Enterprise Financial Corp. v. Ross White Enterprises, Inc.
Enterprise Financial Corp. v. Ross White Enterprises, Inc.
Opinion of the Court
In this suit to recover under a guaranty, defendant Enterprise Financial Corporation (Enterprise) appeals from the grant of summary judgment to plaintiff Ross White Enterprises d/b/a National Computer Distributors (National). Enterprise also appeals from the denial of its own summary judgment motion.
Enterprise loaned money to BYOC, Ltd., a company engaged in the sale of computers. National sold computer equipment to BYOC on an open account. On October 23, 1991, Enterprise as lender to BYOC executed a Letter of Guaranty which guaranteed BYOC’s obligation to pay National for the purchased equipment. The guaranty stated in pertinent part as follows: “This Letter of Guaranty is in effect through January 31, 1992 or unless sooner terminated by [Enterprise] with thirty (30) days written notice to [National], during which
1. In five enumerations of error, Enterprise attacks the trial court’s reasons for granting summary judgment to National. It essentially claims the trial court erred in finding the expiration term was ambiguous and in extending Enterprise’s liability beyond the strict terms of the guaranty.
“It is axiomatic that a contract should be construed by the court where the language is undisputed but the meaning of that language is in dispute. OCGA § 13-2-1. It is the responsibility of the court to determine whether an ambiguity exists. If the contract does not require disentanglement of the language by a jury, i.e., the words used are plain and clear in their common usage, it remains the duty of the trial court to look to the language of the contract with a view to effectuating the intent of the parties.” (Citations and punctuation omitted.) Candler v. Davis & Upchurch, 204 Ga. App. 167, 168 (2) (419 SE2d 69) (1992).
“[W]here the contract is unambiguous and subject to only one construction, the liability of any surety [or guarantor] (whether compensated or not) is not to be extended beyond the terms of the contract by implication or interpretation.” Houston Gen. Ins. Co. v. Brock Constr. Co., 241 Ga. 460, 464 (2) (246 SE2d 316) (1978); see OCGA § 10-7-1. On the other hand, if there is any ambiguity in the contract of guaranty, it “is to be construed most strongly against the maker. [Cit.]” Escambia Chem. Corp. v. Rocker, 124 Ga. App. 434, 441 (184 SE2d 31) (1971).
The thrust of Enterprise’s argument is that the language concerning expiration of the guaranty is capable of only one reasonable interpretation: that National had to demand payment under the guaranty prior to its expiration on January 31, 1992. We disagree. Although the trial court concluded that the language concerning the
Enterprise contends that the language “during which time [National] can exercise their rights” means National “must have made demand” before the expiration date. We find this contention to be without merit. In construing contracts, “if the terms used are clear and unambiguous they are to be taken and understood in their plain, ordinary, and popular sense.” (Citations and punctuation omitted.) Bergan v. Time Ins. Co., 196 Ga. App. 78, 80 (395 SE2d 361) (1990). Contrary to Enterprise’s assertion, the word “can” ordinarily means may, not must. (See Random House Dictionary of the English Language (2d ed. 1987).) We thus read this language to mean National could sell computer equipment to BYOC under faith the guaranty was in existence up through the expiration date.
Moreover, assuming arguendo that the expiration provision was ambiguous, we would be required, as did the trial court, to construe the provision against Enterprise as the drafter of the agreement and the party undertaking the obligation.
For the foregoing reasons, we find the trial court properly granted summary judgment to National and denied summary judgment to Enterprise.
2. In light of our holding in Division 1, we need not address Enterprise’s remaining enumerations of error.
Judgment affirmed.
Although Enterprise claims there is no evidence that it drafted the guaranty, we find such a contention to be without merit. The letter of guaranty is drafted on Enterprise’s letterhead and is addressed to National.
Concurring Opinion
concurring specially.
I agree that the trial court did not err in granting summary judgment to National, but I cannot agree that the expiration provision in the guaranty was unambiguous. If the January 31, 1992 expiration date refers to the date by which a sale of equipment must be made to be subject to the guaranty, rather than the time within which a claim can be made, then the time for making a claim itself would be of indefinite duration. The use of the word “can” in the expiration provision is also ambiguous. Although the word is often used interchangeably with “may,” it also is interpreted as “to be enabled by law” or “to have a right to.” See Black’s Law Dictionary, p. 206 (6th ed. 1990). Even if the word “can” is used in an indefinite sense, it may refer not to a time limitation, but to the expectation or hope that no claim under the guaranty would be necessary.
The trial court correctly found this language to be ambiguous. However, “[t]he construction of a contract is a question of law for the court, and ‘even ambiguous contracts are to be construed by the court unless an ambiguity remains after application of applicable rules of construction.’ [Cit.]” McGee v. Southern Gen. Ins. Co., 194 Ga. App. 783, 784 (391 SE2d 669) (1990). The trial court applied the appropriate rules of contract construction to the expiration provision, construing it strictly against the drafter to effectuate its intent. I therefore concur in the affirmance of the trial court’s grant of summary judgment to National.
Reference
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