Aetna Finance Co. v. Culpepper, 68041

• Decision Date: 25 June 1984
• Docket Number: No. 68041,68041
• Citation: 320 S.E.2d 228,171 Ga.App. 315
• Parties: , 39 UCC Rep.Serv. 1118 AETNA FINANCE COMPANY v. CULPEPPER.
• Court: Georgia Court of Appeals

Page 228

320 S.E.2d 228

171 Ga.App. 315, 39 UCC Rep.Serv. 1118

AETNA FINANCE COMPANY v. CULPEPPER.

No. 68041.

Court of Appeals of Georgia.

June 25, 1984.

Dorothy Y. Kirkley, Mark B. Wesson, Elizabeth J. Mallory, Atlanta, for appellant.

Charles A. Gower, Columbus, for appellee.

QUILLIAN, Presiding Judge.

Plaintiff appellee Myrtice L. Culpepper and her son Larry purchased a 1978 dump truck in November 1981 for $36,000 from Quality GMC trucks in Columbus. They put $4,000 in cash down and applied for a $34,000 loan from appellant Aetna Finance Company (Aetna). Aetna appraised the dump truck as worth $18,000 and, for additional collateral, paid off the first lien on Mrs. Culpepper's residence for $1,200 and took a first mortgage on the home and the dump truck. A note to Aetna for $35,000 and a security agreement covering the dump truck were executed by both Culpeppers, and Mrs. Culpepper executed a deed to secure debt on her real property. The foreclosure provision in the security deed was specifically explained to Mrs. Culpepper and she was asked to initial and date it to indicate her comprehension that in the event of a default on the loan payments, Aetna was entitled to foreclose on her home. The $35,000 loan was to be paid in monthly installments for two years, then to balloon and the balance become due in full at the end of two years, as the Culpeppers anticipated leasing the dump truck for a substantial profit to be split between them.

The first payment of $1,000 was due on December 6, 1981, but due to bad weather and other factors the Culpeppers had paid only $700 by March 12, 1982, when the truck was extensively damaged in a collision and required repairs costing $3,300. This loss was covered by insurance, except for $369 which Aetna paid to Quality GMC for the repairs. When no loan payment was made in April, Aetna's manager John Hanson telephoned Larry Culpepper to tell him that the loan was in default and Aetna had the legal right to repossess the collateral. Hanson also told Culpepper "[t]hat he could voluntarily surrender the truck and when it came back from being repaired that [Aetna] would try to sell it for the best price and work out an arrangement for him to pay the balance so that it would not affect Mrs. Culpepper's real estate." Larry Culpepper testified that he surrendered the dump truck and signed an acknowledgment of voluntary delivery so that the truck could be sold and the debt "annihilated."

On May 14, 1982, following repair of the truck, Aetna sent a notice of repossession to both Culpeppers, notifying each of Aetna's intent to sell the truck at public sale on June 4, 1982. The public sale drew only one tentative bid of $21,000 from Quality GMC, which was quickly withdrawn. Immediately thereafter Hanson wrote Mrs. Culpepper to tell her what had happened and advised her and Larry that the truck would be sold at private sale to the highest bidder after Aetna received three bids. Quality GMC assisted in the sales effort by placing the truck on its lot at no cost where its salesmen showed it to all their regular customers. Advertisements were placed in two regional trucking magazines and nationally within the Aetna organization for several months, and Hanson also contacted eight other truck dealerships in Georgia and Alabama seeking bids. Three bids of under $20,000 were received but rejected by Aetna as too low. On August 23, 1982, Quality GMC made another tentative bid of $25,000 contingent upon a resale to a specific customer, which was accepted by Aetna. After painting, repairs, installation of air conditioning and general cleaning, Quality GMC sold the truck for $30,000 realizing a profit of 5.75%, which was shown to be comparable to three other sales made that year.

The entire $25,500 was credited to the Culpepper's outstanding loan account balance of $48,424.57 on September 1, leaving an unaccelerated balance of $22,924.47, not including the sum of $290 which Aetna paid to insure the real property, although the deed to secure debt required that such insurance be maintained by Mrs. Culpepper. When attempts to arrange a new loan with an extended payment schedule were unsuccessful, Aetna notified Mrs. Culpepper on December 6, 1982, a year after the default in the first payment, that the account had been accelerated, that $16,473.72 was then due and if not paid Aetna could begin foreclosure proceedings. First notice of foreclosure was published on December 10. On December 22, Mrs. Culpepper filed the instant lawsuit, and on December 28 she filed a voluntary petition for bankruptcy which stayed Aetna's foreclosure proceedings.

Mrs. Culpepper sought $1,000,000 in actual damages and $4,000,000 in punitive damages and attorney fees, all based upon the loan transaction. Her complaint alleged (1) the intentional infliction of emotional distress; (2) sale of the truck in a commercially unreasonable manner; (3) usury; (4) wrongful foreclosure; and (5) violation of the Georgia Motor Vehicle Sales Finance Act. Aetna denied liability and both parties moved for summary judgment. The trial court ruled that the interest rate on the loan was not usurious; that the Motor Vehicle Sales Finance Act was inapplicable; that the June 4, 1982 notice of private sale did not comply with the notice requirement of the security deed, but that Aetna was not prohibited from initiating foreclosure proceedings despite the improper notice; and that the issues remaining to be tried were the alleged intentional infliction of emotional distress, wrongful foreclosure, and punitive damages and attorney fees.

During pretrial discovery Mrs. Culpepper moved to have the original ledger card in the Atlanta office produced for inspection by her expert. Aetna resisted on the grounds of relevance and protection of the original, but after a hearing the court ordered its production with certain precautionary safeguards. The Culpeppers' expert was unable to appear for deposition by Aetna until the day before the trial, at which time Aetna learned that he would contend at trial that one of the figures on the bids for the truck had been altered after filing of the action, as had certain other records in Aetna's possession.

At trial Mrs. Culpepper contended through her expert that comparison of the original ledger card on the account with the copy provided by Aetna showed that several additional entries had been made, and that a loop had been added to the figure "7" to make it look like a "2" in one of the bids. Aetna's Columbus manager John Hanson, its representative at trial and chief witness, had been custodian of this card and was solely responsible for its preparation. Hanson testified that he made all the entries on the card contemporaneously with the date recorded, and denied that there was ever a bid of $27,000 for the truck. He also denied that he had harassed the Culpeppers or used abusive language about surrendering the truck or foreclosure on the real property, as alleged. The trial court denied Aetna's motion for directed verdict, and the jury returned a verdict of $50,000 actual and compensatory damages, $20,000 punitive damages and $35,000 attorney fees, on which judgment was entered July 19, 1983.

Aetna filed a motion for judgment j.n.o.v. or for new trial, which was pending when Mrs. Culpepper filed a second action concerning the same loan against IT&T Consumer Financial Corporation (ITTCFC), Aetna's parent company, seeking $6,000,000 in damages. In preparing to defend that suit, Aetna's counsel discovered in ITTCFC's files another copy of the ledger card which varied substantially from the original introduced at the instant trial; it contained a bid for $27,000 where $25,500 was on the original and did not contain two other entries. Aetna reported the existence of this new card to the court and disavowed Hanson's conduct by...