Citizens and Southern Nat. Bank of South Carolina v. Lanford
| Decision Date | 06 January 1994 |
| Docket Number | No. 24063,24063 |
| Citation | 313 S.C. 540,443 S.E.2d 549 |
| Court | South Carolina Supreme Court |
| Parties | , 25 UCC Rep.Serv.2d 491 The CITIZENS AND SOUTHERN NATIONAL BANK OF SOUTH CAROLINA, Respondent, v. John F. LANFORD, William N. Geiger, Michael B. McKeithen, Mark M. King, Edward W. Pike, Jr., Dennis R. Gerwing, and Oscar S. Wooten, Defendants, of whom William N. Geiger is Appellant. . Heard |
A. Camden Lewis, of Lewis, Babcock & Hawkins, Columbia, for appellant.
John T. Moore and Steven A. McKelvey, both of Nelson, Mullins, Riley & Scarborough, Columbia, for respondent.
This case arises from an action to enforce guaranty obligations under a Note and Guaranty of Payment. The circuit court awarded judgment to respondent, The Citizens and Southern National Bank (C & S), against appellant William N. Geiger for the full amount of the primary debt, plus interest and attorneys fees.
On January 14, 1988, Timberlake Plantation Company (Timberlake), through its representatives, executed a note in the amount of $185,000 to be paid in monthly installments over ten years to C & S. The note contained a Guaranty of Payment bearing the undisputed signatures of John F. Lanford, Michael B. KcKeithen, Mark M. King, Dennis R. Gerwing, Oscar S. Wooten, Edward W. Pike, Jr., and William N. Geiger. The note was secured by a mortgage on certain property owned by Timberlake. Subsequently, Timberlake filed for Chapter 11 bankruptcy, and C & S demanded payment from the guarantors. After being awarded judgment against McKeithen, King, Gerwing, Wooten and Pike, C & S moved for summary judgment against Geiger based upon the following terms of the Guaranty of Payment:
For value received, the undersigned (who if two or more in number, shall be jointly and severally liable hereunder) hereby unconditionally guarantee(s) the payment of this Note and all extensions or renewals thereof, and all expenses ... any of whom may be sued by the holder hereof with or without joining any of the other endorsers or makers of this Note and without first or contemporaneously suing such other persons, or otherwise seeking or proceeding to collect from them. (Emphasis added).
The trial court granted summary judgment in favor of C & S for $193,341.79, the entire amount of the note, holding that Geiger was bound by the unconditional guaranty.
Geiger appeals on the ground that certain actions and omissions of C & S give rise to issues of material fact which preclude summary judgment. He contends he is entitled to assert defenses under S.C.Code Ann. § 36-3-606 (1976) relating to C & S's alleged impairment of the collateral. Geiger also claims summary judgment is inappropriate because he is entitled to litigate whether he is entitled to Appraisal Statute protection. Finally, he contends the trial court erred in awarding C & S summary judgment on his negligence counterclaim. We affirm.
A guaranty of payment is an absolute or unconditional promise to pay a particular debt if it is not paid by the debtor at maturity. AMA Management Corp. v. Strasburger, 309 S.C. 213, 420 S.E.2d 868 (Ct.App.1992). Under an absolute guaranty of payment, the creditor may maintain an action against the guarantor immediately upon default of the debtor. Peoples Federal S & L v. Myrtle Beach Retirement Group, 300 S.C. 277, 387 S.E.2d 672 (1989).
We find that on its face, the guaranty agreement establishes the existence of an absolute guaranty of payment. Moreover, the record reflects no actions or omissions on the part of C & S in contravention of the clear language of the guaranty agreement. No obligation was imposed upon C & S, as Geiger insists, to pursue and/or exhaust the collateral. The guaranty agreement unambiguously places all guarantors, jointly and severally, under liability for 100% of the contract debt. The intention of the parties, as expressed in the guaranty, should guide the court. Peoples Federal S & L, supra.
Geiger's contention that the case involves issues of material facts is predicated on his assertion that C & S unjustifiably impaired the collateral. He argues that since the guaranty and note are contained on the same sheet of paper, and the note is a negotiable instrument, a signor of the guaranty becomes a "party to the instrument" and is entitled to assert defenses available to such a party. 1 We disagree.
The general rule in South Carolina, as noted in Rock Hill Nat'l Bank v. Honeycutt, 289 S.C. 98, 344 S.E.2d 875 (Ct.App.1986), is that a guaranty of payment is an obligation separate and distinct from the original note. This point is elucidated in 38 Am.Jur.2d, Guaranty, § 4, which states:
The debtor is not a party to the guaranty, and the guarantor is not a party to the principal obligation. The undertaking of the former is independent of the promise of the latter; and the responsibilities which are imposed by the contract of guaranty differ from those which are created by the contract...
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