Fields v. Willis , 123 Ga. 272 ( 1905 )

Evans, J.

(After stating the facts.) If the liability of Willis was that of a guarantor, the court did not err in dismissing the suit, because a guarantor must be sued in the county of his residence. Geiser Mfg. Co. v. Jones, 90 Ga. 307. If he was liable as a surety, then he was properly joined in the suit with the principal in the county of the latter’s residence. In some respects contracts of suretyship and of guaranty are identical, and the terms - “ surety ” and “ guaranty ” are oftentimes colloquially used as interchangeable expressions of collateral liability. A guarantor has the same right as a surety by written notice to compel the institution of a suit against the principal. Civil Code, § 2974. The theoretical distinction between the two forms of contract is clear, but in the application of the principle the decisions of courts of last resort are in a state of inextricable confusion. While the liability of both is accessorial to the principal, in the case of a surety the obligation is primary, and the guarantor’s liability is secondary. “ A surety binds himself to perform if the principal does not, without regard to his ability to do so. His contract is equally absolute with that of his principal. They may be sued in the same action, and judgment may be entered up against both. A guarantor, on the other hand, does not contract that the principal will pay, but 'simply that he is able to do so; in other words, the guarantor warrants nothing but the solvency of the principal.” Manry v. Waxelbaum, 108 Ga. 17. Ordinarily the surety joins in the contract with the principal; the guarantor engages in an independent undertaking. The former’s liability is immediate and direct; the latter’s arises upon the default or failure of his principal to perform his undertaking. Stern’s Law of Suretyship, § 6. Our code draws the distinction between the contract of suretyship and that of guaranty, that the consideration of the latter is a benefit flowing to the guarantor. “ The contract of suretyship is that whereby one obligates himself to pay the debt of another in consideration of credit or indulgence, or other benefit given to the principal, the principal remaining bound therefor. It differs from a guaranty in this, that the consideration of the latter is a benefit flowing to the guarantor.” Civil Code, § 2966. No consideration is expressed in the postscript to the contract, which is relied on as creating the relation of principal and guarantor. Neither is there any allegation in the petition that there was a consideration flowing to Willis to make the contract. On the contrary, from the averments in the petition it is inferable that the contract of the principal and Willis was contemporaneously executed. The paper declared on does not indicate to the contrary.' There is no date to the obligation of Fields, although the witnesses to the contract of Fields are not the same as those who attest the signature of Willis. No particular or formal phrase is required to create a contract of suretyship. Courts may disregard formal expressions, to ascertain the real intent of the parties, and the form of the contract is immaterial, provided the fact of suretyship exists. Civil Code, § 2969. The mere use of the word “guarantee” will not make a.contract one of guaranty. Baldwin Fertilizer Company v. Carmichael, 116 Ga. 763. “Guarantors, viewed in reference to the consideration of their contract, are either mere sureties or more than sureties. They are more than sureties when the consideration of the guaranty moves, not to them, but to the person for whose performance they become bound.” Wright v. Shorter, 56 Ga. 76. Eeading together the two contracts which appear to have been signed on a single piece of paper, it would seem that the purpose of Cox' was to sell Fields a certain number of cattle of the specified grade upon stated terms, and, in default of delivery of the cattle pursuant to the contract, to become liable to Fields in stipulated damages. The extreme amount of damages which Fields would be entitled to recover, under the contract, was $600, and this sum was advanced to Cox. The defendant Willis was aware that this sum was to be advanced to Cox, because it was so stipulated in the contract. Willis’s liability was limited to this sum, and his undertaking was the evident inducement to Fields to enter into the contract with Cox. No other consideration is even suggested by the contracts, which induced Willis to sign, than the binding effect of the executory contract between Fields and Cox. No independent consideration flowed to Willis, but the consideration of his contract was the engagement between Cox and Fields. In the case of Manry v. Waxelbaum, supra, the consideration was one dollar paid to the guarantor. In another case (Geiser Mfg. Co. v. Jones, supra) the consideration of guaranty was alleged to be upon “a consideration not herein named.” The liability in these cases was that of guaranty rather than one of surety, because not only was the guarantor’s undertaking independent of the principal’s contract, but it was supported by its own consideration, which flowed to the benefit of the guarantor.

It might be urged, from the definition of the contract of suretyship quoted from the code (supra), that the obligation of the surety is to pay the debt of the principal, and not to perform undertakings other than payments of indebtedness, and for .that reason the liability of Willis is only that of a guarantor. This distinction can not be sound. In the case of a forthcoming bond the undertaking of the principal is to deliver the property at a given time and place, and the liability to pay arises upon the default of the principal so to do ; and yet one who signs a bond of this character with the principal is liable as surety and not as guarantor. The analogy between the illustration just used and the instrument under consideration is. very close. Willis, by guaranteeing the fulfillment of the contract, simply acknowledges his liability to the obligee to pay the stipulated damages in case his principal fails to perform his contract. His liability for the stipulated damages, while dependent upon his principal’s failure to perform the contract, is primary and joint with the principal for the payment of the stipulated damages resulting from a non-performance; and as the consideration moving Willis to sign the contract was not a benefit flowing to himself, but the making of an executory contract between his principal and the plaintiff, we conclude that his liability on the paper declared upon was that of a surety and not a guarantor.

That there might be no doubt as to. the character of the action or the nature of the contract declared on, the plaintiff offered an amendment to his petition, alleging that the “ signing of said Willis [was] contemporaneous with and a part of the making of said contract, there being no contract between the said Fields and the said Cox until the signing thereof by said Willis, and the said Willis signing the same really as surety for said Cox and as joint contractor with him, and became surety for said Cox and joint contractor with him, and without any consideration or benefit flowing to said Willis, and without any consideration except the credit extended to said Cox in said contract, it being the intention of all of said parties that said Willis should be such surety and joint contractor, and not a guarantor within the strict meaning of the term, irrespective of the words used therein; and if the words used in said contract import a different legal meaning, they were so used by mistake of all parties.” This amendment in no way contradicted the terms of the writing, was germane to the cause of action set forth in the plaintiff’s petition, and should, we think, have been allowed. Treating it as presenting the real truth with regard to the nature of the contract into which the parties entered, the conclusion is irresistible that the plaintiff had a right to hold Willis liable as a surety, aud that the suit should not have been dismissed as to him.

Judgment reversed.

All the Justices concur, except Simmons, C. J., absent.