Ray v. Tattnall Bank

• Decision Date: 09 September 1983
• Docket Number: Nos. 66698,66701,s. 66698
• Citation: 307 S.E.2d 754,167 Ga.App. 871
• Parties: RAY v. TATTNALL BANK; TATTNALL BANK v. RAY.
• Court: Georgia Court of Appeals

Page 754

307 S.E.2d 754

167 Ga.App. 871

RAY v. TATTNALL BANK;

TATTNALL BANK v. RAY.

Nos. 66698, 66701.

Court of Appeals of Georgia.

Sept. 9, 1983.

Richard D. Phillips, Ludowici, for appellant.

Glen A. Cheney, Reidsville, for appellee.

McMURRAY, Presiding Judge.

This is a dispute between two creditors with reference to their respective rights to an alleged overage from the sale of a debtor's property by The Tattnall Bank in the foreclosure of a deed to secure debt held by it.

The plaintiff Howard O. Ray brought this action against The Tattnall Bank alleging that it had foreclosed and sold certain real property under the power of sale contained in the deed from their debtor (Bobby Ray) for the sum of $31,000 of which the defendant was entitled to recover under its note and deed to secure debt only the sum of $22,000 leaving an overage, and it has failed and refused to account to the plaintiff, a judgment creditor, for said excess. Plaintiff contends he has "a judgment lien against said property" in the principal sum of $5,330.34, plus interest and costs. Plaintiff also alleged defendant had acted in bad faith, had been stubbornly litigious and put the plaintiff to unnecessary trouble and expense by failing and refusing to honor his judgment liens and in addition to the principal amount of the indebtedness and interest he sought punitive damages of $10,000 and attorney fees of $5,000.

The defendant answered the complaint admitting only that defendant is a banking corporation but otherwise denying the claim or at least neither admitting nor denying the averments therein with reference to its actions in foreclosing upon the property of the debtor and having any excess from same or as to any information with reference to plaintiff's claim of a judgment lien. Defendant also filed separate defenses that the judgment liens obtained by the plaintiff against the debtor were procured by fraud and misrepresentation upon the small claims court by knowingly representing to the court that the sums claimed had arisen out of separate causes of action in order to bring each of the actions within the jurisdictional limits of the small claims court and the judgments were therefore null and void having been rendered by a court which did not have jurisdiction.

By deposition the plaintiff disclosed that he was in the fertilizer, chemical and seed business as a self-employed farmer supplying said products to others and during the course of business he had certain dealings on open account with the debtor "Bobby Carl Ray." He maintained four separate accounts as to Ray two of which were individual (personal) accounts for separate years, the first being for 1978 as to goods sold although service charges were thereafter charged from April 30, 1978, through February 1980, and for 1979 for goods sold from March 13, 1979, to May 1979 with service charges thereafter through "2/30" (?), 1980. He also maintained two partnership accounts as to Ray and his partners during 1979 (March 9, 1979, to "2/31" (?), 1980, and another from March 12, 1979, to "2/30" (?), 1980). These accounts were maintained in this manner because the plaintiff contends in the deposition that he had to pledge the accounts as collateral to his fertilizer supplier.

In February 1980 he sought judgments by filing five separate claims in the Small Claims Court of Tattnall County against the defendant Bobby Ray, said court having jurisdiction of claims of $1,500 or less. He obtained judgments as follows: Case No. 80-230 in the amount of $1,305.25 (1978 account of Bobby Ray) plus court costs, dated "3-26-80"; Case No. 80-231 (for the sum due on a partnership account) in the amount of $906.27, plus court costs, dated "3-26-80"; Case No. 80-232 (another partnership account) for the sum of $1,401.12, plus court costs, dated "3-26-80"; Case No. 80-233 (for part balance on the account of the debtor) in the amount of $1,500 (the claim showing a total balance of $1,645.70), dated "3-26-80"; Case No. 80-234 for $145.70, plus court costs (remaining balance of the $1,645.70 account), dated "3-26-80."

The plaintiff moved for summary judgment attaching his affidavit thereto, contending he is the holder of a superior judgment lien. He further contended that the defendant had sold the debtor's property at public outcry on October 6, 1981, at the price of $31,000 and "the indebtedness to defendant under said note and deed to secure debt" was only $22,000, hence defendant failed and refused to account to the affiant (plaintiff) for the excess funds for the satisfaction of his judgment lien as provided by law, and he was entitled to judgment as a matter of law.

The defendant responded by moving for summary judgment in its favor contending it was entitled to judgment as there were no genuine issues of material fact.

In opposition to defendant's motion plaintiff responded that the defendant had no standing to challenge the judgments and that there are questions of fact with reference to the amounts of each separate account and the separation of accounts. He also attached another affidavit wherein he set forth that the debtor (Bobby Carl Ray) had filed a petition for bankruptcy and all issues between the parties were fully litigated or could have been fully litigated in "the many adversary proceedings arising therefrom," and the judgments he had obtained in the small claims court were not stricken "nor was the validity of said judgment nor the jurisdiction of the Court challenged therein [and the issue] as to jurisdiction of the Court would have been res judicata between plaintiff and [the debtor] and his successors and assigns."

The motions for summary judgment came on for a hearing and the trial court made findings of fact with reference to the five judgments against the debtor by the plaintiff. The defendant had purchased the deed to secure debt held by another as to the real property and had foreclosed same, and the sales price at the public sale was $31,000. However, the defendant had loaned other money subsequent to the liens and had another deed to secure debt on the aforementioned property of the debtor and had applied the remainder of the proceeds after the foreclosure to that deed to secure debt and no sums were applied to the debt evidenced by the judgment liens of the plaintiff. The trial court also determined the jurisdictional limits of the small claims court "at the time of the filing of the liens" was $1,500. The debtor had previously filed for bankruptcy and had obtained relief "under Chapter 7." The court then determined that the issues were whether the judgment liens were valid liens and enforceable against the defendant and did the defendant have standing to attack the judgment liens held by the plaintiff and further had the defendant acted in bad faith and been stubbornly litigious so as to authorize an award of punitive damages and attorney fees. The trial court then concluded as a matter of law that the judgments shown above in Case Numbers 80-230 ($1,305.25), 80-233 ($1,500), and 80-234 ($145.70) resulted solely from the indebtedness of the debtor and were void and unenforceable in that the aggregate sum exceeded the jurisdictional limits of the Small Claims Court of Tattnall County. The court further held that a judgment rendered by a court without jurisdiction is a mere nullity, citing former Code Ann. § 81A-160(f) (Ga.L.1966, pp. 609, 622; 1967, pp. 226, 239, 240; 1974, p. 1138) (now OCGA § 9-11-60(f)); Edwards v. Lampkin, 112 Ga.App. 128, 144 S.E.2d 119; The Central Bank of Georgia v. Gibson, 11 Ga. 453; and Ricks v. Liberty Loan Corp., 146 Ga.App. 594, 247 S.E.2d 133. The court held that the small claims court having rendered judgment beyond its jurisdiction, the judgment was void as to third persons and could be impeached whenever and wherever it is sought to be used as a valid judgment, citing in support thereof The Central Bank of Georgia v. Gibson, 11 Ga. 453, supra; Canal Ins. Co. v. Cambron, 240 Ga. 708, 242 S.E.2d 32; Lewis v. Lewis, 228 Ga. 703, 187 S.E.2d 872; and Simpson v. Bradley, 189 Ga. 316, 5 S.E.2d 893. Therefore, the defendant had standing to attack same. The court concluded that the remaining judgments arose out of farming partnerships holding same were valid and enforceable, the same being Case Numbers 80-232 ($401.12) and 80-231 ($906.27).

In Case No. 66698 plaintiff appeals the granting of partial summary judgment to the defendant declaring the small claims court judgments in Case Numbers 80-230, 80-233 and 80-234 as void and unenforceable. In Case No. 66701 the defendant appeals the grant of partial summary judgment to the plaintiff declaring the small claims court judgments in Case Numbers 80-231 and 80-232 as valid and enforceable and granting judgment against the defendant in the principal amount of said judgments together with interest thereon. Held:

1. The judgment here under review was dated 10 February 1983. At that particular time the jurisdiction of the Small Claims Court of Tattnall County was $2,500 as established by Georgia Laws 1981, Volume II, p. 4587. However, the Small Claims Court of Tattnall County was created by Georgia Laws 1975, pp. 3684, 3685 in which the jurisdiction of the court was set forth as "cases at law in which the demand or value of the property involved does not exceed $1,500.00." The 1981 amendment was not remedial legislation requiring the trial court to accept the amendment as the law in considering the attack upon the judgments. We, therefore, apply the law in effect at the time (1980) of the judgments, that is, the $1,500 limitation as to the demand.

First of all, the judgments are not void on their face and must be attacked by a direct proceeding. This would be the case here, after process and service, as an affirmative defense by the defendant to this action. See OCGA § 9-11-60(a) (formerly Code Ann. § 81A-160(a) (Ga.L.1966, pp. 608, 662; 1967, pp. 226, 239, 240; 1974, p. 1138))....