Annotate this Case

306 S.E.2d 508 (1983)


No. 8227DC989.

Court of Appeals of North Carolina.

September 6, 1983.

*509 Peter Thompson, Charlotte, for plaintiff-appellee.

Gray & Stroud by Charles D. Gray, III, Gastonia, for defendant-appellant.

ARNOLD, Judge.

Two appellate rule violations must first be addressed before we consider the merits of this case.

The plaintiff contends that the absence of an award of attorneys' fees in the judgment should be reviewed by this Court on appeal. We disagree because timely notice of appeal was not given.

The judgment was entered on 31 March 1982 and the defendant gave notice of appeal in open court. The amended appeal entry, which stated for the first time that the plaintiff was appealing, was dated 19 April 1982.

Under Rule 3(c), N.C.Rules App.Proc. and G.S. 1-279(c), the plaintiff had 10 days to give notice of appeal after the defendant's appeal in open court. Since it did not do so, its appeal on the attorney's fees issue is not before this Court. Rule 3(c) and G.S. 1-279(c) are jurisdictional. Giannitrapani v. Duke Univ., 30 N.C.App. 667, 228 S.E.2d 46 (1976).

Although the defendant failed to list the relevant exceptions and assignments of error after his issue in his brief as Rule 28(b)(5) suggests, his exception is not abandoned because he did note them properly in the record. See Rule 10(b)(1) and (c). We now turn to the substantive issue presented by this case.

This case presents the following question: when a creditor cancels a note on which the guarantor is liable for the debts of a principal and issues a new note to the same principal and an additional principal as partners and individually without disbursing any new funds and without notifying the guarantor of the new note or addition of a principal, is the guarantor liable for payment on the new note?

The RESTATEMENT OF SECURITY (1941) [hereinafter Restatement] provides guidance in resolving this case. Section 128 states in part:

*510 Where, without the surety's consent, the principal and the creditor modify their contract otherwise than by extension of time of payment (a) the surety, other than a compensated surety, is discharged unless the modification is of a sort that can only be beneficial to the surety....

It should first be noted that the defendant is not a compensated surety. That designation contemplates "a person who engages in the business of executing surety contracts for a compensation called a premium, which is determined by a computation of risks on an actuarial basis." Restatement Section 82, comment i.

But the defendant was not discharged when the plaintiff modified its contract with the principal because the modification could only benefit the surety. The October note that was substituted for the cancelled May note reduced the debt of the principals by almost $1,000.

In addition, a second principal was added on the October note, which gave the plaintiff another person to look to for payment of the debt before looking to the defendant. These changes could only benefit the defendant. See Restatement § 128 comment e and illustration 6 to that comment.

We also note the principle that construction of a contract like the guaranty agreement in this case is a matter of law for the courts when the language is plain and unambiguous. Gillespie v. DeWitt, 53 N.C. App. 252, 266, 280 S.E.2d 736, 746, disc. rev. denied, 304 N.C. 390, 285 S.E.2d 832 (1981). Contracts of surety are interpreted by general contract rules of construction. Restatement § 88.

With this principle in mind, we note the statement in the guaranty that the defendant enters the agreement "in order to induce FUNB, from time to time; in its sole discretion, to extend or continue credit ... and enter into various contractual relationships with Customer [the principal]...." The defendant also waived any notice "of entering into and engaging in business transactions and/or contractual relationships and any other dealings between Customer and FUNB...." These provisions illustrate that the guaranty agreement was not meant only to cover the May note.


WEBB and BRASWELL, JJ., concur.

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