From 2005 to 2008, Branch Banking & Trust Company (BB&T) and its predecessors made 16 loans for residential housing development to two companies (Borrowers) which executed promissory notes and deeds to secure debt. The notes were guaranteed by various other companies (Guarantors) which, along with Borrowers, were all controlled by the same individuals. After default on the notes, BB&T gave Borrowers notice of foreclosure as to nine of the notes and purportedly conducted non-judicial foreclosures on June 2, 2009. BB&T was the sole and winning bidder but, three days later, notified Borrowers that it rescinded any notices or actions taken with respect to the foreclosure and that the foreclosure sale had not been and would not be consummated. On June 22, 2009, BB&T brought suit against Borrowers and Guarantors (Appellants) for more than $19 million then due under the notes. BB&T also raised fraudulent transfer claims, and the trial court entered an interlocutory injunction to preserve the status quo, which was affirmed by this Court in
SRB Investment Services v. Branch Banking and Trust Co.,
Case Number S11G1728
1. Appellants argue that the Court of Appeals, in holding that no valid foreclosure sale occurred, erroneously relied on its determination that BB&T did not satisfy the Statute of Frauds.
“A sale under the powers contained in a deed to secure debt divests the grantor of all title, and right of equity of redemption, to the lands described in the deed. [Cits.]”
Cummings v. Johnson,
Where a sale of land is made under a power contained in a security deed, and by permission of the grantor contained in the deed the grantee purchases the land at such sale, the grantor can not defeat the purchaser’s right to have the sale fully consummated, by tender of the amount of his indebtedness to the grantee before the actual execution of the deed pursuant to the terms of the sale.
Carrington v. Citizens Bank of Waynesboro,
“[T]his Court has long held that a creditor holding a promissory note secured by real property may either sue on the note or foreclose ‘ “until the debt is satisfied.” ’ [Cit.]” (Emphasis omitted.)
SRB Investment Services v. Branch Banking and Trust Co.,
supra at 6 (3) (a). Indeed, such creditor “is not put to an election of remedies as to whether he shall sue upon the note or exercise a power of sale contained in the deed, but he may do either, or ‘pursue both remedies concurrently until the debt is satisfied.’ [Cits.]”
Oliver v. Slack,
This analysis is entirely consistent with OCGA § 44-14-161 (a), as that statute explicitly applies only “[w]hen any real estate is sold on foreclosure” and, being in derogation of common law, must be strictly construed.
Taylor v. Thompson,
supra at 672, 673. Thus, we cannot infer any requirement for confirmation where a foreclosure sales contract is formed but the sale is never consummated. See
129 Acres v. Atlanta Business Bank,
Furthermore, where, as here, the bidder and the creditor are the same entity and “the deeds have not been delivered nor have the notes been marked paid in full, it is clear that the proceeds of sale have not been transferred in the cases before us.”
Federal Deposit Insurance Corp. v. Dye,
supra. Compare
In re Williams,
supra at 818 (distinguishing Dye as not addressing the issue of when the debtor’s right of redemption is extinguished);
In re Sanders,
supra at 849, fn. 3;
Leggett v. Morgan (In re Morgan),
Case Number S11G1729
2. In Division 2 of its opinion, the Court of Appeals initially held that
the 2008 guaranties failed to identify the pre-2008 notes with the specificity required for a promise to answer for another’s debt to be binding on the guarantor under the Statute of Frauds because there is nothing in the guaranties or any other documents referenced in them from which the amounts promised to be paid and the date the debts became due could be determined. [Cits.]
Legacy Communities Group v. Branch Banking & Trust Co., supra at 474 (2).
The statute of frauds requires that a promise to answer for another’s debt, to be binding on the promisor, “must be in writing and signed by the party to be charged therewith.” OCGA § 13-5-30 (2). [Cit.] This requirement has been interpreted to mandate further that a guaranty identify the debt, the principal debtor, the promisor, and the promisee. [Cits.]
John Deere Co. v. Haralson,
In applying this requirement, the Court of Appeals has upheld guaranties where no exact promissory note or instrument was identified in the guaranty itself, but where the guaranty identified the debt as “ ‘[p] resent and [fjuture [d]ebt,’ ” “ ‘all obligations under any notes however and whenever incurred or evidenced, now existing or hereafter contracted or acquired,’ ” “ ‘any and all invoices for services rendered,’ ” or “ ‘any and all materials billed.’ ” Brzowski v. Quantum Nat. Bank, supra at 771-772 (1), fn. 8. In John Deere Co. v. Haralson, supra at 193, 195, we held that the required elements were contained in a guaranty which identified the debt as “ ‘past and/or future extension of credit’ to the principal debtor.”
In the present case, the 2008 guaranties identified the pre-2008 notes to which they applied as any prior loan made by BB&T to certain named or described borrower entities, and those guaranties expressly encompassed the obligations under any and all notes and other indebtedness owed by such borrowers to BB&T now or hereafter.
Legacy Communities Group v. Branch Banking & Trust Co.,
supra at 472-473 (2). These references to existing debts include any pre-2008 note which can be identified completely thereby without the aid of parol evidence. See
Cox v. U. S. Markets,
specifically identify the debt guaranteed, we find that the plain meaning of the language . . . shows that [the] obligations under the Guarantees] had no temporal limitation and applied to debts owed by [the named or described borrowers] to [BB&T] that were in existence at the time the Guarant[ies] [were] signed as well as [the] future debts created after the Guarantees’] execution. [Cit.]
Brzowski v. Quantum Nat. Bank, supra at 771 (1).
Because the Court of Appeals erroneously held that the 2008 guaranties did not sufficiently identify any pre-2008 notes, the Court of Appeals failed to address the 2008 Guarantors’ contention that the 2008 guaranties did not sufficiently identify Legacy Investment Group, LLC (LIG) as the debtor on three of the pre-2008 notes which were executed in 2005. As that alternative contention is no longer moot, we remand the case to the Court of Appeals to address it. However, if that Court determines that the 2008 guaranties do not fully satisfy the Statute of Frauds with respect to the 2005 notes executed by LIG, it should not again apply the “part performance” exception to the Statute of Frauds. See OCGA § 13-5-31 (3). The Court of Appeals’ analysis in that regard was erroneous for the reasons set forth below.
A contract which is either not reduced to writing or defectively so reduced and which is “sought to be enforced based on part performance must be certain and definite in all essential particulars. [Cit.]”
Lemming v. Morgan,
In the present case, whether the essential element sought to be supplied is the identity of the pre-2008 notes being guaranteed or of the debtor on the 2005 notes, BB&T’s extension of credit pursuant to the 2008 notes clearly does not constitute such partial performance as will tend to prove the identity of either other notes executed in prior years or the debtors thereon. See
Studdard v. George D. Warthen Bank,
Moreover, Georgia adheres to the view that the extension of credit to the debtor does not constitute such part performance as to take a promise to answer for the debt of another out of the Statute of Frauds. See 73 AmJur2d Statute of Frauds § 380. That view was eloquently explained by Justice Bleckley as follows:
The true consideration of the collateral contract with [the guarantor] was the incurring of the risk of dealing with [the debtor] on a credit, and of accepting him as a debtor. The moment that the debt arose, this risk was incurred.... Regarding the actual incurring of the risk as the perfor- manee or the part performance contemplated by the Code, there would be no case in which a parol promise to answer for the debt of another would not be obligatory so that the promise was made before the creation of the debt, and acted upon in extending the credit involved in its creation.Such a construction of the Code would throw open to mere parol evidence all that numerous class of guaranties which look to prospective indebtedness, and thus work a stupendous change in the prior law as embodied in the English statute of frauds. If the collateral promise is to be binding simply because the credit has been extended on the faith of it, and because the creditor, trusting to the promise, has put himself in a situation to be injured if it is not performed, then oral contracts of guaranty are as obligatory as written ones, in perhaps a large majority of the actual cases which arise in business, and the statute of frauds, in one of its most important features, is wiped out. ... It would be very idle to interpret the Code as saying, in effect, “a parol promise to answer for the future debt of another is not obligatory unless the debt shall be created, in which event it is obligatory.”
McGaughey Bros. v. Latham,
Accordingly, although the Court of Appeals correctly held that none of BB&T’s claims is barred by its failure to seek confirmation after the foreclosure auctions, the Court of Appeals did err in holding that the 2008 guaranties did not sufficiently identify any pre-2008 notes and that the 2008 Guarantors were estopped by BB&T’s part performance from asserting a Statute of Frauds defense to BB&T’s claims against them on pre-2008 notes. Therefore, the judgment of the Court of Appeals is affirmed in Case Number S11G1728, and, in Case Number S11G1729, the judgment is affirmed in part and reversed in part, and the case is remanded to the Court of Appeals with direction that it consider whether the 2008 guaranties fully satisfy the Statute of Frauds with respect to the 2005 notes executed by LIG, and for further proceedings not inconsistent with this opinion, including determination of which, if any, specific claims are barred and of how the trial court should properly dispose of the cross-motions for partial summary judgment.
Judgment affirmed in Case Number S11G1728. Judgment affirmed in part and reversed in part, and case remanded with direction in Case Number S11G1729.