General Elec. Credit Corp. v. Brooks

• Decision Date: 08 September 1978
• Docket Number: No. 33703,33703
• Citation: 249 S.E.2d 596,242 Ga. 109
• Parties: GENERAL ELECTRIC CREDIT CORPORATION of Georgia v. BROOKS.
• Court: Georgia Supreme Court

Page 596

249 S.E.2d 596

242 Ga. 109

GENERAL ELECTRIC CREDIT CORPORATION of Georgia v. BROOKS.

No. 33703.

Supreme Court of Georgia.

Argued July 10, 1978.

Decided Sept. 8, 1978.

Harmon, Smith & Bridges, Nolan B. Harmon, Archer D. Smith, III, Tyrone M. Bridges, Ginger C. Jones, Atlanta, for appellant.

Redfern, Butler & Morgan, Rex M. Lamb, III, Atlanta, for appellee.

BOWLES, Justice.

We granted certiorari in Brooks v. General Elec. Credit Corp. of Ga., 145 Ga.App. 407, 243 S.E.2d 635 (1978), to decide whether failure to meet the exact statutory requirements of Code Ann. § 20-506(c) results in the disallowance of attorney's fees incurred in connection with the collection of a written promise to pay with provisions therefor.

The respondent, Charles C. Brooks, brought an action to recover attorney's fees paid under protest to petitioner, General Electric Credit Corporation of Georgia, which arose in connection with the collection of an indebtedness, evidenced by an agreement providing for reasonable attorney fees incurred by General Electric Credit in the enforcement of its agreement with Brooks as guarantor of a note. In his complaint, Brooks alleged that General Electric Credit's notice of intent to collect attorney fees had failed to comply with the requirements of Code Ann. § 20-506 and, therefore, was legally insufficient.

The notice to respondent from petitioner's counsel read as follows: "We have been asked to represent the interest of General Electric Credit Corporation of Georgia insofar as a claim is concerned against Bryant Atlanta Corporation, and you, Arising out of an indebtedness from Bryant Atlanta Corporation, and you, to it growing out of loans and monies advanced Pursuant to a security agreement dated October 16, 1972, and the individual Guaranty Agreement executed by you individually on the same date.

"Because of a default under the terms and provisions of said Security Agreement, General Electric Credit Corporation of Georgia has elected to declare the full amount of said indebtedness immediately due and payable. Demand is hereby made upon you for the immediate payment of the total amount of said indebtedness which, as of April 10, 1975 amounts to $432,744.04 principal, interest through April 10, 1975 in the amount of $1,520.00, together with additional interest from April 10, 1975 at the rate of $156.22 per day.

"Pursuant to the provisions of Section 20-506 of the Code of Georgia of 1933, as amended, you are hereby notified that in the event the Above indebtedness is not paid in full within ten (10) days from your receipt of this letter, that attorneys' fees will be demanded, in addition." (Emphasis supplied.) Brooks contended that the above notice was defective in two regards; first, that it failed to refer to contractual provisions regarding attorney fees; and second, that it failed to clearly provide that the principal and interest without attorney fees could be paid within 10 days of receipt of the notice.

The case was heard in the State Court of Fulton County on Brooks' motion for summary judgment and General Electric Credit's response thereto. At that hearing the parties stipulated that there as no dispute as to any of the material facts, and, that only an issue of law remained, that being, "whether the notices sent to plaintiff . . . regarding the obligation to pay attorney fees was sufficient to comply with the requirement of Ga. Code Ann. § 20-506(c)."

In granting General Electric Credit's motion for summary judgment, and ordering that a judgment in its favor be entered, the trial court found that there was "no question that (Brooks) understood the notices to apprise him of the facts which the statute requires the creditor to tell him." Further, the trial court found that, "while the letter (did) not track the language of the statute specifically, no authority has been suggested which would make such requirement," and concluded that, "(I)f the legislature intended notice to contain some magic language in particular words, it no doubt would have included a form in the statute itself. Absent such a requirement, it appears clear that defendant complied with the requirements of Section 20-506 and that the notice given was sufficient. The purpose of the statutory conditions to the written contract, which '. . . is to protect the debtor, in spite of default, from any liability for attorney's fees, unless he fails to pay after the lapse of ten days from receiving notice . . .' was here fulfilled."

On appeal, the Court of Appeals reversed the judgment of the lower court and held that, "(T)he failure to meet the Exact statutory requirements of Code Ann. § 20-506(c), supra, will result in disallowance of such attorney fees." (Emphasis supplied.) Since, ". . . there was no reference to provisions in any instrument relative to payment of attorney fees . . ." and since the notice did not ". . . meet the statutory requirement of notification to the plaintiff that he has 10 days from the receipt of such notice to pay the principal and interest without the attorney's fees," notice was legally insufficient.

We reverse.

In construing Code Ann. § 20-506 we recognize that "(I)n all interpretations, the courts shall look diligently for the intention of the General Assembly, keeping in view, at all times, the old law, the evil, and the remedy." Code Ann. § 102-102(9); McPherson v. City of Dawson, 221 Ga. 861, 148 S.E.2d 298 (1966). "Where the letter of the statute results in absurdity or injustice . . . , the meaning of general language may be restrained by the spirit or reason of the statute . . . It is the duty of the court to consider the results and consequences of any proposed construction and not so construe a statute that will result in unreasonable or absurd consequences not contemplated by the legislature." (Emphasis supplied.) State of Ga. v. Livingston, 222 Ga. 441, 150 S.E.2d 648 (1966); New Amsterdam Cas. Co. v. Freeland, 216 Ga. 491, 495, 117 S.E.2d 538 (1960). "To ascertain the intention of the Legislature, after examining the words of the Act itself, it is necessary to take into view every fact and circumstance that influenced its passage. We must consider what the law was before; the mischiefs against which the law did not provide, the nature of the remedy proposed; the true reason of the remedy." Swan v. State, 29 Ga. 616, 621 (1860).

The intent of the legislature in enacting Code Ann. § 20-506 can be gathered from an analysis of the Act, passed in 1891, and subsequent amendments thereto.

At common law, and in Georgia until 1891, attorney fee provisions in instruments of indebtedness were looked upon with favor and were as valid as any other stipulation in an instrument. National Bank of Athens v. Danforth, 80 Ga. 55(8), 7 S.E. 546 (1887), Merck v. American Freehold Land Mtg. Co., 79 Ga. 213(3), 7 S.E. 265 (1887); Keating v. Woods-Young Co., 42 Ga.App. 63, 72, 155 S.E. 206 (1930).

In 1891, the Georgia legislature voiced its concern over the common law rule by declaring all contractual provisions for the collection of attorney fees on notes or other evidences of indebtedness "absolutely void, and no court shall have the power to enforce such contract and agreement to pay such attorney fees, unless a plea or pleas be filed by the defendant and not sustained." Ga.L.1890- 91, p. 221. The clear intent of the legislature was that attorney fees should be paid only if the debtor actually litigated the debt and was not vindicated. This was recognized in the case of Demere v. Germania Bank, 116 Ga. 317, 42 S.E. 488 (1902) wherein it was stated, "Before the passage of this act, a stipulation to pay attorney's fees subjected the debtor to a penalty for a failure to pay his indebtedness, even though he honestly could not pay and made no resistance to the creditor's suit. This was the evil at which the act was directed, the remedy being to relieve the debtor from the payment of attorney's fees except where he litigated with the creditor and resisted the suit on grounds which were not in any part upheld . . ." (Emphasis supplied.)

In 1900 the legislature amended the 1891 statute. This amendment provided that attorney fees were void, unless, "the holder of the obligation sued upon, his agent or attorney notifie(d) the defendant in writing ten (10) days before suit is brought of his intention to bring suit, and also the term of court to which suit will be brought" and the holder failed to pay the debt on or before the return day of court. Ga.L.1900, p. 53. The 1900 statute was clearly more favorable to the creditor than was the 1891 statute. "The intention of the old law (Ga.L.1890-91, p. 221) was to prevent the collection of attorney's fees provided for in a note, unless the debtor should file a defense and fail to sustain it. The amending act (Ga.L.1900, p. 51) adopted a different scheme, which was to require notice of an intention to sue to be given at least 10 days before suit should be brought, to allow the debtor until return day to pay the debt, and thus to save the creditor the necessity and expense of bringing suit at all." Harris v. Powers, 129 Ga. 74, 87, 58 S.E. 1038, 1044 (1907).

The attorney fee statute was again amended in 1946 to eliminate the requirement that the creditor notify the debtor of the term of court to which the suit would be brought. Ga.L.1946, p. 766. This change was a part of a comprehensive act to simplify practice and procedure in the Georgia courts, and it did not significantly alter the substantive law regarding the recovery of attorney fees. Ga.L.1946, pp. 761, 762.

The current version of Georgia Code Ann. § 20-506 was enacted by the legislature (Ga.L.1953, pp. 545, 546) in 1953. Although it has been changed in two respects since 1953, neither of these changes is relevant to a decision in the instant case. ¹ The 1953 statute differed from its predecessors in several respects. Attorney fee provisions were no longer void and unenforceable...