Genuine Auto Parts Company v. Convenient Car Care, Inc., Dan Babb Enterprises, Inc., and Dan Babb, Individually

This is a collection action. The defendant corporation owned an automotive repair shop. In order to obtain a line of credit to purchase automobile parts from the plaintiff auto parts supply company, the sole shareholder of the defendant corporation signed a personal guaranty. After the corporation had incurred about $20,000 on its line of credit, the plaintiff supply  company filed this lawsuit against the corporation and the individual shareholder to recover that debt. The shareholder argued that, before the debt was incurred, he sold the business to a third party and canceled his personal guaranty on the debt of the corporation. The trial court rejected that argument and entered a judgment in favor of the plaintiff against both the corporation and the shareholder. The shareholder now appeals. We affirm, concluding that holding the shareholder liable for the debt of the corporation is appropriate under these circumstances, regardless of  whether his personal guaranty remained intact.