Atlantic Loan Co. v. Peterson
| Decision Date | 16 October 1935 |
| Docket Number | 10875. |
| Citation | 182 S.E. 15,181 Ga. 266 |
| Parties | ATLANTIC LOAN CO. v. PETERSON. |
| Court | Georgia Supreme Court |
Syllabus by the Court.
1. Where a security deed executed in 1930 provided that in case of default in the payment of the debt the grantee might sell the property at the courthouse in a named county different from that in which the property was located, after first advertising the sale for a stated period in a newspaper published in the county in which the sale should be conducted, section 2 of the Act of March 28, 1935 (Laws 1935 pp. 381, 382), could not be constitutionally applied to such pre-existing contract so as to require, in terms of the statute, that the sale should "be advertised and conducted at the time and place and in the usual manner of sheriff's sales in the county in which such real estate or a part thereof, is located."
2. The same is true of the provisions of section 1 of such statute (page 382), relating to confirmation of sale, and abridging the right to a deficiency judgment after a sale under the security deed.
3. As to the rights conferred by the prior security deed, the entire act is invalid. The court erred in granting an injunction to restrain the grantee from exercising the power of sale in conformity to the stipulations contained in such instrument.
Error from Superior Court, Fulton County; Edgar E. Pomeroy, Judge.
Suit for injunction by L. S. Peterson against the Atlantic Loan Company. To review a judgment granting an injunction defendant brings error.
Reversed.
Lovick G. Fortson, of Atlanta, for plaintiff in error.
T. B Clarkson, of Atlanta, for defendant in error.
On October 21, 1930, Lyman S. Peterson obtained a loan of about $700 from Atlantic Loan Company, of Fulton county, conveying as security therefor a tract of land situated in De Kalb county. The security deed referred to the loan company as parties of the second part, and provided that in case of default "said parties of the second part, or assigns, may enter upon said premises and collect the rents and profits thereof, and may sell the said property at auction at the usual place of conducting sales at the court-house in Fulton County, Georgia, to the highest bidder for cash, first giving notice of the time and place of sale and terms of sale, by advertisement once a week for four weeks, without regard to the number of days, in a newspaper published in said county, all other notices being hereby waived by said party of the first part." By an act approved March 28, 1935 (Laws 1935, p. 381), the Legislature undertook to regulate the manner of exercising powers of sale contained in security deeds, by providing, among other things, that the sale shall be advertised in the same manner as sheriff's sales, and shall be conducted in the county in which the land or a part thereof is located. The act also purports to require confirmation of sales under powers, without legal process, and to limit the right to deficiency judgments in such cases. The complete act, including caption, is as follows:
"An Act to provide for confirmation of sales under foreclosure proceedings on real estate, to limit and abate deficiency judgments in suits and foreclosure proceedings on debts secured by mortgages, security deeds and other lien contracts on real estate, to provide for advertisement of foreclosure sales; and for other purposes.
Section 1. Be it enacted by the General Assembly of Georgia, and it is hereby enacted by authority of the same, that from and after the passage of this Act when any real estate is sold on foreclosure, without legal process, under powers contained in security deeds, mortgages or other lien contracts, and at such sale said real estate does not bring the amount of the debt secured by such deed, mortgage, or contract, no action may be taken to obtain a deficiency judgment unless the person instituting the foreclosure proceedings shall, within thirty days after such sale, report the sale to the Judge of the Superior Court of the county in which the land lies for confirmation and approval, and obtains an order of confirmation and approval thereon. The court shall require evidence to show the true market value of the property sold under such powers, and shall not confirm the sale unless he is satisfied the property so sold brought its true market value on such foreclosure sale. The court shall direct notice of the hearing to be given the debtor at least five days prior thereto, and at the hearing the court shall also pass upon the legality of the notice, advertisement, and regularity of the sale. The court may, for good cause shown, order a resale of the property.
Sec. 2. Be it further enacted, that no sale of real estate under powers contained in mortgages, debt, deeds, or other lien contracts shall be valid unless the sale shall be advertised and conducted at the time and place and in the usual manner of sheriff's sales in the county in which such real estate, or a part thereof, is located.
Sec. 3. That all laws and parts of laws in conflict with this law be and the same are hereby repealed." Ga. Laws 1935, p. 381.
In April, 1935, Peterson filed a suit against Atlantic Loan Company, alleging that the defendant had placed an advertisement in the Northside Press, a newspaper published in Fulton county, Ga., giving notice that because of a default by the plaintiff the loan company would, on April 29, 1935, after four weeks' advertisement, sell the property in accordance with the terms of the security deed. The plaintiff in his petition invoked the provisions of section 2 of the Act of March 28, 1935 (Laws 1935, p. 382), and sought an injunction to prevent the sale as advertised. The plaintiff admitted in his petition that the defendant was proceeding in conformity to the power of sale contained in the security deed, but insisted that the subsequent act of the Legislature was controlling, and that the defendant was violating this statute in the following particulars: (1) The sale is being advertised in a newspaper different from that in which sales by sheriffs are advertised; (2) the sale will not be had on the same day as sheriff's sales; (3) the sale will be conducted in Fulton county, whereas the land is situated in De Kalb county. The defendant filed an answer in which it admitted the plaintiff's allegations of fact, but further pleaded that the Act of March 28, 1935, is unconstitutional and void as applied to the existing contract, for the following reasons: (1) The act would impair the obligation of the contract, in violation of the State and Federal Constitutions (Const. U.S. art. 1, § 10, cl. 1; Code 1933, § 1-134; Const. Ga. art. 1, § 3, par. 2, Code 1933, § 2-302); (2) it attempts to confer upon the court nonjudicial powers; (3) it denies the right of trial by jury, as conferred by the State and Federal Constitutions (Const. U.S. amend. 7; Const. Ga. art. 6, § 18, par. 1 ). The case was tried upon an agreed statement of facts, without a jury. The result was a decree in favor of the plaintiff, enjoining the defendant permanently from exercising the power of sale in the manner attempted. To this judgment the defendant excepted. The judge stated in his order that he entertained some doubt as to the constitutionality of the act in question, especially its applicability to existing contracts.
As indicated in the preceding statement, the defendant challenged the Act of March 28, 1935, on several grounds. Since we are of the opinion that the whole act is invalid as applied to the prior security deed, for the reason that its enforcement would unconstitutionally impair the obligations of such contract, we do not deem it necessary to consider the other questions raised. While under this record the defendant was directly concerned with section 2 only, it did not attack this section in particular, but in each ground of objection assailed the statute as a whole. In this state of the record it is necessary to examine the act in its entirety, because, if any part of it may be constitutionally applied to the contract in question, the attack embracing a mass objective only will necessarily fail, and the judgment against the plea should be affirmed. Theoretically, the defendant's position would have been safer if a separate objection had been made to section 2; and at the same time, in the view which we take of the case, a decision of the single question would have been sufficient under the present record. But after a consideration of the act as a whole, we are convinced that none of it may be constitutionally enforced as to contracts in existence at the time of its passage, and thus that the loan company should have prevailed in the court below.
1. We will first discuss the provisions of section 2, which, though remedial in form, would substantially alter a remedy given by express agreement in the security deed. In this case we have the promise to pay the debt as the primary obligation, and the power of sale as a remedy; not a legal, but a contractual remedy. Cf. Vizard v. Moody, 119 Ga. 918 (3), 47 S.E. 348. The remedies existing by law at the time of the execution of a contract may be modified by the Legislature without impairing the obligation, provided an efficient remedy is left for its enforcement. Tennessee v Sneed, 96 U.S. 69, 24 L.Ed. 610. The rule is different, however, as to a remedy which the parties have expressly made a part of the contract, because in such case the remedy is integrated as a part of the obligation, and a subsequent statute which affects the remedy impairs the obligation and is unconstitutional. See 6 R.C.L. 351, § 356; 12 C.J. 1070, § 728. Even a remedial statute may impair the obligation of a contract, and in such event the act is unconstitutional. Bronson v....
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