Crop Prod. Servs., Inc. v. Moye

345 Ga.App. 228

812 S.E.2d 565

CROP PRODUCTION SERVICES, INC.

v.T. E. MOYE.

A17A1775

Court of Appeals of Georgia.

March 15, 2018

Roger Brent Hatcher Jr., Gainesville, Michael Andrew Strickland, for Appellant.

Robert D. Howell, Moultrie, Donald A. Sweat, Deena Plaire, Albany, for Appellee.

Branch, Judge.

Crop Production Services, Inc. ("CPS") brought suit against T. E. Moye, his daughter Mollie Squires, Mollie's husband Richard, and Gracie's Ridge, LLC, a company owned by Mollie and operated by her husband. The claims against Moye were based on his written guaranty of Gracie Ridge's account with CPS. Moye moved for partial summary judgment based on an alleged oral agreement in which CPS allegedly agreed to rescind or revoke Moye's obligations under the guaranty. The trial court granted summary judgment on that ground, and CPS appeals. Because we find an issue of fact regarding that agreement, we reverse.¹

Summary judgment is proper when there is no genuine issue of material fact and the movant is entitled to judgment as a matter of law. OCGA § 9–11–56 (c). "In reviewing a grant or denial of summary judgment, we owe no deference to the trial court's ruling and we review de novo both the evidence and the trial court's legal conclusions." GAPIII, Inc. v. Seal Indus. , 338 Ga. App. 101, 102, 789 S.E.2d 321 (2016). Moreover, we construe the evidence and all inferences and conclusions arising therefrom most favorably toward the party opposing the motion. SKC, Inc. v. EMAG Solutions , 326 Ga. App. 798, 798, 755 S.E.2d 298 (2014).

The record² shows that CPS is an agricultural products supply company that provided Gracie's Ridge, LLC, with agricultural products on account through a series of orders and deliveries. At all relevant times, Lavon Odom was the primary salesman in CPS's Arlington location responsible for the Gracie's Ridge account; he also held the title "manager" at that location for some portion of the relevant time and signed some documents as the "Branch Manager." In his role as a salesman, Odom was responsible for getting credit applications and other form documents signed by Gracie's Ridge in connection with the account. He would then submit the documents to the credit manager in CPS's area office in Tifton, which decided whether to grant credit. But according to CPS's internal rules, Odom did not have authority to grant credit to CPS's customers or to rescind or revoke a guaranty.

Moye is a college-educated farmer, former chairman of the Baker County Board of Commissioners, and former 30–year district field representative for the Georgia Farm Bureau. Moye had known and done business with Odom for twenty years, and Odom was the only CPS representative with whom Moye had any contact during the time relevant to this case. At all relevant times, Moye's daughter Molly Squires owned Gracie's Ridge and her husband operated the farming business and ordered products from CPS; other than advising Richard what to plant, Moye played no role in the company and never represented to CPS that he did. Moye did, however, sign checks on behalf of Gracie's Ridge from time to time between 2011 and 2013; he was a signator on Gracie's Ridge's bank account during that time.

Moye testified that in about April 2011, he told Odom that he "wanted to get it fixed up where we could get the children some credit started." Consequently, on April 26, 2011, Moye entered into a Guaranty Agreement (the "First Guaranty") with CPS, "[i]n consideration of and to induce [CPS] extending credit to Gracie's Ridge." In this guaranty, Moye unconditionally guaranteed payment by Gracies' Ridge for "all goods for which credit has been or is so given." The First Guaranty provides that any notice of revocation had to be submitted in writing:

This Guaranty Agreement shall continue until CPS shall receive from the undersigned, or any of the undersigned, written notice of revocation which revocation shall be effective

only as to payment of purchase price on goods ordered by purchaser [Gracie's Ridge] (or contractual duties or obligations of purchaser arising) after the receipt thereof. Any such notice of revocation by any one of the undersigned shall not affect the obligations hereunder of any other of the undersigned.

Odom signed the guaranty as a witness. Thereafter, Gracie's Ridge began placing orders with CPS.

On February 5, 2013, Moye executed a one-paragraph guaranty located on a CPS Customer Profile and Commercial Credit Agreement for Gracie's Ridge. Odom signed the document as CPS's "Branch Manager." This "Second Guaranty" provides that Moye

guarantee(s) the payment ... and assume(s) personal liability for the payment ... of all obligations due and owing CPS for products and services to Applicant(s) pursuant to this request for credit.... This guaranty is absolute, unconditional, and continuing and shall remain in effect until Applicant's (s') obligations have been paid, performed, and discharged in full .

(Emphasis supplied.) The document indicates a credit limit of $60,000. Gracie's Ridge then continued to place orders on credit with CPS. But the balance on the Gracie's Ridge account hit zero on October 4, 2013, and Gracie's Ridge did not charge on the account again until March 12, 2014.

Meanwhile, in January 2014, Moye drove to CPS's Arlington location and met with Odom. Moye averred that he stated to Odom,

Lavon, I'm quitting farming. I know that I have been working with these children these '11, '12 and '13, and I'm telling you I'm done. They are going to take the whole farming operation and I'm not going to guarantee anything that they purchase here, anything that they buy.

Moye testified that Odom replied, "I'm completely in agreement with you and I completely understand.... I agree. I understand you. I am in complete agreement with you." Moye testified that he also gave Odom a signed writing evidencing revocation of the guaranty, but no writing has been produced and CPS denies having received one.

Odom testified to the same conversation as follows:

Q. Okay. You were told that the LLC was going to take over the farming operations in 2014?

A. I was....

Q. Okay. You do recall Mr. Moye saying that he was no longer going to be involved in the farming operations, correct?

A. I do recall that....

Q. And at that time do you recall Mr. Moye telling you that he was turning the farm over to Richard and Molly or the LLC?

A. I do.

Q. Do you recall him telling you that they were on their own?

A. I do.

Q. Okay. Do you recall him telling you that he would not be liable for any of their debt?

A. Yes, I do.

Q. And what did you say in response to that statement?

A. I agreed to it.

Q. And so you told him, yes, sir, I understand or—

A. Yes, sir.

In an affidavit, however, Odom purported to clarify that by stating that he understood, he meant merely that he understood Moye did not want to be liable for the Gracie's Ridge debt.

Gracie's Ridge resumed making charges on the account on March 12, 2014, and on June 25, 2014, Gracie's Ridge executed another CPS financing form, requesting from CPS an increased credit limit of $500,000 "valid for only purchases made between 6/1/14 and 12/31/14." This document is not signed by Moye but is signed by Odom as "Branch Manager." In handwriting, there is a "Recommendation" that states, "Suggest that Husband (Richard Squires) to sign as Guarantor." But CPS did not obtain any new guaranties in connection with this June 2014 document. Between March 2014 and April 2015, Gracie's Ridge resumed ordering product and its balance on the account rose to at least $247,000 three times and peaked at $285,111.35 on April 30, 2015. During this time, some payments on the account were made by Thomas Edward Land, LLC, and Notchaway Land & Cattle, LLC, entities controlled by Moye that have no relationship with Gracie's Ridge. And during the 2014 growing season, as well as the preceding years, CPS submitted the Gracie's Ridge bills to Moye at his address; Moye then took them to Gracie's Ridge's accountant, who paid them.

Eventually, when Gracie's Ridge failed to make payments on the account, CPS asked Moye to pay the debt based on his guaranties. Moye refused and CPS later filed suit against Moye, Molly and

Richard Squires, and Gracie's Ridge. In Count 2 of the complaint,³ CPS sought to recover from Moye on the two guaranties that he signed. Moye moved for summary judgment and argued, in part, that (1) regardless whether he gave Odom a written revocation, Moye was entitled summary judgment on both guaranties because an oral agreement to revoke a guaranty is enforceable as a matter of law and Odom, an agent of CPS, agreed to revoke the guaranties; and (2) any liability under the Second Guaranty was terminated when the account balance was paid in full as of October 4, 2013. The trial court granted Moye's motion for summary judgment on Count 2, finding only that "[Moye's] defense of rescission is a complete and valid defense." CPS appeals.

1. CPS first argues that the trial court erred because under the Statute of Frauds, revocation of a guaranty must be in writing to be effective. CPS contends in the alternative that there is an issue of fact as to whether the parties had a meeting of the minds to revoke or cancel the guaranties. For the reasons that follow, we hold that a writing is not necessary where parties mutually agree to cancel an executory⁴ guaranty subject to the Statute of Frauds, but that there is an issue of fact as to whether these parties agreed to rescind the guaranty.

(a) The Statute of Frauds provides that "[a] promise to answer for the debt ... of another" must be in writing. OCGA § 13–5–30 (2) ; see also Lafarge Bldg. Materials v. Thompson , 295 Ga. 637, 639 (2), 763 S.E.2d 444 (2014) ("a personal guaranty of a debt is not enforceable unless it is in writing"). And it is well-established that "[a] contract which must, under the statute of frauds, be in writing, and which accordingly is put in writing and duly executed, cannot be subsequently modified by a parol...