S & A INDUSTRIES, INC. v. Bank Atlanta

• Decision Date: 01 December 2000
• Docket Number: No. A00A1399., No. A00A1398
• Citation: 543 S.E.2d 743,247 Ga. App. 377
• Court: Georgia Court of Appeals
• Parties: S & A INDUSTRIES, INC. v. BANK ATLANTA et al. Bank Atlanta et al. v. S & A Industries, Inc.

543 S.E.2d 743

247 Ga. App. 377

S & A INDUSTRIES, INC. v. BANK ATLANTA et al.

Bank Atlanta et al. v. S & A Industries, Inc.

Nos. A00A1398, A00A1399.

Court of Appeals of Georgia.

December 1, 2000.

Reconsideration Denied December 15, 2000.

Smith, White, Sharma & Halpern, Larry J. White, Laurence H. Margolis, Atlanta, for appellant.

Schreeder, Wheeler & Flint, John A. Christy, Timothy C. Batten, Atlanta, for appellees.

David R. Wade, pro se.

PER CURIAM.

S & A Industries, Inc. filed suit against Bank Atlanta¹ in connection with the bank's attempts to collect on a line of credit opened by S & A. Both parties moved for summary judgment. The trial court denied S & A's motion and granted in part and denied in part the bank's motion. We now consider the parties' cross-appeals in response to that order.

S & A is a Georgia corporation engaged in hotel renovations. Daoud Shakkour is the president of the company and the third-party defendant in this action. In early 1996, Shakkour agreed to loan $20,000 to David Wade, a business acquaintance, to enable him to meet the payroll at his company, Wade Electric Supply Company, Inc. Wade was the president and sole shareholder of Wade Electric. Shakkour gave Wade a check without requiring any written loan agreement, without requiring interest and without obtaining any information regarding Wade Electric's financial situation.

At that time, Wade Electric owed money to First Capital Bank and was in the process of negotiating with Bank Atlanta for a replacement loan of $400,000. The loan was to be guaranteed by the U.S. Small Business Administration. In the course of these negotiations, it was determined that Wade Electric needed an infusion of $300,000 to qualify for the SBA loan. Shakkour was approached to put up the necessary money for Wade Electric. Shakkour had previously written a letter to First Capital Bank stating that he intended to make a $300,000 capital investment in Wade's company, although at deposition he stated that he signed the letter in blank.

On February 21, 1996, Bank Atlanta issued a loan commitment letter, agreeing to make Wade Electric a $400,000 SBA loan. The loan commitment was expressly contingent, however, on the receipt by Bank Atlanta of "satisfactory evidence that not less than $300,000 cash has been injected into the business as an equity injection from Daoud Shakkour, a Standby Creditor." To facilitate this transaction, Wade Electric opened an account at Bank Atlanta. And in that regard, the company provided Bank Atlanta with a corporate resolution showing that Wade and Shakkour, along with two other individuals, were authorized to withdraw funds from the account.

At around the same time, S & A had applied for and received a commitment from Bank Atlanta to increase the company's line of credit from $200,000 to $400,000. On March 6, 1996, at the closing on the increased line of credit, Shakkour signed, on behalf of S & A, a promissory note in the amount of $402,000.² He also signed a personal guaranty and gave the bank a security deed on the property he owned at 141 Sams Street in Decatur.

Subsequently $300,000 was drawn from S & A's line of credit and deposited into Wade Electric's account at Bank Atlanta. Bank Atlanta contends that the funds were withdrawn at Shakkour's authorization with the intention of making a capital investment in Wade Electric so that it could qualify for the SBA loan. But S & A contends that Shakkour made that authorization only because Purdy Richardson, president of Bank Atlanta, assured him that he would get the money back at the closing on Wade Electric's SBA loan. In his deposition, Shakkour testified that shortly after the closing on S & A's loan, he met with Wade and Richardson to discuss the SBA loan. He states that he learned for the first time at this meeting that Wade Electric required $300,000 to close the loan. Although initially reluctant, Shakkour states that he agreed to the loan because Richardson told him that the money was going to stay in the bank and merely be used to show that Wade Electric had the necessary funds available to it at the time of closing. According to Shakkour, Richardson said that after the closing, the funds would be returned to S & A's account. Richardson denies making any such representations.

Wade Electric's SBA loan closed on March 21, 1996. The previous day, Shakkour had signed the SBA-required standby agreement, acknowledging that the $300,000 was a loan and agreeing that he would not attempt to collect on this loan, with certain exceptions, without the prior written consent of Bank Atlanta.

Shortly after the loan closed, Wade Electric withdrew the $300,000 from its Bank Atlanta account in order to pay off certain outstanding corporate debts. Subsequently, Wade Electric filed a bankruptcy petition and obtained a discharge of its corporate debt under Chapter 7. Despite the fact that Shakkour obtained a promissory note from Wade Electric two months earlier on all monies loaned, neither Shakkour nor S & A asserted their interest in the bankruptcy proceedings.

Meanwhile, interest payments began to accrue on the S & A line of credit beginning June 6, 1996. And on June 14, Bank Atlanta began sending S & A delinquent payment notices. In response, S & A made 11 monthly payments of interest totaling $29,697.75 between June 1996 and March 1997. None of the payments were made under objection or protest. The line of credit matured on March 6, 1997, but S & A and Bank Atlanta entered into a modification agreement whereby the maturity date was extended until June 30, 1997. Nevertheless, S & A failed to repay the outstanding balance due on the note, and subsequently filed this action. Bank Atlanta, in turn, asserted a counterclaim and filed a third-party complaint against Shakkour. S & A appeals from the denial of its motion for summary judgment, and Bank Atlanta appeals from the partial denial of its motion.

Case No. A00A1398

We first address S & A's appeal and must note initially that S & A has failed to comply with Court of Appeals Rule 27(c)(1), which requires that the sequence of argument in a brief follow the enumerations of error and be numbered accordingly. S & A enumerates ten errors, but the sections of its argument are not numbered, and many of the headings do not directly correlate with the enumerated errors. As we have held:

Rule 27(c)(1) is more than a mere formality. It is a requirement which this Court imposes to ensure that all enumerations of error are addressed and to facilitate review of each enumeration. By failing to comply with the rule, the appellant has hindered the Court's review of [its] assertions and has risked the possibility that certain enumerations will not be addressed. Accordingly, to the extent that we are able to discern which of the enumerations are supported in the brief by citation of authority or argument, we will address those enumerations. Pursuant to Court of Appeals Rule 27(c)(2), however, all other enumerations will be treated as abandoned.

(Citation and punctuation omitted.) Desmond v. Troncalli Mitsubishi, 243 Ga.App. 71-72, 532 S.E.2d 463 (2000).

1. S & A contends that the terms of the note were usurious and that the trial court erred in denying its motion for summary judgment on this issue. We reject that contention for the reasons set forth in the special concurrences below.

2. S & A also argues that the trial court erred in finding that the Statute of Frauds did not apply to the oral authorization to withdraw $300,000 from its line of credit. S & A asserts that the oral withdrawal was a commitment to lend money and thus was required to be in writing under the Statute of Frauds. OCGA § 13-5-30(7). The trial court found, however, that the transaction at issue in the case was the loan by Bank Atlanta to S & A and that transaction was evidenced by the written promissory note signed by Shakkour on behalf of his corporation. Therefore, the trial court reasoned, no violation of the Statute of Frauds occurred. We agree.

When Shakkour verbally authorized the withdrawal of $300,000 from S & A's line of credit, he simply executed the loan to which the bank had already contractually agreed and which was controlled by the parties' promissory note. It is the enforcement of that note which Bank Atlanta seeks and which S & A seeks to avoid. And it is undisputed that the note meets the requirements of the Statute of Frauds. OCGA § 13-5-30(7).

Nothing in that promissory note required that authorizations for withdrawals be in writing. And Shakkour has pointed to no other document requiring such a written authorization. In fact, the record shows that both Shakkour and his business partner had given oral authorization for withdrawals from the account, both prior to and after the $300,000 withdrawal at issue in this case. Nor does the lack of any contemporaneous written agreement evidencing the transfer of $300,000 from Shakkour to Wade Electric³ affect the validity of the S & A promissory note. Although in the absence of such a writing, Shakkour may have had difficulty enforcing Wade Electric's obligation to repay that amount, it has no effect on S & A's obligations under the note to Bank Atlanta.

3. S & A also contends that the trial court erred in holding that evidence of Richardson's representations, which Shakkour claims induced him to authorize the $300,000 withdrawal, were inadmissible under the parol evidence rule. S & A asserts that because the authorization to withdraw the $300,000 was oral, the parol evidence rule does not bar such evidence.

But in making this argument, S & A is, in effect, simply attempting to avoid its obligations under the promissory note. To the extent that S & A is relying on these conversations "to add to, take from or vary" the terms of its promissory note with Bank Atlanta, it is barred by the parol evidence rule.⁴ OCGA § 13-2-2(1). See, e.g., Devin Lamplighter, Ltd. v....