Home Federal Savings & Loan Assn. v. Ramos

Opinion

WIENER, J.

Defendant Ronald J. Ramos appeals a judgment after the trial court directed a verdict in favor of plaintiff Home Federal Savings & Loan Association (Home Federal) regarding Ramos’s liability on a personal loan guaranty. We affirm.

Factual and Procedural Background

Defendant Ramos was president of the Ramos/Jensen Company (R/J Co.), a California corporation. R/J Co. was the general partner of a limited partnership, the Peacock Ridge Company (Peacock), formed to complete the Peacock Ridge construction project. Between September 1983 and March 1985, plaintiff Home Federal loaned nearly $7.4 million to the Peacock partnership. Each of the four separate loans was personally guaranteed by Ramos.

By November 1986, financial difficulties on the project caused Peacock to default on the Home Federal loans. At that point, Peacock owed substantial sums in accrued interest and had other obligations in connection with the project. Home Federal accepted a “workout agreement” in which it forgave all but $100,000 of the interest and agreed to loan Peacock an additional $50,000. In return, Peacock promised to execute a promissory note for $150,000 secured by a personal guaranty signed by Ramos.

The workout agreement was negotiated on behalf of Peacock by Arthur Brooks, an R/J Co. employee. Thomas Lynn, a major loan officer for Home Federal, negotiated the agreement with Brooks and prepared three documents—the loan modification agreement, the promissory note and the *1612 personal guaranty—which he delivered to Brooks for the purpose of obtaining Ramos’s signature. Brooks returned all three signed documents to Lynn on December 18, 1986. 1

The promissory note provided a signature line for “Ronald J. Ramos, President” of R/J Co. as general partner of Peacock. Ramos signed the document “RJ. Ramos, Pres.” The personal guaranty included the following operative language:

“In consideration of the loan from the Association to Borrower, I, Ronald J. Ramos (Guarantor), absolutely and unconditionally guarantee and promise to pay to Association, or whomever Association orders me to pay, any and all indebtedness of Borrower to Association evidenced by, or in any way connected with the loan (including but not limited to additional advances or loans) or the note, and to perform all covenants and agreements of Borrower contained in the note or any security agreement between Borrower and Association.” The signature line at the bottom of the document provided for the signature of “Ronald J. Ramos.” Instead, Ramos signed it as he had signed the promissory note: “RJ. Ramos, Pres.”

When Peacock defaulted on the new note and Home Federal brought suit to enforce the guaranty, Ramos defended on the ground that his signature as “Pres.” indicated an intent to bind only R/J Co. and not himself personally on the guaranty. At the close of all the evidence, the trial court granted Home Federal’s motion for a directed verdict, concluding it was bound by the court’s decision in Sebastian International, Inc. v. Peck (1987) 195 Cal.App.3d 803 [240 Cal.Rptr. 911].

Discussion

We begin with a word about the procedural posture of the case. The trial court directed a verdict against Ramos, concluding there was no conflict in *1613 the relevant foundational evidence and believing itself bound by an earlier Court of Appeal decision. (See generally Auto Equity Sales, Inc. v. Superior Court (1962) 57 Cal.2d 450, 455 [20 Cal.Rptr. 321, 369 P.2d 937].) Even in the absence of a controlling appellate decision, however, the court was correct in deciding that no jury question was presented. As the Supreme Court explained in Parsons v. Bristol Development Co. (1965) 62 Cal.2d 861 [44 Cal.Rptr. 767, 402 P.2d 839], “The interpretation of a written instrument, even though it involves what might properly be called questions of fact [citation], is essentially a judicial function to be exercised according to the generally accepted canons of interpretation so that the purposes of the instrument may be given effect. . . . It is therefore solely a judicial function to interpret a written instrument unless the interpretation turns upon the credibility of extrinsic evidence.” (Id. at p. 865; see also Medical Operations Management, Inc. v. National Health Laboratories, Inc. (1986) 176 Cal.App.3d 886, 891-892 [222 Cal.Rptr. 455].) Here, because the parties presented little relevant and no conflicting extrinsic evidence (see Pacific Gas & E. Co. v. G.W. Thomas Drayage etc. Co. (1968) 69 Cal.2d 33, 37 [69 Cal.Rptr. 561, 442 P.2d 641, 40 A.L.R.3d 1373]), the trial court properly refused to submit the interpretation of the written guaranty to the jury. (See Medical Operations Management, supra, 176 Cal.App.3d at p. 892, fn.4.) Likewise, however, we as the reviewing court consider the evidence and interpret the guaranty de novo. (Parsons, supra, 62 Cal.2d at p. 866; Medical Operations Management, supra, 176 Cal.App.3d at p. 891.)

Thus our function is not to determine whether factual issues remain to be resolved but rather to decide whether the trial court’s interpretation of the guaranty was correct. In this regard we must interpret the document consistent with the expressed intent of the parties under an objective standard. (Mission Valley East, Inc. v. County of Kern (1981) 120 Cal.App.3d 89, 97 [174 Cal.Rptr. 300].) Would a reasonable lender in Home Federal’s position have understood Ramos’s conduct as indicating that only R/J Co. was to be bound? Applying this standard, we agree with the trial court that Ramos’s addition of the abbreviation “Pres.” after his signature did not change the legal effect of the document as Ramos’s personal guaranty of Peacock’s liability under the promissory note.

Sebastian International, Inc. v. Peck, supra, 195 Cal.App.3d 803, relied on by the trial court, supports the conclusion that a signatory’s mere addition of a title following the signature on a document otherwise purporting to be a personal guaranty does not change its personal character. In Sebastian, *1614 the defendant Peck was vice-president of West Valley Blanchard Grinding, Inc. Peck signed a personal guaranty of West Valley’s obligations under a lease but added the notation “Vice-President” after his signature. In an action to enforce the guaranty, Peck contended that because he signed in his corporate capacity, the guaranty bound only the corporation. Rejecting this argument, the court referred to cases from several other jurisdictions for the proposition that titles and the like are generally terms “ ‘descriptive of the person rather than the relationship in which he signs the agreement.’ ” (Id. at p. 808, quoting Klutts Resort Rlty. v. Down 'Round Development (1977) 268 S.C. 80 [232 S.E.2d 20, 24].)

For the purposes of this case, we see no reason to articulate a blanket rule that a signatory’s notation of his corporate capacity can never raise an issue as to the identity of the guarantor. 2 (Cf. Farmers’ & Mech. Bk. v. Colby (1883) 64 Cal. 352, 353 [28 P. 118].) Here as in Sebastian, however, to interpret the document as a guaranty by the corporate principal is objectively unreasonable because the corporations were already liable without the guaranty. In Sebastian, West Valley was the primary lessee. Here, while R/J Co. was not the primary obligor on the note, it is well established that a general partner is personally liable for the debts of a limited partnership. (Evans v. Galardi (1976) 16 Cal.3d 300, 305 [128 Cal.Rptr. 25, 546 P.2d 313].) Under these circumstances, to interpret the guaranty as binding only the corporation would render it a nullity. 3

*1615 Disposition

Judgment affirmed.

Kremer, P. J., and Work, J., concurred.