Spencer Oil Co. v. Welborn , 20 N.C. App. 681 ( 1974 )

BROCK, Chief Judge.

It appears to us that the findings of fact by the trial judge do not support his conclusion “that the plaintiff has shown no right to recover against the defendant, Ruth Welborn.”

The trial court found from competent evidence the following facts, among others:

“ (8) That thereafter defendant, Austin Welborn, returned to plaintiff with the bond and guaranty agreement signed by himself and his wife, . . . and delivered said bond and guaranty agreement, along with the contract to plaintiff.”

“(7) ‘ . . . [T]hat defendant, Ruth Welborn, never at any time informed plaintiff that she never authorized delivery of said bond and guaranty agreement to plaintiff, nor that her signature on the document was with the understanding that Burén Andrews and his wife would sign the agreement, and if they refused to sign the agreement, she did not intend that the instrument be delivered to plaintiff; that all times in question, Austin Welborn and wife, Ruth Welborn were husband and wife and lived together.’ ”

“(11) ... Mr. Spencer had seen the signature of Mrs. Austin Welborn and Austin Welborn on the bond and guaranty, and on the reliance that the instrument was executed by her he continued to provide credit and continued the lease arrangement for the defendant Austin Welborn.”

The evidence discloses that defendant Ruth Welborn was at the filling station almost every day; that defendant Austin Welborn referred plaintiff to defendant Ruth Welborn to talk about how much could be paid on his account and when it could be paid; that plaintiff at times would negotiate with defendant Ruth Welborn pertaining to the account of defendant Austin Welborn; that defendant Ruth Welborn kept the checkbooks, made deposits, kept up with the money, and knew how much and when she could make payments.

The defendant Ruth Welborn testified that she knew that in order for defendant Austin Welborn to continue doing business with plaintiff, and to continue obtaining goods, gas and supplies for his business from plaintiff, she had to sign the guaranty agreement.

The findings by the trial court that defendant Ruth Wel-born never authorized delivery of the guaranty agreement to plaintiff, and signed only on condition that Mr. and Mrs. Andrews signed, do not relieve her of liability. She placed the guaranty agreement within the possession of defendant Austin Welborn, the principal debtor, with restrictions and conditions which were not communicated to the creditor. Plaintiff creditor did not have actual or constructive notice of the restrictions and conditions, and extended credit in reliance upon the signature of defendant Ruth Welborn. “ . . . [I]f the creditor did not participate therein or have knowledge thereof, recovery by him is not defeated by the fact that the debtor induced the guarantor to execute the contract by false representations or other misconduct.” 38 Am. Jur. 2d, Guaranty, § 58, p. 1061.

It is questionable whether the testimony of defendant Ruth Welborn concerning restrictions and conditions on the delivery and use of the guaranty agreement was admissible over objection. The answer of defendant Ruth Welborn to the amended complaint is a general denial. It seems that where a party intends to rely upon the failure of the occurrence of a necessary condition, it should be specially pleaded in the answer. See G.S. 1A-1, Rule 9 (c).

In our opinion, the evidence and the facts found require a conclusion that defendant Ruth Welborn is liable on the guaranty agreement, and that judgment should be entered against both defendants on the guaranty agreement.

The findings of fact are fully supported by the evidence and will not be disturbed.

That portion of the judgment which concludes “that the plaintiff has shown no right to recover against the defendant, Ruth Welborn” is reversed.

The complaint, as amended, specifically seeks recovery from defendants, jointly and severally, on their guaranty agreement. Although plaintiff alleged that defendants were indebted in the sum of $14,996.20 (the full amount of the account owed by defendant Austin Welborn), the guaranty agreement was for an amount not to exceed $10,000.00. Therefore, entry of judgment against Austin Welborn for more than the guaranty agreement sued upon was error. That portion of the judgment which allows recovery against defendant Austin Welborn in the sum of $14,996.20 plus interest and attorney fees is reversed.

The cause will be remanded to the District Court for entry of judgment against Austin Welborn and Ruth Welborn in accordance with the terms of the guaranty agreement.

Reversed in part and remanded.

Judges Moréis and Carson concur.