Hill v. General Finance Corp. of Georgia

• Court: Georgia Court of Appeals
• Writing for the Court: DEEN; BIRDSONG; WEBB; WEBB
• Citation: Hill v. General Finance Corp. of Georgia, 241 S.E.2d 282, 144 Ga.App. 434 (Ga. App. 1977)
• Decision Date: 01 December 1977
• Docket Number: No. 54871,No. 3,54871,3
• Parties: D. L. HILL et al. v. GENERAL FINANCE CORPORATION OF GEORGIA et al

Page 282

241 S.E.2d 282

144 Ga.App. 434

D. L. HILL et al. v. GENERAL FINANCE CORPORATION OF GEORGIA et al.

No. 54871.

Court of Appeals of Georgia, Division No. 3.

Dec. 1, 1977.

Rehearing Denied Dec. 20, 1977.

Clein & Heimanson, Neil L. Heimanson, Atlanta, for appellants.

King & Spalding, Nolan C. Leake, Frank C. Jones, G. Lemuel Hewes, Hansell, Post, Brandon & Dorsey, W. Rhett Tanner, Richard M. Kirby, Atlanta, for appellees.

DEEN, Presiding Judge.

The appellants Hill borrowed money from General Finance Corp. on October 17, 1972, giving a note with acceleration clause and personal property as security. On August 20, 1973, while the note was unpaid, they entered a voluntary bankruptcy proceeding under Chapter XIII which is still unresolved, and General Finance filed a proof of claim therein. In 1977 they filed the present action against General Finance, which is licensed under the Industrial Loan Act, and Georgia Consumer Finance Association, Inc., which is not, alleging that the loan agreement and others like it are void for usury, that the defendant Consumer Finance represents the interest of that defendant and many other loan companies which have used the same usurious loan agreements, that plaintiffs are bringing a class action on behalf of themselves and all other customers of Georgia Finance and the other member lenders of Consumer Finance, all of whom have violated the rights of the plaintiffs or members of the class which the plaintiffs seek to represent, and they seek, for themselves and others similarly situated, judgment for all sums paid on the void loans plus punitive damages in the sum of $25,000 for each member of the class represented. The defendants answered, contesting among other things the plaintiffs' right to a class action. General Finance filed a counterclaim in the event a class action were allowed and Consumer Finance filed a motion for summary judgment. The class action prayer was denied and the summary judgment granted. The latter was appealed directly to this court. The former was initially the subject of an interlocutory appeal in the Supreme Court which gave direction that it be included in the summary judgment appeal. Held :

1. Code § 81A-123(a) provides in part: "If persons constituting a class are so numerous as to make it impracticable to bring them all before the court, such of them, one or more, as will fairly insure the adequate representation of all may, on behalf of all, sue or be sued, when the character of the right sought to be enforced for or against the class is: (1) Joint, or common, or secondary in the sense that the owner of a primary right refuses to enforce that right and a member of the class thereby becomes entitled to enforce it."

The class action right sought to be enforced here is a declaration against all loan companies which are members of the Georgia Consumer Finance Association, Inc. who may have used the language which is contained in the plaintiff's loan agreement with General Finance and which the plaintiff contends renders the note void for usury, and a declaration in favor of all the persons (at present unascertained) with whom these so far undesignated loan companies have done business based on such notes, that the transactions between this class of loan companies (that is, those companies which have made use of the language in question) and this class of defendants (persons which have borrowed money and signed notes using such language) are completely void, and that the undesignated loan companies owe the undesignated borrowers both compensatory and punitive damages, the compensatory damages in each case to be figured according to the circumstances of the particular transaction. It is stated that General Finance alone has some 40,000 customers. How many other loan companies there are represented by Consumer Finance and how many customers they have in the aggregate can only be guessed at, but under Eisen v. Carlisle & Jacquelin, 417 U.S. 156, 173-175, 94 S.Ct. 2140, 40 L.Ed.2d 732, the entity seeking to represent the alleged class must mail an initial notice of the alleged class action to each member of such class. This is obviously an extravagant liability to be undertaken by a bankrupt plaintiff, and it has been held both in Eisen and in Buford v. American Finance Co., D.C., 333 F.Supp. 1243, 1250, that class certification may be denied where the proposed class representative is not financially responsible for the costs it must assume in this role. It is well established that the discretion of the trial judge in certifying or refusing to certify a class action is to be respected in all cases where not abused. See City of New York v. International Pipe & Ceramics Corp., 2 Cir., 410 F.2d 295, 298; Wright v. Stone Container Corp., 8 Cir., 524 F.2d 1058, 1061. Although it was held in Ga. Investment Co. v. Norman, 229 Ga. 160, 190 S.E.2d 48 that class actions are permissible where the right sought to be enforced is "common" to the members of the class, albeit neither joint, nor derivative, nor one affecting specific property, the trial court may deny certification, where granted a common right, individual questions of law or fact as between the defendant and the individual class plaintiffs would yet predominate. One of the facets of the litigation raising such individual questions is the matter of counterclaims, such as exists here on the part of General Finance against the plaintiff (see Rollins v. Sears, Roebuck & Co., 71 F.R.D. 540, 544 and cit.), and also the...