Coffey Enterprises Realty & Development Co. v. Holmes , 233 Ga. 937 ( 1975 )

Nichols, Chief Justice.

In 1970, Louise Holmes bought described real estate from one Bill Sudderth. At the time the property was purchased there was an outstanding deed to secure debt issued by James W. Brown, a predecessor in title of Sudderth to Collateral Investment Company. Louise Holmes continued to make payments on the indebtedness secured by such deed to secure debt until approximately December, 1973. Thereafter, on June 4, 1974, after the advertisement of such property for four weeks the property was sold by Collateral Investment Company acting as agent for James W. Brown to Coffey Enterprises Realty & Development Company, Inc. In July, 1974, Louise Holmes brought the present action in which she sought to have such sale set aside. On the same date that service of process in this suit was perfected the complaint of Coffey Enterprises seeking a dispossessory warrant against Louise Holmes was filed in the State Court of Cobb County. Thereafter, an amendment to Louise Holmes’ complaint was filed in which she sought to temporarily enjoin any further proceedings in the dispossessory warrant suit until such complaint was determined. A temporary restraining order was issued and thereafter Coffey Enterprises filed a motion for dissolution of her injunction, as well as other defenses to her complaint.

On August 22, 1974, the trial court, based upon a hearing previously had, overruled the motion of Coffey Enterprises Realty & Development Company, Inc. to dissolve the temporary restraining order, granted a temporary injunction and overruled the motion to dismiss the complaint. The appeal is from this judgment.

1. The complaint filed by Louise Holmes pre-dated the dispossessory warrant proceedings in the State Court of Cobb County. The dispute between Louise Holmes and Coffey Enterprises Realty & Development Company, Inc. as to right of possession alleged in the complaint and that alleged in the dispossessory proceedings arose out of the same "transaction or occurrence.” Under the Civil Practice Act (Ga. L. 1966, pp. 609, 625; Code Ann. § 81A-113.(a)) the defendant Coffey Enterprises Realty & Development Company, Inc. was required to raise the issue of right of possession in this litigation and could not raise it later in other litigation between the parties. Accordingly, the trial court did not err in enjoining the proceedings in the State Court of Cobb County.

2. The complaint attacks the constitutionality of the provisions of Ga. L. 1935, p. 381 (Code Ann. § 67-1506). Plaintiff also attacks the use of other provisions of the Georgia Code in that they fail to provide adequate notice and opportunity to be heard. The basis of the plaintiffs attack is that these Code sections permit the sale of real estate conveyed to secure a debt without a prior judicial determination of the debtor’s liability.

This power of sale may not be utilized except under the provisions of a contract and if exercised the statute provides the manner in which such power is to be exercised. It is a purely contractual matter between two parties in the exercise of private property rights. There is insufficient meaningful government involvement to constitute state action by the mere adoption of statutes providing for the sale of real estate under powers contained in mortgages, debts, deeds or other lien contracts where the grant of such power is contained in the contract between the parties thereto. No government official or agency is involved in such process.

It would be unwise to require judicial approval prior to permitting the exercise of a contractual right prior to permitting such a sale to take place. It could ultimately lead to having every business transaction approved in an adversary court proceeding before it would be enforceable. If this should happen, the wheels of trade and commerce would grind to a halt and already congested court dockets would become completely unmanageable. It would be an insult to the public intelligence to require the government, through its courts, to become involved in all private affairs and require court approval for the exercise of rights under a private contract involving consenting adults as if they were minors or lunatics. Of course, the courts are always open to an aggrieved party to correct an injustice caused by fraud. Compare Kouros v. Sewell, 225 Ga. 487 (169 SE2d 816).

"In a sense, the government is supportively involved in the existence of all rights enjoyed by private citizens; even without resort to the courts, the spectre of legal enforcement orders social interaction and assures respect by one person for the legally defined rights of the other. But if such involvement were to constitute 'state action,’ there would scarcely be a realm of private action beyond the reach of the constitutional amendments,...” 74 Col. L. Rev. 664, 665 (1974).

The insufficiency of state action under the provisions of Code Ann. § 67-1506, supra, is demonstrated by a review of cases dealing with the "self-help” repossession procedures authorized by commercial codes relating to chattels. See Adams v. Southern Cal. First Nat. Bank, 492 F2d 324 (1973) cert. den. Nov. 11, 1974, 43 USLW 3281; James v. Pinnix, 495 F2d 206 (1974); Brantley v. Union Bank &c. Co., 498 F2d 365 (1974), cert. den. Nov. 25, 1974, 43 USLW 3306.

Since no meaningful government involvement to constitute state action is involved, any contention that such statute violates the equal protection or due process provisions of the Constitution is without merit. See Ruff v. Lee, 230 Ga. 426 (197 SE2d 376); National Community Builders v. C. & S. Nat. Bank, 232 Ga. 594 (207 SE2d 510); Law v. U. S. Dept. of Agriculture, 366 FSupp 1233; and Global Industries, Inc. v. Harris, 376 FSupp. 1379 (1974).

3. The pleadings in this case disclosed that the plaintiff had been in possession of the property during the entire period covered by the controversy. The complaint also shows a refusal on the part of the grantee named in the deed to secure debt to provide the plaintiff with a "pay-off” figure until after the sale took place, although she was attempting to ascertain such figure so that the amount could be paid in full. The complaint also alleges an attempt on the part of the plaintiff, prior to seeking the "pay-off’ figure, to forward checks for the then arrearage.

In Berry v. Williams, 141 Ga. 642 (81 SE 881), it was held: "1. A deed absolute in form may be shown to have been made to secure a debt, where the maker remains in possession of the land. Mercer v. Morgan, 136 Ga. 632 (71 SE 1075).

"2. Actual possession is notice to the world of the right or title of the occupant. Mercer v. Morgan, supra; Bridger v. Exchange Bank, 126 Ga. 821 (56 SE 97, 8 LRA (NS) 463, 115 ASR 118); Austin v. Southern Home &c. Assoc., 122 Ga. 439 (50 SE 382).

"3. Where the owner of land executes a deed of the character mentioned in the first note, and remains in possession of the land, and the grantee conveys the land to another who has no actual notice of the undisclosed agreement that the deed should operate as a security for debt, and who has made no inquiry of the occupant, the latter may pay or tender the amount of the debt to the first grantee and maintain an equitable action against the first grantee and the remote grantee for cancellation of both deeds as clouds upon his title, and to have the title decreed to be in him.

"4. If the first grantee absents himself so that a tender cannot be made to him, a suit of the character mentioned in the preceding note may be maintained without a tender to the creditor in person, if the plaintiff offers to pay the money into court for him.”

The refusal of Collateral Investment Company to accept any payment or to provide Louise Holmes with the correct "pay-off’ of such loan is in reality no different than a grantee absenting himself so that a tender cannot be made. An inquiry by Coffey Enterprises Realty & Development Company, Inc. to Louise Holmes would have (1) disclosed such facts or (2) would have precluded her from making such contentions in the present litigation. The judgment of the trial court overruling the motion to dismiss for failure to state a claim was not error.

4. The notice of appeal in this case states that the hearing was not reported "so there will be no transcript of evidence, and it may be reviewed upon the facts and admissions set forth in the pleadings.” The verified pleadings considered as evidence authorized the grant of the temporary injunction which required the plaintiff to make payment into the registry of the court until a final disposition of the case.

5. While the record contains other enumerations of error, the above holding disposed of each issue made in the appeal.

Submitted January 27, 1975 Decided March 12, 1975. Thompson, Rubin & Charron, for appellant. Holcomb & McDuff, Gregory S. Crone, Hansell, Post, Brandon & Dorsey, Lowell H. Hughen, for appellees.

Judgment affirmed.

All the Justices concur, except Gunter, J., who concurs specially.