Mock v. Canterbury Realty Co.

• Decision Date: 08 January 1980
• Docket Number: No. 58414,58414
• Citation: 152 Ga.App. 872,264 S.E.2d 489
• Parties: MOCK et al. v. CANTERBURY REALTY COMPANY.
• Court: Georgia Court of Appeals

Page 489

264 S.E.2d 489

152 Ga.App. 872

MOCK et al. v. CANTERBURY REALTY COMPANY.

No. 58414.

Court of Appeals of Georgia.

Argued Sept. 11, 1979.

Decided Jan. 8, 1980.

Robert E. Hall, Atlanta, for appellants.

William R. King, W. Pitts Carr, David H. Pope, Charles B. Zirkle, Jr., Atlanta, for appellee.

BIRDSONG, Judge.

Summary judgment. The appellants, Mock and Tam-O-Shanter Properties, Inc. (TOS), undertook to purchase several hundred acres of land divided into separate parcels, most parcels being individually held by separate banks. The banks held title to the land due to deeds in lieu of foreclosure executed by an earlier developer. Each bank held title to a portion of the entire tract equivalent in ratio to that bank's portion of the entire loan to the original developer. TOS, together with Mock as its principle owner, executed security deeds to the several banks in addition to a minimal cash down payment. Each bank established a schedule of installment payments on the security deeds to be made by TOS based upon the projected sale of lots and houses thereon. TOS and Mock (and Mock's real estate firm) entered into an agreement with the appellee, Canterbury Realty Co., where Canterbury agreed to aggressively promote lots and homes for sale by TOS. Among other financial arrangements, TOS executed four notes to Canterbury. In substance each note reflected TOS' payment of deferred real estate commissions due Canterbury arising from TOS' purchase from a bank of that bank's undivided interest in the whole parcel of real property. Minimum payment on any annual installment due on a Canterbury note was 5% of the cash amounts paid in partial liquidation of the purchase price to the particular bank from whom the land was purchased. In effect the face amount of each promissory note for commissions from TOS to Canterbury was based upon the total purchase price paid by TOS to the selling bank. However, to limit the financial impact upon TOS which was in the process of purchasing a several million dollar development, to be paid to the selling banks over a period of several years from funds generated by the development of the lots and sale of homes thereon, TOS was not obligated to pay Canterbury the entire real estate commission at the outset. Nevertheless, each note called for a sum certain to be paid, this amount being equal to the real estate commission payable for a sale of a particular tract at the full price as if paid in one payment. The installment payments called for in each note were based upon the projection of minimum sales generated by Canterbury during each year of the existence of the note. There was a provision also that TOS could pay partial prepayments on the note, with such partial prepayments credited to the next annual principal payment due. Apparently this provision contemplated that Canterbury might generate more than the minimum sales during any given year. If Canterbury failed to generate the promised sales, TOS also had the right to terminate the exclusive agency granted to Canterbury. Each note however also provided that Canterbury had the right to declare the total amount due and forthwith payable in advance of the maturity date upon the failure of TOS to pay when due any one of the installments. It is uncontested that each of the notes was executed by TOS, remain unpaid, and that demand for payment has been made by Canterbury.

In addition to the four notes executed by TOS, Mock in his individual capacity executed a $5,000 note to Canterbury. This note was prepared on a standard business form entitled "Real Estate Note Equal Monthly Payments." However, the note as executed was an unequivocal promise by Mock to pay to Canterbury the sum of $5,000. The face of the form note provided blanks for stating a rate of interest and a number of monthly installments, in amounts and frequency to be inserted. These spaces were not filled in on the face of the note. The form note also provided a blank to insert the place at which principal and interest might be paid as well as provisions for a security deed. Neither were these blanks filled. In substance then the note provided only that Mock would pay Canterbury the sum of $5,000.

Canterbury filed suit against several defendants, including Mock as an individual and TOS as a corporate defendant. In its complaint Canterbury sought to recover the $5,000 from Mock on the individual note and a sum of $44,863.12 from TOS based upon the four notes signed by TOS in favor of Canterbury, in addition to certain other claims. Mock and TOS filed an answer denying the indebtedness and filed a counterclaim. The counterclaim asserted that Canterbury had "meddled" in the affairs of TOS to the extent that major lenders had refused to continue to make advances to TOS requiring TOS to execute deeds back to the lenders in lieu of foreclosure. TOS sought in excess of $1,000,000 as punitive damages as a deterrence to Canterbury. The trial court granted summary judgment to Canterbury as to the note executed by Mock and as to the four notes executed by TOS, but did not mention or otherwise dispose of the remaining counts of the complaint or the counterclaim. The court entered final judgment on the notes in the amount claimed. The briefs reflect that Canterbury has sought a fi. fa. on the judgment. Mock and TOS bring this appeal enumerating two alleged errors. Held :

1. In their first enumeration of error, appellants Mock and TOS urge that it was error for the trial court to grant summary judgment to Canterbury without also disposing of the counterclaim. This enumeration presents a procedural question that is clouded in confusion. The progenitor of what would appear to be a supportive rule is found in Rubel Baking Co. v. Levitt, a 1968 case of this court found at 118 Ga.App. 306, 163 S.E.2d 437. That case held in substance that where the defendant urges a legally sufficient counterclaim for an amount in excess of the amount demanded in the petition, the denial of a motion for summary judgment in toto ordinarily will not be error. From this holding declaring only that ordinarily the denial of summary judgment, where a valid counterclaim is pending, is appropriate, this court has significantly extended the Rubel rationale for reasons not apparent. In McDonald v. Parker, 134 Ga.App. 577, 215 S.E.2d 334, the trial court was faced with a suit involving a note for $3,000. McDonald admitted the note but urged partial satisfaction. McDonald also filed a counterclaim, which if established, would have allowed McDonald to recoup $3,780, an amount in excess of the principal and interest sought on the note by Parker. In those circumstances, this court held that the trial court erred in granting summary judgment in any amount to Parker. Though no authority was cited for this statement, it would appear to have its genesis in the Rubel holding that ordinarily it is not error to deny summary judgment where the amount of a valid counterclaim exceeds the amount of the original claim. It was a major extension of the beneficent rule that it is not error to deny summary judgment where there is a significant chance that the plaintiff's recovery might be substantially reduced or offset, to one that asserts it is error to grant summary judgment under such circumstances. Since the McDonald v. Parker case, supra, that rule has been expressed repeatedly by this court. One of the latest cases stating the expanded rule is Match Point v. Adams, 148 Ga.App. 673, 675, 252 S.E.2d 90, in which this court held without stating a rationale that where the order granting summary judgment to appellees made no reference to the counterclaim, it was error to grant the summary judgment on the complaint without also ruling on the counterclaim. The citation in sole support for this ruling was Shaw v. Cousins Mtg. etc. Investments, 142 Ga.App. 773(7), 236 S.E.2d 919, which in turn relied upon Real Estate World v. Southeastern Land Fund, 137 Ga.App. 771, 224 S.E.2d 747. Real Estate World held that the trial judge erred in granting summary judgment to the plaintiff on a note while defendant's counterclaim, which alleged a right of recovery, was still pending. The authority cited for that holding was McDonald v. Parker, supra. Thus, the evolution of the positive pronouncement found in Match Point v. Adams, supra, would appear to have its creative support in the Rubel decision, a case that clearly did not hold or establish a rule that it is error to grant summary judgment where there is a pending counterclaim.

We further observe that what appeared to be a permissive exercise of judicial discretion in the Rubel case, has moved somewhat toward a more arbitrary rule. Following the Rubel decision in 1968, this court followed the rule announced therein in the case of Tipton v. Harden, 128 Ga.App. 517, 519(2), 197 S.E.2d 746, adhering to the principle that it is not an abuse of discretion to deny a summary judgment in the face of a valid, pending counterclaim. However, in White v. Watson Enterprises, a 1973 case appearing at 129 Ga.App. 203, 205(2), 199 S.E.2d 357, this court held: "Of course, the filing of a legally sufficient counterclaim in excess of plaintiff's claim ordinarily requires the denial of a motion for summary judgment." (Emphasis supplied.) The basis for this pronouncement was the Rubel case. It is interesting to note that because as a matter of law the counterclaim did not exceed the plaintiff's claim (and because the Rubel case was not controlling), this court affirmed a grant of summary judgment to the plaintiff even though there was a pending counterclaim.

Yet another line of cases has evolved from the supportive case of Rubel Baking Co. v. Levitt, supra. In Mays v. C. & S. Nat. Bank, 132 Ga.App. 602, 606, 208 S.E.2d 614, 617, this court held: "Because there was a cross claim pending at the time the motions (for summary judgment) were filed, seeking recovery of sums in excess of the amount sought by...