Court Opinion

ID: 9586637
Source: CourtListenerOpinion
Date Created: 2023-08-21 23:13:33.60696+00
Date Added: 2024-06-11T17:32:46.010304
License: Public Domain

Felton, Justice,
dissenting in part. I recognize the principle cited in Division 3 of the majority opinion, that, in order to set aside a sale of property under power, not only must the price realized be grossly inadequate, but also the sale must be accompanied by either fraud, mistake, misapprehension, surprise or other circumstances which might authorize a finding that such circumstances contributed to bringing about the inadequacy of price. No argument should be necessary to show that the price realized, $35,000, was grossly inadequate for the property sold, evidence of the value of which ranged from approximately $100,000 to $215,000. If the inadequacy of price be great, it is of itself a strong circumstance to evidence fraud (Parker v. Glenn, 72 Ga. 637 (2)); that circumstance, taken in connection with others of a suspicious nature, may afford such a vehement presumption of fraud, as will authorize the court to set aside the conveyance. Lasater v. Petty, 220 Ga. 592, 594 (140 SE2d 864) and cit. There are many cases *81from other jurisdictions to the effect that inadequacy of price great enough to shock the conscience of the court and raise a presumption or inference of fraud, may invalidate a sale. See 8 ALR 1001,1004-1007 (III, IV) and cit. It is my position that the inadequacy of consideration here was great enough so that it alone was evidence of fraud sufficient to raise a jury issue and that, furthermore, the sale was accompanied by such "other circumstances” as are above mentioned.
It is true, as the majority opinion indicates, that Stubbs was authorized by the terms of the security deed to bid in the property himself, which he did through his agent. Apparently overlooked, however, has been the fact that Stubbs was acting in a dual role in the sale. He was not only the buyer, but also the seller under the irrevocable power of attorney granted him by the security deed, which constituted him an agent of the original grantor in the deed. That such agency was thereby created is indicated by the fact that "[t]he proper method to be employed by an attorney in fact in signing a deed for his principal is to sign the principal’s name, with the additional statement that it is done by him (the agent) as attorney in fact, thus: 'John Smith, by his attorney in fact, William Hall.’” Powell on Actions for Land, § 218, p. 231. Stubbs later became also the agent of the Giordanos, subsequent grantors in privity with the original grantor. Delray, Inc. v. Reddick, 194 Ga. 676 (22 SE2d 599, 143 ALR 519).
"An agent is a fiduciary with respect to the matters within the scope of his agency. The very relation implies that the principal has reposed some trust or confidence in the agent, and the agent or employee is bound to the exercise of the utmost good faith, loyalty, and honesty toward his principal or employer. The fiduciary relationship existing between an agent and his principal has been compared to that which arises upon the creation of a trust, and the rule requiring an agent to act with the utmost good faith and loyalty toward his principal or employer applies regardless of whether the agency is one coupled with an interest, or the compensation given the agent is small or nominal, or *82that it is a gratuitous agency.” 3 AmJur2d 580, Agency, § 199. "A power of sale is a trust.” Coleman v. Cabaniss, 121 Ga. 281 (2) (48 SE 927). "Powers of sale in deeds of trust, mortgages, and other instruments shall be strictly construed and shall be fairly exercised.” (Emphasis supplied.) Code Ann. § 37-607. "The relationship of principal and agent, being confidential and fiduciary in character, demands of the agent the utmost loyalty and good faith to his principal. Any breach of this good faith whereby the principal suffers any disadvantage and the agent reaps any benefit is a fraud of such nature as to preclude the agent from taking or retaining the benefit.” Johnson v. Sherrer, 197 Ga. 392, 396 (29 SE2d 581); Harrison v. Harrison, 214 Ga. 393 (1) (105 SE2d 214), citing Code §§ 4-205 and 37-708; Forlaw v. Augusta Naval Stores Co., 124 Ga. 261 (6) (52 SE 898). "The general morality of the law is higher than many good people suppose. . . The standard it has in view is not merely conscience, but enlightened conscience.” Barnes v. Mays, 88 Ga. 696, 698 (16 SE 67); Ga. Bapt. Orphans Home v. Moon, 192 Ga. 81, 85 (14 SE2d 590). Although some of the decisions have applied these standards to the duty of plaintiffs, these great, immutable equitable principles, of necessity, are applicable equally to both parties. To further emphasize these standards, I cite again a portion of the opinion in Scott v. Paisley, 271 U. S. 632, 636, cited by the majority: "All that is required of him is to advertise and sell the property according to the terms of the instrument, and that the sale be conducted in good faith.” (Emphasis supplied.)
What did the exercise of the utmost good faith, loyalty and honesty require of Stubbs in the instant case? What kind of consent does the law contemplate in reference to one’s consent that his agent purchase at his own sale? Does it mean a free and untrammeled one or one contained in a deed to secure debt, where the grantor has no choice but to consent and the knowledge of which in many cases is wholly unknown and unconsciously given? It has been held that "[t]he trustee or mortgagee must use reasonable effort *83to obtain a fair price for the property. It has been said that he should obtain the greatest amount possible on foreclosure.” (Emphasis supplied.) 55 AmJur2d 663, Mortgages, § 731. "Under Georgia law, the grantee-seller under power of sale in a security deed has a duty to sell the property at its fair market value. Langley v. Stone, 112 Ga. App. 237, 239 (2) (144 SE2d 627).” Buckhead &c. Bldg. v. Oxford &c. Cos., 115 Ga. App. 534, 536 (154 SE2d 760). The provision of Code Ann. § 67-1504 (Ga. L. 1935, p. 381), that the payment of the true market value of property sold under power is a condition precedent to confirmation of the sale, should apply equally to a situation where no confirmation is sought; nay, even more so, since in such event the sale would otherwise escape the watchful, protective scrutiny of a court of equity.
Stubbs had the choice of reducing his claim to judgment and letting a neutral and impartial officer sell the land securing his debt or of selling the security under his power of sale, in which latter event he would act as attorney in fact of the owner, owing Gaston good faith in exercising the power as such agent. If good faith had been exercised and the property produced its fair market value, there would have been an excess of the amount owed by Gaston, which Stubbs would have held in trust for those who later bought the land and assumed existing loans. These subsequent purchasers were in privity with Gaston and the good faith duty of Stubbs inured to the benefit of all later purchasers, who would have been entitled to such proceeds as were sufficient to cover their claims in the event the property brought its true value or an amount approximating it.
Stubbs’ selling the property at somewhere between approximately one third and one sixth of its value is not good faith toward Gaston and his privies, especially since he himself bought it and would stand to benefit tremendously by such transaction. Stubbs might have exercised the requisite good faith under the circumstances, for example, by paying a fair price for the property if he bought it himself, or even by refusing to sell it under his power of sale if a *84fair price could not be obtained, then having it sold either at another sale under his power or by judicial process. This failure to exercise good faith is sufficient, added to the gross inadequacy of the sale price, to render the sale void under the very decisions cited in the majority opinion. Another circumstance which easily could have contributed to bringing about the inadequacy of price, was the fact that the Trust Company was, at one time, a grantee of the security deed, then the instrument was transferred, perhaps unknown to subsequent privies of the parties thereto, back to Stubbs, who then foreclosed in his own name, which the grantors might not have realized to be that of the grantee of the deed. There is evidence that when the Trust Company of Georgia re-transferred the security deed to Stubbs, it did not receive payment for Stubbs’ indebtedness which the deed secured, but that it renewed Stubbs’ note. Under such circumstances, the bona tides of the re-transfer of the security deed to Stubbs becomes vital in this case for solution by a jury.
I am aware of Code § 37-104, and cases holding to the effect that, before a debtor can have equitable relief against a sale under power in a security deed, he must pay or tender the principal and interest due. See Gilbert v. Carson, 213 Ga. 387, 389 (99 SE2d 105) and cit. I do not believe that a tender was necessary in the present case, however; firstly, because, in addition to equitable relief, there was a demand for alternative relief in the form of a monetary judgment, which would be an adequate remedy. Secondly, "[i]n order for the plaintiff to prevail he must show that the circumstances complained of produced gross inadequacy of price, and that he himself was free from fault.” (Emphasis supplied.) Croft v. Sorrell, 151 Ga. 92, 96 (106 SE 108). Gaston and the other grantors have done nothing wrong or inequitable; hence, they are free from fault and in court with clean hands.
Even if a tender was required, moreover, "[djelinquencies which have had no injurious consequences are held not to defeat a suit.” 27 AmJur2d 674, Equity, § 138. The "clean *85hands” maxim "should not be applied where the defendant has not been seriously harmed and the wrong complained of can be corrected.” 27 AmJur2d 681, Equity, § 144. Certainly, it would be inequitable for the grantor to be required to have "cleaner hands” than the grantee. In this case, setting aside the sale under power would still leave Stubbs with all of his rights to exercise his rights to collect his debt, since only the sale, and not the security deed, would be set aside. In other words, the original contract would still be intact and not affected by the voiding of this particular sale under power. It is in this respect that the present action differs from those to rescind or set aside merely a contract wherein the only rights or values accruing to the opposite party are held thereunder, and would be forfeited were it not for a tender in the amount of such opposite party’s rights under the contract.
The complaint raised a jury question as to whether the circumstances justified the relief sought. However, there was various opinion testimony as to the value of the property sold, based upon which summary judgment can never issue. Ginn v. Morgan, 225 Ga. 192 (2) (167 SE2d 393). For the latter reason, I would affirm the lower court’s judgment denying the motions for summary judgment of all of the parties and I dissent from the majority opinion reversing the judgment denying Stubbs’ motion for summary judgment.