ROBERTS Et Al. v. SMITH
341 Ga. App. 823
| Ga. Ct. App. | 2017Background
- Four siblings (Johnnie Smith, Estelle Roberts, Charlie Smith, and Osie Outlaw) agreed informally that siblings would contribute as needed toward purchase/maintenance of a Cordele house Johnnie bought in Nov. 2011; Johnnie was sole buyer and borrower on the mortgage.
- Johnnie made the $11,136.49 down payment, obtained financing from Atlanta Postal Credit Union (APCU), and set up automatic mortgage withdrawals from a joint APCU account he held with his wife Mary.
- In Jan. 2012 Johnnie executed a warranty deed conveying the property to himself and the three siblings as joint tenants with right of survivorship, telling them only after the transfer.
- Johnnie died Dec. 2012; mortgage payments continued to be deducted from the joint account for months; Mary (as executor) closed accounts in Aug. 2013, APCU reversed a payment, accelerated the loan, and later applied funds from Johnnie’s individual account to the loan, leaving a balance which Mary paid to avert foreclosure and then caused assignment of the loan documents to the estate.
- Appellants sued Mary (as executor) seeking declaratory relief to recognize their ownership, payoff information, an accounting, damages; Mary counterclaimed for judicial foreclosure, an implied trust, and liquidated damages for breach of an alleged agreement to pay the mortgage. Trial court granted Mary summary judgment on all claims; appellants appealed.
Issues
| Issue | Plaintiff's Argument (Mary) | Defendant's Argument (Appellants) | Held |
|---|---|---|---|
| Existence of enforceable agreement to pay off mortgage | Siblings agreed to help Johnnie pay and thus had binding obligation to pay mortgage; failure to pay is breach | Agreement was vague: no specified amounts, timing, or obligation to pay mortgage; family understanding was ‘‘whatever was needed’’ — no meeting of the minds | Reversed: no enforceable contract; arrangement too vague and indefinite to impose mortgage payment duty |
| Implied trust (resulting vs constructive; familial gift presumption) | Estate entitled to implied/purchase-money trust because Johnnie paid consideration and loan | Appellants invoke familial gift presumption (siblings) and argue Johnnie’s payments could be gifts/voluntary, defeating unjust enrichment and resulting-trust claim | Reversed: triable issue exists whether contributions were gifts/voluntary; summary judgment for estate on trust claim improper |
| Effect of estate’s payoff of mortgage — cancellation/satisfaction v. assignment/equitable subrogation | Mary’s payment properly resulted in assignment to estate via equitable subrogation; estate preserved creditor rights and could foreclose | Under Walker v. Neil, when the obligor (or obligor’s estate) pays debt it is a release/satisfaction, not an assignment; Johnnie/estate was debtor on loan, so payoff should cancel loan documents | Reversed: Walker controls; estate’s payoff entitled appellants to cancellation/satisfaction of loan documents rather than an enforceable assignment permitting foreclosure |
| Trial court’s entry of summary judgment / dismissal of petition | Mary argued she was entitled to judgment on claims and counterclaims; judicial foreclosure and implied trust supported | Appellants argued trial court erred because key issues (agreement, gift vs. obligation, satisfaction vs. assignment) were contested facts or governed by Walker | Reversed: material factual and legal issues existed; summary judgment for Mary was improper and petition dismissal erroneous |
Key Cases Cited
- Vernon v. Assurance Forensic Accounting, 333 Ga. App. 377 (summary judgment standard and uncertainty in contract enforcement)
- Jimenez v. Gilbane Bldg. Co., 303 Ga. App. 125 (requirement of meeting of the minds for contract formation)
- McElvaney v. Roumelco, LLC, 331 Ga. App. 729 (contracts unenforceable if terms incomplete or uncertain)
- Lemming v. Morgan, 228 Ga. App. 763 (need for reasonable certainty in contractual obligations)
- Brock v. Brock, 279 Ga. 119 (familial gift presumption in resulting trusts)
- Reeves v. Newman, 287 Ga. 317 (constructive trust as equitable remedy for unjust enrichment)
- Estate of Crook v. Foster, 333 Ga. App. 36 (no restitution for voluntary payments/gifts)
- Johnson v. AgSouth Farm Credit, 267 Ga. App. 567 (equitable subrogation inapplicable where payer is debtor)
- Walker v. Neil, 117 Ga. (Supreme Court of Ga.) (payment by obligor or obligor’s representative operates as release/satisfaction, not assignment)