I Guaranty It

In 1986, Summers Electric Company extended credit to Stuart Electric, Inc., which backed its credit application with the personal guaranty of its owners, Barry and Zac Stuart. The guaranty was in favor of Summers or its assigns, for all money that may come to be due to Summers by Stuart Electric. Although Summers’ ownership and name changed over the years, Stuart continued to do business with the company.  In 2008, Barry and Zac sold Stuart Electric. The new ownership group continued to purchase materials from Summers, but failed to pay up. Summers turned to the Stuarts to make good on their 22-year-old written guaranty, which they refused. Summers then filed suit, obtaining a default judgment against Stuart Electric and a summary judgment against Barry and Zac.

On appeal, the Court of Appeals first sustained the trial court’s decision not to strike the Stuarts’ affidavits, in which they testified that Summers’ employees had told them they were no longer on the company’s account and were not responsible for any purchases made by Stuart Electric. Although the Stuarts were interested witnesses, their affidavits were still admissible because they were sufficiently “clear, positive, and direct, free from contradictions or inconsistencies, and could have been readily controverted.”  Tex R. Civ. P. 166(a)(c). That affidavit testimony also supported each of the elements of the Stuarts’ promissory estoppel defense, which precluded the trial court’s grant of summary judgment against them. The Court therefore reversed and remanded for further proceedings.

Stuart v. Summers Group, Inc., No. 05-12-00489-CV