{ "id": 2571003, "name": "CRAFTIQUE, INC.; BAKER FURNITURE, a division of Baker, Knapp and Tubbs, Inc.; HECKMAN COMPANIES, a division of Beatrice Foods Co.; HENREDON FURNITURE INDUSTRIES, INC.; and STATESVILLE CHAIR CO. v. STEVENS AND CO., INC.; and GEORGE B. STEVENS", "name_abbreviation": "Craftique, Inc. v. Stevens & Co.", "decision_date": "1988-02-03", "docket_number": "No. 267PA87", "first_page": "564", "last_page": "569", "citations": [ { "type": "official", "cite": "321 N.C. 564" } ], "court": { "name_abbreviation": "N.C.", "id": 9292, "name": "Supreme Court of North Carolina" }, "jurisdiction": { "id": 5, "name_long": "North Carolina", "name": "N.C." }, "cites_to": [ { "cite": "355 S.E. 2d 265", "category": "reporters:state_regional", "reporter": "S.E.2d", "year": 1987, "opinion_index": -1 }, { "cite": "85 N.C. App. 348", "category": "reporters:state", "reporter": "N.C. App.", "year": 1987, "opinion_index": -1 }, { "cite": "182 S.E. 702", "category": "reporters:state_regional", "reporter": "S.E.", "year": 1935, "opinion_index": 0 }, { "cite": "209 N.C. 17", "category": "reporters:state", "reporter": "N.C.", "case_ids": [ 2221292 ], "year": 1935, "opinion_index": 0, "case_paths": [ "/nc/209/0017-01" ] }, { "cite": "185 S.E. 2d 737", "category": "reporters:state_regional", "reporter": "S.E.2d", "year": 1972, "opinion_index": 0 }, { "cite": "13 N.C. App. 429", "category": "reporters:state", "reporter": "N.C. App.", "case_ids": [ 8554034 ], "year": 1972, "opinion_index": 0, "case_paths": [ "/nc-app/13/0429-01" ] }, { "cite": "123 S.E. 2d 590", "category": "reporters:state_regional", "reporter": "S.E.2d", "year": 1962, "pin_cites": [ { "page": "596" } ], "opinion_index": 0 }, { "cite": "256 N.C. 110", "category": "reporters:state", "reporter": "N.C.", "case_ids": [ 8571475 ], "year": 1962, "pin_cites": [ { "page": "118" } ], "opinion_index": 0, "case_paths": [ "/nc/256/0110-01" ] }, { "cite": "37 S.E. 2d 906", "category": "reporters:state_regional", "reporter": "S.E.2d", "weight": 2, "year": 1946, "pin_cites": [ { "page": "907-908" }, { "page": "908" } ], "opinion_index": 0 }, { "cite": "226 N.C. 303", "category": "reporters:state", "reporter": "N.C.", "case_ids": [ 8618494 ], "weight": 2, "year": 1946, "pin_cites": [ { "page": "305-306" }, { "page": "306" } ], "opinion_index": 0, "case_paths": [ "/nc/226/0303-01" ] }, { "cite": "217 S.E. 2d 105", "category": "reporters:state_regional", "reporter": "S.E.2d", "weight": 3, "year": 1975, "pin_cites": [ { "page": "107-108" }, { "page": "107" } ], "opinion_index": 0 }, { "cite": "26 N.C. App. 720", "category": "reporters:state", "reporter": "N.C. App.", "case_ids": [ 8555139 ], "weight": 3, "year": 1975, "pin_cites": [ { "page": "722-23" }, { "page": "722" } ], "opinion_index": 0, "case_paths": [ "/nc-app/26/0720-01" ] }, { "cite": "156 S.E. 2d 835", "category": "reporters:state_regional", "reporter": "S.E.2d", "year": 1967, "opinion_index": 0 }, { "cite": "271 N.C. 444", "category": "reporters:state", "reporter": "N.C.", "case_ids": [ 8564625 ], "year": 1967, "opinion_index": 0, "case_paths": [ "/nc/271/0444-01" ] }, { "cite": "188 S.E. 2d 342", "category": "reporters:state_regional", "reporter": "S.E.2d", "year": 1972, "opinion_index": 0 }, { "cite": "281 N.C. 191", "category": "reporters:state", "reporter": "N.C.", "case_ids": [ 8574517 ], "year": 1972, "opinion_index": 0, "case_paths": [ "/nc/281/0191-01" ] } ], "analysis": { "cardinality": 558, "char_count": 12666, "ocr_confidence": 0.814, "pagerank": { "raw": 2.3092213582452847e-07, "percentile": 0.7882805136515681 }, "sha256": "7bea664d6b57d21f561d45a408721086bf7c9d376f735e04f46c396c2b65b170", "simhash": "1:0dfbee781c42bd4c", "word_count": 2091 }, "last_updated": "2023-07-14T17:04:28.747837+00:00", "provenance": { "date_added": "2019-08-29", "source": "Harvard", "batch": "2018" }, "casebody": { "judges": [], "parties": [ "CRAFTIQUE, INC.; BAKER FURNITURE, a division of Baker, Knapp and Tubbs, Inc.; HECKMAN COMPANIES, a division of Beatrice Foods Co.; HENREDON FURNITURE INDUSTRIES, INC.; and STATESVILLE CHAIR CO. v. STEVENS AND CO., INC.; and GEORGE B. STEVENS" ], "opinions": [ { "text": "MITCHELL, Justice.\nThe primary issue before us is whether the Court of Appeals erred in reversing the trial court\u2019s entry of summary judgment for the plaintiffs, Craftique, Inc. and Henredon Furniture Industries, Inc., on their claim for breach of a personal guaranty. We hold that the Court of Appeals erred in this regard and reverse its ruling. Further, we conclude that the trial court properly calculated and awarded interest on the amounts owed.\nCraftique, Inc. and Henredon Furniture Industries, Inc. are in the business of manufacturing furniture and selling it to retail dealers. For several years they supplied the defendant Stevens & Co., Inc. furniture on an open account, and the corporation paid its bills regularly. In 1981, however, the defendant corporation fell behind in its payments.\nOn 19 February 1982 the corporation\u2019s president, the defendant George B. Stevens, sent the plaintiffs the following letter:\nGentlemen:\nThis letter is written to you to advise of a change being made in the financial structure of the retail furniture business being operated in Mooresville, North Carolina, under the name of Stevens and Company. All of the common stock in this corporation is owned by George B. Stevens.\nThis corporation is being dissolved under Section 337 of the Internal Revenue Code and this business will continue to operate as a sole proprietorship owned by George B. Stevens. All the assets of Stevens and Company will be transferred to George B. Stevens, individually, and George B. Stevens will personally assume all obligations and debts of Stevens and Company. Your position as a vendor of Stevens and Company will be strengthened by this change.\nIf you have any questions concerning the foregoing please feel free to contact me.\nYours very truly,\ns/George B. Stevens\nGeorge B. Stevens\nBoth Craftique and Henredon relied on the letter as a personal guaranty and continued to make shipments of furniture. When they did not receive payment, they filed this action against Stevens & Co. and George B. Stevens, individually, seeking to collect money owed.\nThe plaintiffs sought relief on the theory that the letter was a personal guaranty by George Stevens that he would pay the bills if the defendant company defaulted. The trial court entered summary judgment in favor of the plaintiffs. George Stevens appealed.\nThe Court of Appeals concluded that the letter was not clearly a guaranty, but even if it was, it included a condition precedent that had not occurred. That condition was that Stevens & Co. was to be dissolved and all assets transferred to George B. Stevens before he would become personally liable. Even by the time of trial, the condition had not occurred. The Court of Appeals reversed the trial court\u2019s summary judgment for the plaintiffs and remanded the case to the Superior Court, Iredell County, for entry of summary judgment for the defendants.\nCraftique and Henredon petitioned this Court for discretionary review on the issue of whether the letters George Stevens sent to them included a condition precedent. We conclude that they did not and that they constituted his personal guaranty to pay the past, present, and future debts of Stevens & Co. A guaranty of payment is an absolute promise to pay the debt of another if the debt is not paid by the principal debtor. Investment Properties v. Norburn, 281 N.C. 191, 188 S.E. 2d 342 (1972). When the terms of a guaranty are clear and unambiguous, its meaning is a matter of law for the court. North Carolina National Bank v. Corbett, 271 N.C. 444, 156 S.E. 2d 835 (1967).\nIn Cargill, Inc. v. Credit Assoc., Inc., 26 N.C. App. 720, 217 S.E. 2d 105 (1975), the Court of Appeals defined \u201cconditions precedent\u201d as\n\u2018those facts and events, occurring subsequently to the making of a valid contract, that must exist or occur before there is a right to immediate performance, before there is a breach of contract duty, before the usual judicial remedies are available.\u2019 3A Corbin, Contracts \u00a7 628, at 16 (1960). On the other hand, one who makes a promise expresses an intention that some future performance will be rendered and gives the promisee assurance of its rendition.\nCargill, 26 N.C. App. at 722-23, 217 S.E. 2d at 107-108. Conditions precedent are not favored by the law. Jones v. Palace Realty Co., 226 N.C. 303, 305-306, 37 S.E. 2d 906, 907-908 (1946). Absent plain language, a contract ordinarily will not be construed as containing a condition precedent. Construction Co. v. Crain & Denbo, Inc., 256 N.C. 110, 118, 123 S.E. 2d 590, 596 (1962). The use of language such as \u201cwhen,\u201d \u201cafter,\u201d and \u201cas soon as\u201d clearly indicates that a promise will not be performed except upon the happening of a stated event, i.e., a condition precedent. Jones, 226 N.C. at 306, 37 S.E. 2d at 908. The letters from George Stevens to Henredon and Craftique did not contain any language plainly and clearly indicating that the dissolution of Stevens & Co. and the transfer of its assets to George Stevens were a condition precedent to his guaranty. Rather, the letters merely stated that the transaction would take place and that George Stevens would assume the obligations and debts of Stevens & Co.\nOrdinarily, when such operative words can be construed as either a promise or a condition, the presumption is in favor of a promise. Cargill, 26 N.C. App. at 722, 217 S.E. 2d at 107. \u201cIn resolving doubts as to whether an event is made a condition of an obligor\u2019s duty, ... an interpretation is preferred that will reduce the obligee\u2019s risk of forfeiture, unless the event is within the obligee\u2019s control or the circumstances indicate that he has assumed the risk.\u201d Restatement (Second) of Contracts \u00a7 227 (1979). Here, the control of the dissolution of Stevens & Co. and the transfer of assets to George Stevens were within his volitional control as sole shareholder of the company. The language of his letters conveyed a promise and not a condition.\nIn the analogous case of Clear Fir Sales Company v. Carolina Plywood Distributors, 13 N.C. App. 429, 185 S.E. 2d 737 (1972), the Court of Appeals affirmed the entry of summary judgment against an individual guarantor of a corporation\u2019s debt. The guarantor had sent the creditor a letter, which the trial court determined to be a guaranty as a matter of law. The Court of Appeals reasoned that the language of the letter must be given the construction that the guarantor should have anticipated it would be given by the creditor. We find that reasoning equally applicable in this case. Because George Stevens failed to use clear and plain language in his 19 February 1982 letters to create a condition to his assuming the debts and obligations of Stevens & Co., he should have anticipated that Craftique and Henredon would construe them as promises of guaranty. The trial court correctly interpreted the letters as letters of guaranty.\nThe defendant George Stevens brings before this Court another issue, which the Court of Appeals did not address. He contends that the trial court\u2019s award of prejudgment interest to Henredon and Craftique was erroneous. He argues that he is liable for interest only from the date of demand for payment, which he contends was the date this action was filed, and not from the date of breach.\nN.C.G.S. \u00a7 24-5 authorizes awards of interest on damages resulting from breach of contract from the date of the breach at the rate of interest provided in the contract, or at the legal rate if the parties have not agreed on their own rate. When interest is not made payable on the face of the instrument, payment of interest will be imposed by law in the nature of damages for the retention of the principal of the debt. Security National Bank v. Travelers\u2019 Ins. Co., 209 N.C. 17, 182 S.E. 702 (1935). In the present case Henredon had an agreed interest rate in its contract; Craftique did not. Therefore, the trial court awarded interest at Henredon\u2019s contract rate for the debt owing to it and at the legal rate for the debt owing to Craftique.\nGeorge Stevens\u2019 agreements to \u201cassume all obligations and debts of Stevens and Company\u201d were guaranty agreements to pay the principal amounts of Stevens & Co.\u2019s accounts with Henredon and Craftique, and to pay interest at the contract rate to Henredon and at the legal rate to Craftique for balances not paid within thirty days. The trial court\u2019s award of prejudgment interest on all amounts not paid by Stevens & Co. within thirty days from the date of invoice was not based on George Stevens\u2019 breach of his collateral guaranty contract, but was an element of the debt that Stevens had agreed to pay.\nA guarantor may be charged with interest on the principal sum either because: (1) interest was a part of the primary obligation and the guaranty contract, properly interpreted, guaranteed both the principal sum plus interest thereon; or (2) the guarantor did not pay the creditor the amount guaranteed as that amount became legally due under the guaranty contract and interest is properly chargeable, under applicable rule of law, on that amount. . . .\nWhere interest is recoverable because it is part of the guaranteed underlying obligation, interest is generally allotted on the sum guaranteed from the time of default of the principal. Where interest is recoverable because the guarantor has not paid the obligation which has matured and has become a primary obligation of the guarantor, interest is recoverable from the guarantor from the time of notice and demand.\n38 Am. Jur. 2d Guaranty \u00a7 76, at 1081-82 (1968).\nWe conclude that the trial court properly entered summary judgment against George Stevens for interest on the principal amounts owed by Stevens & Co., at the contract rate for Henredon and at the legal rate for Craftique, on all amounts not paid within, thirty days of the date of the invoice. These interest awards were proper because George Stevens had guaranteed interest as well as principal amounts owed by Stevens & Co. and not as a result of his breach of the guaranty contract. Therefore, interest was properly chargeable from the date of Stevens & Co.\u2019s breach, rather than from the date of demand and notice to George Stevens.\nWe hold that summary judgment in favor of the plaintiffs, Henredon and Craftique, was proper because there are no genuine issues of material fact, and these plaintiffs are entitled to judgment as a matter of law. N.C.G.S. \u00a7 1A-1, Rule 56 (1983). George Stevens\u2019 19 February 1982 letters to Henredon and Craftique were unconditional guaranty contracts to pay all of Stevens & Co.\u2019s debts and obligations to these plaintiffs, including interest. The opinion of the Court of Appeals is reversed, and the case is remanded to that court for reinstatement of the trial court\u2019s summary judgment in favor of the plaintiffs.\nReversed and remanded.", "type": "majority", "author": "MITCHELL, Justice." } ], "attorneys": [ "Stem, Graham and Klepfer, by James W. Miles, Jr., for the plaintiff appellant.", "Homesley, Jones, Gaines & Fields, by Edmund L. Gaines and Clifton W. Homesley, for the defendant appellee George B. Stevens." ], "corrections": "", "head_matter": "CRAFTIQUE, INC.; BAKER FURNITURE, a division of Baker, Knapp and Tubbs, Inc.; HECKMAN COMPANIES, a division of Beatrice Foods Co.; HENREDON FURNITURE INDUSTRIES, INC.; and STATESVILLE CHAIR CO. v. STEVENS AND CO., INC.; and GEORGE B. STEVENS\nNo. 267PA87\n(Filed 3 February 1988)\n1. Guaranty \u00a7 2\u2014 letter promising personal payment of debt upon dissolution of corporation \u2014 dissolution of corporation not condition precedent\nThe trial court correctly entered summary judgment for plaintiffs in an action based on a letter which plaintiffs claimed was a personal guaranty where the individual defendant wrote a letter to plaintiff creditors indicating that the corporation would be dissolved and that he would personally assume all obligations and debts of the company, but the corporation was never dissolved. There was no condition precedent because the letters did not contain any language plainly and clearly indicating that the dissolution of the corporation and the transfer of its assets were a condition precedent to defendant\u2019s guaranty; defendant should have anticipated that plaintiffs would construe the letters as promises of guaranty.\n2. Judgments \u00a7 55\u2014 guaranty action \u2014 prejudgment interest \u2014 from breach of guaranty contract\nPrejudgment interest was properly awarded in a guaranty action from the date of the principal\u2019s breach rather than from the breach of the guaranty contract. N.C.G.S. \u00a7 24-5.\nON appeal of an unpublished decision of the Court of Appeals, 85 N.C. App. 348, 355 S.E. 2d 265 (1987), which reversed a judgment entered by Ross, J., on 1 May 1986, in Superior Court, Iredell County. Heard in the Supreme Court 12 November 1987.\nStem, Graham and Klepfer, by James W. Miles, Jr., for the plaintiff appellant.\nHomesley, Jones, Gaines & Fields, by Edmund L. Gaines and Clifton W. Homesley, for the defendant appellee George B. Stevens." }, "file_name": "0564-01", "first_page_order": 592, "last_page_order": 597 }