Chelena v. Georgia Federal Sav. & Loan Ass'n

• Decision Date: 22 October 1986
• Docket Number: No. 43730,43730
• Citation: Chelena v. Georgia Federal Sav. & Loan Ass'n, 349 S.E.2d 180, 256 Ga. 336 (Ga. 1986)
• Parties: CHELENA v. GEORGIA FEDERAL SAVINGS & LOAN ASSOCIATION.
• Court: Georgia Supreme Court

Page 180

349 S.E.2d 180

256 Ga. 336

CHELENA v. GEORGIA FEDERAL SAVINGS & LOAN ASSOCIATION.

No. 43730.

Supreme Court of Georgia.

Oct. 22, 1986.

George P. Graves, Decatur, for Vincent Chalena et al.

Steven F. Unti, Gambrell, Clarke, Anderson & Stolz, Atlanta, for Georgia Federal Sav. & Loan Assn.

GREGORY, Justice.

The Chelena brothers sued Georgia Federal Savings & Loan Association (Georgia Federal) seeking a constructive trust and damages for alleged mishandling of a trust in their name. The trial court granted summary judgment in favor of Georgia Federal. We affirm.

Marie and Carl Chelena were divorced in 1969. Mrs. Chelena was awarded custody of their five sons and the title to the family home, which she was to hold in trust for the children. On May 21, 1973, the court authorized Mrs. Chelena to sell the house and place the proceeds in a trust account in a federally insured savings and loan association. The court order stated encroachment on the corpus by the trustee could be made for necessary support or maintenance, but only after petitioning the court for permission.

With the sale proceeds, Mrs. Chelena opened two revocable trust savings accounts of $5,000 each with Georgia Federal. The trust accounts named Mrs. Chelena as trustee. The terms allowed Mrs. Chelena to borrow against the trust funds and pledge them as collateral. The terms also directed Georgia Federal to act pursuant to Mrs. Chelena's signature in any manner consistent with the deposits.

Three Georgia Federal employees stated in affidavits that they were not made aware of any court order having to do with the trust accounts. In a deposition, Mrs. Chelena admitted she never presented Georgia Federal with copies of any court orders, but stated she discussed the court order with a representative when she opened the accounts. In 1973, Mrs. Chelena obtained two $3,000 savings account loans from Georgia Federal by pledging the trust certificates as collateral. The loans were eventually paid with money from the trust accounts. All this was accomplished without court permission.

In August 1979, the five Chelena sons brought suit against Georgia Federal seeking to recover the funds taken from the trust accounts for the loans. The trial court granted summary judgment in favor of Georgia Federal and denied summary judgment to the Chelenas. The Chelenas contend it was error to grant summary judgment to Georgia Federal because there is a disputed issue of fact as to whether Georgia Federal had knowledge of the court order prohibiting encroachment on the corpus of the trust without prior court approval.

This case is controlled by OCGA § 7-1-790 governing deposits by fiduciaries in building and loan associations and savings and loan associations. It provides:

"A building and loan association or a savings and loan association may receive deposits in the name of an administrator, executor,...