Roberts v. Community & Southern Bank
331 Ga. App. 364
| Ga. Ct. App. | 2015Background
- In 2009 Roberts executed a $800,500 promissory note for his late father’s estate, signed by Roberts as attorney-in-fact for his mother (the executrix); he also executed a personal guaranty covering the Estate’s debt.
- The loan funds were used to purchase real estate for the Estate; the Estate later defaulted and Roberts made no guaranty payments.
- First National Bank (original lender) failed in January 2010; the FDIC transferred the Note and Guaranty to Community & Southern Bank (Community Bank).
- Community Bank moved for summary judgment (supported by an officer’s affidavit, a loan-history report, and a payoff statement) seeking principal, accrued interest, “secondary” interest, late charges, contractual attorney fees, and post-judgment interest.
- Trial court granted summary judgment for Community Bank for the amounts claimed; Roberts appealed arguing (1) the Note was unenforceable because Roberts lacked authority to bind the Estate and the probate court never authorized borrowing, (2) the Bank’s damages proof relied on inadmissible summaries, and (3) the award of “secondary” interest lacked evidentiary basis.
Issues
| Issue | Plaintiff's Argument (Roberts) | Defendant's Argument (Community Bank) | Held |
|---|---|---|---|
| Whether Roberts can assert defenses to the Note’s enforceability despite the Guaranty | Guarantor may assert defenses available to the principal; Note unenforceable because Roberts lacked authority and probate court never authorized loan | Guaranty contains clear waiver of defenses to illegality, invalidity, or unenforceability of underlying debt; obligation independent | Held for Bank — guaranty’s explicit waiver bars Roberts from challenging the Note’s enforceability |
| Whether the Bank’s Loan History Report was an inadmissible summary rather than a business record | The Loan History Report is a summary of records and inadmissible because underlying records were not produced | The report is a detailed transaction history (a data compilation) and admissible as a business record under OCGA § 24-8-803(6) | Held for Bank — report is a business record; trial court acted within discretion |
| Whether successor bank can rely on predecessor’s records without treating them as summaries | Underlying transactions occurred under First National, so report is necessarily a summary of another’s records | A successor bank may integrate predecessor’s records into its own business records if proper foundation is shown | Held for Bank — successor may rely on predecessor’s records; report admissible |
| Whether “secondary” interest was proved and recoverable | No business record or note provision justifies the $84,040.55 secondary interest | Bank sought such interest but conceded on appeal that award should be reduced to eliminate secondary interest and related attorney-fee portion | Judgment affirmed on condition: reduce award to eliminate secondary interest and related attorney fees |
Key Cases Cited
- Thomasson v. Pineco, Inc., 173 Ga. App. 794 (guarantor generally may assert defenses of principal)
- Vickers v. Chrysler Credit Corp., 158 Ga. App. 434 (waiver in guaranty can preclude defenses)
- Baby Days, Inc. v. Bank of Adairsville, 218 Ga. App. 752 (guarantor may consent in advance to waive defenses)
- HWA Properties v. Community & Southern Bank, 322 Ga. App. 877 (waiver of challenges to underlying transaction enforceability)
- Community & Southern Bank v. DCB Investments, 328 Ga. App. 605 (enforcement where defendants waived defenses in guaranty)
- Capital City Developers, LLC v. Bank of North Ga., 316 Ga. App. 624 (computer printouts of current balances treated as inadmissible summaries when underlying records not produced)
- Dawson Pointe, LLC v. SunTrust Bank, 312 Ga. App. 338 (loan history reports admitted as business records)
- Ishak v. First Flag Bank, 283 Ga. App. 517 (loan history report with transaction dates admissible as business record)
- Ware v. Multibank 2009-1 RES-ADC Venture, LLC, 327 Ga. App. 245 (successor bank may integrate predecessor’s records into its business records)
- Walter R. Thomas Assoc. v. Media Dynamite, 284 Ga. App. 413 (affidavits alone insufficient to establish debt without supporting business records)