text:
    A94A1257, A94A1258.
    EVANS v. MERRILL LYNCH BUSINESS FINANCIAL SERVICES, INC.; and vice versa.
    (446 SE2d 215)
   Blackburn, Judge.

This is a combined appeal. In Case No. A94A1257, appellant C. Gary Evans appeals the trial court’s order partially granting defendant Merrill Lynch Business Financial Services, Inc.’s motion for summary judgment. In Case No. A94A1258, Merrill Lynch cross-appeals the same order to the extent that the trial court denied its motion for summary judgment with regard to the amount of damages in excess of $200,000, owed by Evans to Merrill Lynch.

The underlying facts are not disputed. Evans, as president of Glen Restaurants, Inc., obtained a line of credit from Merrill Lynch’s predecessor in interest. The line of credit was evidenced by a promissory note in the amount of $250,000. The note was secured by a security agreement granting Merrill Lynch a first-in-priority security interest in Glen Restaurants’ furniture, fixtures, and equipment located at four locations. The note was further secured by an unconditional guaranty executed by Evans, individually. The note, security agreement, and guaranty were all executed on February 3, 1986.

Glen Restaurants defaulted under the terms of the note and security agreement and on August 23, 1990, Glen Restaurants filed a petition under Chapter 11 of Title 11, United States Code, in the Bankruptcy Court for the Northern District of Georgia. On January 18, 1991, Evans, individually, executed a financing agreement whereby he agreed to repay the $200,000 debt to Merrill Lynch. Merrill Lynch agreed to forebear enforcement of its remedies under the unconditional guaranty as long as Evans complied with the terms of the financing agreement. The financing agreement evidenced the parties’ intent that Evans remain obligated to repay the debt under the terms of the unconditional guaranty. Also on January 18,1991, and as further security for payment of the debt, Evans executed certain deeds to secure debt. The deeds granted Merrill Lynch a second-in-priority lien upon, security title to, and security interest in certain tracts of real estate.

Evans’ payments to Merrill Lynch on the financing agreement were made late, missed entirely, and made in irregular amounts. Merrill Lynch notified Evans of his default on the financing agreement, and pursuant to the power of sale contained in the security deed, Merrill Lynch advertised a non-judicial foreclosure sale to be held on April 6, 1993. On April 5, 1993, Evans obtained a temporary restraining order enjoining Merrill Lynch from foreclosing upon the commercial real property listed in the security deed.

Case No. A94A1257

1. Evans first contends that his liability under the guaranty was extinguished due to increased risk. OCGA § 10-7-22 provides, in pertinent part “[a]ny act of the creditor, either before or after judgment against the principal, which injures the surety or increases his risk or exposes him to greater liability shall discharge him.” Evans argues that Merrill Lynch’s conduct in loaning more than the $250,000 limit in the note increased the risk and released him from the guaranty. However, it is uncontroverted that the amount sought by Merrill Lynch from Evans does not exceed $250,000, see White v. Chapman, 149 Ga. App. 409 (3) (254 SE2d 434) (1979), and, furthermore, the extension of additional credit does not affect Evans’ risk under the guaranty. See Walter E. Heller & Co. v. Aetna Business Credit, 158 Ga. App. 249, 263 (280 SE2d 144) (1981). Therefore, assuming arguendo that amounts in excess of the $250,000 limit were loaned, Evans remains liable under the unconditional guaranty.

2. Evans next contends that his liability under the unconditional guaranty was extinguished as Merrill Lynch failed to dispose of its collateral in a commercially reasonable manner. The equipment, listed in the security agreement as collateral for the note, became property of the bankruptcy estate after Glen Restaurants filed for Chapter 11 bankruptcy. Thereafter, the bankruptcy trustee abandoned the equipment as valueless, and the storage facility manager sold it to pay for outstanding storage fees. Evans failed to show that Merrill Lynch obtained either constructive or actual possession of the equipment.

3. Evans contends that the financing agreement is unenforceable. First, Evans argues that the financing agreement fails for a lack of consideration. This argument is without merit as it is based upon Evans’ contention that the unconditional guaranty was extinguished. However, in Divisions 1 and 2, we determined that the unconditional guaranty was not extinguished. Therefore, Merrill Lynch’s agreement to forebear enforcement of its rights under the guaranty was sufficient consideration.

Next, Evans argues that the financing agreement was signed under duress. A duress claim must be supported by acts of the opposing party which are wrongful or unlawful. Charter Med. Mgmt. Co. v. Ware Manor, 159 Ga. App. 378 (3) (283 SE2d 330) (1981). In the case sub judice, Merrill Lynch had the right to enforce the unconditional guaranty against Evans. Therefore, Merrill Lynch’s actions were neither wrongful nor unlawful.

4. Evans asserts that the security deed did not contain a power of sale sufficient to authorize a non-judicial foreclosure. Evans argues that the security deed does not grant Merrill Lynch the authority to act as Evans’ agent or attorney-in-fact to conduct a non-judicial foreclosure sale. The security deed contains the following language: “AND the party of the first part further covenants and agrees that in case the debt hereby secured shall not be paid when it becomes due . . . the party of the second part. . . may sell the said property at public sale . . . and there upon execute and deliver to the purchaser at such sale a sufficient conveyance of said premises in FEE SIMPLE . . . which conveyance shall contain recitals as to the happening of the default upon which the execution of the power of sale herein granted depends, and the said party of the first part hereby constitutes and appoints the said party of the second part the agent and attorney-in-fact of said first party to make such recitals.” (Emphasis supplied.)

The language in the security deed is plain and unambiguous. It not only provides that Merrill Lynch “may sell” the property, it also refers to the “power of sale” granted therein. See Benton v. Patel, 257 Ga. 669 (1) (362 SE2d 217) (1987). This language sufficiently establishes a power of sale granted to Merrill Lynch.

5. Evans admits that he missed several of his payments to Merrill Lynch entirely and that many payments were made late or for partial amounts due. Evans contends that Merrill Lynch’s failure to provide notice of its intention to require strict compliance with the terms of the Financing Agreement, after its acceptance of late and irregular payments, precludes Merrill Lynch from foreclosing. “As a general rule, evidence of acceptance by a creditor of repeated, late, irregular payments from a debtor creates a factual question as to the formation of a quasi new agreement. [Cits.] However, the evidence in this case shows without dispute that [Evans] was not merely late and irregular in making his payments but had failed altogether to make . . . payments which had become due as of the time the notice of foreclosure was published. Under these circumstances, [Merrill Lynch] clearly was entitled pursuant to the terms of the security agreement to accelerate the entire balance due and to institute foreclosure proceedings.” Lewis v. C & S Nat. Bank, 174 Ga. App. 847, 848 (332 SE2d 11) (1985). See also Borden v. Pope Jeep-Eagle, 200 Ga. App. 176 (3) (407 SE2d 128) (1991).

6. A copy of the advertisement of the foreclosure sale under Merrill Lynch’s power of sale was sufficient to provide Evans with notice of acceleration of the debt. Lee v. O’Quinn, 184 Ga. 44, 45 (190 SE 564) (1937).

7. Evans’ efforts to establish a genuine issue of material fact are without merit. Thomas Soulsby’s affidavit was properly considered by the trial court. The document attached to Soulsby’s affidavit was properly qualified as a business record under OCGA § 24-3-14.

8. As the trial court was correct in granting Merrill Lynch’s motion for summary judgment on Evans’ main claims, the trial court was also correct in granting summary judgment on Evans’ claims for punitive damages and attorney fees.

Case No. A94A1258

9. In its cross-appeal, Merrill Lynch contends that the trial court erred in denying summary judgment on its counterclaim in that no genuine issue of material fact exists regarding the amount of debt owed by Evans. The trial court determined that, at least, $200,000 was owed Merrill Lynch, as a matter of law and that the only issue of fact remaining was whether the lender credited the last payment of $4,883.23 to the debt. However, during oral argument, counsel for Merrill Lynch stated that he would concede the difference between the amount of the last payment as established by Merrill Lynch and the amount of the last payment as established by Evans.

Merrill Lynch’s concession resolved any dispute regarding the amount to be credited to Evans for the last payment. Therefore, the trial court should have entered judgment on Merrill Lynch’s counterclaim in the amount of $207,496.05.

Decided June 15, 1994

Reconsideration denied July 12, 1994

C. Gary Evans, pro se.

Schwieger & Moore, Francis X. Moore, for appellant.

Rogers & Hardin, Amy S. Haney, Tony G. Powers, for appellee.

Judgment affirmed in part and reversed in part.

Birdsong, P. J., and Senior Appellate Judge Harold R. Banke concur.

       The trial court incorrectly stated $4,288 in its order when referring to the last payment made by Evans.


source: Caselaw Access Project

author: Birdsong, Presiding Judge.

license: Public Domain

text:
    A94A1602.
    SAMAY v. SOM.
    (446 SE2d 230)
   Birdsong, Presiding Judge.

This is a discretionary appeal by Benson Samay of the trial court’s order granting appellee/plaintiff Sophat Som’s motion for reconsideration, which reinstated a judgment entered against appellant Samay. (Appellant’s direct appeal in Case No. A94A1475 has been withdrawn.) The order rescinded, by grant of the motion for reconsideration, had declared void the original judgment on grounds of improper service of process. Appeal was granted as to three issues. Held:

1. Can process served pursuant to OCGA § 9-10-94 be served only by a person authorized to serve process under OCGA § 9-11-4 (c)? Appellant contends that under OCGA § 9-10-94, service under the Long Arm Statute, there are two process server requirements: the process server must be a person listed in OCGA § 9-11-4 (c) and the process server must also be allowed to serve process under the law of the foreign jurisdiction.

OCGA § 9-10-94 pertinently provides: “A person subject to the jurisdiction of the courts of the state under Code Section 9-10-91 [Long Arm Statute] . . . may be served with a summons outside the state in the same manner as service is made within the state by any person authorized to make service by the laws of the state, territory, possession, or country in which service is made or by any duly qualified attorney, solicitor, barrister, or the equivalent in such jurisdiction.” (Emphasis supplied.) OCGA § 9-11-4 provides, inter alia, for the manner of service and by whom process can be served in this state.

OCGA § 9-10-94 is clear and unambiguous on its face. Where, as here, the language of a statute is plain and does not lead to any absurd or impracticable consequences, the court simply construes it according to its terms and conducts no further inquiry. Diefenderfer v. Pierce, 260 Ga. 426, 427 (396 SE2d 227). OCGA § 9-10-94 by its terms provides that the manner of service may be as provided by law “within the state” of Georgia. A proper manner of service therefore generally may be effected when executed in the form provided by the law of this state, that is, as expressly provided by OCGA § 9-11-4 or elsewhere in the Code. See Marbury v. Marbury, 256 Ga. 651, 652 (1) (352 SE2d 564). (OCGA § 9-11-4 (i), pertaining to alternative service, provides that the methods of service in said Code section are cumulative with other methods in other statutes.) Thus, the Supreme Court has generalized that “[a] person subject to the jurisdiction of the Georgia courts under the long arm statute may be served with a summons outside the state in the same manner as service is made within the state.” (Emphasis supplied.) Braden v. Braden, 260 Ga. 269, 270 (392 SE2d 710); compare Rose v. Ryan, 209 Ga. App. 160, 162 (2) (433 SE2d 291) (no return or proof of service shown as required under either Alabama or Georgia law); Bowers v. Economation, Inc., 208 Ga. App. 661, 663 (431 SE2d 420) (to perfect service under the Long Arm Statute summons is to be served in same manner as service within the state). Of course, manner of service must in all cases meet the constitutional requirements of due process. Compare McDade v. McDade, 263 Ga. 456 (435 SE2d 24). Additionally, OCGA § 9-10-94 sets forth by its terms those persons who are qualified to effectuate a service of process under the Long Arm Statute; the “person” who may effectuate such service shall include “any person authorized ... by the laws of the state ... in which service is made.” That is, the “person” who effectuates the prescribed method of service either must be a person authorized to do so under the law of the sovereign in which service is made or be a duly qualified attorney, solicitor, barrister, or the equivalent in such jurisdiction. Thus, “[s]ervice under the long arm statute is made by any person authorized to make service by the laws of the foreign jurisdiction or by any duly qualified attorney, solicitor, barrister or equivalent in such jurisdiction.” Ga. Prac. & Proc. (6th ed.), p. 210, § 8-13; compare Shahan v. Scott, 189 Ga. App. 514, 515 (376 SE2d 221) (record does not establish service made by West Virginia process server in accordance with laws of that state); see also Denny v. Croft, 195 Ga. App. 871 (2) (395 SE2d 72); cf. American Photocopy Equip. Co. v. Lew Deadmore & Assoc., 127 Ga. App. 207, 208-209 (1) (193 SE2d 275).

Appellant’s reliance on Lee v. Pace, 252 Ga. 546, 547 (2) (315 SE2d 417) (publication combined with mailing of notice and complaint by certified mail constituted proper service) and Bailey v. Hall, 199 Ga. App. 602, 604 (2) (405 SE2d 579) (complaint and process sent by certified mail without publication was ineffective) is misplaced. These cases are distinguishable; the pertinent issue addressed in these cases was whether the manner of service was proper.

Accordingly, we decline to accept appellant’s contention that process served pursuant to OCGA § 9-10-94 must always be served by a person authorized to serve process under OCGA § 9-11-4 (c).

2. Is notice of intent to rely on foreign law required to be made before a trial court may take, either sua sponte or on request of a party, judicial notice of the law of another state pursuant to OCGA § 24-1-4; and, if such notice is required, does OCGA § 9-10-94 on its face provide such “other reasonable written notice” within the meaning of OCGA § 9-11-43 (c)? Even as to the issue of who can serve process under the Long Arm Statute, the law of Georgia as to service would apply in the absence of admissible proof or authorized judicial recognition of the sister state statute pertaining thereto. Maxwell v. Columbia Realty Venture, 155 Ga. App. 289, 291 (3) (270 SE2d 704).

(a) Several statutes have been promulgated in this state pertaining to the judicial determination of foreign law of other jurisdictions. Statutes should be construed in pari materia with other statutes and courts should strive to give effect to the purpose of a statute. Ga. Marble Co. v. Whitlock, 260 Ga. 350, 354 (1d) (392 SE2d 881). There exist three separate Code sections (OCGA §§ 9-11-43 (c); 24-1-4; and 24-7-24) pertaining to the methods by which foreign law can be judicially determined. Meeker v. Eufaula Bank &c., 208 Ga. App. 702, 703 (2) (431 SE2d 475). The first sentence of OCGA § 9-11-43 (c) provides that “[a] party who intends to raise an issue concerning the law of another state or of a foreign country shall give notice in his pleadings or other reasonable written notice.” Construing the above statutes in pari materia it appears that before a party can raise an issue of foreign law, relevant to any substantive, evidentiary, procedural or jurisdictional issue in a case, such reasonable notice must be given; this notice is a condition which must be met (Souchak v. Close, 132 Ga. App. 248 (1) (207 SE2d 708)) before a party can establish a particular foreign law by compliance with any of the three statutory means above cited, or before a party can cause a duty to be imposed on a court to judicially recognize any relevant, existing foreign law (as published authority) whether or not the party produced it. OCGA § 9-11-43 (c); see Meeker v. Eufaula Bank, supra; Swafford v. Globe American Cas. Co., 187 Ga. App. 730, 732-733 (1) (371 SE2d 180). This interpretation is consistent with legislative intent to require notice of intent to rely upon foreign law to give both the court and opposing party adequate preparation time for the litigation of the foreign law issue. Wade v. Crannis, 209 Ga. App. 501, 503 (2) (433 SE2d 669); Souchak, supra at 251. We therefore conclude that notice of intent to rely on foreign law is required before a party can establish such law in accordance with any of the three statutory methods or place a duty on the trial court to judicially recognize foreign law as published by authority.

(b) As a general rule neither the lower court nor this court can take judicial notice of the law of a sister state when the record discloses that a party has not given notice in their pleadings or other reasonable written notice of their intent to raise the foreign law issue. White v. Orr Leasing, 210 Ga. App. 599, 602 (3) (436 SE2d 693); Lauer v. Bodner, 137 Ga. App. 851, 854 (2) (225 SE2d 69). However, under the facts of this case, there is justification for departing from this general rule. See Division 2 (c), below.

(c) The superior court ruled that, as a matter of law, appellee/ plaintiff Som did not have to give notice of intent to litigate foreign law issues, as the OCGA § 9-10-94 “already gives notice and provides that the laws of the foreign jurisdiction as they relate to service will be used and applied.” This issue is one of first impression for this court. As recognized in Wade and Souchak, supra, the purpose of the notice requirement is to give the court and parties adequate preparation time to litigate the foreign law issue. As above discussed, while OCGA § 9-10-94 on its face establishes that the method of service must conform to the laws of this state, nevertheless, the issue of who may serve process was intended by the legislature to be determined by the law of the foreign jurisdiction “in which service is made.” Likewise, even the question whether service can be made, under OCGA § 9-10-94, by a “duly qualified attorney, solicitor, barrister, or the equivalent in such jurisdiction” requires that any issues as to the server’s professional qualification or professional equivalency be controlled by the law of the state “in which service is made.” Additionally, lack of personal jurisdiction, insufficiency of process, and insufficiency of service of process are subject to waiver unless timely, raised in accordance with OCGA § 9-11-12 (h). See generally Orkin Exterm. Co. v. Morrison, 187 Ga. App. 780 (3) (371 SE2d 407); Boyer v. King, 129 Ga. App. 690 (200 SE2d 906). No issue of foreign law pertaining to sufficiency of long arm process service will arise during the course of litigation, unless the defendant timely raises such issue as prescribed by law. Thus, defendant will always have actual knowledge when an issue of foreign law, pertaining to adequacy of service of long arm process, will be litigated and will therefore have a reasonable opportunity to prepare for such litigation. Accordingly, we find that OCGA § 9-10-94, perforce provides the requisite notice of intent to prove foreign law, as pertains to the issue of by whom service of process can be made thereunder. “[A] judgment right for any reason must be affirmed. [Cit.]” Shapiro v. Lipman, 259 Ga. 85, 86 (377 SE2d 673).

In view of our holding, we need not determine whether as an exception to the general notice requirement discussed in Division 2 (b), above, a court can as necessary in aid of its jurisdiction take judicial notice sua sponte of the existence of foreign law thereby establishing the adequacy of service of process. Ga. Const. 1983, Art. VI, Sec. I, Par. IV.

Decided June 27, 1994

Reconsideration denied July 12, 1994

Sawyer & Sawyer, H. Kimbrell Sawyer III, for appellant.

Ronald C. Goulart, Gearhiser, Peters & Horton, Robert L. Lockaby, Jr., for appellee.

Judgment affirmed.

Blackburn, J., and Senior Appellate Judge Harold R. Banke concur.


author: Blackburn, Judge.

text:
    A94A1622.
    GORDON v. SOUTH CENTRAL FARM CREDIT, ACA.
    (446 SE2d 514)
   Blackburn, Judge.

The appellant, Annie Mae Gordon, filed the instant action sounding in tort against the appellee, South Central Farm Credit, ACA (South Central), based upon South Central’s alleged wrongful foreclosure of approximately 137 acres of property located in Burke County pledged as collateral on a promissory note executed by Gordon and her two sons in favor of South Central’s predecessor in interest.

Following the commencement of discovery, South Central moved for summary judgment, asserting that the foreclosure sale was conducted in accordance with the applicable law and the documents executed by the parties, and that the alleged inadequacy of the price received at the foreclosure sale affords Gordon no valid basis for relief. The trial court granted the motion, finding that Gordon defaulted under the terms of the promissory note, and South Central rightfully foreclosed upon the property pursuant to the terms of the deed to secure debt and the applicable statutory authority. This appeal followed.

In her sole enumeration of error, Gordon asserts that the trial court erred in granting the motion for summary judgment because material issues of fact remain for jury resolution on whether the value of the collateral greatly exceeded the outstanding indebtedness, whether the price realized on foreclosure was grossly inadequate, whether the loan was undersecured, and whether South Central acted arbitrarily in foreclosing upon the real property.

The record viewed in the light most favorable to Gordon, the nonmovant, shows that on or about May 4, 1982, Gordon executed a deed to secure $10,000 in debt in favor of the Federal Land Bank of Columbia, South Carolina. Federal Land Bank subsequently assigned its interest in the promissory note to South Central in 1991. Paragraph 6 of the security deed specifically provided that if Gordon failed to abide by the terms of the promissory note or the terms of the deed, South Central could “[d]eclare all amounts secured by this instrument immediately due and payable without notice [,] [and] [s]ell at public outcry to the highest bidder for cash, at the courthouse of the county wherein said land or any part thereof lies, all or any part of said land, after advertising ... in the newspaper. . . .” Gordon admitted in her deposition that she understood the terms of the power of sale contained in the deed.

It is undisputed that Gordon has been delinquent on her obligation to make timely payments under the promissory note and pay the annual property taxes on the property since the execution of the note in 1982 although the loan was reamortized in 1983 to provide for monthly payments instead of annual installments. As recently as November 1991, Gordon’s property was scheduled for foreclosure for her failure to make monthly payments for several months but Gordon cured her default on the loan on the day prior to the scheduled sale. It is further undisputed that Gordon failed to make any monthly payments as they became due under the terms of the reamortized promissory note following her partial payment in July 1992. By certified letter of September 15, 1992, Gordon was notified of South Central’s acceleration of the payments due and its intention to foreclose upon the property if Gordon did not cure the default. By certified letter of October 9, 1992, South Central further provided Gordon with copies of the legal advertisement of the scheduled foreclosure sale. The property was subsequently sold at the foreclosure sale in December 1992, to the highest bidder for $26,000, and South Central forwarded the excess proceeds to Gordon but Gordon returned the check to South Central. The excess proceeds have been paid by South Central into the court’s registry. Gordon does not challenge the manner in which the sale was conducted or the sufficiency of the newspaper advertisements.

Under Georgia law, “[i]t is clear that a security deed which includes a power of sale is a contract and its provisions are controlling as to the rights of the parties thereto and their privies.” (Citations and punctuation omitted.) Druid Assoc. v. Nat. Income Realty Trust, 210 Ga. App. 684, 685 (436 SE2d 721) (1993). See also Giordano v. Stubbs, 228 Ga. 75, 77 (184 SE2d 165) (1971). The record in this case shows and Gordon concedes in her deposition that South Central complied with the terms of the security deed by properly advertising the foreclosure sale and further concedes that the property was auctioned off from the courthouse steps to the highest bidder. See id. Gordon also admits that she was notified of the foreclosure sale pursuant to OCGA § 44-14-162 et seq.

While Gordon primarily maintains that the foreclosure sale did not realize an adequate sales price for the property, “[inadequacy of [the] price paid upon the sale of property under power [of sale contained in a deed to secure debt] will not of itself and standing alone be sufficient reason for setting aside the sale. It is only when the price realized is grossly inadequate and the sale is accompanied by either fraud, mistake, misapprehension, surprise or other circumstances which might authorize a finding that such circumstances contributed to bringing about the inadequacy of price that such a sale may be set aside. . . .” Stubbs, supra at 79.

As this Court stated in Kennedy v. Gwinnett Commercial Bank, 155 Ga. App. 327, 330-331 (270 SE2d 867) (1980), “implicit in th[e] holding [in Stubbs, supra] is that the duty to sell the property according to the terms of the deed and to conduct the sale in good faith does not include a requirement that a specific amount such as the fair market value of the property be obtained. If the sale is conducted according to the terms of the power and in good faith the foreclosing party has satisfied his duties and obligations to the debtor pretermitting the alleged inadequacy of price. The foreclosing party has a duty to obtain that amount which results from a sale conducted according to the terms of the deed and in good faith. . . . [T]he focus is on the manner in which the sale was conducted and not solely on the result of the sale. The foreclosing party is not an insurer of the results of his exercise of the power of sale; his only obligation is to sell according to the terms of the deed and in good faith and to obtain the amount produced by such a sale. If the manner in which the sale was conducted is otherwise unobjectionable, the mere fact that, in the debtor’s opinion, it brought an inadequate price does not demonstrate that the power was exercised other than in good faith.”

In the case sub judice, Gordon, in response to South Central’s motion for summary judgment, has submitted evidence that the price realized at the foreclosure sale was less than the fair market value of the property but “has cited no evidence showing that the price realized on the foreclosure of [her] property was grossly inadequate and accompanied by fraud or other improper circumstance. [Cit.] Because [Gordon] failed to rebut [South Central’s] showing that it properly foreclosed on the property, the court did not err in granting summary judgment to [South Central] on the wrongful foreclosure claim.” Threadmill, Ltd. v. First Union Nat. Bank of Ga., 207 Ga. App. 688, 689 (1) (428 SE2d 685) (1993). We reject Gordon’s assertion that South Central’s actions were governed by Georgia’s Uniform Commercial Code since the case at bar does not involve the sale of goods and the Uniform Commercial Code is hence inapplicable. See Lake Tightsqueeze v. Chrysler First Financial Svcs. Corp., 210 Ga. App. 178 (4) (435 SE2d 486) (1993).

Decided June 22, 1994

Reconsideration denied July 12, 1994

William R. McCracken, for appellant.

Brown & Livingston, Charles H. Brown, for appellee.

Moreover, contrary to Gordon’s assertion, she was not entitled to notice pursuant to OCGA § 13-4-4 that South Central intended to rely upon the exact terms of the promissory note and deed to secure debt before the company was entitled to accelerate the obligation and pursue foreclosure as a remedy to obtain payment. “Appellee accelerated the unpaid balance due on the note based upon appellant’s total failure to make any payments whatsoever for three consecutive months. While there may be evidence that, in the past, appellee had accepted untimely payments and applicable late charges from appellant, there is no evidence that appellee had previously waived its right to any payment whatsoever on the note for a three-month period. Under OCGA § 13-4-4, a ‘party must be given a reasonable opportunity to cure any deviations from the exact terms before foreclosure can be commenced due to defaults which were tolerated under the quasi agreement.'’ [Cit.] There is no evidence that appellee tolerated a previous three-month failure to make any payments on the note such that appellant would be entitled to receive notice before appellee could effect a valid acceleration based upon his instant three-month failure to make any payments whatsoever on the note.” Booth v. Gwinnett Fed. &c. Assn., 200 Ga. App. 60, 61 (406 SE2d 568) (1991). Under those circumstances, South Central was entitled to seek its remedies under the security deed, including acceleration of the debt and foreclosure proceedings, without providing Gordon with the notice contemplated under OCGA § 13-4-4. Borden v. Pope Jeep-Eagle, 200 Ga. App. 176 (3) (407 SE2d 128) (1991).

Judgment affirmed.

Birdsong, P. J., and Senior Appellate Judge Harold R. Banke concur.

       Gordon alleges in her complaint that 142.3 acres of land were foreclosed at the December 1992 sale. However, the record shows that one acre of the land was not included as collateral at the time of the execution of the deed. In addition, four acres of the property in question were released from the deed for the purpose of constructing a residence in 1983, leaving 137.3 acres of realty remaining as collateral.


text:
    A93A2177.
    KROGER COMPANY v. BARENTINE.
   Blackburn, Judge.

In Kroger Co. v. Barentine, 210 Ga. App. 795 (437 SE2d 629) (1993), we reversed the trial court’s denial of Kroger Company’s motion for directed verdict and for j.n.o.v. The Supreme Court granted certiorari and reversed our decision in Barentine v. Kroger Co., 264 Ga. 224 (443 SE2d 485) (1994). Accordingly, our judgment in this case is vacated and the judgment of the Supreme Court is made the judgment of this court.

Decided July 12, 1994.

Webb, Carlock, Copeland, Semler & Stair, Douglas A. Wilde, for appellant.

Drew, Eckl & Farnham, John G. Blackmon, Jr., for appellee.

Judgment affirmed.

Birdsong, P. J., and Johnson, J., concur. McMurray, P. J., disqualified.


author: Judge Harold R. Banke.

text:
    A94A0462.
    BARNETT BANK OF ATLANTA v. THURMAN et al.
    (446 SE2d 529)
   Judge Harold R. Banke.

Robert Poteete brought an action for conversion against the appellant alleging that the appellant wrongfully set-off $20,800 from Poteete’s bank account against an outstanding indebtedness of $30,714.44 which Poteete owed the appellant. The funds in question were derived from Poteete’s sale of three tractors owned by Edward Thurman at an auction. Poteete also sold a tractor, but he received one check from the auction company for $28,462.50 representing the sale of all four tractors. Once the check was deposited in Poteete’s account, the appellant set-off the entire amount of the check against Poteete’s $30,714.44 indebtedness. Thurman then brought an action for conversion against Poteete which was followed by Poteete’s third-party action against the appellant for conversion and the appellant’s counterclaim against Poteete to recover his remaining indebtedness.

At trial, Poteete testified that a bank officer accompanied him as he deposited the check into his account; that he intended for $7,650 to be applied toward his indebtedness; and that the remaining $20,800 belonged to Thurman. However, the bank official testified that Poteete never indicated that any money belonged to Thurman nor did Poteete present any evidence to the bank of Thurman’s interest in the check. The jury returned two verdicts, one in favor of Thurman against the appellant in the amount of $27,248.65 and $9,000 in attorney fees, and the other in favor of the appellant against Poteete for $24,590.42 plus attorney fees. The trial court subsequently set aside the award of attorney fees against the appellant, but the court denied the appellant’s motion for j.n.o.v. on the merits of the case. This appeal followed.

1. The appellant contends the trial court erred in denying its motion for directed verdict because the evidence demonstrated that it was entitled to set-off the funds in Poteete’s account against his outstanding loan. “Denial of a motion for directed verdict must be affirmed if there is ‘any evidence’ to support the verdict. [Cit.]” Torrance v. Brennan, 209 Ga. App. 65, 67 (2) (432 SE2d 658) (1993).

“It is well settled in this state, as in a sizeable number of other jurisdictions, that unless funds deposited with a lending bank are in an account governed by an agreement which designates the funds as trust funds, or unless the lending bank by other means has actual knowledge that the funds deposited in a general account are intended to discharge a specific obligation or otherwise partake of the character of trust funds, then the funds are treated as any other general deposit funds, are commingled with other funds on deposit with the bank, and are subject to set-off against any matured indebtedness for which the bank is creditor to the principal. [Cits.]” Cotton States Mut. Ins. Co. v. C & S Nat. Bank, 168 Ga. App. 83, 87 (2) (308 SE2d 199) (1983).

In the instant case, the appellant denies ever being informed that Thurman had any interest in the check deposited by Poteete. However, Poteete testified that before he presented the check from the auction company for deposit, he informed the bank officer that he sold three of Thurman’s tractors at the auction in addition to his tractor; that at the time of deposit, he also gave the bank officer a check for $7,650, representing his portion of the auction proceeds, to be applied toward his loan; that he asked the bank officer how long it would be before Thurman got his money; and that the bank officer indicated that Thurman could get his money within five to ten days after the auction company’s check cleared the bank. “An appellate court neither weighs the evidence nor determines witness credibility; rather, it determines evidence sufficiency. [Cit.]” Hap Farms v. Heard, 209 Ga. App. 684, 687 (3) (434 SE2d 118) (1993). Since there is some evidence of the appellant’s knowledge of Thurman’s entitlement to a portion of the check, we will uphold the judgment. Torrance v. Brennan, supra.

2. The appellant enumerates as error being added as a party defendant. Since the evidence demonstrated that the appellant could have been liable for conversion or misapplication of entrusted funds, we find no error in its addition to the litigation. OCGA § 9-11-20.

3. The appellant contends the trial court erred in refusing to enforce a settlement agreement reached by the parties prior to trial. Such agreements must be “definite, certain, and unambiguous.” Topa Ins. Co. v. Acree, 209 Ga. App. 234, 235-236 (433 SE2d 312) (1993). The settlement agreement provided that Thurman accept $35,000 as total settlement, $28,000 from Poteete and $7,000 from the appellant. The appellant stood ready to tender payment, but when Thurman learned that Poteete was unable to pay his share, Thurman refused to partially settle the matter against the appellant. Because the agreement does not provide for partial settlement or otherwise detail the obligations of the parties if payment from both the appellant and Poteete is not forthcoming, we agree with the trial court that the agreement is indefinite, uncertain and ambiguous and find no error in the court’s refusal to enforce.

Decided July 12, 1994.

Macey, Wilensky, Cohen, Wittner & Kessler, Mark L. Golder, Rachel A. Snider, for appellant.

Richard B. Thurman, for appellees.

4. Finally, the appellant contends the court erred in charging the jury on a bank’s obligation upon receipt of funds for deposit for a specific purpose, as requested by Poteete, and in improperly modifying certain requests submitted by the appellant which were correct statements of the law. We have reviewed the charge in its entirety and find that it fully and correctly instructed the jury on the elements of conversion in the context of this case.

Judgment affirmed.

Birdsong, P. J., and Blackburn, J., concur.


text:
    A94A0798.
    BASELER v. THE STATE.
    (446 SE2d 250)
   Judge Harold R. Banke.

The appellant, James Paul Baseler, wás convicted of driving under the influence of alcohol. On appeal, he contends that the trial court erred in denying his motion to suppress based on an illegal stop of his vehicle, and in admitting into evidence an inculpatory statement he made at the time of his arrest.

1. The trial court properly denied the appellant’s motion to suppress because it was untimely filed only six days before trial in the matter. “Uniform Superior Court Rule 31.1 requires that all motions be filed at or before arraignment unless the time is extended by the judge. Further, OCGA § 17-5-30 has been interpreted ... as requiring that motions be filed by the time of arraignment. [Cits.]” Van Huynh v. State, 258 Ga. 663, 664 (2) (373 SE2d 502) (1988).

2. The arresting officer was allowed to testify that just as he was placing the appellant under arrest for driving under the influence, the appellant acknowledged that he was impaired and pleaded with the officer not to arrest him. The trial court found the inculpatory statement to be properly admissible as a spontaneous remark made before the officer could advise him of his Miranda rights.

Decided July 12, 1994.

Burkett, Schneider & Mumford, Robert F. Mumford, for appellant.

Cheryl F. Custer, District Attorney, S. Dabney Yarbrough, Assistant District Attorney, for appellee.

A trial court’s findings as to factual determinations relating to the voluntariness of a defendant’s statement will be upheld on appeal unless they are clearly erroneous. Mills v. State, 210 Ga. App. 217 (435 SE2d 736) (1993). The trial court’s findings in the instant case were not clearly erroneous, and the appellant’s inculpatory statement thus was properly admitted into evidence.

Judgment affirmed.

Birdsong, P. J., and Blackburn, J., concur.


text:
    A94A0832.
    DEVINS v. LEAFMORE FOREST CONDOMINIUM ASSOCIATION OF OWNERS.
    (446 SE2d 531)
    Decided July 12, 1994.

      Robert S. Devins, pro se.
   Judge Harold R. Banke.

On April 21, 1993, the appellant filed a notice of appeal from the grant of summary judgment for the appellee in this declaratory judgment action commenced by the appellant. On October 13, 1993, after finding that there had been an unreasonable delay in the filing of the transcript and that the appellant was guilty of laches in failing to monitor the progress of the appeal or to take appropriate steps to cause it to be docketed, the trial court dismissed the appeal. That order of dismissal is now appealed.

The record shows that transmittal of the record to this court was delayed because the appellant’s notice of appeal mistakenly designated that a nonexistent transcript would be included as part of the record, and that the appellant made no effort to expedite the appeal. Under these circumstances, the trial court did not abuse its discretion in dismissing the appellant’s notice of appeal. Johnston v. Ga. Pub. Svc. Comm., 209 Ga. App. 224 (433 SE2d 65) (1993); Teston v. Mills, 203 Ga. App. 20 (416 SE2d 133) (1992).

Judgment affirmed.

Birdsong, P. J., and Blackburn, J., concur.

Simmons, Warren & Szczecko, William C. McFee, Jr., for appellee.


text:
    A94A0886.
    ZINSER v. TORMENTA, S.A.
    (446 SE2d 249)
   Judge Harold R. Banke.

We granted the appellant’s application for interlocutory appeal to determine whether the trial court erred in granting the appellee’s motion to intervene in an action brought by the appellant against her ex-husband, Lawrence Gandolfi, and his employer, Eagles Nest Homes, Inc. In her suit, the appellant sought damages and a permanent injunction of Gandolfi’s assignment to the appellee of receivables Eagles Nest owed Gandolfi.

In granting the injunction, the trial court found that under OCGA § 19-5-7, the appellant has a valid lien in all of the personal property that Gandolfi acquired and owned up to the date the Gandolfis’ divorce was final, including money owed by Eagles Nest to Gandolfi; that the appellant’s lien interest is primary and superior to all receivables of Gandolfi from Eagles Nest and any conveyance, assignment or sale from Gandolfi to the appellee; that the conveyances made by Gandolfi during the pendency of the divorce proceeding violated the appellant’s valid lien under both OCGA §§ 19-5-7 and 18-2-1; that the conveyances were fraudulent, having been made for the express purpose of attempting to keep the appellant from recovering and satisfying the divorce decree; and that said conveyances were null and void. The court then enjoined Eagles Nest from paying any monies to the appellee under the assignments from Gandolfi until the appellant is fully paid all the money she is owed by Gandolfi.

After entry of the permanent injunction, the appellee filed a motion to intervene in the action, claiming an interest in a promissory note in the amount of $1,250,000 from Eagles Nest to Gandolfi, which Gandolfi assigned to the appellee. With no acknowledgment of its previous order declaring the assignments null and void, the trial court granted the motion to intervene, finding that intervention was necessary to enable the appellee to protect its interest in property which was the subject matter of the action. This appeal followed.

1. The appellant contends the court erred in granting the motion to intervene because the motion was untimely and the appellee had no interest to protect in the action since the trial court declared the subject contract assignments to be null and void.

“Upon timely application anyone shall be permitted to intervene I in an action . . . [w]hen the applicant claims an interest relating to the property or transaction which is the subject matter of the action and he is so situated that the disposition of the action may as a practical matter impair or impede his ability to protect that interest, unless the applicant’s interest is adequately represented by existing parties.” OCGA § 9-11-24 (a) (2). “Intervention after judgment is not usually permitted, and to justify it requires a strong showing. [Cit.] The decisions whether intervention is timely and the showing sufficient are matters within the sound discretion of the trial court and will not be controlled absent an abuse of discretion. [Cits.]” Doe v. Garcia, 177 Ga. App. 61, 62 (338 SE2d 710) (1985). “[I]f the one who seeks to intervene will still be left with his right to pursue his own independent remedy against the parties, regardless of the outcome of the pending case, then he has no interest that needs protecting by intervention and should not be allowed to intervene over objection.” Gregory v. Tench, 138 Ga. App. 219, 220 (1) (225 SE2d 753) (1976).

Decided July 12, 1994.

Paul R. Koehler, Weinstock & Scavo, Michael Weinstock, John M. Bruce, for appellant.

Roach, Hasty & Geiger, Thomas A. Roach, Jr., Marc D. Celia, Baker & Baker, Elliott R. Baker, William E. Whitaker, Fraser & Bussart, Mark S. Fraser, for appellee.

The appellee has made no showing why it should be allowed to intervene to address matters already concluded by the permanent injunction. The trial court previously determined that the appellant’s lien is superior to any alleged interest by the appellee and that the conveyance to the appellee is null and void. Under the court’s order, the appellee can only recover from Eagle’s Nest after the appellant’s judgment is fully satisfied. Thus, intervention is not required since the appellee’s interest will not be impaired by the satisfaction of the superior lien. Moreover, regardless of the outcome of the appellant’s case, the appellee is still left with its right to pursue its own independent action against Gandolfi. See Gregory v. Tench, supra. Under these circumstances, the trial court abused its discretion by granting the appellee’s motion to intervene in this action.

2. In light of our decision in Division 1, it is unnecessary to address the appellant’s remaining enumerations.

Judgment reversed.

Birdsong, P. J., and Blackburn, J., concur.


author: Pope, Chief Judge.

text:
    A94A0131.
    A94A0132.
    A94A0133.
    MAIL & MEDIA, INC. v. ROTENBERRY. SULLIVAN GRAPHICS, INC. v. ROTENBERRY. ROTENBERRY v. MAIL & MEDIA, INC.
    (446 SE2d 517)
   Pope, Chief Judge.

Case No. A94A0131

In 1990, Mr. Rotenberry sold all issued and outstanding stock in a corporation he solely owned called Mail & Media, Inc. to Sullivan Graphics, Inc. Mail & Media was engaged in the business of developing and printing advertising circulars, inserts and catalogues for various retail establishments. At the time of the sale, Mr. and Mrs. Rotenberry entered into a noncompetition agreement with Mail & Media. The noncompetition agreement provided for payment to the Rotenberrys of $3,000,000, subject to certain restrictions. Mr. Rotenberry also entered into an employment agreement with Mail & Media for an initial three-year term at an annual salary of $300,000. Mr. Rotenberry died on May 23, 1992. Mail & Media made the requisite payments under the employment and noncompetition agreements until August 2, 1992. Mail & Media refused to make subsequent payments to Mrs. Rotenberry, contending its obligations under those agreements had ceased. Mrs. Rotenberry filed suit against Mail & Media, seeking sums allegedly due her personally and as executrix of the estate of Mr. Rotenberry pursuant to those agreements for the time period after August 2, 1992. Mail & Media counterclaimed for alleged breaches of fiduciary duty by the Rotenberrys while they were officers of Mail & Media. Mrs. Rotenberry and Mail & Media filed cross-motions for partial summary judgment on Rotenberry’s claim and Rotenberry moved for summary judgment on Mail & Media’s counterclaim. Mail & Media appeals from the trial court’s grant of Mrs. Rotenberry’s motion for partial summary judgment, denial of its motion for partial summary judgment and the grant of Mrs. Rotenberry’s motion for summary judgment as to its counterclaims.

1. Mail & Media first contends the trial court erred in entering judgment in favor of Mrs. Rotenberry concerning the noncompetition agreement. Specifically, it argues that because the noncompetition agreement was a personal services contract, all of its obligations under that contract ceased upon Mr. Rotenberry’s death. See OCGA § 53-7-8.

The issue of whether noncompetition agreements ancillary to the sale of a business are personal services contracts is one of first impression in Georgia. Other jurisdictions have addressed this issue, however, and the majority rule is that noncompetition agreements which are not part of larger agreements (such as employment contracts) containing affirmative promises of personal services are not personal services contracts. Compare Sanfillippo v. Oehler, 869 SW2d 159 (Mo. App. 1993) (holding noncompetition agreement was not one for personal services when the agreement only required the promisor to refrain from certain activity) and TPS Freight Distrib. v. Texas Commerce Bank-Dallas, 788 SW2d 456 (Tex. App. 1990) (same) with Bloom v. K & K Pipe &c. Co., 390 S2d 770 (Fla. Dist. Ct. App. 1980) (holding noncompetition agreement which also contained affirmative promise to answer buyer’s questions was personal services contract). When a noncompetition agreement ancillary to the sale of a business does not also require the seller to affirmatively provide services to the buyer, the essential benefit the buyer is purchasing is the business’s good will (as opposed to the seller’s expertise), see Redmond v. Royal Ford, 244 Ga. 711, 713 (261 SE2d 585) (1979); and the seller’s death does not deprive the buyer of this benefit, particularly since the seller’s heirs and successors will continue to be bound by the agreement. See TPS Freight, 788 SW2d at 458. We find Sanfillippo and TPS Freight persuasive, and therefore adopt their rule as our own: while a noncompetition agreement joined with affirmative promises is a personal services contract which terminates upon the death of the promisor, a noncompetition agreement standing alone, with no affirmative promises, is not.

In this case, the noncompetition agreement contains no affirmative promises. An employment agreement (discussed in Division 2) was executed at the same time as the noncompetition agreement, but it is a totally separate and independent document, with separate and independent consideration. See Sanfillippo, 869 SW2d at 161. Accordingly, Mail & Media’s obligation under the noncompetition agreement did not terminate when Mr. Rotenberry died. As there is no evidence that the Rotenberrys or Mr. Rotenberry’s heirs or successors competed with Mail & Media during the time periods set forth in the noncompetition agreement, the trial court properly entered judgment in favor of Mrs. Rotenberry (individually and as executrix of Mr. Rotenberry’s estate) for the full amount owed the Rotenberrys under the noncompetition agreement as written.

2. We next consider whether the trial court properly held that Mrs. Rotenberry, as executrix of the estate of Mr. Rotenberry, is entitled to payment under the employment agreement. The employment agreement between Mr. Rotenberry and Mail & Media expressly contemplates the death or incapacity of Mr. Rotenberry. Pursuant to that agreement, in appreciation for Mr. Rotenberry’s services, Mail & Media agreed to pay upon his death or incapacitation 50 percent of the compensation otherwise due him for the remainder of the initial term of the contract.

Mail & Media contends, however, that it is relieved of that obligation because the Rotenberrys breached fiduciary duties to Mail & Media. Specifically, Mail & Media contends that prior to its purchase Mr. Rotenberry placed in jeopardy Mail & Media’s relationship with Bi-Lo, Inc., its largest customer, by setting up a reserve account for Bi-Lo. Mail & Media contends certain payments were made from that account for unusual expenses, including the personal expenses of Bi-Lo’s advertising director, ultimately resulting in the loss of the Bi-Lo account. Mail & Media further alleges the Rotenberrys breached fiduciary duties owed to Mail & Media because (1) they knew about the unorthodox nature of the reserve account for Bi-Lo but failed to disclose that information before the purchase; and (2) they participated in setting up the reserve account and making unauthorized payments through it. Mail & Media also contends Mr. Rotenberry breached fiduciary duties owed to Mail & Media after the purchase by not revealing all information concerning the reserve account while he was acting as President of Mail & Media.

In granting summary judgment in favor of Mrs. Rotenberry, the trial court held that prior to the sale Mr. Rotenberry could not breach a fiduciary duty to the corporation because as the sole stockholder and director any action taken by him would have necessarily been ratified by the corporation. The trial court further held that the record did not support a finding that Mr. Rotenberry breached any fiduciary duty owed to Mail & Media after the purchase.

We hold that Mr. Rotenberry, as seller, did not owe a fiduciary duty to Sullivan Graphics during the time period the parties were negotiating the sale of Mail & Media. “A fiduciary or confidential relationship arises ‘where one party is so situated as to exercise a controlling influence over the will, conduct, and interest of another or where, from a similar relationship of mutual confidence, the law requires the utmost good faith, such as the relationship between partners, principal and agent, etc.’ OCGA § 23-2-58. The law recognizes ‘that a confidential relationship may exist between businessmen, depending on the facts.’ [Cit.] . . . ‘The mere fact that one reposes trust and confidence in another does not create a confidential relationship. “In the majority of business dealings, opposite parties have trust and confidence in each other’s integrity, but there is no confidential relationship by this alone.” [Cit.]’ [Cit.]” Kienel v. Lanier, 190 Ga. App. 201, 203 (378 SE2d 359) (1989).

Furthermore, employees of the purchaser were made aware of the reserve account before the purchase, but the record reveals that the purchaser’s due diligence inquiry about the reserve account was less than thorough. Although Mail & Media asserts the purchaser’s questions about the account were not fully answered, the purchaser’s employees made the decision not to press for complete disclosure on the account. In fact, although the purchaser’s employees met with Bi-Lo’s advertising director and his supervisor before the sale was consummated and after they had knowledge of the reserve account, they did not inquire about the reserve account during the meeting. Also the purchaser had knowledge that Bi-Lo accounted for more than 50 percent of Mail & Media’s business and that there was no written contract between Bi-Lo and Mail & Media. Still it willingly entered into the purchase agreement with nothing more than assurances from Bi-Lo that the relationship between Bi-Lo and Mail & Media was strong.

We find no breach of fiduciary duty by Mr. Rotenberry to Mail & Media under the facts of this case. The record reveals that Mail & Media set up the reserve account in question for Bi-Lo at the direction of either Bi-Lo’s advertising director, his assistant or both. Employees of Bi-Lo controlled the use of the reserve funds. Although there is no evidence that the Vice-President of Bi-Lo who supervised the advertising director knew the extent of how the reserve funds were used, he approved the concept of such an account and knew that the advertising director requested Mail & Media to pay for at least one unorthodox expense from that account, a skybox at a university football stadium. There is no evidence funds were appropriated for either the use of Mail & Media or any employee or principal of that corporation. While such an account constituted an unorthodox business practice and may evidence bad business judgment on the part of the Rotenberrys in agreeing to set up the account and maintain it in the manner directed by Bi-Lo’s advertising director, there is no evidence that the Rotenberrys engaged in any conduct harmful to Mail & Media with regard to this account.

Moreover, assuming arguendo that the Rotenberrys breached a fiduciary duty to Mail & Media through the creation and use of a reserve account for Bi-Lo, there was no resulting harm to Mail & Media stemming from that account. The record does not support Mail & Media’s contention that the creation and use of the Bi-Lo reserve account led to Mail & Media’s loss of the Bi-Lo account. The employee of Bi-Lo who decided to stop using Mail & Media was the person who replaced the long-time advertising director through whom Mr.. Rotenberry had established Mail & Media’s relationship with Bi-Lo. He testified he had no knowledge of the reserve account until after Bi-Lo had severed its relationship with Mail & Media. When pressed about the reason Bi-Lo severed its relationship with Mail & Media, he gave two reasons: (1) Bi-Lo had made the decision even before he was brought in to replace the former advertising director to bring the work Mail & Media was doing in-house; and (2) he was basically disappointed with how Mail & Media handled the Bi-Lo account after he took over. The new advertising director’s supervisor confirmed that the use of the reserve account was not the reason Bi-Lo ceased doing business with Mail & Media.

The record also supports the trial court’s finding that Mr. Rotenberry did not breach any fiduciary duty owed to Mail & Media after the purchase was complete. The evidence shows that when the purchaser expressed concern about the unusual reserve account for Bi-Lo, Mr. Rotenberry assured it that the account would be cleared up before the sale. Although there is some evidence that there was certain activity of that account after the sale, there was no evidence presented by Mail & Media that those transactions were questionable, or that those transactions prompted or were part of the inquiry the new director of advertising for Bi-Lo made to Mail & Media. We also find no merit in Mail & Media’s contention that Mr. Rotenberry should have fully disclosed all activities of the Bi-Lo reserve account after the sale since, as we discussed above, the record does not support Mail & Media’s contention that the creation and use of the reserve account resulted in the loss of Bi-Lo’s business. At most, Mr. Rotenberry and others associated with Mail & Media may have contributed to the loss of the Bi-Lo account by not responding as promptly and thoroughly to inquiries made by the new director of advertising for Bi-Lo as the new director wanted. However, there is no evidence the new director of advertising inquired about the reserve account and all allegations concerning breach of fiduciary duty center on that account. We further note that Bi-Lo had decided to bring its printing work in-house before it experienced problems with Mail & Media handling its account, and Bi-Lo continued to use Mail & Media until it brought its work in-house. For all these reasons we hold the trial court did not err in granting Mrs. Rotenberry’s motion for partial summary judgment, denying Mail & Media’s motion for partial summary judgment and granting Mrs. Rotenberry’s motion for summary judgment as to Mail & Media’s counterclaims.

Case No. A94A0132

In this case, applicant for intervention Sullivan Graphics, Inc. appeals the denial of its motion to intervene pursuant to OCGA § 9-11-24 (b) in this action. Sullivan Graphics argues that the claims it seeks to assert in this case for breaches of fiduciary duties by the Rotenberrys to Mail & Media stem from the same facts as those underlying Mail & Media’s breach of fiduciary duty claims. However, it appears from the parties’ assertions in their briefs that Sullivan Graphics seeks to assert claims against the Rotenberrys stemming from the stock purchase agreement, whereas no claim in Case No. A94A0131 stemmed directly from that agreement.

“Whether permissive intervention is granted is addressed to the sound discretion of the trial judge, and a decision on this issue will not be reversed unless there is an abuse of discretion. [Cit.]” Sloan v. Southern Floridabanc Fed. Savings &c. Assn., 197 Ga. App. 601, 603 (2) (398 SE2d 720) (1990). It is well-settled that denial of a movant’s motion to intervene is not error when “the one who seeks to intervene will still be left with his right to pursue his own independent remedy against the parties, regardless of the outcome of the pending case.” Gregory v. Tench, 138 Ga. App. 219 (1) (a) (225 SE2d 753) (1976). This court takes judicial notice that Sullivan Graphics has filed suit against Mrs. Rotenberry in the United States District Court for the Northern District of Georgia, Case No. 1-93-CV-1174. Because Sullivan Graphics can pursue its claims in another forum, the trial court did not err in denying its motion for permissive intervention.

Case No. A94A0133

The sole issue on appeal in this case is whether an agreement dated August 6, 1991, among and between Mail & Media and the Rotenberrys in which they agreed to defer the second and third installment payments under the noncompetition agreement, is an enforceable agreement even though it failed to recite what consideration, if any, they received in exchange for their promises. We agree with Mail & Media that this agreement constituted a valid waiver and for that reason the trial court did not err in upholding the agreement. We note that the noncompetition agreement expressly provided for waivers and only required that such agreements be in writing and signed by the parties to be charged. Certainly this agreement falls within that contractual description.

Furthermore, this agreement falls within the traditional definition of waiver: the intentional relinquishment of a known right. Hathcock v. Hathcock, 246 Ga. 233, 234 (271 SE2d 147) (1980); E. Allen Farnsworth, Contracts, 587 (1990). A waiver is an unilateral action that needs no consideration. Farnsworth, supra at 589. The Rotenberrys’ course of conduct was consistent with a waiver of their right to payment under the original terms of the contract. All evidence of record shows that the Rotenberrys agreed to defer timely payment under the terms of the noncompetition agreement because, after Mail & Media lost the Bi-Lo account, it was in dire financial condition and making the requisite payments under the noncompetition agreement on time would have probably forced Mail & Media out of business. Furthermore, there is no evidence of record that the Rotenberrys contended they had not waived their right to timely payment under the noncompetition agreement before filing suit. This court will affirm the judgment of the trial court if it is right for any reason. Because we hold the disputed agreement constituted a valid waiver, the trial court did not err in enforcing that agreement.

Decided June 24, 1994

Reconsideration denied July 13, 1994

Smith, Gambrell & Russell, John G. Despriet, Dana M. Richens, for Mail & Media, Inc. and Sullivan Graphics, Inc.

Schreeder, Wheeler & Flint, David H. Flint, Mark W. Forsling, for Rotenberry.

Judgments affirmed.

McMurray, P. J., and Smith, J., concur.

        Keller v. California Liquid Gas Corp., 363 FSupp. 123 (D. Wyo. 1973), the only decision holding that a noncompetition agreement without any affirmative promises was a personal services contract, failed to distinguish between those noncompetition agreements which are made in the context of an employment agreement and those which are not. Because the Keller decision relied on case law dealing with the former without noting the distinction, we think its reasoning is flawed. Cf. Redmond v. Royal Ford, 244 Ga. 711, 713-714 (261 SE2d 585) (1979) (recognizing and emphasizing difference between noncompetition agreements ancillary to sale of business and noncompetition agreements ancillary to employment contracts).

       The only other evidence of creation of a similar account by Mail & Media for another customer was for Red Foods after Bi-Lo’s advertising director’s assistant took a position with that company.

       We reject Rotenberry’s argument that the agreement was bilateral in nature rather than unilateral. Mail & Media’s obligation to make the payments was pre-existing, and the only change agreed to by the parties was that the Rotenberrys agreed to extend the time in which Mail & Media could timely make payments under the noncompetition agreement.


text:
    A94A0174.
    WEIR v. KIRBY CONSTRUCTION COMPANY, INC.
    (446 SE2d 186)
   Birdsong, Presiding Judge.

Kirby Construction Company, Inc. sued Paul Weir for a debt on a contract for renovation of the “Patti Arbuckles” restaurant. As president of Patti Arbuckles Productions, Inc., Mr. Weir contracted for the work on a date between March 21-26, 1990. On March 23, 1991, Kirby estimated the work would cost $417,000 but Patti Arbuckles Productions informed Kirby it wanted to keep the cost under $400,000. When the job was half done, Kirby Construction estimated it would cost $375,000. The final bill was $431,000. Patti Arbuckles Productions paid Kirby $394,191.

Kirby sued Paul Weir for the remainder, on discovering that when Weir entered the contract as president of the corporation, its certificate of incorporation had not yet issued. Weir’s attorney had signed the articles of incorporation on March 1, 1991. In early March he informed Weir they were ready for filing with the Secretary of State and sent Weir a bill for this work. The certificate of incorporation was issued April 1, 1991, by the Secretary of State.

There is no evidence Weir actually knew the certificate of incorporation had not issued when he entered the contract as president of the corporation.

Kirby sued Weir on the theory of “promoter liability” under common law. See Wells v. Fay & Egan Co., 143 Ga. 732 (85 SE 873). Paul Weir unsuccessfully moved for summary judgment on grounds that the repeal of former OCGA § 14-2-23 and enactment of OCGA § 14-2-204 effectively removed the common law “promoter’s liability.” Over objection, the court charged the jury: “If Paul J. Weir, at the time of the signing of the contract . . . knew or should have known that Patti Arbuckles Productions, Inc. was not incorporated then he is personally liable to [Kirby] for any sums remaining due under the contract.” (Emphasis supplied.) The jury gave a verdict against Weir for $36,493.06 and awarded $22,330.60 attorney fees. The trial court assessed $11,841.74 interest.

Weir enumerates, inter alia, the denial of his motions for summary judgment, directed verdict and judgment n.o.v.; the trial court’s jury charge quoted above; and the submittal to the jury of the issue of attorney fees. Held:

1. The trial court erred in denying Weir’s motion for directed verdict. Appellant contends that as there is no evidence he knew the certificate of incorporation had not been issued when he entered the construction contract, under OCGA § 14-2-204 he cannot be personally liable for the corporation’s debt. Kirby contends the common law “promoter’s liability” is extant and requires only proof that Weir knew “or should have known” the certificate of incorporation had not issued.

Wells held: “If one contracts as agent, when in fact he has no principal, he will be personally liable. A promoter, though he may assume to act on behalf of the projected corporation and not for himself, can not be treated as an agent of the corporation for it is not yet in existence; and he will be personally liable on his contract, unless the other party agreed to look to some other person or fund for payment.” Id. at 733. Former OCGA § 14-2-23 provided: “All persons who assume to act as a corporation before the Secretary of State has issued the certificate of incorporation . . . shall be jointly and severally liable for all debts and liabilities incurred or arising as a result thereof.” This statute was repealed by Ga. L. 1988, p. 1070, § 1; OCGA § 14-2-204, effective July 1, 1989: “All persons purporting to act as or on behalf of a corporation, knowing there was no incorporation under this chapter, are jointly and severally liable for all liabilities created while so acting.” (Emphasis supplied.)

Liability under former § 14-2-23 and the common law “promoter’s liability” authorized in Wells, supra, are not separate theories of liability. Former § 14-2-23 absorbed the common law “promoter’s liability” by making liable “[a]ll persons who assume to act as a corporation before the Secretary of State has issued the certificate of incorporation.” (Emphasis supplied.) Under Wells and former OCGA § 14-2-23, liability was imposed without regard to such person’s lack of knowledge that the certificate of incorporation had not issued. The liability in Wells arose from contract and agency law prior to the enactment of the Business Corporations Act including former OCGA § 14-2-23.

Kirby insists the enactment of § 14-2-204 revived or left intact the common law “promoter’s liability” because the comments following § 14-2-204 indicate this new Code section protects only “innocent investors who are ignorant of the failure to complete the incorporation process.” Thus, Kirby says, the new statute does not protect Weir, who Kirby says was in a position to know and had a duty to know whether such steps had been completed, i.e., he was a “promoter” who “should have known” the corporation did not yet exist. However, former § 14-2-23 captures “all persons” who act as a corporation before certificate of incorporation is issued. OCGA § 14-2-204 clearly does not protect only “innocent investors,” but applies to “ [a] 11 persons purporting to act as or on behalf of a corporation, knowing there was no incorporation.”

Behind Kirby’s assertion that new § 14-2-204 protects only “innocent investors” is Kirby’s perception that a “promoter” is a person who fraudulently “promotes” something which does not exist. But in Wells, a “promoter” was described as a person acting “to bring about the formation of a corporation.” Id. at 733. Wells did not create a class of corporate carrion called “promoters”; it simply held Mr. Wells liable on his purchase of machinery as “Ficklen Spoke & Handle Co., by L. M. Wells” before the corporation existed. Compare Kelley v. RS&H of North Carolina, 197 Ga. App. 236 (398 SE2d 213). To boost the perception that Weir is a “promoter” guilty of unsavory acts, Kirby on appeal asserts that Weir improperly used a renovation allowance for purposes other than paying Kirby’s full bill. However, Kirby did not sue Weir for fraud, and whether there should have been money available to pay the full bill is immaterial to this suit. The evidence shows Kirby’s bill was disputed and that the corporation paid nearly all of it, and Weir was sued for the remainder merely because he entered the contract as president of the corporation before the certificate of incorporation was issued.

To the extent that common law “promoter’s liability” was based on what a person “should have known,” it is inconsistent with § 14-2-204, which imposes liability only on persons “purporting to act as ... a corporation, knowing there was no incorporation.” (Emphasis supplied.) To “purport” one thing while “knowing” another requires culpable knowledge. This language replaced a statute which had made liable persons who merely “assumed” to act for a corporation without knowing the charter of incorporation had not been issued. Under former § 14-2-23, innocent mistake, lack of actual knowledge, or even equitable estoppel would not help such persons. See Video Power v. First Capital Income Prop., 188 Ga. App. 691, 692 (373 SE2d 855). The inequity of such a statute is obvious. The new statute requires culpable knowledge. If Weir acted as president of a corporation believing the corporation existed, and the corporation did exist soon thereafter, there is no just reason to impose a “promoter’s liability” on him under Wells, for OCGA § 14-2-204 requires actual knowledge that there was no incorporation.

There being no evidence cited to us that Weir “purported” to act on behalf of the corporation, “knowing” it was not in existence, he is not personally liable under § 14-2-204. No evidence is cited from the trial that Weir actually knew the corporation was not in existence. He signed the articles of incorporation before he entered this contract; the articles of incorporation were issued days later. The facts do not lead to a reasonable inference that Weir “purported” to act for a corporation while “knowing” it did not exist. The trial court erred in denying Weir’s motion for directed verdict and his motion for judgment n.o.v.

2. The trial court erred in charging the jury that it could find Weir liable on the contract if he “should have known” the articles of incorporation had not been filed. This was harmful error as it is contrary to the plain terms of OCGA § 14-2-204, and it cannot be determined whether the jury found Weir liable merely because of what he “should have known.”

3. The attorney fee award falls with the verdict.

4. Kirby contends the denial of Paul Weir’s summary judgment is moot. We recently addressed the assertion that a denial of summary judgment is always rendered “moot” by a subsequent verdict and judgment entered at trial, in Schirmer v. Amoroso, 209 Ga. App. 682, 683 (434 SE2d 80), cert. denied, and concluded that the “rule” is not true in all cases.

OCGA § 5-6-34 (d) requires us to address enumerations which will affect the proceedings below. When a verdict is affirmed as supported by evidence, obviously an earlier denial of summary judgment to the appellant was correct, or harmless. If, after a summary judgment is denied, there is a trial and the evidence “shows that a verdict for the opposing party is authorized, the error is harmless.” Hill v. Willis, 224 Ga. 263, 266 (161 SE2d 281). So, “[w]here a motion for summary judgment is overruled on an issue and the case proceeds to trial and the evidence at the trial authorizes the verdict (judgment) on that issue, any error in overruling the motion for summary judgment is harmless.” (Emphasis supplied.) Dunlap v. Dunlap, 234 Ga. 304, 306 (215 SE2d 674). See also Talmadge v. Talmadge, 241 Ga. 609 (247 SE2d 61); Shaw v. Hughes, 199 Ga. App. 212 (1) (404 SE2d 309).

However, where the verdict is reversed, the case is remanded for new trial as in Schirmer, an earlier denial of summary judgment is no longer “moot.” If the denial of summary judgment is enumerated as error, OCGA § 5-6-34 (d) requires us to address that enumeration if it will affect the proceedings below. The issue of summary judgment is preserved for appeal in the posture of the evidence as it was when the motion for summary judgment was denied, for it was appellee’s duty (‘at that time” to rebut appellant’s prima facie showing of entitlement to judgment. Id. at 684.

In this case, the issue is the denial of directed verdict. Since we hold that the evidence at trial entitled Weir to a directed verdict, the case is at an end, and the issue of an earlier denial of summary judgment is truly “moot.” Accord Ray v. Atkins, 205 Ga. App. 85, 89 (3), 91 (5) (421 SE2d 317); Canal Ins. Co. v. Wilkes Supply Co., 203 Ga. App. 35 (1), 37 (416 SE2d 105). See also Allera Corp. v. Derby Cycle Corp., 210 Ga. App. 564 (1), 565 (436 SE2d 753), where the verdict was reversed for insufficient evidence. In Seabolt v. Cincinnati Ins. Co., 199 Ga. App. 715 (405 SE2d 757), the denial of summary judgment to appellant was moot because the verdict and judgment were not enumerated as error and were thus, in effect, affirmed. Seabolt cited Hardaway Constr. v. Browning, 176 Ga. App. 530 (336 SE2d 579) where the verdict was affirmed. The case is at an end when we affirm the verdict so a prior denial of summary judgment is definitely moot. Schirmer, supra.

In short, if the denial of summary judgment prior to trial will affect the proceedings below after appeal and if it is enumerated as error, OCGA § 5-6-34 (d) requires that we address it. If the verdict is reversed and a new trial is ordered, the summary judgment ruling may affect the proceedings below. But if we reverse the judgment because appellant was entitled to a directed verdict, as in this case, or judgment n.o.v., then the case is over, so the earlier denial of summary judgment to appellant will not affect the proceedings below, and is therefore moot.

5. In view of this ruling, it is unnecessary to address enumerations as to jury charges and form of verdict.

Judgment reversed.

Cooper and Blackburn, JJ., concur.

Decided May 9, 1994

Reconsideration denied July 13, 1994

On Motion for Reconsideration.

Kirby Construction insists that OCGA § 14-2-204 does not supplant “promoter’s liability.” Wells v. Fay & Egan Co., 143 Ga. 732 (85 SE 873) was written when there was no statute on the issue. Hagan v. Asa G. Candler, Inc., 189 Ga. 250, 253 (5 SE2d 739). Wells had to borrow agency principles; it was even explained as a case where it was impossible to infer that the agent intended to bind the principal (Hagan at 258) but this was fiction, for in fact Wells’ intent to bind the principal and its intent to be bound, were proved; the principal soon did exist, assumed the debt and made payments which the creditor accepted.

Public policy justified the result in Wells, so a law was passed imposing “promoter’s liability” (former OCGA § 14-2-23); this law was repealed when public policy no longer required it. See OCGA § 14-2-204, Comment. Nevertheless, Kirby says the new public policy expressed in § 14-2-204 and in this opinion allows people to act for nonexistent corporations and throws all the risk on innocent parties. There is, however, always liability for fraud. Moreover, after Hagan, a law was passed which provides that a contract by one purporting to bind a nonexisting principal is void and any party “misled thereby to his injury” has a right of action for damages. OCGA § 10-6-89. In this case the principal ratified the contract and assumed the debt (OCGA § 10-6-52), so Kirby was not misled to its injury by the fact that Weir acted for a corporation which was not in legal existence.

Kirby’s assertion that the jury found Weir “morally at fault in the failure of Kirby to be paid its entire bill” tells the tale. Despite Kirby’s efforts to show that Weir acted badly in the corporation’s payment of only $394,191 of $431,000, Kirby cannot show that this dispute has any connection to the fact that Weir entered the contract when, unbeknownst to him, the corporation did not yet exist. The corporation paid all the bill except what it disputed, so its failure to pay more was not caused by Weir’s acting before it existed, and but for the court’s erroneous charge the jury could not have concluded that it was. It is, moreover, impossible to tell whether the award represents Weir’s supposed liability for a corporate debt, or damages for his own “moral wrong” in entering a contract before the certificate of incorporation issued, but in either case it is insupportable and amounts to a penalty under this jury charge.

Motion for reconsideration denied.

Neely & Player, Richard B. North, Jr., Lorre J. Gaudiosi, Mark L. Wilhelmi, for appellant.

Warlick, Tritt & Stebbins, Charles C. Stebbins III, for appellee.


text:
    A94A0675.
    EILAND v. THE STATE.
    (445 SE2d 765)
   Pope, Chief Judge.

Defendant Jerry Don Eiland was convicted by a jury of three counts of child molestation. He appeals following the denial of his motion for new trial.

1. Defendant challenges the admission of similar transaction evidence, arguing specifically that the trial court erred in allowing a prior indictment charging defendant with two counts of child molestation to be admitted into evidence. The record shows that several months prior to trial a hearing was held concerning the admissibility of the similar crimes evidence. The presiding judge concluded that testimony concerning the prior crimes would be admissible at trial to show intent and possibly identity, but that the actual indictment was inadmissible because it charged defendant with two counts of child molestation and defendant was never found guilty of those charges but instead entered a guilty plea to two counts of sexual battery. The presiding judge also stated that if the State did seek to admit the indictment at trial, it should redact the indictment to remove the impermissible matters.

The case proceeded to trial before a different judge, and the State informed the court that a pre-trial hearing had been conducted and its similar transaction evidence ruled admissible, although the State did not indicate to the court that the prior indictment had been ruled inadmissible unless redacted. The trial court inquired into the admissibility of the evidence and also ruled that testimony concerning the prior crimes was admissible. The defendant objected to the admission of the indictment, and the court initially reserved ruling on that issue. However, the trial court subsequently ruled that the unredacted indictment was admissible, over the strenuous and repeated objections of the defendant. Defendant urges that the admission of the indictment requires reversal, especially since the victim of one of the prior crimes did not testify at trial.

We agree that the admission of the unredacted indictment requires reversal under the facts of this case. A review of the record shows that the prior indictment charged defendant with two counts of child molestation, that defendant originally entered guilty pleas to those charges, that those pleas were withdrawn and that defendant subsequently pled guilty to two counts of sexual battery.

Testimony about defendant’s prior similar acts was admissible under the test enunciated in Williams v. State, 261 Ga. 640 (2) (409 SE2d 649) (1991). Indeed, testimony about prior similar acts may be admitted even if the defendant was not charged with any crime arising out of the similar acts or if he was tried but not convicted of any crime involving the similar transaction. Randolph v. State, 198 Ga. App. 291 (2) (401 SE2d 310) (1991). Evidence that defendant entered a guilty plea to the offense of sexual battery based on incidents involving children was also admissible; and that evidence could have been in the form of the prior indictment if no impermissible matter was contained therein or if it had been properly redacted, even if no testimony had been presented about the similarity of the prior offense. See Adams v. State, 208 Ga. App. 29 (430 SE2d 35) (1993) (setting forth an exception to the requirement of Stephens v. State, 261 Ga. 467 (6) (405 SE2d 483) (1991) in cases involving sex crimes against children). However, the indictment admitted as evidence of prior similar acts in this case showed that defendant had been previously charged with two counts of child molestation, a crime involving a different intent than that to which he had entered his plea. Compare OCGA §§ 16-6-4; 16-6-22.1. Moreover, at least as to one of the counts, no other evidence except the charging instrument was presented. Thus, the indictment contained impermissible matter and was not admissible. This is especially true in this case because the indictment also showed on its face that defendant originally pled guilty to the child molestation charges, and even though defendant withdrew his plea, the jury was made aware of this admission of guilt. The only purpose in admitting such evidence was to show the jury that defendant had been previously charged with and, although withdrawn, entered a guilty plea to the very same offense for which he was on trial in the present case, but for which defendant had never been found guilty. Clearly the relevance of the evidence showing the prior charges and withdrawn plea was outweighed by the extreme prejudice arising from its admissions. Moreover, our review of the record shows that this is not a case where overwhelming evidence of defendant’s guilt allows affirmance despite error. Cf. Favors v. State, 182 Ga. App. 179 (1) (355 SE2d 109) (1987). The trial court’s failure to either excise the objectionable material or keep the indictment from the jury mandates a reversal.

2. Because of our holding in Division 1, it is unnecessary for us to address defendant’s remaining enumeration of error.

Judgment reversed.

McMurray, P. J., and Smith, J., concur.

Decided May 11, 1994

Reconsideration denied July 13, 1994.

Ruskell & Harris, G. Charming Ruskell, for appellant.

Garry T. Moss, District Attorney, Cecelia M. Harris, Assistant District Attorney, for appellee.