Smith v. Allen

• Decision Date: 21 October 1986
• Docket Number: No. 72778,72778
• Citation: 349 S.E.2d 548,180 Ga.App. 624
• Parties: SMITH v. ALLEN.
• Court: Georgia Court of Appeals

Page 548

349 S.E.2d 548

180 Ga.App. 624

SMITH v.ALLEN.

No. 72778.

Court of Appeals of Georgia.

Oct. 21, 1986.

John S. Jenkins, Elberton, for appellant.

Robert K. Broome, Larry J. Steele, Decatur, J. Hue Henry, Athens, M.T. Simmons, Decatur, for appellee.

McMURRAY, Presiding Judge.

W. Fred Allen(plaintiff) sued J. David Smith(defendant) and Marvin Shiflet(defendant) alleging that defendants are indebted to him in the aggregate principal amount of $120,000 for loans made by plaintiff to defendants.Plaintiff further alleged that the defendants agreed to pay interest on said loans at a rate of 13% per annum from the date the loans were executed.Defendant Smith answered, denying the material allegations of the complaint.Defendant Shiflet did not respond to the plaintiff's complaint.On February 19, 1986, a jury trial was conducted and the following evidence, in pertinent part, was adduced: 29 North Mobile Homes, Inc., d/b/a 29 North Mobile Homes, (the corporation) was incorporated in Georgia on March 29, 1984.Defendant Smith provided the initial capital for the corporation and he was the sole member of the corporation's board of directors.Defendant Shiflet was employed by the corporation and conducted the corporation's daily business operations.

In 1985 the corporation encountered financial difficulty and on March 1, 1985, defendants executed an unsecured "commercial note" in favor of Athens Federal Savings Bank (the bank) in the principal amount of $247,500.(The proceeds of this loan were used by the defendants to pay outstanding checks which had been drawn on the corporation's checking account.)

On April 26, 1985, defendant Shiflet executed an unsecured "promissory note" in favor of plaintiff in the principal amount of $40,000, bearing interest at a rate of 13% per annum.The proceeds of this loan were used to reduce the principal and satisfy the interest on the "commercial note" which was executed by the defendants in favor of the bank.

Plaintiff entered into evidence a document entitled "REAL ESTATE NOTE," dated May 7, 1985, purportedly executed by defendant Smith and defendant Shiflet, in their individual capacities, in favor of plaintiff evidencing a loan in the principal amount of $80,000 bearing interest at a rate of 13% per annum.This note provided that "payments of principal and interest [are] to be made as follows: A minimum monthly payment of Five Thousand dollars ($5,000.00) due and payable by the Tenth (10th) day of each month, commencing the Tenth (10th) day of June 1985, and a like amount paid each month until [the] note is paid in full.The interest to be paid each month as it accrues at the rate of Thirteen (13) percent on the remaining principal balance."

While it is not disputed that defendants executed an $80,000 note in favor of plaintiff at a rate of 13% per annum, defendant Smith testified that he did not execute the document entitled "REAL ESTATE NOTE" entered into evidence by plaintiff.Defendant Smith testified that the document he signed, evidencing the $80,000 debt, was a "corporate note" which indicated that he was the president of 29 North Mobile Home, Inc.

Notwithstanding this conflicting evidence, it is not disputed that $65,132 of the $80,000 loan proceeds were used to reduce the principal and satisfy the interest on the "commercial note" executed by the defendants in favor of the bank.The remaining loan proceeds were deposited into the "operating account" of "29 N. Mobile Homes, Inc."

On May 7, 1985, defendants executed the following memorandum: "This is to confirm the agreement that [the plaintiff] is to be paid a minimum of Four percent (4%) interest per annum on the note in the amount of Forty Thousand dollars ($40,000.00) dated April 26, 1985 and the note in the amount of Eighty Thousand dollars ($80,000.00) dated May 7, 1985 above the percent of interest that he has to pay the banks in order to obtain the loan to make the money available for these two notes.This money is to be paid cash each month on or before the Tenth (10)th day, commencing June 10, 1985 until the total amount of One Hundred Twenty Thousand dollars ($120,000.00) is paid in full."

Upon conclusion of the evidence, the trial court conducted a hearing concerning plaintiff's and defendant Smith's opposing motions for directed verdict.In this regard, the trial court denied defendant Smith's motion for directed verdict; granted plaintiff's motion for directed verdict and awarded plaintiff the principal amount of $117,283.01, $13,805.08 interest, and $13,108.80 attorney fees.Defendant Shiflet did not appear at trial and a default judgment was entered against him.Defendant Smith now appeals, challenging the trial court's order directing a verdict in favor of plaintiff.Held:

1."A motion for directed verdict is to be granted only where there is no conflict in the evidence as to any material issue and the evidence introduced, with all reasonable deductions, demands a particular verdict.OCGA § 9-11-50(a);Mercer v. Woodard, 166 Ga.App. 119, 127 (13)(303 S.E.2d 475)."Doyle v. Estes Heating, etc., 173 Ga.App. 491, 493-494 (3), 326...