Builders Dev. Corp. v. Hughes Supply Inc.

The debtor company's president and sole shareholder was personally liable for the entire $50,000 debt owed to the plaintiff, because he signed an unlimited guarantee and allowed the plaintiff to advance funds in excess of the debtor's $15,000 credit limit.

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Builders Development Corporation applied for credit from Hughes Supply, Inc. P. R. Wood, the president and sole shareholder of Builders Development, signed a Continuing Personal Guaranty, in which he agreed to be personally responsible to Hughes Supply for all purchases made by Builders Development. Over the course of the next several months, Builders Development became indebted to Hughes Supply for more than $50,000. When the debt went unpaid, Hughes Supply sued Builders Development and P. R. Wood as guarantor of the debt. After a bench trial, the court granted judgment to Hughes Supply, finding that Builders Development and Wood are jointly and severally liable for the debt. Wood and Builders Development filed a joint appeal from that judgment, though the arguments raised on appeal only relate to Wood’s liability and not to Builders Development’s liability.

Citing OCGA § 10-7-22, Wood maintains his obligation was discharged because Hughes Supply committed an act that increased his risk. The act with which Wood finds fault is Hughes Supply’s extension of credit to Builders Development in an amount exceeding the requested $15,000 credit limit. He argues that since any change in the terms of the agreement results in the discharge of the guarantor, Hughes Supply’s extension of credit beyond the amount requested in the credit application extinguished his liability. Under the facts presented here, we must disagree.

Builders Dev. Corp. v. Hughes Supply Inc.

The debtor company's president and sole shareholder was personally liable for the entire $50,000 debt owed to the plaintiff, because he signed an unlimited guarantee and allowed the plaintiff to advance funds in excess of the debtor's $15,000 credit limit.

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