First National Bank of Columbus, Plaintiff-appellant, v. Shelby Drummond, Defendant-appellee, 642 F.2d 181 (5th Cir. 1980)

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US Court of Appeals for the Fifth Circuit - 642 F.2d 181 (5th Cir. 1980)

Unit A

April 10, 1981.

David T. Cobb, Paul S. Minor, Biloxi, Miss., for plaintiff-appellant.

F. Gerald Maples, Pascagoula, Miss., for defendant-appellee.

Appeal from the United States District Court for the Southern District of Mississippi.

Before INGRAHAM, POLITZ and WILLIAMS, Circuit Judges.


The appeal in this diversity jurisdiction case presents an important issue of Mississippi law particularly appropriate for state resolution. We defer decision in the cause and certify the issue to the Supreme Court of Mississippi pursuant to its Rule 46, adopted August 1, 1980.




It appears to the United States Court of Appeals for the Fifth Circuit that this case involves a question of the law of the State of Mississippi which is determinative of an essential threshold issue for which we find no clear, controlling precedent in the decisions of the Supreme Court of Mississippi. We accordingly certify the questions of law infra, to the Supreme Court of Mississippi, requesting an answer based on the facts as recited.

1. Style of the Case.

The case in which this certificate is issued is entitled First National Bank of Columbus, Plaintiff-Appellant, v. Shelby Drummond, Defendant-Appellee, number 80-3402 on the docket of the United States Court of Appeals for the Fifth Circuit and is an appeal from the United States District Court for the Southern District of Mississippi.

2. Statement of the Case.

On or about November 4, 1975, Shelby Drummond executed an instrument in favor of the First National Bank of Columbus, Georgia (the Bank), wherein he agreed to guaranteed payment of any loan, within a stated limit, which the Bank extended to J. C. H. Restaurants, Inc. D/B/A Brer Rabbit's. A copy of the instrument is attached as Exhibit "A."

On or about January 19, 1977, the Bank loaned J. C. H. Restaurants, Inc., the sum of $151,760 pursuant to an installment promissory note, a copy of which is attached as Exhibit "B."

Some payments were made after which J. C. H. Restaurants, Inc., defaulted and the collateral securing the loan was liquidated. A foreclosure sale was held on September 30, 1977. After applying the proceeds of the sale, there remained a net principal balance deficit of approximately $40,000.

The Bank was unsuccessful in its amicable demands for payment directed to J. C. H. Restaurants, Inc., and Shelby Drummond and it filed suit in federal district court on December 17, 1979. Jurisdiction was based on diversity of citizenship of the parties, the plaintiff bank being a national banking corporation with its office and place of business in Columbus, Georgia, and defendant being a citizen of the State of Mississippi. Attaching copies of Exhibits "A" and "B" the Bank sought judgment for $39,587.86 plus interest from September 30, 1977, attorney's fees and costs.

Shelby Drummond filed a Motion for Summary Judgment contending that the one year statute of limitations contained in Mississippi Code Anno., Section 15-1-23 (1972) controlled in this cause and that the action was barred because it was filed more than one year after the foreclosure proceding. The district court agreed that Section 15-1-23 applied and held that the instant complaint was barred. The Bank's petition was dismissed with prejudice and it now appeals contending that the proper provision of Mississippi law to be applied in this instance is Section 15-1-49 (1972) which establishes a six year period of limitations for the filing of this suit.

Section 15-1-23 provides:

In all cases, no suit or action shall hereafter be commenced or brought upon any installment note, or series of notes of three or more, whether due or not, where said note or notes are secured by mortgage, deed of trust, or otherwise, upon any property, real or personal, unless the same is commenced or brought within one year from the date of the foreclosure or sale of the property pledged as security for said note or notes.

Section 15-1-49 provides:

All actions for which no other period of limitation is prescribed shall be commenced within six years next after the cause of such action accrued, and not after.

3. Questions to be Certified.

Which period of limitations applies to the instant fact situation, the one year period established by Section 15-1-23 (1972) or the six year period established by Section 15-1-49 (1972) of the Mississippi Code Annotated? Is some other period of limitations applicable? Was the complaint by the Bank timely filed?

The entire record in this case, together with copies of the briefs of the parties, are transmitted herewith.




Muscogee COUNTY

In consideration of the sum of Five Dollars ($5.00) and other valuable considerations, as well as for the purpose of seeking to induce THE FIRST NATIONAL BANK OF COLUMBUS, GEORGIA, to extend credit to J.C.H. Restaurants, INC. D/B/A Brer Rabbit's

(hereinafter termed the "principal") or to renew or extend in whole or in part, loans or discounts already contracted by said principal, the undersigned (hereinafter termed the "guarantor") does hereby guarantee to said Bank and to its endorsers, transferees, successors or assigns, of either this guaranty or any of the obligations secured thereby, the prompt payment according to their terms of all obligations of the principal to the Bank of any kind or character, and does agree that if they, or any of them, are not so paid by the principal, the guarantor will immediately do so.

The obligations covered by this guaranty shall include all obligations of the principal to the Bank now existing or hereafter coming into existence and of renewals or extensions in whole or in part, of any of the obligations before described, together with all damages, losses, costs, interest, charges, expenses and liabilities of every kind, nature and description suffered or incurred by the Bank, arising in any manner out of or in any way connected with, or growing out of said indebtedness or liabilities of the principal to the Bank.

The liability of the guarantor hereunder is limited to the principal sum of Two Hundred Fourty Thousand and 00/100 ($240,000.00) Dollars.

This is a continuing guaranty and shall remain in force until a written notice revoking it has been received by the Bank; but such revocation shall not release the guarantor from its guaranty of all obligations of the principal (as hereinbefore defined) then in existence, or from any renewals or extensions thereof, in whole or in part.

The undersigned hereby consent and agree that the Bank may at any time, either with or without consideration, surrender any property or other security of any kind or nature whatsoever held by it or by any person, firm or corporation on its behalf or for its account securing any indebtedness of liability covered by this guaranty or substitute any collateral so held by it for other collateral or like kind or of any kind without notice to or further consent from the undersigned and such surrender or substitution shall not in any way affect the liability of the undersigned hereunder.

Where the obligation hereby guaranteed is an obligation of a corporation, this guaranty is to cover all obligations to said Bank purporting to be made in behalf of such corporation by any officer or agent of said corporation without regard to the actual authority of such officer or agent. The term corporation shall include associations of all kinds and all purported corporations whether correctly and legally chartered and organized or not.

At the option of the Bank this may be treated as a guaranty or as a suretyship, with the right to proceed against the guarantor without first proceeding against the principal.

The guarantor hereby waives notice of acceptance of this guaranty or of the creation or extension or renewal of any obligation of the principal to which it relates, or of any default by the principal. Guarantor agrees that no act or omission on the part of the Bank shall in any way affect or impair this guaranty. The guarantor hereby waives the right to require the holder of the obligation guaranteed to take action against the principal as provided for in Section 103-205 of the 1933 Georgia Code.

Where the guarantor is a natural person this agreement binds his heirs, administrators and executors, and where a corporation, its successors and assigns. Where signed by more than one guarantor, the singular term "guarantor" shall include the plural, and their obligation shall be joint and several.

This guaranty is made subject to all the terms, conditions, agreements or stipulations contained in the notes evidencing the obligations hereby guaranteed, and said guarantor further agrees that the terms, conditions and provisions of any notes which may be executed by the principal to evidence obligations in the future incurred, shall simultaneously with the execution of such notes, become a part of this guaranty, said guarantor hereby ratifying and confirming the agreements contained in said notes, both as to him or itself and any and all collateral in the possession of said Bank or which may hereafter, during the life of this guaranty, come into its possession securing either this obligation or any other obligation.

The undersigned and each of them waive and renounce each for himself and family any and all homestead or exemption rights either of us may have under or by virtue of the constitution or laws of Georgia, any other State or the United States, as against the liability and obligation hereby created; and do hereby jointly and severally transfer, convey and assign to the Bank or holder hereof a sufficient amount of any homestead or exemption as may be set apart in bankruptcy to pay this obligation in full, with all costs of collection; and each of the undersigned hereby directs the trustee in bankruptcy having possession of such homestead or exemption to deliver to the Bank a sufficient amount of property or money so set apart as exempt to pay the obligation hereby created.