Opinion
Submitted October 14, 1980.
Decided October 29, 1980.
Upon appeal from Superior Court. Reversed and Remanded.
Kenneth M. Roseman (argued), Wilmington, for plaintiff-appellant.
Robert K. Pearce (argued) and James F. Kipp, of Trzuskowski, Kipp, Kelleher Pearce, Wilmington, for defendants-appellees.
Before HERRMANN, C. J., and QUILLEN and HORSEY, JJ.
Appellant-plaintiff York Distribution Company, Division of McCrory Corporation (York) supplies merchandise to retail stores, one of which is B. J. Hoy 5 10 Stores, Inc. (Hoy), owned principally by appellees-defendants Carl and Joan Wittig. Mr. Wittig is secretary of Hoy and in regular contact with those in charge of operations.
In October, 1978, Hoy owed York nearly $50,000 for goods purchased on credit, resulting in York terminating all deliveries to Hoy. Robert King, on behalf of York and Seymour Perlman, president of Hoy, entered into discussions concerning the debt, resulting in a schedule of repayment memorialized in a letter from King to Perlman dated October 23, 1978. Before York would resume delivering merchandise, however, it demanded that repayments under the schedule be made by certified check and that the Wittigs personally guaranty all Hoy debts. The Wittigs agreed to a guaranty but expressly limited their individual responsibility to subsequent debts. The Wittigs executed such a guaranty, on November 9, 1978, providing that they would be responsible for all unpaid sums owed York by Hoy, up to $15,000, from November 9th until March 1, 1979. York accepted the guaranty.
On November 14, 1978, after a prior refusal on November 9th, to accept checks that were not certified, York received three certified checks from Hoy. One check was in the amount of $6,039.00, the exact amount due by November 1st according to the repayment schedule. Another check was in the amount of $3,020.00, the precise amount due by November 10th under the repayment schedule. The third check was in the amount of $478.33, the sum, to the penny, due as interest by November 10th under the repayment schedule. There was no express discussion between King and Perlman as to the application of the payments.
York, naturally believing it had received the first payments under the repayment plan, and having received the Wittigs' guaranty, shipped $8,836.68 of merchandise to Hoy on or about November 21st, 1978. Hoy never paid for the goods, and the company has now filed a petition in bankruptcy. York brought suit against the Wittigs on their guaranty for the amount due plus interest. At trial, the Wittigs argued that the three certified checks received by York on November 14th were intended as advance payments for the goods shipped on November 21st. York, of course, contended that the checks were intended to be applied under the repayment schedule.
The Trial Judge, sitting without a jury, held for the Wittigs, stating that York did not meet its burden of proof. In an appeal from such a factual determination, we act with restraint. "It is only when the findings below are clearly wrong and the doing of justice requires their overturn that we are free to make contrary findings of fact." Levitt v. Bouvier, Del.Supr., 287 A.2d 671, 673 (1972). See also International Boiler Works v. General Waterworks Corp., Del.Supr., 372 A.2d 176, 177 (1977); duPont v. duPont, Del.Supr., 216 A.2d 674, 680 (1966).
In this case, however, we have reviewed the record and conclude that the Trial Judge's finding that York did not meet its burden of proof was clearly erroneous. In our judgment it is clear that both Hoy and York intended that the three checks be applied to the past due account under the repayment schedule. We ground our decision upon the following factors:
(1) Perlman acknowledged receiving the letter containing the repayment schedule and never announced dissatisfaction nor suggested a different schedule.
(2) Most importantly, the three certified checks received by York on November 14th were for the exact amounts due under the repayment schedule. The check amounts are a clear manifestation of intention, if not an express direction, that the payments were for past debt.
(3) Additionally, the sequential check numbers corresponded directly with the chronological order of payment, i. e., the first check was in the amount due under the first payment.
(4) A common sense approach suggests that an advance payment would be in one specifically designated check rather than three and in an amount relating to the goods ordered.
(5) Hoy received monthly account statements from York that reflected the parties' current financial status. The statements reflecting the November transactions disclosed that the goods ordered on November 21st were not paid for and, accordingly, by implication, that the checks had been applied to the past debt under the terms of the repayment schedule. Hoy offered not a whimper to the contrary upon receipt of the statements, an unlikely course of conduct had the checks been intended as advances for the goods received.
(6) Mr. Wittig, as a principal shareholder and corporate officer of Hoy, cannot avoid the clear implication of the actions taken by Hoy. Hoy, and derivatively its shareholders, benefited from the extension of credit and there is no just reason to shield the Wittigs from the burden of their agreement. Nothing in the guaranty agreement prevents Hoy from making payments in accordance with the repayment schedule.
Since we find it clear that the payments were intended to be applied to the past debt, we conclude that the Wittigs are personally responsible for the price of the goods shipped by York on or about November 21st, 1978 under the terms of their guaranty. We reverse the judgment of the Superior Court and remand the case for such proceedings as may be necessary to enter an appropriate order in York's favor consistent with this opinion.