Aar Aircraft & Engine Group, Inc. v. Edwards

Argued September 28, 2001 AAR sold Charles Edwards' company (Kiwi International) an airplane engine on an installment plan, requiring Edwards to sign an ""absolute"" and ""unconditional"" personal guaranty for the loan. The purchase price was $1,325,000. After paying around $325,000 on the note, Kiwi missed a payment, and AAR accelerated the debt and sued Edwards to collect just over $1 million remaining on the contract. AAR also repossessed the engine, then ""bought"" it back at an auction for $250,000--some $750,000 less than its estimated value--when no one else appeared and entered a bid. Therefore, when the district court entered summary judgment for AAR, it got both a $1 million damage award against Edwards plus the engine, which was worth roughly the same amount. So it got, in essence, double what it had coming. Edwards, apparently no meshuggener, senses that something is not quite right with this deal so he appeals. Edwards was the chairman and principle shareholder of Kiwi. In 1998 AAR Aircraft & Engine Group, Inc., a subsidiary of American Airlines, and Kiwi entered into a 3-year, monthly-installment sales agreement for the engine. Edwards' personal guaranty, which AAR drafted, provided that he ""absolutely and unconditionally"" guaranteed Kiwi's debt.