Durham Shopping Center, Inc. v. Orco, Inc.

HEDRICK, Judge. Defendant contends the trial court erred in holding him liable under the guaranty since the lease he guaranteed was either superseded by other leases or materially altered in its terms. Defendant argues that the greater weight of the evidence shows that plaintiff entered into lease agreements with Bambino’s International, Inc., or Andrews, thereby discharging defendant’s liability as guarantor. This argument does not present an issue for review as the trial court’s findings are conclusive on appeal when supported by any competent evidence. The trial court found that no lease had been executed except the original lease between ORCO and plaintiff. Testimony from plaintiffs president and the absence of any other written leases supported this finding. Thus, [631] there is no basis for defendant to claim on appeal that his liability was discharged by plaintiff entering new leases. Nor was the lease altered in any manner that would discharge defendant as guarantor. Normally a surety is discharged where there has been an agreement among the other parties injuriously affecting the surety’s rights or liabilities. Deal v. Cochran, 66 N.C. 269 (1872). However, in the present case defendant was benefitted rather than injured by plaintiffs agreement to reduce the lease payments after 1 December 1978. The controlling principle is stated in Crouse v. Stanley, 199 N.C. 186, 188-89, 154 S.E. 40, 41 (1930): “This Court has adopted the pro tanto theory; that is to say . . . the surety in obedience to equitable principles is discharged and relieved to the extent of the loss actually suffered and no further.” The trial court properly reduced defendant’s liability under the guaranty in accordance with the rent reduction agreement and no further. Defendant contends the trial court erred in concluding that the guaranty was a “continuing” guaranty for which the statute of limitations did not begin to run until the last rental payment on 11 May 1981. We disagree. “In North Carolina a plaintiffs cause of action against a guarantor arises when the principal refuses to make further payments on the promissory note.” Advertising, Inc. v. Peace, 43 N.C. App. 534, 536, 259 S.E. 2d 359, 360 (1979), disc. rev. denied, 299 N.C. 328, 265 S.E. 2d 393 (1980). The same reasoning applies by analogy to a guarantor of a lease for a term of years: the statute of limitations begins to run from the date of the last payment or other event triggering the guarantor’s liability on the entire lease. The present guaranty agreement provided for defendant’s liability twenty days after plaintiff gave notice of its intent to declare default. Plaintiff gave such notice to defendant on 14 July 1981, and the complaint was filed on 18 November 1981. The action thus commenced well within three years of ORCO’s last payment and notice to defendant of his liability. Defendant guaranteed the entire lease, and therefore plaintiff had the right to sue for the entire amount owed, as in Advertising, Inc., supra, once it became apparent that the principal would make no more payments. Defendant last contends the trial court erred in concluding that plaintiff did not unreasonably delay in demanding payment of [632] him or in bringing suit. The trial court’s conclusion was supported by its findings that defendant was reminded many times of the arrearages and his responsibility as guarantor. Moreover, plaintiff made repeated demands for payment of back rent. Testimony from plaintiffs president supported these findings. The trial court’s findings and conclusion that there was no unreasonable delay thus are conclusive on appeal. Affirmed. Judges Webb and Hill concur.