Case Name: FIRST NATIONAL BANK & TRUST COMPANY v. KUNES et al.
Court: Court of Appeals of Georgia
Jurisdiction: Georgia
Decision Date: 1973-02-22
Citations: 128 Ga. App. 565
Docket Number: 47555
Parties: FIRST NATIONAL BANK & TRUST COMPANY v. KUNES et al.
Judges: Bell, C. J., Quillian and Clark, JJ., concur. Eberhardt, P. J., and Pannell, J., concur specially. Hall, P. J., Deen and Stolz, JJ., dissent.
Reporter: Georgia Appeals Reports
Volume: 128
Pages: 565–575

Head Matter:
47555.
FIRST NATIONAL BANK & TRUST COMPANY v. KUNES et al.

Opinion:
Evans, Judge.
The First National Bank & Trust Company in Macon, as plaintiff, filed suit in the Superior Court of Tift County against Coastal Plains Realty Company (a corporation) and GTGerald Kunes and Andrew M. Garrison, as defendants. The complaint alleged that defendants had executed seven promissory notes payable to plaintiff, secured by a security deed; that defendants had defaulted in payment and the property was sold under a power of sale; that the sale price was less than the indebtedness; that plaintiff had secured an order from the Superior Court of Tift County confirming the sale, in accordance with Code Ann. § 67-1503, 67-1504, 67-1505, 67-1506 (former Code Ann. § 37-608 through 37-611; Ga. L. 1935, p. 381); and the complaint prayed recovery of the difference between the sales price and the indebtedness, plus attorneys' fees. Defendants Kunes and Garrison filed defensive pleadings, and at the trial, moved to dismiss counts one and two of the complaint as to them because of plaintiff's failure to comply with the statute in respect to confirmation of the sale. The trial judge heard evidence and thereafter sustained the motion to dismiss, and from said judgment the plaintiff Bank appeals. Held:
1. The statute as to confirmation of sales where a deficiency judgment is sought is in derogation of the common law and must be strictly construed. Oberdorfer v. Smith, 102 Ga. App. 336, 339 (116 SE2d 308); Watson v. Thompson, 185 Ga. 402, 406 (195 SE 190); Taylor v. Jones, 123 Ga. App. 476 (1) (181 SE2d 506).
2. The statute in question is Code Ann. § 67-1505, supra, and is as follows, to wit: "The court shall direct notice of the hearing to be given the debtor at least five days prior thereto, and at the hearing the court shall also pass upon the legality of the notice, advertisement and regularity of the sale. The court may, for good cause shown, order a resale of the property." The purpose of this statute is tersely set forth in Goodman v. Nadler, 113 Ga. App. 493, 496 (148 SE2d 480) as follows: "The strongest ground of public policy which occurs for the enforcement of statutes requiring confirmation in foreclosure proceedings 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."
3. It was shown at the hearing on motion to dismiss that this statute had been complied with as to Coastal Plains Realty Company, but had not been complied with as to Kunes and Garrison. The proceeding for confirmation was brought solely against the corporation, and the rule nisi was directed solely to the corporation. Neither Kunes nor Garrison was mentioned therein. Thus, as to these two defendants there was no compliance with the statute, and no right on plaintiffs part to subject them to a judgment for the deficiency between sale price and actual indebtedness.
4. Plaintiff argues quite persuasively that despite the failure of the application to name these two defendants, and despite the rule nisi being directed solely to the corporation, that each of them had actual knowledge of the confirmation proceeding, with opportunity to object, and having failed to object, they are bound by the judgment of confirmation. But actual notice or knowledge will not cure the failure to comply with the statute as to confirmation. A party is not bound by every court proceeding of which he has knowledge. For instance, one may be present in court when a case is tried and judgment rendered against him; still if he has not been served with copy of complaint and summons, he has not had his day in court, and is not bound by the judgment. It has even been held by this court that a defendant who is named in a petition, but not named in the process, is not bound to answer, even though served with the proper petition and improper process. See Frank Adam Electric Co. v. Witman, 16 Ga. App. 574 (2) (85 SE 819). Also see John Holland Gold Pen Co. v. Williams & Co., 7 Ga. App. 173, 174 (66 SE 540).
5. Plaintiff contends that Kunes and Garrison were not endorsers, but were guarantors, and therefore, technically they were not "debtors" at the time the confirmation proceeding was pending; and thus it was unnecessary that they be named in the confirmation proceeding and rule nisi. It is true that the statute requires the court to "direct notice of the hearing to be given to the debtor . . ." But the intent of our lawmakers in enacting this statute, as is reinforced by the language in the Goodman case, supra, was 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." It would only be under the principle of reductio ad absurdum to say the General Assembly wished to protect the principal debtor from double payment, but did not have any concern whatever for endorsers and guarantors. 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. And, the plaintiffs position on this question is not tenable, in that he seems to contend that Kunes and Garrison were not debtors until the very instant when the judge signed the confirmation order, but that immediately thereafter they became debtors and subject to the payment of the deficiency judgment. The complaint in this case contains certain statements which are admissions in judicio and under Code § 38-114 are binding upon plaintiff. It is alleged as to the three defendants, Coastal Plains Realty Company, G. Gerald Kunes and Andrew M. Garrison, in various paragraphs of complaint, as follows: "4. Defendants executed a promissory note, . 5. Defendants defaulted in payment of said note . 6. Defendants did not pay said note and under the power of sale contained in the security deed used to secure payment of said note plaintiff sold said property described in the security deed. Wherefore, plaintiff demands judgment against the defendants ." Thus, the plaintiff, when filing the complaint, alleged (as a solemn admission in judicio) that all three defendants executed the note; that all three defendants defaulted in payment. If Kunes and Garrison were not debtors, they could not have defaulted in payment, because they had no obligation to pay, under plaintiffs contention, until the confirmation order was signed. Black's Law Dictionary defines "default" as a failure, an omission of that which ought to be dáñe; the omission or failure to perform a legal duty. So plaintiff himself regarded both Kunes and Garrison as "debtors" (according to his complaint) at the time the note became due. Black's Law Dictionary defines "debtor" as one who owes a debt; he who may be compelled to pay a claim or demand; any one liable on a claim, whether due or to become due.
Argued October 2, 1972
Decided February 22, 1973
— Rehearing denied March 20, 1973
Jones, Cork, Miller & Benton, George T. Williams, Wallace Miller, Jr., for appellant.
Reinhardt, Whitley & Sims, John S. Sims, Jr., for appellees.
6. Kunes and Garrison were debtors within the meaning of the term as employed in the statute as to confirmation of sales where a deficiency judgment is to be sought. The plaintiff bank expected to try to hold them liable for payment of the balance, and it was therefore under obligation to pursue the statute and comply with it by having the court "direct notice of the hearing to be given to the debtor at least five days before the hearing." They were under no duty whatever to object to an application for confirmation which was not directed to them, but to the contrary, had the right to conclude that by not naming them, none of their rights was involved in the proceeding.
7. The trial judge properly sustained defendants' motion to dismiss.
Judgment affirmed.
Bell, C. J., Quillian and Clark, JJ., concur. Eberhardt, P. J., and Pannell, J., concur specially. Hall, P. J., Deen and Stolz, JJ., dissent.