United Companies Lending Corp. v. Coates, A99A0198.

• Decision Date: 28 June 1999
• Docket Number: No. A99A0198.,A99A0198.
• Citation: 238 Ga. App. 716,520 S.E.2d 236
• Parties: UNITED COMPANIES LENDING CORPORATION v. COATES et al.
• Court: Georgia Court of Appeals

520 S.E.2d 236

238 Ga. App. 716

UNITED COMPANIES LENDING CORPORATION v. COATES et al.

No. A99A0198.

Court of Appeals of Georgia.

June 28, 1999.

David G. Crockett, Douglas L. Brooks, Atlanta, for appellant.

Harris & James, Lisa Neill-Beckmann, Macon, for appellees.

BARNES, Judge.

United Companies Lending Corporation ("United Companies") filed a complaint against two minors, Alton Coates, Jr. and Omar Coates ("the minors"), seeking imposition of an equitable trust on property owned by the minors, a declaration that it is subrogated to the position of a prior first lienholder, and restitution of money that unjustly enriched the minors. United Companies claimed it was entitled to equitable relief because the minors' guardian and mother, Bobbie Coates, defaulted on a loan secured by the property. The trial court granted the minors' motion for summary judgment and denied United Companies' motion for summary judgment because it is undisputed that Coates never obtained approval from the probate court to secure the loan with the minors' property. United Companies appeals, contending the trial court erred by granting summary judgment to the minors and denying its motion for summary judgment. For reasons which follow, we affirm.

Summary judgment is proper when there is no genuine issue of material fact and the movant is entitled to judgment as a matter of law. OCGA § 9-11-56(c). A de novo standard of review applies to an appeal from a grant of summary judgment, and we view the evidence, and all reasonable conclusions and inferences drawn from it, in the light most favorable to the nonmovant. Rice v. Huff, 221 Ga.App. 592, 593, 472 S.E.2d 140 (1996).

Matjoulis v. Integon Gen. Ins. Corp., 226 Ga.App. 459(1), 486 S.E.2d 684 (1997).

The record, so viewed, reveals that the minors' grandmother, Essie Mae Hodge, devised the subject property, which consists of a house and a lot, to the minors in her will. After Hodge's death, the property was conveyed to the minors by the executrix of her estate in 1990. The probate court appointed the minors' mother, Coates, as the guardian of their property with the authority "to receive same and manage it according to the law." The probate court also issued Letters of Natural Guardian which authorized Coates "to receive, collect, and take charge of the estate, both real and personal, of [her] minor children...."

Approximately five years later, Bobbie Coates and her husband, Alton Coates, Sr., executed a promissory note in favor of United Companies with an original principal amount of $21,000. As security for the loan, Bobbie Coates signed a deed to secure debt which encumbered the minors' property.¹ She also signed an affidavit in which she affirmatively represented that she had "a perfect right to convey the security interest described above." It is undisputed that no court authorized Bobbie Coates to encumber the minors' property with the security deed in favor of United Companies.

Pursuant to the terms of the promissory note, United Companies dispersed $4,842.89 of the loan proceeds to Peachtree Investment Group to satisfy an outstanding first lien on the property and $1,611.97 to pay off four unsecured creditors of Bobbie Coates and Alton Coates, Sr. It also dispersed $7,500 to an escrow account to be used for improvements to the property. Bobbie Coates and Alton Coates, Sr. received $548.79 cash at the closing. The remainder of the loan proceeds was used to pay the settlement charges for the loan which totaled $6,496.35, almost one-third of the total loan amount.²

Bobbie Coates and Alton Coates, Sr. filed a Chapter 13 bankruptcy petition approximately four months after entering into the loan with United Companies. Two years later, United Companies filed this action against the minors.

1. United Companies asserts the trial court improperly granted summary judgment to the minor defendants. We disagree. OCGA § 29-2-20 provides:

The guardian may not borrow money and bind his ward therefor nor bind his ward's property or create any lien thereon by any contract other than those specially allowed by law; provided however, that, upon application and showing the need by evidence, the probate court or the superior court may authorize a guardian to borrow money to renovate or to make improvements upon property of his ward, or for purposes set out in Code Sections 29-2-3 and 29-2-4.

The record shows, without dispute, that Bobbie Coates did not obtain court approval before obtaining the loan from United Companies. As a result, the deed to secure debt executed by Bobbie Coates cannot be enforced against the minors. See McQueen v. Fisher, 22 Ga.App. 394, 395, 95 S.E. 1004 (1918).

United Companies argues that the trial court should have applied equitable principles to allow it to recover against the minors...