Opinion
35364.
DECIDED NOVEMBER 16, 1954.
Action on contract. Before Judge Cooper. Augusta Municipal Court. July 15, 1954.
Mixon Chambers, R. H. Jones, for plaintiff in error.
Maurice Steinberg, contra.
The agreement sued on was one of suretyship, and the defendant is primarily liable on the obligation created thereby. The court erred in sustaining the demurrers to the petition and in dismissing the action.
DECIDED NOVEMBER 16, 1954.
Mrs. Annie Laurie Nichols, as executrix of the estate of William Nichols, sued W. Howard Miller and Mrs. Eleanor Miller on a contract of indebtedness. The petition as finally amended alleged in substance: that the defendants were indebted to William M. Nichols at the time of his death in the sum of $450 as principal plus interest; that on November 10, 1947, William M. Nichols loaned to Mrs. Eleanor Miller $900 in cash, and Mrs. Miller executed a written acknowledgment that she would repay the sum within a period of ten days; that on November 19, 1947, Mrs. Miller repaid to Nichols $450, leaving her still owing on said obligation a balance of $450; that on April 4, 1949, Mrs. Miller executed a promissory note, payable to Mrs. Edward L. Foster, payable 90 days from date in the amount of $2,000; that on August 25, 1949, Mrs. Edward L. Foster transferred and assigned the same note to the defendant W. Howard Miller in consideration of his payment to her of $2,000; that on August 25, 1949, W. Howard Miller transferred and assigned the same note to William M. Nichols, and the following written transfer appears on the back of the note: "For the amount of $2,000 cash and for consideration of obligation of $450 of Mrs. Eleanor Miller, I hereby transfer and assign the within note to Wm. Nichols, his heirs, this 25th day of August, 1949. The sum of $2,450 to be paid Wm. Nichols without interest on or before the 25th day of August, 1950, to redeem this note by W. Howard Miller. (Seal) W. Howard Miller /s/"; that thereafter on July 14, 1950, the defendant W. Howard Miller paid $2,000 to William M. Nichols on said promissory note; that demand has been made on the defendants for the payment of $450, but payment has been refused. By amendment the plaintiff struck Mrs. Eleanor Miller as a party defendant because no service had been effected upon her, and the case proceeded against W. Howard Miller as the sole defendant. The defendant's renewed demurrers to the petition as finally amended were sustained, and the action was dismissed. The plaintiff excepts to this judgment.
The defendant in error concedes, and we think correctly so, that the words included in the indorsement of the note constitute an obligation to pay William Nichols the sum of $2,450. The only contention the defendant in error makes is that the obligation to pay the $450 sued for is secondary and not primary, for the reason that the undertaking of W. Howard Miller was not contemporaneous with that of Mrs. Eleanor Miller and was based on a different and subsequent consideration. We do not agree with this contention. The fundamental difference between a contract of suretyship and that of guaranty is that the undertaking in the former is a primary obligation to pay the debt, and in the latter it is a secondary obligation which merely guarantees the solvency of the principal. Watkins Medical Co. v. Marbach, 20 Ga. App. 691 ( 93 S.E. 270). The undertaking in this case is a primary obligation to pay the total amount of $2,450. There is no theory on which the obligation to pay $2,000 can be separated from that to pay $450. The fact that the promisee and promisor received a consideration for the indorsement and promise is immaterial since the primary promise to pay the money is the controlling factor. Where the obligation is secondary, it will be construed to be a guaranty even if the guarantor receives no consideration other than the benefit flowing to the principal. Whitley v. Powell, 47 Ga. App. 105 (2) ( 169 S.E. 766). Where the obligation is primary, the fact that an independent consideration moved to the creditor does not preclude the contract from being that of surety. Smith v. Aultman, 30 Ga. App. 507 ( 118 S.E. 459). To render one a surety, the obligations of the parties are not required to be in the same instrument. McKibben v. Fourth National Bank of Macon, 32 Ga. App. 222 (2) ( 122 S.E. 891). The obligation of a surety may be for a previously existing obligation if there is a consideration for the execution of the instrument. McCrary v. Berry, 51 Ga. App. 947 ( 181 S.E. 814). In this case the payment of $2,000 by the creditor to the indorser was consideration for the indorser's agreement to pay the additional $450.
The court erred in holding that the contract was one of guaranty and in sustaining the demurrers to the petition and in dismissing the action.
Judgment reversed. Quillian and Nichols, JJ., concur.