text:
    A90A0650, A90A0651.
    KIEFFER et al. v. LINTON; and vice versa.
    (396 SE2d 13)
   McMurray, Presiding Judge.

Plaintiff Linton purchased a house from defendant Kieffer on or about July 28, 1985. Defendant Arrow Exterminators, Inc. (“Arrow”) furnished defendant Kieffer with a “clearance letter” which was given to plaintiff in connection with this purchase and sale. The clearance letter stated that defendant Arrow had performed an inspection of the house and found no active termite infestation. In May of 1987, plaintiff discovered termites in the house and this action followed.

At trial, plaintiff proceeded against defendant Arrow on a theory of negligent inspection and against defendant Kieffer on a theory of fraud. The jury returned a verdict in favor of plaintiff and against the defendants jointly in the amount of $36,000, and also awarded punitive damages against each of the defendants separately in the amount of one dollar each. Additionally, the jury awarded attorney fees and costs of litigation against defendant Kieffer in the amount of $15,000. In Case No. A90A0650 defendants appeal from the judgment entered against them, while in the cross-appeal, Case No. A90A0651, plaintiff appeals from the amount of punitive damages. Held:

1. Defendants’ first two enumerations of error complain of the denial of their motions for directed verdict at the conclusion of the plaintiff’s evidence. The plaintiff’s evidence shows that shortly prior to the inspection of the house by defendant Arrow, a partial inspection of the house was conducted by Richards. Richards did not complete his inspection of the house because upon looking underneath the crawl spaces of the house he found evidence of subterranean termites, mud tubes and tunnels along the floor joist and coming from the ground up to the beams, and evidence of powder post beetles, straps from the exit holes on the floor joist and beams. Based on these findings Richards did not complete the inspection, but informed defendant Kieffer that he would not issue a clearance letter.

Defendants contend that plaintiff failed to prove that defendant Arrow was negligent since plaintiff did not present any evidence concerning what was done or not done during the inspection performed by defendant Arrow’s employee. Smith v. Morico, 166 Ga. App. 737, 738 (305 SE2d 465), is cited for the proposition that negligence is not to be presumed and that in the absence of affirmative proof of negligence, we must presume performance of duty and freedom from negligence. However, lack of direct evidence is not lack of affirmative proof since such may be established by circumstantial evidence. Plaintiff presented evidence demonstrating that an inspection of the house, conducted with reasonable care by defendant Arrow’s employee, would have discovered the infestation. That it did not is ample circumstantial evidence of the negligence of defendant Arrow’s employee.

Defendants also contend that plaintiff failed to produce any evidence of defendant Kieffer’s alleged fraud since plaintiff did not testify as to any statements made by defendant Kieffer with regard to the presence or absence of termites or termite damage. However, a misrepresentation may be perpetrated by acts as well as words and even silence may in some instances amount to fraud. “ ‘Concealment of material facts may amount to fraud . . . where the concealment is of intrinsic qualities of the article which the other party by the exercise of ordinary prudence and caution could not discover. (Cit.) . . .’ [Cits.]” Woodall v. Orkin Exterminating Co., 175 Ga. App. 83, 84 (332 SE2d 173). There is ample evidence authorizing the jury in this case to find that defendant Kieffer knowingly utilized an inaccurate termite clearance letter to accomplish the sale of the house. Whether viewed as a positive act or a concealment, such is a misrepresentation which when considered together with the proof of the remaining elements of fraud will support a verdict in a fraud action.

2. Defendants contend that the trial court erred in denying their motion for directed verdict since plaintiff failed to present any evidence relevant to the proper measure of damages. “The appropriate measure of the repair costs plaintiff is entitled to recover is that which would have been incurred had the repairs been undertaken upon the discovery of the damage . . . not the cost of repairs as incurred [at a later date.]” Getz Svcs. v. Perloe, 173 Ga. App. 532, 535 (3), 536 (327 SE2d 761). Therefore, in the main appeal, plaintiff is entitled to the repair cost which would have been incurred in June 1987. Plaintiff’s evidence as to repair cost consists of an assessment of the damage and estimate of cost to repair which were completed some 18 months or more after the time of the discovery of the infestation by plaintiff. Defendant contends that this evidence should not have been admitted, that there was no evidence presented as to the damage in 1987, and that the jury was permitted to speculate as to damages.

It is clear that under the holding in Getz Svcs. v. Perloe, 173 Ga. App. 532, 535 (3), 536, supra, that the cost of repairs which would have been incurred had repairs been accomplished at the time the damage was discovered may be established by appropriate adjustment to damage and repair estimates developed at a later date. In the main appeal, there is some evidence that would contribute to an appropriate adjustment to the 1989 damage and repair estimates. This includes evidence that due to drought conditions the termites had not been active during the interval between the discovery of the infestation by plaintiff and the preparation of the damage and cost estimates, and that the cost of constructiori materials had not changed. However, there was no similar evidence as to the amount of any change in construction labor cost. Thus, plaintiff failed to provide the jury with sufficient data to enable calculation without speculation of the amount of repair cost at the time the damage was discovered. It follows that the verdict and judgment must be set aside.

“Although plaintiff did not prove the amount of special damages with the requisite degree of specificity, she did show that she was damaged in some (albeit unspecified) amount. Accordingly, we will exercise our discretion to meet the ends of justice and order that a new trial be had. OCGA § 9-11-50 (e). See Roland v. Byrd, 163 Ga. App. 408, 411 (294 SE2d 626).” Horne’s Pest Control Co. v. Elliott, 190 Ga. App. 351, 353 (378 SE2d 734). Consequently, a new trial is necessary in this case (the main appeal).

3. In view of our holding in Division 2, the remaining enumerations of error, including the sole enumeration of error raised in the cross-appeal, are moot.

Judgment reversed in Case No. A90A0650. Appeal dismissed in Case No. A90A0651.

Carley, C. J., and Sognier, J., concur.

Decided June 21, 1990

Rehearing denied July 12, 1990.

Churchill & Ferguson, Glenn A. Delk, Anthony Thomasson, Lynwood D. Jordan, Jr., for appellants.

Lipscomb, Johnson & Ashway, R. Timothy FLamil, for appellee.


source: Caselaw Access Project

author: Banke, Presiding Judge.

license: Public Domain

text:
    A90A0746.
    STEELE v. THE STATE.
    (396 SE2d 4)
   Banke, Presiding Judge.

The appellant was convicted of armed robbery, making terroristic threats, giving a false name to a law enforcement officer, and two counts of aggravated assault. He brings this appeal from the denial of his motion for new trial.

The state’s evidence showed that the appellant, accompanied by an unidentified accomplice, entered a personal residence and held a gun on several of its occupants while his accomplice took money from the pockets of at least one of them. There was also testimony that the appellant threatened to kill one of the individuals in the house and that he ultimately fired shots at two persons, wounding one. The appellant fled the scene but was recognized by a police officer at a shopping mall approximately two weeks later and was arrested at that time. The officer’s account of the events which preceded the arrest provided the evidentiary support for the appellant’s conviction on the charge of giving a false name to a law enforcement officer. Held:

1. The appellant contends that the trial court erred in refusing to declare a mistrial after the arresting officer testified that he (the officer) had been responding to a call for assistance “in reference to a. shoplifting suspect” when he confronted the appellant at the shopping mall. The appellant did not object to this testimony at the time it was offered but later moved for a mistrial on the ground that it placed his character at issue. The motion was properly denied. “[W]here evidence is relevant for the purpose of showing the circumstances of the arrest, it will not be excluded because it incidentally shows the commission of other crimes.” Bixby v. State, 234 Ga. 812, 814 (218 SE2d 609) (1975). Moreover, “a mistrial will not lie where evidence is admitted without objection [cit.] and a motion for mistrial not made contemporaneously with the alleged misconduct makes the motion not timely. [Cit.]” Bennett v. State, 165 Ga. App. 600, 601 (3) (302 SE2d 367) (1983).

2. The appellant contends that the evidence did not support his conviction of aggravated assault because the individual who was shot was not available to testify at trial, with the result that there was no evidence that the shooting placed him “in reasonable apprehension of his immediate safety.” However, intentionally firing a gun at another, absent justification, is sufficient in and of itself to support a conviction of aggravated assault. See Williams v. State, 249 Ga. 6, 8 (287 SE2d 31) (1982). See generally OCGA § 16-5-21 (a) (2). Moreover, the fact that the victim was severely wounded as a result of the shooting certainly supported an inference that he was placed in reasonable apprehension of his immediate safety.

Decided June 13, 1990

Rehearings dismissed June 28, 1990 and July 12, 1990.

C. Jackson Burch, for appellant.

Spencer Lawton, Jr., District Attorney, Elise O. Gray, Assistant District Attorney, for appellee.

3. The appellant contends that the evidence was insufficient to support his conviction of making terroristic threats because the testimony by the alleged victim of that offense regarding what had been said to him by the appellant was not corroborated, as required by OCGA § 16-11-37. The victim’s testimony in this regard was sufficiently corroborated by the evidence concerning the events which transpired immediately before and after the appellant made the asserted threats. “The sufficiency of the corroboration evidence is peculiarly a matter for the jury to determine. If the verdict is founded on slight evidence of corroboration connecting a defendant with the crime, the verdict.is legally sufficient. [Cit.]” Carter v. State, 237 Ga. 617, 618 (229 SE2d 411) (1976).

4. The credibility of the witnesses was for the jury. The evidence, construed in the light most favorable to the verdict, was sufficient to enable a rational trier of fact to find the appellant guilty beyond a reasonable doubt of each of the remaining offenses of which he was convicted. See generally Jackson v. Virginia, 443 U. S. 307 (99 SC 2781, 61 LE2d 560) (1979).

Judgment affirmed.

Birdsong and Cooper, JJ., concur.


author: Carley, Chief Judge.

text:
    A90A0067.
    KURC v. HERREN et al.
    (396 SE2d 62)
   Carley, Chief Judge.

Appellant-plaintiff entered into a written agreement to rent an apartment from appellee-defendants. Alleging the conversion of certain items of his personal property that remained on the premises after the early termination of the lease, appellant filed suit against appellees. Appellees answered, asserting that the property had been abandoned, and they subsequently moved for summary judgment. The trial court granted summary judgment in favor of appellees and appellant appeals.

1. “[A]fter the tenant’s term and possession are ended . . . personalty remains the property of the tenant; and though it may be left in the building, it is not by that fact alone to be treated as abandoned to the landlord. [Cits.]” (Emphasis supplied.) Cozart v. Johnson, 181 Ga. 337, 343 (1) (182 SE 502) (1935). However, appellant’s abandonment of his personal property is shown by more than the mere fact that he left it on the premises after the early termination of the lease. In relevant part, the lease itself provided the following definition of “abandonment”: “[Appellees] shall . . . have the right to store or dispose of any of [appellant’s] property remaining on the property after the termination of this agreement. Any such property shall be considered [appellees’] property and title thereto shall vest in [appellees].” Compare Cozart v. Johnson, supra at 342 (wherein “[t]here was no evidence of an express agreement touching the rights of the parties with respect to the [tenant’s personalty]. . . .”) Although there is no Georgia authority directly on point, other jurisdictions have recognized the enforceability of such a lease provision. “A stipulation in the lease as to the ownership of chattels which may be placed upon the demised premises will be enforced, regardless of what may be the rights of the parties at common law. . . . The lease may expressly provide that chattels shall become the property of the lessor on the expiration of the lease.” 5IC CJS 804, Landlord & Tenant, § 317 (a) (1968). The recognition of the enforceability of such a lease provision would not be inconsistent with general principles of Georgia law. “It is the paramount public policy of this state that courts will not lightly interfere with the freedom of parties to contract. [Cit.] And, ‘a person may waive or renounce what the law has established in his favor when he does not thereby injure others or aifect the public interest.’ [Cit.] Thus, it is general contract law in Georgia that parties are free to contract about any subject matter, on any terms, unless prohibited by statute or public policy, and injury to the public interest clearly appears. [Cit.]” Lovelace v. Figure Salon, 179 Ga. App. 51, 52 (1) (345 SE2d 139) (1986). Accordingly, there being no statutory or public policy prohibition which militates against enforcement of a lessee’s agreement that his personalty shall be deemed “abandoned” and become the property of the lessor if left on the premises after the termination of the lease, we hold that such provisions are enforceable in this state according to their terms. See generally Hardin v. Macon Mall, 169 Ga. App. 793 (1) (315 SE2d 4) (1984).

Appellant urges that, even if such lease provisions are generally enforceable in Georgia, the instant provision is not because it does not satisfy the tripartite test for enforceability as a liquidated damages provision. See Fields v. Smith, 190 Ga. App. 369 (378 SE2d 741) (1989). However, the instant provision need not satisfy that tripartite test because it is not a liquidated damages provision. Liquidated damages “are a sum to be paid in lieu of performance. [Cit.]” Thorne v. Lee Timber Prods., 158 Ga. App. 226 (279 SE2d 521) (1981). The provision in the instant lease does not purport to authorize appellees’ recovery of damages in the event of appellant’s breach of the lease. Instead, it merely provides that, notwithstanding appellant’s rights as a tenant under common law, any items of his personalty remaining on the premises after termination of the lease would be deemed abandoned and become the property of appellees. Under its terms, appellees’ title to such of appellant’s personalty as remained on the premises was in no way dependent upon appellant’s breach of the lease, but merely upon the termination of the lease. Since the provision in the instant lease is clearly not a liquidated damages provision, we need not decide whether Fields v. Smith, supra, remains viable authority or whether it may have erroneously construed the provisions of an enforceable option agreement as being a potentially unenforceable liquidated damages provision.

2. Appellant urges that a genuine issue of material fact remains as to whether he intended to abandon his personalty. In light of our holding in Division 1, however, summary judgment would have been improperly granted only if a genuine issue of material fact remains as to whether the lease was terminated. If the lease was in fact terminated, any of appellant’s personalty that remained on the premises was “abandoned” as a matter of contract law notwithstanding appellant’s subjective intent to the contrary. “Where the contract terms are clear and unambiguous, the court will look to that alone to find the true intent of the parties. [Cit.]” (Emphasis supplied.) Southern Fed. &c. Assn. of Atlanta v. Lyle, 249 Ga. 284, 287 (1) (290 SE2d 455) (1982).

The undisputed evidence of record is as follows: The written lease provided for the early termination of the lease by appellant upon certain conditions. On September 1, 1986, appellant invoked this provision and it was mutually agreed that the lease would terminate as of the end of that month. Although appellees did retain appellant’s security deposit, one of the conditions for early termination was that appellant pay “an amount equal to one months rent” and the lease otherwise provided that the security deposit could “be applied by [appellees] to satisfy all or part of [appellant’s] obligations. ...” In any event, there is no contention that appellees’ retention of the security deposit was in express recognition and consideration of appellant’s right to continue to occupy the premises past September 30, 1986. Compare Pleasant Hill Acres v. Todd, 158 Ga. App. 730, 731 (1) (282 SE2d 148) (1981).

Decided July 12, 1990.

Powell, Goldstein, Frazer & Murphy, Jerry B. Blackstock, James D. Meadows, for appellant.

Renda M. Bailey, Michael W. Broadbear, for appellees.

On this evidence, it is clear that there was an early termination of the lease and that, as of October 1, 1986, any items of appellant’s personalty that remained on the premises had been “abandoned” and belonged to appellees. It follows that the trial court correctly granted summary judgment in favor of appellees.

Judgment affirmed,

McMurray, P, J., and Sognier, J., concur.


author: McMurray, Presiding Judge.

text:
    A90A0390.
    FULTON COUNTY v. MORTON.
    (396 SE2d 65)
   McMurray, Presiding Judge.

In this condemnation proceeding, condemnor Fulton County took two contiguous tracts of land in the City of East Point, Georgia. After the special master awarded condemnee $30,000, condemnor appealed the matter to a jury trial. The jury awarded condemnee $100,000 and condemnor appeals. Held:

1. The condemnor’s first three enumerations of error complain that the trial court erred in permitting certain testimony by the condemnee over objection. However, in two of these instances the issues argued by condemnor on appeal are different than those raised by the objections submitted before the trial court and therefore will not be considered on appeal. Auto Rental & Leasing v. Blizzard, 159 Ga. App. 533, 535 (3), 536 (284 SE2d 47).

In the third instance, the condemnee was not allowed to answer the questions to which condemnor objected, but condemnee’s counsel was repeatedly required to rephrase questions to which condemnor had objected. Condemnee answered the revised question without any objection from condemnor and contrary to condemnor’s argument the transcript does not reveal any continuing objection to the line of questions involved. An issue presented for the first time on appeal will not be considered. Southeastern Ambulance Corp. v. Freeman, 185 Ga. App. 119, 121 (4) (363 SE2d 571); Payne v. McCollum, 174 Ga. App. 491 (1) (330 SE2d 421).

2. The trial court did not err in admitting the testimony of condemnee’s expert as to what it would cost condemnee to acquire property similar to that which was taken. Such testimony was not speculative, but was relevant to the jury’s determination of the value of the land taken by condemnor. “In determining the market value of land, due consideration should be given to ‘all the elements reasonably affecting value.’ Wright v. MARTA, [248 Ga. 372, 375 (283 SE2d 466)].” Department of Transp. v. Whitehead, 253 Ga. 150, 152 (2) (317 SE2d 542).

Decided July 12, 1990.

Robert G. Young, for appellant.

3. Next, condemnor enumerates as error the admission into evidence of a 1974 letter from Metropolitan Atlanta Rapid Transit Authority (“MARTA”) General Manager Alan F. Kiepper to County Attorney Sheats, albeit apparently in his capacity as attorney for an East Point landowner. While condemnor correctly complained that no foundation had been laid for the admission of this letter into evidence, we can perceive no prejudice resulting from this irrelevant material. The letter was dated more than nine years prior to the taking at issue, and does not relate to the property taken, but to the concerns of a landowner-client who is not a party to this action. In the letter, statements are made that MARTA planned to begin property acquisition in the East Point area in the latter part of 1975 but that MARTA would attempt to advance the acquisition of the property of the landowner-client if that would be beneficial to him. This evidence was of no probative value as to any material issue in the case sub judice, therefore its admission was error. Nonetheless, the irrelevant evidence is not shown to have been prejudicial to condemnor, therefore its admission must be deemed harmless and is not a cause for reversal. Brooks v. Steele, 139 Ga. App. 496, 497 (1) (229 SE2d 3); Weiss v. Johnson & Johnson Constr. Co., 98 Ga. App. 858, 873 (9) (107 SE2d 708).

4. In its final enumeration of error, condemnor contends there was no evidence of an unaccepted offer to buy or sell property such as would authorize a charge given to the jury that: “While evidence of an unaccepted offer to buy or sell property is not in and of itself evidence of value, yet where a witness testifies as to the value, and bases his opinion partly on such offer, his testimony is admissible.” However, in view of condemnee’s testimony that his opinion as to the value of the property taken was based in part upon an offer he had received for a portion of the property, we must conclude that this instruction, which condemnor concedes is a correct statement of the law, was properly included in the charge given to the jury. Hannula v. Ramey, 177 Ga. App. 512, 513 (2) (339 SE2d 735); Cale v. Jones, 176 Ga. App. 865, 868 (4) (338 SE2d 68).

Judgment affirmed.

Carley, C. J., and Sognier, J., concur.

H. Fred Gober, for appellee.


author: Cooper, Judge.

text:
    A90A0422.
    AMBASE INTERNATIONAL CORPORATION et al. v. BANK SOUTH, N.A.
    (395 SE2d 904)
   Cooper, Judge.

This case arises from an action brought by appellee, Bank South, to recover the balance due on a commercial installment note. The trial court granted summary judgment to appellee and appellants bring this appeal.

Appellants are Ambase International Corporation (“Ambase”), Management Services, Inc. (“MSI”), Everett Suters (“Suters”), and Curry Brothers, Inc., d/b/a Curry Marketing Systems (“Curry”). Ambase is the wholly owned subsidiary of MSI, and Suters is the chairman of the board of Ambase, MSI, and Curry as well as the majority shareholder of MSI.

In June 1986, Ambase executed a commercial installment note in favor of appellee, Bank South, in the principal amount of $300,000 and simultaneously executed a security agreement giving Bank South a security interest in the equipment, inventory and accounts receivable of Ambase. MSI and Suters were guarantors of the loan. MSI, which had an established lender/borrower relationship with Bank South since 1984, was also indebted to Bank South as evidenced by a promissory note in an amount in excess of $80,000 in favor of Bank South and a security agreement covering MSI’s equipment, inventory and accounts receivable. During the latter part of 1986, Ambase and MSI failed to make the installment payments on their notes, prompting John Murphy (“Murphy”), Bank South’s account representative for the Ambase and MSI loans, to discuss with Suters alternate proposals for retiring the debts of Ambase and MSI. Following the discussions, Ambase and MSI each established collateral accounts with Bank South into which all accounts receivable were deposited and, at Bank South’s direction, the funds deposited were transferred into the respective operating accounts of the two companies. For approximately the next seven months, neither Ambase nor MSI made any payments of principal due under the notes. During this time, MSI was engaged in negotiations with a company for the proposed sale of MSI’s customer list. However, the deal could not be consummated without the approval of Bank South. Bank South analyzed the company’s offer but declined to approve the sale. On July 17, 1987, in separate letters to each company, Bank South declared the Ambase and MSI notes to be in default. The following week, Bank South applied the funds in the collateral accounts to the respective indebtedness of the two companies. The indebtedness of MSI was satisfied in full and the indebtedness of Ambase was further reduced by the proceeds of a subsequent sale by MSI of a portion of its office equipment and furniture and the collection of accounts receivable; however, an outstanding principal balance due on the Ambase note remained. Bank South sued Ambase, MSI and Suters for the amount due under the note plus interest and attorney fees and also sued MSI, Suters, and Curry alleging the fraudulent conveyance of an insurance policy. Appellants answered, denying any liability under the note and further denying the allegation of fraudulent conveyance, and counterclaimed, seeking damages from Bank South for the commercially unreasonable sale of assets, tortious interference with contract, bad faith foreclosure and liquidation, and unjust enrichment. The trial court granted summary judgment to Bank South on its claim and on all counts of appellants’ counterclaim. Although the sole enumeration of error is the trial court’s grant of summary judgment to Bank South, appellants allege several erroneous findings and conclusions of the trial court in entering the order.

1. Appellants contend that the sale of equipment belonging to MSI, and the sale of a mainframe computer belonging to Ambase, were performed at the request of Bank South and were not conducted in a commercially reasonable manner pursuant to OCGA § 11-9-504. The record reflects that MSI entered into a written agreement with an auction company for the sale of MSI’s furniture and equipment which belonged to Bank South by virtue of the security agreement; that pursuant to that agreement the checks received from the auction were to be made jointly payable to. MSI and Bank South; that the agreement with the auctioneer was signed by MSI’s vice-president; and that a week prior to the auction a bill of sale was signed by MSI’s vice president for the sale of Ambase’s computer mainframe. The trial court found that the written contracts for the auction and sale of the MSI and Ambase assets clearly show that MSI and Ambase were the sellers of the assets and the written agreements could not be contradicted by parol evidence and further, that since appellants were the sellers, the requirement of OCGA § 11-9-504 that the sale be conducted in a commercially reasonable manner was inapplicable. Appellants argue that the trial court erred in not admitting parol evidence, which appellants contend would have raised a question of fact as to whether MSI or Bank South was the seller at the auction. We find no error with the trial court’s ruling. Bobby Brown, vice-president of MSI and Ambase, testified during his deposition that two days before the sale of MSI’s equipment, he received a letter from MSI’s landlord stating that if the past due rent in the amount of almost $150,000 was not paid in three days, legal action would be taken to recover the premises being leased. On the day Brown received the letter, Bank South had a representative present, who was tagging the furniture and equipment of MSI which was secured by Bank South’s lien. Brown contends that the Bank South representative made the decision to sell the equipment and that he went along with it because he was trying to cooperate. “Although parol evidence as to the surrounding circumstances is admissible to explain ambiguities and to aid in the construction of contracts, [OCGA § 24-6-3 and § 24-6-4] parol evidence which contradicts or varies the terms of a written instrument is inadmissible.” Kellos v. Parker-Sharpe, 245 Ga. 130 (1) (263 SE2d 138) (1980). Appellant’s attempt to show that Bank South was the seller of MSI’s equipment directly contradicts the terms of the unambiguous written agreement and the evidence was properly excluded. It also appears from the record that even if the evidence were admitted, it would not raise a question of fact as to whether Bank South was the seller. Brown’s testimony at best would have established that as a result of the impending dispossession, he felt as though he had no alternative other than selling the equipment. There is no evidence of any undue coercion or fraudulent inducement on the part of Bank South from which an inference could be drawn that Bank South was the seller of the assets in question; therefore, any error in not admitting the evidence was harmless.

2. We have reviewed the record and find no error in the trial court’s finding that the relationship between appellants and Bank South did not transform from borrower/lender into a partnership or joint venture. Appellants contend that as early as December 1986 Bank South changed its role from that of lender to one of partner with the debtor. In support of their contention, appellants allege that during a telephone conversation between Murphy and Brown, Murphy referred to the bank’s relationship with Ambase and MSI as a “partnership” and that Bank South took over the day to day operations of MSI and Ambase. Murphy testified during his deposition that if he used the word “partner,” he meant only that Bank South was an interested party in the retirement of the outstanding debts and was willing to cooperate with appellants in trying to accomplish that goal. The record reflects that Bank South took an active interest in the repayment of the loans by Ambase and MSI to the extent of having Ambase and MSI set up controlled depository accounts so that accounts receivable could be monitored on a daily basis, but that Bank South did not exercise control over how the funds in Ambase and MSI’s operating accounts were used. Nor do we find that Bank South’s forbearance from collecting the indebtedness transformed the relationship from borrower/lender to a partnership or joint venture. The record is replete with evidence of Bank South’s efforts to work with Brown on a regular basis toward Bank South’s goal of retiring the loans which continuously went unpaid. Thus, “[c]ontrary to the appellants’ allegation, the record affirmatively shows that the relationship between [Ambase and MSI] and [Bank South] was that of borrower/lender and that a joint venture did not exist.” Dolanson Co. v. C & S Nat. Bank, 242 Ga. 681 (1c) (251 SE2d 274) (1978). Furthermore, “even if a joint venture was shown to exist, the appellants have not demonstrated how this would preclude the bank from enforcing the clear and unambiguous terms of the [notes they signed].” Id at 684.

3. Appellants’ argument that Bank South unreasonably refused to cooperate in the consummation of the sale of MSI to another company is without merit. The record shows that prior to the defaults by MSI and Ambase, MSI entered into negotiations with another company for the sale of MSI’s customer base. Bank South evaluated the offer but declined to consent to the sale; therefore, the sale was never consummated. Bank South was under no obligation to agree to the sale and place itself in a less secure position with respect to the notes and security agreement, and was authorized to decline to give its consent to any proposal which it determined was not in the best interest of the bank. There being no wrongful, unlawful, or unauthorized action on the part of Bank South, appellants’ claim for tortious interference with contract was properly denied. See Singleton v. Itson, 192 Ga. App. 78, 80 (383 SE2d 598) (1989).

4. At the time of default, MSI was the owner and sole beneficiary of a one million dollar life insurance policy, which had lapsed due to nonpayment of the premium, on the life of Dale Burri, the president of Ambase and MSI. Subsequent to the default, Curry paid the past due premium to reinstate the policy and a change of beneficiary form was executed transferring MSI’s interest in the proceeds to Curry. Upon Burri’s death in August 1987, the proceeds of the policy were paid to Curry. The trial court found that the transfer of the insurance policy was without consideration at a time when MSI was insolvent, therefore it was a fraudulent conveyance within the meaning of OCGA § 18-2-22 (3). A creditor/debtor relationship between Bank South and MSI at the time the policy was transferred having been conclusively shown by the evidence, the two elements which must be established in order to meet the test of OCGA § 18-2-22 (3) are: (1) a voluntary conveyance made without valuable consideration and (2) the debtor’s insolvency at the time of the conveyance. Stokes v. McRae, 247 Ga. 658 (1) (278 SE2d 393) (1981). We note at the onset that appellants’ argument that nothing of value was transferred because the policy had lapsed at the time of transfer and had no cash value is without merit. MSI’s interest, as beneficiary in a one million dollar life insurance policy, was one that was capable of being transferred (see McGahee v. McGahee, 204 Ga. 91 (2) (48 SE2d 675) (1948)), and the execution by the parties of the change of beneficiary form prior to the actual reinstatement of the policy does not change the substance of the transfer. It is undisputed that Curry gave MSI nothing of value for the insurance policy, and that at the time of the transfer MSI was unable to pay the debts of many of its creditors, including its landlord; therefore, we find no error with the trial court’s finding that there was a fraudulent conveyance within the meaning of OCGA § 18-2-22 (3).

Decided July 12, 1990.

Glass, McCullough, Sherrill & Harrold, John A. Sherrill, Evert & Weathersby, Michael N. Weathersby, for appellants.

Kilpatrick & Cody, Stephen E. Hudson, Susan A. Cahoon, for appellee.

We also conclude that OCGA § 33-25-11 (b) is inapplicable and does not limit Bank South’s recovery to the amount of fraudulently paid premiums. OCGA § 33-25-11 (a) concerns the rights of beneficiaries to life insurance policies as against creditors and specifically does not apply to cases of transfers of life insurance policies with the intent to defraud creditors. OCGA § 33-25-11 (b) creates an exception to subsection (a) for the benefit of creditors by providing that “the amount of any premiums for said insurance paid with intent to defraud creditors with interest thereon shall inure to the benefit of creditors from the proceeds of the policy.” Inasmuch as OCGA § 33-25-11 does not apply where the policy has been fraudulently assigned, it is inapplicable to appellants’ case.

For the foregoing reasons, we find that the trial court’s grant of summary judgment to Bank South was correct.

Judgment affirmed.

Banke, P. J., and Birdsong, J., concur.


text:
    A90A0540, A90A0541.
    OMNI INSURANCE COMPANY v. HARPS et al.
    (396 SE2d 66)
   Carley, Chief Judge.

The relevant facts in this declaratory judgment action are as follows: Appellant-plaintiff insurer issued a policy of motor vehicle liability insurance to appellee-defendant Mrs. Sharon Harps. Under the general definitions of the policy, “you” and “your” were defined to mean “the Policyholder named in the Declarations and spouse if living in the same household.” The policy further defined an “insured person” as “[y]ou or a relative.” However, the policy also provided that “[n]o person shall be considered an insured person if that person uses a vehicle without a reasonable belief of having permission to use the vehicle.” Appellee Mrs. Harps was married to appellee-defendant Mr. Barry Harps and they were living in the same household. Although appellee Mrs. Harps had given her husband a set of keys to her car for safekeeping in case she lost her set, he had no driver’s license and it was understood that he was not to drive her car without first having her permission. Despite this understanding, appellee Mr. Harps would occasionally drive his wife’s car without first securing her permission. However, such unauthorized use would invariably result in an argument. On the night in question, appellee Mr. Harps took his wife’s set of keys while she was asleep and drove away in her automobile. He did not awaken his wife to ask her permission because he had been drinking and he “knew that she was going to object, and —and [he] didn’t want the hassle.” Appellee Mrs. Harps had never before given her husband permission to drive her car after he had been drinking. She acknowledged that, had she been asked on this occasion, she would not have given her permission. He acknowledged that his “state of mind was that if [he] asked her [permission to] use the car . . . she would have said no[.]” After taking his wife’s keys and her car without her permission, appellee Mr. Harps was involved in a collision.

As the result of this collision, appellant filed this declaratory judgment action to determine whether it afforded liability coverage to appellee Mr. Harps. Appellant named as defendants not only appellees Mr. and Mrs. Harps, but also the individuals and entities, including appellee-defendant City of Jackson, who had sustained personal injuries and property damage in the collision. After all of the appellees had answered, appellant moved for summary judgment. The trial court denied appellant’s motion and appellee City of Jackson subsequently moved for summary judgment. The trial court granted the City of Jackson’s motion for summary judgment, holding: “This policy of insurance treats the named insured and the spouse of the named insured as one and the same person for purposes of insurance coverage, if they live in the same household. The language in the policy requiring a reasonable belief of having permission to use the vehicle does not apply to the spouse living in the same household. Under the terms of this policy, permission is no more necessary for the spouse living in the same household than the named insured.” Appellant filed two separate, but identical, timely notices of appeal from this order and the two cases that were docketed in this court will be treated in this one opinion.

As noted above, the policy does specifically provide coverage to both the named insured and to the spouse of the named insured living in the same household as “insured persons.” However, the policy also generally excludes coverage for “any person” who uses a vehicle without a reasonable belief of having permission to do so. Thus, although she is the named insured and has the status of an “insured person,” appellee Mrs. Harps may nevertheless have no coverage under the policy if, under the circumstances of the alleged insured event, she is otherwise a person who has used a vehicle without a reasonable belief that she had permission to do so. “It is clear that ‘any person’ means just that, including the named insured.” Georgia Farm &c, Ins. Co. v. Fire &c. Ins. Co. of Conn., 180 Ga. App. 777, 778 (350 SE2d 325) (1986). For example, if appellee Mrs. Harps stole a vehicle, she would not be afforded coverage under the policy simply because she was the named insured and had the status of an “insured person.” Likewise, appellee Mr. Harps, as the spouse of the named insured and an “insured person” himself may have no coverage under the policy if, under the circumstances of the alleged insured event, he is otherwise a person who has used a vehicle without a reasonable belief that he had permission to do so. See generally Robertson v. Lumbermen’s Mut. Cas. Co., 160 Ga. App. 52, 54 (2) (286 SE2d 305) (1981) overruled on other grounds Grange Mut. Cas. Co. v. Brinkley, 182 Ga. App. 273 (355 SE2d 767) (1987). Accordingly, the trial court erred in construing the exclusion from coverage as having no application as against the named insured and his or her spouse living in the same household. The exclusion is applicable as against “any person” and, in any alleged insured event, it is a relevant inquiry whether the circumstances are such that the “insured person” had a reasonable belief that he or she had permission to use the vehicle.

“The use of the term ‘reasonable belief’ in the exclusionary clause provides an objective standard by which the trier of fact may determine the substance of a claimant’s action. From the language of the clause it is clear that coverage is excluded if the driver (a) knew he was not entitled to drive the vehicle, or (b) if he claimed he believed he was entitled to drive the vehicle, but was without reasonable grounds for such belief or claim. [Cit.]” Nationwide Mut. Ins. Co. v. Southern Trust Ins. Co., 174 Ga. App. 513, 514 (1) (330 SE2d 443) (1985). A reasonable belief that one has implied permission to drive his or her spouse’s automobile may otherwise be inferred from the mere existence of the marital relationship and from possession of a set of keys to that automobile. However, such an inference has clearly been rebutted in the instant case. According to the unrebutted testimony, appellee Mrs. Harps gave a set of keys to her husband only for safekeeping and it was understood that appellee Mr. Harps would not drive his wife’s automobile without first securing her express permission. Although he had taken the car on occasion without having her express permission, she had never ratified his doing so and such prior use of the vehicle without permission had resulted in an argument. It is undisputed that, if her husband had asked her express permission to drive her car on the night in question, appellee Mrs. Harps would not have granted his request. It is undisputed that, although he knew that his wife would not give him express permission to use her car on the night in question, he nevertheless surreptitiously took her set of keys and drove it away. Since the undisputed evidence of record shows that appellee Mr. Harps had no implied permission to drive his wife’s car that night otherwise resulting from his possession of a set of keys and from the marital relationship and that he did not have the express permission from his wife that he knew was necessary, it follows that the trial court erred in granting summary judgment in favor of appellees and in failing to grant appellant’s motion for summary judgment. See generally Johnson v. Blue Ridge Ins. Co., 189 Ga. App. 616 (376 SE2d 703) (1988); Nationwide Mut. Ins. Co. v. Southern Trust Ins. Co., supra. Compare USAA v. Lail, 192 Ga. App. 487, 489 (1) (385 SE2d 424) (1989).

Decided July 12, 1990.

Crim & Bassler, Harry W. Bassler, Philip G. Pompilio, for appellant.

Bush & Smith, Wilson H. Bush, Kendall, Dixon, Turk, Ransom & Mitchell, Kenneth A. Glenn, Henry M. Kellum, Garland & Milam, Richard G. Milam, for appellees.

Judgment reversed.

McMurray, P. J., and Sognier, J., concur.


author: Deen, Presiding Judge. Beasley, Judge,

text:
    A90A0549.
    FREEMAN v. THE STATE.
    (396 SE2d 69)
   Deen, Presiding Judge.

Defendant appeals his convictions for rape, OCGA § 16-6-1; aggravated sodomy, OCGA § 16-6-2; and false imprisonment, OCGA § 16-5-41.

1. A psychiatrist, called as a witness by defendant, testified that the victim had been his patient for four years and that he had performed certain evaluations of her. In response to a question as to the results, he testified: “I found at that time the patient to be suffering some major psychiatric disorders.” The State objected on the basis of the patient-psychiatrist privilege. It was established out of the jury’s presence, that contrary to defendant’s assertions, the victim had not waived and did not waive her reliance on the privilege. Objection was sustained.

As a matter of public policy Georgia excludes communications between psychiatrist and patient. OCGA § 24-9-21 (5). This privilege is absolute (Atlantic C. L. R. Co. v. Daugherty, 111 Ga. App. 144, 149 (1) (141 SE2d 112) (1965)), although it may be waived. McCord v. McCord, 140 Ga. 170 (2) (78 SE 833) (1913). The requisite confidential relationship existed. Kimble v. Kimble, 240 Ga. 100, 101 (1) (239 SE2d 676) (1977). Without a waiver, there was no basis for the admission of testimony about communications between psychiatrist and patient. Gilmore v. State, 175 Ga. App. 376, 378 (333 SE2d 210) (1985); Wilson v. Bonner, 166 Ga. App. 9, 17 (5) (303 SE2d 134) (1983).

While the general rule is correctly stated in Stephen W. Brown &c. Assoc. v. Gowers, 157 Ga. App. 770, 781 (278 SE2d 653) (1981), the latter case was affirmed, as “none of this testimony appears to be relevant and material to the issues so as to show the defendants were harmed when the court refused to allow their counsel to show what he expected to prove by further cross examination.” Id. at 782. The trial judge in the instant case refused to permit the psychiatrist to testify as to the patient’s mental illness without a written waiver or without oral testimony under oath that the patient waived the claim to confidential communication. The trial judge on two occasions inquired if the psychiatrist could testify as to anything other than mental illness. No proffer to the court of any specific testimony on any other matter was made. The error, if any, is harmless as the evidence was overwhelming as to the abduction, gang rape, and sodomizing by several males at gunpoint.

2. Certain photographs were identified by the investigating officer as being accurate representations of the scene and objects at the scene where the criminal acts occurred. Thus, they were admissible and not subject to the objection raised by defendant. “The quantum of evidence required to sufficiently identify photographs as true and accurate representations of what they purport to depict is a matter to be left within the discretion of the trial court.” Johnston v. State, 232 Ga. 268, 270 (1) (206 SE2d 468) (1974). Accord Williams v. State, 174 Ga. App. 56, 57 (2) (329 SE2d 226) (1985).

We must affirm the convictions for rape, aggravated sodomy, and false imprisonment.

Judgment affirmed.

McMurray, P. J., Banke, P. J., Birdsong, Sognier, Pope and Cooper, JJ., concur. Carley, C. J., and Beasley, J., concur in part and dissent in part.

Beasley, Judge,

concurring in part and dissenting in part.

I respectfully dissent with respect to Division 1 but concur in Division 2.

Insofar as defendant sought to introduce evidence via the psychiatrist which did not involve privileged communications, such as the extent of her treatment for drug addiction, the effect of crack on a person and on his perception or memory, or the effect of the drug she admittedly had taken before testifying, the trial court erred by not permitting defendant to make proffer of that testimony, as requested. It refused to allow defendant to make the proffer offered at the conclusion of the argument on the State’s objection to the psychiatrist’s testifying at all without a waiver of the privilege:

Decided July 12, 1990.

Richard D. Wilson, for appellant.

Robert E. Keller, District Attorney, Todd E. Naugle, Assistant District Attorney, for appellee.

“[Defendant’s counsel]: We’d like to make a proffer for the Court of Appeals. I understand the jury won’t hear it, but we’d like to take it up on appeal. The Court: I don’t see any sense in going into all that. We’re trying to get a case tried here.”
“[W]here offer of proof is necessary it is error for the trial court to refuse an opportunity to counsel to state what he proposes to prove by the evidence offered.” Stephen W. Brown &c. Assoc. v. Gowers, 157 Ga. App. 770, 781 (6) (278 SE2d 653) (1981).

■ The judgment of conviction should be reversed and the case remanded in order that defendant be permitted to make an offer of proof. If only psychiatrist-patient communications were involved then the verdict would stand and a new judgment could be entered thereon, but if evidence outside of privileged communications was sought and excluded, then a new trial would have to be granted because the exclusion hampered the establishment of Freeman’s defense. In the former event, and after a conviction in the latter event, a new appeal would lie.

I am authorized to state that Chief Judge Carley joins in this opinion.


author: Sognier, Judge.

text:
    A90A0717.
    NAJMAISTER v. THE STATE.
    (396 SE2d 71)
   Sognier, Judge.

Herman Najmaister was convicted of selling a Schedule I drug to an undercover officer in violation of the Georgia Controlled Substances Act, and the trial court authorized this out of time appeal.

1. Appellant enumerates as error two matters that arose during voir dire: the denial of his mistrial motion made in response to the trial judge’s comment upon excusing a police officer for cause, and the court’s failure to exclude a juror for cause.

(a) After excusing for cause a jury panel member who was a sworn police officer, the trial judge commented in the presence of the panel that he had no discretion in the matter because of a prior appellate ruling, and that he disagreed with that ruling of the appellate court. Appellant contends this comment improperly bolstered the credibility of law enforcement officers, which was harmful error here because the State’s case rested on the testimony of the undercover officer. We do not agree. Although “[i]t is error for any judge in any criminal case ... to express or intimate his opinion as to what has or has not been proved or as to the guilt of the accused,” OCGA § 17-8-57, the comment challenged here did not constitute a statement of opinion either as to proof or as to guilt, and thus did not impermissibly bolster any witness’ credibility. See Hendricks v. State, 157 Ga. App. 715, 716 (1) (278 SE2d 453) (1981). “While it is better practice, during the trial of cases, for the court and counsel not to make references to . . . the reviewing courts except to cite their decisions as authority; yet the statement here . . . could in no wise be so construed as prejudicial to the accused, and the trial judge properly overruled the motion for a mistrial.” Bryant v. State, 197 Ga. 641, 655 (8) (30 SE2d 259) (1944).

(b) Appellant contends a prospective juror should have been disqualified as mentally incompetent to serve. The transcript reveals that the juror was taking medication for a “nervous condition,” and that she received disability income, apparently for a mental or emotional disability. The juror initially indicated that because of the medications she and her children were taking, she was somewhat uncomfortable with the idea of serving on a jury in a drug case, but in response to questioning from the court stated that she could concentrate on the proceedings provided she took her daily medication, and that she could be a fair and impartial juror.

The trial court must excuse for cause a juror who, upon objection by counsel and presentation of evidence, is shown to be “incompetent to serve as a juror because of mental illness or mental retardation.” OCGA § 15-12-163 (b) (3), (c); see Wall v. State, 126 Ga. 549, 552-553 (3) (55 SE 484) (1906). Our review of the transcript discloses that the trial judge questioned the juror at length before deciding she was competent to serve. We cannot conclude that the trial court abused its discretion in finding this juror was mentally competent to serve. See Wall, supra at 553 (3); see generally Robinson v. State, 180 Ga. App. 248, 249 (2) (348 SE2d 761) (1986).

2. Appellant next contends the trial court improperly interfered with his due process rights by threatening to hold his trial counsel in contempt of court, thereby “chilling” the proceedings by intimidating his counsel. The transcript reveals that during his cross-examination of the undercover officer, GBI Special Agent James Tarvin, appellant’s trial counsel raised a question concerning the officer’s compliance with a pretrial order compelling disclosure of the identity of a confidential informant. After the attorneys disagreed about the existence of the order, with the assistant district attorney asserting that no such order had been entered, the trial judge dismissed the jury. Counsel and. the court then engaged in a protracted and somewhat heated discussion concerning the order, which was resolved when the judge discovered it in the record. During this exchange, the judge stated that he intended to bring contempt proceedings against appellant’s trial counsel after the trial; however, while the jury was deliberating the next day, the trial judge informed counsel that he now understood what had caused the confusion and no longer planned to pursue a contempt citation.

While our review of the transcript did disclose some conflict between the trial judge and appellant’s counsel on this matter, we find no evidence of prejudice against appellant. See Dyke v. State, 232 Ga. 817, 825 (209 SE2d 166) (1974). The trial judge’s statements during this exchange occurred outside the presence of the jury, see Bowens v. State, 171 Ga. App. 364, 368 (6) (320 SE2d 189) (1984), and resulted from the confusion created when the two attorneys disagreed about what had transpired earlier in the case. “It is the duty of the trial court to control the trial of the case and to insure a fair trial to both sides. . . . Sometimes this requires interference by the court with the conduct of counsel or with a witness in the trial. The trial judge has broad discretion in handling these matters and we are loath to interfere with that discretion unless it is manifestly abused by clearly demonstrated prejudice or unfairness. While another trial judge may not have conducted the trial of this case in the same way as this trial judge did, we do not agree the trial court interfered so as to deprive the appellant of a fair trial. [Cits.]” Dyke, supra. Accordingly, we find no error in the denial of appellant’s motion for mistrial. See Bowens, supra.

3. Appellant objects to certain statements made by the prosecutor in his closing argument. Because appellant failed to raise any objection to the statements at the time they were made, he has waived his right to have this issue considered on appeal. Williams v. State, 191 Ga. App. 217, 218-219 (2) (381 SE2d 399) (1989).

4. Appellant’s final enumeration of error concerns the trial court’s failure to compel production of the GBI’s confidential informant’s personnel file in response to appellant’s subpoena. A subpoena for the production of the GBI’s file on the informant addressed to Special Agent Tarvin was served on Tarvin by appellant, but Tarvin did not produce the file, citing as his reasons a GBI policy prohibiting disclosure of such information and the fact that he was not the custodian of the file. Tarvin testified that he did not maintain the file, and that he had to obtain a key from a supervisor to view the file himself.

While we agree with appellant that the proper method for opposing a subpoena duces tecum is to file a motion to quash, OCGA § 24-10-22 (b) (1), and further agree that the trial court has the power to compel compliance with a subpoena, OCGA §§ 24-10-25; 15-1-3, no harmful error occurred here because the evidence established that Tarvin, to whom the subpoena was addressed, was not the custodian of the file sought by appellant. Muff v. State, 254 Ga. 45, 49 (326 SE2d 454) (1985). Further, after appellant learned this, he made no effort to subpoena the proper person or to move for a continuance to do so. Id.

Decided July 12, 1990.

Walter M. Henritze, Jr., for appellant.

Lewis R. Slaton, District Attorney, Nancy A. Grace, Joseph J. Drolet, Assistant District Attorneys, for appellee.

Judgment affirmed.

Carley, C. J., and McMurray, P. J., concur.


text:
    A90A1308.
    YOUNG et al. v. FIRST AMERICAN BANK OF GEORGIA, N.A.
    (396 SE2d 73)
   McMurray, Presiding Judge.

Plaintiff First American Bank of Georgia, N.A. initiated this foreclosure of personal property action against defendants Young and Fowler d/b/a Paces Ferry Medical Group to enforce a past due debt secured by a 1980 Cadillac Fleetwood automobile. Following a non-jury trial, the trial court entered its findings of fact and conclusions of law. The trial court found that while there had been some deviations from the schedule of payments specified under the note, that whenever defendants were late in making payments the plaintiff sent past due notices and demands. The trial court concluded that there was no evidence of consideration or mutuality for the creation of a novation or quasi new agreement. The trial court also found that there was not sufficient evidence that plaintiff’s decision to accelerate the loan was racially motivated. After concluding that plaintiff was legally entitled to acceleration and to foreclosure, the trial court ordered that plaintiff’s foreclosure petition was granted and that a writ of possession issue. Defendants appeal and plaintiff moves for the award of damages for frivolous appeal pursuant to OCGA § 5-6-6. Held:

1. Defendants’ two enumerations of error complain of the trial court’s refusal to accept or consider certain evidence. Consideration of these enumerations of error requires a review of a transcript of the evidence adduced at trial.

Unfortunately, the record contains no transcript of the evidence adduced at trial and appellants (defendants) have not prepared a transcript from recollection pursuant to OCGA § 5-6-41 (g) (formerly Code Ann. § 6-805). The burden is on the appellants (defendants) to prepare a copy of the transcript for inclusion in the appellate record. OCGA § 5-6-41 (c) (formerly Code Ann. § 6-805). Accordingly, without a transcript to consider we must presume that the trial court’s findings were proper and supported by competent evidence. See Foster v. Housing Auth. of Columbus, 146 Ga. App. 12 (245 SE2d 349). The judgment of the trial court must be affirmed.

Decided July 12, 1990.

Towery, Thompson, Gulliver & Bunch, Harold S. Gulliver, for appellants.

Crowe & Mann, M. Douglas Mann, Wayne C. Crowe, for appellee.

2. The plaintiff has made a motion for an assessment of damages against defendants for pursuing a frivolous appeal pursuant to OCGA § 5-6-6. Since there is no award of money damages in the case sub judice, an award of damages for frivolous appeal under OCGA § 5-6-6 as sought by plaintiff is not an available remedy. See Shepherd v. Epps, 242 Ga. 322, 323 (3) (249 SE2d 33). Consequently, plaintiff’s motion is denied.

Judgment affirmed.

Motion to assess damages denied. Carley, C. J., and Sognier, J., concur.


author: Beasley, Judge. Deen, Presiding Judge,

text:
    A90A0207, A90A0208.
    MASSACHUSETTS BAY INSURANCE COMPANY v. HALL et al.; and vice versa.
    (395 SE2d 851)
   Beasley, Judge.

Justin Hall and Ray Hall sued Massachusetts Bay Insurance Company for its refusal to provide coverage upon demand of payment for the loss by fire of their residence, which was insured for $500,000. Insurer contended that it was not obligated to pay under the policy because the cause of the fire was arson, committed by Justin Hall, and also because of claim misrepresentation. Extensive evidence, much of it conflicting, was presented by both sides. The jury verdict was for the Halls for $1,217,049.50 including policy proceeds, bad faith penalty and attorney fees, and prejudgment interest.

Insurer appeals from the denial of its motion for judgment notwithstanding the verdict or for new trial. The Halls cross-appeal from the grant of insurer’s motion for partial summary judgment on the issue of fraud.

1. The Halls moved to dismiss the main appeal, asserting that insurer waived its right to appeal because it failed to pay the loss within 60 days after receiving proof of loss and entry of a final judgment, as the policy required. Their argument is that the “final judgment” contemplated by the policy is the judgment entered on the jury verdict, as defined by OCGA § 5-6-34 (a) (1), “where the case is no longer pending in the court below.” The rationale is that the term “final judgment” is to be strictly construed against the insurer. They concede that such a final judgment may be appealed and therefore “a judgment cannot be treated as final so long as either party has the right to have it reviewed by an appellate court.” Scott v. Liberty Mut. Ins. Co., 168 Ga. App. 815, 816 (310 SE2d 772) (1983).

The interpretation urged would deny the insurer its right to an appeal under OCGA § 5-6-33 (a) (1). As further stated in Scott, where an appeal is timely filed from the entry of a final judgment in the trial court, “the effect is to suspend the finality of the trial court’s judgment. [Cit.] If no timely appeal is filed, however, the original ‘final’ judgment of the trial court evinces the termination of the proceedings. [Cit.]” Id. at 816. Only if no appeal is taken does the final judgment in the trial court progress “ ‘from a prima facie termination of the action to an irrebuttable conclusion of finality.’ [Cit.]” Id. The motion to dismiss must be denied.

2. At the close of the plaintiffs’ evidence the Halls moved for, and the court granted, a directed verdict as to insurer’s defense of claim misrepresention, contending that it was waived because insurer did not tender a return of premium when asserting that the policy was void for that reason, but rather sent non-renewal notices and let the policy expire. In later denying insurer’s motion for judgment n.o.v. or for new trial, the trial court reaffirmed its directed verdict ruling. It adopted as additional grounds that the evidence showed that insurer had the “necessary information” to assert its defense prior to sending non-renewal notice, and that it failed to make a decision whether to deny Halls’ claim prior to the filing of the instant suit and despite the allegations of a void policy in a prior declaratory judgment action insurer filed in federal court.

a) We first deal with the ruling that, by failing to return the premium, the insurer waived the right to refuse coverage as based on certain express policy exclusions.

Insurer’s defense included reliance on two provisions of the policy. One states: “We do not insure for loss caused directly or indirectly by any of the following. Such loss is excluded regardless of any other cause or event contributing concurrently or in any sequence to the loss . . . (h) Intentional loss, means any loss arising out of any act committed (a) by or at the direction of the insured; and (b) with the intent to cause a loss.”

The other states: “Concealment or Fraud. We do not provide for an Insured who has (a) intentionally concealed or misrepresented any material fact or circumstance; or (b) made false statements or engaged in fraudulent conduct; relating to this insurance.”

The motion for a directed verdict against defendant insurer’s misrepresentation defense was made by plaintiffs after they closed their case-in-chief. This was procedurally incorrect, as such a motion may be made only at the close of the opponent’s evidence or at the close of the case. OCGA § 9-11-50 (a); Heard v. Midwest Mut. Ins. Co., 167 Ga. App. 44, 45 (3) (306 SE2d 49) (1983). See Williams v. Buckley, 148 Ga. App. 778, 779 (3) (252 SE2d 692) (1979). However, defendant responded to the merits of the challenge, the court ruled on the inappropriate motion, and procedural propriety is not raised as an issue on appeal. So we proceed with what occurred.

The sole ground offered by plaintiffs in their demand for a verdict at this stage was that defendant had not tendered the premium back to the insureds. This, insureds contended, waived the defense by virtue of State Farm Fire &c. Co. v. Jenkins, 167. Ga. App. 4 (305 SE2d 801) (1983), and Loeb v. Nationwide Mut. Fire Ins. Co., 162 Ga. App. 561 (292 SE2d 409) (1982).

Insurer countered the attack with citation to Columbian Nat. Life Ins. Co. v. Mulkey, 146 Ga. 267 (91 SE 106) (1916), for the rule that the premium need not be tendered back in order to rely on the defense that plaintiffs had made material misrepresentations in their claim. It also represented that it had never received the premium in the first place, as the agent had not forwarded and was not authorized to accept it. Insurer also cited Sales v. State Farm Fire &c. Co., 632 FSupp. 435 (N.D. Ga. 1986), rev’d on other grounds, 849 F2d 1383 (11th Cir. 1988), and Sullivan v. Connecticut Indem. Assn., 101 Ga. 809 (29 SE 41) (1897).

In granting insureds’ motion, the court eliminated insurer’s defense of misrepresentation, which would have avoided the claimed coverage altogether, including coverage of the house as well as the contents. The court immediately instructed the jury that misrepresentation would not preclude coverage and that the only defense left was arson. It also instructed that only evidence of misrepresentation concerning contents would be relevant, because plaintiffs had to prove those losses and their value by a preponderance of evidence but did not have to prove the amount for the house because of Georgia’s “valued property act.”

Contrary to the court’s ruling, the failure to return the premium did not work a waiver of the contractual right to avoid payment of the claim. The premium was earned at the beginning, when the risk attached. Pinkerton & Laws Co. v. INA, 121 Ga. App. 26, 27 (172 SE2d 465) (1970); Nalley v. Hanover Fire Ins. Co., 56 Ga. App. 555, 565 (2) (193 SE 619) (1937).

The policy was not cancelled (the policy specified how each party may cancel), which would have required a refund of any unearned portion of the premium. Columbian Nat. Life Ins. Co. v. Mulkey, 146 Ga. 267, supra; Pinkerton, supra at 27-28. Nor did the insurer seek to rescind the contract, which would require returning the parties to where they were before the contract was entered into. OCGA § 13-4-60.

Instead, avoiding payment because of misrepresentation depends on the existence of the policy and its provisions, which insured agreed to be bound by. It arises by some action or inaction on the part of the insured in connection with a claim occurring during the policy’s life. The improper claim by the insureds does not earn for them a refund of the premium which has been earned by the insurer. The proper fulfillment of a purpose of the contract is frustrated by the claimant’s misrepresentation, and such action does not entitle claimant to a return of the consideration paid for the policy. Their right to recover is voided and the insurer’s concomitant obligation to pay is avoided by the condition subsequent. 7 Couch on Insurance 2d § 36:49. A rule otherwise would reward the fraud. This would be close to what the Court described in Columbian, supra at 271, as “an invitation to fraud.” See also Nalley, supra at 566.

Obviously, a return of the premium would not be required if the defense was arson and the policy provided “no coverage” in the event of arson. The same must be true when the defense is fraud of a different type, i.e., misrepresentation in the claim. It would be anomalous to say that by keeping the premium for the policy, the insurer was thereby forfeiting or waiving its right to rely on the policy provision which excluded coverage for misrepresentation in claims under the policy. It is the policy itself which is the foundation of the defense, and it must be in force and effect if the defense is to have life. Defendant cited the policy itself, not the common law or OCGA § 33-1-9, as the authority for its defense; the policy was the operative source of the defense.

In other words, the exclusions state in effect that the insurer’s agreement to pay does not cover all claims submitted, but only legitimate ones.

The dictum in Loeb v. Nationwide Fire Ins. Co., 162 Ga. App. 561 (292 SE2d 409) (1982), does not control because it related to misrepresentation in a claim made for an event occurring during the policy’s life. As to Sullivan’s effect on Loeb and Jenkins, see the view expressed in Sales, supra, 849 F2d at 1387. As to Jenkins, see also Sales, supra, 632 FSupp. at 436. Haugseth v. Cotton States Mut. Ins. Co., 192 Ga. App. 853 (386 SE2d 725) (1989), like Loeb, involves misrepresentation in an insurance application.

The preclusion of this defense cannot be said to be harmless error. Defendant’s evidence of misrepresentations and their significance was curtailed and undermined.

In addition, the jury was not permitted to consider the effect of misrepresentations on coverage vel non. The defendant was deprived of the opportunity to have the jury find that the claim was invalid because of misrepresentation, even though defendant’s investigation led it to believe that the claim was not covered under this policy for this reason. Although some evidence of misrepresentations was permitted for the purpose of countering plaintiffs’ evidence regarding what contents were lost and what their value was, it was limited to this circumscribed aspect of the case.

b) Next we deal with the ruling that insurer waived the defense of claim misrepresentation by sending the non-renewal notices. The trial court denied the insurer’s motion for j.n.o.v., repeating the foregoing ground and adding additional bases for concluding that there had been a forfeiture or waiver of the misrepresentation defense. On appeal the insurer complains that the court erred as to the interrelated grounds of insurer’s failing to promptly assert the misrepresentation and deny the claim plus its sending two non-renewal notices. The court considered the latter action of the insurer to be inconsistent with its defense of misrepresentation and to constitute another independent instance of waiver of it.

This was in error because the non-renewal notices sent during the course of the sixty-day investigatory period which is statutorily-allowed, OCGA § 33-4-6, and contractually-provided (“Loss will be payable 60 days after we receive your proof of loss and. . . .”), are not inconsistent with the later-asserted defense of claim misrepresentation. The forms focus on non-renewal of the policy, a future event covering a future time period, and not on the status of the policy in force or the claim filed under it. The reasons for non-renewal given are “underwriting reasons,” about which the policyholder is invited to obtain further information by writing to a named representative within ninety days.

These non-renewal notices were clearly signals of the adverse relationship of the parties to the contract and precursors to the denial of the claims the next month, after the investigation was completed. They indicated to the insureds that the insurer believed that something was amiss. No recitation was made in the notices with respect to satisfaction of the pending fire loss claim. No inference of acceptance of that claim appears.

Moreover, the insurer was fulfilling its responsibility to advise its insureds in advance that they would not cover their property, so that the insureds would have adequate time and opportunity to secure other coverage. OCGA § 33-24-46 (d). The Code section, which requires the notices to be given at least 30 days in advance of the expiration/non-renewal date, is specifically pointed to in the notices. Since the policy anniversary date was January 28, 1987, the insurer had no choice but to send the notices in December. In so doing it did not forfeit its right to contest the claim for an event that had already occurred. It was happenstance that the notices had to be sent, by law, while the investigation of the claim was still in progress, a congruence caused in part by plaintiffs’ not getting the claim to the insurer in proper form until November 3. Insurer had until early January to complete it, according to the Loss Payment provision of the policy.

The trial court’s finding, as a matter of law, that insurer had the “necessary information” at the end of November 1986 to assert that it would not pay due to misrepresentation was the premise for concluding that the non-renewal notices were “inconsistent.” But such a finding is not compelled. The caution which was exhibited by the insurer in taking numerous steps in its investigation from November to January before it moved from suspicion to certainty, as far as it was concerned, should not be faulted.

As stated by Judge Alaimo in Carver v. Allstate Ins. Co., 94 FRD 131, 134 (S.D. Ga. 1982): “In the early stages of claims investigation, management is primarily concerned . . . with ‘deciding whether to resist the claim, to reimburse the insured and seek subrogation of the insured’s claim against the third party, or to reimburse the insured and forget about the claim thereafter.’ [Cit.] At some point, however, an insurance company’s activity shifts from mere claims evaluation to a strong anticipation of litigation.” The court recognized: “[CJlaims for fire loss, unlike other types of property loss, can more easily be cloaked in fraudulent or criminal conduct, and engender more wariness from insurance companies at the time of filing.” Id. at 135. Exhibited in this case is that wariness turned to suspicion which, with the deposition of Justin Hall on January 8, turned to conviction.

We hold infra that, as a matter of law, the arson defense was “not frivolous or unfounded.” The trial court’s ruling would have required the insurer to deny coverage based on misrepresentation in November, when its investigation into both arson and misrepresentation was incomplete. Such would engender premature denials, to the detriment of insureds.

This case differs significantly from State Farm Fire &c. Co v. Jenkins, supra. In it, the insurer’s messages to the insured were that the policy would continue in force if the premiums were paid. It was the “demand for payment in full for premiums due” which acted as a waiver. Id. at 7. Here the notices advise of a discontinuation of the contractual relationship as it relates to that period of time when a renewal would ordinarily be effected. This is the opposite of notification that the contractual relationship would continue if the new consideration, for the new calendar period, were paid. In Jenkins, the uninterrupted course of travel was being offered, whereas in Halls’ case, an impossible roadblock was being announced.

The insurer did, within days of its completion of the investigation, act to avoid liability for coverage. It sought a judicial declaration that the policy became void, according to its terms, due to the happening of a condition subsequent to its inception, i.e., the filing of an allegedly invalid claim.

3. Insurer validly contends that the trial court erred in refusing to grant its motion for judgment n.o.v. or for new trial, and in failing to rule that its defense was not frivolous or unfounded so that the jury’s consideration of the issue of bad faith was improper as a matter of law.

“To support a cause of action under OCGA § 33-4-6, the insured bears the burden of proving that the refusal to pay the claim was made in bad faith. [Cits.] ‘A defen[s]e going far enough to show reasonable and probable cause for making it, would vindicate the good faith of the company as effectually as would a complete defense to the action.’ [Cits.] ‘Penalties for bad faith are not authorized where the insurance company has any reasonable ground to contest the claim and where there is a disputed question of fact.’ [Cit.]” Central Nat. Ins. Co. of Omaha v. Dixon, 188 Ga. App. 680, 683 (5) (373 SE2d 849) (1988).

Fortson v. Cotton States Mut. Ins. Co., 168 Ga. App. 155, 156 (1) (308 SE2d 382) (1983) is controlling. Here, as in Fortson, the insurer asserted an arson defense and presented expert testimony that the fire was of incendiary origin. In the opinion of insurer’s experts, the fire had been intentionally set as shown by a liquid burn pattern and traces of kerosene and gasoline in the debris and unburned kerosene and gasoline soaked papers in other unburned areas. Insurer also tendered evidence to show motive and opportunity in that the Halls were experiencing financial difficulties at the time and Justin Hall was the last person to leave the house shortly before the fire was discovered around midnight. The Halls offered evidence that the fire originated from an electrical malfunction, that there was no burn pattern and that they were not in poor financial condition.

“Penalties for bad faith are not authorized where the insurance company has any reasonable ground to contest the claim and where there is a disputed question of fact. [Cit.] Where the question of liability is close and the facts are disputed so that the insurer has reasonable grounds to contest the claim, no penalty should be permitted. [Cit.] ‘The test of bad faith within the meaning of the law in such cases is as of the time of trial, in the final analysis, and not at the time of refusal to pay upon demand. Whatever the facts are at the time of such refusal to pay if at the trial there was a reasonable ground for the insurer to contest the claim there can be no finding against the insurance company for bad faith and attorney’s fees regardless of the outcome of the case.’ [Cit.] In determining whether the evidence is sufficient to support the verdict, ‘(t)he proper rule is that the judgment should be affirmed if there is any evidence to support it unless it can be said as a matter of law that there was a reasonable defense which vindicates the good faith of the insurer.’ [Cit.]” Fort-son, supra at 158. Accord Vulcan Life Ins. Co. v. Davenport, 191 Ga. App. 79 (8) (380 SE2d 751) (1989).

4. Before trial the insurer filed a motion in limine seeking to exclude evidence of the fact that no criminal arson charges had been brought against the Halls in connection with the fire. The court ruled that such evidence would be excluded unless insurer itself presented evidence of criminal matters.

“ ‘The policy of Georgia ... is to admit evidence, even if its admissibility is doubtful, because it is more dangerous to suppress the truth than to allow a loophole. . . .’ [Cit.] If evidence is relevant, has probative value, and is not inadmissible for some reason of prejudice or illegality, it should be admitted.” Whidby v. Columbine Carrier, 182 Ga. App. 638, 645 (6) (356 SE2d 709) (1987). This evidence may have been relevant to the issue of bad faith, but we have reversed the award of bad faith damages, so under the circumstances it was not prejudicial.

5. In the cross-appeal the Halls enumerate as error the trial court’s grant of partial summary judgment to insurer in finding as a matter of law that the Halls did not prove the requisite five elements of fraud in connection with their claim for damages arising from insurer’s alleged fraudulent misrepresentations. The Halls maintained that it intentionally misled them as to the cause of the fire by statements and actions in order to make them believe that the insurance company thought the fire was of accidental origin and the only question being investigated was the amount of contents lost in the fire; and that they were not informed of insurer’s true belief that the fire was of incendiary origin until some four months after the house burned, at which time any investigation they might have made in their own behalf was impossible because the debris at the scene had been “shoveled out” by insurer’s investigators.

Justin Hall executed a standard non-waiver agreement with insurer immediately following the fire, permitting it to conduct a full investigation into the cause of the fire and the extent of damage and its liability therefor. “An action for misrepresentation requires proof of five elements: ‘ “(1) (t)hat the defendant made the representations; (2) that at the time he knew they were false; (3) that he made them with the intention and purpose of deceiving the plaintiff; (4) that the plaintiff relied on the representations; (5) that the plaintiff sustained the alleged loss and damage as the proximate result of their having been made.” (Cit.)’ [Cit.]” Ekstedt v. Charter Med. Corp., 192 Ga. App. 248 (1) (384 SE2d 276) (1989). However, the plaintiff is not “entitled to rely on the alleged misrepresentations without exercising due diligence to ascertain their basis in truth. . . Id. at 249. Thus, considering the non-waiver agreement, the trial court found that “[t]he exercise of common prudence and diligence would have mandated [the Halls’] hiring [their] own experts. It is inconceivable that [the Halls], given the agreement between the parties, the size of the loss and the extent of the investigation, could have justifiably relied on any representation of [insurer’s adjuster].”

Given the circumstances, the Halls could have hired their own investigator earlier or, at the very least, should have made inquiry of those who had investigated the fire. Such “blind reliance” on the statements and actions, or lack thereof, of insurer’s agents “must be considered unjustified as a matter of law. [Cits.] [T]he trial court did not err in entering summary judgment against [the Halls] on the fraud claim.” Bennett v. Clark, 192 Ga. App. 698, 699 (1) (385 SE2d 780) (1989). Accord Hill v. Century 21 Max Stancil Realty, 187 Ga. App. 754 (2) (371 SE2d 217) (1988); McClintock v. Wellington Trade, 187 Ga. App. 898, 904 (9) (371 SE2d 893) (1988); Bowen & Bowen v. McCoy-Gibbons, 185 Ga. App. 298, 303 (2) (363 SE2d 827) (1987).

A new trial is required.

Judgment reversed.

Carley, C. J., Birdsong, Sognier, Pope and Cooper, JJ., concur. Deen, P. J., McMurray, P. J., and Banke, P. J., concur in part and dissent in part.

Deen, Presiding Judge,

concurring in part and dissenting in part.

I concur in all divisions except 2 and 3.

1. In ruling on Massachusetts Bay’s motion for judgment n.o.v. or for new trial, the trial court reaffirmed its ruling granting the Halls’ motion for directed verdict on the waiver issue; it also adopted as additional grounds that the evidence showed that Massachusetts Bay had the “necessary information” to assert its defense prior to sending the non-renewal notice, and that it failed to make a decision whether to deny the Halls’ claim prior to the filing of the instant suit and despite the allegations of a void policy in a prior declaratory judgment action filed in federal court. Massachusetts Bay argues on appeal that the trial court “has confused the basic difference between the bare receipt of information, and knowledge in the larger context of knowing what it means.”

Notwithstanding Massachusetts Bay’s protestations that it had not sufficiently “appreciated the facts to conclusively refute the Halls’ assertions,” this court has held that “ ‘ “[t]he demand for payment in full of a future premium subsequently to the breach of a condition which would have entitled the insurer to insist upon a forfeiture of the contract will be held to be a waiver of the forfeiture, and be treated as an acknowledgment that the delinquent policy-holder is still entitled to the benefits conferred by his contract.” [Cit.]’ [Cits.]” State Farm Fire &c. Co. v. Jenkins, 167 Ga. App. 4, 6 (1) (305 SE2d 801) (1983). We conclude that the sending of a non-renewal notice is likewise an acknowledgment that the contract remained in effect and entitled the Halls to the benefits conferred thereunder. Massachusetts Bay admitted that when it sent the notice it knew of “some” of the alleged false representations, and that is all that is required. “If a party to a contract seeks to avoid it on the ground of fraud or mistake he must, upon discovery of the facts, at once announce his purpose and adhere to it. Otherwise he cannot avoid or rescind such contract.” Gibson v. Alford, 161 Ga. 672, 673 (5) (132 SE 442) (1925).

Decided June 25, 1990

Rehearing denied July 13, 1990 — Cert, applied for.

Drew, Eckl & Farnham, Clayton H. Farnham, Barbara Jo Call, for appellant.

Gorby, Reeves, Moraitakis & Whiteman, Nicholas C. Moraitakis, Eve A. Appelbaum, Robert E. Richardson, for appellees.

Moreover, Massachusetts Bay has failed to show how it was harmed by this ruling since it was allowed to present evidence concerning the alleged false statements to the jury. Out of some 2,000 items claimed in a 70-page Proof of Loss document submitted by Justin Hall, Massachusetts Bay disputed no more than 23 items, and the jury clearly did not believe that the Halls made false statements since it awarded all the plaintiffs requested except for $12,000 out of the $300,000 in available contents coverage. If any error occurred it was harmless, and harmless error does not constitute reversible error. Goss v. Mathis, 188 Ga. App. 702 (373 SE2d 807) (1988).

2. Massachusetts Bay also complains that the trial court erred in ruling that its failure to return the Halls’ premium effected a waiver of its right to void the policy for fraud and misrepresentation. Not only was the trial court’s ruling correct under the holding in Jenkins that inconsistent acts result in a waiver of the forfeiture, there is controlling authority that in order to declare a policy void for misrepresentations, the insurer must tender the premium back to the insured. See Loeb v. Nationwide Mut. Fire Ins. Co., 162 Ga. App. 561 (292 SE2d 409) (1982); Haugseth v. Cotton States Mut. Ins. Co., 192 Ga. App. 853 (386 SE2d 725) (1989).

I am authorized to state that Presiding Judge McMurray and Presiding Judge Banke join in this opinion.