Opinion
No. 4-107 / 03-0589
April 28, 2004.
Appeal from the Iowa District Court for Crawford County, Richard J. Vipond, Judge.
Defendant Laurence Schroeder appeals from the district court's grant of summary judgment in favor of plaintiff United Suppliers, Inc. AFFIRMED AND REMANDED WITH INSTRUCTIONS.
John Werden of Van Dyke Werden, P.L.C., Carroll, for appellant.
Thomas Flynn and Margaret Callahan of Belin Lamson McCormick Zumbach Flynn, P.C., Des Moines, for appellee.
Heard by Mahan, P.J., and Zimmer and Eisenhauer, JJ.
Defendant Laurence Schroeder appeals from the district court's grant of summary judgment in favor of plaintiff, United Suppliers, Inc. (United Suppliers), in a suit for breach of contract. We affirm and remand with instructions.
I. Background Facts Proceedings
In December 1999, United Suppliers began selling farm chemicals and fertilizer to a business known as "Menu Ag." On February 10, 2000, Menu Ag president Fred Neumann and his wife, Rodonna, signed a guaranty so that United Suppliers would extend credit to Menu Ag. Laurence Schroeder, a friend of Fred Neumann and a substantial customer of Menu Ag, signed the guaranty document as a witness.
Menu Ag conducted a retail sales and service business from the beginning of 2000 until September 2001.
Menu Ag subsequently requested that United Suppliers extend its line of credit. On March 3, 2000, the assistant credit manager of United Suppliers, Steve Greiner, wrote a letter to Fred Neumann. The letter stated:
As we discussed I am sorry that we were not able to approve expanding your credit line at the present time beyond our initial $30,000 level. We would be happy to reevaluate this if you were able to obtain a qualified guarantor or a bank letter of credit.
United Suppliers provided Fred Neumann with a guaranty form essentially identical to the one that was previously signed by Fred and Rodonna Neumann. Fred Neumann asked Laurence Schroeder to sign the guaranty. On April 18, 2000, Schroeder signed the guaranty. Schroeder signed the guaranty on a line expressly marked "Guarantor." Rodonna Neumann signed the document as a witness. Schroeder claims he thought he was signing the guaranty as a witness to the signature of Rodonna Neumann and not as a guarantor.
On April 20, 2000, Steve Greiner wrote a letter to Schroeder. The letter, which was received by Schroeder, stated:
Thank you for your cooperation in supplying your personal guaranty and personal financial statements to support the credit line of Menu Ag, Inc. with United Suppliers, Inc. Attached is a copy of the guaranty for your records.
According to Schroeder, after receiving the letter, he became aware that he had signed the guaranty as a guarantor. Schroeder did not respond to the letter. He admits he did not contact Greiner or anyone else at United Suppliers to challenge the guaranty or to try to have it revoked.
During the months following the execution of the guaranty, Greiner called Schroeder on several occasions. At no time did Schroeder tell Greiner that the guaranty was executed by mistake. In reliance on Schroeder's guaranty, United Suppliers, extended Menu Ag additional credit. Eventually, Menu Ag's indebtedness reached a level more than three times its original credit limit of $30,000.
In November 2001, Greiner notified Schroeder that United Suppliers, based on its belief that it likely would not be able to collect from either Menu Ag or the Neumanns, would be looking to Schroeder to fulfill the terms of his guaranty. In response, Schroeder referred United Suppliers to his counsel. His counsel then informed United Suppliers, for the first time, that Schroeder disputed his status as a guarantor. In February 2002, United Suppliers sued Schroeder for breach of contract.
In October 2002, both United Suppliers and Schroeder moved for summary judgment. On March 11, 2003, the district court granted summary judgment for United Suppliers and overruled Schroeder's motion for summary judgment. The court ruled the plaintiff was entitled to a judgment against the defendant in the amount of $95,763.06, which was the amount of the debt secured by the guaranty. The court also concluded the plaintiff was entitled to interest, costs, and attorney fees which were determined in a subsequent order. Schroeder appeals.
II. Scope of Review
We review summary judgment rulings for correction of errors of law. Wiedmeyer v. Equitable Life Assur. Society of U.S., 644 N.W.2d 31, 33 (Iowa 2003). Summary judgment is appropriate only when the moving party shows there are no genuine issues of material fact. Wright v. American Cyanamid Co., 599 N.W.2d 668, 670 (Iowa 1999). We examine the record in the light most favorable to the party opposing summary judgment. Kelly v. Iowa Mut. Ins. Co., 620 N.W.2d 637, 641 (Iowa 2001).
III. Discussion
Schroeder claims the district court erred in granting summary judgment to United Suppliers because he generated a genuine issue of material fact regarding his intentions when he signed the guaranty. He argues that when he signed the guaranty he did not intend to sign as the guarantor, but rather as a witness to Rodonna's signature. For purposes of this appeal, we accept as "fact" Schroeder's assertion that he thought he was signing the guaranty as a witness rather than a guarantor.
The district court correctly noted that ignorance of the contents of an instrument does not ordinarily affect the liability of one who signs it. Gouge v. McNamara, 586 N.W.2d 710, 713 (Iowa 1998). "It is also the settled rule of law that if a party to a contract is able to read, has the opportunity to do so, and fails to read the contract, he cannot thereafter be heard to say that he was ignorant of its terms and conditions, for the purpose of relieving himself from its obligation." Id. Schroeder suggests a different rule should apply where his particular mistake consisted of the failure to read the word "guarantor" under the line where he signed his name. We disagree.
Any absence of actual assent merely renders the contract voidable under the otherwise applicable contract rules regarding mistake, fraud, and related doctrines. See Restatement (Second) of Contracts § 19(3) comments c d. A party who claims to have made a mistake may avoid the contract only if the other party had reason to know of, or caused the mistake, or if the effect of the mistake is such that enforcement of the contract would be unconscionable. See Restatement (Second) of Contracts § 153.
As the district court mentioned, United Suppliers did not participate in the events that led to Schroeder signing the guaranty. Schroeder acknowledges that no representative of the plaintiff was present when he signed the guaranty. Moreover, United Suppliers had no reason to know that Schroeder did not intend to sign the document in question as a guarantor. Schroeder alone made the mistake of signing as a guarantor. He then failed to inform the plaintiff of his mistake despite numerous opportunities to do so. As a result, he must assume the consequences of his actions or lack thereof. Schroeder's alleged mistake provides no basis for reversal of the district court's summary judgment ruling enforcing the guaranty.
Schroeder also claims that no consideration exists for the guaranty in this case. He contends that because United Suppliers did not formally increase Menu Ag's credit limit, after they received the guaranty he signed, no consideration existed. However, Greiner stated the following in his affidavit:
In reliance on Laurence Schroeder's guaranty, United Suppliers internally raised the credit limit of Menu Ag. We did not formally raise the credit limit above $30,000, because we wanted to use the guaranty lightly and monitor the account. Without the guaranty, United Suppliers would not have extended the credit that it did to Menu Ag in the time following April 18, 2000.
Additionally, the guaranty signed by Schroeder contains no requirement that United Suppliers formally raise Menu Ag's credit limit. Instead, the guaranty states that it is given "for consideration of [United Suppliers] extending to Menu Ag, Inc. . . . credit . . . from time to time."
It is undisputed that at the time United Suppliers contacted Schroeder, to collect on the guaranty that he had signed, Menu Ag owed United Suppliers an amount far in excess of the original limit of $30,000. The record reveals that United Suppliers extended Menu Ag additional credit in return for Schroeder's guaranty, even though it never formally raised Menu Ag's credit limit. Consequently, we agree with the district court's finding that there was consideration for Schroeder's guaranty.
On appeal, Schroeder mentions several other defenses which he asserted in his answer to plaintiff's petition. The district court summarily rejected those defenses after concluding Schroeder had failed to show he could present evidence necessary to support any of them. Schroeder's reasserts the same defenses in his brief on appeal. However, his recitation is unaccompanied by any argument or citation of authorities. Accordingly, the record fails to raise any further issue for review by this court. See Soo Line R. Co. v. Iowa Dep't of Transp., 521 N.W.2d 685, 691 (Iowa 1994).
We conclude the district court properly granted summary judgment for United Suppliers. Under the guaranty, plaintiff is entitled to recover appellate attorney fees and expenses incurred in defending this appeal. We remand this issue to the district court for a determination of the amounts to which United Suppliers is entitled.