Hunter v. COMMUNITY LOAN & INVESTMENT CORPORATION

193 S.E.2d 55, 127 Ga. App. 142, 11 U.C.C. Rep. Serv. (West) 798, 1972 Ga. App. LEXIS 817

Opinions

Hall, Presiding Judge.

Defendant in a suit on a note appeals from the judgment. Defendant signed a note along with his daughter for which a 1965 Mustang automobile was pledged as collateral. The loan was apparently for the purpose of financing an automobile for the daughter. It seems that this automobile burned, so with the consent of the plaintiff loan company, the insurance company provided the daughter with a 1966 Mustang in substitution. Following a default on the loan and repossession of the automobile, plaintiff brought this action for the balance due.

Defendant contends that he was discharged from his obligation on the note when the collateral was substituted without his knowledge or consent. The contention is without merit. Under Code Ann. § 109A-3 — 606 (1) (b), a discharge results only when the holder "unjustifiably impairs any collateral for the instrument,” i.e., increases the risk to the party. The evidence here would support a finding that the collateral was not impaired by the substitution.

Judgment affirmed.

Quillian, J., concurs. Pannell, J., concurs specially.