Ben Moye and James Dennard (plaintiffs) sued Michael Hill and David Hayes (defendants) to recover a debt arising from a deficiency judgment obtained on a foreclosed tract of commercial property. The trial court granted partial summary judgment to plaintiffs, finding defendants liable as a matter of law. Defendants appeal, contending the trial court should have granted their motion and discharged them from any liability to plaintiffs. We agree and reverse.
Plaintiffs and defendants are parties in the chain of title to this property, which consists of three tracts of land in Valdosta. In 1979, Vivian Jones sold the property to plaintiffs and took back a note and security deed. The note called for 25 years of installment payments. When plaintiffs sold the property to defendants in 1983, defendants gave them a note for $7,300, took the property “subject to” the security deed between plaintiffs and Jones, and “assume[d] and agree[d] to pay” the original debt to Jones. It appears defendants did pay the required installments directly to Jones. Later, Hill obtained Hayes’ interest, paid the $7,300 debt to plaintiffs, and sold the property to Benny Mitcham, with Mitcham taking “subject to” the Moye/Dennard-Jones security deed and assuming the same original debt.
In 1993, with the note in default, Jones foreclosed on the property and applied for confirmation, naming as defendants in the confirmation proceeding Moye and Dennard, the plaintiffs in this case. The trial court confirmed the sale, leaving a deficiency in an amount not clear from the record. Moye and Dennard “settled” the deficiency *412 by paying Jones $21,000, then brought this action to recover from defendants Hill and Hayes.
Defendants’ sole contention is that because they did not receive legal notice of the confirmation action pursuant to the statute regulating deficiency judgments following foreclosure sales, OCGA § 44-14-161, plaintiffs cannot collect from them any amounts resulting from a deficiency judgment on this property. We agree. “Summary judgment is appropriate where the moving party shows he is entitled to judgment as a matter of law and there is no genuine issue of material fact. [Cit.]”
Devin Lamplighter, Ltd. v. American Gen. Finance,
Pursuant to OCGA § 44-14-161, when the holder of a security deed sells the secured property and the property does not bring the amount of the debt, the creditor may seek a deficiency judgment only if the superior court confirms the property sold fairly. OCGA § 44-14-161 (a), (b). See
Guthrie v. Bank South,
1. Plaintiffs Moye and Dennard characterize this action as a suit by sureties who have paid a debt against the persons primarily responsible for the debt. See OCGA § 10-7-41. But however characterized, the action pending between these parties is a deficiency action contemplated by the statute. We have defined a “deficiency judgment” as a judgment for that part of a debt secured by a mortgage not realized from a sale of the mortgaged property.
Gentry v. Hibbler-Barnes Co.,
The fact that neither plaintiffs nor defendants were in possession of the property at the time of foreclosure and confirmation does
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not exclude this case from the purview of the deficiency statute; substance, not form, controls. See
Redman Indus. v. Tower Props.,
517 FSupp. 144, 149 (N.D. Ga. 1981). The purpose of the deficiency statute is to “protect the debtor from being subjected to double payment in cases where the property was purchased for a sum less than its market value.” (Punctuation omitted.)
First Nat. Bank &c. Co. v. Kunes,
2. Defendants are “debtors” entitled to notice by personal service. “The statute, by using the word ‘debtor,’ included all who were presently subject to payment of the debt, or who might be subjected to payment thereof, if within the knowledge of the payee of the note.”
Kunes,
Plaintiffs argue defendants were not debtors because they did not meet the definition of debtor found in OCGA § 44-14-162.1. But that section, by its own language, does not apply to § 44-14-161. See
Ray v. Atkins,
Finding the deficiency statute inapplicable in this situation would create an absurd result. See
Kunes,
Had plaintiffs sought to ensure any deficiency judgment against them would be enforceable against defendants, they could have moved to join them as defendants in the confirmation action and could have ensured they were properly served with notice of the confirmation hearing.
Small Business Admin. v. Desai,
Judgment reversed.
Notes
In fact, in this action defendants served a third-party complaint on Mitcham, but he apparently declared bankruptcy.