Court Opinion

ID: 9567299
Source: CourtListenerOpinion
Date Created: 2023-08-21 19:51:56.184125+00
Date Added: 2024-06-11T10:00:31.550982
License: Public Domain

*571Stolz, Judge,
dissenting. In my opinion the trial court erred in sustaining the defendants’ oral motions to dismiss as to count 2 of the complaint. Matters outside the pleadings were considered and the trial judge correctly treated the motions as being for summary judgment, pursuant to Code Ann. § 81A-112 (b) (Ga. L. 1966, pp. 609, 622; as amended).
The record reveals that between December 20, 1965 and March 27, 1967, the defendants executed eight promissory notes in favor of the plaintiff bank for a total of $133,187.06. One of these notes, for $52,858.67, was secured by a security deed on certain real estate; 6 of these notes, totalling in value $69,764.00, were secured by another security deed on other real estate: and the 8th note for $10,564.39 was secured by personal property.
The record reveals that the defendants defaulted on all of the aforesaid notes; that, subsequently, the bank exercised the power of sale provisions contained in each of the aforesaid security deeds; and that the sale price in each instance was less than the indebtednesses secured thereby.
Thereafter, the plaintiff bank filed a petition in the Superior Court of Tift County to confirm the aforesaid sales but named only Coastal Plains Realty Company as a party to the proceeding. It obtained service on the defendant Coastal Plains by serving the defendant Garrison as an officer of the corporation. No service was had on the defendant Kunes. After a hearing, the judge of the Tift Superior Court confirmed the sale as to Coastal Plains Realty Company, finding that the sale prices of the property described in the petition represented the true market value on the date of the sales, that the property was advertised for sale and sold in full accordance with all applicable laws and the provisions of the deeds to secure debt, and that the sales were legal and regular.
The plaintiff bank then brought a three-count petition against Coastal Plains Realty Company, G. Gerald Kunes *572and Andrew M. Garrison. Count 1, as finally amended, alleged that the defendants executed a promissory note for $52,857.67 on March 23, 1967; that said note was secured by a security deed; that the note came in default; that the plaintiff legally exercised the power of sale provisions in the security deed; and that the property securing the same was properly sold for $50,000.00 on November 27, 1967 and sought to recover the difference in the amount owed and the sale price. The complaint had attached as an exhibit the promissory note executed by the corporation and endorsed by the individual defendants.
Count 2 of the complaint as finally amended, alleged the execution of 6 notes by the defendants over a period of time which were secured by real estate described in a security deed. The notes came in default, the plaintiff legally exercised the power of sale provisions in the security deed and the property was sold for $65,000, and sought to recover the difference in the amount owed and the sale price. Count 2 of the complaint as finally amended also alleged that defendants Garrison and Kunes had executed separate indemnity agreements with the plaintiff bank under which each defendant agreed to guarantee and hold harmless the plaintiff from any loss that it might suffer arising out of present and future obligations of Coastal Plains Realty Company. A copy of each indemnity agreement was attached as an exhibit to the complaint as amended. The consideration recited in each agreement was the plaintiff bank’s extending a line of credit to Coastal Plains Realty Company amounting to $80,000. The agreement extended "to any and all obligations owing to said bank.” The plaintiff sought judgment against Coastal Plains Realty Company for $24,180.69, against defendant Garrison for $11,097.33, and against defendant Kunes for $11,168.38, plus interest and court cost.
Count 3 of the complaint as finally amended, alleged *573the execution of a promissory note for $10,564.39 by the defendants, the securing of same by personal property, the default in payment, the sale of collateral securing the note, and a deficiency of $3,757.96.
Defendants Kunes and Garrison made oral motions to dismiss the complaint as to counts 1 and 2, which were sustained by the trial court. The jury found for the defendants on count 3 of the complaint.
1. I concur in Divisions 1, 2, 3, and 4 of the majority opinion.
2. Defendants Kunes and Garrison signed each of the promissory notes in question as endorsers. Consequently, they were debtors within the meaning of the statutes governing confirmation of sales. As such, they should have been made parties to the proceedings for the confirmation of the sales and received the statutory notice thereof. This was not done. Consequently, the trial judge was correct in sustaining the defendants’ oral motion to dismiss count 1 of the complaint and I concur in the judgment rendered in Divisions 5 and 6 as to this count.
Count 2 of the complaint sought recovery against the individual defendants based on the agreements executed by them in favor of the plaintiff bank, which were attached as Exhibits "I” and "J” to the complaint. Thus, the suit against the individual defendants in count 2, is not on the promissory notes themselves, but on the agreements executed by the individual defendants with the bank. These identical contracts provided in part: "I ... do hereby contract, agree and bind myself to save the First National Bank & Trust Company, in Macon, harmless by reason of the credit extended to Coastal Plains Realty Company.
"This indemnity agreement is executed and delivered in consideration of said bank’s agreement to extend said Coastal Plains Realty Company a line of credit amounting to $80,000. It is distinctly understood, *574however, that the protection of this guaranty shall extend to and include all notes or other obligations of said Coastal Plains Realty Company now held by said bank, or future obligations and renewals thereof, for the evidence by the straight paper of said Coastal Plains Realty Company . . . and it is also the express intention of the parties that the protection of this guaranty shall extend to any and all obligations owing to said bank, whether the same be now in excess of the amount of the guaranty hereinabove stipulated or not, and shall also, any amount that may hereafter accrue in favor of said bank, even though the same be in excess of said stipulated guaranty.
"And in the event of liability accruing under this agreement the signer, or signers, thereof shall be jointly and severally liable to said bank for the indebtedness of the said Coastal Plains Realty Company as endorsers or liable to the holder of a negotiable instrument under the Law Merchant, demand, protest and notice of demand, protest and non-payment and any and all other formalities being expressly waived.
“. . . should said bank undertake to collect upon said collateral or any part thereof, it shall not be liable for any negligence or mistake in judgment in making such collection, and shall have the full right and authority to adjust, compromise and receive less than the amount due upon any of said collateral, and otherwise enter into any accord and satisfaction with respect to same as may to said bank seem advisable, without liability of any nature to any party to this paper, except to duly credit the amount received less expenses, upon the indebtedness to it.” (Emphasis supplied.)
The above contract is clearly one of guaranty. It was each of the defendants’ own, separate undertaking. The principal (Coastal Plains Realty Company) did not join in its execution. They were entered into before any of the promissory notes were executed by the principal and were founded on a separate consideration. The *575promissory notes of the principal (and the individuals as endorsers) were not their contracts as guarantors, and as guarantors they were not bound to take notice of the nonperformance or default in payment of the notes. The guaranty contracts were separate undertakings and the individual defendants’ liabilities were contingent on the default of Coastal Plains Realty Company. Once that default occurred, the guarantors became absolutely liable for the debt of their principal. See Hartsfield Co. v. Hamil, 180 Ga. 615, 617 (180 SE 128, 99 ALR 921), quoting Georgia Cas. Co. v. Dixie Trust &c. Co., 23 Ga. App. 447 (98 SE 414).
Therefore, count 2 of the complaint stated a claim for liability based solely upon the guaranty contract and the default on the notes. The mere fact that the notes were secured by security deeds, would not relieve the defendants of their obligations under the guaranty contract. The defendants guaranteed the debt of Coastal Plains, whether or not it was secured, and specifically agreed that the bank should have "the full right and authority to . . . receive less than the amount due upon any of said collateral . . . .” This being so, the bank was entitled to proceed directly against the defendant guarantors on the guaranty contract, without regard to the collateral and how much or how little it may have brought at the sales under power.
For the foregoing reasons, I believe the trial court erred in sustaining the defendants’ oral motions to dismiss count 2 of the complaint, and dissent from Divisions 5 and 6 of the majority opinion.
I am authorized to state that Presiding Judge Hall and Judge Deen concur in this dissent.