Material Partnerships, Inc. v. Ventura, Jorge Lopez

• Court: Court of Appeals of Texas
• Decided: March 6, 2003
• Docket: 14-01-01068-CV
• Status: Published

Opinion

Reversed in Part and Rendered, and Majority and Concurring Opinions filed March 6, 2003

Reversed in Part and Rendered, and Majority and Concurring Opinions filed March 6, 2003.

In The

Fourteenth Court of Appeals

____________

NO. 14-01-01068-CV

MATERIAL PARTNERSHIPS, INC., Appellant

V.

JORGE LOPEZ VENTURA, Appellee

On Appeal from the 55th District Court

Harris County, Texas

Trial Court Cause No. 99-35432

M A J O R I T Y   O P I N I O N

Appellant Material Partnerships, Inc. (AMPI@) originally sued Sacos Tubulares del Centro, S.A. de C.V. (ASacos@), a Mexican corporation, claiming Sacos owed MPI over $900,000 for materials MPI delivered to Sacos on an open account.  MPI subsequently amended its petition to allege that appellee, Jorge Lopez Ventura (ALopez@) was individually liable for the corporate debt under the terms of a personal guaranty.^[1]  Following a bench trial, the district court rendered a default judgment in the amount of $962,139.79, plus interest and attorney=s fees, in favor of MPI on its claim against Sacos, and a take-nothing judgment in favor of Lopez on MPI=s claim against him.^[2]  In four issues, MPI challenges the trial court=s sole finding of fact and three conclusions of law.  Concluding the guaranty on which MPI relies is unambiguous and enforceable, we reverse that portion of the judgment denying recovery to MPI in its suit against Lopez and render judgment for MPI and against Lopez, as guarantor, in the amount of $962,139.79, plus pre-judgment and post-judgment interest.  The remainder of the judgment is unaffected by this decision.

Factual and Procedural Background

Lopez is an international businessman who speaks English as a second language, having first studied it in third or fourth grade.  Lopez also speaks German and French.  He has been personally involved in business transactions in the United States since 1984 and has made more than 200 trips to the United States.  From 1988 or 1989, Lopez was an owner and the general manager of Sacos, a bag manufacturing company.

Beginning in 1997, Sacos purchased products from MPI.  Sacos was slow in making payments to MPI almost from the beginning of the relationship, and did not pay invoices from March through November 1998.

In August 1998, MPI owner Joel Burgower and Ken Gross, owner of MPI=s supplier, met with Lopez in Mexico to discuss several matters, including Sacos=s payment of the invoices.  During the meeting, Lopez told Gross that Sacos had the ability to pay its debts to MPI, and Gross asked Lopez whether he would give a personal guaranty for the outstanding debts.  Lopez testified he told Gross he (Lopez) could not give his personal guaranty.  Gross, however, testified Lopez said he was willing to provide the personal guaranty and had the assets to back it up.  Burgower and Gross testified there was no discussion about Lopez providing a corporate guaranty.

On September 18, 1998, Burgower wrote Lopez requesting Awritten assurances in regards to the outstanding debts and obligations that you have with us.@  Burgower specifically asked Lopez to Aforward a personal guarantee covering all past and future obligations.@  The letter was addressed to AJorge Lopez, SACOS TUBULARES DEL CENTRO S.A. DE C.V.@  At the time the letter was drafted, MPI had stopped shipping product to Sacos.

Lopez did not recall receiving Burgower=s letter.  Over hearsay and relevance objections, however, Burgower testified that Claudio Carrera, a Sacos employee who dealt with the MPI account, acknowledged in a telephone conversation that both Carrera and Lopez had received the letter.^[3]  According to Burgower, Carrera asked what Burgower wanted in response to the September 18 letter, and Burgower told Carrera he wanted AMr Lopez to personally guarantee, on a personal basis, all past and future obligations to MPI.@

In a letter to Burgower dated September 25, 1998, Lopez wrote, AI . . . want to certify you [sic] that I, personally, guaranty all outstandings [sic] and liabilities of Sacos Tubulares with Material Partnerships as well as future shipments.@  Lopez drafted the letter himself and signed it over the designation, AJORGE LOPEZ VENTURA, GENERAL MANAGER.@  After receiving the September 25 letter, MPI resumed shipping product to Sacos, sending additional shipments valued at approximately $200,000.  MPI subsequently received one payment of approximately $60,000 from Sacos.  When Sacos did not pay for the additional shipments, MPI stopped shipping to Sacos.

In July 1999, MPI sued Sacos.  In November 1999, the Sacos plant closed.  In February 2000, MPI amended its petition to include a claim against Lopez on the guaranty.

Before trial, Sacos withdrew its answer and permitted a default judgment to be rendered against it.  MPI=s claim against Lopez was then tried to the bench.  At trial, Lopez testified he drafted the September 25 letter after a conversation with Burgower over his cellular phone.  During that phone call, Burgower requested a written statement that money was owed and was going to be paid.  A request for a corporate guaranty made sense to Lopez because, as Lopez explained, under typical business practice in Mexico, shipping the product is not a complete guaranty of payment from the vendor=s perspective because many things can occur to make the obligation to pay invalid.  Lopez is familiar with the practice of vendors, who routinely seek acknowledgment from a manager or representative with sufficient corporate authority to accept the obligation for the company so the vendor has a strong legal position to claim payment.^[4]  Lopez did not believe that Burgower intended to withhold additional shipments to Sacos, absent a personal guaranty from Lopez that bound him individually for the corporate debt.  Lopez believed Burgower simply wanted a more solid commitment from Sacos that all transactions were accepted by the company, which, as Lopez explained, is common in Mexico when amounts of business are important.

Lopez testified he intended to sign, and did sign, the September 25 letter in his capacity as general manager of Sacos.  He gave MPI a corporate guaranty.  Lopez made the promise on the company=s behalf.  He had no personal debts to MPI.  Lopez further explained the concept of Aaval,@ as understood in Mexico, means to make a guaranty besides the obligation of the original debtor.  But for the aval to qualify as a personal aval, the signator must specify that he is signing in an individual capacity.  Lopez gave the September 25 letter to Burgower in Lopez=s capacity as Ageneral manager@ of Sacos.  Except for giving an aval to banks, Lopez had never given an Aaval,@ or guaranty, so that his personal assets would be responsible for paying Sacos=s debt.

After hearing the evidence, the trial court filed the following finding of fact and conclusions of law:

Findings[sic] of Fact

1.  The Court finds that Defendant Jorge Lopez Ventura did not sign [the September 25, 1998 letter] in an individual or personal capacity.

Conclusions of Law

1.  The Court concludes that [the September 25, 1998 letter], read as a whole, does not clearly express an intent to bind Jorge Lopez Ventura in an individual or personal capacity.

2.  The Court concludes that [the September 25, 1998 letter] is ambiguous.

3.  The Court concludes that [the September 25, 1998 letter] lacks terms which are essential to the creation and enforcement of a personal guaranty, and is not complete in every material detail.

4.  The Court concludes that [the September 25, 1998 letter] is not enforceable as a personal guaranty.

The court then rendered judgment ordering MPI recover $962,139.79, pre- and post-judgment interest, and attorneys fees in its suit against Sacos.  The court further ordered MPI take nothing by its suit against Lopez.

Discussion

Introduction and Standard of Review

MPI presents the following four issues for review: (1) whether the trial court erred in concluding Lopez=s September 25 letter is ambiguous and does not express an intent to bind Lopez in an individual or personal capacity; (2) whether the trial court erred in finding Lopez did not sign the September 25 letter in an individual or personal capacity; (3) whether the trial court erred in concluding Lopez=s September 25 letter lacked terms essential to the creation and enforcement of a personal guaranty and is not complete in every material detail; and (4) whether the trial court erred in concluding Lopez=s September 25 letter is not enforceable as a personal guaranty (interpreted by MPI as relating to consideration).

We review the trial court=s conclusions of law de novo.  Smith v. Smith, 22 S.W.3d 140, 143B44 (Tex. App.CHouston [14th Dist.] 2000, no pet.).  The standard of review for conclusions of law is whether they are correct.  Dickerson v. DeBarbieris, 964 S.W.2d 680, 683 (Tex. App.CHouston [14th Dist.] 1998, no pet.).  We will uphold conclusions of law on appeal if the judgment can be sustained on any legal theory the evidence supports. Waggoner v. Morrow, 932 S.W.2d 627, 631 (Tex. App.CHouston [14th Dist.] 1996, no writ). Thus, incorrect conclusions of law do not require reversal if the controlling findings of fact support the judgment under a correct legal theory. Id.

We review the trial court=s findings of fact for legal and factual sufficiency of the evidence by the same standards we apply in reviewing the evidence supporting a jury=s finding. Catalina v. Blasdel, 881 S.W.2d 295, 297 (Tex. 1994).  When the appellate record contains a reporter=s record as it does here, findings of fact are not conclusive on appeal if the contrary is established as a matter of law, or if there is no evidence to support the findings.  Middleton v. Kawasaki Steel Corp., 687 S.W.2d 42, 44 (Tex. App.CHouston [14th Dist.]), writ ref=d n.r.e., 699 S.W.2d 199 (Tex. 1985) (per curiam).

Issue one:  Whether Lopez=s September 25 Letter is Ambiguous

In issue one, MPI challenges the trial court=s legal conclusion that Lopez=s September 25 letter, in which he stated, AI, personally, guaranty all outstandings and liabilities of Sacos Tubularies,@ was ambiguous.  A guaranty agreement is a contract in which one party agrees to be responsible for the performance of another party even if he does not have direct control.  Gooch v. Am. Sling Co., 902 S.W.2d 181, 185 (Tex. App.CFort Worth 1995, no writ).  Whether a contract is ambiguous is a question of law.  Fein v. R.P.H., Inc., 68 S.W.3d 260, 265 (Tex. App.CHouston [14th Dist.] 2002, pet. denied) (citing Heritage Res., Inc. v. NationsBank, 939 S.W.2d 118, 121 (Tex. 1996)).  If a contract is subject to two or more reasonable interpretations, the contract is ambiguous, thereby creating a fact issue on the parties= intent.  Fein, 68 S.W.3d at 265 (citing Columbia Gas Transmission Corp. v. New Ulm Gas, Ltd., 940 S.W.2d 587, 589 (Tex. 1996)).  In contrast, if the written instrument is worded so that it can be given a certain or definite legal meaning or interpretation, then it is not ambiguous, and the court will construe the contract as a matter of law.  Fein, 68 S.W.3d at 265 (citing Coker v. Coker, 650 S.W.2d 391, 393 (Tex. 1983)).

The fact the parties provide conflicting interpretations does not create an ambiguity.  Fein, 68 S.W.3d at 265 (citing Columbia Gas Transmission Corp., 940 S.W.2d at 589).  For an ambiguity to exist, both interpretations must be reasonable.  Lake Charles Harbor & Terminal Dist. v. Bd. of Trustees of the Galveston Wharves, 62 S.W.3d 237, 243 (Tex. App.CHouston [14th Dist.] 2001, pet. denied) (citing Nat=l Union Fire Ins. Co. v. CBI Indus., Inc., 907 S.W.2d 517, 520 (Tex. 1995)).  Only after a court first determines a contract is ambiguous may the court consider the parties= interpretations and admit extraneous evidence to determine the true meaning of the instrument.  Lake Charles Harbor, 62 S.W.3d at 243 (citing Nat=l Union Fire Ins. Co., 907 S.W.2d at 520).  It is improper to use a party=s testimony to create an ambiguity when a contract is otherwise unambiguous.  Columbia Gas Transmission Corp., 940 S.W.2d at 592 n.2.^[5]

In arguing the September 25 letter is ambiguous, Lopez invokes the rule of strictissimi juris, which entitles a guarantor to have his agreement strictly construed and not extended by construction or implication beyond the precise terms of his contract.  See McKnight v. Va. Mirror Company, 463 S.W.2d 428, 430 (Tex. 1971).  This rule, however, applies after the terms of the guaranty have been ascertained.  See id.

In the September 25 letter, Lopez wrote, AI . . . want to certify you [sic] that I, personally, guaranty all outstandings [sic] and liabilities of Sacos Tubulares with Material Partnerships as well as future shipments.@  Lopez nevertheless argues the Amere mention@ of Aguaranty@ or Aguarantor@ is not sufficient to create individual liability without other material terms.  In support, he cites Tenneco Oil Co. v. Gulsby Engineering, Inc., 846 S.W.2d 599, 605 (Tex. App.CHouston [14th Dist.] 1993, writ denied), and Gulf & Basco Co. v. Buchanan, 707 S.W.2d 655, 657 (Tex. App.CHouston [1st Dist.] 1986, writ ref=d n.r.e.).  In each case, the court emphasized the absence of any guaranty language in the body of the document.

Tenneco involved the conveyance of a deed of trust as collateral to secure certain indemnity obligations.  846 S.W.2d at 605.  The defendants had signed the deed on lines bearing their names AIndividually and d.b.a. Gulsby Enterprises@ and also on signature lines bearing their names as AGuarantor for Gulsby Engineering, Inc.@  Id. at 605.  This court held, AAbsent any guaranty language in the body of the deed, we refuse to find that adding a signature line with the word >guarantor= can transform a deed of trust into a guaranty of obligations additional to the conveyance of property described in the deed.@  Id.  Unlike Tenneco, the body of Lopez=s letter contains unambiguous guaranty language: AI, personally, guaranty.@

In Gulf & Basco Co. v. Buchanan, the First Court of Appeals also acknowledged that a signature alone will not create an ambiguity in otherwise clear guaranty language in the body of an instrument:

[T]here is no clear mode of signature that will absolutely fix or avoid personal liability.  A signature followed by corporate office will result in personal liability where the individual is clearly designated within the instrument as personal surety for the principal.  In such case, the corporate office may be construed a descriptio personae of the signator rather than indication of the capacity in which he signs.

707 S.W.2d at 657.

Lopez contends Gulf & Basco Co. v. Buchanan is on point, arguing the fact he used company letterhead and signed the letter in his capacity as general manager of Sacos, rather than individually, renders the language in the body of the letter ambiguous.  The document at issue in Gulf & Basco contained the following signature lines:

Alan Buchanan Builders, Inc.  [hand written]

NAME (Printed)                        [pre‑printed]

6301 Ranchester, Houston              

HOME ADDRESS                          

Alan B. Buchanan (hand written)

SIGNATURE                                   

Id. at 658.

The First Court of Appeals concluded, Ain the absence of a clear intent within the instrument to bind Buchanan in his individual capacity, the manner of execution is susceptible of two different and reasonable interpretations,@ i.e., as binding either a corporation or an individual.  Id.  But, as discussed above, when clear language within the instrument designates the individual as personal surety for the principal, the corporate office following the signature does not vitiate the guaranty.  Id. at 657.

Unlike the document in Gulf & Basco, the letter in the present case does express a clear intent to bind Lopez Apersonally.@  Accordingly, Lopez=s signature over his corporate office does not render the document ambiguous.  Gulf & Basco is inapposite.

On the issue of ambiguity, we conclude the document in the present case more closely resembles that in a recent case from the San Antonio court of appeals:  Taylor‑Made Hose, Inc. v. Wilkerson, 21 S.W.3d 484 (Tex. App.CSan Antonio 2000, pet. denied).  In Taylor-Made Hose, the court considered language at the end of a single-page credit application by North American Transit, Inc.  See id. at 486. The application had been signed by Lynne Wilkerson under lines containing her hand printed name and a hand printed designation of her title of vice president.  See id.  The court concluded:

As stated in the credit application . . . , Lynne Wilkerson Apersonally agree[d] to pay all invoices and cost of collection ... on any amount remaining unpaid after 90 days@ on North American Transit=s open account with Taylor‑Made Hose.  This agreement is not in any respect ambiguous.  By agreeing to Apersonally . . . pay@ North American Transit=s delinquent account, Wilkerson made herself personally liable for the corporation=s debt.

Id. at 488 (emphasis added).

Lopez nevertheless argues we should distinguish language found in credit applications because a credit application Ais by definition@ a guaranty.^[6]  Even if this is the case, it does not answer the question of whether the guaranty language and the signature show clear intent that the individual be bound.  As in Taylor-Made Hose, the guaranty language unambiguously indicates Lopez=s personal guaranty.

Finally, Lopez directs this court=s attention to Texas Business and Commerce Code section 3.402(b)(1), which provides:

(b) If a representative signs the name of the representative to an instrument and the signature is an authorized signature of the represented person, the following rules apply:

(1) If the form of the signature shows unambiguously that the signature is made on behalf of the represented person who is identified in the instrument, the representative is not liable on the instrument.

Tex. Bus. & Com. Code Ann. ' 3.402(b)(1) (Vernon 2002).

Section 3.402(b)(1), however, deals with negotiable instruments.  See Tex. Bus. & Com. Code Ann. ' 3.102(a) (Vernon 2002) (stating chapter applies to negotiable instruments).  See also Tex. Bus. & Com. Code Ann. ' 3.104(b) (Vernon 2002) (providing, A>Instrument= means a negotiable instrument@).  A guaranty agreement is not a negotiable instrument, and is not governed by the provisions of the Texas UCC.  Vaughn v. DAP Fin. Svcs., 982 S.W.2d 1, 6 (Tex. App.CHouston [1st Dist.] 1997, no pet.); Dann v. Team Bank, 788 S.W.2d 182, 186 (Tex. App.CDallas 1990, no writ); Cortez v. Nat=l Bank of Commerce, 578 S.W.2d 476, 478 (Tex. Civ. App.CCorpus Christi 1979, writ ref=d n.r.e.).

Furthermore, even were we to assume Texas Business and Commerce Code section 3.402(b)(1) somehow informs our analysis of the letter at issue, the section does not answer the question of whether Lopez=s signature unambiguously shows he signed on behalf of Sacos, particularly given the language of personal guaranty in the body of the letter.  The example of an unambiguous signature given in the comment, A>P[rincipal] by A[gent], Treasurer,=@ differs significantly from Lopez=s signature.  See Tex. Bus. & Com. Code Ann. ' 3.402(b)(1) cmt. 2 (Vernon 2002).  Here, we have neither the designation ASacos by Lopez@ nor the designation ALopez for Sacos.@  Cf. Block v. Aube, 718 S.W.2d 914, 915 (Tex. App.CBeaumont 1986, no writ) (concluding appellant did not personally guaranty employment contract when he never used any personal pronouns in employment contract and the signature block contained company name followed by appellant=s signature and ABy its Owner and President,@ employer).

We hold Lopez=s September 25 letter is not ambiguous, and therefore sustain MPI=s issue one.  Because of our disposition of issue one, we need not address MPI=s issue two, which challenges the sufficiency of the evidence to support the trial court=s finding Lopez did not sign the September 25 letter in an individual or personal capacity.

Issue Three: Whether the September 25 Letter Contained All the Essential Terms Necessary to Creation and Enforcement of a Personal Guaranty.

Texas Business and Commerce Code section 26.01 provides in relevant part:

(a) A promise or agreement described in Subsection (b) of this section is not enforceable unless the promise or agreement, or a memorandum of it, is

(1) in writing; and

(2) signed by the person to be charged with the promise or agreement or by someone lawfully authorized to sign for him.

Tex. Bus. & Com. Code Ann. ' 26.01(a) (Vernon 2002).  Subsection (b) applies to Aa promise by one person to answer for the debt, default, or miscarriage of another person.@  Id. ' 26.01(b)(2).^[7]  This provision requires Aa written memorandum which is complete within itself in every material detail, and which contains all of the essential elements of the agreement, so that the contract can be ascertained from the writings without resorting to oral testimony.@  Cohen v. McCutchin, 565 S.W.2d 230, 232 (Tex. 1978).  The essential terms of a guaranty agreement are (1) the parties involved, (2) a manifestation of intent to guaranty the obligation, and (3) a description of the obligation being guaranteed.  Park Creek Assocs., Ltd. v. Walker, 754 S.W.2d 426, 429 (Tex. App.CDallas 1988, writ denied).

Lopez=s September 25 letter set forth the parties involved: Lopez and MPI.  The letter contained a manifestation of intent to guaranty the obligation: AI, personally, guaranty.@  Finally, the letter contained a description of the obligation being guaranteed: Aall outstandings and liabilities of Sacos Tubulares with Material Partnerships as well as future shipments.@  Although Lopez lists other potential terms not included in the letter, such as when Lopez is to pay, whether MPI must make demand on Sacos before making demand on Lopez, whether Lopez and Sacos are jointly liable, Lopez provides no case law to support a claim these are essential terms.

Lopez instead relies on Dunn v. Growers Seed Ass=n, 620 S.W.2d 233 (Tex. App.CAmarillo 1981, no writ).  In Dunn, the Amarillo court of appeals concluded the following two documents did not contain essential terms of a guaranty agreement:

1.  A telegram from the corporation=s executive vice president, stating,

I WISH TO CONFIRM OUR VERBAL UNDERSTANDING REGARDING SEED REQUESTS, THE COMPANY WILL BE PLEASED TO EXECUTE NOTES WE WILL GUARANTEE PAYMENT AS PROMISED.  REGARDING THIS CROP NEEDS.  SUNFLOWER SEEDS FOR 3,000 ACRES.  MILO SEEDS FOR 3,000 . . . .

2.  A mailgram from the corporation=s officer and 80 percent owner, stating,

WE HAVE SALE ON LARGE PERCENT OF HAITIAN PLANTATION TO HAITIAN DEAL IS SUPPOSE TO CLOSE JUNE 23 YOUR ACCOUNT IN LINE TO BE PAID IN FULL AT CLOSING

SINCERELY

LONNIE DUNN

Id. at 235-36, 238.  The Amarillo court observed the mailgram was not a promise by Dunn to pay the account, but simply a statement the account was Ain line to be paid@ by an unspecified entity.  Id. at 238.  The court also observed the telegram did not state what was to be paid, who was to pay it, or the terms of the Apayment as promised.@  Id.  In contrast, as discussed above, Lopez=s September 25 letter states he (Lopez) promises to pay Saco=s liabilities to MIP.  Dunn is distinguishable.

Because the September 25 letter set forth the essential terms to establish an enforceable guaranty, we sustain issue three.

Issue Four: Whether there was Consideration for the Guaranty Agreement

Like any contract, a guaranty agreement must be supported by consideration.  Hargis v. Radio Corp. of Amer., Elec. Components, 539 S.W.2d 230, 232 (Tex. Civ. App.CAustin 1976, no writ).  Consideration Aconsists of either a benefit to the promisor or a detriment to the promisee.  The detriment must induce the making of the promise, and the promise must induce the incurring of the detriment.@  Roark v. Stallworth Oil & Gas, Inc., 813 S.W.2d 492, 496 (Tex. 1991) (citations omitted).  Consideration for a guaranty agreement is usually either the sufferance of a detriment by the creditor or a benefit conferred on the primary debtor.  Hargis, 539 S.W.2d at 232.

When, as in the present case, the parties enter into the guaranty independent of the transaction that initially caused an obligation, consideration independent of the obligation must support the guaranty.  Gooch, 902 S.W.2d at 185.  The consideration need not pass to the guarantor; consideration is sufficient if the primary debtor receives some benefit.  Beltran v. Groos Bank, N.A., 755 S.W.2d 944, 948 (Tex. App.CSan Antonio 1988, no writ); see Smith v. Christley, 755 S.W.2d 525, 532 (Tex. App.CHouston [14th Dist.] 1988, writ denied), disapproved on other grounds by Van Allen v. Blackledge, 35 S.W.3d 61, 65 n.3 (Tex. App.CHouston [14th Dist.] 2000, pet. denied).  An agreement to continue doing business with a party confers a benefit on that party.  Gooch, 902 S.W.2d at 185.

In the present case, MPI had stopped shipping product to Sacos when MPI=s owner wrote Lopez requesting Lopez=s personal guaranty.  After receiving Lopez=s September 25 letter, MPI resumed shipping product to Sacos, sending additional shipments valued at approximately $200,000.  Lopez=s guaranty was supported by consideration.  See Gooch, 902 S.W.2d at 185.

We sustain issue four.

Conclusion

We conclude Lopez=s September 25 letter is an unambiguous and enforceable personal guaranty of Saco=s debt to MPI.  We therefore sustain MPI=s issues one, three, and four.  Accordingly, we reverse that portion of the judgment denying recovery to MPI in its suit against Lopez and render judgment for MPI and against Lopez, as guarantor, in the amount of $962,139.79, plus pre-judgment and post-judgment interest.  The remainder of the judgment is not before the court and is unaffected by this decision.

/s/        John S. Anderson

Justice

Judgment rendered and Majority and Concurring Opinions filed March 6, 2003.

Panel consists of Justices Yates, Anderson, and Frost.  (Frost, J., concurring).

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^[1]  Except in quoted material, we use Aguaranty@ to refer to the act of promising and to the promise; we use Aguarantee@ to refer only to the person to whom the promise is made, in this case MPI.  See Black's Law Dictionary 705 (6th ed.1990) (defining Aguarantee@ and Aguaranty@).

^[2]  Before trial, Sacos withdrew its answer and permitted a default judgment to be taken against it. 

^[3]  During Burgower=s testimony, Carrera=s first name was transcribed as AClaudia.@  Given an earlier transcription as AClaudio,@ and the references to AMr. Carrera,@ we use the designation, AClaudio.@

^[4]  Lopez possessed authority to give a guaranty on behalf of Sacos.

^[5]  In National Union Fire Insurance Co. v. CBI Industries, Inc., the supreme court explained:

 An ambiguity in a contract may be said to be Apatent@ or Alatent.@  A patent ambiguity is evident on the face of the contract.  A latent ambiguity arises when a contract which is unambiguous on its face is applied to the subject matter with which it deals and an ambiguity appears by reason of some collateral matter.  If a latent ambiguity arises from this application, parol evidence is admissible for the purpose of ascertaining the true intention of the parties as expressed in the agreement.

907 S.W.2d 517, 520 (Tex. 1995) (citations and footnote omitted).  The court provided the following example of a latent ambiguity: A[I]f a contract called for goods to be delivered to >the green house on Pecan Street,= and there were in fact two green houses on the street, it would be latently ambiguous.@  Id. at 520 n.4.  Lopez is not claiming a latent ambiguity in the present case.

^[6]  In support, Lopez cites Austin Hardwoods, Inc. v. Vanden Berghe, 917 S.W.2d 320, 323 (Tex. App.CEl Paso 1995, writ denied).  Referring to the multi-purpose form used for credit applications in the case before it, the El Paso court of appeals wrote:

The fact that the agreement was for extension of credit to FISI does not create a conflict between the guaranty paragraph and the rest of the application.  The application is by definition a guarantee agreement whereby a third person undertakes to answer for the debt of another.  FISI stood as the primary obligor with Vanden Berghe as guaranty in the event that FISI failed to pay.

Id.

^[7]  The parties agree the guaranty agreement in this case is within the statute of frauds.  As discussed in issue four, below, the consideration for the guaranty flowed to Sacos, rather than to Lopez.  This aspect of the guaranty brings it within the statute of frauds.  See Cooper Petroleum Co. v. La Gloria Oil & Gas Co., 436 S.W.2d 889, 896 (Tex. 1969) (holding when only benefit guarantor received from continued credit sales was as one of stockholders, benefit was too remote and indirect to be enforceable as an original undertaking and promised guaranty was within statute of frauds).