Alice Atkins sued Patricia Ray, Ronald Graham, and Donna Gra
With the aid of money loaned by Atkins for a down payment, Ronald Graham purchased the property at issue in 1984. The property was conveyed by warranty deed from Austin to Ronald Graham with Graham giving Austin a note for $43,000 and a first priority debt deed over the property. In July 1987, pursuant to another loan to Ronald Graham, Atkins received a $25,000 promissory note from Graham and his wife, Donna, secured by a mortgage ovеr the property second in priority to Austin’s 1984 debt deed. The Grahams subsequently forged and recorded an instrument giving notice that the $25,000 mortgage had been paid. No payment had been made on it, and Atkins later recorded an instrument refuting the satisfaction notice. On July 31, 1987, Ronald Graham executed a warranty dеed to the property to his brother, William Graham. This warranty deed was delivered to Ray, who later recorded it on May 31, 1989. On June 16, 1989, William Graham executed a warranty deed to the property to Atkins, who recorded it on June 19, 1989. The Grahams continued to use the property as their residence, and Ronald Graham continued to be responsible under and make the payments on the indebtedness evidenced by the 1984 note and debt deed. On June 29, 1989, Atkins sued the Grahams seeking a determination of her rights and interest in the property, or in the alternative to foreclose on the 1987 mortgage. Events occurring after the first suit was filed prompted Atkins to file a second suit on December 12, 1989, alleging that Ray had fraudulently conspired with the Grahams to destroy her interest in the property. On September 7, 1989, Austin assigned the 1984 note and debt deed to Ray for $12,700, the approximate amount remaining due on the note. After the Grahams failed tо make the October and November payments on the 1984 note, Ray instituted non-judicial foreclosure proceedings under the terms of the debt deed, purchased the property at the public foreclosure sale for $14,183.20, and recorded the foreclosure deed to herself on December 5, 1989.
After a trial of both suits, the jury concluded: (1) that the promissory note from the Grahams to Atkins was a valid debt in the
1. First, we address the status of Atkins’ interest in the property at the time of the foreclosure. The 1987 instrument from the Grahams to Atkins was sufficient to qualify as a mortgage creating a lien over the property, but conveying no title to Atkins.
Cherokee Ins. Co. v. Gravitt,
These transfers did not result in a merger of interests extinguishing the Atkins mortgage. “[U]nless the contrary intent is clearly shown, the acquisition of the equity of redemption by a mortgagee will not bring about a merger if the continued existence of the mortgage is necessary to protect against intervening liens. . . . [T]he doсtrine of merger is designed primarily for the benefit of one who acquires an interest in property greater than he possessed in the first instance and will not be held to apply against his will to his disadvantage.” (Punctuation and citations omitted.)
Barron Buick v. Kennesaw Fin. Co.,
We find no merit in Ray’s enumeration of error 8 claiming the trial court erred in failing to grant her motion for a directed verdict оn the basis that Atkins’ mortgage lien merged with her equitable interest.
2. Next, we address whether Ray’s failure to give Atkins written statutory notice of the non-judicial foreclosure under the power of sale in the debt deed was a basis upon which to find fraud and set aside the foreclosure deed. The verdict and judgment reflect a deter
In foreclosure proceedings instituted pursuant to OCGA § 44-14-160 et seq., only a debtor, as defined by statute, is entitled to receive any notice of the initiation of foreclosure other than by advertisement.
Breitzman v. Heritage,
As discussed eаrlier, Atkins retained a creditor’s interest in the mortgage lien, and owned equitable title to the property. As holder of the mortgage lien, Atkins was entitled to notice only by advertisement.
Breitzman,
supra at 172. However, as one to whom equitable interest in the property was transferred, Atkins fit within the definition of debtor under OCGA § 44-14-162.1 as the current owner of equitable title to the encumbered property. Moreover, the evidence was sufficient to show that Atkins’ identity as such was known to and acknowledged by Ray prior to the foreclosure as required by OCGA § 44-14-162.1. Nevertheless, under the plain language of OCGA § 44-14-162.3 (a), to establish the debtor’s right to nоtice, the debtor must be one who used the property as a residence at the time he acquired the status of debtor as defined by OCGA § 44-14-162.1 Under OCGA § 44-14-162.2, notice “shall be given to the debtor,” but this requirement applies under OCGA § 44-14-162.3 only to the sale of property “to be used as a dwelling place by the debtor at the timе the mortgage, security deed or lien contract is entered into.” The record shows that Atkins resided in Texas when she became the debtor by acquiring equitable ownership of the property by warranty deed. She never resided in the property, and testified she never intended to use the
For these reasons, we find nо merit in Atkins’ argument on cross-appeal in Case No. A92A0758. In light of the verdict and judgment finding notice was proper, Ray’s enumeration 12 is rendered moot.
3. In Ray’s first three enumerations of error she claims the evidence was insufficient to support the verdict and judgment setting aside the foreclosure deed for fraud. Similarly, in enumerations of error 9 and 10, Ray contends the trial court erred in denying her motion for directed verdict on the basis that she made no misrepresentations or otherwise engaged in an illegal conspiracy. Atkins contended, and the jury concluded, that Ray and the Grahams fraudulently conspired to foreclose the first debt deed and extinguish her mortgage lien and equity interest in the property. The theory was that the Grahams arranged for Ray to purchase and take an assignment of the 1984 note and debt deed for the designed purpose of foreclosing Atkins’ interests. Generally, “it is not a fraud against the holder of a junior lien for the owner of the land to arrange with a third person for the purchase of an outstanding valid senior lien, for the purpose of thereafter advertising and selling the property thereunder in order to satisfy any actually unpaid debt secured by the senior lien, since in such a legitimate transaction the remedy of the junior lienholder is the payment or tender of the debt secured by the senior lien . . . .”
Sweat v. Arline,
The evidence here is insufficient to establish that Ray partici
4. In her fourth enumeration of error, Ray claims the trial court erred by failing to grant her pre-trial motion to dismiss based on lack of venue. We find no error in the trial court’s refusal to dismiss Ray on lack of venue prior to presentation of the evidence at trial. However, we note the evidence as adduced at trial reflects a lack of venue. Although the suit against Ray sought to have the foreclosure deed set aside, this is not a suit respecting title to land which must be brоught in the county where the land is located.
Borden v. I. B. C. Corp.,
5. Ray’s claim in enumeration 5 that the trial court improperly denied her motion for summary judgment was rendered moot by the entry of a verdict and judgment based on evidence introduced at trial.
Seabolt v. Cincinnati Ins. Co.,
6. Based on our determination in Division 3 that the evidence was insufficient to set aside the foreclosure deed on the basis of fraud, we need not address Ray’s additional claims in enumerations 6, 7, 11, and 13 regarding lack of tender, default, and actual damages, and that Ray relied on advice of counsel, nor do we address the remaining enumerations regarding jury instructions.
Judgment reversed.
Notes
Ray sent statutory notice to Ronald Graham at the property address pursuant to OCGA § 44-14-162.2. Evidence showed that despite the transfer of his equitable interest, no assumption of the first priority debt took place, and he continued making the payments on the note. As he remained responsible for the note secured by the 1984 debt deed, and the Grahams continued to use the property as a residence, he arguably remained a debtor within the meaning of OCGA § 44-14-162.1 as grantor of the security deed and note. However, as Graham retained no legal or equitable interest in the property at the time of foreclosure, he was nоt a debtor entitled to notice under OCGA § 44-14-162.2 before being deprived of his interest in real property by foreclosure under power of sale. Whether he would occupy the status of debtor for purposes of dealing with the obligation on the debt in an action for a deficiency judgment under OCGA § 44-14-161 is a question not presented here. See
Breitzman,
supra at 172 (comparing the definition of debtor under OCGA § 11-9-504 (3) as addressed in
Branan v. Equico Lessors,