Court Opinion

ID: 5647693
Source: CourtListenerOpinion
Date Created: 2022-01-11 07:00:32.584371+00
Date Added: 2024-06-11T08:38:25.902963
License: Public Domain

McMurray, Presiding Judge,
dissenting.
I, respectfully, dissent because I cannot go along with the majority’s holding that Haiseal’s claim against Southeast is nothing more than a veiled attempt to collect a deficiency judgment without judicial confirmation. Neither Haiseal’s claim against Southeast nor the jury’s verdict is based upon a deficiency under the promissory note. Haiseal’s claim against Southeast, as well as the jury’s verdict, is based upon Southeast’s failure to turn over proceeds from the sale of collateral (timber) off the Baxter and Thompson tracts. The majority nonetheless holds that this judgment is void — absent confirmation under OCGA § 44-14-161 — because Southeast’s obligation to pay Haiseal for the harvested timber springs from the same note and security deed which authorized Haiseal’s foreclosure of Southeast’s interest in the property. It is my view that this logic superficially discounts the rule that a lender’s failure to confirm a foreclosure sale does not estop the lender from pursuing other contractual security on the debt. See Turner v. Commonwealth Mtg. Assurance Co., 207 Ga. App. 428 (1) (428 SE2d 398). To this end, I believe Southeast’s duty to compensate Haiseal for diminishing the collateral (timberland) is not the same as Southeast’s promise to pay principal and interest under the promissory note. I would therefore affirm the trial court’s determination that confirmation is not mandatory before holding Southeast to its promise to pay Haiseal for cutting timber from the Baxter tract. Saying otherwise, in my view, not only ignores the jury’s finding that Southeast unfairly profited from the timber sale, but also overlooks the fact that Southeast — by retaining the entire worth of the collateral — was not in danger at the foreclosure sale of being victimized by injustices the confirmation statute was designed to overcome, i.e., exposing debtors to double payment in cases where collateral is sold for less than its fair market value. See Redman Indus. v. Tower Properties, 517 FSupp. 144, 148-150 (N.D. Ga. 1981).
I also disagree with the majority’s holding that Haiseal relinquished its right to recover timber proceeds from the Thompson tract by providing Southeast with a “QUITCLAIM DEED.” While this instrument may have effectively transferred certain rights to Southeast, it did not extinguish Southeast’s obligation to pay Haiseal for the timber that was harvested from the Thompson tract. See Morris v. Johnson, 219 Ga. 81, 83 (1), 85 (132 SE2d 45).

*105
The Baxter Tract

“ ‘Although the failure to confirm a foreclosure sale precludes a lender from seeking a deficiency judgment, it does not extinguish the underlying debt. Further, failure to confirm does not estop even the actual lender from pursuing other contractual security on the debt.’ (Citations omitted.) Turner[ v. Commonwealth Mtg. Assurance Co., 207 Ga. App. 428 (1), 429,] supra.” Lund v. Commonwealth Mtg. Assurance Co., 216 Ga. App. 322, 324 (2) (454 SE2d 194). That is, “[t]he confirmation statute does not bar [the lender from pursuing] a subsequent action ‘to recover on an independent, separate, unsecured obligation. . . .’ Murray v. Hasty, 132 Ga. App. 125, 126 (207 SE2d 602) (1974).” Kennedy v. Trust Co. Bank &c., 160 Ga. App. 733, 734 (288 SE2d 87). The controlling question in the case sub judice, then, is whether the majority is correct in holding that Southeast’s obligation to pay Haiseal 80 percent of the timber sale proceeds is not such an independent, separate, unsecured obligation.
In Turner v. Commonwealth Mtg. Assurance Co., 207 Ga. App. 428 (1), 429, supra, a lender’s private mortgage insurance carrier required the borrowers to .execute an indemnity agreement covering the insurer against loss by reason of the borrowers’ default. When a subsequent foreclosure sale failed to satisfy the underlying debt, the borrowers refused to indemnify the private mortgage insurance carrier for the lender’s losses because the lender failed to have the foreclosure sale confirmed. The borrowers reasoned that the indemnity agreement was merely a subterfuge for avoiding compliance with the confirmation statute. Id. at 429 (2), 430. The Court of Appeals rejected this reasoning, holding that the lender’s failure to confirm the foreclosure sale did not preclude enforcement of the indemnity agreement because — even though the indemnity agreement was an essential element of the underlying loan transaction — the indemnity agreement was a “completely independent source than the debt the [borrowers] owed the lender. . . .” Id. at 428 (1), 429. I find no material difference between this holding and the circumstances in the case sub judice.
Just as it was obvious that the indemnity agreement in Turner was a completely separate promise than the debtor’s obligation under the promissory note, it is obvious to me in the case sub judice that Southeast’s duty to compensate Haiseal for selling timber off the encumbered premises is an entirely different obligation than Southeast’s promise to make regular principal and interest payments under the promissory note. Further, like the indemnity agreement in Turner, Southeast’s promise to pay Haiseal a percentage of the timber sale proceeds was merely an additional means of securing the underlying loan transaction. Moreover, Southeast’s obligation to *106share timber sale proceeds with Haiseal — unlike Southeast’s principal and interest payment obligations — only vested after Southeast sold timber off the encumbered property. Under these circumstances, I believe that Haiseal’s claim for the timber sale proceeds is based upon a separate, distinct and unsecured obligation. I would therefore affirm the trial court’s determination that Southeast should not be allowed to dishonor its promise to share its timber sale profits with Haiseal simply because Haiseal did not have the underlying foreclosure sale confirmed. Saying otherwise, in my view, ignores the jury’s finding that Southeast unfairly profited from the sale of timber off the encumbered land and overlooks the fact that Southeast — by retaining the entire worth of the collateral — was not in danger of being victimized by injustices the confirmation statute was designed to overcome, i.e., exposing debtors to double payment in cases where collateral is sold for less than its fair market value. See Redman Indus. v. Tower Properties, 517 FSupp. 144, 148-150, supra.
Decided December 5, 1996
Reconsideration denied December 19, 1996
Martin, Snow, Grant & Napier, John T. McGoldrick, Jr., Linwood R. Lovett, for appellants.

The Thompson Tract

I also disagree with the majority’s holding that Haiseal relinquished its right to recover proceeds from the sale of timber from the Thompson tract by giving Southeast a “QUITCLAIM DEED.”1 While this instrument may have effectively transferred certain rights to Southeast, it did not extinguish Southeast’s obligation to pay Haiseal for the timber that was harvested from the Thompson tract. “The . . . fact that such sum was not actually paid . . . creates a liability upon the purchaser which may be enforced in an action at law.” Morris v. Johnson, 219 Ga. 81, 83 (1), 85, supra.
I am authorized to state that Chief Judge Beasley and Presiding Judge Pope join in this dissent.
Westmoreland, Patterson & Moseley, Thomas H. Hinson II, for appellee.

 The instrument Haiseal gave Southeast is a form document entitled, “QUITCLAIM DEED,” which conveys to Southeast “[a]ll trees and timber, regardless of species or size, standing, growing, lying or being upon the property set forth hereinbelow, save and except, white oak and pine.” Consequently, the majority incorrectly states that “Haiseal executed and delivered a quitclaim deed to Southeast relinquishing any interest in the tract,” and for the same reason, the majority also wrongly concludes that “Haiseal no longer had any interest in the Thompson tract at the time it commenced this action [and that] Haiseal executed and delivered a quitclaim deed to Southeast which released all of its interest in the tract, relinquishing any claim, right or title to the premises or its appurtenances.”