South Atlanta Associates, Ltd. v. Strelzik

McMurray, Presiding Judge,

concurring in part and dissenting in part.

Plaintiff South Atlanta Associates, Ltd., entered into a contract whereby it leased certain premises to Housecall, Inc. Plaintiff’s action is predicated upon a contemporaneously dated guaranty agreement wherein the guarantors agreed to be jointly, severally and primarily obligated to plaintiff for all amounts owed by Housecall, Inc., under the lease.

Plaintiff’s complaint, as amended, seeks a judgment against two of the three guarantors named in the agreement, defendant Strelzik and defendant Shefte. Both of the defendants executed the guaranty agreement. A third guarantor, Midlick, also named in the body of the guaranty agreement, did not sign the guaranty agreement and the signature line subscribed with his name remains blank.

Upon consideration of plaintiff’s motion for summary judgment the state court granted a summary judgment in favor of defendant Strelzik. The state court found, “that a right of contribution existed between the guarantors as a result of the guarantors entering into the to the lease agreement. OCGA § 51-12-32. The fact that the two guarantors that ultimately signed the guaranty (Strelzik and Shefte) thought that there would be three guarantors to this agreement has convinced this Court that their exposure to risk was increased as a result of the Plaintiff’s inability to get the guaranty of Mr. Midlick. This increased risk, therefore, acts as a ground for discharge of the other guarantors. OCGA § 10-7-22.” Plaintiff appeals from the grant of summary judgment in favor of defendant Strelzik and the denial of its motion for summary judgment.

Both plaintiff’s enumerations of error and argument are couched in language responsive to the state court’s reliance on OCGA § 10-7-22. That statute relates to release of a guarantor whose risks are increased by the creditor. I do not view OCGA § 10-7-22 as controlling in the case sub judice since there was never a binding guaranty agreement.

While the state court’s citations of authority were not apropos, the underlying reasoning was sound, and the state court’s conclusion correct. Although I concur in the judgment as to Division 1,1 respect*578fully dissent as to Division 2 of the majority opinion since I would hold that Strelzik is entitled to summary judgment because the ab- , sence of the third required signature on the guaranty agreement rendered that document incomplete and thus not a valid and binding contract. I cannot agree with the conclusion of the majority that the delivery by Strelzik of the incomplete and thus unenforceable guaranty agreement somehow breathed life into that document. Thus, there can be no question of fact remaining as to whether Strelzik consented to an alteration of the guaranty agreement since that document was never a binding contract.

“When the intent is manifest that the contract is to be executed by others than those who actually sign it, it is inchoate and incomplete, and does not take effect as a valid and binding contract. [Cits.]” Peacock v. Horne, 159 Ga. 707, 722 (2), 723 (126 SE 813). In the case sub judice, the intent that the guaranty be executed by all three of the guarantors named therein is manifested by the form of the document and by each guarantor’s loss of remedy by way of contribution where the third named guarantor failed to execute the document. Peacock v. Horne, 159 Ga. 707, 722 (2), 723, supra. See also OCGA §§ 10-7-50 and 13-3-2. “ ‘ “In order that there may be an 1 agreement, the parties must have a distinct intention common to both . and without doubt or difference. Until all understand alike, there can 1 be no assent, and therefore, no contract. Both parties must assent to . the same thing in the same sense, and their minds must meet as to all! the terms. If any portion of the proposed terms is not settled, or no > mode is agreed on by which it may be settled, there is no agreement.” ■ (Cit.)’ Aero Constr. Co. v. Grizzard, 76 Ga. App. 649, 652 (2) (46 SE2d 767) (1948).” Christensen v. Roberds of Atlanta, 189 Ga. App. 289, 291 (2) (375 SE2d 267).

In the case sub judice, specific individuals are identified as parties to the guaranty contract and the form of the guaranty contract anticipates the signatures of all of the identified guarantors. Where less than all the anticipated guarantors have signed the document there is no contract since there has been no meeting of the minds. In other words, each signatory anticipates that all guarantors will sign and agree to bear a level of risk predicated on this assumption. Of course, as a given number of guarantors is reduced the level of risk to each remaining guarantor is increased. Therefore, if less than all anticipated guarantors sign, the level of risk to which each signatory would be exposed is greater than that which they have agreed to bear. Therefore, due to the absence of Midlick’s signature, there was no meeting of the minds concerning the terms of the guaranty agreement. See generally OCGA § 10-7-50.

“This case does not come within that class of cases wherein it is held that a party who signs and delivers an instrument is bound by , *579the obligations it contains, although it is not executed by all the parties for whose signatures it was prepared, where there is nothing to indicate an intention on the part of him who signs not to be bound thereby until it is signed by others, which intention is brought home to the obligee therein, and where there is no express agreement or manifest intent to such effect, and where there is no loss of remedy by way of indemnity or contribution, by failure of other parties to execute the instrument.” (Emphasis supplied.) Peacock v. Horne, 159 Ga. 707, 722 (2), 723, supra.

Cosby v. A. M. Smyre Mfg. Co., 158 Ga. App. 587, 591 (6), 592 (281 SE2d 332), and Residential Indus. Loan Co. v. Brown, 559 F2d 438 (5th Cir.), cited by plaintiff, may be distinguished on the facts. Cosby v. A. M. Smyre Mfg. Co., supra, involves an unsuccessful defense of fraud predicated upon an oral promise as to a future event. Residential Indus. Loan Co. v. Brown, supra, turned on the conclusion that the failure of a party to insure the genuineness of a coguar-antor’s signature did not constitute a release under OCGA § 11-3-606 (1) (Uniform Commercial Code).

Defendant Strelzik’s preparation of the revised guaranty and the existence of defendant Strelzik’s obligation under the lease agreement to execute an individual guaranty of the lease may supply, authority for a construction of the guaranty agreement in favor of plaintiff. See generally OCGA § 13-2-2 (5). However, there is no authority to rewrite the agreement contained in the guaranty contract under the guise of construction of that document. The guaranty agreement as revised by Strelzik anticipates clearly upon its face the signatures of all three named guarantors. No reasonable construction can obliterate this fact. Therefore, in the absence of the signatures of all of the guarantors named in the revised guaranty agreement the document remains incomplete. This does not suggest that plaintiff was under any duty to obtain Midlick’s signature, only that plaintiff failed to recognize the incomplete nature of the document it received from defendant Strelzik so as to prompt remedial measures.

I am authorized to state that Presiding Judge Banke and Judge Benham join in this opinion.