General Finance Corp. of Atlanta, Northeast v. Welborn

• Decision Date: 22 September 1958
• Docket Number: No. 2,No. 37274,37274,2
• Parties: GENERAL FINANCE CORPORATION OF ATLANTA, NORTHEAST v. Fanny Mae WELBORN
• Court: Georgia Court of Appeals

Page 386

105 S.E.2d 386

98 Ga.App. 280

GENERAL FINANCE CORPORATION OF ATLANTA, NORTHEAST v. Fanny Mae WELBORN.

No. 37274.

Court of Appeals of Georgia, Division No. 2.

Sept. 22, 1958.

Rehearing Denied Oct. 6, 1958.

Syllabus by the Court

The contract sued on in the case is one of guaranty, and the trial court erred in holding the action subject to general demurrer on the ground it was one of suretyship and that the obligor in the contract being a married woman could not be sued thereon.

Smith, Swift, Currie & McGhee, Charles L. Weltner, Atlanta, for plaintiff in error.

Carpenter, Karp & Mathews, A. Tate Conyers, Atlanta, for defendant in error.

CARLISLE, Judge.

General Finance Corporation of Atlanta, Northeast, sued Mrs. Fanny Mae Welborn, a married woman, on an alleged contract of guaranty, the material provisions of which are as follows:

'This agreement of guaranty is given to induce General Finance Corporation of Atlanta, N. E., (hereinafter referred to as 'Corporation') from time to time to extend credit to and to otherwise do business with Spray-Welborn Motors, Inc. (hereinafter referred to as 'Debtor') and in connection therewith the undersigned, jointly and severally, request that you extend credit or financial assistance or both to Debtor, or discount or purchase from said Debtor notes, drafts or other evidence of indebtendness owned or guaranteed (or both) by said Debtor. In consideration of the foregoing, the undersigned hereby, jointly and severally, guarantee to Corporation and to its successors and assigns, that the said Debtor will promptly and faithfully pay at maturity or when due (whether such maturity or due date occurs by acceleration or otherwise), and fully discharge and perform each and every contract obligation and undertaking of said Debtor to Corporation, regardless of the nature or kind, whether direct or indirect, absolute or contingent, howsoever created, arising or evidenced or acquired by corporation, and whether now, heretofore or hereafter accrued or contracted; and agree, without Corporation having to proceed against the said Debtor or against any goods, things, or choses in action given to or held by Corporation as security for any obligation or undertaking of said Debtor, to pay upon demand (either oral or written) any and all sums due to Corporation from the said Debtor, and all loss, damages, costs, attorney's fees, or expenses which may be suffered by Corporation by reason of the default of the said Debtor upon any such obligation or undertaking. The undersigned agree to be bound by and, upon demand, to pay any deficiency resulting from any sale of the goods, things or choses in action (if Corporation elects to proceed against the same) held by Corporation as such security. * * *

'The undersigned waive notice of acceptance of this guaranty, and notice of any default, non-payment, partial payment, presentment, demand, protest, and of any sale, pledge, surrender, compromise, release, renewal, extension, indulgence, alteration, exchange, or modification of any obligation or undertaking of the Debtor or of any collateral given or pledged to secure the obligations or undertakings of the Debtor or of the undersigned, under this guaranty, or any notice to which the undersigned might be otherwise entitled, or which might be required, otherwise, by law as to any note, draft, draft acceptance or other obligation signed, accepted, guaranteed or endorsed by the said Debtor. Without impairing the liability of the undersigned, Corporation may amend, modify, alter, exchange, renew or extend any note, or other obligation or undertaking of said Debtor, and of any collateral given or pledged to secure the same or accept partial payment thereon, or settle, release, compound, surrender, or compromise any of the same, or collect upon, or otherwise liquidate any claims held by Corporation and apply all monies received by Corporation toward the payment of any obligations of the Debtor to Corporation in such manner as Corporation may deem advisable. This guaranty and every part thereof shall be binding upon the heirs, personal representatives, successors and assigns of each of the undersigned.' This instrument was signed by the defendant.

In the petition it was alleged that in reliance on the contract, the plaintiff did from time to time extend credit to the principal debtor and took as security therefor liens on certain automobiles; that on February 3, 1958, all of the property subject to the said liens was sold at public outcry resulting in net proceeds therefrom of $60,771.75, and leaving a balance due petitioner by said principal debtor of $20,788.45 the amount sued for; and, that demand had been made upon the defendant and upon the principal for the payment of the deficiency, 'but both principal and defendant have failed and refused to pay the same.' The trial court sustained a general demurrer and dismissed the action holding that the contract sued on is one of suretyship, and it being conceded that the defendant is a married woman, such action may not be maintained.

Much has been written by the courts of this State defining contracts of suretyship and contracts of guaranty and distinguishing between the two. Many different tests for determining whether particular contracts be contracts of suretyship or guaranty have been held proper for consideration by the court. Invariably, any treatise on the subject as it pertains to the provisions of the Georgia law must begin with a consideration of Code, § 103-101. The distinction between the two kinds of contracts set forth there is based on whether or not the consideration for the promise made flows to the principal or to the guarantor. If the consideration of credit or indulgence or other benefit be given to the principal, it...