FIRST CITIZENS BANK & TRUST COMPANY, Plaintiff,
v.
Phillip C. McLAMB, Kathy S. McLamb, James B. Rivenbark, Elaine N. Rivenbark, Harold E. Bryant, Donna G. Bryant, Benjamin F. Clifton, Jr., and Katherine Clifton, Defendants.
No. 9211SC762.
Court of Appeals of North Carolina.
November 16, 1993. Publication Ordered December 23, 1993.*168 Ward and Smith, P.A. by Michael P. Flanagan and Louise W. Flanagan, Greenville, for plaintiff-appellee.
Battle, Winslow, Scott & Wiley by Joseph N. Callaway, Rocky Mount, for defendants-appellants.
JOHNSON, Judge.
Summary judgment must not be granted if there exits a genuine issue of material fact. North Carolina General Statutes § 1A-1, Rule 56(c) (1988). Defendants' contend that the issues of material fact are (1) whether the agreement was actually a surety contract or a guaranty agreement and (2) whether the contract was materially altered so as to release them from their obligation. Plaintiff contends that these issues of fact are not material since the terms of the agreement signed by defendants allow plaintiff to enter into note modifications, such as an extension of time, with the defendants' full assent.
Although defendants correctly argue that North Carolina law states that as a general rule, material alterations of a contract between a principal and a creditor will operate to discharge a surety, Fleming v. Bordon, 127 N.C. 214, 37 S.E. 219 (1900), we also find that a material alteration of a contract between a principal debtor and creditor without a guarantor's consent will discharge the guarantor from its obligation. North Carolina General Statutes § 25-3-606 (1987). Therefore, the dispositive issue is not whether the contract is a surety contract or a guaranty agreement but whether there was a material alteration so as to discharge defendants from their obligation. Labels are not necessarily binding. It is the substance of the transaction that controls. Gillespie v. DeWitt, 53 N.C.App. 252, 258, 280 S.E.2d 736, 741, cert denied, 304 N.C. 390, 285 S.E.2d 832 (1981). In the instant case, the agreement and the notes by their terms guaranteed the debts of Smithfield F-L-M to plaintiff. The Unconditional Continuing Guaranty Agreement provides that the signatory has consented to, among other things, that plaintiff:
[M]ay at any time, or from time to time, in its sole discretion; (i) extend or exchange the time of payment, and/or any manner, place or terms of payment of any or all of the `Obligations of Borrower'; ... and in such manner and upon such terms as BANK may deem proper and/or desirable, and without notice to further assent from GUARANTOR, it being agreed that GUARANTOR shall be and remain bound upon this Unconditional Guaranty ... notwithstanding any such change, exchange, settlement, compromise, surrender, release, sale or other disposition, application, renewal or extension[.]
Contained within the terms of both the $67,500.00 note and $150,000.00 note are provisions which clearly constitute waiver of any extension of time for payment, or notice thereof:
All parties to this note, whether maker, guarantor, surety, or endorser, hereby waive presentment for payment, demand, protest, notice of protest, nonpayment, and dishonor, agree that any extension of time for the payment of this note shall not affect the liability of such parties, and hereby waive all notice of such extension[.]
The agreement as stated allows for extensions of time and other modifications, but *169 provides that such modifications will not discharge defendants from liability for any debts guaranteed. "Where the language of a contract is plain and unambiguous, construction of the agreement is a matter of law; and the court may not ignore or delete any of its provisions, nor insert words into it, but must construe the contract as written, in light of the undisputed evidence as to the custom, usage and meaning of its terms." Martin v. Martin, 26 N.C.App. 506, 508, 216 S.E.2d 456, 457-58 (1975). Where the language of a contract of guaranty, or one of suretyship, provides that the signatory has made him or herself liable for all renewals, extensions and modifications and a renewal, extension or modification occurs, the signatory is bound by the terms of the agreement and will not be discharged from his or her liability. Love v. Bache & Co., 40 N.C.App. 617, 253 S.E.2d 351 (1979); Trust Co. v. Creasy, 301 N.C. 44, 269 S.E.2d 117 (1980).
By executing the agreement, defendants clearly waived any defense of discharge due to the extension of the notes. We agree with the trial court that there was no genuine issue of fact.
We also note defendants' argument that the bank had a duty to notify the guarantors that the purported extended continuing guaranty agreements were in fact surety contracts and that the words were not binding without ratification because these were surety contracts and defendants were gratuitous sureties.
A surety is in general a friend of the principal debtor, acting at his request, and not at the request of the creditor; and, in ordinary cases, it may be assumed that the surety obtains from the principal all of the information which he requires. This is the applicable rule unless there is some fact, which the creditor knows the surety probably will not discover, of such vital importance to the risk that the creditor must have been aware that the non-disclosure would in effect amount to a contrary representation to the surety. Construction Co. v. Crain and Denbo, Inc., 256 N.C. 110, 123 S.E.2d 590 (1962).
Nothing in the record reveals the bank was aware that the contract was anything other than an Unconditional Continuing Guaranty Agreement. The record does not show that the bank was attempting to deceive or misled defendants when defendants signed the Unconditional Continuing Guaranty Agreement. As such, we find defendants argument meritless.
Lastly, defendants argue that the court failed to consider James B. Rivenbark's counterclaim that was set out in his affidavit. North Carolina Rules of Civil Procedure require that a counterclaim shall be set forth in a pleading. N.C.R.Civ.P. 13. As an affidavit is not a pleading, the court was not at liberty to consider a counterclaim that was not in its proper procedural form. N.C.R.Civ. P. 7.
We affirm the decision of the trial court.
GREENE and WYNN, JJ., concur.