Searching over 5,500,000 cases.


searching
Buy This Entire Record For $7.95

Official citation and/or docket number and footnotes (if any) for this case available with purchase.

Learn more about what you receive with purchase of this case.

OLIN CORPORATION v. ASPINWALL

United States District Court, Northern District of Illinois


October 30, 1974

OLIN CORPORATION, PLAINTIFF,
v.
JOHN ASPINWALL, DEFENDANT.

The opinion of the court was delivered by: Bauer, District Judge.

MEMORANDUM OPINION AND ORDER

This cause comes before the Court on plaintiff's motion for a summary judgment. This is a contract action in which plaintiff's complaint alleges that the defendant is liable to Olin Corporation under a personal guaranty executed by John Aspinwall for an amount of goods purchased by Harbach Farm Supply, Inc. At the time of the purchase and execution of the personal guaranty, Aspinwall was an officer and shareholder of Harbach Farm Supply, Inc.

Apparently there were only two persons present when the guaranty was executed, the defendant and Jack L. Naylor, an agent and employee of Olin Corporation. The depositions of both individuals were taken and attached to the memoranda submitted to the Court. The Court has reviewed the depositions and defendant's amended answer.

The fact that Aspinwall executed the guaranty in April of 1969 is uncontested. The guaranty*fn* was a typical agreement used by dealers to insure payment when they extend credit to a small or new company. Basically such an agreement provides that the signor will be personally responsible for the amount of credit extended or incurred in the event that the company should go bankrupt. Usually such a personal guaranty is sought from the principle shareholders of the company.

In April of 1969 Aspinwall was the Vice-President of the corporation. His father-in-law, Lawrence Harbach, was the President of the corporation and owned two-thirds of the stock. Aspinwall owned the remaining one-third. He contends that he signed the personal guaranty with the understanding that his father-in-law would also make the same guaranty. However, Olin Corporation only obtained the personal guaranty of Aspinwall.

Harbach Supply Inc. was adjudicated a bankrupt on March 29, 1973, in the United States District Court for the Northern District of Illinois, case No. 73 B 205. Then plaintiff sought to enforce the personal guaranty it had received from Aspinwall. However, the defendant refused to pay the debt incurred by the company. He claims that the personal guaranty was invalid because he entered the contract of guaranty only after being informed that Harbach's president, his father-in-law, Lawrence Harbach, would also execute the same agreement. He argues that Harbach's execution of the same agreement was a condition precedent to liability under the guaranty contract.

Plaintiff seeks a summary judgment on the issue of liability claiming that there is no material question of law or fact and since presentation of evidence concerning Harbach's execution of the same guaranty contract would be barred by the rule against parol evidence.

On the other hand the defendant submits that parol evidence is admissible from the defendant on his contention that the guaranty was supposed to be signed by Lawrence Harbach. Since the parol evidence rule does not foreclose this particular testimony there remains a question of fact to be decided by the jury.

The Court is of the opinion that there is no material question of fact or law since the rule against parol evidence would prohibit the introduction of evidence as to Aspinwall's understanding that Harbach would also execute the guaranty.

Defendant argues that where one guarantor's signature is conditioned upon the signing by other parties as guarantors, he is not bound unless the others sign. In support of his argument he cites West Madison Bank v. Mudd, 250 Ill. App. 258 (1928). However, the cited case is inappropriate to defendant's argument In West Madison Bank, defendant, Joseph Mudd, signed an instrument guaranteeing to pay all promissory notes signed by both Ray Lancaster and Frank Mudd, if the Chicago Motor Sales Company did not pay same. Plaintiff brought suit upon a note which was not paid by Chicago Motor. This note was not signed by both Joseph Mudd and Lancaster. The Court found the defendant free of liability under the guaranty because the promissory note was not signed in the manner mandated by the guaranty. As stated by the Court:

  "The indorsement of the note by Mudd and Lancaster was a
  condition precedent to the fixing of any liability of the
  guarantor, and . . . regardless of all the other questions
  presented, the failure of the defendant to perform the
  essential condition of the contract of guaranty raises an
  absolute defense to the plaintiff's claim" 250 Ill.App. at 265.

This is not what is at controversy here. If the guaranty in dispute here had expressly provided that Aspinwall's liability on the guaranty was conditioned on the additional signature of Lawrence Harbach, then there would be a material question as to whether liability attached. However, the guaranty does not so state.

If this cause goes to trial, defendant will seek to introduce testimony as to the alleged condition precedent which will be at variance with the terms of a clear and unambiguous document. In the deposition of defendant attached to plaintiff's motion for summary judgment as Exhibit "C", he admits the genuineness and execution of the guaranty. He also admits that he knew the purpose of said guaranty. Defendant further admits that plaintiff would not deliver any goods unless the guaranty was executed.

Defendant cannot violate the parol evidence rule by altering the terms of a document which is clear and unambiguous. Hart v. Moran, 108 Ill. App.2d 139, 246 N.E.2d 820 (1st Dist. 1969); Armstrong Paint v. Continental Can, 301 Ill. 102, 133 N.E. 711 (1922). Defendant must stand by the legal obligation which he has voluntarily brought upon himself. In Castle v. Powell, 261 Ill. App.? 132 (1931), defendants sought to escape liability under the terms of an unambiguous guaranty which they had executed. The Court stated:

  "The contract of guaranty must be considered and interpreted as
  a whole and from it, as a whole, must be gathered the intention
  of the parties. It must be construed by and from its own terms
  and provisions, as far as they furnish a guide; the contract
  should be construed so as to make it effective and enforceable
  where it can be done without violence to the intent of the
  parties to be gathered within the language of the four corners
  of the writing [citing cases] . . . . The contentions of the
  parties to the contract are not the criterion which should
  guide the court in determining

  whether the written contract is a full expression of the
  agreement of the parties. The Court must determine this from
  the writing itself. [citing cases]" 261 Ill.App. at 140-141.

The fact that defendant admits that plaintiff would not deliver any goods unless the guaranty was executed indicates that there was no fraud in the inducement. Fraud in the inducement would be something that goes to the very heart of the agreement itself, not, as here, an attempt to alter or vary the terms of the agreement.

Accordingly, plaintiff's motion for summary judgment is hereby granted.


Buy This Entire Record For $7.95

Official citation and/or docket number and footnotes (if any) for this case available with purchase.

Learn more about what you receive with purchase of this case.