Darling International, Inc. v. Carter

FINAL COPY
294 Ga. 455S13A1745. DARLING INTERNATIONAL, INC. v. CARTER et al.
BENHAM, Justice.
This case involves a dispute over title to a 7.63 acre parcel of land located
in Bacon County. The parcel was originally part of a 95.125 acre parcel owned
by H.S. Carter, now deceased, that was taken by Bacon County via eminent
domain proceedings commenced in 1973. As a result of the condemnation
proceedings, Bacon County acquired a total of 2522.3 acres for the purpose of
creating a public recreation project known as Lake Alma and the 95.125 acre
Carter parcel was just one of the parcels condemned for this purpose. The
record shows that the proposed Lake Alma was part of a larger urban
development project that received funds from the Federal Model Cities Program
so that the City of Alma and Bacon County could execute a development plan
that included, among other things, an industrial park, a waste water treatment
plant, and improvement of the local airport, in addition to construction of Lake
Alma. The other projects were completed but, due to protracted litigation and
other reasons, the Lake Alma project was abandoned and never constructed. In
the meantime, in 1985, the county granted an undivided one-half interest in the
Lake Alma tract to the City of Alma. After the project was abandoned, at the
request of the city and county, the General Assembly passed an amendment to
OCGA § 36-9-3, effective July 1, 1992, that permitted counties to sell back to
the original owners land that had been acquired for creation or development of
a lake, such as the Lake Alma project, but the legislation failed to provide for
repurchase of land by the heirs of the original owners. See Ga. L. 1992, p. 1348,
§ 1. By that time, H.S. Carter was deceased, and the 95.125 acre parcel
originally owned by him was apparently one of the only parcels condemned for
construction of Lake Alma that was not repurchased by the original owner.
The chain of title to the 7.63 acres at issue in this appeal reflects the
following conveyances: On December 31, 2003, the county and city each
executed quitclaim deeds purporting to convey the 7.63 acres to the Bacon
County Development Authority, and on that same day the Development
Authority executed a warranty deed for the property to Southeastern
Maintenance and Construction, Inc. In 2005, Southeastern Maintenance granted
an easement over a portion of the property to appellant Darling International,
Inc. Also in 2005, Southeastern Maintenance executed a warranty deed
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purporting to convey 3.048 acres of the disputed property to Darling, and in
2007 it executed a warranty deed conveying the remainder of the 7.63 acres to
Darling.
On July 1, 2010, OCGA § 36-9-3 was amended to grant the heirs of the
original landowners the right to repurchase land such as that which was
condemned for Lake Alma (OCGA § 36-9-3 (g) (3) (B)). See Ga. L. 2010, p.
746, § 1/HB 703. Shortly thereafter, certain heirs of H. S. Carter sought to
repurchase Mr. Carter’s original 95.125 acre parcel. On December 21, 2010, the
City of Alma executed a quitclaim deed to Bacon County conveying its
undivided interest in the 95.125 acres and, that same day, Bacon County
executed a quitclaim deed conveying all of its undivided interest in the property
to the H.S. Carter heirs who are the appellees herein. The quitclaim deed states
that Bacon County intends “to convey to Grantees only all properties which it
obtained from their father Hoke Carter by condemnation . . . Less & Except any
portion of said properties which have been previously legitimately conveyed by
the Grantor.” The Carter heirs then filed a petition to quiet title and for
ejectment against Darling and Southeastern Maintenance with respect to the
7.63 acres. The parties stipulated to the undisputed material facts, and each
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party filed a motion for summary judgment. Darling asserted it was entitled to
summary judgment with respect to the Carter heirs’ quiet title action and their
claim for ejectment because, as a result of the county’s previous conveyance of
the disputed property to the Development Authority and the subsequent chain
of conveyances by which Darling ultimately obtained title, the Carter heirs do
not have title to that property. The Carter heirs asserted they were entitled to
summary judgment, and that Darling’s motion should be denied, because the
previous conveyances are not valid. The Carter heirs argued that the previous
conveyance to the Development Authority was invalid as a result of the county’s
failure to follow the requirements of OCGA § 36-9-2 to enter an order on its
minutes authorizing disposal of the real property. They further argued that the
conveyance of the previously condemned property to Southeastern Maintenance
was invalid because it amounted to a legally impermissible sale of condemned
property to private developers for private use and was not a transfer for a proper
alternative public use.1 Darling argued that these previous conveyances are
1
The conveyance from Bacon County to the Bacon County Development Authority and the
subsequent conveyance to Southeastern Maintenance and Construction, Inc. occurred on the same
day. The Carter heirs assert, and Darling appears to concede, that Bacon County utilized the Bacon
County Development Authority as a “straw man” to convey the property to Southeastern
Maintenance for purported economic development purposes.
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legally valid. Further, Darling asserted it was entitled to judgment in its favor
because it was a bona fide purchaser of the property without knowledge of the
Carter heirs’ interest in the property.2
Without addressing Darling’s bona fide purchaser argument, the trial court
entered judgment in favor of the Carter heirs along with a decree that title to the
property vests in them and is superior to Darling’s claim of title. The court
found that the county’s 2003 conveyance to the Development Authority was
invalid and did not serve to pass title because the county failed to follow the
procedures required by OCGA § 36-9-2 to record on its minutes the
authorization to convey the property, which deficiency was never corrected by
ratification. Further, the court found that the subsequent attempt to transfer the
property to Southeastern Maintenance was invalid because neither the county
nor the city ever formulated an economic development plan that encompassed
an alternative public use of the property.
1. (a) The first issue raised on appeal is whether, despite Bacon County’s
2
Although the attorney representing the Carter heirs states in a supplemental brief that the
issue of Darling’s status as a bona fide purchaser was first raised on appeal and was “never presented
to the trial court for determination,” the record reflects this issue was raised and supported by
argument and citations to legal authority in Darling’s brief responding to the Carter heirs’ cross-
motion for summary judgment.
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failure to comply with the requirements of OCGA § 36-9-2 when it conveyed
its undivided one-half interest in the property to the Development Authority,
Darling is a bona fide purchaser for value and without notice of this irregularity
so that its title is superior to that of the Carter heirs. Pursuant to OCGA § 23-1-
20, “[a] bona fide purchaser for value without notice of an equity will not be
interfered with by equity.” At the time Darling purchased the property for
value, no other outstanding interest was reflected in the recorded chain of title.
At the time of the 2003 conveyance of the property to Southeastern
Maintenance, the 2010 amendment to OCGA § 36-9-3 (g), permitting
disposition to the heirs of the original owner of property that had been
condemned for construction of a recreational lake but which was no longer
needed for such a purpose, had not yet been passed. See Ga. L. 2010, p. 746, §
1/HB 703. “[F]ailure to use the lands for the purpose for which they were
condemned does not cause title to revert to the original owners.” Galloway v.
Bd. of Commrs. of Banks County, 246 Ga. 472, 473 (271 SE2d 784) (1980),
citing Sadtler v. Atlanta, 236 Ga. 396 (223 SE2d 819) (1976). Accordingly,
Darling asserts the Carter heirs’ interests did not arise until 2010 and thus were
nonexistent at the times of Darling’s purchases in 2005 and 2007 and that it was
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an impossibility for Darling to have notice of an interest that did not yet exist.
First, relying upon Head v. Lee, 203 Ga. 191, 201 (4) (45 SE2d 666)
(1947), the Carter heirs assert that because Bacon County failed either to record
authority for the sale to the Development Authority on its minutes as required
by OCGA § 36-9-2, or to ratify the sale at any time before the 2010 conveyance
to them, the purported 2003 conveyance to the Development Authority did not
pass title and the Development Authority’s title is void. In West v. Fulton
County, 267 Ga. 456, 457 (1) (479 SE2d 722) (1997), this Court noted “[t]here
are no exceptions set forth in OCGA § 36-9-2 to the requirement that
authorization for the conveyance of county-owned property must be duly
entered on the minutes of the proper county authority.” But in West, it was the
county that sought to void the mistaken conveyance of county-owned property
in a tax sale because the property, having been owned by the county, was not
subject to taxation and should not have been the subject of levy and sale by the
tax commissioner. And in neither Head nor West was the issue of the
purchaser’s status as a bona fide purchaser without notice raised or considered
by this Court.
In asserting the title conveyed to the Development Authority was void, the
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Carter heirs analogize the conveyance to a forged deed which, this Court has
held, is a nullity that does not pass good title even to a subsequent bona fide
purchaser without notice. See Brock v. Yale Mtg. Corp., 287 Ga. 849 (700 SE2d
583) (2010) (“[E]ven a bona fide purchaser for value without notice of a forgery
cannot acquire good title from a grantee in a forged deed, or those holding under
such a grantee, because the grantee has no title to convey.”). But the Carter
heirs cite no authority for the proposition that county-owned property conveyed
via a properly executed deed, where the order directing disposal of the property
was simply not recorded on the minutes, constitutes a void conveyance that
would not pass title to a subsequent bona fide purchaser for value without
notice. As applied to the facts of this case, we decline to adopt such a rule.
Unlike the circumstances present in the case of a forged deed, here the county
possessed title to its undivided one-half interest in the property, and no issue
was raised regarding the authority of the individual who executed the deed to act
on behalf of the county. We also reject the attempted analogy to cases involving
a deed executed by a mentally incompetent person. Those cases have held that
such a deed is not void but voidable by the incompetent person or his heirs even
as against a bona fide purchaser for value without notice of such incompetence.
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See, e.g., Sewell v. Anderson, 197 Ga. 623, 624 hn. 8 (30 SE2d 102) (1944);
Thornton v. Carpenter, 222 Ga. App. 809, 813 (2) (d) (476 SE2d 92) (1996).
In the case of a conveyance of county-owed property that was not properly
recorded in the minutes as required by OCGA § 36-9-2, the deed to the
immediate grantee may be voidable in that the county or the immediate grantee
may seek to invalidate the conveyance (compare West v. Fulton County, supra);but as to a subsequent bona fide purchaser without notice of the failure to
comply with the statute, the deed is not void.
(b) Second, even if the previous conveyance to the Development
Authority is not void, the Carter heirs assert Darling does not qualify as a bona
fide purchaser without notice. They argue the issue is not whether Darling had
notice of their claim but whether it had notice of any legal impediment to its
acquiring title as against the world. According to the Carter heirs, once Darling
was placed on notice that a government entity was a predecessor in title it was
under a duty to determine whether the requirements of OCGA § 36-9-2 were
met, and, having failed to do so, Darling was placed on constructive notice of
the defect in the chain of title. No legal authority, however, is cited for this
proposition. Instead, the Carter heirs seek to draw an analogy to the duty
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incumbent upon a purchaser to confirm the validity of a guardian’s appointment
when the chain of title contains a deed executed by one who purports to act in
the capacity of legal guardian of another. See Chase Manhattan Mtg. Corp. v.
Shelton, 290 Ga. 544, 547-548 (2) (722 SE2d 743) (2012). But guardianship
presents a special situation in which the person executing the title has no interest
to convey and the execution is valid and passes title only if there has been an
appointment by the probate court. See Dickey v. Sweeney, 16 Ga. App. 559 (85
SE 766) (1915). In such a case, it has long been held that the purchaser is
“bound, at his peril” to examine the validity of the appointment. See Dooley v.
Bell, 87 Ga. 74, 77 (13 SE 284) (1891). As noted above, no issue has been
raised with respect to the authority of the individual who executed the deed
conveying the property to the Development Authority to act on behalf of and
bind the county. Compare Deutsche Bank Nat. Trust Co. v. JP Morgan Chase
Bank, N.A., 307 Ga. App. 307, 309 (1) (704 SE2d 823) (2010) (a warranty deed
was valid on its face because it appeared to be duly executed by an officer of a
corporation with authority to act, and thus there was no reason to put a good
faith purchaser on notice to inquire further into its validity). Unlike a
conveyance by a guardian, Bacon County owned the property in its own name
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and did not purport to convey the property on behalf of any other person or
entity.
“Any circumstance which would place a man of ordinary prudence fully
upon his guard, and induce serious inquiry, is sufficient to constitute notice of
a prior unrecorded deed.” (Citations and punctuation omitted.) Montgomery v.
Barrow, 286 Ga. 896, 897 (1) (692 SE2d 351) (2010) (an issue of fact was
created as to whether the purchaser was a bona fide purchaser without notice of
prior unrecorded deeds where a representative of the corporation that purchased
the property admitted he had been told unrecorded deeds to the property
existed). See also OCGA § 23-1-17 (“Notice sufficient to excite attention and
put a party on inquiry shall be notice of everything to which it is afterwards
found that such inquiry might have led. Ignorance of a fact due to negligence
shall be equivalent to knowledge in fixing the rights of parties.”). In this case,
however, it is not an unrecorded deed but a fact wholly outside the chain of title
that the Carter heirs claim should have placed Darling on notice and created a
duty to conduct an inquiry into it. Circumstances that have been deemed
sufficient to incite a duty to inquire into facts outside the recorded deed records,
or at least raise an issue with respect to the purchaser’s duty to inquire, include
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facts showing the purchaser had been informed of the existence of prior
unrecorded deeds (see Montgomery, id.); evidence of open and notorious
adverse possession of the property that should have placed the purchaser on
notice of another’s interest in the property (see, e.g., Dyal v. McLean, 188 Ga.
229 (3 SE2d 571) (1939)); and evidence sufficient to put a mortgagee on notice
of a fraudulent scheme (see Collins v. Freeman, 226 Ga. 610, 611-612 (3) (176
SE2d 704) (1970)). But we decline to hold that the existence, within the chain
of title, of a conveyance by a county is a circumstance that requires a subsequent
purchaser to inquire into whether the county complied with the requirements of
OCGA § 36-9-2 to enter an order on its minutes authorizing disposal of the real
property, and that failure to inquire defeats the subsequent purchaser’s status as
a bona fide purchaser without notice.3 Consequently, the trial court erred in
concluding that the Carter heirs’ title is superior to that of Darling’s as a result
of Bacon County’s failure to comply with the requirements of OCGA § 36-9-2
3
Further, we reject the Carter heirs’ assertion that title did not pass on the second of the two
conveyances of title to Darling because the grantor does not appear in the chain of title. The title
dated August 1, 2007 in Darling’s favor shows “Southeast Maintenance and Construction, Inc.” as
the grantor instead of Southeastern Maintenance and Construction, Inc., which was the true previous
owner of the property. “[A] mere misnomer of a corporation in a written instrument is not material
or vital in its consequences, if the identity of the corporation intended is clear or can be ascertained
by proof.” (Citations and punctuation omitted.) Deutsche Bank Nat. Trust Co., supra, 307 Ga. App.
at 310 (1) (a); see also Hawkins v. Turner, 166 Ga. App. 50, 51-52 (1) (303 SE2d 164) (1983).
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with respect to its 2003 conveyance of its interest in the property to the Bacon
County Development Authority.4
2. The trial court also erred in finding the 2003 conveyance to
Southeastern Maintenance was invalid as a result of the governing authorities’
failure to formulate a new economic development plan. The 1973 condemnation
petition reflects condemnation of the subject property was sought to acquire fee
simple title for the purpose of using it for a public lake, park, and recreation
area. While the petition states only that it was filed pursuant to what is now
OCGA § 22-2-100 et seq., the Special Master provisions for eminent domain
proceedings, the parties stipulated to the fact that the Lake Alma project was
part of a development plan formulated by the City of Alma for the purpose of
utilizing funds awarded under the federal Model Cities Program to combat the
effects of blighted neighborhoods in participating cities. Construction of Lake
Alma was one of four projects included in the development plan. The other
projects were improvement of an industrial park, upgrade of water and sewage
4
Further, we note that even if the County’s failure to comply with the requirements of
OCGA § 36-9-2 was sufficient to invalidate its quitclaim deed to the Development Authority or
defeat the subsequent purchaser’s status as a bona fide purchaser without notice of a defect in the
chain of title, this would not have served to invalidate the City of Alma’s conveyance of its
undivided one-half interest in the property since this statute applies only to disposal of property
owned by a county.
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treatment facilities, and improvement of the airport. Regardless of what
condemnation law the proceedings were predicated upon, no one disputes that
the 1973 condemnation was for a proper public purpose. Nevertheless, the trial
court found that the 2003 transfer of title to Southeastern Maintenance, a private
developer, thirty years after the initial condemnation, was invalid because
neither Bacon County nor the City of Alma ever formulated a new economic
development plan that encompassed an alternative use of the condemned
property. We find no authority for the proposition that, at the time of the
conveyance involved in this case, a governing authority was required to
reformulate a new development plan for an alternative public use of condemned
property once its original use was abandoned.
Pursuant to OCGA § 36-61-9 (c), with respect to property that a
municipality or county seeks to acquire in accordance with the Urban
Redevelopment Law, “[u]nless the property is to be acquired for the purpose of
devoting it to a public use,” it may be acquired through the exercise of the power
of eminent domain only after the condemning entity has adopted an urban
redevelopment plan authorizing the exercise of eminent domain by the agency
to acquire the property, the owner of the real property to be acquired has been
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notified of the planned rehabilitation of the property as set forth in the plan, and
the owner has been offered the opportunity to develop the property in
accordance with the plan. In this case, the property was not expressly acquired
pursuant to the Urban Redevelopment Law, OCGA § 36-61-1 et seq., but in any
event the parties do not dispute it was properly acquired through eminent
domain proceedings and that the Lake Alma project was part of a development
plan.
Even assuming the original condemnation proceeding was conducted
pursuant to the Urban Redevelopment Law and that OCGA § 36-61-9 was
applicable to it, the 2003 conveyance was not a re-taking by a municipality or
county, and thus the transaction was not governed by the requirements of OCGA
§ 36-61-9. By its terms, the statute applies to the original taking of property by
eminent domain. The 2003 conveyance was, instead, a re-purposing of the
property from that involved in the original taking. “[W]here property is not
ultimately used for the purpose for which it was originally condemned, it may
be devoted to another proper public use.” Galloway, supra, 246 Ga. at 473. The
deed to Southeastern Maintenance incorporates an agreement whereby it agreed
to construct improvements on the property that were deemed to be in the public
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interest and “to foster and develop new industry and employment opportunities
for the citizens of Alma and Bacon County.” At the time of the conveyance to
Southeastern Maintenance, such a conveyance was constitutionally permissible.
See Talley v. Housing Auth. of Columbus, 279 Ga. App. 94 (2) (630 SE2d 550)
(2006) (affirming summary judgment to a housing authority sued by the original
owner of property that had been acquired by condemnation but later sold to a
private citizen without any requirement for public use after the original public
purpose for the condemnation was abandoned). In 2003 the Georgia
Constitution had not yet been amended, in response to public concern over the
holding of the United States Supreme Court in Kelo v. City of New London, 545
U. S. 469 (125 SCt 2655, 162 LE2d 439) (2005),5 to withdraw the previous
constitutionally granted authority for the sale or disposition of property,
acquired by a governmental entity by eminent domain, to private entities for
private use.6 The amendment to OCGA § 36-61-9 (c) in 1971 (Ga. L. 1971, p.
5
In Kelo, the Supreme Court held that a governmental entity’s disposition of property
acquired by eminent domain to another private entity did not violate the Fifth Amendment
prohibition against taking private property for public use without just compensation when the
disposition was made in furtherance of an economic development plan that serves a public purpose.
6
At the time of the conveyance to Southeastern Maintenance, Art. IX, Sec. II, Par. VII of
the Georgia Constitution of 1983 read, in pertinent part: “The General Assembly may authorize any
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445, §§ 1, 2), requiring the condemning governmental entity to offer the owner
of the property to be acquired the opportunity to develop the property in
accordance with an adopted urban redevelopment plan, was enacted as a remedy
to the previous “evil” of the absolute power granted to counties and
municipalities to take private property for any public or even non-public
purpose so long as the taking was to effectuate an adopted urban redevelopment
plan. See McCord v. Housing Auth. of City of Atlanta, 246 Ga. 547, 550 (I)
(272 SE2d 247) (1980). But by its terms, this requirement applies to the initial
acquisition. Likewise, at the time of the conveyance to Southeastern
Maintenance, the General Assembly had not yet enacted certain amendments
to OCGA § 22-1-1, known as the Landowner’s Bill of Rights and Private
Property Protection Act, which exempted, from the definition of “public use,”
the public benefit of economic development with respect to authority for
exercising the power of eminent domain. See OCGA § 22-1-1 (9) (B), effective
April 4, 2006 (Ga. L. 2006, p. 39, § 3/HB 1313).
county, municipality, or housing authority to undertake and carry out community redevelopment,
which may include the sale or other disposition of property acquired by eminent domain to private
enterprise for private uses.” The amendment which eliminated this provision and substituted the
requirement that “eminent domain shall not be used for redevelopment purposes by any entity,
except for public use, as defined by general law” (see Ga. L. 2006, p. 1111, § 1), was approved by
the voters at the general election held on November 7, 2006.
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The 2003 disposition of the property in dispute in this case is not governed
by these 2006 changes to the law governing eminent domain. We conclude that
at the time of the 2003 conveyance to Southeastern Maintenance, the City of
Alma and Bacon County were not required to formulate an economic
development plan for an alternative use of the property originally acquired by
condemnation thirty years earlier. See Talley, supra. Further, the conveyance
in this case was made for what appears to have been a proper public purpose at
that time. We reject the Carter heirs’ assertion that it was a one-to-one transfer
of property interests for a private and not a public purpose which violates the
Fifth Amendment.7 Consequently, we reverse the trial court’s holding that the
2003 conveyance to Southeastern Maintenance was invalid.
For these reasons, the trial court’s order granting summary judgment to
the Carter heirs is reversed, and the decree establishing title is vacated.
Judgment reversed in part and vacated in part. All the Justices concur,
except Hunstein and Nahmias, JJ., who concur in judgment only as to Division
7
Because the original condemnation was for a proper public purpose, this case is not
analogous to those cases involving exercise of eminent domain for the purpose of one-to-one
transfers of private property which the Supreme Court in Kelo stated are properly viewed “with a
skeptical eye.” See Kelo, supra, 545 U. S. at 487, n17.
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2.
Decided January 27, 2014.
Title to land. Bacon Superior Court. Before Judge DeVane.
Hunter, Maclean, Exley & Dunn, Robert B. Lovett, Heather N.
Hammonds, for appellant.
Smith, Ramay & Bennett, Ken W. Smith, for appellees.
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