U. S. BANK TRUST NATIONAL ASSOCIATION AS DELAWARE TRUSTEE v. CHIEFTAIN ATLANTA, L. P., A21A0796

Background

In 2001 Jannifer Thomas executed a security deed on property to secure a $98,907 loan; the loan and deed were eventually assigned to U.S. Bank in April 2013.
A cancellation purportedly signed by Wells Fargo was recorded in September 2014; Wells Fargo discovered the cancellation during a title exam in October 2014 and concluded it was a forgery.
In May 2015 Wells Fargo (as servicer) and U.S. Bank recorded an affidavit attesting the September 2014 cancellation was forged and that the loan remained unpaid.
Chieftain Atlanta purchased the property by limited warranty deed on July 22, 2015, after obtaining a title report that disclosed the May 2015 affidavit.
U.S. Bank sued for a declaratory judgment that the cancellation is ineffective as a forgery and that its security deed remains a first-priority lien; the trial court denied U.S. Bank’s summary judgment motion on the ground that disputed facts might show ratification by delay.
The Court of Appeals reversed: it held no ratification as a matter of law and granted summary judgment to U.S. Bank on the declaratory-judgment claim.

Issues

Issue	Plaintiff's Argument	Defendant's Argument	Held
Whether U.S. Bank ratified the forged cancellation by delay	U.S. Bank repudiated the cancellation by recording the May 2015 affidavit before Chieftain acquired title, so no ratification	Chieftain: U.S. Bank’s delay in repudiating creates a jury question whether silence amounted to ratification	No ratification as a matter of law: recording the affidavit repudiated the cancellation before Chieftain relied on it, and U.S. Bank accepted no benefit from the cancellation
Whether the recorded affidavit was sufficient to give notice and defeat a ratification defense	Affidavit, when recorded, put the world (including Chieftain) on notice of the forgery and outstanding debt	Chieftain argued an affidavit alone is not equivalent to a conveyance or legal proceeding to attack title and insufficient to avoid ratification issues	Affidavit sufficed as notice; it preserved evidence and put Chieftain on notice prior to purchase, undermining any reliance on the cancellation
Whether a forged cancellation defeats the mortgagee’s security interest	U.S. Bank: a forged cancellation is a nullity and does not reconvey title because the debt remains unpaid	Chieftain: relied on recorded cancellation (but knew of the affidavit) and asserted delay issues	Forged cancellation ineffective; security deed remains in force until debt paid, so U.S. Bank retains its lien
Appropriateness of summary judgment on declaratory relief	U.S. Bank sought summary judgment showing forgery, unpaid debt, and Chieftain’s notice of the affidavit	Chieftain argued factual disputes preclude summary judgment (ratification)	Summary judgment granted: undisputed evidence established forgery, outstanding debt, and Chieftain’s notice; U.S. Bank entitled to declaratory relief

Key Cases Cited

Rains v. Dolphin Mtg. Corp., 241 Ga. App. 611 (1999) (ratification may be implied; standards for agency/ratification)
Hendrix v. First Bank of Savannah, 195 Ga. App. 510 (1990) (burden on party asserting ratification; acceptance and retention of benefits with knowledge required)
Griggs v. Dodson, 223 Ga. 164 (1967) (ratification burden and context-sensitive application)
Harris v. Underwood, 208 Ga. 247 (1951) (ratification may be implied from silence; prompt repudiation required to avoid presumption)
Ferguson v. Golf Course Consultants, Inc., 243 Ga. 112 (1979) (forged signature can be ratified if party knowingly accepts benefits)
Southtrust Bank of Ga. v. Parker, 226 Ga. App. 292 (1997) (ratification where forged signature accepted with knowledge)
Brock v. Yale Mtg. Corp., 287 Ga. 849 (2010) (forged signature may be binding if principal accepts benefits with knowledge)
Patel v. J. P. Morgan Chase Bank, N. A., 327 Ga. App. 321 (2014) (cancellation recorded in error does not reconvey title absent payment)
Deljoo v. SunTrust Mtg., Inc., 284 Ga. 438 (2008) (recordation gives constructive notice; purchaser charged with knowledge of recorded facts)
Maxco, Inc. v. Volpe, 247 Ga. 212 (1981) (recorded affidavit: puts the world on notice, preserves evidence, and supports admissibility)