Haynie v. First Nat. Bank of Atlanta, 43460

• Citation: 162 S.E.2d 27,117 Ga.App. 766
• Decision Date: 10 May 1968
• Docket Number: No. 43460,No. 1,43460,1
• Parties: Clyde D. HAYNIE v. FIRST NATIONAL BANK OF ATLANTA et al
• Court: United States Court of Appeals (Georgia)

Page 27

162 S.E.2d 27

117 Ga.App. 766

Clyde D. HAYNIE v. FIRST NATIONAL BANK OF ATLANTA et al.

No. 43460.

Court of Appeals of Georgia, Division No. 1.

May 10, 1968.

Syllabus by the Court

1. A guaranty contract may be entire, or it may be separable and divisible.

2. Where the guaranty is separable or divisible, it may be revoked by any guarantor, in futuro, by the giving of a proper notice to the creditor; aliter where it is entire.

3. To be effective a notice of revocation must be in strict and full compliance with provisions of the contract calling for notice, and must be clearly expressed, unqualified, positive and absolute.

This is the second appearance of this case in this court. See Haynie v. First National Bank of Atlanta, 115 Ga.App. 499, 155 S.E.2d 32. However, the issues involved on this appeal are different.

After the remittitur in the former appeal was made the judgment of the trial court the bank moved for a summary judgment. Mr. Haynie submitted affidavits in opposition for the purpose of showing that he had terminated his status as a guarantor prior to the time the obligation sued on was incurred. It appeared from his affidavits that on August 2, 1965, he resigned his office and position with E. H. Overcash & Associates, Inc., and on that date the corporation directed a letter to the bank informing it that he had terminated his connection and requested that the bank void his signature authorization 'as being authorized to sign on our account,' as of that date. In his own affidavit he asserted that on a later date while he was on the conduct of other business at the Decatur branch office of the bank he was informed by one of its officers that the bank had received the letter from the corporation and that the officer asserted that it was sufficient to constitute notice of revocation of his guaranty agreement with the bank.

The question before us is whether under Mr. Haynie's counter-showing a genuine issue of fact was raised, making the grant of a summary judgment in favor of the bank error.

Sanders, Mottola & Haugen, A. Burt Rutledge, Newnan, for appellant.

Hansell, Post, Brandon & Dorsey, Hugh M. Dorsey, Jr., McChesney H. Jeffries, Robert B. Harris, R. J. Armstrong, Atlanta, for appellees.

EBERHARDT, Judge.

1. In resolving this question we must consider whether the contract of guaranty was entire or severable. If it was entire, as will be seen from the discussion that follows, there could be no revocation. If it was severable and revocable we must then determine whether, under the counter showing, a revocation was effected.

There is an entire consideration only when all of it passes at the time of the execution of the contract, but when the guaranty is to apply not only to indebtednesses already incurred, but as well to future obligations, as was the case here, it is divisible and separable. Code § 20-112. divisible and separable. Code § 20-112. 38; Hunnicutt & Bellingrath Co. v. Van Hoose, 111 Ga. 518, 36 S.E. 669; Burns v. Mitchell, 55 Ga.App. 862, 191 S.E. 870.

Guaranties are of two kinds: First, where the entire consideration from the creditor passed at the time of the signing of the contract: second, where the consideration passes at different times, and is therefore divisible or separable. Bennett v. Checotah State Bank of Checotah, 176 Okl. 518, 56 P.2d 848. Thus, where, as here, the guaranty is to cover not only obligations already incurred but, as well obligations 'hereafter coming into existance,' it is a divisible or separable contract.

Where the guaranty is for an entire consideration it is not revocable; aliter if separable or divisible. American Oil Co. v. Estate of Wigley, 251 Miss. 275, 169 So.2d 454; Danby v. Osteopathic Hospital Assn. of Delaware, 34 Del.Ch. 172, 101 A.2d 308, 34 Del.Ch. 427, 104 A.2d 903; Commonwealth Trust & Savings Bank v. Hart, 268 Ill.App. 322; American Chain Co. v. Arrow Grip Mfg. Co., 134 Misc. 321, 235 N.Y.S. 228. Cf. Rawleigh Medical Co. v. Burney, 22 Ga.App. 492(3), 96 S.E. 578; Sulter v. Citizens' Bank & Trust Co., 51 Ga.App. 798, 181 S.E. 694.

3. At common law a contract of guaranty, though in writing itself, could be revoked or terminated by parol, but where the instrument provides otherwise a revocation or termination must be in accordance with its terms. Meadow Brook National Bank v. Feraca, 33 Misc.2d 616, 224 N.Y.S.2d 846. In accord with this principle it was held that a notice to the creditor that an individual guarantor had severed his connections with the corporation whose obligations were the subject matter of the guaranty did not serve as a notice of revocation of his guaranty, since the guaranty was not conditioned upon his status as an officer or stockholder of the corporation. Manufacturers' Finance Co. v. Rockwell, 278 Mass. 502, 180 N.E. 224. And where the president and the treasurer of a corporation guaranteed its obligations, a notice from the president asking a return of the guaranty with the request that the creditor 'please do not ship any merchandise on our personal guaranty, hereafter,' did not relieve the treasurer of his continuing obligation as a guarantor. James Talcott, Inc. v. Levy, 123 Pa.Super. 94, 186 A. 251.

The notice of revocation or termination must be clearly expressed, unqualified, positive and absolute. Associated Food Stores, Inc. v. Siegel, 10 A.D.2d 1003, 205 N.Y.S.2d 208; Rogers-Pyatt Shellac Co. v. Starr Piano Co., 212 App.Div. 792, 209 N.Y.S. 727, 733. If the notice is given by one of several guarantors, in full compliance with the requirements of the contract, it is effective only as to him, and can not affect the liability of the others. Klatte v. Franklin State Bank, 211 Wis. 613, 248 N.W. 158, 249 N.W. 72; D.N. & E. Walter & .co. v. Domelen, Or., 425 P.2d 166.

The contract now before us provides that it 'is a continuing agreement and shall remain in force until a written notice revoking it has been received by the bank; but such revocation shall not release the undersigned from liability for any and all obligations of the principal then in existence, or from any renewals or extensions thereof, in...