Opinion
No. 78-336
Decided January 25, 1979.
Guarantor appealed a judgment holding him liable in that capacity.
Affirmed
1. GUARANTY — Notice of Revocation — Continuing Guaranty — Requirement — Clearly and Unqualifiedly Expressed — No Inference of Intent. A notice of revocation or termination of liability under a continuing guaranty must be expressed clearly and unqualifiedly; an intent to revoke will not be inferred by the courts.
2. Notice — Guarantor — Severed Connections — Guaranteed Corporation — Insufficient — Terminate — Continued Liability. Notice alone that a guarantor has severed his connection with the corporation whose obligations he had personally guaranteed is insufficient revocation to terminate the guarantor's liability since such severance is not necessarily incompatible with continued liability.
Appeal from the District Court of the City and County of Denver, Honorable Charles E. Bennett, Judge.
Edward R. Gleason, for plaintiff-appellee.
DiManna, Eklund, Ciancio Jackson, Gene A. Ciancio, for defendant-appellant.
Defendant, Donald C. Sandefur, appeals from a judgment holding him liable as guarantor to plaintiff, Insurance Specialists, Inc. He contends that the trial court erred in holding that he could not terminate unilaterally his liability for future transactions between plaintiff and the principal obligor, Treat and Associates, Inc., under "continuing" guaranties. We affirm.
The essential facts are not disputed. In January 1975, plaintiff and Treat executed two agency contracts whereby Treat, as agent for plaintiff, was authorized to issue insurance in connection with its business operations and to collect premiums on behalf of plaintiff. Defendant was president and part owner of Treat. He executed two separate instruments whereby he "personally and unconditionally" guaranteed Treat's performance and obligations under the agency agreements on a continuing basis. Plaintiff required these guaranties prior to execution of the agency contracts.
On April 1, 1975, defendant wrote a letter to plaintiff advising that he had terminated his association with Treat and that his personal guaranties "are now rescinded." Plaintiff denied receipt of defendant's letter. However, plaintiff's agent testified that he had learned indirectly sometime after April 1 that defendant had terminated his association with Treat.
Subsequent to defendant's termination of his association with Treat, Treat defaulted on its obligations under the agency contracts with plaintiff, and plaintiff sought to recover the outstanding obligations in the amount of $2,355.30 plus interest and costs from defendant as guarantor. Defendant denied liability based on his alleged rescission in his letter of April 1.
The trial court found that defendant's letter had been mailed, but had not been received. However, irrespective of this finding, it concluded that defendant could not unilaterally rescind the "continuing" guaranties, and found him liable on the primary obligation. In denying defendant's motion for new trial, the court also found that the guaranties were supported by consideration.
Plaintiff contends that defendant is precluded from raising on appeal the issue of the effectiveness of his unilateral termination of liability because he did not include it as a ground for reversal in his motion for new trial. See C.R.C.P. 59(f); Dulin v. West, 35 Colo. App. 6, 528 P.2d 411 (1974). We have examined defendant's motion and supporting "memorandum of law" and conclude that together they apprised the trial court of the issue now asserted as error and that it has been properly preserved for appellate review in compliance with C.R.C.P. 59(f). See Catron v. Catron, 40 Colo. App. 476, 577 P.2d 322 (1978); see also Martin v. Opdyke Agency, Inc., 156 Colo. 316, 398 P.2d 971 (1965).
Defendant contends that with respect to future transactions a continuing guaranty is not a contract supported by consideration but rather an offer which may be unilaterally revoked by the guarantor. Hence, he maintains that the termination of liability was effective because the obligations at issue here were incurred after the purported termination. We do not reach this argument because we hold that defendant's attempted revocation was ineffective.
Defendant does not now rely upon his letter to establish his revocation. He argues that the evidence established without dispute that plaintiff had actual knowledge that he had terminated his association with Treat and that knowledge by itself effectively revoked his guaranties. We do not agree.
[1,2] A notice of revocation or termination of liability under a continuing guaranty must be expressed clearly and unqualifiedly. E.g., Haynie v. First National Bank, 117 Ga. App. 766, 162 S.E.2d 27 (1968); an intent to revoke will not be inferred by the courts. A. Stearns, The Law of Suretyship, § 4.20 (J. Elder 5th ed.). A notice that a guarantor has severed his connection with the corporation whose obligations he had personally guaranteed has been held an insufficient revocation to terminate the guarantor's liability since such severance is not necessarily incompatible with continued liability. See Manufacturers' Finance Co. v. Rockwell, 278 Mass. 502, 180 N.E. 224 (1932). Assuming, therefore, plaintiff's actual knowledge that defendant was no longer associated with the principal obligor, we hold that such knowledge would be insufficient as a matter of law to terminate defendant's liability on his personal guaranties.
Judgment affirmed.
JUDGE SMITH and JUDGE RULAND concur.