Court Opinion

ID: 9618467
Source: CourtListenerOpinion
Date Created: 2023-08-22 05:12:58.265156+00
Date Added: 2024-06-11T11:37:10.653313
License: Public Domain

Per curiam.
The instant case is before this court by writ of certiorari. See C. & S. Nat. Bank v. Yeager Enterprises, 156 Ga. App. 341 (274 SE2d 730) (1980). We reverse.
Appellant C. & S. filed a complaint alleging an indebtedness on the part of Yeager Enterprises, Inc., maker of a note, and George Yeager, Erma Yeager and Gigi’s of DeLowe, Inc., guarantors of the note. Both Yeager Enterprises and the guarantors raised the defense of fraud.
The Yeagers are the sole officers and stockholders of Yeager *798Enterprises. It is undisputed that after certain notes and guarantees were executed, the Yeagers learned of the actions which, they assert, constitute fraud. Negotiations ensued which culminated in a consolidated renewal note signed by the Yeagers on behalf of Yeager Enterprises. Payments were made under this note from August 1977 until January 1979. This action was instituted after payments ceased.
The liability of Yeager Enterprises is not at issue in this case. Rather, we are concerned with the liability of appellees on their individual guaranty agreements. The guaranty agreements contain the following provisions: “This guaranty shall be continuing, absolute and unconditional and shall remain in full force and effect as to the undersigned, subject to discontinuance of this guaranty as to any of the undersigned (including, without limitation, any undersigned who shall become deceased, incompetent or dissolved) only as follows: Any of the undersigned, and any person duly authorized and acting on behalf of any of the undersigned, may give written notice to the Bank of discontinuance of this guaranty as to the undersigned by whom or on whose behalf such notice is given, but no such notice shall be effective in any respect until it is actually received by the Bank and no such notice shall affect or impair the obligations hereunder of the undersigned by whom or on whose behalf such notice is given with respect to any Liabilities existing at the date of receipt of such notice by the Bank, any interest thereon or any expenses paid or incurred by the Bank in endeavoring to collect such Liabilities, or any part thereof, and in enforcing this guaranty against such undersigned. Any such notice of discontinuance by or on behalf of any of the undersigned shall not affect or impair the obligations hereunder of any other of the undersigned.
“The Bank may, from time to time, without notice to the undersigned ...(c) extend or renew for any period (whether or not longer than the original period), alter or exchange any of the Liabilities, ..." (Emphasis supplied.)
The trial court denied appellants’ motion for summary judgment on the guaranty agreements, holding that appellees “as guarantors on the notes in question, have not, as a matter of law, waived [their] defenses... based on fraud and failure of consideration . . .” The Court of Appeals granted appellants’ application for interlocutory appeal and affirmed. We granted certiorari to determine whether appellees, as individual guarantors, are estopped, as a matter of law, to assert a defense as to which they had knowledge when they signed a renewal note for Yeager Enterprises in their corporate capacities.
As noted by the Court of Appeals, “ ‘[i]n law, (defendants-guarantors) and the corporation are entirely separate and distinct *799entities.’ [Cits.]” C. & S. Nat. Bank v. Yeager Enterprises, supra at 343. This is not to say, however, that the realities of the situation are to be ignored. The individuals who signed the renewal notes in this case were the same individuals who signed the guaranty agreements. All of the guaranties provide that they are continuing until discontinued in writing and that they apply to all renewals of the underlying obligations. It is uncontroverted that the guaranties were not discontinued in writing. Appellees concede that the actions upon which the fraud defense is based were known prior to the execution of the renewal note.
In National Duck Mills v. Catlin & Co., 10 Ga. App. 240 (73 SE 418) (1911), the Court of Appeals held that the rule of “estoppel by silence” applied “where one party to a contract, when the day has come on which the other party can call him to a settlement, fails to set up any counter-claim under the contract, and (in order to get an extension of time payment) makes an unqualified and unconditional promise to pay such other party the full amount of his claim.” Id. at 244. Thiis, in the instant case, the trial court held as a matter of law that the defense of fraud was unavailable with respect to the underlying corporate obligation.
We see no reason why the rule of “estoppel by silence” should not be applied to the guarantors of the obligation of Yekger Enterprises. For, under the circumstances presented, we do not believe it can be seriously disputed that appellees’ silence with respect to the guaranty agreements was tantamount to an outright affirmance of them.
Appellees must be held to know the terms of the guaranties they had signed. See Musgrove v. Musgrove, 213 Ga. 610, 612 (100 SE2d 577) (1957). Given these terms and the fact that the individuals who signed the original and renewal notes as officers of the corporation are the same individuals who signed the guaranty agreements, we believe any reasonable person would consider the renewal of the underlying obligation, coupled with silence regarding the guaranties, an “acknowledgment of the righteousness of [appellant’s] claim” as to both. National Duck Mills v. Catlin & Co., supra at 246. “[T]o be injured, [one] would ordinarily have to be... ignorant of the common dictates of honesty and fair dealing between men, which would of necessity deter the upright man from misleading the other party ... by [implicitly] promising to pay [under the guaranties] at a future date, without any intimation of subsequent intention to repudiate his promise ...” Id. at 246.
By their silence at the time of the renewal of the corporate obligations, appellees, as guarantors, are estopped as a matter of law from asserting defenses of which they then had knowledge. The *800judgment of the Court of Appeals is therefore reversed.
Decided June 30, 1981
Rehearing denied July 14, 1981.
Stagg, Wildau, Simpson, Hoy & Oakley, Susan Hoy, Alston, Miller & Gaines, Robert D. McCallum, Jr., for appellants.
Harold D. Corlew, Leon L. Rice, for appellees.

Judgment reversed.

All the Justices concur, except Undercofler, Smith and Gregory, JJ., who dissent.