Menke v. First National Bank

Carley, Judge.

The issues presented for review in the three instant appeals are identical and involve the construction of the following acceleration provision of a promissory note: “Notwithstanding any other provisions of this note, holder must, before the exercise of his option to declare the entire remaining balance due and payable give maker written notice specifying the default and giving maker fifteen (15) days in which to cure said default. Said notice must be by certified mail addressed to the maker’s last address.” (Emphasis supplied.)

The question arises within the following undisputed factual context: Appellant is the maker and appellee is the holder of certain promissory notes which contain the above quoted provision. It is undisputed that the notes were in default and that appellee sent written notice to appellant which specified the default on each of the notes and which gave him fifteen days within which to cure it. The written notices were sent certified mail, return receipt requested, on January 11,1982, to appellant’s last known address. The notices were all subsequently returned to appellee by the postal service as having been “unclaimed” by appellant.

On February 15, 1982, appellee filed three separate suits, each seeking to recover the full accelerated unpaid balance on various notes, plus interest, late fees, attorney fees and costs. Service of the three complaints was made on February 17, 1982. On February 27, 1982, appellant tendered an amount to appellee which would have been sufficient to cover the unpaid monthly installments on the notes, but which was insufficient to cover the full unpaid accelerated balances thereon. When appellee refused this tender and insisted upon payment of the full accelerated balance on each note, appellant filed his answer to the three complaints, denying that the full unpaid balances were due and owing thereon.

Subsequently, both appellee and appellant moved for summary judgment in all three cases. In support of his motions and in opposition to appellee’s, appellant asserted that he had never received appellee’s notices of acceleration, apparently because he was out of town at all times prior to their being returned as “unclaimed” by the postal service. According to appellant, he first became aware of the contents of the written notices of acceleration by virtue of the fact that copies thereof were attached as exhibits to the complaints. Appellant further asserted that, within fifteen days after service of the complaints, he had cured the default by tendering the amounts specified in those notices as being in arrears. Appellee’s position on the cross-motions for summary judgment was that it had given appellant “notice of default as required by the terms of said Note[s]” and that appellant had “failed to cure the default within the time specified.” Accordingly, the decisive issue in the cross-motions for summary judgment was whether the “notice” of acceleration contemplated by the terms of the notes was satisfied, as appellant contended, only upon their actual receipt by him or, as appellee contended, simply by its act of mailing them.

After conducting a hearing on the cross-motions, the trial court granted appellee’s motions and denied appellant’s. Notices of appeal were filed by appellant from the trial court’s order in each of the three cases and the resulting appeals have been consolidated for disposition in this single opinion.

1. The sole issue presented for review in these cases is whether or not appellant is entitled to claim a right to cure the defaults or whether he is obligated to pay the full accelerated unpaid balance thereon. See generally McRae v. Federal Land Bank, 36 Ga. App. 51 (135 SE 112) (1926). Appellee contends that it is owed the full unpaid balances because appellant failed to cure the defaults by paying the installment arrearages within fifteen days from the date that it mailed its acceleration notices. Appellant, on the other hand, asserts a right to cure the defaults by paying the installment arrearages within fifteen days of first receiving written notice of acceleration in the form of the served complaints, a time when, according to appellee, the unpaid balances had already been accelerated and the only cure possible was payment of the entire accelerated amounts.

On the uncontroverted evidence before us, the questions of appellant’s right to “cure” the underlying defaults and whether that right was properly exercised are questions of law, not of fact. “[T]he construction or sufficiency of a notice is for the court. [Cits.]” Great Central Ins. Co. v. Bowery Savings Bank, 142 Ga. App. 630, 631 (236 SE2d 772) (1977).

It is clear that appellee’s option to accelerate the entire remaining unpaid balances due on the notes was predicated upon the giving of written notice to appellant and that appellee “would have to exercise the option in order for the note[s] to become due and payable. [Cits.]” Barnwell v. Hanson, 80 Ga. App. 738, 741 (57 SE2d 348) (1950). See also Woodstock Rd. Inv. Prop. v. Lacy, 149 Ga. App. 593, 594 (2) (254 SE2d 910) (1979). “Notice is defined as ‘information; the result of observation, whether by senses or the mind; knowledge of the existence of a fact or state of affairs; the means of knowledge.’ [Cit.]” Hamilton v. Edwards, 245 Ga. 810, 811 (267 SE2d 246) (1980).

“ ‘[W]here notice is required to be given, it is generally held, in the absence of anything appearing to the contrary, that the notice is not complete until it is received; and that, while mailing a notice duly directed and stamped may furnish presumptive evidence of its receipt, it does not alone constitute notice. [Cits.]’ [Cits.]” Favors v. Travelers Ins. Co., 150 Ga. App. 741, 744 (258 SE2d 554) (1979) (construing statutory notice provision). See also Hamilton v. Edwards, supra (construing statutory notice provision). This is a rule not merely of statutory construction; it is also applicable in the construction of contracts. See Puryear v. Farmers Mut. Ins. Assn., 137 Ga. 579, 581 (73 SE 851) (1911) (construing a policy of insurance); Musgrove v. Long, 248 Ga. 902 (287 SE2d 23) (1982) (construing an option to purchase). The operative provision in the notes in the instant cases obligated appellee to “give” appellant notice, not merely to send him notice. Compare Genone v. Citizens Ins. Co., 207 Ga. 83, 86 (2) (60 SE2d 125) (1950) (construing a policy of insurance). Nor did the provision otherwise provide that the mere mailing of written notice to appellant would in and of itself constitute the contemplated “giving” of the requisite notice. Compare Genone v. Citizens Ins. Co., supra; Favors v. Travelers Ins. Co., supra; St. Paul Fire &c. Ins. Co. v. C.I.T. Corp., 55 Ga. App. 101 (189 SE 390) (1936). Under these circumstances, it would appear that the proper construction of the provision is that mailing of the notices was contemplated as the means and method by which notice to appellant would be effectuated, not the contemplated “notice” itself, and that for “notice to be effectuated appellant would have to have received them.” Puryear v. Farmers Mut. Ins. Assn., supra; Hamilton v. Edwards, supra; Musgrove v. Long, supra; Favors v. Travelers Ins. Co., supra.

Accordingly, the instant cases come within the rule that, where notice is attempted to be effectuated by mail, there must be proof that the notice was received before the sender’s action, which must be based upon the giving of “notice,” is authorized. Genone v. Citizens Ins. Co., supra at 87. Appellee’s evidence that it mailed the notices and that they were returned as “unclaimed” rather than “refused” merely raised a presumption that appellant had received them and that he consequently had the requisite “notice of appellee’s intent to accelerate the notes if the defaults were not cured within the specified time.” See Roland v. Shelton, 106 Ga. App. 581, 584 (127 SE2d 497) (1962). However, appellant’s uncontradicted evidence is that he did not receive them. “While proof that the notices were mailed raised a presumption that the defendant received them this presumption is a rebuttable one and is entirely overcome by the uncontradicted evidence of the defendant that [he] did not receive the notices. [Cits.]” Roland v. Shelton, supra at 585. “Where a properly stamped and addressed letter has been mailed... the presumption that it has been received is completely rebutted by undisputed testimony . . . that the letter was never received; unless there is additional evidence which tends to impeach or discredit [the] testimony [of non-receipt.] [Cit.]” Rawleigh Medical Co. v. Burney, 25 Ga. App. 20, 21 (4) (102 SE 358) (1920). “In the absence, however, of any evidence other than the fact that the letter was mailed, it would never do to charge with notice of the contents of a letter one who in fact never received it from the agency which the sender had himself selected. The presumption that the agency so selected did its duty and delivered the letter must yield to the presumption that the addressee, who positively swears that he did not receive it, is swearing the truth, unless some additional circumstance be produced to impeach or discredit his statement and to show that perhaps he is not testifying truly.” Parker v. Southern Ruralist Co., 15 Ga. App. 334, 337 (83 SE 158) (1914).

Although appellee in the instant case was also an opponent to appellant’s motion for summary judgment, it relied solely on the presumption of receipt that arises by proof of mailing and submitted no other evidence tending to impeach appellant’s testimony of non-receipt or to show that the letters were in fact received. In view of appellant’s unequivocal denial of receipt, appellee’s submission of such additional evidence would be necessary “to raise an issue of fact for solution by the jury.” Parker v. Southern Ruralist Co., supra at 337. If appellee had any additional evidence concerning appellant’s receipt of the notices other than the presumption of mailing, the time for submitting that evidence was in the context of the cross motions for summary judgment. See generally Meade v. Heimanson, 239 Ga. 177 (236 SE2d 357) (1977).

Accordingly, on the record before us the uncontroverted evidence conclusively demonstrates that although appellee attempted to give appellant written notice by mail of its intent to accelerate, appellant never received those notices. On this uncontroverted evidence, the presumption of receipt that arises by proof of mailing must yield to the presumption that appellant did not receive the notices and no jury question remained in that regard. Parker v. Southern Ruralist Co., supra. Instead, appellant first received written notice of appellee’s election to accelerate when the complaints were served. Within fifteen days of receiving those written notices, appellant unsuccessfully attempted to cure the defaults by paying the installment arrearages on the notes. On this evidence, the trial court erred in granting appellee’s motions for summary judgment and in denying appellant’s. See Lee v. O’Quinn, 184 Ga. 44, 46 (2) (190 SE 564) (1937). “[T]he evidence in this case demanded a finding that the letter [s] in question had never been received by the plaintiff...” Rawleigh Medical Co. v. Burney, supra at 21 (5).

This holding does not mean that any debtor may always avoid acceleration by not opening his mail. Our ruling is a narrow one and has application only to a debtor who is the maker of a note in which the acceleration clause provides that he be given written notice of the election to accelerate without further provision that the act of mailing alone is sufficient notice of this election and who, under the uncontroverted evidence, has not received the mailed notice of that election. Appellee could have contracted for the giving of no notice of its election to accelerate in the event of appellant’s default. However, appellee having made the decision to contract for the giving of such notice, it is the terms of the notes that appellee holds and the uncontroverted evidence in the instant cases, not appellant’s mere status as a debtor, which mandate the result we reach in these appeals.

Decided October 3, 1983. Thomas B. Benham, Todd K. Maziar, for appellant. Guy Parker, J. Caleb Clarke III, for appellee.

2. Remaining enumerations of error, not otherwise addressed, are rendered moot by our holding in Division 1 of this opinion.

3. The orders appealed from are reversed as to the grant to appellee and the denial to appellant of summary judgment.

Judgments reversed.

Deen, P. J., and Banke, J., concur specially.