## Facts

- A commercial tenant entity negotiated to lease office space from Park 100 Investors, Inc. in the Park 100 complex.
- Park 100 sought a separate written guaranty intended to impose personal liability on the tenant’s principals, the Kartes.
- During a hurried move-in period, Park 100’s representative presented multiple documents for signature as routine “lease” or “occupancy” paperwork.
- The Kartes signed the document without understanding it was a personal guaranty, asserting it was not clearly identified or explained as such and that they lacked a fair opportunity to learn its true character.
- The tenant later defaulted on lease obligations, and Park 100 sued to enforce the guaranty against the Kartes personally.
- After trial, the court entered judgment for the Kartes, finding the guaranty unenforceable based on the manner in which it was presented and executed.
- Park 100 appealed, contending the Kartes were bound by their signatures.

## Issues

1. Whether the Kartes were personally liable under the signed guaranty despite their claim that Park 100’s agent misrepresented the document’s nature during execution.
2. Whether the evidence supported a finding of fraud in the execution sufficient to render the guaranty unenforceable.
3. Whether the appellate court should disturb the trial court’s credibility determinations and factual findings regarding misrepresentation and reasonable reliance.

## Decision

- The Court of Appeals of Indiana affirmed the judgment for the Kartes.
- The court held the guaranty was unenforceable because the Kartes’ signatures were procured through misrepresentation about the character of the document.
- The court applied the doctrine of fraud in the execution, distinguishing it from mere failure to read or understand a contract.
- The court declined to reweigh evidence or reassess credibility, concluding the trial court’s findings were supported by the record and supported the judgment.

## Legal Principles

- A signer is generally presumed to know and accept the contents of a contract, but that presumption can be overcome where the signature is obtained by fraud in the execution.
- Fraud in the execution exists when a party is induced to sign an instrument by a material misrepresentation about the instrument’s character or essential terms, coupled with an absence of a reasonable opportunity to learn the truth.
- When enforceability turns on fact-intensive determinations of what was said, what was reasonably understood, and whether reliance was reasonable, appellate review is limited; supported trial-court findings control.
- A personal guaranty presented as routine lease paperwork, without clear disclosure and under rushed circumstances, may be found unenforceable if the signer reasonably believed it was not a guaranty.

## Conclusion

The court affirmed a defense judgment where a landlord attempted to enforce a personal guaranty obtained during a hurried lease-signing process, concluding that misrepresentation about the document’s nature supported a finding of fraud in the execution and rendered the guaranty unenforceable.


Park 100 Invs., Inc. v. Kartes, 650 N.E.2d 347 (Ind. Ct. App. 1995)