Skrypek v. St. Joseph Valley Bank

Citations: 469 N.E.2d 774; 1984 Ind. App. LEXIS 3003Docket: 3-284A41

Court: Indiana Court of Appeals; October 25, 1984; Indiana; State Appellate Court

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Edward K. Skrypek appealed a summary judgment favoring St. Joseph Valley Bank regarding a guaranty for RBS Industries, Inc.'s indebtedness. He argued that material questions of fact existed that should prevent summary judgment, and claimed errors in the trial court's interpretation of the guaranty. The identified issues included: (I) whether the guaranty terms were ambiguous, creating genuine material fact disputes; (II) whether Skrypek waived notice of future loans and default by RBS; and (III) whether there were factual disputes concerning fraud or misrepresentation in the guaranty execution.

The court affirmed the summary judgment, stating that it would do so if no genuine issues of material fact existed and the moving party was entitled to judgment as a matter of law. The trial court could only consider evidence but not resolve conflicting facts. The record indicated that Skrypek, as an officer and shareholder of RBS, executed a "Continuing Guaranty" for a $25,000 loan, which was later increased. After selling his stock and resigning from RBS, he continued business transactions with the company before RBS defaulted on the loan. Skrypek contended that the guaranty was meant to cover only the initial loan and that ambiguities regarding the term "accrue" raised factual questions preventing summary judgment.

Skrypek contends that the term 'accrue' in the guaranty agreement should be interpreted to refer only to expenses and interest from the original loan, not to new debts. He argues that this ambiguity prevents determining the parties' intent as a matter of law, necessitating a trial. However, the court disagrees, noting that guaranty contracts are to be interpreted based on the parties' intentions as reflected in the contract and surrounding circumstances. A guaranty can be continuing or limited; unless explicitly stated otherwise, it remains in effect until revoked. The court emphasizes that Skrypek's guaranty is a continuing guaranty, as indicated by its language which covers future debts and transactions. Specific clauses in the guaranty confirm that it guarantees all current and future indebtedness until the guarantors provide written notice of termination. The court finds the language unambiguous and asserts that the intent of the parties can be determined solely from the contract itself, excluding extrinsic evidence. Additionally, Skrypek claims he should be discharged from his obligations due to the Bank's material changes to the loan agreement without his consent, failure to notify him of RBS's default, and failure to protect the loans through set-off against RBS's deposits.

Skrypek asserts that he is discharged from liability as a guarantor because SJVB renewed a loan note at a higher interest rate without his consent, constituting a material alteration of the contract. He cites legal precedent indicating that any binding change to a principal's contract without the surety's consent discharges the surety. Although he acknowledges that prospective consent may be granted in the guaranty agreement, he claims he did not provide such consent in his agreement with SJVB. Skrypek distinguishes the consent language in a cited case where the guarantor waived notice regarding changes to the indebtedness, arguing that his guaranty does not contain similar language. His guaranty includes multiple waivers of notices related to acceptance, credit extensions, presentment for payment, and the right to require the Bank to pursue the debtor before enforcing the guaranty. Furthermore, the guaranty stipulates that the Bank may modify security arrangements without affecting the guarantors' obligations, and that their liability remains in full force regardless of any forbearance or changes in the debtor’s circumstances.

Consent within the guaranty agreement is consistent with legal precedent, specifically referencing the waiver of notice for credit extensions and indebtedness amounts. The agreement explicitly states that extending time or obtaining additional security does not discharge the guarantor, and unambiguously waives notice of default and the bank's obligation to pursue the debtor before relying on the guaranty. The provisions indicate that impairment of security does not relieve the guarantor of liability. The trial court determined that Skrypek was not discharged from liability due to any actions or inactions by the bank. Regarding claims of fraud or misrepresentation, the court found that Skrypek failed to preserve a valid allegation and did not provide supporting authority or facts for his claims. His argument regarding reliance on representations made by Peter Ruch, an agent of the bank, was deemed untenable. The court emphasized that Skrypek, as an officer and shareholder of RBS Industries, had the capacity to understand the guaranty agreement and could not rely on his failure to read it before signing.

A guarantor cannot evade liability for a signed instrument due to a mistake stemming from their own fault, especially when they are expected to investigate the relevant facts. Reliance on others’ statements instead of reading the guaranty does not excuse liability. Under Indiana law, a party in an arm's length transaction cannot rely on another's representations about the legal implications of a clear instrument. The claim that the Bank employed Ruch as an agent to secure Skrypek's signature is unfounded; both Ruch and Skrypek were on the same side of the financing transaction with SJVB. Previous case law indicates that a guarantor's preparation of a contract does not make them responsible for misrepresentations made by the principal unless they were aware of or participated in the deception. The court affirmed that the guaranty was unambiguous regarding the parties' rights and responsibilities, ruling that Skrypek could not succeed on any claims of fraud or misrepresentation against the Bank or Ruch. The judgment was upheld. Additionally, Skrypek’s argument regarding a factual determination tied to the termination of the guaranty was deemed waived due to lack of preservation in his Motion to Correct Error. A loan to RBS has been repaid and is not part of the current dispute. Finally, the court did not find it necessary to address Skrypek's argument concerning the discharge provisions of negotiable instruments, as consent under the guaranty was established.