GENERAL MOTORS ACCEPTANCE CORP. v. DANIELS
Court of Appeals of Maryland, 1985.
303 Md. 254, 492 A.2d 1306.
BACKGROUND AND FACTS In June 1981, John Daniels agreed to purchase a used car from
Lindsay Cadillac Company. Because John had a poor credit rating, his brother, Seymoure,
agreed to cosign the installment sales contract. Seymoure signed the contract on the line
designated “Buyer,” and John signed on the line designated “Co-Buyer.” Lindsay then assigned
the contract to General Motors Acceptance Corporation (GMAC). In May 1982, GMAC declared
the contract in default. After attempting to locate the car for several months, GMAC finally
found it in a condition of total loss. GMAC brought an action for damages, but because service
of process was never effected on John, the action proceeded only against Seymoure. The trial
court found that Seymoure was a guarantor of the contract between John and GMAC and held
that GMAC would have to attempt to bring suit first against John before it could proceed against
Seymoure. GMAC appealed the ruling.
COLE, Judge.
****
A suretyship and guaranty are contractual agreements. * * * It is well settled that Maryland
follows the objective law of contracts. A court construing an agreement under this test must first
determine from the language of the agreement itself what a reasonable person in the position of
the parties would have meant at the time it was effectuated. In addition, when the language of the
contract is plain and unambiguous there is no room for construction, and a court must presume
that the parties meant what they expressed. In these circumstances, the true test of what is meant
is not what the parties to the contract intended it to mean, but what a reasonable person in the
position of the parties would have thought it meant. * * *
****
Our review of the evidence in this case convinces us that the District Court erred in finding that
Seymoure was a guarantor rather than a surety with respect to the installment contract. * * *
* * * Seymoure agreed to purchase the subject automobile by affixing the signature to the
installment sales contract on the line designated “Buyer.” The contract clearly stated that all
buyers agreed to be jointly and severally [individually] liable for the purchase of that vehicle.
Therefore, under the objective law of contracts, a reasonable person knew or should have known
that he was subjecting himself to primary liability for the purchase of the automobile. In short,
although uncompensated sureties are favorites of the law, Seymoure’s careless indifference does
not insulate him from primary liability on that agreement.
Seymoure executed the same contract as his brother, thereby making himself a party to the
original contract. There is no evidence that Seymoure executed an agreement collateral to and
independent of this contract. This fact, standing alone, ordinarily negates the existence of a
guaranty. * * *
Both Seymoure and John signed the contract at the same time. * * * [T]his fact tends to establish
the existence of a contract of suretyship rather than a contract
— Page 627 —
of guaranty. Furthermore, there are no competent facts indicating that Seymoure expressly
agreed to pay for the automobile only upon the default of John.
DECISION AND REMEDY The appellate court reversed the lower court’s ruling.
Full text of case
¾¾¨¾¾