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100 INVESTORS, INC. V. KARTES 650 N.E.2d 347 (1995)

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Nature of the Case

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Facts

Ds were part-owners of Kartes Video Communications, Inc. (KVC) in Indianapolis. KVC was growing rapidly and required larger operating facilities. P contacted D about leasing space. After discussing the general requirements and terms for the new facilities, D delegated all of the lease negotiations to David Kaplan, a KVC senior vice-president. The details were worked out, and P provided a lease agreement form to KVC. The lease did not include any provisions for a personal guaranty of the lease, and a personal guaranty was never mentioned during any of the lease negotiations. KVC's attorney approved the lease, and it was signed and delivered. KVC made preparations to move its operations into Building 107 over the weekend of July 28-29, 1984. On Friday, July 27, 1984, the evening before KVC was to move into Building 107, P went to KVC's offices at 5:00 p.m. and found Ds getting into their car to leave for the day. P told Ds that he had 'lease papers' for them to sign. D explained that they were late for their daughter's wedding rehearsal and asked if the matter could wait until the following Monday. P informed the Ds that the matter could not wait and that KVC could not move into Building 107 until the papers were signed. They went into KVC's building, where P produced a document entitled 'Lease Agreement.' D telephoned Kaplan, who was in another part of the building, and asked if the lease agreement had been approved by KVC's lawyer. P remained silent. Upon ending his discussion with Kaplan, D asked where he was to sign the document. P opened the papers to the signature page, and Ds both signed the document. Ds, being officers of the corporation, did not think it unusual that their signatures would be required on the lease. P never told Ds that what they were signing was actually a personal guaranty of lease. Years later, P sent the Ds a 'Tenant Agreement' that included an estoppel certificate. Ds first learned of the personal guaranty of lease. They immediately disavowed the guaranty and refused to affirm that portion of the 'Tenant Agreement.' Ds sold their interest in KVC to Saffron Associates, which subsequently failed to make rent payments to P. P brought suit to collect the unpaid rent from Ds under the personal guaranty. The trial court found that P obtained the signatures of Ds on the personal guaranty of lease through fraudulent means. The trial court held that Ds were not liable and P appealed.