Opinion
Hutchinson, Black, Hill, Buchanan & Cook, Robert G. Mistler, James C. Ruh, Boulder, for plaintiff-appellant and cross appellee.
John P. Tracy, Boulder, for defendants-appellees and cross appellants.
COYTE, Judge.
On September 2, 1969, Robert Burns borrowed $16,499.52 from the National State Bank of Boulder (Bank) and executed a note in that amount. Approximately $12,500 remains unpaid on the note, and the Bank seeks to impose liability for the unpaid balance on Elizabeth Burns in connection with two contracts of guaranty executed by her. Judgment was previously entered against defendant Robert L. Burns on the note. At the conclusion of plaintiff's evidence, in a trial to the court, the court entered judgment in favor of defendant Elizabeth W. Burns on both contracts of guaranty and the Bank brought this appeal. We affirm in part and reverse in part.
I.
The Bank first contends that the findings of fact and conclusions of law entered by the trial court were insufficiently complete to satisfy the requirements of C.R.C.P. 52. We disagree. The requirements of C.R.C.P. 52(a) are satisfied when the findings of fact and conclusions of law are made so explicit as to give the reviewing court an opportunity to determine on what ground the trial court reached its decision, and whether that decision was supported by competent evidence. Hipps v. Henning, 167 Colo. 358, 447 P.2d 700. Here, the trial court made oral findings which reviewed the various exhibits and testimony adduced at trial and stated its findings and conclusions with respect to the material and ultimate issues involved in the case. Such findings and conclusions were sufficient to satisfy the requirements of C.R.C.P. 52(a). Lininger v. Lininger, 138 Colo. 338, 333 P.2d 625.
II.
The Bank relies upon a contract of guaranty executed on September 3, 1969, which contract guaranteed the indebtedness of Holiday on the Hill Jewelers in the amount of $25,000. It is conceded by defendants that defendant Robert L. Burns operated Holiday on the Hill Jewelers as a sole proprietorship. Burns also operated other businesses. The contract of guaranty was executed by Robert Burns and Alizabeth Burns. The indebtedness which is the subject of this dispute is evidenced by a promissory note dated September 2, 1969, and executed by Robert Burns.
The Bank asserts that although the principal debtor named in the guaranty is Holiday on the Hill Jewelers, it was intended that the instrument guarantee the individual debt of Robert Burns. In support of this argument, the Bank introduced, without objection, several documents. One document was entitled 'Statement as to Purpose of Loan' executed by Robert Burns on September 2, 1969, which stated that the proceeds of the note were to be used solely for business purposes. In addition, the Bank introduced into evidence a document signed by Robert Burns which authorized the Bank to deposit the proceeds of the note into the account of Holiday on the Hill Jewelers and a statement of account which showed that $15,000 was deposited in that account on September 3, 1969. There was no testimony adduced regarding the intentions of the parties with respect to the September 3, 1969, contract of guaranty.
At the close of plaintiff's evidence, defendants moved for dismissal. The trial court ruled that, as a matter of law, the contract of guaranty did not guarantee the personal obligations of Robert Burns. The Bank contends that this ruling was erroneous. We agree.
The evidence introduced in connection with the September 3, 1969, contract of guaranty consisted solely of written instruments. We, therefore, are not bound by the trial court's construction of those documents and may ourselves determine the legal effect of the instruments. Helmericks v. Hotter, 30 Colo.App. 242, 492 P.2d 895.
We recognize that a guarantor, like a surety, is favored in the law and his liability is not to be extended by implication beyond the express limits or terms of the instrument, or its plain intent. Burkhardt v. Bank of America, 127 Colo. 251, 256 P.2d 234; Yama v. Sigman, 114 Colo. 323, 165 P.2d 191. A person who enters into a contract of guaranty agrees to undertake a specific risk, and courts are reluctant to increase the guarantor's burden by extending the limits of the guaranty beyond the terms of the written instrument. However, with respect to ascertaining the identity of the principal debtor, it is said in L. Simpson, Handbook on the Law of Suretyship s 19:
'The surety should never be held for the nonperformance of a principal unless there is reasonable ground to believe that he contemplated the person in default as principal. But if the person in default is identified and was in fact contemplated as principal, the surety should be liable even though the principal is slightly misdescribed or incorrectly named in the guaranty.'
Here, the documentary evidence established that the proceeds of the promissory note executed by Robert Burns were to be used solely for business purposes and, further, that the proceeds of the note were paid into the account of Holiday on the Hill Jewelers. Moreover, it is conceded that Holiday on the Hill Jewelers was a sole proprietorship operated by Robert Burns. Accordingly, we conclude that the contract of guaranty and the instruments executed concurrently with it manifest a plain intent that defendant Elizabeth Burns guaranteed the obligations of Robert Burns to the extent that the proceeds of his indebtedness were utilized in the business known as Holiday on the Hill Jewelers. Therefore, we conclude that the trial court erred when it rendered judgment in favor of defendants on the September 3, 1969, contract of guaranty.
III.
The Bank also sought to impose liability on Elizabeth Burns on the basis of a guaranty executed on December 4, 1969. Since we have determined that Elizabeth Burns is liable under the September guaranty, her liability under the December guaranty becomes moot. However, we would note that, considering the limitation on the amount of liability contained in the December guaranty, an ambiguity existed as to the period of coverage. Thus, the trial court properly considered parol evidence to determine that guaranty's retroactive effect, and, on substantial evidence, properly ruled that such guaranty did not extend to impose liability on Elizabeth Burns for the indebtedness incurred the rpior September.
We have examined defendants' contention on cross-appeal that plaintiff's motion for new trial was not timely filed, and find it to be without merit.
The judgment is affirmed as to the December 4th guaranty, reversed as to the September 3rd guaranty and, since judgment was entered at the close of plaintiff's evidence, the cause is remanded for a new trial on the September 3rd guaranty, in accordance with the views expressed herein.
SILVERSTEIN, C.J., and ENOCH, J., concur.