Porter v. Midland-Guardian Co.

• Court: Georgia Court of Appeals
• Writing for the Court: SHULMAN; QUILLIAN, P. J., and BANKE
• Citation: Porter v. Midland-Guardian Co., 243 S.E.2d 595, 145 Ga.App. 262 (Ga. App. 1978)
• Decision Date: 22 February 1978
• Docket Number: No. 2,Nos. 54705,54731,MIDLAND-GUARDIAN,s. 54705,2
• Parties: Alfred PORTER et al. v.COMPANY (two cases)

Page 595

243 S.E.2d 595

145 Ga.App. 262

Alfred PORTER et al. v. MIDLAND-GUARDIAN COMPANY (two cases).

Nos. 54705, 54731.

Court of Appeals of Georgia,Division No. 2.

Feb. 22, 1978.

Rehearing Denied March 14, 1978.

W. E. Lockette, Albany, for appellants.

Hatcher, Cook & Strickland, Donald E. Strickland, Albany, for appellee.

SHULMAN, Judge.

Plaintiff petitioned to foreclose its security interest in defendant's mobile home and for a writ of possession. A trial was had before a judge without a jury. This appeal follows a judgment granting possession to the plaintiff and awarding $2724.38 as the unpaid balance owing by reason of the contract. We affirm the judgment.

1. "The sale of a mobile home comes within the provisions of the Motor Vehicle Sales Finance Act (Ga.L.1967, p. 674; Code Ann. Ch. 96-10). (Cit.)" Smith v. Society Nat. Bank, 141 Ga.App. 19, 20, 232 S.E.2d 367, 369.

2. Appellant asserts that appellee violated Code Ann. § 96-1004 as a matter of law by accelerating the loan without necessary prepayment adjustments and thereby demanding both earned and unearned finance charges. A violation of Code Ann. § 96-1004 invokes the penalty provisions of Code Ann. § 96-1008(b) and results in forfeiture of "any finance charge, delinquency or collection charge on the contract."

A. By letter, appellant's collection supervisor notified appellee that the account was delinquent. The letter further advised: "In the event of your failure to honor this demand this letter shall constitute and be deemed to be notice that we declare the total obligation under your contract to be immediately due and payable." Appellant emphatically argues that the term "obligation" as used in this letter is not a casual or vague reference to the underlying transaction but, rather, is a specific reference to a clear provision in the loan contract defining "obligations." The term "obligations" is contractually defined as follows: "The security interest granted herein secures in addition to the Total of Payments, any and all amounts owing to the holder by Buyer, direct or indirect, absolute or contingent, due or to become due, now existing or hereinafter arising (all hereinafter referred to as the 'Obligations')." This contract provision is a version of a commonly used "dragnet" clause. See Vaughn & Co. v. Saul, 143 Ga.App. 74, 237 S.E.2d 622. We are not willing to hold that the demand letter incorporated this provision by reference.

If the demand letter reference to "obligation" was intended to refer to a contractual provision, it was a reference to the acceleration clause and not the dragnet clause. The acceleration clause provided that on default the secured party has the right to "declare all of the Obligations to be immediately due and payable."

The mere presence of this acceleration clause is not violative of the Motor Vehicle Financing Law. Cf. Bell v. Loosier of Albany, Inc., 137 Ga.App. 50, 222 S.E.2d 839, holding affd. 237 Ga. 585, 229 S.E.2d 374 (clause allowing acceleration of "entire amount of purchaser's indebtedness" not violative of Georgia Retail Installment and Home Solicitation Sales Act, Code Ann. Ch. 96-9; legislative intent of Motor Vehicle Sales Finance Act and Retail Installment and Home Solicitation Sales Act similar).

" 'An intention contrary to the law should not be read into a contract by placing such a construction upon a provision therein, when the provision is just as susceptible of a construction that will show a lawful intention.' (Cit.)" Bell, supra, 137 Ga.App. 50, 53, 222 S.E.2d 839, 842. See generally, Freeman v. Decatur Loan etc. Corp., 140 Ga.App. 682(3), 231 S.E.2d 409.

" The contract in this case, when entered into by the parties, did not violate the Act; the rates charged over the entire term of the contract did not violate the Act; (and) the presence of the acceleration clause in the contract did not violate the Act . . ." Bell, supra, 237 Ga. 585, 586, 229 S.E.2d 374, 375. Nor did the reference, if any, to the acceleration clause in the demand letter, absent an illegal enforcement attempt (i. e., a demand for recovery of unearned rates), violate the Act. Appellant filed its complaint against the buyer seeking recovery of earned, and therefore permissible, not excessive, rates only. Compare Smith v. Society Nat. Bank, supra, Division 1. Under these circumstances, the trial court's award of appellee's prayer which was based on the contract indebtedness with necessary adjustments for unearned finance charges was not contrary to the Motor Vehicle Sales Finance Act.

B. In another letter, an attorney acting on appellee's behalf notified appellant that the account was delinquent. The letter further advised appellant that ". . . under the terms of your security agreement and note . . . all remaining installments due thereunder (are declared) to be due and payable immediately." Appellant asserts that this acceleration demand necessarily included a charge for excessive rates and was therefore in contravention of the Motor Vehicle Sales Finance Act. We disagree.

The letter, in conjunction with other letters, effected its intended purpose of acceleration. Lee v. O'Quinn, 184 Ga. 44(2), 190 S.E. 564 (written notice of intent to exercise option is method of accomplishing acceleration).

We recognize that an acceleration of "all remaining installments" has been held to necessarily demand the collection of charges in excess of those permitted. See Goodwin v. Trust Co. of Columbus, 144 Ga.App. 787, 242 S.E.2d 302 (decided under Industrial Loan Act rationale). See also Roberts v. Allied Financing Co., 129 Ga.App. 10, 198 S.E.2d 416 (dicta: acceleration of "all remaining installments" would include impermissible charges; presence of clause with that language in contract violated the ILA).

We cannot agree, however, that the letter here necessarily demanded impermissible charges. The letter clearly stated on its face the monetary amount of the "Net Current Balance." The "Net Current Balance," to wit: $2724.38, reflected necessary adjustments and sought recovery of earned, and therefore permissible rates only. The delinquency letter by its very terms negates any inference that the phrase "all remaining installments" necessarily demanded excessive charges and constituted an unlawful acceleration. This being so, we will not read into the letter an intention contrary to law. See Division 2A of this opinion.

The defense asserted in this enumeration is specious and the trial court properly rejected it as such.

3. Appellant also relies on testimony concerning the "total obligations" owing as of the date of the demand letter as indicating that this amount included unearned interest and was violative of the Act. It is clear from the record that this testimony was given under the assumption that appellant was requesting the balance due if appellant continued to pay on the schedule as provided by the contract, and could not be interpreted as either supporting or confirming appellant's contention that upon acceleration this same amount would be due without any adjustment as a result of prepayment.

4. Appellant argues, citing Candler I-20 Properties v. Inn Keepers Supply Co., 137 Ga.App. 94, 222 S.E.2d 881 and Wallace v. Aetna Finance Co., 137 Ga.App. 580, 224 S.E.2d 517, that a money judgment was not authorized in this case because there is no statutory provision in the foreclosure law allowing for the entry of such a judgment.

If appellee were proceeding solely under Ch. 67-7, then no money...