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D was a package liquor retailer operating several stores in Houston. P is a liquor wholesaler and entered into numerous transactions with D in 1974 to supply alcoholic beverages. Rose Marie Bagnoli (D) was the president and major stockholder of D. Bagnoli (D) was having financial problems and she hired Dr. William L. Blachman in an effort to revive the failing company. An argument arose between Bagnoli (D) and Blachman over who had the authority to place orders for D with P and the signing of a guaranty agreement. D was closed by the Internal Revenue Service because of unpaid taxes in November 1974. P brought suit to recover the price of liquor and alcoholic beverage merchandise sold to D. P also sued Bagnoli (D) individually, to recover her personal guaranty for the company's indebtedness. D filed a sworn denial and counter-claimed for damages and statutory penalties for violation of the Texas Liquor Control Act. Bagnoli (D) denied execution of the guaranty agreement and in the alternative alleged fraud and duress were used in securing the execution of the instrument. Judgment was awarded in favor of P and D appealed.

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