345 Ga. App. 228
Ga. Ct. App.2018Background
- CPS supplied agricultural products on credit to Gracie's Ridge, LLC; Lavon Odom was the CPS salesman/branch representative who handled the account.
- T.E. Moye signed two written guaranties (April 2011 and February 2013) personally guaranteeing Gracie's Ridge's obligations.
- In January 2014 Moye told Odom he was "done" with the farm and would not guarantee future purchases; Moye says Odom agreed and that he delivered a written revocation (CPS denies receipt).
- Gracie's Ridge resumed charging on the CPS account March 2014–April 2015, with balances peaking over $285,000; CPS later sued to enforce Moye's guaranties when payments ceased.
- Moye moved for summary judgment asserting an oral mutual rescission (or agent agreement to revoke) and that the second guaranty terminated when the account was once paid; trial court granted summary judgment for Moye.
- The Court of Appeals reversed, holding (1) mutual rescission of an executory guaranty need not be in writing under the Statute of Frauds, but (2) there are genuine fact issues about whether the parties actually agreed to rescind and whether Odom had authority to do so.
Issues
| Issue | Plaintiff's Argument (CPS) | Defendant's Argument (Moye) | Held |
|---|---|---|---|
| Whether an oral agreement can rescind a guaranty that falls under the Statute of Frauds | Statute of Frauds requires any release/modification of a guaranty to be in writing, so oral rescission is ineffective | A mutual oral rescission of an executory guaranty is valid and need not be in writing | Court: Mutual rescission of an executory guaranty need not be in writing; the Statute of Frauds does not bar proof of a subsequent oral rescission |
| Whether summary judgment was appropriate despite conflicting evidence about agreement and agent authority | No genuine dispute: Odom (CPS agent) agreed to release Moye so summary judgment should stand | There is conflicting testimony and a question whether Odom had authority to bind CPS; factual issues preclude summary judgment | Court: There are genuine factual disputes (meeting of minds and Odom’s actual authority); summary judgment for Moye reversed |
Key Cases Cited
- Lafarge Bldg. Materials v. Thompson, 295 Ga. 637 (Ga. 2014) (personal guaranty must be in writing to be enforceable under Statute of Frauds)
- Gulf Oil Corp. v. Willcoxon, 211 Ga. 462 (Ga. 1955) (written contracts subject to the Statute of Frauds generally cannot be modified by parol agreement)
- Hendricks v. Enterprise Financial Corp., 199 Ga. App. 577 (Ga. Ct. App. 1991) (court previously held rescission required writing; overruled here to the extent it so held)
- Fidelity Nat. Bank v. Reid, 180 Ga. App. 428 (Ga. Ct. App. 1986) (rescission is itself a contract and mutual rescission need not be written)
- Thompson v. Lovett, 328 Ga. App. 573 (Ga. Ct. App. 2014) (evidence of an oral rescission can create a fact issue even when the original agreement is subject to the Statute of Frauds)