Love v. BACHE & CO., INC.

253 S.E.2d 351 (1979)

40 N.C. App. 617

Dorothy H. LOVE v. BACHE & CO., INC.

No. 7826SC537.

Court of Appeals of North Carolina.

April 3, 1979.

*353 Charles T. Myers, Myers, Ray & Myers, Charlotte, for plaintiff-appellant.

Fleming, Robinson & Bradshaw by Richard A. Vinroot, Charlotte, for defendant-appellee Bache & Co., Inc.; Robert L. Holland Monroe, for defendant-appellee American Bank & Trust Co.

ARNOLD, Judge.

Summary judgment must not be granted if there exists a genuine issue of material fact. G.S. 1A-1, Rule 56(c). Plaintiff contends that the issues of material fact here are (1) whether she consented to extensions of time for payment of the secured debts, and (2) whether she agreed that the proceeds of the sale of the securities would be paid to American to satisfy the debts. Defendants contend that these issues of fact are not material, since the effect of extensions and the disposition of collateral are controlled by the terms of the Guaranty and Hypothecation Agreements.

We find defendants' position correct. The Guaranty by its terms made Love primarily liable on any indebtedness of Speedways to American, "including all renewals, extensions and modifications." The Guaranty allows for revocation by Love, but provides that such revocation shall not release Love as guarantor from liability for any debts guaranteed at the time of revocation, or renewals or extensions of the guaranteed debts, "whether such renewals or extensions are made before or after such revocation." Plaintiff's argument that her consent to renewals or extensions of guaranteed Speedways obligations was required at the time of the extension or renewal is negatived by the terms of the Guaranty itself. Thus the issue of whether she actually gave such consent is immaterial.

Likewise, the Hypothetication Agreements offered Love's named securities as collateral for "any present or future indebtedness" of Harris, "or any extension or renewal thereof," Love "hereby consenting to the extension or renewal . . . of any such indebtedness . . . and waiving any notice of any such . . . extension or renewal." No further consent by plaintiff was required. "A guarantor is bound by an agreement in the guaranty contract which permits extensions of time.. . . [A]n extension of time within the intent of the agreement does not discharge the guarantor." 38 Am.Jur.2d, Guaranty § 94 at 1100.

We also find immaterial the issue of whether plaintiff consented to the use of the sale proceeds to satisfy the Harris and Speedways debts. The Guaranty gave American a lien on "all . . . securities of the [guarantor] at any time in [American's] possession," allowing American to hold, administer and dispose of the securities as collateral. It is undisputed that American held the stocks and debenture, so they were under lien, and their disposition with regard to the Speedways debt was controlled by the Guaranty. See G.S. 25-9-201, 25-9-207(4). No consent by plaintiff was necessary. Similarly, by the Hypothecation Agreement Love agreed that the named securities (the 3200 shares of Holiday Inns and the $11,000 debenture) "shall be subject to disposition in accordance with the terms and conditions of the instruments evidencing [Harris'] indebtedness." The Harris note, in turn, gave the Bank full authority, in case of default, to sell the collateral at public or private sale and apply the proceeds to the payment of the secured liability. Thus American was clearly within its rights under the Agreement in applying the proceeds of sale to the Harris debt, and whether plaintiff consented is not a material question.

Plaintiff's argument that defendants have failed to establish that the securities which were sold had actually been pledged to secure the Harris debt does not prevail. J. W. Adams, an officer of American, in answer to plaintiff's interrogatories filed 17 November 1976, indicated that "[t]he [Hypothecation Agreements] were in connection with a loan to Ernest Harris of $25,000.00," and that the named securities "were pledged as security for said loan by the decedent."

*354 We find no merit in plaintiff's contention that Love's death somehow affected the validity of the agreements. The Guaranty explicitly states that it binds Love's "heirs, executors, legal representatives, successors and assigns." Love's liability on both the Harris and Speedways debts was already fixed at the time of his death, and a guaranty contract, as opposed to an offer of guaranty, is not revoked by the death of the guarantor. See generally 38 Am.Jur.2d, Guaranty § 69.

We have considered plaintiff's other assignments of error and we find that they are groundless. Summary judgment for defendant is

Affirmed.

MORRIS, C. J., and CLARK, J., concur.