Sysco Food Services, Inc. v. Coleman

• Citation: 227 Ga.App. 460,489 S.E.2d 568
• Decision Date: 16 July 1997
• Docket Number: No. A97A0828,A97A0828
• Parties: , 97 FCDR 2849 SYSCO FOOD SERVICES, INC. v. COLEMAN.
• Court: United States Court of Appeals (Georgia)

Page 568

489 S.E.2d 568

227 Ga.App. 460, 97 FCDR 2849

SYSCO FOOD SERVICES, INC. v. COLEMAN.

No. A97A0828.

Court of Appeals of Georgia.

July 16, 1997.

Lee, Black, Scheer & Hart, John D. Lange, Bouhan, Williams & Levy, Peter D. Muller, Savannah, for appellant.

Gannam & Gnann, J. Hamrick Gnann, Jr., Savannah, for appellee.

HAROLD R. BANKE, Senior Appellate Judge.

Charlton Real Estate, Inc. d/b/a Charlton Club South ("Charlton Club") purchased food and kitchen supply items from Sysco Food Services, Inc. ("Sysco"). After Charlton Club purportedly defaulted on payments due on the account, Sysco sued Teresa Coleman, alleging that she was liable under an individual personal guaranty. To its complaint, Sysco attached copies of invoices, the new account form, the terms agreement, and an individual personal guaranty. In her answer, Coleman denied signing the individual personal guaranty.

The terms agreement identifies the "purchaser" as The Charlton Club South. An individual personal guaranty form appears on the lower half of the same page as the terms agreement. It is undisputed that on this individual personal guaranty, the name of the principal debtor (_________"Company") and name of the person individually guaranteeing the indebtedness are left blank.

The trial court determined that the omission of the name of the principal debtor violated the statute of frauds and made the guaranty unenforceable. The court found that the omitted information could not be supplied by parol evidence or by contemporaneous writings. Consequently, the trial court granted Coleman's motion for judgment on the pleadings.

A personal contract of guaranty must be in writing and must satisfy all of the requisites of the statute of frauds, OCGA § 13-5-30(2). Here, the sole question is whether the writing in question, which left blank both the name of the principal debtor (_________"Company") and the name of the person individually guaranteeing the indebtedness, is sufficient to satisfy the statute of frauds.

In an unbroken line of authority, this Court has consistently held that where a guaranty omits the name of the principal debtor, it is unenforceable as a matter of law. Builder's Supply Corp. v. Taylor, 164 Ga.App. 127, 128, 296 S.E.2d 417 (1982) (failure of document to state the identity of the entity whom guarantor agreed to indemnify is fatal). See Ellis v. Curtis-Toledo, Inc., 204 Ga.App. 704, 705(2), 420 S.E.2d 756 (1992) and Northside Bldg. Supply Co. v. Foures, 201 Ga.App. 259, 260, 411 S.E.2d 87 (1991).

Even where the intent of the parties is manifestly obvious, where the name of the principal debtor is omitted from the document, the agreement is not enforceable because it fails to satisfy the statute of frauds. Taylor, 164 Ga.App. at 128, 296 S.E.2d 417. See Foures, 201 Ga.App. at 259, 411 S.E.2d 87 (where guaranty agreement left blank the name of the debtor, the contract is unenforceable even if omission was due to a scrivener's error). See also Ellis, 204 Ga.App. at 704, 420 S.E.2d 756 (omission of identity of principal debtor made contract of guaranty unenforceable as a matter of law).

Notwithstanding Sysco's argument to the contrary, the contemporaneous writing rule, even if applicable, would not authorize a different result. Compare Duke v. KHD Deutz, etc., Corp., 221 Ga.App. 452, 453, 471 S.E.2d 537 (1996) (use of contemporaneous writings permitted to resolve ambiguity where statute of frauds not implicated because guaranty contained all essential terms). Although the "Terms Agreement" and "Individual Personal Guaranty" appear on the same paper, the two sections do not incorporate each other by reference or use the same terms. The terms agreement refers to "seller" (Sysco Corporation and any of its subsidiaries and affiliated entities) and "purchaser" (The Charlton Club South). In contrast, the individual personal guaranty refers to "company" (unidentified, unnamed) and "seller" (Sysco Corporation and each of its subsidiaries and affiliated entities). Compare Baker v. Jellibeans, Inc., 252 Ga. 458, 460(1), 314 S.E.2d 874 (1984) (three contemporaneously executed written agreements could be construed together to determine terms and conditions of option to purchase realty).

The trial court correctly found that in order to determine the identity of the "company" debtor, it would have to make inferences and consider impermissible parol evidence. See Sawyer v. Roberts, 208 Ga.App. 870, 871, 432 S.E.2d 610 (1993) (parol evidence inadmissible to supply any missing essential elements of a contract required by the statute of frauds to be in writing); Taylor, 164 Ga.App. at 128, 296 S.E.2d 417. OCGA § 10-7-3 expressly prohibits the extension of a suretyship contract by implication or by interpretation.

Judicial construction of the contract of guaranty at issue is improper because this defect cannot be treated as an ambiguity. While parol evidence may be admitted to explain ambiguities in descriptions, it cannot be admitted to supply a description entirely omitted. Taylor, 164 Ga.App. at 128, 296 S.E.2d 417. Compare Murray v. Pratt-Dudley Builders Supply, 176 Ga.App. 225, 335 S.E.2d 443 (1985) (statute of fraud problem not created because the creditor was not seeking to enforce a guaranty made on behalf of an unnamed, unspecified debtor).

Sysco's reliance on Schroeder v. Hunter Douglas, Inc., 172 Ga.App. 897, 324 S.E.2d 746 (1984) is misplaced. Schroeder neither authorizes nor requires a different result. In that case, the guaranty agreement contained a clear statement of agreement and properly identified the subject matter of the debt as well as the identities of the promisee and promisor. We rejected Schroeder's contention that the contract of guaranty was unenforceable because it omitted the amount owed and the terms of payment. Inasmuch as the exact amount of the debt on an open account was not determinable at the time of the guaranty's execution, we found that the guaranty satisfied the statute of frauds. Id. at 899, 324 S.E.2d 746.

The guaranty at issue was drafted by Sysco. It was incumbent upon Sysco to ensure that all the essential terms were completed before Coleman signed the form. This Sysco failed to do. Compare Duke, 221 Ga.App. at 453, 471 S.E.2d 537 (where guaranty contained all essential terms, contemporaneous writings could be considered to resolve latent ambiguity). Nor did Sysco object to Coleman's failure to raise the statute of frauds defense in her responsive pleading as required by OCGA § 9-11-8(c). By acquiescing to Coleman's use of this defense in the motion for judgment on the pleadings, Sysco waived any applicable objection. See Bowers v. Howell, 203 Ga.App. 636, 637(1), 417 S.E.2d 392 (1992). Further, after Coleman raised the statute of frauds defense in the motion for judgment on the pleadings, nothing prevented Sysco from amending its complaint to allege some other alternative theories of recovery such as quantum meruit or unjust enrichment.

This Court has consistently treated guaranties containing latent or patent ambiguities differently from those involving the omission of an essential term required by the statute of frauds to be in writing. OCGA § 13-5-30(2). Regardless of why the omission occurred, it rendered the purported guaranty defective and unenforceable as a matter of law. Ellis, 204 Ga.App. at 705(2), 420 S.E.2d 756; Foures, 201 Ga.App. at 259-260, 411 S.E.2d 87; Taylor, 164 Ga.App. at 128, 296 S.E.2d 417.

In light of the statutory mandate requiring that essential terms of a promise to answer for the debt of another be in writing (OCGA § 13-5-30(2)), the statutory bar precluding the extension of a contract of guaranty by interpretation or implication (OCGA § 10-7-3), and the binding and applicable precedent compelling that the identity of the principal debtor be provided on a guaranty, the trial court correctly granted Coleman's motion. Because the pleadings disclose that all of Sysco's complaint was premised on a guaranty which was unenforceable as a matter of law, Coleman was entitled to judgment on the pleadings. OCGA § 9-11-12(c).

Judgment affirmed.

ANDREWS, C.J., BIRDSONG, P.J., and JOHNSON and BLACKBURN, JJ., concur.

POPE, P.J. and RUFFIN, J., dissent.

RUFFIN, Judge, dissenting.

"The granting of a motion for judgment on the pleadings under OCGA § 9-11-12(c) is proper only where there is a complete failure to state a cause of action or defense. For the purposes of the motion, all well-pleaded material allegations of the opposing party's pleading are to be taken as true, and all allegations of the moving party which have been denied are taken as false." (Citations and punctuation omitted; emphasis supplied.) Bacon v. Liberty Mut. Ins. Co., 198 Ga.App. 436, 401 S.E.2d 625 (1991). Viewing the allegations in Sysco's complaint in this light, I cannot say that there has been a complete failure to state a cause of action. Accordingly, I respectfully dissent.

Taken as true, the allegations in Sysco's complaint show that between March 15, 1991 and March 22, 1991, Charlton Club South ("Charlton Club") placed orders on account for the purchase and delivery of various food and kitchen supply items from Sysco. On March 15, 1991, Coleman, who was Charlton Club's vice-president, "signed an individual personal guaranty in favor of [Sysco] to induce [Sysco] to extend credit on account to [Charlton Club]." Charlton Club subsequently defaulted on payments due on the account.

As stated by the majority, Sysco attached a copy of an account terms agreement to the complaint. This agreement, dated March 15, 1991, clearly identifies Charlton Club as the "purchaser" of goods on account and was executed by a Sysco representative and by Coleman in her capacity as Charlton Club's vice-president. The personal guaranty, which appears on the bottom half of the terms agreement, is also dated March 15, 1991, and signed by Coleman and a witness.

It should be noted that I agree with the...