Vickers v. Chrysler Credit Corp.

• Decision Date: 15 April 1981
• Docket Number: No. 61149,61149
• Citation: 280 S.E.2d 842,158 Ga.App. 434
• Parties: , 31 UCC Rep.Serv. 383 VICKERS v. CHRYSLER CREDIT CORPORATION.
• Court: Georgia Court of Appeals

Page 842

280 S.E.2d 842

158 Ga.App. 434, 31 UCC Rep.Serv. 383

VICKERS v. CHRYSLER CREDIT CORPORATION.

No. 61149.

Court of Appeals of Georgia.

April 15, 1981.

Rehearing Denied May 4, 1981.

Certiorari Denied June 23, 1981.

Joseph R. Baker, Jonesboro, for appellant.

Frank E. Jenkins, III, Stephen A. Land, Gregory J. Digel, Atlanta, for appellee.

CARLEY, Judge.

The pertinent facts in the instant appeal are as follows: For the purpose of financing its automobile inventory, Ray Dodge, Inc. ("Ray Dodge") entered into a revolving loan agreement, commonly referred to as a "floor planning" arrangement, with plaintiff-appellee Chrysler Credit Corporation ("Chrysler"). As evidence of this agreement, Ray Dodge executed a "main" promissory note in the principal amount of $400,000 payable to Chrysler on demand. When Ray Dodge desired to purchase an automobile from the manufacturer, Chrysler would make Ray Dodge an advance in the amount of the purchase price. In turn, for each new advance Ray Dodge would execute two instruments in favor of Chrysler: 1) a demand promissory note in the amount of the advance and 2) a trust receipt, purportedly granting Chrysler a security interest in the particular automobile(s) purchased with the advance. As additional security, defendant-appellant Vickers and two other individuals executed a document denominated as a "Continuing Guaranty" to Chrysler in which they, jointly and severally, guaranteed payment of all of Ray Dodge's obligations under the loan agreement.

On December 5, 1978, Chrysler filed a complaint and petition for writ of possession alleging that Ray Dodge had violated certain terms of one of the note-trust receipts underlying the loan agreement and declaring the entire outstanding sum of $158,970.84 as principal and interest under the loan agreement to be due and owing. The complaint further alleged that appellant Vickers was liable to Chrysler for the aforestated sum under the continuing guaranty agreement. Vickers filed his answer admitting the execution of the continuing guaranty agreement but denying the indebtedness as alleged in Chrysler's complaint. The trial court issued Chrysler a writ of possession with respect to Ray Dodge's inventory.

Subsequently, Chrysler moved for summary judgment against Vickers on the guaranty agreement, basing its motion upon all pleadings filed in the case and upon the second affidavit of Ferris P. Hunter, sales representative for Chrysler. Thereafter, Vickers amended his answer alleging, among other things, that Chrysler had failed to dispose of the repossessed collateral in a commercially reasonable manner. After hearing argument of counsel and after considering all pleadings, affidavits and other evidence of record, the trial judge entered findings of fact and conclusions of law, the pertinent portions of which are as follows: Chrysler realized $148,409.21 from the sale of the collateral pursuant to the court issued writ of possession. After application of the proceeds of the sale, the balance of the indebtedness of Ray Dodge was $12,719.79 principal plus $11,455.75 interest plus expenses in the amount of $1,590.00. Chrysler gave notice in accordance with Code Ann. § 20-506 of its intent to recover attorney's fees. Under the terms of the continuing guaranty agreement, Chrysler could obtain a judgment against the signers thereof without first securing a judgment against Ray Dodge. Based upon these findings, the trial court entered judgment in favor of Chrysler and against Vickers in the amount of $25,765.54, plus $2,601.55 as attorney's fees.

1. Vickers first attacks the grant of summary judgment on the grounds that genuine issues of material fact remain especially with regard to the "commercial reasonableness" of Chrysler's disposition of the repossessed collateral. Appellant cites Gurwitch v. Luxurest Furn. Mfg. Co., 233 Ga. 934, 936, 214 S.E.2d 373 (1975) for the proposition that "compliance with Code Ann. § 109A-9 504(3) is a condition precedent to recovery of any deficiency between the sale price of the collateral and the amount of the unpaid balance." Vickers further argues that since Chrysler "made no showing whatsoever regarding the method, manner, time, place, etc. of the sale," summary judgment granting a deficiency judgment was improper. See generally, Hubbard v. Farmers Bank, 155 Ga.App. 720, 272 S.E.2d 510 (1980); Wagner v. Ford Motor Credit Co., 155 Ga.App. 729, 272 S.E.2d 500 (1980). Chrysler, citing the rationale expressed in Brinson v. Commercial Bank, 138 Ga.App 177, 225 S.E.2d 701 (1976) urges that Vickers, as a guarantor, is not entitled to rely upon the statutory obligations imposed by Code § 109A-9 504. Chrysler further argues that under the terms of the continuing guaranty agreement itself, Vickers waived any right he might otherwise have had to question the commercial reasonableness of the disposition of the collateral.

Sections 109A-9 504(1) and (3) provide a creditor with broad alternatives for disposing of collateral after default by the debtor. However, § 109A-9 504(3) also imposes two specific requirements on a reselling creditor. First, unless the collateral to be disposed of is of the type specifically excluded, "reasonable notification of the time and place of any public sale or reasonable notification of the time after which any private sale or other intended disposition is to be made shall be sent by the secured party to the debtor." (Emphasis supplied.) Second, "every aspect of the disposition including the method, manner, time, place and terms must be commercially reasonable." In the present action, the liability of Vickers is predicated upon the agreement entitled "Continuing Guaranty." For purposes of resolving the issues presented in this appeal, it matters not whether this agreement is characterized as a guaranty or suretyship obligation because, in general, the surety or guarantor may assert all defenses, with the exception of personal defenses (e. g., infancy, incapacity, bankruptcy, etc.), available to the principal. See generally, 74 Am.Jur.2d 76-83, Suretyship, § 104-116; 38 Am.Jur.2d 1054-1057, Guaranty, § 51-54; 13 EGL 411, Guaranty and Suretyship, § 24-25; Escambia Chemical Corp. v. Rocker, 124 Ga.App. 434, 440, 184 S.E.2d 31 (1971). Thus, in the absence of waiver or estoppel we see no reason why a guarantor may not assert the "commercially reasonable" defense which would be available to his principal, the debtor, under 109A-9 504(3) in an action by the secured party against the guarantor for a deficiency judgment. It is true that in construing the notice requirement of Code Ann. § 109A-9 504(3) this court has held: "(T)here is nothing shown in the Uniform Commercial Code requiring such notice to be given to a guarantor." Brinson, supra, 138 Ga.App. at 178, 225 S.E.2d 701. The extent of the holding in Brinson, however, was that a guarantor is not a "debtor" within the meaning of Code § 109A-9 504(3) and, therefore, not required under the Code to be notified by the secured party of the impending sale. See McNulty v. Codd, 157 Ga.App. 8, 276 S.E.2d 73 (1981). Brinson does not hold that the requirements as to "commercial reasonableness" imposed upon a secured party are inapplicable or otherwise unavailable to a guarantor defending an action for a deficiency judgment. To the extent Chrysler relies upon Brinson for such a proposition, its reliance is misplaced.

However, we are not aware of any statutory provisions to the effect that one who guarantees payment of an indebtedness cannot waive his right to rely upon or cannot estop himself from relying defensively upon the secured party's failure to comply with the "commercially reasonable" requirements of 109A-9 504(3). To the contrary, we have consistently recognized the fact that "(a) surety or guarantor may consent in advance to a course of conduct which would otherwise result in his discharge." Dunlap v. C. & S. DeKalb Bank, 134 Ga.App. 893, 896(4), 216 S.E.2d 651 (1975); Twisdale v. Ga. R. Bank, 129 Ga.App. 18, 21, 198 S.E.2d 396 (1973). See First Nat. Park Bank v. Johnson, 553 F.2d 599 (9th Cir. 1977). Indeed, in McNulty v. Codd, supra, we held that, notwithstanding the anti-waiver provision of Code Ann. § 109A-9 501(3)(b), language in a guaranty agreement waiving the notice provisions of Code Ann. § 109A-9 504(3) was "viable and enforceable" against the guarantor. Under the terms of the agreement in this action, Vickers "... as primary obligor, ... unconditionally guarantee(d) to (Chrysler) that (Ray Dodge) ... will ... pay ... all of (Ray Dodge's) present and future obligations owing to (Chrysler) ..., and agree(d) without (Chrysler) first having to proceed against (Ray Dodge) or to liquidate paper or any security therefor, to pay on demand all sums due ... and all losses, cost, attorney's fees which (Chrysler) may suffer by reason of (Ray Dodge's) default ... (O)n demand to pay any deficiency established by a sale of any paper or security held by (Chrysler) ..." Vickers further agreed that "(Chrysler) may without notice to (the guarantors) and without affecting or impairing the obligation of (the guarantors), ... compound, compromise, collect, or otherwise liquidate any obligation or security therefor of (Ray Dodge) in any manner..." Accordingly, the agreement gave Chrysler the right to proceed against Vickers without first proceeding against Ray Dodge or the collateral and Chrysler was entitled to release the collateral or liquidate the collateral "in any manner" without affecting Vickers' obligations. We hold that the waiver provisions of this guaranty agreement are not specifically barred under Code Ann. § 109A-9 501(3)(b) and that by virtue of their broad language Vickers waived any protection to which he might otherwise have been entitled under Code Ann. § 109A-9 504(3). Cf. McNulty v. Codd, supra; First Nat. Park Bank v. Johnson, supra. See also Greene v. Bank of Upson, 231 Ga. 287, 201 S.E.2d 463 (1973); ...