LYNCHAR, INC. Et Al. v. COLONIAL OIL INDUSTRIES, INC.
341 Ga. App. 489
| Ga. Ct. App. | 2017Background
- Colonial Oil sold fuel to an account billed as T&W Oil (New Account sheet 1986; updated 1997 listing "T&W Oil Co.").
- Lynchar, Inc. d/b/a T&W Oil Company (Lynchar) failed to pay; Colonial sued Lynchar and two shareholders, Lawrence Derby Sr. and Charles Thompson Jr., alleging breaches and asserting personal guaranties signed by Derby and Thompson.
- The guaranties (2007–2008) identified the debtor as "T&W Oil, Inc." (a name the guarantors say does not exist) and named Colonial as Holder; guaranties promised unconditional payment of the "Obligations."
- Derby and Thompson testified they intended to guaranty Lynchar’s debt (doing business as T&W Oil) but denied that "T&W Oil, Inc." was a correct corporate name; they also withdrew earlier pleading admissions that had suggested personal liability.
- Trial court granted Colonial partial summary judgment on breach of guaranties and attorney fees, admitting parol evidence to equate the names; appellants appealed. The Court of Appeals reversed.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether guaranties are enforceable despite naming "T&W Oil, Inc." instead of the corporate debtor | Guaranties enforceable; parol evidence and other writings show parties treated the names as interchangeable, so guarantors intended to cover Lynchar’s debt | Guaranties fail Statute of Frauds because they do not identify the principal debtor by name; parol evidence cannot supply a missing essential element | Reversed: guaranties unenforceable — naming only a d/b/a that is not the corporate debtor fails Statute of Frauds; parol evidence inadmissible to cure that defect |
| Whether L. Henry (allowing parol evidence for contemporaneous writings) controls | Colonial: L. Henry permits construing the guaranty with other writings to identify the debtor | Appellants: guaranties were not executed contemporaneously with the account instrument containing the correct name; contemporaneous-writing rule does not apply | Held for appellants: L. Henry inapplicable because guaranties were not part of a contemporaneous single transaction with a writing that correctly named the debtor |
| Whether withdrawn admissions in pleadings could be used to prove guaranty liability | Colonial: earlier admissions that defendants guaranteed amounts owed by "T&W Oil" establish liability | Appellants: they withdrew the admissions and the admissions addressed legal effect (not facts), so cannot be used to prove missing Statute of Frauds elements | Held for appellants: court cannot rely on withdrawn admissions that assert legal conclusions about the guaranties’ effect; such admissions do not cure the statutory defect |
| Whether attorney fees under guaranties are recoverable given guaranties unenforceable | Colonial: fee provisions in guaranties entitle it to attorney fees | Appellants: if guaranties unenforceable, fee claim under them fails | Held: trial court erred to grant attorney fees under guaranties; no opinion on other possible bases for fees |
Key Cases Cited
- Community Magazine v. Color Xpress, 326 Ga. App. 330 (parol evidence and Statute of Frauds principles explained)
- PlayNation Play Systems v. Jackson, 312 Ga. App. 340 (guaranty naming only a d/b/a without naming the corporate debtor is unenforceable)
- L. Henry Enterprises v. Verifone, Inc., 273 Ga. App. 195 (parol evidence allowed under contemporaneous-writing rule when documents executed together)
- Citrus Tower Boulevard Imaging Ctr. v. Owens, 325 Ga. App. 1 (limits use of withdrawn admissions; distinguishes factual admissions from legal conclusions)