Editor's notes.

- In Balboa Ins. Co. v. A.J. Kellos Constr. Co., 247 Ga. 393, 276 S.E.2d 599 (1981), it was held that this section applied to compensated sureties. However, Ga. L. 1981, p. 870, § 1, amends O.C.G.A. § 10-7-1 so as to abolish the distinction between contracts of suretyship and guaranty. See the Editor's note to § 10-7-1.

Section is in derogation of common law and strictly construed.

- This section was made in derogation of the common-law rule upon this subject and introduced a new principle of commercial law. It operates as a restriction upon the rights of the holder and should be strictly construed. Howard v. Brown, 3 Ga. 523 (1847).

The discharge under this section is statutory, and a strict compliance with the requirements of this section by one claiming benefit under the statute is mandatory. Glasser v. Decatur Lumber & Supply Co., 95 Ga. App. 665, 99 S.E.2d 330 (1957).

Section affects remedy only.

- This section does not affect either the nature, obligation, construction, or validity of the contract, but goes only to the remedy. Sally v. Bank of Union, 150 Ga. 281, 103 S.E. 460, answers conformed to, 25 Ga. App. 509, 103 S.E. 798 (1920); Overstreet v. W.T. Rawleigh Co., 75 Ga. App. 483, 43 S.E.2d 774 (1947); Fricks v. J.R. Watkins Co., 88 Ga. App. 276, 76 S.E.2d 518, rev'd on other grounds, 210 Ga. 83, 78 S.E.2d 2 (1953).

Section is like limitation of actions.

- This section operates as the extinguishment of a remedy, and not of a right, and is therefore in the nature of a limitation of actions. Vanzant, Jones & Co. v. Arnold, Hamilton & Johnson, 31 Ga. 210 (1860); Sally v. Bank of Union, 150 Ga. 281, 103 S.E. 460, answers conformed to, 25 Ga. App. 509, 103 S.E. 798 (1920); Overstreet v. W.T. Rawleigh Co., 75 Ga. App. 483, 43 S.E.2d 774 (1947); Fricks v. J.R. Watkins Co., 88 Ga. App. 276, 76 S.E.2d 518, rev'd on other grounds, 210 Ga. 83, 78 S.E.2d 2 (1953); Hearn v. Citizens & S. Nat'l Bank, 154 Ga. App. 686, 269 S.E.2d 486 (1980).

Any conflict between this section and the UCC would be controlled by the UCC as the later expression of the legislature. Gunter v. True, 203 Ga. App. 330, 416 S.E.2d 768, cert. denied, 203 Ga. App. 906, 416 S.E.2d 768 (1992).

Compensated as well as uncompensated sureties are governed by the provisions of O.C.G.A. § 10-7-24. Morrison Assurance Co. v. Preston Carroll Co., 254 Ga. 608, 331 S.E.2d 520 (1985), cert. denied, 474 U.S. 1060, 106 S. Ct. 805, 88 L. Ed. 2d 781 (1986).

Purpose of section.

- Object of this section was for the benefit and protection of securities. Bank of St. Marys v. Mumford & Tyson, 6 Ga. 44 (1849).

Essential purpose of O.C.G.A. § 10-7-24 is to accord sureties a mechanism to compel creditors to sue the principal debtor upon accrual of the creditor's cause of action. A.J. Kellos Constr. Co. v. Balboa Ins. Co., 661 F.2d 402 (5th Cir. 1981).

Statutory bonds.

- This section has no reference to statutory bonds, such as a forthcoming bond, taken in the progress of a judicial proceeding. Hobbs v. Taylor, 11 Ga. App. 579, 75 S.E. 906 (1912), later appeal, 13 Ga. App. 451, 79 S.E. 356 (1913).

Guaranty agreements under UCC.

- O.C.G.A. § 10-7-24 does not apply to guaranty agreements governed by the UCC. Gunter v. True, 203 Ga. App. 330, 416 S.E.2d 768, cert. denied, 203 Ga. App. 906, 416 S.E.2d 768 (1992).

Section applicable to guarantor.

- A guarantor has the same right as a surety by written notice to compel the institution of a suit against the principal under this section. Fields v. Willis, 123 Ga. 272, 51 S.E. 280 (1905), later appeal, 132 Ga. 242, 63 S.E. 828 (1909).

Contracts executed in another state.

- This section is applicable to a case when the contract sued on in Georgia was executed in another state. Watkins Co. v. Seawright, 168 Ga. 750, 149 S.E. 45 (1929), answer conformed to, 40 Ga. App. 314, 149 S.E. 389 (1929).

Nonresident principal.

- Fact that the residence of the principal was in another state, and was so stated in the notice, would not, under the terms of this section or the statutes from which it is condensed, preclude the sureties from the benefit thereof, the principal being in fact within the jurisdiction of the court. Fricks v. J.R. Watkins Co., 88 Ga. App. 276, 76 S.E.2d 518, rev'd on other grounds, 210 Ga. 83, 78 S.E.2d 2 (1953).

Discharge of an endorser for which provision is made in this section is not applicable when the principal in the promissory note resides outside this state. Glasser v. Decatur Lumber & Supply Co., 95 Ga. App. 665, 99 S.E.2d 330 (1957).

When it appears that the corporate maker of a note is a foreign corporation, an endorser of the note is not discharged if the creditor, on request, neglects to proceed against the principal, in the absence of an offer of indemnity to the holder against the consequences, risk, delay, or expenses. Glasser v. Decatur Lumber & Supply Co., 95 Ga. App. 665, 99 S.E.2d 330 (1957).

Cited in McMullan v. Community Acceptance Corp., 78 Ga. App. 616, 51 S.E.2d 575 (1949); Kennedy v. Thruway Serv. City, Inc., 133 Ga. App. 858, 212 S.E.2d 492 (1975); Central Bank & Trust Co. v. Price, 136 Ga. App. 302, 221 S.E.2d 71 (1975); Trust Inv. & Dev. Co. v. First Ga. Bank, 238 Ga. 309, 232 S.E.2d 828 (1977); Noland Co. v. Commercial Ins. Co., 141 Ga. App. 285, 233 S.E.2d 259 (1977); American Druggist Ins. Co. v. Georgia Power Co., 145 Ga. App. 104, 243 S.E.2d 319 (1978); Vol T. Blacknall Co. v. Frazee, 148 Ga. App. 327, 251 S.E.2d 122 (1978); McGraw Edison Credit Corp. v. Motorola Communications & Elecs., Inc., 579 F.2d 885 (5th Cir. 1978); Balboa Ins. Co. v. A.J. Kellos Constr. Co., 247 Ga. 393, 276 S.E.2d 599 (1981); National Bank v. Moore, 159 Ga. App. 729, 285 S.E.2d 78 (1981); Goldstein v. GTE Prods. Corp., 160 Ga. App. 767, 287 S.E.2d 105 (1982); Ely & Walker v. Dux-Mixture Hdwe. Co., 732 F.2d 821 (11th Cir. 1984); Breedlove v. Hurst, 181 Ga. App. 4, 351 S.E.2d 212 (1986); Brice v. Northwest Ga. Bank, 186 Ga. App. 871, 368 S.E.2d 816 (1988); Pine Timber Co. v. Anthony, 191 Ga. App. 375, 381 S.E.2d 591 (1989); Johnson Controls, Inc. v. Safeco Ins. Co. of Am., 913 F.2d 907 (11th Cir. 1990); Johnson Controls, Inc. v. Safeco Ins. Co., 261 Ga. 364, 404 S.E.2d 556 (1991); Lewis v. Rogers, 201 Ga. App. 899, 412 S.E.2d 632 (1991); Everts v. Century Supply Corp., 264 Ga. App. 218, 590 S.E.2d 199 (2003).

Notice may be given at any time.

- This section provides that the surety, "at any time" after the debt on which the surety is liable becomes due, may give the notice. Sally v. Bank of Union, 150 Ga. 281, 103 S.E. 460, answers conformed to, 25 Ga. App. 509, 103 S.E. 798 (1920).

Notice after suit against surety.

- When a surety has been sued separately from a principal, it is not too late to give the notice. Sally v. Bank of Union, 150 Ga. 281, 103 S.E. 460, answers conformed to, 25 Ga. App. 509, 103 S.E. 798 (1920); Overstreet v. W.T. Rawleigh Co., 75 Ga. App. 483, 43 S.E.2d 774 (1947).

Notice must be written.

- Notice to the creditor by a surety to proceed against the principal debtor, required by this section, is written notice, an oral request will not suffice. 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).

If it is not claimed that either of the endorsers gave notice in writing to the creditor to proceed to collect the debt out of the principal, the creditor was not barred from bringing suit to recover several years later. Chapman v. Miller, 40 Ga. App. 138, 149 S.E. 70 (1929).

Oral notice is not a sufficient compliance with this section. Gettis v. Gormley, 49 Ga. App. 339, 175 S.E. 393 (1934).

Creditor may waive requirement by filing suit and then discharge surety by dismissing it.

- If oral notice is given by a surety on a note to the creditor to sue on the note, and the creditor agrees to sue and in pursuance to such notice and agreement does actually enter suit, the creditor thereby treats such notice as sufficient and waives the requirements of this section, and the surety acquires a right and interest in the suit; and when such suit is dismissed without the permission of the surety, the creditor must bring another suit within three months from the date of the original notice and executed agreement to sue, and failure to do so will discharge the surety. Gettis v. Gormley, 49 Ga. App. 339, 175 S.E. 393 (1934).

Reliance on assurance of suit will discharge surety to extent of loss.

- A parol notice or request to the creditor by a surety upon a promissory note to bring suit will not operate as a compliance with this section; if, however, the surety is assured by the holder of the note that suit will be brought at the next term of court, and because of such assurance the surety foregoes means of indemnity or protection, and the suit is not brought, the surety will be discharged to the extent of the loss. Longley v. Johnson, 22 Ga. App. 96, 95 S.E. 315 (1918).

Evidence of oral notice.

- If it does not appear that the endorser parted with the means of protecting himself in consequence of any assurances made to him by the creditor and the record discloses nothing that would estop the creditor or relieve the endorser from the necessity of complying with the strict provisions of this section, the court does not err in excluding parol testimony to the effect that the endorser made an oral demand on the officers of the creditor to sue on the note while the principal was solvent and that demand was followed by a promise on the part of the creditor to do so and it failed to do so. Smith v. Morris Fertilizer Co., 18 Ga. App. 217, 89 S.E. 174 (1916).

Notice need not indicate benefit of section will be claimed.

- To entitle a security or endorser to the benefit of the provisions of this section for the endorser's relief, it is only necessary for the endorser to notify the holder to sue the note. It is not necessary that the endorser should, in addition, notify the holder that unless the endorser did proceed to collect the note that the endorser would claim the benefit of this section. Denson v. Miller, 33 Ga. 275 (1862).

Notice must be positive demand to sue.

- It must be a positive demand to sue, and so understood by the parties at the time, in order to discharge the surety. If it appeared that it was a request of a favor, and so considered by the parties at the time, then the surety was not discharged by reason of a failure to sue in three months. Bethune v. Dozier, 10 Ga. 235 (1851).

"Lose no time in suing" is a command to sue. Howard v. Brown, 3 Ga. 523 (1847).

Letters properly excluded which contain no command.

- When two letters were written by the surety, one being mailed before the maturity of the debt and containing merely the expression of a desire on the part of the surety that the plaintiff would collect when the obligation became due and the other suggesting the advisability of bringing suit and expressing doubt whether the money could be made later, but containing no command, there was no notice given as required by this section, and the letters were rightly excluded. Smith v. Morris Fertilizer Co., 18 Ga. App. 217, 89 S.E. 174 (1916).

Notice must state county of principal's residence.

- No notice shall be considered a compliance with the requirements of this section which does not state the county of the principal's residence. Smith v. Morris Fertilizer Co., 18 Ga. App. 217, 89 S.E. 174 (1916).

A notice which states that the principal's residence is "Waycross, Ga.," but which does not state the county of the principal's residence, is not the notice required by this section. Seckinger v. Exchange Bank, 38 Ga. App. 667, 145 S.E. 94 (1928).

Written notice that does not state the county of the principal's residence is not a sufficient compliance with this section. Gettis v. Gormley, 49 Ga. App. 339, 175 S.E. 393 (1934).

If the maker resides in this state, in order for the notice for which provision is made in this section to be effective, such notice must state the county in which the principal resides. Glasser v. Decatur Lumber & Supply Co., 95 Ga. App. 665, 99 S.E.2d 330 (1957).

Notice to a creditor to proceed is ineffective unless the notice states the county in which the principal resides; this requirement is mandatory under the statute. Motz v. Landmark First Nat'l Bank, 154 Ga. App. 858, 270 S.E.2d 81 (1980).

Actual notice is required. Constructive notice, if there is any arising by virtue of an Act of the legislature incorporating a city, that the city is in a particular county, will not suffice as a compliance with this section. Seckinger v. Exchange Bank, 38 Ga. App. 667, 145 S.E. 94 (1928).

When city and county have same name.

- It is not a compliance with the section to say "of Macon, Georgia," there being in the state both a County of Macon and a City of Macon, and the notice not indicating that the county was meant rather than the city. Ware v. City Bank, 59 Ga. 840 (1877).

When county of residence is in another state.

- If a surety gives notice in writing to the creditor, in compliance with this section, to make the debt out of the principal, which notice states that the principal is a resident of a particular county of another state, but also states facts showing that the principal is within the jurisdiction of this state and where the principal may be served by process, and when the creditor fails to commence an action against the principal within three months thereafter, such notice, upon being established as true, is sufficient to discharge the sureties under the provisions of this section. Fricks v. J.R. Watkins Co., 88 Ga. App. 276, 76 S.E.2d 518, rev'd on other grounds, 210 Ga. 83, 78 S.E.2d 2 (1953).

Receipt of notice by creditor does not cure defect as to county.

- A notice to sue, given by a surety under this section in order to afford a defense to a subsequent action brought against the surety by the creditor, must state the county of the residence of the principal debtor since, under the mandate of the statute, "no notice shall be considered a compliance with the requirements of this section which does not state the county of the principal's residence"; a notice fatally defective in this respect, but received by the creditor with the remark "all right," could amount to nothing more than a mere promise by the creditor, without consideration, to proceed against the principal debtor, which would have no effect upon the obligation of the surety. Bowen v. Mobley, 40 Ga. App. 833, 151 S.E. 667 (1930).

Notice by one surety is sufficient.

- Notice by one surety is as effectual as if all the sureties were to unite in the notice; a notice by one surety is as available to the creditor as a notice from all. Jones v. Whitehead, 4 Ga. 397 (1848).

Notice is properly given to creditor holding note.

- When a promissory note to which there is a surety is held by a creditor of the owner as a collateral security, such creditor is the proper person to be notified by the surety to sue the maker. McCrary v. King, 27 Ga. 26 (1859).

Notice to agent, such as cashier of bank.

- Since notice to sue the principal maker of a note by the surety was directed to the cashier of the bank which was the holder of the note, it was sufficient notice to the bank, especially as it appeared that the bank acted upon such notice. Bank of St. Marys v. Mumford & Tyson, 6 Ga. 44 (1849).

Wrongly designating person giving notice is not grounds for excluding notice.

- Fact that the person giving the written notice to sue under this section was designated as "endorser," when, under both the pleading and the evidence, the person was a technical "surety," was not cause for excluding such notice as evidence in the case. Milam v. Lewis, 47 Ga. App. 376, 170 S.E. 404 (1933).

Nature of surety's request may be question for jury.

- If it is doubtful whether the surety intended to request the creditor to sue the principal as a matter of law, it is proper to submit it to the jury to find from the facts how the parties understood the matter. Bethune v. Dozier, 10 Ga. 235 (1851).

After proper notice, failure to sue principal within state discharges surety.

- Under this section, the surety is required only to give the creditor: (a) notice to proceed to collect the debt from the principal; and (b) to state the county in which the principal resides; thereafter, if the principal is within the jurisdiction of the state, and if the creditor fails to commence an action within three months after such notice, the surety will be discharged. Fricks v. J.R. Watkins Co., 88 Ga. App. 276, 76 S.E.2d 518, rev'd on other grounds, 210 Ga. 83, 78 S.E.2d 2 (1953).

Failure of creditor to commence action.

- To the extent O.C.G.A. § 10-7-24 provides for the discharge of a guarantor based on the failure of the creditor to commence an action against the principal it is inconsistent with O.C.G.A. § 11-3-416(1). Gunter v. True, 203 Ga. App. 330, 416 S.E.2d 768, cert. denied, 203 Ga. App. 906, 416 S.E.2d 768 (1992).

Filing of petition without service does not operate to commence suit and no suit is pending until the suit has been served. Southeastern Fid. Ins. Co. v. Tesler, 159 Ga. App. 60, 282 S.E.2d 703 (1981).

Suing in wrong county does not comply with notice.

- Bringing of a suit by a creditor against a principal in a county other than the principal's residence is the equivalent of no suit at all when process was not served on the principal and hence cannot be urged as a compliance upon service of notice provided for in this section. Overstreet v. W.T. Rawleigh Co., 75 Ga. App. 483, 43 S.E.2d 774 (1947); Southeastern Fid. Ins. Co. v. Tesler, 159 Ga. App. 60, 282 S.E.2d 703 (1981).

Suit on obligation on which sureties were not liable.

- Suit by a creditor against the principal debtor on the second of two obligations for which sureties were liable on only the first obligation will not suffice as a suit within three months since this section refers to the obligation on which the sureties sought to be held liable became obligated to pay the creditor. W.T. Rawleigh Co. v. Overstreet, 84 Ga. App. 21, 65 S.E.2d 50 (1951).

New suit is unnecessary if one is pending when notice received.

- If a creditor brings suit against the sureties on a contract, and the sureties give the statutory notice to the creditor to proceed to collect the debt out of the principal, and if upon the trial the creditor admits the creditor's failure to sue the principal within three months after receiving such notice, but shows that the creditor did file suit against the principal in the county of the residence of the principal after the debt was due, but before the creditor received the notice from the sureties and before the creditor brought suit against the sureties, the filing of another suit is unnecessary. J.R. Watkins Co. v. Seawright, 168 Ga. 750, 149 S.E. 45, answer conformed to, 40 Ga. App. 314, 149 S.E. 389 (1929).

Creditor has full three months to sue so surety risks principal's removal.

- If notice was given to the holder to sue the maker, but before the expiration of the three months allowed by this section, the maker removed out of the state, so that no suit could be instituted against the maker, the holder has the whole three months allowed by this section within which to sue, and the removal of the maker was at the risk of the endorser and not of the holder. Howard v. Brown, 3 Ga. 523 (1847).

No duty to sue principal when third party not surety.

- Creditor is not required to proceed against the principal in order to preserve the creditor's rights to hold a third party liable when the third party is neither a surety, guarantor, nor an endorser, but has agreed to a primary obligation to pay for goods. Ely & Walker v. Dux-Mixture Hdwe. Co., 582 F. Supp. 285 (N.D. Ga. 1982), aff'd, 732 F.2d 821 (11th Cir. 1984).

Obtaining default judgment.

- Creditor who obtained a default judgment against the principal (maker of notes) fulfilled the creditor's duty under O.C.G.A. § 10-7-24. United States v. Blue Dolphin Assocs., 620 F. Supp. 463 (S.D. Ga. 1985).

Surety may waive benefit of section.

- Right created by the legislature, as embodied in this section, was established solely for the benefit of one who has become surety for another, and such surety may therefore waive it without injuring others and without affecting the public interest. J.R. Watkins Co. v. Fricks, 210 Ga. 83, 78 S.E.2d 2 (1953).

Provision agreeing creditor may extend time estops surety from giving notice.

- If, for value received, the surety consents that the creditor "may grant any extension on the note that he deems proper," the surety cannot, by giving the notice contemplated in this section, revoke the surety's consent allowing the extension of time and be discharged from liability on the note merely because of a failure on the part of the creditor to commence an action against the principal debtor within the period of three months. Armour Fertilizer Works v. Bond, 139 Ga. 246, 77 S.E. 22 (1913).

If the surety has in the surety's contract consented that the creditor may, within the creditor's discretion, extend the period of time within which the principal's indebtedness is due, the surety will be estopped to give notice under this section after the date the debt is due and claim the benefit of the shorter three-month "statute of limitation" within which the creditor must thereafter bring suit against the principal. Hearn v. Citizens & S. Nat'l Bank, 154 Ga. App. 686, 269 S.E.2d 486 (1980).

Surety waives notice by requesting indulgence to principal.

- If the surety gives notice and then asks the creditor for indulgence, the surety waives the notice, provided the surety's request was made before the expiration of three months after the notice, and provided it was a request for indulgence to the surety's principal, not to the surety. Bailey v. New, 29 Ga. 214 (1859).

Request after three-month period.

- Request for indulgence made after the expiration of three months after the notice will not have the effect of a waiver of notice. Bailey v. New, 29 Ga. 214 (1859).

Provision allowing suit against sureties first does not waive section.

- When relationship of principal and surety exists, the creditor for whose protection the sureties become such may proceed against the sureties without first exhausting its remedies against the principal as a matter of law, with or without a provision to that effect in the contract. Therefore, the creditor acquires nothing by such a provision, and the sureties surrender nothing. Overstreet v. W.T. Rawleigh Co., 75 Ga. App. 483, 43 S.E.2d 774 (1947).

Am. Jur. 2d.

- 74 Am. Jur. 2d, Suretyship, § 28 et seq.

C.J.S.

- 72 C.J.S., Principal and Surety, § 147 et seq.

ALR.

- Incapacity of principal to contract as affecting liability of guarantor or surety, 24 A.L.R. 838; 43 A.L.R. 589.

Language or purport of notice to proceed against principal, noncompliance with which will relieve surety, 30 A.L.R. 1285.

Endorsing payment upon note before maturity as releasing surety or endorser, 37 A.L.R. 477.

Right of surety or his privies to require creditor to resort to security given by principal before enforcing security given by surety, 37 A.L.R. 1262.

Failure to present claim against estate of deceased principal as releasing surety, 50 A.L.R. 1214.

Insolvency of obligee as extending time allowed by fidelity bond for discovery of default, 56 A.L.R. 1263.

Waiver by surety agreement of benefit of rule which releases surety in event of obligee's failure to comply with surety's demand that he proceed against principal, 89 A.L.R. 570.

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

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

Pledgor of property to secure another's obligation as within benefit of rule that requires obligee to comply with surety's demand to proceed against principal, 151 A.L.R. 928.

Applicability to compensated surety or bonding company of statute discharging surety where creditor fails to bring suit against principal after notice, 42 A.L.R.2d 1159.