Stillwater Enterprises, Inc. v. Hanson Pipe & Precast, LLC

Citations: 324 Ga. App. 582; 751 S.E.2d 193; 2013 Fulton County D. Rep. 3591; 2013 WL 5951961; 2013 Ga. App. LEXIS 888Docket: A13A1316

Court: Court of Appeals of Georgia; November 8, 2013; Georgia; State Appellate Court

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A guarantor appeals a summary judgment favoring a seller/creditor, arguing that he should have received notice of the buyer's credit approval before the guaranty became binding. Summary judgment is appropriate when there are no material facts in dispute and the movant is entitled to judgment as a matter of law. This appeal is reviewed de novo, favoring the nonmovant's perspective. The case involves Stillwater Enterprises, Inc. applying for credit with Hanson Pipe Precast, LLC, which required a signed 'Credit Application Purchase Agreement.' The agreement included a 'Guaranty' section where the guarantor, Frank Steinhauer, agreed to personally guarantee payment for Stillwater's account. The agreement specified that credit would not be extended without the assumption of liability and that the obligation would persist until terminated in writing. Although Hanson approved Stillwater's credit application and notified the company, Steinhauer claims he did not receive personal notification of this approval or the credit amount. Despite this, he does not dispute that Stillwater ordered and accepted goods from Hanson. Stillwater failed to pay for these goods between January and August 2009, leading to the current legal dispute.

Hanson sought payment of a liquidated amount from Stillwater and Steinhauer, who refused to pay. Following Hanson's lawsuit and cross-motions for summary judgment, the trial court ruled in favor of Hanson, granting the liquidated claim along with interest and attorney fees. Steinhauer argued that the guaranty could not be enforced because the Purchase Agreement was contingent upon Hanson's decision to extend credit to Stillwater, and he claimed Hanson failed to provide proper notice of this credit extension to him. 

The legal issue centers on whether Hanson was required to inform Steinhauer directly of the credit approval for the guaranty to be binding. The Purchase Agreement, which was unsigned by Hanson, only became effective once Hanson notified Stillwater of the credit approval on March 31, 2006. Relevant case law distinguishes between offers to guaranty at a future time, which require notice of acceptance, and absolute present guaranties, which do not. The interpretation of the guaranty’s terms and the circumstances surrounding it may dictate whether notice is necessary. Ambiguities in the guaranty will not typically be construed to relieve the guarantor of obligations without clear intent in the contract.

Court precedents indicate varying requirements for notice based on specific contractual language and considerations. In cases where the guarantor receives consideration through the extension of credit or delivery of goods, notice of acceptance has been deemed unnecessary. Consequently, the resolution hinges on the interpretation of the guaranty and the surrounding circumstances at the time of its execution.

Debt was established as a fixed amount, with the guaranty activated upon the forbearance to sue. Notice of acceptance of the guaranty is unnecessary when it is made at the request of the creditor, as shown in precedents. Steinhauer's guaranty was deemed an absolute present guaranty, evidenced by several factors: he was required to execute the guaranty on Hanson’s form as part of Stillwater’s credit application, demonstrating Hanson's insistence on the guaranty before proceeding; the guaranty indicated Steinhauer’s financial interest in Stillwater, providing him with consideration; and the terms specified that Hanson would not extend credit to Stillwater without the guaranty, making it a prerequisite. The guaranty stipulated that it would remain effective until terminated in writing, implying it became operative upon signing. Thus, no notification to the guarantor was required, as the extension of credit itself constituted acceptance of the guaranty. Notifications were sent to Stillwater confirming the credit approval, allowing Steinhauer, as president, to ascertain that credit had been extended. The court affirmed the summary judgment in favor of Hanson, concluding that Steinhauer's arguments lacked merit. Only Steinhauer filed briefs for the appeal, while Stillwater appeared to have abandoned its appeal.