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Home / Firm Blog / Business Law / Signature blocks on corporate loan documents matter
12
October
2012

Signature blocks on corporate loan documents matter

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In an unpublished opinion dated October 9, 2012 in Marcuz v Steven Premiere Properties & Development, LLC, the Michigan Court of Appeals affirmed the Oakland Circuit Court’s order of judgment following a bench trial that found defendant Steven Branoff personally guaranteed a loan from the plaintiff to the LLC.

On March 14, 2007, plaintiff Paul Marcuz loaned the LLC $85,000 for the construction of luxury homes in Utah.  On April 3, 2007, he loaned an additional $85,000 to the LLC as evidenced by a promissory note promising repayment to Marcuz by October 3, 2007.  Branoff signed the promissory note twice: once as a member of the LLC and once individually.  When no payments on the principal loan balance were made by September 3, 2009, Marcuz initiated this lawsuit.  The trial court found in favor of Marcuz, ruling that the LLC owed Marcuz $170,000 and that Branoff had personally guaranteed the $85,000 covered by the promissory note.

Branoff appealed, arguing that he did not intend to sign the note in his individual capacity.  The Court affirmed the trial court’s decision, agreeing that it would have been redundant for Branoff to sign the promissory note a second time if he did not intend that his second signature have some legal effect different from his first signature.  Where individual responsibility is demanded, the nearly universal practice is that the officer signs twice—once as an officer and again as an individual.

Parol evidence is admissible to show the intent of the parties when one signs in a manner that makes it doubtful whether the signature was made individually or in a representative capacity. Parol evidence is also admissible to show that an individual executed a document as an officer of a corporation and that the intention of all concerned was that it should bind the corporation and not the individuals.   Here, the trial court heard parol evidence at the bench trial.  At the bench trial, Branoff testified that he did not believe that he was signing individually.  However, the trial court did not find Branoff’s testimony credible, as it found that Branoff’s signature “individually” was sufficient evidence of his intent to personally guarantee the loan. Special deference is given to the trial court’s findings when they are based on the credibility of witnesses.

Because the trial court’s decision was consistent with Michigan law and was logical, the appellate court could not find clear error with it.

Attorneys at the Gallagher Law Firm frequently represent parties loan transactions and disputes.  Contact us today.

Categories: Case Summaries, Business Law

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