Vaughn & Co., Ltd. v. Saul

• Decision Date: 13 July 1977
• Docket Number: No. 3,No. 53986,53986,3
• Citation: 237 S.E.2d 622,143 Ga.App. 74
• Court: Georgia Court of Appeals
• Parties: VAUGHN & COMPANY, LTD., et al. v. B. F. SAUL, II, et al

Page 622

237 S.E.2d 622

143 Ga.App. 74

VAUGHN & COMPANY, LTD., et al. v. B. F. SAUL, II, et al.

No. 53986.

Court of Appeals of Georgia, Division No. 3.

July 13, 1977.

Rehearing Denied July 28, 1977.

Morris, O'Brien & Manning, Joseph R. Manning, Barry B. McGough, Redfern, Butler & Morgan, C. David Butler, Atlanta, for appellants.

Orr & Edwards, W. Fred Orr, II, Decatur, Shaw, Pittman, Potts & Trowbridge, Leslie A. Nicholson, Jr., Mark Augenblick, John Engel, Washington, D. C., for appellees.

WEBB, Judge.

Three loans from the Saul Trust to the Vaughns (Loans 448, 462 and 465) were made at separate times, and each involved a separate promissory note secured by a separate deed to secure debt. Each deed covered a different parcel of property. Saul Trust by exercise of the power of sale foreclosed on the property conveyed as security for Loan 462 (note for $3,100,000 dated June 21, 1974), and was the purchaser at the public sale in Cobb County on the first Tuesday of April 1976. As the advertisement for the foreclosure sale was being published, Saul Trust filed in Fulton Superior Court a complaint on the Loan 465 note seeking a judgment thereon for approximately $4,100,000 principal, plus interest and attorney fees as provided therein. This note bears date of June 9, 1975, was evidence of other loans exclusive of the note for Loan 462, was secured by a deed conveying real property different from that conveyed as security for Loan 462, and was secured also by a guaranty.

Saul Trust did not seek confirmation of the Cobb County foreclosure sale (Code Ann. § 67-1503). The Vaughns contended in answer to the complaint on Loan 465 note that because the security deed for Loan 462 contains a dragnet clause, ¹ under the terms of which Loan 465 promissory note could be said to have been a part of the secured indebtedness, Saul Trust having failed to secure confirmation was thereby estopped to maintain its action. They maintained it was a suit for a "deficiency judgment" within the purview of Code Ann. § 67-1503.

After extensive discovery (a record of approximately 3000 pages), motions for summary judgment were made by both Saul Trust and the Vaughn group. The trial court denied the Vaughns' motions, granted Saul's motion, and entered judgment for Saul Trust against the Vaughn group for $5,105,350.66 principal, interest, late charges and attorney fees, plus costs, specifically declining to accept the Vaughns' argument that the suit was for a "deficiency judgment" and barred by Code Ann. § 67-1503.

From this judgment granting plaintiffs' motion and denying defendants' motion for summary judgment, the Vaughn group appeals, assigning eighteen alleged errors.

1. Enumeration of error No. 1 raises these questions: Did the failure of Saul Trust to seek confirmation of the foreclosure sale of the property conveyed to secure the note made in 1974 for Loan 462 bar this action on the note made in 1975 for Loan 465? That is, where a deed to secure debt given to secure a specific note described therein, containing a dragnet or open-end clause making the property conveyed thereby security for all other debts and obligations either then or thereafter owed by the grantor to the grantee, is foreclosed by exercise of the power of sale in the security deed for which no confirmation of sale was sought, is the grantee barred from maintaining an action to recover on another note between the same parties, subsequently made for another loan and secured by a security deed on a different property?

Open-end or "dragnet" clauses in deeds to secure debt are valid in Georgia if the subsequent indebtedness conforms to the statutory requirements. Code Ann. § 67-1316; C. & S. DeKalb Bank v. Hicks, 232 Ga. 244, 246, 206 S.E.2d 22 (1974); Bryant v. Branch, 142 Ga.App. 189, 235 S.E.2d 688 (1977). And without question, the confirmation statute, Code Ann. § 67-1503 et seq., leaves a security deed creditor an option not to confirm a foreclosure sale thereby forgoing the right to sue for a deficiency. Unlike this case, however, all of the cases brought to our attention, with one exception, involve only one parcel of land conveyed as security for a specific note, to which under the " dragnet" clause there were tacked on other debts of the grantor. That one exception is Salter v. Bank of Commerce, 189 Ga. 328, 6 S.E.2d 290 (1939).

In Salter the bank by exercise of the power contained in its 1931 security deed bought at public sale the security property. No confirmation of sale was sought. The security deed contained a "dragnet" clause. The bank had another note made in 1936 secured by a deed to other property, and upon its effort to foreclose that security deed Salter presented his petition for injunction, contending among other things that the bank was barred from foreclosing because the previous foreclosure sale had not been confirmed. Denial of the injunction was upheld. The court stated that the confirmation statute does not "inhibit subsequent sale under power of property other than the property which at a former sale under power failed to 'bring the amount of the debt.' " Salter v. Bank of Commerce, 189 Ga. 328, 332, 6 S.E.2d 290, 293, supra.

In Bryant v. Branch, supra, Bryant purchased land for $1,100,000. He made a purchase money note for $1,000,000 with a security deed therefor, and gave another note for $50,000. This latter note was shown on the closing statement as "unsecured note from purchaser to sellers." The grantees in the security deed foreclosed under the power of sale, and subsequently brought an action on the note for $50,000. The security deed contained the provision that it was intended "to secure any and all other indebtedness now owing or which may hereafter be owing by the grantor." This court upheld the right of the payee in that note to bring an action on the note for $50,000. The note was not embraced within the foreclosure, and the note was not one for a deficiency arising out of the foreclosure sale.

In this case the Vaughns were given notice by certified mail of Saul Trust's intention to foreclose the 1974 security deed by exercise of the power of sale. The notice described only the note dated June 21, 1974 for $3,100,000 and referred to no other debt of the Vaughn group.

We hold that the present action is not to recover a deficiency judgment on the debt for which foreclosure was had, but to recover on a separate, subsequent and different note made a year later for a different debt and for which a conveyance of other property was made as security. The note sued upon is a separate transaction from that which was the basis for foreclosure, is not within the prohibition of Code Ann. § 67-1503, and Saul Trust was not barred from bringing action thereon.

2. The first enumeration also includes an assertion that the trial court erred in denying the Vaughn group's motion for summary judgment. There were not, however, a certificate of the trial judge and an application to this court for review. Our Supreme Court has held that denial of a motion for summary judgment is not reviewable other than by the procedures set forth in Code Ann. §§ 6-701(a)(2) and 81A-156(h). Marietta Yamaha, Inc. v. Thomas,237 Ga. 840, 842(2), 229 S.E.2d 753 (1976).

3. The Vaughns contend as errors 2 and 3 that the trial court erred in admitting into evidence portions of the affidavit of Philip D. Caraci submitted in support of Saul Trust's motion for summary judgment. The objections were that the affidavit (a) was not the best evidence, Caraci not being qualified to testify to the facts therein, (b) refers to documents not in the record in sworn or certified form, and (c) relies on and refers to documents which do not qualify as business records.

Although Saul Trust's motion for summary judgment was filed on August 3, 1976, supported by the Caraci affidavit and served upon them, the Vaughn group submitted four briefs in opposition to the motion for summary judgment in which they did not object to the Caraci affidavit, and it was not until December 21 thereafter during oral argument on the motion that they challenged the affidavit. An affidavit in support of a motion must set forth such facts as would be admissible in evidence (Code Ann. § 81A-156(e)), and to the extent that it contains material which would not be admissible in evidence it is subject to a motion to strike. But a motion to strike must be timely or the objection is waived. 10 Wright & Miller, Federal Practice § 2738, pp. 706-7 (1973). Failure to have raised this objection at an earlier time was sufficient in itself to justify the overruling of the motion to strike.

Even if it may be said that the motion to strike was timely, the objections to the affidavit fail and the court properly overruled the motion. Code Ann. § 38-711 provides: "Any writing or record, whether in the form of an entry in a book or otherwise, made as a memorandum or record of any act, transaction, occurrence or event shall be admissible in evidence in proof of said act, transaction, occurrence or event, if the trial judge shall find that it was made in the regular course of any business, and that it was the regular course of such business to make such memorandum or record at the time of such act, transaction, occurrence or event or within a reasonable time thereafter. All other circumstances of the making of such writing or record, including lack of personal knowledge by the entrant or maker, may be shown to affect its weight, but they shall not affect its admissibility. The term 'business' shall include every kind of business, profession, occupation, calling or operation of institutions, whether carried on for profit or not. This section shall be liberally interpreted and applied."

In his affidavit Mr. Caraci stated that he is "familiar with the files maintained by the Saul Trust concerning the loan at issue and with the accounting books and records involving the administration of this loan"; that the...