411 S.E.2d 558 | Ga. Ct. App. | 1991
Blair Anderton (“Anderton”) is the president of AS&G, a distributor of insulation products and General Insulation Company (“General”), a major subpurchaser of products from AS&G. Certainteed Corporation (“Certainteed”), a manufacturer of building products, sold insulation materials to AS&G Services, Inc. (“AS&G”) on account. In 1988, AS&G’s account became in arrears and Certainteed requested that General execute a corporate guaranty in favor of Certainteed guaranteeing all of AS&G’s obligations to Certainteed. The corporate guaranty was signed by Anderton’s brother, James Anderton, the vice-president of General. When AS&G’s account was
Case No. A91A1413
1. Anderton’s sole enumeration of error is that the trial court erred in denying his motion for summary judgment because as a matter of law the 1990 note was a novation of the 1989 note thereby discharging him from his obligation as guarantor of the 1989 note. OCGA § 10-7-21 defines a novation as “[a]ny change in the nature or terms of a contract” and further provides that any novation made without the consent of the surety discharges the surety. Anderton argues that since the 1990 note included the outstanding balance of the 1989 note plus purchases made on AS&G’s account after the execution of the 1989 note, the additional debt was a material change in the terms of the 1989 note and constituted a novation. Certainteed argues that even if a novation occurred, Anderton consented to the novation. We agree. The guaranty signed by Anderton provided that Anderton agreed that, without notice to him, Certainteed “(i) may extend, renew, modify or waive any terms of the obligations of [AS&G]; (ii) may release, surrender, exchange, compromise, take security for or settle the obligations of [AS&G], whether by account, notes, or otherwise. . . .” It is axiomatic that “[a] surety or guarantor may consent in advance to a course of conduct which would otherwise
Case No. A91A1414
2. Certainteed enumerates as error the trial court’s denial of its motion for summary judgment against Anderton. For the reasons discussed in Division 1 above, we conclude that no question of fact existed as to Anderton’s advance consent to the alleged novation; therefore, summary judgment should have been granted to Certainteed.
3. Certainteed also contends that the trial court erred in denying its motion for summary judgment against General on the corporate guaranty. General argues that James Anderton was not authorized to sign the corporate guaranty; therefore, the guaranty executed by him was not binding on General. The corporate guaranty was executed on December 30, 1988, along with a corporate resolution which indicated that the president and secretary were empowered to sign the guaranty on behalf of General. In its answer to Certainteed’s complaint, General admitted executing the guaranty. However, in an amended answer filed almost two years later, General denied executing the guaranty and raised the issue of James Anderton being unauthorized to sign the guaranty. It is undisputed that James Anderton was the vice-president of General and that at the time he signed the guaranty, the president, Anderton, was out of town. “If [James Anderton] lacked any such authority to execute the [guaranty], there appears to be no evidence [that Certainteed] knew of any such restriction or lack of
Certainteed also argues that even if James Anderton did not have authority to sign the guaranty, General ratified the guaranty agreement by retaining the benefits of the agreement. The corporate resolution signed on the same day as the guaranty recited that Certainteed required that General execute the guaranty as a condition of its extension of credit to AS&G and that General was interested in AS&G being able to make credit purchases from Certainteed. The record reflects that following the execution of the corporate guaranty, Certainteed did in fact extend additional credit to AS&G which allowed AS&G to purchase products from Certainteed on account. Thus, General retained the benefits of the allegedly unauthorized guaranty for well over a year and did not claim any lack of authority of James Anderton to execute the guaranty until Certainteed filed its motion for summary judgment. We conclude that no issue of material fact remained as to whether there was a ratification of the allegedly unauthorized act of James Anderton and that summary judgment should have been granted to Certainteed on the corporate guaranty. Holliday Constr. Co., supra; Lanier Ins. Agency v. Citizens Bank, 168 Ga. App. 424, 425 (309 SE2d 419) (1983).
General argues that Certainteed’s continued extensions of credit to AS&G after the execution of the corporate guaranty, without General’s consent, released General from any obligation under the corporate guaranty. We note initially that the corporate guaranty contained the same language as the personal guaranty signed by Anderton, with respect to Certainteed’s ability to “extend, renew, and modify” the obligations of AS&G. In addition, the guaranty executed by General provided that General guaranteed all obligations of AS&G, including the purchase price of all products “heretofore sold by Certainteed to [AS&G], and which may be sold hereafter by Certainteed to [AS&G].” For the reasons discussed in Division 1, we conclude that General consented in advance to the extension of additional credit to AS&G.
Judgment affirmed in Case No. A91A1413. Judgment reversed in Case No. A91A1414.
