Lead Opinion
This litigation arose from loans and corresponding deeds to secure debt executed by Loron E. Williams, Jr., in favor of the predecessors in interest of South Central Farm Credit, ACA (“Farm Credit”). Williams began purchasing land in 1946, financing his purchases with mortgages and security deeds to individuals, banks and other entities. In 1987 he filed for relief under Chapter 11 of the United States Bankruptcy Code. A reorganization plan was provisionally confirmed in 1988, discharging approximately half of Farm Credit’s claim and providing for periodic payments to retire the remainder of Farm Credit’s claim. When Williams failed to make those payments, Farm Credit and Williams renegotiated the plan, and the resulting settlement agreement was approved by the bankruptcy court. However, Williams also failed to make the payments provided under the settlement agreement. Farm Credit notified Williams of the acceleration of his indebtedness and gave notice of foreclosure and sale to take place on April 7, 1992.
On April 3, 1992, Williams filed a second bankruptcy proceeding, which he testified was for the purpose of stopping the foreclosure. After an emergency hearing held on April 6, 1992, the bankruptcy court determined Williams had failed to abide by the terms of the settlement agreement, terminated the automatic stay of bankruptcy with respect to Farm Credit, and authorized Farm Credit to proceed with the foreclosure. On the morning of the foreclosure sale, Williams filed a petition to enjoin the sale in Crisp County Superior Court. The petition was denied, and the property was sold to Brooks County Land Partnership.
Williams then filed this action in Crisp County Superior Court seeking injunctive relief and damages against Farm Credit, the partners of Brooks County Land Partnership, Farmers & Merchants Bank, The Citizens Bank, Del-Cook Lumber Company, and The Commercial Bank of Thomasville. After his prayer for an interlocutory injunction was denied, Williams dismissed all defendants except Farm Credit and filed a second amended complaint naming Farm Credit and one of its officers as defendants.
1. In his first enumeration of error, Williams contends the realty should not have been advertised and sold as a single unit. Citing decisions from other jurisdictions, Williams urges the adoption of a rule that distinct parcels of land secured by separate deeds to secure debt should be advertised and sold separately. However, we need not address that question on the facts presented here. The four deeds to secure debt at issue do not each refer to a distinct and separate tract of realty. The same tracts of land are described in more than one deed. Moreover, the deeds were successive deeds executed in favor of Farm Credit’s predecessors in interest over a period of eleven years; two deeds expressly refer to priorities established on the same tracts of property by earlier deeds.
2. Williams next contends the trial court should not have granted summary judgment to defendants because there was evidence their pre-foreclosure conduct “chilled” the sale, causing the realty to be sold at a grossly inadequate price. He first contends Farm Credit and its officer chilled the sale by fraudulently leading him to believe it would accept delinquent payments or a deed in lieu of foreclosure. However, these contentions were fully addressed in the April 6, 1992 emergency hearing before the bankruptcy court. At the hearing, Williams testified at length to the alleged negotiations regarding the payment of the delinquent installments as well as the alleged agreement to accept a deed in lieu of foreclosure. The bankruptcy court concluded Williams had failed to abide by the terms of its final order incorporating the parties’ settlement agreement and allowed the foreclosure sale to proceed. These issues were litigated and necessarily decided by the bankruptcy court, and Williams is barred by the doctrine of collateral estoppel from reasserting them here. Sorrells Constr. Co. v. Chandler Armentrout & Roebuck, P.C.,
Williams next contends Farm Credit represented to a prospective purchaser that the property would be sold for ten percent down, with the balance due in thirty days. He alleges Farm Credit’s later withdrawal of this representation chilled the sale. However, assuming without deciding such a representation was indeed made and relied upon by the prospective purchaser, this does not establish that the sale was chilled. Williams must also establish that the particular conduct complained of caused the property to be sold for a grossly inadequate price. Kennedy, supra. Here, though, the prospective purchaser testified the property ultimately sold for more than he was prepared to pay for it. It is apparent, therefore, that any belief or conduct on the part of this witness did not cause the property to be sold for a grossly inadequate price.
Williams also contends three errors in the advertisement for the sale had a chilling effect. The advertisement consisted of ten closely printed columns published in the Cordele Dispatch on four successive occasions. The three errors were two substitutions of “southeast” for “southwest” in describing an outparcel, and the omission of one line of text referring to a land lot identified immediately below. The errors appeared in the first two publications of the advertisement but were corrected in the third and fourth publications. Each advertisement referenced the deeds to secure debt, giving the book and page number in the records of Crisp County.
If a notice or advertisement of a foreclosure sale under power does not substantially meet the legal requirements, the sale should be set aside. However, in order to void the sale, the irregularity or deficiency in the advertisement must contribute to chilling the price on the sale of the property. Walker v. Northeast Production Credit Assn.,
Williams’s witness acknowledged the reference in the advertisements to the deeds to secure debt. Also, he did not examine those deeds or any other extrinsic evidence to determine whether the errors were cured. There was no evidence that any prospective purchaser was confused by three errors in two out of four publications of the advertisement. Williams stated in aft interrogatory response that he knew of no prospective purchasers who were confused by the advertisement. The only testimony presented was that the prospective purchasers had no problem determining the property offered for sale through the use of official records such as tax plats and maps. Again, Williams has failed to show a causal connection between the alleged wrongdoing and any chilling of the sale. As the trial court observed, the only evidence of any chilling of the sale appeared to be Williams’s own conduct in filing petitions in the bankruptcy court and the superior court immediately before the sale, leading prospective purchasers to believe the sale might not take place. This enumeration of error has no merit.
3. In his remaining enumerations of error, Williams contends Farm Credit’s assignment as collateral of two of the four deeds to secure debt rendered the advertisement and sale null and void and destroyed Farm Credit’s right to attorney fees. These contentions have no merit. Williams acknowledges that the deeds to secure debt had been reassigned to Farm Credit at the time of the sale. Williams contends, however, that the deeds should have been reassigned to Farm Credit before advertisement of the sale. A similar contention was raised in Scroggins v. Harper,
Judgment affirmed.
Notes
Because of our disposition of this appeal, we need not consider whether Farm Credit’s officer properly was added as a party in the amended complaint. See OCGA §§ 9-11-15 (a); 9-11-21.
There were also questions raised as to whether local tax liens and other encumbrances placed on the property as a whole could be apportioned among smaller parcels.
Dissenting Opinion
dissenting.
“The foreclosing party is not a guarantor or insurer of satisfactory results for a defaulting debtor as to market price. Kennedy v. Gwinnett Commercial Bank,
In the case sub judice, plaintiff has presented evidence that the price realized on the foreclosure was grossly inadequate, amounting to approximately one-half the true market value of the property and a shortfall of perhaps $5,000,000. However, as this is a wrongful foreclosure claim, plaintiff’s burden extends beyond a showing of inadequate price as he must also demonstrate that the power of sale was exercised other than in good faith. Threadmill, Ltd. v. First Union Nat. Bank of Ga.,
One of the circumstances of the sale which plaintiff maintains was improper is the sale of many non-contiguous parcels of land, totaling several thousands of acres, as one unit. Recognizing an absence of direct Georgia authority, plaintiff has cited the cases of several other jurisdictions for the proposition that such an en masse sale of property is inconsistent with the foreclosing party’s duty to adopt a procedure intended to obtain the highest amount possible by such sales. See for example Garris v. Fed. Land Bank of Jackson, 584 S2d 791, 793-794. If we may not take notice of such as a general rule of economics, there is ample evidence that the offering of the many non-contiguous parcels in this case separately or in smaller lots would have opened the field to a greater number of bidders who would have offered higher prices.
Defendants have responded by relying upon the contractual language of the deeds to secure debt which authorize defendant Farm Credit to sell “all or any part of said land.” Such language has been construed to permit the secured party to sell the pledged property, in its sole discretion, either in parcels or en masse. Wardlaw v. Wood-ruff,
There are also cases holding that where property is sold under authority of a single security deed, it need not be sold in parcels absent a provision in the deed requiring such a sale. See Harwell v. First Fed. Savings &c. of Winder,
In the present case there are four security deeds. As noted by the majority, some tracts of land are described in more than one deed.
In my view, the combined sale of all of the properties referenced in these four deeds as one unit was improper and when considered in conjunction with the inadequate price realized on the sale constitutes a just basis for an award of damages on plaintiff’s wrongful foreclosure claim. Therefore, I cannot agree with Division 1 of the majority opinion and must respectfully dissent. I would hold that, where multiple security deeds are involved, the foreclosing party’s duty to maximize the proceeds of the sale requires that the property be offered in parcels which maximize the proceeds of the sale, although the parameters of this rule must be limited by the foreclosing party’s rights to offer en masse the property referenced in a single security deed. This supposition has been seen in the confirmation case of First Nat. Bank of Louisville, Kentucky v. Childress-Ross Properties,