Court Opinion

ID: 9852986
Source: CourtListenerOpinion
Date Created: 2023-09-24 05:40:38.973341+00
Date Added: 2024-06-11T09:22:39.092116
License: Public Domain

Cooper, Judge,
concurring in part, dissenting in part.
I agree with the majority’s conclusion in Division 3 that a question of fact exists as to the amount of the claim asserted by Commonwealth. However, I dissent because I believe that the loan indemnity agreement violates the public policy encompassed in OCGA § 44-14-161, which requires that an order of confirmation be obtained before *432the lender may seek a deficiency judgment against the debtors. “ ‘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.’ ” First Nat. Bank & Trust Co. v. Kunes, 128 Ga. App. 565, 566 (197 SE2d 446) (1973). Although the transaction between Commonwealth and appellants was not in the form of a deficiency action, in the interest of justice, it is necessary to look beyond the form of the agreement and examine its substance. See Redman Indus. v. Tower Properties, 517 FSupp. 144 (N. D. Ga. 1981). I cannot conclude, as does the majority, that the indemnity agreement is an “independent contract” which “in no way vitiates the protection the appellants enjoy from the lender seeking a deficiency judgment.” The execution of the indemnity agreement was a prerequisite to the issuance of mortgage insurance by Commonwealth to the lender from whom appellants sought a loan. I acknowledge the lender’s right to insure itself against possible loss resulting from a borrower’s default. However, when such insurance is intimately linked to an agreement requiring the debtor to indemnify the insurer for amounts the insurer paid to the insured, the substance and effect of the transaction is to circumvent the protection afforded by OCGA § 44-14-161. I cannot uphold an agreement which so blatantly attempts to deny appellants the protections which the General Assembly found necessary to afford them. Therefore, I must respectfully dissent.
Decided February 22, 1993.
Davidson, Hopkins & Booth, Joseph H. Booth, for appellants.
McCalla, Raymer, Padrick, Cobb, Nichols & Clark, Wade G. Anderson, for appellee.