Creative Resource Management Inc. v. Soskin
Court of Appeals of Tennessee
Nashville Pro Hockey, LLC, was a limited liability company organized under the laws of Tennessee. The LLC owned and operated the Nashville Nighthawks, a minor-league professional hockey team. On September 4, 1996, Nashville Pro Hockey, LLC, contracted with Creative Resource Management, Inc. (CRM), the plaintiff, whereby CRM, for fees and other consideration, would provide employee leasing services to Nashville Pro Hockey, LLC. The contract was signed by Barry Soskin, the president of Nashville Pro Hockey, LLC. A paragraph in the contract provided: "By affixing my hand and seal to this agreement, I personally guarantee any and all payments payable as represented and outlined in this agreement."
Nashville Pro Hockey, LLC, failed, owing CRM $29,626. CRM sued Nashville Pro Hockey, LLC, and Barry Soskin to recover the unpaid compensation. Soskin defended, alleging that his signature on the contract was in his representative capacity only and not in his individual capacity as a guarantor. The trial court agreed and granted summary judgment to Soskin. CRM appealed.
Justice Cain
The well-settled precedent in Tennessee suggests that a corporate officer's signature preceded by a corporation's capacity is evidence that the signer was acting as an agent of the corporation rather than individually.
This rule, however, must yield where the language of the contract compels a different conclusion. The language of the contract involved in the case at bar distinguishes this case from the general rule. This case concerns a contract, which contains personal guarantee language in the body of the contract.
The words "I personally guarantee any and all payments payable as represented and outlined in this agreement" reflect indisputably a guarantee by someone. Soskin insists that he signed only as a representative of the limited liability company. CRM insists that his signature imposes personal liability upon him. The stark fact is that the words "I personally guarantee" are meaningless if applied to Nashville Pro Hockey, LLC and not to Barry Soskin individually. Since the words "I personally guarantee"cannot refer to Nashville Pro Hockey, LLC, and retain any meaning at all in the text of this agreement, they must of necessity reflect the personal guarantee of Barry Soskin.
CRITICAL THINKING ABOUT THE LAW
Ethical norms act as the lenses through which we view particular situations. Individuals who give greater weight to one ethical norm could easily view the same set of facts as another person but see those facts in a different light. These different lenses do not necessarily suggest that one person has the correct view and the other does not. Instead, these lenses simply influence an individual's perception of certain events, which could lead to disagreement between individuals who are wearing ethical lenses of varying colors. Disagreements on the basis of contrasting ethical lenses are easily seen in the relationship between plaintiffs and defendants. These opposing sides often disagree about what should be the outcome of a case, even when they agree about most of the facts.
In Case 18-3, Soskin and CRM viewed the same set of facts; they agreed that there was a contract, signed by Barry Soskin, and the clause in dispute stated "I personally guarantee." Soskin and CRM, however, vehemently disagreed about who should be liable-the individual or the LLC. The next two questions ask you to view the facts of Case 18-3 while trying on a couple of different ethical lenses
1. Make a list of the facts in Case 18-3.
Clue: Reread the introductory section. Be sure to consider the relevant rules of law in this case
2. Assume that you are defendant Soskin in Case 18-3. What ethical norm would be most important to you when viewing the facts of the case as you make your argument? To enhance your understanding of the ways in which ethical norms influence your perception of given facts, now pretend that you are a business manager for CRM. With which primary ethical norm are you most likely to view this case?
Clue: Focus on the way in which each party would interpret the defendant's capacity in signing the agreement.