Be Careful How You Sign


Signing a document as an owner or officer of a corporation binds the corporation but not the signator personally, right? Correct, IF the person signs as a representative of the business entity ONLY. However, if the document is signed in a personal capacity also, the individual will be personally responsible under the agreement.

In Ubom Law Group v. SunTrust Bank, the Court of Special Appeals of Maryland upheld a lower court's decision to impose personal liability on the owner/managing attorney of the company. Ubom Law Group had established credit with SunTrust Bank and in connection therewith, Ubom had signed a Line of Credit Agreement with the bank. The Agreement included specific information about the company and also personal information about the guarantor. Ubom signed the agreement on signature lines marked "Applicant" (on behalf of the company) and "Guarantor". After each signature, he wrote “Managing Attorney".

Ubom argued that he signed the Agreement in his business capacity as Managing Attorney only. However, the Court decided that it was clear and unambiguous that Ubom had not only signed the SunTrust Agreement in a representative capacity under "Applicant", but also in a personal capacity under "Guarantor". Had the Court decided otherwise, the guaranty itself would have been meaningless since the Company was already bound under the Agreement. Merely adding his corporate title did not extinguish Ubom's commitment to be personally bound as a guarantor. This conclusion was supported by the fact that the signature line was designated for a guarantor, Ubom had included his personal information under the section of the agreement seeking the Guarantor's information, and the Agreement clearly stated that the Applicant and Guarantor would both be jointly and severally liable in the event of default.

The lesson to be learned from this case is to be careful when signing a document (and about providing personal information) on behalf of a company. Read the terms of the document to be sure there is no reference to personal liability. In addition, make sure the signature line includes the company name as well as a company title next to or directly under the signature. If something looks like it may be indicating personal responsibility, ask an attorney for assistance BEFORE you sign.