Editor's notes.

- In Houston Gen. Ins. Co. v. Brock Constr. Co., 241 Ga. 460, 246 S.E.2d 316 (1978), this section was held not to apply to compensated sureties. However, Ga. L. 1981, p. 870, § 1, amended § 10-7-1 so as to abolish the distinction between contracts of suretyship and guaranty. Balboa Ins. Co. v. A.J. Kellos Constr. Co., 247 Ga. 393, 276 S.E.2d 599 (1981). See the editor's note under §§ 10-7-1 and10-7-24.

Section codifies general rule.

- This section is a codification of the general rule. Timmons v. Butler, Stevens & Co., 138 Ga. 69, 74 S.E. 784 (1912); Johnson v. Longley, 142 Ga. 814, 83 S.E. 952 (1914), later appeal, 22 Ga. App. 96, 95 S.E. 315 (1918).

Section is of judicial origin, being merely the adoption and incorporation into the Code by legislative approval of the principles previously asserted in Brown v. Executors of Riggins, 3 Ga. 405 (1847), and Jones v. Whitehead, 4 Ga. 397 (1848). Cloud v. Scarborough, 3 Ga. App. 7, 59 S.E. 202 (1907).

Common law.

- Rule stated in this section is a correct statement of the common law applicable to compensated sureties. Houston Gen. Ins. Co. v. Brock Constr. Co., 241 Ga. 460, 246 S.E.2d 316 (1978); Balboa Ins. Co. v. A.J. Kellos Constr. Co., 247 Ga. 393, 276 S.E.2d 599 (1981).

While O.C.G.A. § 10-7-22 does not apply to compensated sureties, the rule stated therein is a correct statement of common law applicable to compensated sureties. West Cash & Carry Bldg. Materials of Savannah, Inc. v. Liberty Mtg. Corp., 160 Ga. App. 323, 287 S.E.2d 320 (1981).

Uniform Commercial Code provides for discharge of parties on instruments.

- Former Code 1933, § 103-203 was superseded by former Code 1933, § 14-902. Former § 14-902 was, in turn, repealed by Ga. L. 1962, p. 156. The law governing discharge of sureties and other parties on instruments is currently governed by the Uniform Commercial Code provisions. Christian v. Atlanta Army Depot Fed. Credit Union, 151 Ga. App. 403, 260 S.E.2d 533 (1979).

Law governing the discharge of parties from liability on instruments may be found in present O.C.G.A. § 11-3-601. Westwood Place, Ltd. v. Green, 153 Ga. App. 595, 266 S.E.2d 242, aff'd in part, rev'd in part on other grounds, 246 Ga. 287, 271 S.E.2d 194 (1980).

Not applicable to liability of debtor to guarantor.

- O.C.G.A. §§ 10-7-22 and11-3-606 address liability of a guarantor to a creditor, not the liability of a debtor to the debtor's guarantor, and did not apply to the release of a guarantor's principal from liability on a note. Fabian v. Dykes, 214 Ga. App. 792, 449 S.E.2d 305 (1994).

Holder of collateral may not split debt.

- When a debtor to secure a debt deposits more than one piece of property, whether personal or real, as security in gross for an entire debt, the amount of which is definitely fixed in the contract, it is not within the power of the holder of such collateral, whether the holder is the original creditor or a transferee, to split the debt so as to make it the liability of two persons instead of one, and to be paid in full as to a portion of the original amount with a provision that it shall still retain vigor as to the other debtor. Loftis v. Clay, 164 Ga. 845, 139 S.E. 668 (1927).

Contract of guaranty not broken by shipments not confirmed by guarantor.

- Contract guaranteeing a trade account, which says that "this guarantee does not limit the amount of credit extended the said party, but my liability hereunder is not to exceed $2000.00 at any one time," and "no shipments are to be made except on orders confirmed by me," means that the guarantor will not be liable for any shipment not confirmed by the guarantor, nor for more than $2000.00 at any one time, but that the vendor may extend credit in addition to the amounts guaranteed, and consequently the contract was not broken by the vendor shipping some goods to the vendee without the confirmation of the guarantor. Brown Shoe Co. v. Moore, 53 Ga. App. 159, 184 S.E. 923 (1936).

Both principal and surety discharged by verdict against surety only.

- When the principal and the principal's surety on a promissory note, which is joint and several on its face, are sued in the same action, and verdict and judgment are taken against the surety only, both the principal and the surety are discharged. Fricks v. Rome Mercantile Co., 49 Ga. App. 431, 175 S.E. 807 (1934).

Guarantor consented to the additional risk.

- Sole shareholder of the corporation consented to the additional risk created by the extension of credit beyond $15,000, when the personal guaranty language provided that the guarantor's liability under the guaranty was to be "UNLIMITED", and that the guaranty remained in full force and effect until the guarantor gave written notice to the seller to make no further advances on the security of the guaranty. Builders Dev. Corp. v. Hughes Supply, Inc., 242 Ga. App. 244, 529 S.E.2d 388 (2000).

Risk of guarantor not increased.

- Trial court did not err in granting a payee's motion for summary judgment in the payee's action against a maker and a guarantor to collect on a promissory note and to enforce a guaranty because the payee established that there was no issue of material fact as to the defense that its actions in promising to refinance the loan or to extend a line of credit increased the guarantor's risk under the guaranty; a lender's failure to lend additional sums to a principal did not discharge a guarantor from liability for the amount that was actually advanced by the lender. Ga. Invs. Int'l, Inc. v. Branch Banking & Trust Co., 305 Ga. App. 673, 700 S.E.2d 662 (2010).

Instruction proper.

- As there was evidence to support a charge on waiver of a guarantor's right to be discharged by an increase of risk or a novation, and it was not an improper statement of the law, there was no cause to grant the guarantor's motion for a new trial. Fletcher v. C. W. Matthews Contr. Co., 322 Ga. App. 751, 746 S.E.2d 230 (2013).

Waiver of defense clear.

- Trial court properly held a guarantor liable on a promissory note because the construction of the guaranty was a matter of law for the court and the language employed by the parties in the guaranty was plain, unambiguous, and capable of only one reasonable interpretation and the discharge of the surety by increase of risk under O.C.G.A. § 10-7-22 was a legal defense which the plain language of the guaranty waived. Hanna v. First Citizens Bank & Trust Co., Inc., 323 Ga. App. 321, 744 S.E.2d 894 (2013).

After a restaurant operator stopped making rent payments and the plaintiff sued the defendant for rent payments, re-letting costs, accrued interest, and attorneys' fees under a guaranty agreement, it was not error to hold that the defendant waived its defenses to liability pursuant to the terms of the guaranty agreement. ND Props. v. BLRG Rest. Grp., Inc., 649 Fed. Appx. 861 (11th Cir. 2016)(Unpublished).

Cited in Richardson v. Allen, 74 Ga. 719 (1885); Citizens' & S. Bank v. Lewis, 159 Ga. 551, 126 S.E. 392 (1925); Crandall v. Shepard, 166 Ga. 889, 144 S.E. 772 (1928); Short v. Jordan, 39 Ga. App. 45, 146 S.E. 31 (1928); Bulloch Mtg. Loan Co. v. Jones, 63 Ga. App. 55, 10 S.E.2d 88 (1940); Duggan v. Jelks, 67 Ga. App. 571, 21 S.E.2d 282 (1942); Palmes v. Southern Mechanical Co., 117 Ga. App. 672, 161 S.E.2d 413 (1968); Liberty Nat'l Bank & Trust Co. v. Interstate Motel Developers, Inc., 346 F. Supp. 888 (S.D. Ga. 1972); Southland Inv. Corp. v. McIntosh, 137 Ga. App. 216, 223 S.E.2d 257 (1976); Ricks v. United States, 434 F. Supp. 1262 (S.D. Ga. 1976); Crider v. First Nat'l Bank, 144 Ga. App. 536, 241 S.E.2d 638 (1978); DeKalb County Bank v. Haldi, 146 Ga. App. 257, 246 S.E.2d 116 (1978); Hart v. DeLowe Partners, Ltd., 147 Ga. App. 715, 250 S.E.2d 169 (1978); United States v. Fulton Distillery, Inc., 571 F.2d 923 (5th Cir. 1978); Sanders v. Fulton Nat'l Bank, 148 Ga. App. 684, 252 S.E.2d 189 (1979); Williams v. First Bank & Trust Co., 154 Ga. App. 879, 269 S.E.2d 923 (1980); Union Commerce Leasing Corp. v. Beef 'N Burgundy, Inc., 155 Ga. App. 257, 270 S.E.2d 696 (1980); Crutchfield v. Trust Co. Bank, 157 Ga. App. 557, 278 S.E.2d 138 (1981); Walter E. Heller & Co. v. Aetna Bus. Credit, Inc., 158 Ga. App. 249, 280 S.E.2d 144 (1981); Bobbitt v. Firestone Tire & Rubber Co., 158 Ga. App. 580, 281 S.E.2d 324 (1981); Deep S. Servs., Inc. v. Wade, 248 Ga. 80, 281 S.E.2d 561 (1981); Holcombe v. Eng, 163 Ga. App. 343, 294 S.E.2d 568 (1982); White v. Phillips, 679 F.2d 373 (5th Cir. 1982); Rice v. Georgia R.R. Bank & Trust Co., 183 Ga. App. 302, 358 S.E.2d 882 (1987); Bank of Loganville v. Lisle, 187 Ga. App. 763, 371 S.E.2d 215 (1988); Panasonic Indus. Co. v. Hall, 197 Ga. App. 860, 399 S.E.2d 733 (1990); Regan v. United States Small Bus. Admin., 926 F.2d 1078 (11th Cir. 1991); Greenwald v. Columbus Bank & Trust Co., 228 Ga. App. 527, 492 S.E.2d 248 (1997); Shah v. Taco Del Sur, Inc., 257 Ga. App. 224, 570 S.E.2d 654 (2002); Jaycee Atlanta Dev., LLC v. Providence Bank, 330 Ga. App. 322, 765 S.E.2d 536 (2014).

"Creditor" whose acts relieve is opposite party.

- Acts of "the creditor," the opposite party, are those that relieve. Perkins v. Terrell, 1 Ga. App. 250, 58 S.E. 133 (1907).

Acts enumerated are disjunctive.

- Acts which may effect the discharge of the surety are divided into three distinct classes, not necessarily related to or affecting each other; and proof of any coming within one class will discharge the surety. Kenney v. Armour Fertilizer Works, 33 Ga. App. 126, 126 S.E. 284 (1924), rev'd on other grounds, 161 Ga. 477, 131 S.E. 281, later appeal, 34 Ga. App. 820, 131 S.E. 915 (1926).

Use of the disjunctive "or" shows that injury to the surety or loss is not the only thing which will discharge the surety. It may be loss, or increase of risk, or exposure to greater liability. Any one of these three, according to the words of this section, will discharge the surety. Kenney v. Armour Fertilizer Works, 33 Ga. App. 126, 126 S.E. 284 (1924), rev'd on other grounds, 161 Ga. 477, 131 S.E. 281, later appeal, 34 Ga. App. 820, 131 S.E. 915 (1926).

This section lays down three acts on the part of a creditor which will release a surety: (1) injury to the surety; (2) increasing the risk to the surety; and (3) exposing the surety to greater liability; any one of these three acts will discharge a surety. W.T. Rawleigh Co. v. Kelly, 78 Ga. App. 10, 50 S.E.2d 113 (1948).

Injury necessarily involves something in past.

- Distinction between the first ground of discharge under this section and the other two is apparent because the injury naturally refers to something in the past from which the injury resulted. Cloud v. Scarborough, 3 Ga. App. 7, 59 S.E. 202 (1907).

Acts of creditor causing injury or increased risk.

- Any breach of a contract between a principal debtor and the creditor, made at the time of the making of a loan to the principal debtor, which results in loss or increase of risk to sureties discharges the sureties. Seaboard Loan Corp. v. McCall, 61 Ga. App. 752, 7 S.E.2d 318 (1940).

Surety is discharged by any act of the creditor which injures the surety or increases the surety's risk. Brunswick Nursing & Convalescent Ctr., Inc. v. Great Am. Ins. Co., 308 F. Supp. 297 (S.D. Ga. 1970).

Any novation without the consent of the surety, or increase in risk, discharges the surety. Dunlap v. Citizens & S. DeKalb Bank, 134 Ga. App. 893, 216 S.E.2d 651 (1975).

Unconsented increase in risk is an independent ground for discharge of a surety. Upshaw v. First State Bank, 244 Ga. 433, 260 S.E.2d 483 (1979).

Consent by guarantor in advance to changes.

- Landlord's failure to pursue the landlord's legal remedies as soon as the law allowed and the landlord's refusal to accept the tenant's insufficient rent payments after bringing an eviction action did not affect a guarantor's liability under a lease guaranty; in any event, the guaranty gave the landlord the authority to change the amount, time, or manner of payment of rent and to amend, modify, change, or supplement the lease, and thus, the guarantor consented in advance to changes in the lease. Hood v. Peck, 269 Ga. App. 249, 603 S.E.2d 756 (2004).

Alleged guarantor was not discharged from the obligations of a personal guarantee under O.C.G.A. §§ 10-7-21 and10-7-22 because, although a subsequent agreement changed the terms of the original guaranty by granting an extension of time regarding the terms of purchase from a company and acted as a novation, the alleged guarantor consented to those changes and, thus, an additional risk. Staten v. Beaulieu Group, LLC, 278 Ga. App. 179, 628 S.E.2d 614 (2006).

Trial court did not err in ruling that a promissory note modification was simply a modification of certain terms of the original note instead of a novation that substantially increased a guarantor's personal liability under the guaranty and, therefore, discharged the guarantor because there was no merit to the guarantor's contention that, at the time the guarantor executed the note modification, such modification contemporaneously increased the guarantor's contractual obligations to the creditors; given the unambiguous language of the guaranty, no issue of fact existed as to whether the guarantor was discharged by any increased risk or a purported novation because the guarantor voluntarily and explicitly agreed in advance to the modification of the original note. Core LaVista, LLC v. Cumming, 308 Ga. App. 791, 709 S.E.2d 336 (2011).

Exposure to greater liability.

- Surety may be discharged when the creditor has so acted as to increase the surety's risk or expose the surety to greater liability than that for which the surety contracted. Parker v. Fidelity Bank, 151 Ga. App. 733, 261 S.E.2d 465 (1979).

Change must be material.

- Surety will not be discharged from the contract unless the change or alteration in the contract is material. Brunswick Nursing & Convalescent Ctr., Inc. v. Great Am. Ins. Co., 308 F. Supp. 297 (S.D. Ga. 1970).

Compensated surety is discharged only if the change is material and causes some injury, loss, or prejudice to it. Brock Constr. Co. v. Houston Gen. Ins. Co., 144 Ga. App. 860, 243 S.E.2d 83, aff'd, 241 Ga. 460, 246 S.E.2d 316 (1978).

Loss need not be shown.

- In a contract of suretyship, it is not essential, in order to prove a release, that the surety allege or prove a loss. W.T. Rawleigh Co. v. Kelly, 78 Ga. App. 10, 50 S.E.2d 113 (1948).

Surety is discharged from the terms of the contract even though the surety is not injured by the contract change. Brunswick Nursing & Convalescent Ctr., Inc. v. Great Am. Ins. Co., 308 F. Supp. 297 (S.D. Ga. 1970).

Some acts discharge in whole and some in part only.

- While the language of this section is broad, yet there is a distinction between certain things which will operate to discharge a surety in whole and others which will only discharge a surety in part. Johnson v. Longley, 142 Ga. 814, 83 S.E. 952 (1914), later appeal, 22 Ga. App. 96, 95 S.E. 315 (1918).

Collateral injury discharges pro tanto.

- If a surety suffers injury arising collaterally and not affecting the contract itself, the discharge is only to the extent of the loss or injury, and, if that is not as great as the liability of the surety, then pro tanto. Armour Fertilizer Works v. Kenney, 161 Ga. 477, 131 S.E. 281, later appeal, 34 Ga. App. 820, 131 S.E. 915 (1926); Alropa Corp. v. Snyder, 182 Ga. 305, 185 S.E. 352 (1936).

Discharge pro tanto despite increased risk.

- If the plaintiff sought to recover against the surety on a replevy bond and if, after the bond was executed and the plaintiff obtained a verdict and judgment in the plaintiff's favor establishing a lien upon the cotton (subject of the replevy bond and plaintiff's previous suit in trover), the plaintiff took possession of the cotton, the surety was not discharged from the entire indebtedness but was discharged only in the amount of the value of the cotton, even though this act of the plaintiff may have increased the risk of the surety. Trice v. Cabero, 41 Ga. App. 816, 155 S.E. 54 (1930).

Act of creditor affecting contract itself.

- Principle regarding a release pro tanto has no relevancy when the act of the creditor affected the contract itself. Alropa Corp. v. Snyder, 182 Ga. 305, 185 S.E. 352 (1936).

Accommodation party must show payee knew payee was surety.

- Promissory note signed by two persons as apparent principal makers, reciting, "We promise to pay," etc., when there is nothing to indicate that they are not principal makers, is prima facie a joint note; however, it may be shown by parol, in an action by the payee, that one of the persons so signing the note as an apparent maker was in truth a surety for the other signer, rather than a coprincipal, and when the one thus claiming suretyship claims a discharge or release by reason of some act increasing one's risk as surety, one must go further and show that the payee knew one was a surety at the time of the act in question. Benson v. Henning, 50 Ga. App. 492, 178 S.E. 406 (1935).

Act damaging surety's heirs held not to increase surety's risk.

- Although the plaintiff creditor, through the plaintiff's agent, may have induced the other heirs at law of the intestate surety to purchase the share of the principal debtor, also an heir at law, in the estate of the intestate, and pay the plaintiff therefor, the agent's actions could not have operated to increase the risk of the surety on the note, although it may have resulted in damage to the other heirs at law who had purchased such share. Stephens v. Stone, 46 Ga. App. 293, 167 S.E. 545 (1932).

Act or omission authorized by law does not discharge surety.

- Neither the omission by the creditor of some act not specially enjoined by law nor the commission of some act expressly authorized by law which tends to increase the risk of the security will operate as a discharge. Stewart v. Barrow, 55 Ga. 664 (1876).

Consent may be given in advance to act which otherwise would discharge surety.

- Surety or guarantor may consent in advance to a course of conduct which would otherwise result in the surety's discharge. Dunlap v. Citizens & S. DeKalb Bank, 134 Ga. App. 893, 216 S.E.2d 651 (1975).

When the language of a guaranty specifically contemplated an increase in the obligor's debt and the creation of new obligations, and included waivers of any "legal or equitable discharge" and of any defense based upon an increase in risk, the protections of O.C.G.A. §§ 10-7-21 and10-7-22 were waived. Underwood v. NationsBanc Real Estate Serv., Inc., 221 Ga. App. 351, 471 S.E.2d 291 (1996).

By assenting in advance to a waiver of all legal and equitable defenses, the guarantor was foreclosed from asserting that the guarantor was discharged under O.C.G.A. § 10-7-21 or O.C.G.A. § 10-7-22. Ramirez v. Golden, 223 Ga. App. 610, 478 S.E.2d 430 (1996).

Contract giving additional security does not discharge surety.

- When a second contract simply gave the seller additional security for the payment of the debt, was not inconsistent with the first contract, and did not increase the risk of the surety, the second contract was not a novation of the first within the meaning of former Code 1933, § 103-202 and did not release the surety under either § 103-202 or former Code 1933, § 103-203. W.T. Raleigh Co. v. Overstreet, 71 Ga. App. 873, 32 S.E.2d 574 (1944).

Extension of additional credit.

- Lender's extension of additional credit to the principal obligor did not affect the guarantor's liability under the guaranty since the amount sought by the lender from the guarantor did not exceed the limit in the note secured by the guaranty. Evans v. Merrill Lynch Bus. Fin. Servs., Inc., 213 Ga. App. 808, 446 S.E.2d 215 (1994).

Creditor's nonaction will not discharge surety unless collateral lost, consideration paid, or notice given.

- Mere nonaction by the creditor will not release the surety, unless such nonaction made unproductive some collateral surety or was based upon a consideration paid by the principal debtor to the creditor, or the creditor was notified under former Code 1933, § 103-205 to collect the debt. Lumsden v. Leonard, 55 Ga. 374 (1876); Jordan v. F & M Bank, 5 Ga. App. 244, 62 S.E. 1024 (1908); Chapman v. Miller, 40 Ga. App. 138, 149 S.E. 70 (1929).

Some positive act must be done by the creditor, either before or after judgment, which injures the surety in some way; mere failure or negligence on the part of the creditor will not relieve the surety; the exceptions to this general rule will be found to be where the creditor omits to do something by which some collateral security in the creditor's hands is made unproductive or when the creditor is notified under former Civil Code 1910, § 3546 (see now O.C.G.A. § 10-7-24) to proceed and the creditor fails or refuses. McMillan v. Heard Nat'l Bank, 19 Ga. App. 148, 91 S.E. 235 (1917).

Creditor's loan extensions.

- Because creditor bank's loan extensions increased guarantor's risk of exposure to greater liability due to the marked diminution of the resale value of collateralled stock, guarantor's obligation was accordingly discharged under O.C.G.A. § 10-7-22. Cantrell v. First Tenn. Nat'l Bank Ass'n, 207 Ga. App. 458, 428 S.E.2d 368 (1993).

Surety not discharged by failure to apply judicial sale proceeds to senior execution.

- That the plaintiff in the senior execution, after obtaining in the justice's court a judgment on the first bond, did not seek to have the proceeds of the sale of the property under the junior execution applied to the senior execution or object to the application of such proceeds to the junior execution would not afford a sufficient reason for discharging the surety on the trial of an appeal entered to the judgment rendered against the surety and the surety's principal in the magistrate's court. Reese v. Worsham & Co., 110 Ga. 449, 35 S.E. 680, 78 Am. St. R. 109 (1900).

Failure of creditor to prosecute claim against surety's estate.

- Since the plaintiff creditor failed to apprise the heirs at law of the deceased surety of the fact that the plaintiff held an unpaid note, and to prosecute the claim against the then unrepresented estate, even though the plaintiff may have known that pending such delay the personal property of the intestate had been turned over to the principal debtor and was being wasted by the debtor, the plaintiff's actions amounted to mere inaction on the plaintiff's part and were not such a positive act causing injury to the surety as would operate as a release. Stephens v. Stone, 46 Ga. App. 293, 167 S.E. 545 (1932).

No provision of law requires that a surety be notified of the principal debtor's default. Barnett v. Leasing Int'l, Inc., 151 Ga. App. 715, 261 S.E.2d 452 (1979).

Failing to give notice of default will not discharge surety.

- When a contract for a future sale of goods is signed by the prospective vendor as creditor and the prospective purchaser as principal debtor and by sureties for such purchaser, whereby the obligation of continuing suretyship is imposed upon the sureties, guaranteeing payment for goods which the contract provides shall be furnished from time to time by the prospective vendor to the prospective purchaser, and the contract provides for weekly settlements for the goods furnished under the contract, but does not require that notice of any default in weekly payments shall be given by the creditor to the sureties, the securities are not released from liability to the creditor, or confined to the first weekly default, although such sureties are given no notice by the creditor of the original default and are unaware thereof. Georgian Co. v. Jones, 154 Ga. 762, 115 S.E. 490, answer conformed to, 29 Ga. App. 410, 116 S.E. 65 (1923).

Failure to keep the collateral security insured amounts to an increase in risk which will discharge the surety to the extent that the surety is injured thereby. Evans v. American Nat'l Bank & Trust Co., 116 Ga. App. 468, 157 S.E.2d 816 (1967).

Failure of the bank, knowing the purchaser's insolvency, either to obtain insurance at the purchaser's expense or to notify the surety of the cancellation materially increased the risk and, to the extent of the insurance involved, discharged the surety from liability. Evans v. American Nat'l Bank & Trust Co., 116 Ga. App. 468, 157 S.E.2d 816 (1967).

Breach of agreement to procure life insurance discharges damaged surety.

- Even if an agreement by the creditor to procure insurance on the life of the maker of a note was an agreement subsequent to the making and endorsing of the note and could be classified as a collateral agreement so as to bring the agreement without the rule that a surety is discharged by a breach thereof, the principle that a surety would be discharged to the extent of actual damage would apply, and in such case the damage would be sufficient to discharge the obligation. Seaboard Loan Corp. v. McCall, 61 Ga. App. 752, 7 S.E.2d 318 (1940).

Allowing life insurance not made condition of contract to lapse.

- When life insurance policy was allowed to lapse and the guarantor by not being informed in no manner increased the guarantor's risk, neither guarantor nor the makers having made the fact of life insurance a condition of the contract, the surety may not be discharged. Parker v. Fidelity Bank, 151 Ga. App. 733, 261 S.E.2d 465 (1979).

Change in terms of payment to contractor discharges surety.

- Change by the obligee and principal in the terms of payments to the contractor from that provided in the building contract operates to discharge the surety. Brunswick Nursing & Convalescent Ctr., Inc. v. Great Am. Ins. Co., 308 F. Supp. 297 (S.D. Ga. 1970).

Contractor's failure to pay subcontractor does not discharge subcontractor's surety.

- Main contractor's breach of the contractor's contract with the subcontractor to pay the subcontractor for materials used in construction of the hospital was not such an increase of the risk of the surety on the subcontractor's bond, which was conditioned in part to pay all persons having contracts directly with the subcontractor for materials, as to discharge the surety. Fidelity & Deposit Co. v. Pittman ex rel. Georgia Marble Co., 52 Ga. App. 394, 183 S.E. 572 (1936).

Principal's misrepresentations increasing risk are defense to surety.

- Misrepresentations as to the shape and quality of the land by principal, inducing surety to sign a note and materially increasing the risk, constitute a good defense. Satterfield v. Spier, 114 Ga. 127, 39 S.E. 930 (1901).

If a false representation of an existing fact to the effect that a person had signed as surety to a contract induced another to sign as surety, such misrepresentation increased the risk and exposed to greater liability the person who signed by reason of such false representation, and it is not necessary to prove loss to avoid the contract. W.T. Rawleigh Co. v. Kelly, 78 Ga. App. 10, 50 S.E.2d 113 (1948).

Allegation to the effect that a surety was induced to sign by a false representation that a surety whose name appeared as such had already signed the contract of suretyship is not an effort to vary the terms of a written contract. W.T. Rawleigh Co. v. Kelly, 78 Ga. App. 10, 50 S.E.2d 113 (1948).

Substitution of a promissory note for an original account indebtedness, with the inclusion in the note of an extended time for payment, a higher face amount reflecting accrued interest, and a provision authorizing the recovery of attorney fees in the event of collection by an attorney, did not result in either a novation of the contract nor an increased risk and did not discharge the guarantors of the prior guaranty agreement from liability. Columbia Nitrogen Corp. v. Mason, 171 Ga. App. 685, 320 S.E.2d 838 (1984).

Foreclosure of mortgage.

- Creditor had every right under the creditor's first and second preferred ship mortgages to bring an in rem foreclosure action against a fishing vessel, the subject of the loan proceeds. When it did so, there was no ground for discharge under O.C.G.A. § 10-7-22, even though the act allegedly increased the guarantors' risk. United States v. Blue Dolphin Assocs., 620 F. Supp. 463 (S.D. Ga. 1985).

Increased rate of interest.

- Comaker of the third series of renewal notes was discharged following subsequent renewals at an increased rate of interest, since the provisions of the note did not cover subsequent modifications of the interest rate and the comaker had not signed the subsequent notes. Bank of Terrell v. Webb, 177 Ga. App. 715, 341 S.E.2d 258 (1986).

No discharge of debt due to bad faith or fraud.

- See Delta Diversified, Inc. v. Citizens & S. Nat'l Bank, 171 Ga. App. 625, 320 S.E.2d 767 (1984).

When the arrangement for the use of a pledged savings account did not deviate from the terms of the subject note as agreed to by the plaintiffs, no issue concerning the discharge defenses remained for jury determination, warranting summary judgment. Cohen v. Northside Bank & Trust Co., 207 Ga. App. 536, 428 S.E.2d 354 (1993).

No evidence of increased risk meant no discharge of surety.

- Given that the broad language of a guaranty obligated the guarantor to the bank, absolutely and unconditionally guaranteeing the payment and performance of each and every debt that the debtor would owe, and because no issue of fact existed as to whether the guarantor was discharged by any increased risk or any purported novation, the guarantor remained obligated under the guaranty to the bank. Fielbon Dev. Co. v. Colony Bank, 290 Ga. App. 847, 660 S.E.2d 801 (2008).

Guarantor argued that a bank's settlements with two other guarantors increased the guarantor's risk, discharging the guarantor under O.C.G.A. § 10-7-22; however, the language of the guaranty unconditionally obligated the guarantor individually to pay the entire amount of the borrower's indebtedness, and the language permitted the bank to enter into settlements with the others. Wooden v. Synovus Bank, 323 Ga. App. 794, 748 S.E.2d 275 (2013).

No material breach as surety not exposed to greater liability.

- Creditor did not commit a material breach of a guaranty by not providing monthly billings to the surety as the surety was not exposed to greater liability under O.C.G.A. § 10-7-22 as the guaranty capped the surety's liability at $30,000. General Steel, Inc. v. Delta Bldg. Sys., 297 Ga. App. 136, 676 S.E.2d 451 (2009).

Loss of collateral discharges surety to extent of injury.

- When a creditor has control of liens, securities, or any other means whereby a creditor might satisfy the debt and parts with them, or by the creditor's negligence allows them to become lost or depreciated in value, thus cutting off the surety from the surety's right to be subrogated to such liens, etc., the surety is discharged to the extent of the surety's injury by the loss of such liens. Stewart v. Barrow, 55 Ga. 664 (1876); Poullain v. Brown, 80 Ga. 27, 5 S.E. 107 (1888), later appeal, 82 Ga. 412, 7 S.E. 1131 (1889); Lewis v. Armstrong, 80 Ga. 402, 7 S.E. 114 (1888).

Failure to record lien in time.

- Failure of a creditor to preserve a lien which the creditor had on property of the principal debtor discharges a surety. For instance, where a creditor failed to record a mortgage within the time prescribed, it was held to operate as a discharge of the surety. Stevens v. Zachary, 27 Ga. 427 (1859); Atlanta Nat'l Bank v. Douglass, 51 Ga. 205, 21 Am. R. 234 (1874); Bledsoe v. Ivey, 27 Ga. App. 235, 107 S.E. 615 (1921); Seymour v. Bank of Thomasville, 157 Ga. 99, 121 S.E. 578 (1923), answer conformed to, 31 Ga. App. 602, 121 S.E. 579 (1924).

When the defendant has signed the note as surety, and this fact was known to the plaintiffs when plaintiffs accepted the note, the failure of the plaintiffs to record the retention of title contract within the time required by law did not discharge the surety. La Boon v. Wright & Locklin, 42 Ga. App. 275, 155 S.E. 770 (1930).

Filing claim in bankruptcy on judgment without reserving lien.

- Under former Code 1873, §§ 2153 and 2154 (see now O.C.G.A. §§ 10-7-21 and10-7-22), proof of debt in the bankruptcy court by the judgment creditor against the principal without an express reservation of the lien of the judgment will discharge the lien of the judgment, and the accommodation endorser or surety is discharged, but only to the extent of the injury received. Jones v. Hawkins, 60 Ga. 52 (1878) (no damage shown and surety counsel for principal in bankruptcy proceedings).

Having execution returned without levy.

- If, when the execution is issued, it becomes a valid lien on property of the principal without any levy being made, and such lien is lost in consequence of the return of the execution without a levy by procurement of the creditor, and the surety is thereby injured, the surety is discharged pro tanto. This is in accord with justice and common sense and is within the spirit, if not the very letter, of this section. Griffeth v. Moss & Co., 94 Ga. 199, 21 S.E. 463 (1894).

Failing to enter judgment after verdict.

- When a plaintiff, at a given term of the court, took a verdict against a principal and sureties but failed for several terms to enter a judgment thereon, the sureties were discharged. Hayes v. Little, 52 Ga. 555 (1874); Hall v. Pratt, 103 Ga. 255, 29 S.E. 764 (1898).

Releasing notes taken as collateral.

- When, in a suit on a note against two defendants as apparent joint makers, one of the defendants had signed the note as surety only, which fact was known to the plaintiff, the note sued on was a balance of a larger note, at the time of making the original note there was delivered to the plaintiff bank by the principal, as collateral security, described notes aggregating an amount in excess of the amount of the note sued on, and the plaintiff bank released the collateral notes to the principal without the knowledge or consent of the defendant surety, who did not know that the plaintiff bank had released the collateral notes when the defendant signed the renewal note sued on, by reason of these facts the defendant surety has been injured and the defendant's risk increased so that the defendant is discharged from all liability on the note sued on. Kennedy v. Farmers' & Merchants' Bank, 47 Ga. App. 104, 169 S.E. 769 (1933).

Failing to enter judgment after default.

- An accommodation endorser of a promissory note, sued jointly with the maker thereof, was not discharged merely because the plaintiff, after an entry of "default" had been made upon the judge's docket, permitted one or more terms to elapse before entering up a final judgment in the case. Hall v. Pratt, 103 Ga. 255, 29 S.E. 764 (1898).

Failing to issue execution.

- In the absence of notice to proceed, the surety is not discharged by failure to issue execution on a judgment obtained against the principal. Crawford v. Gaulden, 33 Ga. 173 (1862); Hall v. Langford, 18 Ga. App. 73, 88 S.E. 918 (1916).

Failing to docket execution in time.

- Omission to enter execution on general docket in ten days did not effect discharge of surety. Williams v. Kennedy, 134 Ga. 339, 67 S.E. 821 (1910).

Failing to proceed against collateral.

- Right of a payee of a note to resort to the sureties thereon is not lost because of the payee's failure to sell personal property held as collateral immediately on the maturity of the note. Timmons v. Butler, Stevens & Co., 138 Ga. 69, 74 S.E. 784 (1912).

Mere failure of the payee of a note, who is the holder thereof, to institute suit to recover on the note against one of the sureties thereon, before the expiration of the period of limitation in which suit must be brought against this surety, does not amount to a release by the payee of the obligation to him of a cosurety on the note whose obligation is not barred by the statute of limitations, when the payee's act in refraining from instituting the suit as indicated was not procured by or consented or agreed to by the latter surety. Scott v. Gaulding, 187 Ga. 751, 2 S.E.2d 69, later appeal, 160 Ga. App. 306, 3 S.E.2d 766 (1939).

When no agreement to condition the surety's obligation upon the creditor's enforcement of security is found, the courts have not conditioned the creditor's right of recovery from the surety on the creditor's first using any security the creditor may have to satisfy or reduce the creditor's claim. Trust Inv. & Dev. Co. v. First Ga. Bank, 238 Ga. 309, 232 S.E.2d 828 (1977).

Mere failure of a creditor to proceed against collateral will not operate to discharge a surety. Pippin v. Brigadier Indus. Corp., 150 Ga. App. 401, 258 S.E.2d 18 (1979).

Accepting payment from principal voidable in bankruptcy.

- By virtue of this section, the mere fact that the holder of a note in good faith accepts payment thereof from the maker at a time when the maker is insolvent, so that such payment is voidable in the event of the maker's bankruptcy and is thereafter actually voided by the trustee or voluntarily surrendered to the trustee by the holder, will not discharge the note or release a surety thereon. Higdon v. Bell, 25 Ga. App. 54, 102 S.E. 546 (1920) (See 11 U.S.C. § 547(b)).

Dismissing levy discharges surety.

- If the fi. fa. was levied upon the property of the principal defendant and the levy dismissed by the creditor, whereby injury resulted to the surety, it is just that such act inure to the surety's discharge. Brown v. Executors of Riggins, 3 Ga. 405 (1847); Rawson v. Gregory, 59 Ga. 733 (1887).

Dismissal of levy on realty.

- The dismissal of a levy on the real property of the principal cannot hurt or discharge the surety, for the lien of the judgment on the property being realty cannot be removed, and the lien of the judgment is one to which the surety becomes entitled the moment the surety pays the debt. Wyley v. Stanford, 22 Ga. 385 (1857); Manry v. Shepperd, 57 Ga. 68 (1876).

Placing property out of reach discharges surety pro tanto.

- Removal of principal's property outside the county and beyond reach of judgment by the plaintiffs in fi. fa. discharges the surety to the extent of the property removed. Dasher v. Brannen & Bro., 29 Ga. App. 253, 116 S.E. 206 (1922).

Joint debtors have a right of contribution which may be enforced like that of cosureties, and if the creditor so acted as to place the property of one of the joint debtors beyond the reach of the other, the creditor would be responsible to the latter for the injury done by such wrongful diversion; and this injury may be set up in a claim case, as a discharge, at least to the extent of the damage done, as well as by an action for damages. Green v. Mann, 76 Ga. 246 (1886).

Removal by principal when creditor receives no consideration.

- Removal of personal property from one county in the state to another by the principal judgment debtor will not discharge the surety, though permitted by the plaintiff without action on the plaintiff's part and without the surety's consent, and though the property would be sufficient to satisfy the fi. fa., no consideration being paid to the plaintiff-creditor by the principal debtor. Lumsden v. Leonard, 55 Ga. 374 (1876).

Delivery of property awarded to trustee does not discharge sureties.

- When in an equity cause between the remaindermen and the trustee certain property was awarded to the latter and it was not sought to hold the trustee responsible therefor, the delivery of such property to the trustee did not work a discharge to the sureties, and an allegation to that effect was properly stricken. Haddock v. Perham, 70 Ga. 572 (1883).

When a creditor transferred possession of some collateral to a codebtor, and express language of a guaranty agreement prevented the surety from subrogation until the creditor received full payment of all liabilities, the surety could not be discharged on the claim that the surety's rights to subrogation had been impaired. In re Broomfield, 35 Bankr. 459 (Bankr. N.D. Ga. 1983).

Failure to sue does not discharge surety.

- A mere failure to sue on a bond, required by the court to stay the collection of a judgment, as soon as the law allows or the negligence of the obligee to prosecute with vigor the obligee's legal remedies, unless for a consideration, will not release the surety. Harris v. Woodward, 142 Ga. 297, 82 S.E. 902 (1914).

Forbearance towards principal.

- When indulgence was granted to the acceptors in consideration of the payment of 18 percent interest and the acceptors became insolvent, the security was thereby released. Parmelee v. Williams, 72 Ga. 42 (1883).

If the consequence of forbearance is injury to the surety, the surety is discharged. Brown v. Executors of Riggins, 3 Ga. 405 (1847).

Mere forbearance towards the principal does not discharge the surety. Hall v. Langford, 18 Ga. App. 73, 88 S.E. 918 (1916); McMillan v. Heard Nat'l Bank, 19 Ga. App. 148, 91 S.E. 235 (1917); Hearn v. Durrence, 33 Ga. App. 296, 125 S.E. 794 (1924).

Failure to sue for consideration releases the surety. Camp v. Howell, 37 Ga. 312 (1867) (new note for usurious portion of interest given and paid in part).

When subsequent to the sale by a borrower of the property securing its loan evidenced by a note and the assumption of the indebtedness by the purchaser, which assumption was consented to by the holder of the note, the latter grants a six-month extension to the purchaser with the knowledge, consent, or ratification of either of the signers of the note in consideration of the purchaser paying (apparently after maturity) $500.00 on the note and thereafter 6 percent calculated upon the original amount of the note rather than 8 percent as specified in the note, on the balance, the alleged contract between the holder and the subsequent purchaser, not being supported by a consideration, would not be binding on the holder, and the signers, who, it is alleged had become sureties under the agreement, would not be released. Guaranty Mtg. Co. v. National Life Ins. Co., 55 Ga. App. 104, 189 S.E. 603 (1936), aff'd, 184 Ga. 644, 192 S.E. 298 (1937).

Extension of time for definite period.

- If the defendant is in fact a surety only and the payee, under a valid agreement with the principal and without the consent of the surety, extends the time of maturity as fixed by the obligation, a release of the defendant will result; but in order to discharge a surety by an extension of time granted to the principal, not only must there be an agreement for the extension, but the indulgence must be for a definite period fixed by a valid agreement. Duckett v. Martin, 23 Ga. App. 630, 99 S.E. 151 (1919); Benson v. Henning, 50 Ga. App. 492, 178 S.E. 406 (1935); Guaranty Mtg. Co. v. National Life Ins. Co., 55 Ga. App. 104, 189 S.E. 603 (1936), aff'd, 184 Ga. 644, 192 S.E. 298 (1937).

Surety's reliance on promise to proceed against principal.

- Mere promise by the holder of a promissory note, made to a surety thereon without consideration, to the effect that the creditor would proceed forthwith against the principal debtor, standing alone, would be a nudum pactum and would have no effect upon the obligation of the surety. If, however, the surety is induced by such an assurance to forego any means of indemnity or protection, an estoppel will arise to the extent of the resulting loss, and the surety will be discharged to that extent. Johnson v. Longley, 142 Ga. 814, 83 S.E. 952 (1914), later appeal, 22 Ga. App. 96, 95 S.E. 315 (1918).

Agreeing to increase in interest, with note for increase.

- When the holder of a promissory note on which the interest was 7 percent, without the assent of the surety, agreed with the principal to wait 12 months in consideration of the promise of 16 percent interest and for the 9 percent usurious interest took a new note with security, a portion of which usurious note was paid, and the time was given accordingly, the surety to the original note was discharged. Camp v. Howell, 37 Ga. 312 (1867).

Debtor's promise to pay required interest during forbearance is not consideration.

- Promise by the principal debtor to pay interest upon the debt during the time of forbearance forms no consideration for such forbearance when the debtor is already bound to pay such interest. Harrell v. Kutz & Co., 22 Ga. App. 235, 95 S.E. 717 (1918).

Extension of time by mortgagee.

- When the mortgagee has in fact assented to an assumption by the grantee to pay the mortgage and thus has recognized the relation of principal and surety between such a mortgagor and the grantee, a new agreement made by the mortgagee with the grantee who purchased the property and assumed the debt, extending the time of payment of the debt, if valid and made on a sufficient consideration, will discharge the original mortgagor from personal liability, unless the extension agreement is made with the consent of the mortgagor; but such an implied promise of suretyship with the incident rights of a surety to discharge does not arise when a purchase is made merely subject to the outstanding lien of a mortgage. Nelson v. National Life & Accident Ins. Co., 51 Ga. App. 684, 181 S.E. 202 (1935).

When A purchased land subject to a mortgage which A assumed and later sold the land to B under a like assumption; B sold the land to C, who did not assume; thereafter the mortgagee, at the request of C, extended the maturity of the mortgage and of a portion of the debt, without the knowledge or consent of A, it was held that if the mortgagee had knowledge of the new relationships, the grant of the extension operated to release A from liability. Alropa Corp. v. Snyder, 182 Ga. 305, 185 S.E. 352 (1936).

Whene B conveys lands to C in consideration of the assumption by C of the obligation due to A, the relationship between B and C is that of principal and surety, but so far as A is concerned, such relationship between B and C is not effective as to A unless A assents to and accepts it; but after such assent by A, an extension of time of payment granted to C without the knowledge or consent of B releases B from B's obligation to A. Federal Land Bank v. Conger, 55 Ga. App. 11, 189 S.E. 567 (1936).

Extension of time not shown.

- When whether or not the defendant was a principal, endorser, or surety, there was no showing that the plaintiff entered an agreement with the principal, without the consent of the alleged surety, to extend the time of maturity as fixed by the obligation so as to release the surety, no issue of fact was created and the trial court did not err in granting a partial summary judgment in that there was no discharge of defendant's liability by any novation or increase of the risk. Barnett v. Leasing Int'l, Inc., 151 Ga. App. 715, 261 S.E.2d 452 (1979).

Surety to pay judgment not discharged although judgment becomes dormant.

- If a principal and surety executed a bond required by the court to stay the collection of a judgment, conditioned to pay that judgment in a certain contingency, in a suit brought thereon, seven years after the happening of such contingency, it is no defense to the surety that the judgment may have become dormant in the meantime. Harris v. Woodard, 142 Ga. 297, 82 S.E. 902 (1914).

If no relationship of principal and surety exists between B and C, the voluntary assumption by C of the debt owed by B to A does not make C the principal so far as A is concerned, nor does an extension of time granted to C release B from B's liability to A. Federal Land Bank v. Conger, 55 Ga. App. 11, 189 S.E. 567 (1936).

Refusal to sue after notice by surety.

- See § 10-7-24 and notes thereto.

Consideration for forbearance or notice to sue must be alleged.

- Defense that the plaintiff was guilty of laches, in that the plaintiff did not bring suit earlier and thereby increased the risk of the surety, was properly stricken because there was no allegation that there was a consideration for the postponement nor an averment that the security had given a written notice to sue. Baumgartner v. McKinnon, 10 Ga. App. 219, 73 S.E. 519 (1912).

Surety not released by failure to prove debt in bankruptcy.

- As this section provides nonaction or failure to sue will not release a surety, the failure or refusal of the creditor to prove the creditor's debt in bankruptcy against the principal debtor will not discharge the surety. Jordan v. F & M Bank, 5 Ga. App. 244, 62 S.E. 1024 (1908); Higdon v. Bell, 25 Ga. App. 54, 102 S.E. 546 (1920).

Surety on appeal bond is discharged by dismissal of suit.

- Risk of a surety on an appeal bond is increased and the surety is therefore discharged when the suit is dismissed by the creditor or by the court at the creditor's instance. Armstrong v. Lewis, 61 Ga. 680 (1878), later appeal, 64 Ga. 645 (1880).

Dismissal of suit as to cosurety discharges other.

- Dismissal as to one surety of a suit already brought, for a consideration paid by the surety, and not bringing any further action against the surety, constituted such conduct as released the other surety on the administrator's bond. Wilkinson v. Conley, 133 Ga. 518, 66 S.E. 372 (1909).

Surety is not discharged by dismissal as to principal.

- When a joint action is brought against the principal and the surety on a joint and several promissory note, and the plaintiff, by amendment, voluntarily dismisses the plaintiff's action against the principal, the surety is not thereby ipso facto discharged from liability. McMillan v. Heard Nat'l Bank, 19 Ga. App. 148, 91 S.E. 235 (1917).

When a joint action is brought against a principal and a surety and the plaintiff by amendment voluntarily dismisses the plaintiff's action against the principal, the surety is not thereby ipso facto discharged from liability. Griffin v. H.C. Whitmer Co., 57 Ga. App. 203, 194 S.E. 895 (1938).

Effect of failure to give notice of principal's default.

- Unless the creditor or trustee grants an indulgence based upon a consideration paid by a warehouseman or unless the bond specifies that immediate notice of any known breach by the warehouseman be given, failure of the Commissioner of Agriculture as trustee for the obligees to give such notice will not release the surety. 1967 Op. Att'y Gen. No. 67-423.

Am. Jur. 2d.

- 74 Am. Jur. 2d, Suretyship, § 33 et seq.

C.J.S.

- 72 C.J.S., Principal and Surety, §§ 107, 113.

ALR.

- Agreement by principal to pay compound or additional interest, as releasing surety, 2 A.L.R. 1569.

Consenting to continuance or extension of time in action as releasing surety, 7 A.L.R. 376.

Release of payee from warranty constituting a part of the consideration for a note as releasing a surety, 7 A.L.R. 1605.

Acceptance of interest in advance as consideration for, or evidence of, an extension of time which will release a guarantor, surety, or endorser, 59 A.L.R. 988.

Guaranty of commercial credit of dealer as affected by latter's change of location or field of operation, 89 A.L.R. 651.

Lessee as surety for rent after assignment, and effect of lessor's dealings (other than consent to assignment or mere acceptance of rent from assignee) to release lessee, 99 A.L.R. 1238.

Guaranty as covering renewals, after revocation, of claims within coverage at time of revocation, 100 A.L.R. 1236.

Effect of silence of surety or endorser after knowledge or notice of facts relied upon as releasing him, 101 A.L.R. 1310.

Failure of accommodation maker or endorser to disaffirm transaction, or his continued recognition of note after learning of its use for purpose other than intended, as ratification, or estoppel to assert, the diversion, 105 A.L.R. 437.

Construction and application of provision of guaranty or surety contract against release or discharge of guarantor by extension of time or alteration of contract, 117 A.L.R. 964.

Payments or advancements to building contractor by obligee as affecting rights as between obligee and surety on contractor's bond, 127 A.L.R. 10.

Creditor's reservation of rights against surety in releasing or extending time to principal debtor, 139 A.L.R. 85.

Discharge of accommodation maker or surety by release of mortgage or other security given for note, 2 A.L.R.2d 260.

Right to join principal debtor and guarantor as parties defendant, 53 A.L.R.2d 522.

Extension of net credit in excess of specified amount as discharging or releasing guarantor, 57 A.L.R.2d 1209.

Guarantor of nonnegotiable obligation as released by creditor's acceptance of debtor's note or other paper payable at an extended date, 74 A.L.R.2d 734.

Change in name, location, composition, or structure of obligor commercial enterprise subsequent to execution of guaranty or surety agreement as affecting liability of guarantor or surety to the obligee, 69 A.L.R.3d 567.