Sharer v. Bend Millwork Systems, Inc.

600 So. 2d 223, 1992 WL 86319
CourtSupreme Court of Alabama
DecidedMay 1, 1992
Docket1901933
StatusPublished
Cited by8 cases

This text of 600 So. 2d 223 (Sharer v. Bend Millwork Systems, Inc.) is published on Counsel Stack Legal Research, covering Supreme Court of Alabama primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Sharer v. Bend Millwork Systems, Inc., 600 So. 2d 223, 1992 WL 86319 (Ala. 1992).

Opinion

Bend Millwork Systems, Inc., and Pozzi Window Company ("Bend and Pozzi") sued James L. Sharer, Edgar C. Cost, and Jeffrey W. Floyd, seeking enforcement of a guaranty agreement that Sharer, Cost, and Floyd had executed in favor of Bend and Pozzi on behalf of Sharer Sash and Door, Inc. ("Sash and Door"). Bend and Pozzi are Oregon corporations engaged in the manufacture and wholesale distribution of specialty windows and doors. Sash and Door is an Alabama corporation involved in the retail sale of building supply products. Sash and Door had entered into a distributorship agreement with Bend and Pozzi. At the time the guaranty was executed, Sharer, Cost, and Floyd owned all of Sash and Door's stock.

Bend and Pozzi's complaint alleged that Sharer, Cost, and Floyd had executed a continuing guaranty agreement in which they unconditionally guaranteed to pay any outstanding indebtedness owed by Sash and Door to Bend and Pozzi in the event Sash and Door defaulted on its obligations. Bend and Pozzi further alleged that they shipped goods to Sash and Door after the guaranty agreement was executed, and that Sash and Door had failed and refused to pay the amount owed for the goods.

In response to Bend and Pozzi's complaint, Cost and Floyd answered with a general denial. Although Sharer also answered the complaint with a general denial, he further alleged that he was not liable on the guaranty because no sales were made by Bend and Pozzi until after he had sold his interest in Sash and Door to Cost and Floyd and he alleged that Bend and Pozzi had knowledge before the shipments were *Page 225 made that he was no longer affiliated with Sash and Door.

Sharer answered Bend and Pozzi's complaint, and he also cross-claimed against Cost and Floyd, alleging that they had breached an agreement to use their best efforts to release Sharer from the guaranty and that they had used the guaranty to fraudulently obtain materials and supplies from Bend and Pozzi. Cost and Floyd also cross-claimed against Sharer, alleging that he had misrepresented to them the value of the shares in Sash and Door that they had purchased from him after the guaranty was executed.

Bend and Pozzi moved for a summary judgment against Sharer, Cost, and Floyd. After a hearing on the motion, the court entered a summary judgment against Cost and Floyd. With regard to Sharer, however, the motion was continued for further consideration. Thereafter, Sharer moved for a summary judgment against Bend and Pozzi, alleging that neither Bend nor Pozzi was qualified to do business in Alabama and arguing, therefore, that they could not seek enforcement of the guaranty agreement in Alabama courts. After a hearing on the summary judgment motions, the court denied Sharer's motion and entered a summary judgment for Bend and Pozzi. The trial court then entered an order pursuant to Rule 54(b), A.R.Civ.P., making Bend and Pozzi's summary judgment against Sharer a final judgment, and Sharer appealed. The two cross-claims are still pending in the trial court.

The issues properly before this Court on this appeal are: 1) whether Bend and Pozzi properly supported their summary judgment motion as to each element of their cause of action so as to show that they were entitled to recover on the guaranty agreement; 2) whether Sharer effectively revoked the guaranty prior to Bend and Pozzi's shipment of goods to Sash and Door; and 3) whether Bend and Pozzi's activities in doing business in Alabama were of such a nature as to require that they qualify to do business in this State.1

Initially we note that a motion for summary judgment may be granted only when there is no genuine issue as to any material fact and the moving party is entitled to a judgment as a matter of law. Rule 56(c), A.R.Civ.P.; Southern Guar. Ins. Co. v.First Alabama Bank, 540 So.2d 732 (Ala. 1989). The burden is, therefore, upon the moving party to clearly show that there is no material fact in dispute, and all reasonable inferences from the evidence are to be viewed most favorably to the nonmovant.Southern Guar. Ins. Co., supra.

Rule 56 is read in conjunction with the "substantial evidence rule," § 12-21-12, Ala. Code 1975, for actions filed after June 11, 1987. See Bass v. SouthTrust Bank of Baldwin County,538 So.2d 794 (Ala. 1989). In order to defeat a properly supported motion for summary judgment, the nonmovant must present substantial evidence, i.e., "evidence of such weight and quality that fair-minded persons in the exercise of impartial judgment can reasonably infer the existence of the fact sought to be proved." West v. Founders Life Assurance Co. of Florida,547 So.2d 870, 871 (Ala. 1989).

Sharer initially argues on appeal that the summary judgment for Bend and Pozzi was improper because, he says, Bend and Pozzi failed to properly support their summary judgment motion as to each essential element for recovery on a guaranty. Specifically, Sharer, citing Delro Industries, Inc. v. Evans,514 So.2d 976 (Ala. 1987), argues that Bend and Pozzi failed to prove that Sharer had been given notice of Sash and Door's default on the debt underlying the guaranty.

In Delro Industries we stated:

"Every suit on a guaranty agreement requires proof of the existence of the guaranty contract, default on the underlying contract by the debtor, and nonpayment *Page 226 of the amount due from the guarantor under the terms of the guaranty. However, to recover under a conditional guaranty or continuing guaranty, an additional element, notice to the guarantor of the debtor's default, must be proved."

514 So.2d at 979. (Citations omitted.) The guaranty agreement in Delro Industries and that in the instant case were both continuing guaranty agreements. Furthermore, the holder of the guaranty in Delro Industries, as in the present case, failed to present any evidence that notice of a default on the debt underlying the guaranty was given to the guarantor. Because of the lack of proof on the notice element in Delro Industries, this Court affirmed the judgment that had been entered against the holder of the guaranty. However, the present case, wherein a summary judgment has been entered for the holders of the guaranty, Bend and Pozzi, is distinguishable from DelroIndustries in one decisive respect: the guaranty agreement at issue in this case contains a waiver of notice of nonperformance on the underlying debt.

The guaranty agreement Sharer executed provides in pertinent part:

"We waive, in connection with the indebtedness and with our obligation under this Guaranty, all presentments, demands for performance, notices of non-performance, protests, notices of protest, notices of dishonor and notices of acceptance of this Guaranty and of the existence, creation or incurring of any new or additional indebtedness."

(Emphasis supplied.) The language of the guaranty is controlling in determining whether the holder of the guaranty is under a duty to notify the guarantor of a default by the principal, and notice need not be given when the terms of the guaranty expressly dispense with the need for it. 38 C.J.S.Guaranty, § 63 (1943). Because Sharer waived his right to notice of Sash and Door's nonperformance on the underlying contract, we hold that Bend and Pozzi were not required to prove that they gave Sharer such notice.

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Cite This Page — Counsel Stack

Bluebook (online)
600 So. 2d 223, 1992 WL 86319, Counsel Stack Legal Research, https://law.counselstack.com/opinion/sharer-v-bend-millwork-systems-inc-ala-1992.