Investment Service Co., a Corporation v. James H. Roper and Donald E. Westfall

The sole issue in this case is whether the officers and principal stockholders of a corporation who signed a guaranty for a corporate debt are liable on that guaranty.

The defendants, Roper and Westfall, controlled an Idaho corporation, TDM. TDM negotiated a distributorship agreement with SMC, an Oregon corporation that manufactured snowmobile carriers. A proposed contract was drafted by SMC and sent to Roper and Westfall, who signed the document, both as individuals and as representatives of TDM. The document recited that Roper and Westfall intended to be personally liable for the debt.

The writing that Roper and Westfall signed provided that it would take effect upon its execution by both parties. When it was returned to SMC, however, no one from SMC signed it. SMC then delivered conforming goods, but was not paid. SMC then sued TDM, Roper, and Westfall for breach of contract, in the United States District Court for the District of Oregon. The court declared that it did not have in personam jurisdiction over Roper and West-fall, however, and the suit proceeded only against TDM.

Because of the failure of SMC to execute the proposed contract, the district court instructed the…