Calcot Assn. v. Coast Cotton Mills

CONLEY, J. pro tem

*

Calcot Association, Ltd., a cooperative association for marketing cotton, organized pursuant to the Agricultural Code, sued the defendant Southern California Textile Industries, a corporation, by the fictitious name under which it did business, Coast Cotton Mills, for $11,670.47 as the principal balance due on the sale of cotton, and defendants and appellants James A. Adamo and E. T. Combs on their written guaranties to pay, respectively, two-thirds and one-third of a line of credit granted to the mills up to and including $12,000. Judgment by default was entered against the mills and, after trial, against the appellant guarantors for their respective portions of the total.

The guarantors Adamo and Combs, sole stockholders of the corporation, owned, respectively, two-thirds and one-third of the capital stock. Both were actively engaged in the business of the mills and Adamo had other business interests as a carpet manufacturer involving the use of the cotton yarn

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spun by them. For several years the mills had bought cotton from plaintiff, sometimes on a cash basis, sometimes on a 60-day credit basis, but in August, 1953, the plaintiff, through its assistant manager George T. Akers, Jr., notified E. T. Combs of the mills that no further credit would be extended and no further shipments made unless Adamo and Combs would execute written guaranties. This they agreed to do and the guaranties are as follows:

“August 26th-1953.

‘ ‘ Calcot, Ltd.

Box 3217

Bakersfield, California

Attention Mr. Kennedy

“Dear Mr. Kennedy:

“Confirming conversation with your Mr. Akers over the telephone regarding extension of credit to the Coast Cotton Mills, it is deemed advisable that Mr. Adamo and I guarantee the extension of credit to the corporation on the basis of ownership of stock, namely one third and two thirds. Therefore, I am glad to guarantee the sum of $4,000.00, one third of the agreed $12,000.00 extension of credit.

“I am glad to maintain this personal guarantee of one third of the extended credit of twelve thousand dollars until such time that you see fit to ship us open account based upon our past credit performance.