Tufts v. Levin
| Decision Date | 18 April 1994 |
| Docket Number | No. A94A0306,A94A0306 |
| Parties | TUFTS v. LEVIN et al. |
| Court | Georgia Court of Appeals |
Johnston & Marsh, Howard H. Johnston, Atlanta, for appellant.
Lefkoff, Duncan, Grimes, Dermer & Miller, Joseph Lefkoff, Kimberly A. Richardson, Atlanta, for appellees.
On April 26, 1991, Tufts entered into an agreement to sell a house to Bennett and her parents, the Levins, for $225,000. The sale of the property closed on October 15, 1991. In accordance with the purchase and sale agreement, Tufts conveyed the property to Bennett. Two notes were signed:
1. Bennett executed a 30-year purchase money note in favor of Tufts in the amount of $200,000, with a $3,690.36 accrued interest shortage resulting from lower interest payments during the first two years of the loan due and payable on October 15, 1994. This indebtedness was secured by a security deed referred to as the purchase money security deed.
2. The Levins executed a $25,000 balloon note in favor of Tufts, with a $25,000 principal balance, $7,500 in accrued interest, and $3,690.36 in deferred interest on the primary note, for a total of $36,190.36, due and payable on October 14, 1994. This represented the down payment. To secure this indebtedness, Bennett executed a separate security deed in favor of Tufts.
Each note contained a cross-default clause stating that default by the borrowers under any term of one note and deed to secure debt would be a default on the other. The security deeds were recorded on the same date, the purchase money security deed first.
Bennett defaulted in making monthly payments under the purchase money note. On December 7, 1992, Tufts declared the balloon note due and payable by reason of default. On January 5, 1993, Tufts sold the property to herself at foreclosure under powers contained in the purchase money security deed. She bid in the property in satisfaction of the purchase money note, interest, attorney fees, and expenses of sale.
Tufts then sued the Levins on the balloon note. The parties filed cross-motions for summary judgment. The contested issue is whether Tufts' action is one for deficiency judgment, barred as a result of Tufts' failure to obtain judicial confirmation of the foreclosure sale. The trial court granted the Levins' motion and denied Tufts'.
The confirmation statute, OCGA § 44-14-161(a), provides: "When any real estate is sold on foreclosure, without legal process, and under powers contained in security deeds ... and at the sale the real estate does not bring the amount of the debt secured by the deed ... , no action may be taken to obtain a deficiency judgment unless the person instituting the foreclosure proceedings" obtains a judicial confirmation. (Emphasis supplied.)
The question thus presented is whether the debt evidenced by the balloon note was "somehow included or includable in" the debt secured by the purchase money security deed. Clements v. Fleet Finance, 206 Ga.App. 736, 739, 426 S.E.2d 910 (1992) (Carley, P.J., concurring specially). Comparable cases give direction to the answer.
Langley v. Stone, 112 Ga.App. 237, 144 S.E.2d 627 (1965), involves the sale of real estate by Stone to Langley. Langley assumed a first loan deed from Cathcart to Southern Federal and executed a second loan deed and note to Stone. Stone subsequently became assignee of the first loan deed and sold the property under a power of sale in that deed. He bid in the property at an amount alleged by Langley to have been only one-third of its fair market value. After confirmation of the sale was denied, Stone sued Langley on the second note. We held that by reason of Stone's failure to obtain fair market value for the property, Langley had a claim for damages for failure to fairly exercise the power of sale in the loan deed. Id. at 239(2), 144 S.E.2d 627.
Murray v. Hasty, 132 Ga.App. 125, 207 S.E.2d 602 (1974) involved Murray's purchase of a house from Hasty. Murray agreed to make a down payment of $900 and to pay the balance of $13,000 in monthly payments to be secured by a security deed. Hasty took Murray's note for the $900 down payment, but it was not referred to in the security deed and was not part of the debt secured by it. Hasty later foreclosed the security deed and sued Murray on the note for $900, without having obtained confirmation of the foreclosure sale.
Our view was that (Emphasis in original.) Id. at 126(1), 207 S.E.2d 602. Murray distinguished Langley by stating that in Langley, Id. at 127, 207 S.E.2d 602.
In Kennedy v. Gwinnett Commercial Bank, 155 Ga.App. 327, 270 S.E.2d 867 (1980) (Kennedy I ) and Kennedy v. Trust Co. Bank of Gwinnett County, 160 Ga.App. 733, 288 S.E.2d 87 (1981) (Kennedy II ), appellants obtained a consumer bank loan secured by their assignment to the bank of their rights as grantees in a third security debt. After appellants defaulted on the loan, the bank obtained an assignment of the first security deed and foreclosed on the property in order to collect the debt secured by the first deed, thereby causing the debt secured by the third deed to become unsecured. The bank did not obtain confirmation but sued appellants on its loan to them.
In Kennedy I, we overruled Langley insofar as it held that failure to obtain fair market value of the property at the sale, standing alone, is a breach of the duty to fairly exercise the power of sale in the deed. 155 Ga.App. at 327(1), 270 S.E.2d 867.
In Kennedy II, we held that Kennedy, like Murray, was an action to recover on an independent, separate, unsecured obligation not subject to the confirmation statute. 160 Ga.App. at 734-735, 288 S.E.2d 87. Unlike Langley, appellants' debts were not secured by a security deed in which they were the grantors and the bank was the grantee. At the time the bank foreclosed on the first deed, it did not hold appellants' security deed as security for the consumer loan. The effect of the foreclosure on the first deed, again unlike Langley, was essentially to leave the notes totally unsecured. We held, (Emphasis in original.) 160 Ga.App. at 736, 288 S.E.2d 87.
"Furthermore, and perhaps more importantly," the court in ...
To continue reading
Request your trial
-
Southeast Timberlands, Inc. v. Haiseal Timber, Inc.
...are inextricably intertwined. See C.K.C. v. Free, 196 Ga.App. 280, 282-283(2), 395 S.E.2d 666 (1990); see also Tufts v. Levin, 213 Ga.App. 35, 443 S.E.2d 681 (1994). A verdict in Southeast's favor was demanded as a matter of law, and the trial court erred in denying its motion for directed ......
-
Iwan Renovations v. North Atlanta Nat. Bank
...to prevent creditors from circumventing the statute's mandates by making successive loans against the security of the same property. See Tufts v. Levin;4 Ward v. Pembroke State Bank.5 This prevents creditors from avoiding "the very purpose of the confirmation statute; that being to protect ......
-
OAKVALE RD. ASSOCS., LTD. v. MORTGAGE RECOVERY FUNDATLANTA …
...of determining whether the sale of the real estate "bring[s] the amount of the debt secured by the deed" under OCGA § 44-14-161(a).3 Tufts v. Levin4 analyzed the case law addressing whether debts are "inextricably intertwined" so as to fall within the parameters of the statute. Generally, d......
-
Bank of N. Ga. v. Windermere Dev., Inc.
...omitted.) Iwan Renovations v. North Atlanta Nat. Bank, 296 Ga.App. 125, 128(1), 673 S.E.2d 632 (2009). See also, Tufts v. Levin, 213 Ga.App. 35, 39(2), 443 S.E.2d 681 (1994) ; Oakvale Road Assoc. v. Mortgage Recovery Fund, etc., 231 Ga.App. 414, 416, 499 S.E.2d 404 (1998) (physical preceden......
-
Real Property - T. Daniel Brannan and William J. Sheppard
...at 415-16, 499 S.E.2d at 405-06. 192. Id. 193. Id. at 419, 499 S.E.2d at 408. 194. Id. at 416, 499 S.E.2d at 406 (citing Tufts v. Levin, 213 Ga. App. 35, 443 S.E.2d 681 (1994)). 195. Id. at 416-19, 499 s.e.2d at 406-08. 196. Id. at 417-18, 499 s.e.2d at 407. 197. Id. 198. Id. at 418, 499 s.......