Southland Plumbing Supply, Inc. v. Crescent Refrigeration, Inc.
Docket: No. 88-CA-1759
Court: Louisiana Court of Appeal; April 13, 1989; Louisiana; State Appellate Court
Defendant Crescent Refrigeration, Inc. appeals a trial court judgment that awarded plaintiff Southland Plumbing Supply, Inc. $24,327.35. Crescent Refrigeration had subcontracted mechanical work for the International Marine Terminal project to R.A. McGuire Construction Co., which it subsequently sub-subcontracted to John B. Patterson for plumbing tasks. Patterson sought materials from Southland Plumbing on credit, and Southland's secretary-treasurer, Alan Vinturella, agreed to this only after confirming with Crescent's president, Brent Driskill, who agreed to a joint check payment arrangement for Patterson and Southland. Driskill documented this agreement in a letter dated February 26, 1982, stating payments would occur monthly after Crescent received payment for work done.
Between February 19, 1982, and March 4, 1983, nine payments were made under this agreement, with the last joint check for $5,944.36 issued on February 10, 1983. However, following this payment, two water heaters costing $12,720 were purchased on February 22, 1983, after Vinturella received assurance from Driskill about sufficient funds for payment. Patterson was removed from the project on April 25, 1983, with an outstanding balance of $24,327.35 on Southland's account, and no further joint checks were issued after February.
Southland filed suit against Crescent only. At trial, Driskill claimed Patterson did not receive any payments after February due to a liquidated damages clause in both Patterson's contracts. The trial judge ruled in favor of Southland, asserting that Crescent had guaranteed payment, fulfilling the consent requirement of Louisiana Civil Code Article 1979. The court noted that Southland refused to deliver equipment until assured by Crescent of payment, underscoring the importance of Driskill's personal assurance for the transaction's completion.
The plaintiff's testimony established that the delivery of the property was contingent on the defendant's assurances. The defendant's agreement to guarantee payment indicated a mutual understanding, fulfilling the necessary elements for a contract as per former La.C.C. art. 1979, which includes legally capable parties, legally given consent, a certain object, and a lawful purpose. However, despite meeting these requisites, a contract of suretyship was not formed because, under La.C.C. art. 3035 et seq., additional requirements must be satisfied. Specifically, La.C.C. art. 3039 mandates that suretyship must be expressed and cannot be implied, and La.C.C. art. 2278(3) prohibits the use of parole evidence to establish promises to pay a third party's debt. The jurisprudence allows an exception for promises motivated by business interests or credit extension.
In this case, the court determined that the facts fell within this exception, allowing consideration of parole evidence. However, it concluded that the original agreement did not constitute an express promise by Crescent to pay Patterson's debts, as the correspondence did not clearly indicate such an obligation. In contrast, a prior conversation suggested that Crescent would cover costs for heaters should Patterson default, establishing an express assurance related to that specific transaction. Consequently, Southland is entitled to recover $12,720 for the heaters from Crescent, while the claim for the account balance is denied. The trial court's judgment is amended to reflect this award while affirming other aspects.
