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IN THE COURT OF APPEALS 05/07/96 OF THE STATE OF MISSISSIPPI
NO. 95-CA-00128 COA

JOSEPH TRAMONTANA AND BARBARA GHOLSON APPELLANTS v. SUSANNAH SMITH APPELLEE

THIS OPINION IS NOT DESIGNATED FOR PUBLICATION AND MAY NOT BE CITED, PURSUANT TO M.R.A.P. 35-B

TRIAL JUDGE: HON. JERRY O. TERRY COURT FROM WHICH APPEALED: HARRISON COUNTY CIRCUIT COURT ATTORNEY FOR APPELLANTS: H. M. YOSTE, JR. ATTORNEY FOR APPELLEE: J. FREDERICK AHREND NATURE OF THE CASE: CIVIL: CONTRACT DISPUTE TRIAL COURT DISPOSITION: JUDGMENT GRANTED IN FAVOR OF APPELLEE.

BEFORE FRAISER, C.J., McMILLIN, AND SOUTHWICK, JJ. SOUTHWICK, J., FOR THE COURT: Joseph Tramontana and Barbara A. Gholson appeal the Harrison County Circuit Court's judgment in

favor of Susannah Smith. Tramontana and Gholson contend that the court erred in holding them personally liable for breach of contract under a personal guarantee clause contained in a corporate purchase contract which they executed for the corporation as signing officers. We agree and reverse. FACTS This case involves a dispute over whether two corporate officers, Gholson and Tramontana, are liable on a personal guarantee clause contained in a corporate purchase contract. Gholson is

president of Behavioral Educational Training Associates, Inc. ("BETA"), and Tramontana is vicepresident. On July 1, 1992, Susannah Smith, the seller, and BETA, the purchaser, entered into a contract for the sale of Smith's professional practice, Coast Psychotherapy Associates. The contract contained a personal guarantee clause. Smith argues that this clause required Tramontana and Gholson to guarantee the performance of the warranties and covenants made by them in the agreement and attached exhibits. Tramontana and Gholson executed the contract on behalf of the corporation. The question is whether they executed it as individuals. BETA ultimately breached the contract. Smith filed a complaint against BETA, Tramontana and Gholson. At trial, BETA admitted liability for the breach. The court also found the individual officers, Gholson and Tramontana, to be personally liable. DISCUSSION The central question on this appeal is whether individuals can be bound to the personal liability provision of a contract that they did not as individuals execute. There are also side issues, including whether an attachment to the contract effectively removed the personal liability clauses. Two corporate officers signed a contract in a manner that facially was an attempt to be an execution only for the corporation, and not as individuals. We must determine whether the attempt was effective. If Tramontana and Gholson did not sign the contract as individuals, then they are no more personally liable than any other two people who had no connection to the transaction. We first examine the personal guarantee clause itself. This clause was not a separate signed agreement, but rather was one of the many provisions which comprised the contract. The guarantee clause provided that:

The parties acknowledge and agree that they have read this Agreement and the attached exhibits in their entirety and that they understand and agree to be bound by the terms and conditions as stated therein. The parties expressly waive the right to protest the reasonableness of, and individually and personally guaranty the performance of the respective warranties and covenants made by them in this Agreement and the attached exhibits, whether corporate or individual.

We next turn to the signature page of the contract. There Gholson and Tramontana executed the agreement as follows, with the italicized words being those that were handwritten on the page: BETA, Inc. by Barbara A. Gholson, M.S.W., President /s/ Barbara A. Gholson (seal) Purchaser

Beta, Inc. by Joseph Tramontana, Phd., Vice President /s/ Joseph Tramontana, PhD (seal) Purchaser

The officers themselves wrote BETA's name, their respective titles, and the qualifier "by" above their own names. A starting point in the analysis is that the relevant clause refers to the "parties" personally guarantying performance. Are individuals "parties" to a contract that they do not sign as individuals? If a contract refers to three individuals as buyers, but only one signs the contract, the nonsigning second and third individuals are not parties until they do execute the document. We do not rely on the meaning of the word "parties," however, and move on to the effect of the signatures. In this case, the two individuals named in the contract only executed the contract as officers of a third entity named in the contract, a corporation. An officer's mere addition of a title following his signature on a document otherwise purporting to be a personal guarantee does not alter its personal character. Sebastian Int'l Inc. v. Peck, 195 Cal. App. 3d 803, 807-08 (Cal. Ct. App. 1987), cited in American Management Corp. v. Dunlap, 784 F. Supp. 1245, 1251 (N.D. Miss. 1992). However, "[i]t is hornbook law that officers of a corporation assume no personal obligation on an instrument which they sign in the clear as the corporation's agents. A corporate officer cannot be held liable on the corporation's written contract if, as herein, it is executed for the corporation 'by' that officer." Stewart Coach Indus., Inc. v. Moore, 512 F. Supp. 879, 884 (S.D. Ohio 1981) (citing 19 Am. Jur. 2d Corporations

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