Morgan v. Hawkins

• Decision Date: 24 September 1980
• Docket Number: No. 60228,60228
• Citation: 155 Ga.App. 836,273 S.E.2d 221
• Court: Georgia Court of Appeals
• Parties: MORGAN v. HAWKINS et al.

Page 221

273 S.E.2d 221

155 Ga.App. 836

MORGAN v. HAWKINS et al.

No. 60228.

Court of Appeals of Georgia.

Submitted July 7, 1980.

Decided Sept. 24, 1980.

Jerry L. Minge, Rome, for appellant.

Richard J. MacLeod, Rome, for appellees.

BIRDSONG, Judge.

Appellant Morgan, a real estate broker and developer, sold a house to Mr. and Mrs. Hawkins, for which the Hawkins executed a promissory note in the amount of $13,500. The purchase price of the house was $54,900, but the Hawkins traded or exchanged other equities for all but the amount of the note. The Hawkins paid nothing on the note and when foreclosure was threatened, filed a complaint against Morgan alleging fraud in the inducement of the note. Morgan answered, and filed a counterclaim setting up the execution of the note and the default thereunder and demanding judgment therefor. Morgan was denied a summary judgment to which he claimed he was entitled inasmuch as the Hawkins admitted in pleading the execution of the note. The jury returned a verdict for the plaintiff in the amount of $7,000 special and general damages and $1,500 punitive damages. Morgan's appeal attributes eight errors to the proceedings below. Held :

1. Appellant Morgan ascribes error to the trial court's denial of his motions for summary judgment, directed verdict and judgment nov on his counterclaim, and the denial of his motions for directed verdict and judgment nov on the Hawkins' claim. He urges this court to accept as law the principle that where there is no issue of fact as to execution and default of an obligation, the payee is entitled to a judgment on the obligation regardless of any defenses, claims, or counterclaims interposed by the maker against the obligation. This proposed principle is apodictically without merit. Failure of consideration and fraud in the inducement of the contract are good defenses to the enforceability of the obligation (Code Ann. §§ 20-305, 20-310, 20-502; 37-709). House v. Martin, 125 Ga. 642, 644-645, 54 S.E. 735; Thompson v. First Nat. Bank, 142 Ga.App. 174, 176, 235 S.E.2d 582. Morgan was not entitled to judgment based merely on the fact that the execution and default of the note were admitted, nor did the pleadings and the evidence at trial entitle him to a verdict. The jury was authorized to conclude from the evidence that artful, false and fraudulent representations and concealment of material facts concerning serious leakage problems in the house, were practiced upon the Hawkins, by and through which they were induced to purchase the house and execute a promissory note therefor and moreover that because of the serious leakage problems, unknown to the Hawkins, there was a failure of consideration for the obligation. House v. Martin, supra, 125 Ga. pp. 644-645, 54 S.E. 735.

The testimony of the parties was in conflict, but its resolution was for the jury and we will not disturb the verdict unless it is insupportable as a matter of law. Glover v. State, 237 Ga. 859, 860, 230 S.E.2d 293; Harris v. State, 236 Ga. 242, 223 S.E.2d 643; Lewis v. State, 149 Ga.App. 181, 254 S.E.2d 142; and see Lanier Petroleum v. Hyde, 144 Ga.App. 441, 442, 241 S.E.2d 62; Crosby Aeromarine v. Hyde, 115 Ga.App. 836, 838, 156 S.E.2d 106. The Hawkins testified that neither Morgan nor the sales agent, Ms. Clarke, told them about the severe leakage problems in the house. Months before, while driving in an unfamiliar part of town, they had been amused by a sign put up in front of a house by its owner "telling the world" that the house leaked "running water" and that a lawsuit was pending. Later, when the Hawkins inquired concerning a home purchase from Morgan, with whom they had dealt before, Morgan's agent showed the Hawkins this house. As the previous owner had moved, there was no sign, and the Hawkins had completely forgotten having seen such a sign. In fact, they did not connect the sign with this house until after they had brought it and Morgan mentioned the sign in the course of their own problems with leakage. While looking over the house with an eye to purchase, Mrs. Hawkins questioned Ms. Clarke about the off-color basement tile, but was told that the lighting was distorting the color. The Hawkins saw putty or glue and a knife and were told that some tile had been replaced, and that the walls had been freshly painted to get the house ready to show. Other evidence showed that Morgan had in fact been sued by the previous owner because of the leakage. Morgan had had some landscaping done and removed a large rock which he thought would solve the problem, but the evidence indicated that the problem had obviously not been solved and Morgan apparently made no other efforts to cure it before selling the house to the Hawkins. On some occasions when it rained in a particular way, water would seep in a mysterious fashion into the walls and onto the first floor and stand in puddles. It would soak the walls of a closet until they turned to mush; everything in the closet was ruined. The house kept a terrible odor. Several inches of water would collect on the basement floor and on at least two occasions, Mrs. Hawkins had to use a water pump to remove it. Furniture and carpets were ruined. The Hawkins called Mr. Morgan when they first discovered that they "had bought a swimming pool" but, although he visited the house and commiserated, he did nothing to correct the problem and continued to dun the Hawkins for the monthly payments. Under this version of the evidence, which we must assume in deference to the verdict (Georgia-Carolina Brick &c. Co. v. Brown, 153 Ga.App. 747, 266 S.E.2d 531), the evidence is sufficient to support a verdict for fraud in the inducement of the contract and failure of consideration.

In addition to a full and fair charge on actual and constructive fraud (see Code Title 37-7 ...