First City Bank v. 740 Esplanade Avenue

665 So. 2d 1190, 95 La.App. 4 Cir. 0538, 1995 La. App. LEXIS 3225, 1995 WL 707835
CourtLouisiana Court of Appeal
DecidedNovember 30, 1995
DocketNo. 95-CA-0538
StatusPublished

This text of 665 So. 2d 1190 (First City Bank v. 740 Esplanade Avenue) is published on Counsel Stack Legal Research, covering Louisiana Court of Appeal primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
First City Bank v. 740 Esplanade Avenue, 665 So. 2d 1190, 95 La.App. 4 Cir. 0538, 1995 La. App. LEXIS 3225, 1995 WL 707835 (La. Ct. App. 1995).

Opinion

IrWALTZER, Judge.

Appellant R.C. Llewellyn appeals a September 30,1994 judgment against him and in favor of Billy Ray Eubanks in the sum of $355,811.00 with interest at the rate of 11.5% from September 27,1994.

This court has previously ruled in this matter in First City Bank v. 740 Esplanade Ave., 611 So.2d 715, 716-717 (La.App. 4 Cir.1992) writ denied 613 So.2d 979 (La.1993), (hereinafter “740-1”), wherein the court provided the following:

On July 14, 1983, B.R. Eubanks, Thomas T. Cloke, David S. Cressy, Albert J. Aueoin, Jr. and R.C. Llewellyn signed a partnership agreement creating “740 Esplanade Avenue, A Partnership in Com-mendam” (The Partnership). The agreement provided that Llewellyn would be a limited partner and the others general partners. Also on that date, Llewellyn signed a continuing guaranty, guaranteeing the negative cash flow of the partnership up to one hundred and fifty thousand ($150,000.00) dollars.
On July 15, 1983, the Partnership purchased the property located at 740 Esplanade Avenue in the City of New Orleans and executed a collateral mortgage and note for Two million ($2,000,000.00) dollars in favor of First City to secure First City’s loan to the Partnership. Subsequently, the collateral mortgage note was pledged by the Partnership to secure certain indebtedness in favor of First City represented by four (4) promissory hand notes in the amounts of one million, three hundred thousand ($1,300,000.00) dollars; seventy thousand ($70,000.00) dollars; one hundred and fifty thousand ($150,000.00) dollars and sixty-seven thousand ($67,-000.00) dollars.
The Partnership failed to make any payments on the notes and First City commenced executory process foreclosure proceedings on November 29,1984.
Subsequent to the foreclosure proceedings, Eubanks paid the remaining indebtedness to First City and was assigned their rights to a deficiency judgment. As a result Eubanks was substituted as plaintiff in these proceedings. On February 3, 1986, Eubanks filed ha Supplemental and Amending Petition for Deficiency Judgment naming the Partnership, Cloke and Cressy as defendants. On February 14, 1986, Eubanks filed a Second Supplemental and Amending Petition for Deficiency Judgment joining Llewellyn as a defendant. Eubanks’ basis for joining Llewellyn was Llewellyn’s continuing guaranty.
In response Llewellyn filed a Rule for Judgment on the Pleadings predicated upon the legal doctrine of confusion. The trial court granted Llewellyn’s rule and dismissed Eubanks’ claim against him ...
Eubanks argues that he is not the principal obligor on any of the Partnership’s obligations, that he did not execute the notes as maker and thus his payment did not extinguish the indebtedness by confusion. He argues that he is entitled to pursue Llewellyn’s guaranty. We agree. The Court in 740 I further stated:
Notes II and III were not signed by Eubanks in any capacity. Therefore, there can be no confusion and he certainly can pursue his claim against all the guarantors, including Llewellyn, subject to the limitations in the continuing guaranty. [1193]*1193With respect to these two notes Eubanks is in the same position as a third party who purchased the notes from First City and then proceeded against the guarantors.
The record, however, is not clear as to Eubanks’ capacity with respect to Notes I and IV. Eubanks argues that if he signed as principal obligor there would have been no need to sign the reverse of the notes as guarantor. He asserts that his signature as guarantor proves he could not have been a maker. This, however, is not necessarily correct. Because the word “BY:” does not appear before his signature on the front of either note, we cannot say from the pleadings before us that Eubanks signed in a representative capacity for the partnership or an individual capacity. While it may be true that it is meaningless for a party who is a maker to also sign as a guarantor, that fact does not, in and of itself, prove that he is not a maker. (At 717).

740-1 was remanded to the trial court for a determination of Eubanks’ status with respect to Notes I and IV.

On remand, the trial court provided the following written reasons for judgment:

When the project went into default and the property foreclosed, Dr. Eubanks, because of another more significant pending loan application, was persuaded to buy the property and the notes. He now proceeds against Dr. Llewellyn in the shoes of the bank to enforce the guarantee by way of pursuing a deficiency judgment.
|8The Articles of Partnership required that three of the four general partners (excluding Aucoin) personally co-make the loan, if required by the Bank. The Bank did not so require. Instead it had the three sign separate continuing guarantees. The testimony was inconclusive on whether the notes were in fact eo-made by the partners. At the top of each note the maker is said to be the partnership. At the bottom is typed the name of the partnership followed by the signature of the three general partners. Notes II, III and IV are clearly signed by the partners in a representative capacity. Only Note I lacks the usual representative designation “by”. If the three signatures on Note I are deemed personal, then no one signed for the partnership itself in a representative capacity. Also, the printed words “maker” and “co-maker” appear after the signatures. That designation, I believe was inadvertent, and not dispositive. I conclude from the documentary evidence including the face of the notes, they were all signed in a representative capacity.
Dr. Llewellyn asserts that Aueoin’s failure to co-sign partnership checks was a breach of the side agreement, relieving him of his obligation under his limited guarantee. I disagree. There is no evidence that such failure caused any harm to defendant. Specifically, no one testified that Aucoin would have questioned any check had he been asked to co-sign. The “breach” even if imputed to plaintiff, is irrelevant.
Dr. Llewellyn guaranteed the loan of the bank up to $150,000.00 as limited by the partnership agreement. The partnership articles provide that he guarantee negative cash flow up to $6,000.00 in any month for a period of 24 months. There was in fact negative cash flow for each of 23 months representing an indebtedness of $138,-000.00. This was a capital investment obligation which he never fulfilled. This capital obligation was passed through to the bank in the form of Dr. Llewellyn’s separate and continuing guarantee for which defendant is liable.
I believe Dr. Llewellyn should only be charged with 10% of the court costs, sheriffs fees, and attorney fees incurred in the original proceeding.
Although the continuing guaranty makes no provisions for attorney fees for its enforcement, I believe Dr. Llewellyn in (sic) nevertheless responsible for the Draper fees. The continuing guarantee is an accessory obligation to the note. C.C. Art. 1913. It guarantees attorney fees incurred in collecting the note and this action is based on both instruments.
There will be judgment in the amount of $355,811.00.
(Emphasis added).

[1194]

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Bluebook (online)
665 So. 2d 1190, 95 La.App. 4 Cir. 0538, 1995 La. App. LEXIS 3225, 1995 WL 707835, Counsel Stack Legal Research, https://law.counselstack.com/opinion/first-city-bank-v-740-esplanade-avenue-lactapp-1995.