligations thereunder, the simple but unequivocal act of manifesting such intent can be accomplished by having the officer also sign in his individual capacity. Such practice, in addition to making the guaranty agreement explicit, would promote the policies behind the statute of frauds." Wired Music, Inc. of the Great Midwest v. Great River Steamboat Co., 554 S.W.2d 466, 471 (Mo.Ct.App. 1977).
Because the writing is ambiguous as to whether the defendant individually was a party to the agreement, it does not furnish a complete agreement as to its terms, including the parties thereto. Accordingly, it is insufficient to satisfy the statute of frauds as a matter of law, and the court must grant the defendant's motion for summary judgment. Having found that the claim against the defendant is unenforceable, the plaintiff's motion for summary judgment is necessarily denied.
CONCLUSION
For all the foregoing reasons, the defendant's motion for summary judgment is hereby granted. The plaintiff's motion for summary judgment is hereby denied.