Stearns Bank, N.A. v. Mullins
333 Ga. App. 369
| Ga. Ct. App. | 2015Background
- In 1995 Mullins granted a deed to secure debt to Jasper Banking Company (recorded June 13, 1995) as a deed to secure a revolving line of credit covering a 21.88-acre tract. The deed included a future-advances/dragnet clause and express language that the instrument would remain in effect "until released," even if balance reached zero.
- The initial loan under the line matured June 2, 1996; the deed did not fix a final single maturity for all indebtedness because it secured an open-ended revolving credit.
- Hawkins (ex-wife) obtained a divorce decree (1999) directing Mullins to convey a 5-acre parcel (part of the 21.88 acres) to her; Mullins could not convey clear title because of the 1995 security deed.
- Mullins moved to set aside the 1995 security deed, arguing title reverted to him seven years after the original debt maturity (i.e., by June 2003) under OCGA § 44-14-80.
- The trial court agreed and canceled the deed, finding the seven-year reversion applied because the bank had not recorded the deed until after the seven-year period lapsed.
- Stearns Bank (successor to Jasper) appealed; the Court of Appeals reversed, holding the deed’s language plus the revolving-credit structure evidenced an affirmative intent to create a perpetual/indefinite security interest, so the 20-year reversion period applies.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether the 1995 deed manifested an affirmative intent to create a perpetual/indefinite security interest under OCGA § 44-14-80(a)(1) | Hawkins/Mullins: deed did not establish 20-year reversion; title reverted after seven years from maturity (2003) | Bank: deed’s revolving-line language and statements that instrument "remain[ed] in effect until released" show intent to create perpetual/indefinite security, invoking 20-year reversion | Court: Held bank’s deed sufficiently evidenced affirmative intent; 20-year reversion applies |
| Whether Mullins’ later draws, notes, and deed modifications affect reversion | Mullins: reversion already occurred in 2003; later acts cannot revive title | Bank: continued advances, notes, and recorded modifications show ongoing indebtedness and acceptance of instrument’s continuing effect | Court: Treated Mullins’ later borrowings and recorded modifications as consistent with the deed’s continuing effect; such conduct supports bank’s position |
| Whether late recording of the deed controlled reversion | Mullins: trial court relied on late recording as basis for seven-year reversion | Bank: recording date does not negate parties’ affirmative intent expressed in the deed | Court: Rejected recording-timing rationale; focused on deed language and revolving-credit character |
| Whether cancellation was appropriate where bank still held security for indebtedness | Hawkins/Mullins: requested cancellation to enable conveyance per divorce decree | Bank: deed remains valid security under 20-year rule; cancellation improper | Court: Cancellation vacated; deed remains effective as security |
Key Cases Cited
- Wilkes v. Fraser, 324 Ga. App. 642 (construction of deed and intent governs) (court reviews deed construction de novo)
- Dixon v. Cook Banking Co., 191 Ga. App. 861 (revolving loan language and future-advances clause make deed remain effective until agreement terminated)
- Tedesco v. CDC Fed. Credit Union, 167 Ga. App. 337 (grantor’s express agreement that deed remains effective despite repayment waives reconveyance rights)
- Northwest Carpets, Inc. v. First Nat. Bank of Chatsworth, 280 Ga. 535 (dragnet clause alone does not prevent reversion if original indebtedness fully paid absent evidence of renewal)
- Martin v. Fairburn Banking Co., 218 Ga. App. 803 (open-end clauses keep deeds effective so long as indebtedness exists)
- Vineville Capital Group v. McCook, 329 Ga. App. 790 (language like "forever" bears on intent but must be read in context)