Commercial Bank & Trust Co. of Troup County v. Anderson

• Decision Date: 05 December 1990
• Docket Number: Nos. A90A0910,A90A0917,s. A90A0910
• Citation: 399 S.E.2d 751,197 Ga.App. 901
• Parties: COMMERCIAL BANK & TRUST COMPANY OF TROUP COUNTY v. ANDERSON et al. ANDERSON et al. v. COMMERCIAL BANK & TRUST COMPANY OF TROUP COUNTY.
• Court: Georgia Court of Appeals

Page 751

399 S.E.2d 751

197 Ga.App. 901

COMMERCIAL BANK & TRUST COMPANY OF TROUP COUNTY v. ANDERSON et al.

ANDERSON et al. v. COMMERCIAL BANK &

TRUST COMPANY OF

TROUP COUNTY.

Nos. A90A0910, A90A0917.

Court of Appeals of Georgia.

Dec. 5, 1990.

Daniel, Hadden & Meadors, A.E. Daniel III, for appellant.

H.J. Thomas, Jr., Willis, McKenzie & Long, D. Ray McKenzie, for appellees.

CARLEY, Chief Judge.

The facts, insofar as they are relevant, are as follows: Commercial Bank & Trust Company of Troup County (the Bank) brought suit on a guaranty agreement against Ray Anderson, Edward Goodwin, and Tad Moore (the Guarantors). The Bank sought to recover $94,553.15 in unpaid principal and interest, attorney's fees and costs of collection. Answers were filed and two of the Guarantors, Anderson and Goodwin, filed counterclaims against the Bank. The counterclaims alleged that the guaranty agreement had been negligently prepared by the Bank's agent. After discovery, the Bank moved for summary judgment. The trial court held that the Guarantors were liable on the guaranty agreement but that, under the terms of that agreement, the Bank was limited to a pro tanto one-third recovery from each. The trial court further found that genuine issues of material fact remained with regard to the Bank's recovery of the costs of collection. On the counterclaims, the trial court granted summary judgment in favor of the Bank. In Case No. A90A0910, the Bank appeals from the trial court's order and in Case No. A90A0917, Anderson and Goodwin cross-appeal.

Case No. A90A0910

1. The Bank enumerates as error the holding that, under the terms of the guaranty agreement, it is limited to a pro tanto one-third recovery from each Guarantor.

Under the guaranty agreement, the Guarantor "unconditionally guarantee[d] the full and prompt payment when due" of a $600,000 promissory note. However, section 3 of the guaranty agreement further provided that "the right of recovery against [each Guarantor] is ... limited to Two Hundred Thousand Dollars ($200,000.00) of the principal amount of the liabilities plus the interest on such amount and plus the expenses as applicable thereto and as applicable to this guaranty and the additions to tax as defined in Section 9 hereof." (Emphasis supplied.) Section 9 provided that, "[i]n addition to any other obligations of [the Guarantors] under this guaranty, upon the occurrence of a determination of taxability ..., [each Guarantor] shall pay to the Bank ... up to one-third ( 1/3) of any additions to tax payable by the Bank and any other holder of the Note." (Emphasis supplied.) The trial court held that these two provisions must be construed together and that, when this is done, the intent was to limit the Bank to a pro tanto one-third recovery from each Guarantor.

The above-quoted language of the guaranty agreement is clear and unambiguous. Under Paragraph 3, the Bank's right of recovery against each Guarantor is limited to $200,000 of the $600,000 "principal amount of the liabilities" plus certain other enumerated elements, including up to one-third of the "additions to tax" as otherwise defined in Section 9. Thus, nothing in the provisions purports to limit the Bank to a one-third recovery from each Guarantor, except insofar as its ultimate recovery from each Guarantor cannot exceed one-third of the "principal amount of the liabilities" plus certain other elements, including one-third of the "additions to tax." See generally Friedland v. C & S South DeKalb Bank, 135 Ga.App. 591, 593(6), 218 S.E.2d 302 (1975). The clear and unambiguous language of the provisions is not subject to the interpretation that the Bank was limited to a pro tanto one-third recovery from each Guarantor and the trial court erred in holding otherwise. "Where the language employed by parties to a contract is plain, unambiguous, and capable of only one reasonable interpretation, no construction of the contract is required to ascertain the intention of the parties. [Cit.]" South Atlanta Assoc. v. Strelzik, 192 Ga.App. 574, 575(1), 385 S.E.2d 439 (1989).

2. The trial court's denial of the Bank's motion for summary judgment as to its recovery of $3,466.28 as the "costs of collection" is enumerated as error. In support of its motion the Bank submitted the affidavit of one of its officers who averred that $3,466.28 was the total amount of expenses that the Bank had incurred in collecting the indebtedness, exclusive of attorney's fees, but who did not otherwise indicate what specific expenses were included in that claimed amount. The trial court denied the Bank's motion on the ground that there was "no evidence of what the expenses were."

We note at the outset that there is some question whether, as a general principle of Georgia law, attorney's fees and "costs of collection" are deemed to be synonymous or independent terms and whether, therefore, the Bank can recover any amount of the "costs of collection" as a separate and distinct element from attorney's fees.

There is neither controlling nor persuasive authority for the legal proposition that the terms are generally deemed to be independent rather than synonymous. Ray v. Pease, 97 Ga. 618, 25 S.E. 360 (1895) merely holds that attorney's fees incurred in resisting the debtor's efforts to enjoin the creditor's suit on the note are recoverable. Thus, Ray clearly "dealt with recovery of attorney's fees rather than other costs of collection." Tobler v. Yoder & Frey Auctioneers, 462 F Supp. 788, 795 (S.D.Ga.1978). Tobler itself is not only a non-binding federal decision, it is not even persuasive authority for the legal proposition that the terms are generally deemed to be independent rather than synonymous. Tobler addresses only the recoverability of the "costs of collection" as specifically authorized under former OCGA § 44-14-2(a) and does not recognize the general recoverability of the "costs of collection" as a separate and distinct element from attorney's fees in any and all suits on a note or guaranty which may happen to contain a provision mentioning both. Likewise, OCGA § 11-3-106(1)(e) merely provides that the existence of a provision whereby the debtor agrees to pay both the "costs of collection" and attorney's fees in the event of default will not otherwise serve to render a note non-negotiable. Nothing in that statute has any direct bearing on the entirely separate issue of the extent to which such a provision is otherwise properly construable as imposing a liability upon the defaulting debtor.

There is, however, persuasive authority which does directly address the issue and which holds that the two terms are generally deemed to be synonymous rather than independent. "In our opinion, the terms 'cost of collection' and 'attorney's fees' ... mean one and the same thing, and the use of both of them imposes no other or greater burden upon the maker of the notes than would the use of either of them alone.... 'In a strict legal sense "collection fees" might be a broader term than "attorney's fees," for "collection fees" might embody expenses involved in endeavoring to collect said note by some person other than a licensed attorney and so this might be true of "costs of collection"; however, the courts, in determining the meaning of these stipulations, so far as we have been able to ascertain, have all treated them as synonymous terms when used in promissory notes and holding that it was a provision or stipulation to reimburse the payee and his assignees for an attorney's fee.' " (Emphasis supplied.) Wood v. Ferguson, 71 Mont. 540, 230 P. 592, 594(1) (1924).

However, there is ultimately no need to resolve the legal issue of whether attorney's fees and the "costs of collection" are synonymous and can be recovered independently in the instant case. Even assuming that the terms are not synonymous and that the Bank is otherwise entitled to collect both attorney's fees and the "costs of collection," the trial court's ruling was nevertheless correct because the Bank made no factual showing to authorize the grant of its motion for summary judgment seeking $3,466.28 as the amount of the recoverable "costs of collection."

The mere fact that the Bank may have incurred $3,466.28 in "expenses" does not, in and of itself, demonstrate that that amount is necessarily legally recoverable as the "costs of collection." As the trial court correctly held, there is no evidence as to what expenses are included in the $3,466.28 figure and the affidavit constitutes no more than the unsubstantiated conclusion of the affiant that that specific amount represents the "costs of collection" that may otherwise be legally recoverable by the Bank. All or a portion of the $3,466.28 may represent non-legal expenses, such as a charge for the administrative time expended by employees of the Bank in attempting to "collect" the indebtedness before the matter was turned over to an attorney. Such non-legal expenses certainly would not be recoverable pursuant to a contractual provision regarding reimbursement for the "costs of collection," but would constitute only a non-recoverable element of the administrative overhead of the creditor. If such administrative expenses were recoverable as the "costs of collection" in a suit to recover on a note or other contract, there would be no limit on the types and amounts of expenses that could be claimed and the recoverable "costs of collection" could easily exceed the amount of the unpaid indebtedness even though the amount of recoverable attorney's fees is otherwise statutorily limited to a percentage of the unpaid indebtedness by OCGA § 13-1-11. No court in this state has ever approved the recovery of non-legal expenses as the "costs of collection." See Whitaker v. Trust Co. of Columbus, 167 Ga.App. 360, 362(2), 306 S.E.2d 329 (1983), wherein the creditor's affidavit showed that, pursuant to former OCGA § 44-14-2(a), it had "incurred total costs of litigation" in a specified...