McCallum v. Griffin
| Decision Date | 31 May 1961 |
| Docket Number | No. 18492.,18492. |
| Parties | Phillip McCALLUM, as Administrator of Small Business Administration and United States of America, Appellants, v. Mrs. Burma S. GRIFFIN, Appellee. |
| Court | U.S. Court of Appeals — Fifth Circuit |
Sherman L. Cohn, Morton Hollander, Dept. of Justice, Washington, D. C., Slaton Clemmons, Asst. U. S. Atty., George Cochran Doub, Asst. Atty. Gen., Charles D. Read, Jr., U. S. Atty., Atlanta, Ga., for appellants.
D. Wright Mitchell, Douglas W. Mitchell, Jr., Robert L. Vining, Jr., Dalton, Ga., for appellee.
Before TUTTLE, Chief Judge, and JONES and WISDOM, Circuit Judges.
In 1957, the Luxury Carpet Mills, Inc., in which appellee owns some 40 percent of the stock, obtained a loan from the Small Business Administration under the provisions of 15 U.S.C.A. § 631 et seq. As a condition of the loan, the Administration required, inter alia, that the three stockholders, Mrs. Griffin, her husband, and another relative, execute "guaranties" on SBA Form 148 and that Mrs. Griffin's "be secured by first mortgage of land, including improvements of the properties" owned solely by her. Accordingly, the three stockholders executed the forms, separate documents from the principal contract of the corporation, and Mrs. Griffin additionally executed a security deed upon her separate real property, as a result of which the corporation received the requested loan of $25,000.
Thereafter the corporation failed to pay its indebtedness, and the SBA, in accordance with its power under the agreement, accelerated the maturity of the debt, declaring it to be in default, and advertised for sale the collateral of the corporate debtor and that of the appellee. Appellee then instituted a proceeding in a state court to prohibit the sale of the property described in the security deed and to have the security deed and the Form 148 "guaranty" cancelled. On petition of the appellants, the cause was removed to the District Court for the Northern District of Georgia.
The District Court held both documents executed by appellee to be contracts of suretyship, and, as such, null and void under the law of Georgia, 53 Ga. Code Ann. § 503.1 From that judgment, the appellants bring this appeal, alleging: (1) that state law should not be applied to this type of government contract for it was clearly the intent of Congress in the enactment of the statute that "questions of federal rights and liabilities must be uniformly determined by reference to Federal law", and (2) that even if state law is properly applicable, then the contracts here involved nevertheless do not fall within the prohibitions of § 503, supra.
The argument made out by the appellant on the first point is persuasive, but, taking the view which we do of this case, we find it unnecessary to rule upon it without a clearer manifestation of Congressional intent as to the applicability vel non of state law to this class of contracts.2 Rather, we choose to rest our decision upon Georgia law, and we find that the trial judge erroneously applied that law. Accordingly, it will be necessary to enter a judgment of reversal.
While the courts of Georgia have given effect to the provisions of § 503, set out above, they have done so in strict contemplation of another provision of the Georgia Code which carefully distinguishes between contracts of surety and of guaranty;3 thus they have held that, while § 503 does invalidate contracts of surety made by a married woman, it does not apply to contracts of guaranty. Wilson Brothers v. Heard, 46 Ga.App. 497, 167 S.E. 913; but see, e. g., the statement in Shores-Mueller Co. v. Bell, 21 Ga.App. 194, at page 197, 94 S.E. 83 at page 84: "It is presumed that the common law is of force and must govern, and under it the defense actually set up by Mrs. Bell, that her contract of guaranty did not bind her, was good." See also Durham v. Greenwold, 188 Ga. 165, 3 S.E.2d 585.
Though § 101 established some formula for determining whether a given contract was one of surety or of guaranty, "even this test is subject to apparent exceptions." General Finance Corporation of Atlanta, Northeast v. Welborn, 98 Ga.App. 280, at page 282, 105 S.E.2d 386, at page 388. Over half a century ago, the Supreme Court of Georgia was moved to comment that "The theoretical distinction between the two forms of contract is clear, but in the application of the principle the decisions of courts of last resort are in a state of inextricable confusion." Fields v. Willis, 123 Ga. 272, at page 275, 51 S.E. 280, at page 281. Cases decided before this utterance, see e. g., Manry v. Waxelbaum Co., 108 Ga. 14, 33 S.E. 701, and after, see, e. g., Etheridge W. T. Rawleigh Co., 29 Ga.App. 698, 116 S.E. 903, Arkansas Fuel Oil Co. v. Young, 66 Ga.App. 33, 16 S.E.2d 909, and others cited in General Finance...
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Ricks v. United States
...bind her separate estate by a contract of guaranty. Wolkin v. National Acceptance Company, 222 Ga. 487, 150 S.E.2d 831; McCallum v. Griffin, 289 F.2d 135 (5th Cir.); Scarboro v. Universal C.I.T. Credit Corporation, 364 F.2d 10 (5th Cir.); Rankin v. Smith, 113 Ga.App. 204, 147 S.E.2d VIII Ad......
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McAllister v. Pier 67, Inc.
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