Cross references.

- Exercise of judicial power, Ga. Const. 1983, Art. VI, Sec. I, Para. IV.

Venue for equity cases, Ga. Const. 1983, Art. VI, Sec. II, Para. III.

Granting of injunctions generally, T. 9, C. 5.

Venue for actions in equity generally, § 9-10-30.

Trusts generally, T. 53, C. 12.

CHAPTER 1 GENERAL PROVISIONS

23-1-1. Equity jurisdiction - Vested in superior courts and State-wide Business Court.

All equity jurisdiction shall be vested in the superior courts of the several counties and in the Georgia State-wide Business Court as provided in Code Section 15-5A-3.

(Laws 1799, Cobb's 1851 Digest, p. 467; Code 1863, § 3013; Code 1868, § 3025; Code 1873, § 3080; Code 1882, § 3080; Civil Code 1895, § 3921; Civil Code 1910, § 4518; Code 1933, § 37-101; Ga. L. 2019, p. 845, § 3-4/HB 239.)

The 2019 amendment, effective May 7, 2019, added "and in the Georgia State-wide Business Court as provided in Code Section 15-5A-3" at the end of this Code section.

Cross references.

- Exercise of judicial power, Ga. Const. 1983, Art. VI, Sec. I, Para. IV.

Law reviews.

- For article on the 2019 amendment of this Code section, see 36 Ga. St. U.L. Rev. 1 (2019).

JUDICIAL DECISIONS

Equity determined by allegations contained in petition.

- Whether an action is one at law or in equity is determined by the allegations of the petition and the nature of the relief prayed and not by the designation given to the action by the pleader. Griffin v. Securities Inv. Co., 181 Ga. 455, 182 S.E. 594 (1935).

Equity jurisdiction is conferred upon the superior courts and not upon the judges thereof, and judges sitting in vacation are not courts of equity. Humber v. Garrard, 205 Ga. 357, 53 S.E.2d 748 (1949).

Equity had jurisdiction to render decrees in open court authorizing the several trustees to contract for loans and secure the loans by deed conveying the trust property. Jackson v. Massachusetts Mut. Life Ins. Co., 183 Ga. 659, 189 S.E. 243 (1936).

In an equitable proceeding, it is the general rule that all persons having a legal or equitable interest in the subject matter of the suit must be made parties; and no court should undertake to reform a written instrument in an essential matter, without having before it all the parties to be affected by the proposed reformation. American Fid. & Cas. Co. v. Elder, 189 Ga. 229, 5 S.E.2d 668 (1939).

Federal jurisdiction.

- Since an action to set aside award of year's support to widow for fraud could be brought in superior courts of the state, it might be brought in federal court, assuming that all other jurisdictional prerequisites had been satisfied. Dunaway v. Clark, 536 F. Supp. 664 (S.D. Ga. 1982).

State court had jurisdiction over unjust enrichment claim.

- State court had jurisdiction to give an award based on the equitable theory of unjust enrichment because the plaintiffs, the buyers of a sports bar, sought only damages against the sellers, not equitable relief. Lee v. Shim, 310 Ga. App. 725, 713 S.E.2d 906 (2011).

Cited in Watters v. Southern Brighton Mills, 168 Ga. 15, 147 S.E. 87 (1929); Lamb v. Lamb, 169 Ga. 567, 150 S.E. 817 (1929); Biddle v. Papa, 180 Ga. 468, 179 S.E. 357 (1935); McDowell v. McDowell, 68 Ga. App. 363, 22 S.E.2d 851 (1942); Rockefeller v. First Nat'l Bank, 213 Ga. 493, 100 S.E.2d 279 (1957); Miller v. New Amsterdam Cas. Co., 105 Ga. App. 174, 123 S.E.2d 717 (1961); Moody v. Mendenhall, 238 Ga. 689, 234 S.E.2d 905 (1977); Country Greens Village One Owners Ass'n v. Meyers, 158 Ga. App. 609, 281 S.E.2d 346 (1981); Southeast Serv. Corp. v. Savannah Teachers Props., 263 Ga. App. 513, 588 S.E.2d 310 (2003); Levenson v. Word, 294 Ga. App. 104, 668 S.E.2d 763 (2008).

23-1-2. Equity jurisdiction - Scope; modes of remedy.

Generally, equity jurisprudence embraces the same matters of jurisdiction and modes of remedy as were allowed and practiced in England.

(Orig. Code 1863, § 3033; Code 1868, § 3045; Code 1873, § 3100; Code 1882, § 3100; Civil Code 1895, § 3945; Civil Code 1910, § 4542; Code 1933, § 37-124.)

JUDICIAL DECISIONS

In England, as well as in most of the states, the rule that equity acts upon the person of the defendant is held to prevail, in the absence of statutory modification; so that it remains the general rule that jurisdiction in rem or quasi in rem, in equity, just as at law, is the creature of statutes, which are to be strictly construed. Grimmett v. Barnwell, 184 Ga. 461, 192 S.E. 191 (1937).

Cited in Voyles v. Federal Land Bank, 182 Ga. 569, 186 S.E. 405 (1936); Jackson v. Massachusetts Mut. Life Ins. Co., 183 Ga. 659, 189 S.E. 243 (1936); Rockefeller v. First Nat'l Bank, 213 Ga. 493, 100 S.E.2d 279 (1957).

RESEARCH REFERENCES

Am. Jur. 2d.

- 27 Am. Jur. 2d, Equity, §§ 6, 118.

23-1-3. Equity jurisdiction - Grounds.

Equity jurisdiction is established and allowed for the protection and relief of parties where, from any peculiar circumstances, the operation of the general rules of law would be deficient in protecting from anticipated wrong or relieving for injuries done.

(Orig. Code 1863, § 3014; Code 1868, § 3026; Code 1873, § 3081; Code 1882, § 3081; Civil Code 1895, § 3922; Civil Code 1910, § 4519; Code 1933, § 37-102.)

JUDICIAL DECISIONS

Universal test of the jurisdiction of a court to issue injunctions is the absence of a legal remedy by which the complainant might obtain the full relief to which the facts and circumstances entitle the complainant, and this is likewise the test of its power to restrain breaches of a contract. Ford v. Finney, 35 Ga. 258 (1866); Chadwick v. Dolinoff, 207 Ga. 702, 64 S.E.2d 76 (1951).

Equity will grant relief only when there is no available and adequate and complete remedy at law. Colston v. Hutchinson, 208 Ga. 559, 67 S.E.2d 763 (1951); Cantrell v. Henry County, 250 Ga. 822, 301 S.E.2d 870 (1983).

In a breach of contract action between an insurer and an agency, the trial court did not abuse the court's discretion in granting an interlocutory injunction to the agency as, after a balancing of the equities in the agency's favor, the record supported the finding that the insurer conducted itself, to the agency's detriment, as though arbitration of the dispute had been completed and it had been absolved from complying with its post-termination obligations under the underlying agency agreement between the parties. Cotton States Mut. Ins. Co. v. Stephen Brown Ins. Agency, Inc., 290 Ga. App. 660, 660 S.E.2d 445 (2008), cert. denied, No. S08C1321, 2008 Ga. LEXIS 687 (Ga. 2008).

When all relief sought can be obtained in the manner provided for by law, it is error for equity to intervene. Waller v. Conner, 218 Ga. 633, 129 S.E.2d 845 (1963); Thomason v. Harper Motor Lines, 225 Ga. 312, 168 S.E.2d 147 (1969).

Equity by writ of injunction will restrain any act which is illegal or contrary to equity and good conscience and for which no adequate remedy at law is provided. But when all the relief sought can be obtained in the manner provided by law, a suit in equity for injunction will not lie. Lanier v. Suttles, 212 Ga. 154, 91 S.E.2d 21 (1956).

Injunction does not lie when the complaining party has a plain and adequate remedy at law which is practical and efficient to the ends of justice and its prompt administration as the remedy in equity. Thomason v. Harper Motor Lines, 225 Ga. 312, 168 S.E.2d 147 (1969).

Since equity jurisdiction is for the relief of parties when the general rules of law would be deficient in protecting from anticipated wrong or affording relief for injuries done, there is no sound reason in law or equity why equity should not take jurisdiction and grant relief from a void marriage complained of that will be both adequate and complete. Gearllach v. Odom, 200 Ga. 350, 37 S.E.2d 184 (1946).

When no legal reason appears from the allegations of the petition why the plaintiff, without seeking an injunction, is not possessed of an adequate and complete remedy at law; in the absence of such indispensable averments, the petition fails to state a proper cause for the extraordinary equitable remedy of injunction. Chadwick v. Dolinoff, 207 Ga. 702, 64 S.E.2d 76 (1951).

Equitable relief is inappropriate when an adequate and complete remedy at law in the form of an action in implied assumpsit or quasi-contract was and is available against a party, the record and the order of the trial court suggest that a money judgment against the party would provide complete relief with respect to the party, and the record fails to disclose affirmatively that such a remedy would not be adequate. Cantrell v. Henry County, 250 Ga. 822, 301 S.E.2d 870 (1983).

When a statutory remedy by appeal has failed to eliminate the law violation or gross abuse of discretion which is its equivalent, equity will grant relief. Carter v. Board of Educ., 221 Ga. 775, 147 S.E.2d 315 (1966).

When, upon the death of the grantee in a deed executed by a married woman, a receiver is appointed for the property belonging to his estate, and the grantor in such a deed intervenes in the equitable proceeding for the purpose of asserting her right to recover the property so conveyed to the decedent, and mesne profits thereon, upon the ground that the conveyance was made in satisfaction of the debt of her husband, the proceeding is one in equity and is governed by equitable principles. In such a case the intervenor cannot recover against the assets in the hands of the receiver for administration in equity, without accounting for such portion of the consideration for her deed as was represented by her own obligation. Turner v. Warren, 193 Ga. 455, 18 S.E.2d 865 (1942).

Courts exercising equitable jurisdiction will not enjoin prosecutions under municipal ordinances, even when the ordinances are allegedly invalid and there are threats of arrest and multiplicity of prosecutions, unless it is shown that the threatened prosecutions are for the sole purpose of unlawfully taking or destroying property or the business of the plaintiff, or that they will in fact result in irreparable injury thereto, and unless the complaining party has no plain and adequate remedy at law which is as practical and efficient to the ends of justice and its prompt administration as its remedy in equity. Arnold v. Mathews, 226 Ga. 809, 177 S.E.2d 691 (1970).

Statement that decisions of the boards of education will not be interfered with by courts of equity unless they amount to a violation of law or are a gross abuse of discretion must be read and considered along with the rule of law that remedies at law, if adequate, must be exhausted before resort to equity will be allowed; when thus construed they mean simply that, when the remedy by appeal has failed to eliminate the law violation or gross abuse of discretion which is its equivalent, equity will grant relief or, as is permissible in all cases to prevent irreparable injury, or when equity alone can grant adequate relief, exhaustion of the statutory remedy of appeal is not a prerequisite to relief in equity. Bedingfield v. Parkerson, 212 Ga. 654, 94 S.E.2d 714 (1956).

When it is necessary to prevent irreparable injury or when equity alone can grant adequate relief, exhaustion of a statutory remedy of appeal is not a prerequisite to relief in equity. Carter v. Board of Educ., 221 Ga. 775, 147 S.E.2d 315 (1966).

A court of equity should not exercise the court's extraordinary powers when there is no grave danger of impending injury; bare fears of injury will not authorize such action. McPhaul v. Simon, 181 Ga. 260, 182 S.E. 19 (1935).

Fact that repeated arrests and prosecutions may be instituted under an invalid ordinance will not, without more, justify equitable interference. Jewel Tea Co. v. City of Cartersville, 185 Ga. 799, 196 S.E. 712 (1938).

The fact that a prosecution may be based on an invalid ordinance does not, in the absence of other circumstances, justify intervention of equity changing the general rule. Spur Distrib. Co. v. Mayor of Americus, 190 Ga. 842, 11 S.E.2d 30 (1940).

Mere inconvenience and expense and apprehension of injury to property rights will not give equity jurisdiction; neither will mere general allegations of irreparable injury and deprivation of property rights. Spur Distrib. Co. v. Mayor of Americus, 190 Ga. 842, 11 S.E.2d 30 (1940).

Mere financial inability to furnish the bond required affords no lawful basis for equitable interference. Grimmett v. Barnwell, 184 Ga. 461, 192 S.E. 191 (1937).

As a general rule, equity will not decree specific performance of contracts relating to personal property. Black v. American Vending Co., 239 Ga. 632, 238 S.E.2d 420 (1977).

Only under exceptional facts and circumstances may equity powers be used to restrain criminal prosecutions, even though their defense may be burdensome and attended by inconvenience. Spur Distrib. Co. v. Mayor of Americus, 190 Ga. 842, 11 S.E.2d 30 (1940).

When a petitioner seeking an equitable decree annulling a bigamous marriage asserts that he did not know at the time of the ceremony that the defendant was a married woman; he does not come into court with unclean hands barring him from equitable relief. Gearllach v. Odom, 200 Ga. 350, 37 S.E.2d 184 (1946).

Although it is uncertain that there can be a successfully-maintained proceeding in equity to annul a marriage that, as a matter of law, is null and void already, the designation of the petition as one for annulment is no reason why a decree as prayed, declaring the marriage void, should not be granted, since such a decree is essential to the full protection of the petitioner from injury that is and well may be anticipated as a result of a void marriage ceremony. Gearllach v. Odom, 200 Ga. 350, 37 S.E.2d 184 (1946).

Minor children may bring wrongful death action.

- After a surviving spouse abandoned the minor children and could not be found, the factual circumstances demand the exercise of the court's equitable powers to preserve the rights of the minor children. The trial court should have allowed these minors, who have no remedy at law, to maintain an action for the wrongful death of their mother. Brown v. Liberty Oil & Ref. Corp., 261 Ga. 214, 403 S.E.2d 806 (1991).

When equity will enjoin foreclosure.

- When one borrows a sum of money and executes a deed to an undivided interest in certain realty to secure the repayment of the loan, the lender has a right to foreclose upon and sell the undivided interest; and a court of equity will not, unless under peculiar circumstances, enjoin one against enforcement of the security deed, so as to allow the debtor time to have the property partitioned. Ward v. Gerdine, 183 Ga. 722, 189 S.E. 588 (1937).

Application of O.C.G.A.

§ 23-1-3 to the successor liability doctrine. - Corporate debtor that declared Chapter 11 bankruptcy was not liable to an LLC for unpaid rent that was owed by a lock and key company, even though the same individual owned both companies and the debtor had accepted collateral the lock and key company owned in full satisfaction of debt the company owed. The debtor's decision to accept collateral the lock and key company owned in full satisfaction of the company's debt was permitted under O.C.G.A. § 11-9-620 and was not a fraudulent attempt to avoid liabilities the lock and key company owed, the debtor was not a "mere continuation" of the lock and key company, and a contrary conclusion would have elevated form over substance and abridged the equitable principles that were codified in O.C.G.A. § 23-1-3. Acme Sec., Inc. v. CLN Props., LLC (In re Acme Sec., Inc.), 484 Bankr. 475 (Bankr. N.D. Ga. 2012).

Restraint of criminal prosecution.

- Allegations of petition by filling station operators asking protection from the effect of a city ordinance requiring payment by certain operators for a business license, in addition to the regular business license required of all gasoline filling stations, when the city marshal had made and was threatening to make cases against the petitioners for violation of the ordinance, the city was threatening to issue executions against plaintiff's property for the penalties in the ordinance, and there was no charter provision for the filing of affidavits of illegality, did not make out such a case as would take it out of the general rule that equitable powers may not be used to restrain criminal prosecution in enforcement of a municipal ordinance alleged to be invalid. Spur Distrib. Co. v. Mayor of Americus, 190 Ga. 842, 11 S.E.2d 30 (1940).

Courts of equity in this state are without authority to review decisions of football referees because those decisions do not present judicial controversies. Georgia High Sch. Ass'n v. Waddell, 248 Ga. 542, 285 S.E.2d 7 (1981).

Bond was adequate remedy at law for subcontractor on school project.

- When a subcontractor on a school district's high school project had a remedy against the general contractor on the general contractor's performance bond under O.C.G.A. § 36-91-90, this legal remedy was adequate and precluded the subcontractor from asserting an equitable lien against the school district. McArthur Elec., Inc. v. Cobb County Sch. Dist., 281 Ga. 773, 642 S.E.2d 830 (2007).

Adequate remedy at law.

- Superior court erred in granting an aunt and uncle custody of minor children because the court lacked subject matter jurisdiction to consider the petition for custody since a probate court had exclusive jurisdiction to issue and revoke letters of testamentary guardianship, and O.C.G.A. § 29-2-4(b) mandated the issuance of letters of testamentary guardianship to the brother of the children's father without notice and a hearing and without consideration of the children's best interests; equity afforded no valid basis for the superior court's exercise of jurisdiction because the aunt and uncle had an appropriate remedy in the probate court to challenge the testamentary guardianship: a petition for revocation or suspension of the brother's letters of testamentary guardianship. Zinkhan v. Bruce, 305 Ga. App. 510, 699 S.E.2d 833 (2010).

Court found no adequate remedy at law.

- When an attorney-in-fact sought to enjoin the attorney-in-fact's siblings from enforcing a revocation of their parent's durable health care power of attorney, the attorney-in-fact did not have an adequate remedy at law through appointing an emergency guardian. Under O.C.G.A. § 29-4-14(b)(6), a petition for such an appointment had to set forth that no other person appeared to have authority to act, whereas the attorney-in-fact's position was that the attorney-in-fact did have the authority to act. Luther v. Luther, 289 Ga. App. 428, 657 S.E.2d 574 (2008), cert. denied, No. S08C0912, 2008 Ga. LEXIS 520 (Ga. 2008).

Specific performance properly applied.

- Specific performance was the proper remedy since there was no adequate remedy at law given the nature of the stock in the small, family-owned business, and the explicit acknowledgment in the shareholders' buy-sell agreement that specific performance was the appropriate remedy in the event of a breach. Moreover, given the failure of all parties to strictly follow the terms of either the agreement or bylaws, an equitable remedy considered that done which ought to be done. Wallace v. Wallace, 345 Ga. App. 764, 813 S.E.2d 428 (2018), cert. denied, No. S18C1329, 2019 Ga. LEXIS 42, cert. denied, No. S18C1332, 2019 Ga. LEXIS 48 (Ga. 2019), cert. denied, 2019 U.S. LEXIS 6165, 205 L. Ed. 2d 30 (U.S. 2019).

Equity improperly invoked in custody cases.

- Trial court erred by invoking equity as a basis to grant custody of the twins to their biological mother because when the mother surrendered her parental rights to the twins the mother forfeited the mother's custody rights to them, when the adoptive father adopted them the father gained the right to their custody, and the mother was not included within O.C.G.A. § 19-7-1(b.1)'s list of third parties permitted to seek custody against a parent when the mother filed her custody petition. Oni v. Oni, 351 Ga. App. 400, 830 S.E.2d 775 (2019), cert. denied, 2020 Ga. LEXIS 158 (Ga. 2020).

Cited in Edwards Mfg. Co. v. Hood, 167 Ga. 144, 145 S.E. 87 (1928); Harper v. Durden, 177 Ga. 216, 170 S.E. 45 (1933); Aetna Ins. Co. v. Lunsford, 179 Ga. 716, 177 S.E. 727 (1934); Sutton v. Adams, 180 Ga. 48, 178 S.E. 365 (1934); Biddle v. Papa, 180 Ga. 468, 179 S.E. 357 (1935); Lewis v. Board of Educ., 183 Ga. 687, 189 S.E. 233 (1936); Manning v. Wills, 193 Ga. 82, 17 S.E.2d 261 (1941); Cummings v. Robinson, 194 Ga. 336, 21 S.E.2d 627 (1942); Hamrick v. Hamrick, 206 Ga. 564, 58 S.E.2d 145 (1950); Coffey v. City of Marietta, 212 Ga. 189, 91 S.E.2d 482 (1956); Hortman v. Yarbrough, 214 Ga. 693, 107 S.E.2d 202 (1959); Ayers v. Baker, 216 Ga. 132, 114 S.E.2d 847 (1960); Burch v. Williams, 226 Ga. 10, 172 S.E.2d 417 (1970); Hughes v. Albert, 238 Ga. 721, 235 S.E.2d 34 (1977); Pembroke State Bank v. Balboa Ins. Co., 144 Ga. App. 609, 241 S.E.2d 483 (1978); Cawthon v. Douglas County, 248 Ga. 760, 286 S.E.2d 30 (1982); Brown v. Brown, 265 Ga. 725, 462 S.E.2d 609 (1995).

RESEARCH REFERENCES

Am. Jur. 2d.

- 27 Am. Jur. 2d, Equity, §§ 19 et seq., 87.

C.J.S.

- 30 C.J.S., Equity, § 19 et seq.

ALR.

- Right of victim of practical joke to recover against its perpetrator, 9 A.L.R. 364.

Jurisdiction of equity to protect personal rights, 14 A.L.R. 295.

Constitutionality of statute conferring on chancery courts power to abate public nuisance, 22 A.L.R. 542; 75 A.L.R. 1298.

Power of equity in absence of statute to render deficiency judgment in foreclosure action, 34 A.L.R. 1015.

Relief of purchaser against forfeiture of land contract, 40 A.L.R. 182.

Breach of building or construction contract as ground of suit in equity for its rescission, 52 A.L.R. 1175.

Validity and enforceability of restrictive covenants in contracts of employment, 52 A.L.R. 1362; 67 A.L.R. 1002; 98 A.L.R. 963.

Inherent power of equity, at instance of a stockholder, to appoint receiver for, or to wind up, a solvent, going corporation, on ground of fraud, mismanagement, or dissensions, 61 A.L.R. 1212; 91 A.L.R. 665.

Relief in equity from mistake of law, 75 A.L.R. 896.

Power of equity to enjoin prosecution of independent actions at law by different persons injured by the same tort, 75 A.L.R. 1444.

Jurisdiction of equity on the ground of avoiding multiplicity of actions at law of suit to enforce statutory liability of stockholders or to enjoin actions at law in that regard, 94 A.L.R. 1372.

Jurisdiction of equity courts in the United States, without the aid of statute expressly conferring it, to entertain independent suit for alimony or separate maintenance without divorce or judicial separation, 141 A.L.R. 399.

Right of lessee to equitable relief against forfeiture for breach of conditions as affected by lessor's giving a lease to or entering into other contractual obligations with a third person, 166 A.L.R. 807.

Remedy at law available to beneficiary of trust as exclusive of remedy in equity, 171 A.L.R. 429.

Injunction as remedy for breach of contract to employ plaintiff or give exclusive right to promote or sell defendant's product or invention, 173 A.L.R. 1198.

Jurisdiction of equity to protect personal rights; modern view, 175 A.L.R. 438.

Doctrine of constructive trust or unjust enrichment as applicable between owner and one who fraudulently procures tax certificates, 175 A.L.R. 700.

Purchaser's misrepresentations as to intended use of real property as ground for vendor's equitable relief from contract and deed, 35 A.L.R.3d 1369.

Construction and operation of parking-space provision in shopping-center lease, 56 A.L.R.3d 596.

Right of contingent remainderman to maintain action for damages for waste, 56 A.L.R.3d 677.

23-1-4. Effect of legal remedy on exercise of jurisdiction.

Equity will not take cognizance of a plain legal right where an adequate and complete remedy is provided by law; but the mere privilege of a party to bring an action at law or the existence of a common-law remedy not as complete or effectual as the equitable relief shall not deprive equity of jurisdiction.

(Orig. Code 1863, § 3028; Code 1868, § 3040; Code 1873, § 3095; Code 1882, § 3095; Civil Code 1895, § 3941; Civil Code 1910, § 4538; Code 1933, § 37-120.)

JUDICIAL DECISIONS

It will be readily seen from this section that, if the law itself provides a full and adequate remedy, ordinarily that is the end of the matter, and equity will not interfere. Grimmett v. Barnwell, 184 Ga. 461, 192 S.E. 191 (1937).

Equity grants no relief to one who has an adequate remedy at law. Goodman v. Georgia R.R. Bank & Trust Co., 221 Ga. 396, 144 S.E.2d 764 (1965).

When private property is actually about to be confiscated by the enforcement of an assessment for a local improvement, the remedy of affidavit of illegality as provided in the city charter is not as complete or effectual as equitable relief; in such a case an injunction may be granted. Holst v. City of La Grange, 175 Ga. 402, 165 S.E. 217 (1932).

A mere privilege to a party to sue at law, or the existence of a common-law remedy not as complete or effectual as the equitable relief, does not deprive equity of jurisdiction. Quitman Cooperage Co. v. People's First Nat'l Bank, 178 Ga. 90, 172 S.E. 17 (1933).

A money judgment having been rendered in a trover suit pending bankruptcy proceedings voluntarily instituted by the defendant therein, the petition brought by the defendant to enjoin garnishment proceedings based on the trover judgment on the ground that the debt had been subsequently discharged by the order of the bankruptcy court, should have been dismissed on general demurrer (now motion to dismiss); because, if the debt was discharged, the defendant could have been fully protected by setting up this defense in the court where the garnishment case was pending and where he had an adequate and complete remedy at law, in which event a court of equity will not grant relief; and because a judgment for the plaintiff in an action of trover, although rendered for a sum of money and not for the property in controversy, constitutes an adjudication of the plaintiff's title to the property, and the debt thus created is not dischargeable in bankruptcy. Nash Loan Co. v. Yonge, 182 Ga. 672, 186 S.E. 811 (1936).

When a defendant has been served and a judgment is rendered against the defendant by fraud, accident, or mistake, without fault or negligence on the defendant's part, a petition in equity to set aside the judgment will lie. Dollar v. Fred W. Amend Co., 184 Ga. 432, 191 S.E.2d 696 (1937).

If for any special reason the remedy by attachment against a nonresident debtor in an ordinary claim ex contractu or ex delicto is unavailable or inadequate, equity will lend its aid; but, when in such an ordinary claim the remedy by attachment is available and affords adequate relief, and when the facts alleged fail to invoke any other recognized principle authorizing equitable relief, a court of equity will refuse to assume jurisdiction. Grimmett v. Barnwell, 184 Ga. 461, 192 S.E. 191 (1937).

Petition to have defendant enjoined from interfering with plaintiffs in possession of disputed part of land, possession and control of which was alleged to be in defendant, showed no ground for equitable relief, and the existence of an adequate remedy at law because a court of equity will not ordinarily entertain a bill solely for the purpose of establishing the title of a party to real estate, or for the recovery of possession thereof, as these objects can generally be accomplished by an action of ejectment at law. Slaughter v. Land, 190 Ga. 491, 9 S.E.2d 754 (1940).

When the plaintiff contends all partnership relations between the plaintiff and the defendant have come to an end, that a balance has been struck, and that an indebtedness is allegedly due by the defendant to the plaintiff, which cannot be affected by any transactions between the partnership and its creditors or debtors, this is not an equitable action by a member of a firm against one's copartner, but an action of law, one man against another who has formerly been one's partner, upon an indebtedness a part of which grew out of the formerly existing partnership between them. Manry v. Hendricks, 192 Ga. 319, 15 S.E.2d 434 (1941).

When the partnership has been fully dissolved by written contract and the rights of each party definitely established, in case of a breach of such contract equity will not order an accounting as the remedy is at law. Manry v. Hendricks, 192 Ga. 319, 15 S.E.2d 434 (1941).

Even if in any case equity can remove an executor, when there were no allegations in petition seeking inter alia removal of an executor for fraud and conspiracy tending to show why complainants could not by pursuing the remedy provided by law before the court of ordinary (now probate court), obtain relief as complete and effectual as in a court of equity, under the principle codified in this section, equity would not assume jurisdiction. Georgia Baptist Orphans Home v. Weaver, 193 Ga. 669, 19 S.E.2d 272 (1942).

When plaintiff alleges that the plaintiff provided certain labor and materials used in the construction of an apartment house under a contract with the subcontractor of the general contractor, for which the plaintiff has not been paid, and alleges no reason why the plaintiff's remedy at law, suit on the contract, would not be adequate, full, and complete, nor does the plaintiff allege that the subcontractor is insolvent or unable in any way to respond in damages, or is a nonresident of the state, the trial court did not err in sustaining the general demurrer (now motion to dismiss). Maggi v. Sylvan Circle Apts., Inc., 207 Ga. 580, 63 S.E.2d 368 (1951).

When the petitioner sought to have an ordinance declared void, and the prosecutions enjoined, and by an amendment to the charter disputed tax executions may be contested by affidavit of illegality, this adequate and complete remedy at law to contest the validity of the ordinance being available, the intervention of equity would not be authorized. City of Eatonton v. Peck, 207 Ga. 705, 64 S.E.2d 61 (1951).

A bare threat of injury to property, which, if followed up by an overt act would work irreparable injury, affords no basis for equitable relief by injunction or otherwise. Nottingham v. Elliott, 209 Ga. 481, 74 S.E.2d 93 (1953).

Equity grants no relief to one who has an adequate and complete remedy at law for the redress of an actionable wrong. Mayor of Carrollton v. Chambers, 215 Ga. 193, 109 S.E.2d 755 (1959).

Since the plaintiff had an adequate and complete remedy at law by affidavit of illegality, an affidavit of illegality, and not a petition for injunction, was the procedure which the plaintiff should have employed to test the validity of property tax assessments. Mayor of Carrollton v. Chambers, 215 Ga. 193, 109 S.E.2d 755 (1959).

Insolvency of a subcontractor and inability to respond to such damages as the contractor might recover for breach of the contract is ground for equitable intervention. By bringing in the surety whose principal was insolvent the contractor would be able to obtain full relief, but the contractor's legal remedy would not be complete or as effective and efficient to the ends of justice as that which could be afforded by a court of equity. Concrete Coring Contractors v. Mechanical Contractors & Eng'rs, 220 Ga. 714, 141 S.E.2d 439 (1965).

In the absence of statutory authority, equity will not intervene when a party has a complete and adequate remedy at law and no other equitable reasons, such as avoidance of a multiplicity of suits or that the acts of the defendant complained of constitute a constantly recurring wrong, generally denominated a continuing wrong, are alleged. Womble v. State Bd. of Exmrs., 221 Ga. 457, 145 S.E.2d 485 (1965).

When an adequate remedy at law exists, equity is without jurisdiction of the case. Y. v. S., 224 Ga. 352, 162 S.E.2d 321 (1968).

Equitable relief is improper if the complainant has a remedy at law which is "adequate," i.e., as practical and as efficient to the ends of justice and its prompt administration as the remedy in equity. Sherrer v. Hale, 248 Ga. 793, 285 S.E.2d 714 (1982).

Equity will grant relief only when there is no available adequate and complete remedy at law. Cantrell v. Henry County, 250 Ga. 822, 301 S.E.2d 870 (1983).

Equitable relief is inappropriate when an adequate and complete remedy at law in the form of an action in implied assumpsit or quasi-contract was and is available against a party, the record and the order of the trial court suggest that a money judgment against the party would provide complete relief with respect to that party, and the record fails to disclose affirmatively that such a remedy would not be adequate. Cantrell v. Henry County, 250 Ga. 822, 301 S.E.2d 870 (1983).

When subsequent to the court's order of payment of a sum of money into the court registry, the jury awarded a judgment in that amount to the plaintiff, as the plaintiff had an adequate remedy at law, the equitable relief granted by the trial court was inappropriate. Prosser v. Hancock Bus Sales, Inc., 256 Ga. 399, 349 S.E.2d 460 (1986).

In a breach of contract action between an insurer and an agency, the trial court did not abuse the court's discretion in granting an interlocutory injunction to the agency as, after a balancing of the equities in the agency's favor, the record supported the finding that the insurer conducted itself, to the agency's detriment, as though arbitration of the dispute had been completed and it had been absolved from complying with its post-termination obligations under the underlying agency agreement between the parties. Cotton States Mut. Ins. Co. v. Stephen Brown Ins. Agency, Inc., 290 Ga. App. 660, 660 S.E.2d 445 (2008), cert. denied, No. S08C1321, 2008 Ga. LEXIS 687 (Ga. 2008).

Injunction requiring a bank to pay certain funds into a trial court's registry was inappropriate because a lender had an adequate remedy at law since it could obtain a judgment to completely compensate it for any loss from the bank's removal of funds from a debtor's account. Century Bank of Ga. v. Bank of Am., N.A., 286 Ga. 72, 685 S.E.2d 82 (2009).

An employer whose employee had opened a competing business and taken the employer's trade secrets and confidential information had an adequate and complete remedy at law because it could recover money damages from the employee if the employee removed funds from the employee's competing business that rightfully belonged to the employer. Therefore, under O.C.G.A. §§ 9-5-6 and23-1-4, a trial court erred in requiring the employee to deposit the business's funds into the registry of the court. Coleman v. Retina Consultants, P.C., 286 Ga. 317, 687 S.E.2d 457 (2009).

Mere apprehension of danger, unless founded upon reason, will not require equitable relief. Maggi v. Sylvan Circle Apts., Inc., 207 Ga. 580, 63 S.E.2d 368 (1951).

Mere financial inability to furnish the bond required affords no lawful basis for equitable interference. Grimmett v. Barnwell, 184 Ga. 461, 192 S.E. 191 (1937).

A mere verbal claim to, or assertion of ownership in, property is not such a cloud upon the title of the owner as can be removed by equitable proceedings. Nottingham v. Elliott, 209 Ga. 481, 74 S.E.2d 93 (1953).

A remedy at law, to exclude appropriate relief in equity, must be complete and the substantial equivalent of the equitable relief.

- It is not enough that there is a remedy at law. It must be plain and adequate, or, in other words, as practical and as efficient to the ends of justice and its prompt administration as the remedy in equity. Davis v. Logan, 206 Ga. 524, 57 S.E.2d 568 (1950).

In a case arising from a mortgage fraud scheme, the government unsuccessfully argued that a title insurance company was not entitled to a constructive trust because it had an adequate remedy at law based on the Attorney General's authority, pursuant to 21 U.S.C. § 853(i)(1), to remit a forfeiture in the interest of justice. Not only was the § 853(i)(1) remission a non-judicial remedy left entirely to the discretion of the Attorney General, but under O.C.G.A. § 23-1-4, equitable remedies, such as constructive trusts, were not precluded by the existence of an alternate remedy that was not as complete or effectual as the equitable relief. United States v. Shefton, 548 F.3d 1360 (11th Cir. 2008).

An unconstitutional or void statutory provision will not furnish an adequate remedy at law. Stinson v. Manning, 221 Ga. 487, 145 S.E.2d 541 (1965).

When it is necessary to prevent irreparable injury or when equity alone can grant adequate relief, exhaustion of a statutory remedy of appeal is not a prerequisite to relief in equity. Carter v. Board of Educ., 221 Ga. 775, 147 S.E.2d 315 (1966).

When a statutory remedy by appeal has failed to eliminate the law violation or gross abuse of discretion which is its equivalent, equity will grant relief. Carter v. Board of Educ., 221 Ga. 775, 147 S.E.2d 315 (1966).

Property owners dissatisfied with the act of a building inspector in issuing a permit to erect a church have the right to appeal from the order of the building inspector to the board of adjustment. Ledbetter v. Callaway, 211 Ga. 607, 87 S.E.2d 317 (1955).

As a general rule, equity will not decree specific performance of contracts relating to personal property. Black v. American Vending Co., 239 Ga. 632, 238 S.E.2d 420 (1977).

A court of equity will not ordinarily entertain a bill solely for the purpose of establishing title of a party to real estate, or for the recovery of possession thereof, as these objects can generally be accomplished by an action of ejectment of law. Collier v. Garner, 177 Ga. 467, 170 S.E. 353 (1933); Nottingham v. Elliott, 209 Ga. 481, 74 S.E.2d 93 (1953).

Except in a case specially provided for by statute, equity will not interfere to restrain a trespass, unless the injury is irreparable in damages, or the trespasser is insolvent, or there exist other circumstances which, in the discretion of the court, render the interposition of this writ necessary and proper. Collier v. Garner, 177 Ga. 467, 170 S.E. 353 (1933); Nottingham v. Elliott, 209 Ga. 481, 74 S.E.2d 93 (1953).

When a petition does not allege facts showing irreparable damages nor any trespass by the defendant upon any lands claimed by the petitioner, nor that the defendant is insolvent, and does not show why a court of equity should take jurisdiction in order to avoid multiplicity of action, the petition failed to state a cause of action for any equitable relief. Shobkov v. Pennington, 217 Ga. 315, 122 S.E.2d 87 (1961).

Rezoning must be sought before constitutionality of ordinance considered.

- Before litigants seek declaration by court of equity that zoning ordinance is unconstitutional as applied to their property, they must apply to the local authorities for relief by rezoning. Village Ctrs., Inc. v. DeKalb County, 248 Ga. 177, 281 S.E.2d 522 (1981).

Time limit on filing suit challenging zoning ordinance.

- Not only is application for rezoning a prerequisite to filing suit in equity seeking declaration that zoning ordinance is unconstitutional, but, after application for rezoning is denied by governing authority, any suit in equity attacking zoning ordinance as applied to property involved is time barred when no suit challenging zoning classification is filed within 30 days of that decision. Village Ctrs., Inc. v. DeKalb County, 248 Ga. 177, 281 S.E.2d 522 (1981).

Restrictive covenant cases.

- An injunction will lie in restrictive covenant cases by employers against former employees even when damages are also sought. National Settlement Assocs. v. Creel, 256 Ga. 329, 349 S.E.2d 177 (1986).

Bond was adequate remedy at law for subcontractor on school project.

- When a subcontractor on a school district's high school project had a remedy against the general contractor on the general contractor's performance bond under O.C.G.A. § 36-91-90, this legal remedy was adequate and precluded the subcontractor from asserting an equitable lien against the school district. McArthur Elec., Inc. v. Cobb County Sch. Dist., 281 Ga. 773, 642 S.E.2d 830 (2007).

Cited in Bowden v. Georgia Pub. Serv. Comm'n, 170 Ga. 505, 153 S.E. 42 (1930); American Sec. Co. v. Miller, 173 Ga. 82, 159 S.E. 692 (1931); Reid v. Gordon, 173 Ga. 168, 159 S.E. 708 (1931); Sutton v. Adams, 180 Ga. 48, 178 S.E. 365 (1934); Gavant v. Berger, 180 Ga. 753, 180 S.E. 613 (1935); Jackson v. Becker Roofing Co., 180 Ga. 769, 180 S.E. 822 (1935); Pendley v. Tumlin, 181 Ga. 808, 184 S.E. 283 (1936); Hodges v. State Revenue Comm'n, 183 Ga. 832, 190 S.E. 36 (1937); Wallace v. Stovall, 189 Ga. 195, 5 S.E.2d 635 (1939); Bibb County v. Winslett, 191 Ga. 860, 14 S.E.2d 108 (1941); McCord v. Walton, 192 Ga. 279, 14 S.E.2d 723 (1941); Matson v. Crowe, 193 Ga. 578, 19 S.E.2d 288 (1942); Stephens v. City Council, 193 Ga. 815, 20 S.E.2d 80 (1942); Cummings v. Robinson, 194 Ga. 336, 21 S.E.2d 627 (1942); Robinson v. Murray, 198 Ga. 690, 32 S.E.2d 496 (1944); Dwyer v. Jones, 201 Ga. 259, 39 S.E.2d 313 (1946); Fulmer v. Wilkins, 201 Ga. 322, 39 S.E.2d 405 (1946); Haney v. Sheppard, 207 Ga. 158, 60 S.E.2d 453 (1950); Ware v. Martin, 207 Ga. 512, 63 S.E.2d 335 (1951); Scarbrough v. Cook, 208 Ga. 697, 69 S.E.2d 201 (1952); Williamon v. Williamon, 209 Ga. 494, 74 S.E.2d 71 (1953); Boatright v. Yates, 211 Ga. 125, 84 S.E.2d 195 (1954); Patterson v. Boyd, 211 Ga. 679, 87 S.E.2d 861 (1955); Winn v. Morton, 212 Ga. 282, 92 S.E.2d 97 (1956); Hortman v. Yarbrough, 214 Ga. 693, 107 S.E.2d 202 (1959); Ramsey v. Womack, 214 Ga. 722, 107 S.E.2d 180 (1959); Ellis v. City of Atlanta, 214 Ga. 811, 108 S.E.2d 269 (1959); Ayers v. Baker, 216 Ga. 132, 114 S.E.2d 847 (1960); K. Gordon Murray Prods., Inc. v. Floyd, 217 Ga. 784, 125 S.E.2d 207 (1962); Stein Steel & Supply Co. v. Briggs Mfg. Co., 219 Ga. 779, 135 S.E.2d 862 (1962); Murdock v. Perkins, 219 Ga. 756, 135 S.E.2d 869 (1964); Clements v. Elder, 221 Ga. 438, 145 S.E.2d 246 (1965); Parker v. Davidson, 223 Ga. 672, 157 S.E.2d 489 (1967); Burch v. Williams, 226 Ga. 10, 172 S.E.2d 417 (1970); Jonesboro Area Athletic Ass'n v. Dickson, 227 Ga. 513, 181 S.E.2d 852 (1971); Burnham v. Lynn, 235 Ga. 207, 219 S.E.2d 111 (1975); Allsouth Sprinkler Co. v. Network Bldg. Sys., 238 Ga. 372, 233 S.E.2d 174 (1977); City of Atlanta v. Wolcott, 240 Ga. 244, 240 S.E.2d 83 (1977); Liniado v. Alexander, 199 Ga. App. 256, 404 S.E.2d 602 (1991); Mayor & Council v. Hall, 261 Ga. 681, 410 S.E.2d 105 (1991); Powell v. City of Snellville, 266 Ga. 315, 467 S.E.2d 540 (1996); City of Duluth v. Riverbrooke Properties, Inc., 233 Ga. App. 46, 502 S.E.2d 806 (1998); McBride v. Life Ins. Co., 190 F. Supp. 2d 1366 (M.D. Ga. 2002); Paine v. Nations, 301 Ga. App. 97, 686 S.E.2d 876 (2009); Sanders v. Riley, 296 Ga. 693, 770 S.E.2d 570 (2015).

RESEARCH REFERENCES

Am. Jur. 2d.

- 27 Am. Jur. 2d, Equity, §§ 10, 89.

C.J.S.

- 30 C.J.S., Equity, § 89.

ALR.

- Constitutionality of statute conferring on chancery courts power to abate public nuisance, 22 A.L.R. 542; 75 A.L.R. 1298.

Injunction against exercise of power of eminent domain, 93 A.L.R.2d 465.

23-1-5. Concurrent jurisdiction of law and equity.

Where law and equity have concurrent jurisdiction, whichever first takes jurisdiction shall retain it, unless a good reason shall be given for the interference of equity.

(Orig. Code 1863, § 3029; Code 1868, § 3041; Code 1873, § 3096; Code 1882, § 3096; Civil Code 1895, § 3943; Civil Code 1910, § 4540; Code 1933, § 37-122.)

JUDICIAL DECISIONS

When law and equity have concurrent jurisdiction, the court first taking will retain it, unless a good reason can be given for the interference of equity. Duke v. Duke, 181 Ga. 21, 181 S.E. 161 (1935); Robinson v. Georgia Sav. Bank & Trust Co., 185 Ga. 688, 196 S.E. 395 (1938).

A court of equity has concurrent jurisdiction with the judge of probate court over the settlement of accounts of administrators and executors; and the court first taking jurisdiction will retain it. Terry v. Chandler, 172 Ga. 715, 158 S.E. 572 (1931).

When a habeas corpus proceeding is filed in the court of ordinary (now probate court), involving custody of a minor child, and subsequently a petition is filed involving divorce, alimony, and the custody of such child, equity has power to enjoin the habeas corpus proceeding and determine all the issues in one action. Duke v. Duke, 181 Ga. 21, 181 S.E. 161 (1935).

Since equity has concurrent jurisdiction with courts of ordinary (now probate courts) in the administration of estates, when its interference is necessary for the full protection of the rights of parties at interest and since it is a recognized rule that, when the heirs at law get together and agree to divide the estate and appoint an agent and put the agent in possession of the property for that purpose, a bill may be filed against the agent by any one or more of the distributees, the same as against an administrator, it cannot be said that, a petition seeking an order restraining the heir's agent from the alleged fraudulent acts, and a receivership under direction of the court of equity was devoid of equity. Shingler v. Shingler, 184 Ga. 671, 192 S.E. 824 (1937).

While the ordinary (now judge of probate court) and the judge of the superior court have equal and concurrent jurisdiction in determining the custody of the children of husband and wife living in a state of separation, only the superior court, so far as habeas corpus proceedings may be resorted to, has jurisdiction of such subject matter when related to a suit for divorce, and superior court judge who, after a habeas corpus proceeding before the ordinary (now judge of probate court) acquires jurisdiction of the subject matter in a divorce proceeding, may properly enjoin further progress of the former proceeding before the ordinary (now judge of probate court), in order that all questions raised by the divorce suit may be considered together. Ponder v. Ponder, 198 Ga. 781, 32 S.E.2d 801 (1945).

While the ordinary (now judge of probate court) and the judge of the superior court have equal and concurrent jurisdiction in a habeas corpus proceeding between husband and wife involving the custody of their child, it is the general rule that, when two courts have such concurrent jurisdiction over the subject matter and the parties, the court first taking jurisdiction will retain it unless some good reason be shown for equitable interference. Breeden v. Breeden, 202 Ga. 740, 44 S.E.2d 667 (1947).

When the superior court acquired jurisdiction of the question of the custody of a child in a divorce case, it retained that jurisdiction for the purpose of rendering a final judgment as to the custody of the child, and when the attempted dismissal by the wife of the proceeding was ineffectual, the ordinary (now judge of probate court) of the county, to whom the wife presented a petition for the writ of habeas corpus, was without jurisdiction to act upon the petition. Breeden v. Breeden, 202 Ga. 740, 44 S.E.2d 667 (1947).

When the court has acquired equitable jurisdiction of the parties and the cause by virtue of equitable averments and prayers, it retains jurisdiction for all related purposes as made by the pleadings. Kniepkamp v. Richards, 192 Ga. 509, 16 S.E.2d 24 (1941).

When it appears from a petition praying for an accounting that there was pending in another court a suit by the corporate defendant against the plaintiff, such court being empowered to render an accounting between the parties, and no special reason being set out why a court of equity should assume jurisdiction for such purpose, equity will not enjoin the proceedings and processes of a court of law in the absence of some intervening equity or other proper defense of which the party, without fault on the party's part, cannot avail oneself at law. Peeples v. Peeples, 193 Ga. 358, 18 S.E.2d 629 (1942).

Equity will not interfere with the regular administration of estates at the instance of an heir except when there is danger of loss or other injury to one's interest. Gill v. Gill, 211 Ga. 567, 87 S.E.2d 389 (1955).

Concurrent jurisdiction no longer existed.

- Trial court had jurisdiction to enter an adoption decree that terminated the parental rights of the biological father because the juvenile court proceeding as to the biological father's parental rights had long since ended and, therefore, there was no problem of overlapping jurisdiction or competing, inconsistent rulings. Parker v. Stone, 333 Ga. App. 638, 773 S.E.2d 793 (2015).

Concurrent jurisdiction over counterclaim for accounting of estate.

- Because the plaintiffs asserted claims for conversion of property and sought a court order requiring the defendants to turn over certain items of personal property, such claims were properly heard by the superior court, as the court of equity and, accordingly, the superior court properly exercised concurrent jurisdiction over the counterclaim for accounting of an estate. Braswell v. Benton, 351 Ga. App. 372, 830 S.E.2d 758 (2019).

Cited in Davis v. Culpepper, 167 Ga. 637, 146 S.E. 319 (1929); Calbeck v. Herrington, 169 Ga. 869, 152 S.E. 53 (1930); Darby v. Green, 174 Ga. 146, 162 S.E. 493 (1932); Chase v. Bartlett, 176 Ga. 40, 166 S.E. 832 (1932); McCord v. Walton, 192 Ga. 279, 14 S.E.2d 723 (1941); Beavers v. Williams, 199 Ga. 114, 33 S.E.2d 343 (1945); Taylor v. Abbott, 201 Ga. 254, 39 S.E.2d 471 (1946); Walker Elec. Co. v. Walton, 203 Ga. 246, 46 S.E.2d 184 (1948); Hoffman v. Chester, 204 Ga. 296, 49 S.E.2d 760 (1948); Hamrick v. Hamrick, 206 Ga. 564, 58 S.E.2d 145 (1950); Clark v. White, 185 F.2d 528 (5th Cir. 1950); Rountree v. Davis, 90 Ga. App. 223, 82 S.E.2d 716 (1954); Seckinger v. Citizens & S. Nat'l Bank, 213 Ga. 586, 100 S.E.2d 587 (1957); Simpson v. American Nat'l Bank, 139 Ga. App. 112, 227 S.E.2d 903 (1976); Benefield v. Martin, 276 Ga. App. 130, 622 S.E.2d 469 (2005); Long v. Long, 303 Ga. App. 215, 692 S.E.2d 811 (2010).

RESEARCH REFERENCES

Am. Jur. 2d.

- 27 Am. Jur. 2d, Equity, §§ 10, 88, 158.

C.J.S.

- 30 C.J.S., Equity, § 21.

23-1-6. Nature of equity - Follows the law.

Equity is ancillary, not antagonistic, to the law; hence, equity follows the law where the rule of law is applicable and follows the analogy of the law where no rule is directly applicable.

(Orig. Code 1863, § 3016; Code 1868, § 3028; Code 1873, § 3083; Code 1882, § 3083; Civil Code 1895, § 3923; Civil Code 1910, § 4520; Code 1933, § 37-103.)

JUDICIAL DECISIONS

Rule that equity follows the law has become first maxim of equity. Lewis v. Board of Educ., 183 Ga. 687, 189 S.E. 233 (1936).

Equity is not antagonistic to the law, but follows the law. Irwin v. Life & Cas. Ins. Co., 204 Ga. 582, 50 S.E.2d 354 (1948).

While equity follows the law as to limitations of actions, neither laches nor the statute of limitations will run against one in peaceable possession of property under a claim of ownership for delay in resorting to the courts to establish one's rights. Crow v. Whitfield, 105 Ga. App. 436, 124 S.E.2d 648 (1962).

A court of equity will not set aside a judgment, although obtained by willful and corrupt perjury, unless it appears that the perjurer has been convicted of such perjury, and unless it appears that a judgment could not have been rendered without the perjured testimony. Hutchings v. Roquemore, 171 Ga. 359, 155 S.E. 675 (1930).

A judge could not refuse to grant an injunction to which a party was entitled under the law, unless that party would agree to waive the incompetency declared by statute of a witness as to the particular testimony sought to be delivered by the witness as equity is not antagonistic to the law, but follows the law. Ferrell v. Wight, 187 Ga. 360, 200 S.E. 271 (1938).

Between a debtor and the debtor's judgment creditor the controlling equity lies in favor of the creditor to have satisfaction of the debtor's judgment and a court of equity will rarely, if ever, interfere with the creditor in the debtor's use of the legal means afforded the debtor for the collection of the debtor's debt. Shedden v. National Florence Crittenton Mission, 191 Ga. 428, 12 S.E.2d 618 (1940).

In a contract suit against a nonresident of Georgia who could not be served personally, praying for a temporary receiver to take charge of certain securities and hold them subject to the order of the court and for other relief when legal attachment was impossible and a court of equity intervened, the court was authorized to require a bond of the plaintiff, similar to an attachment bond. Maryland Cas. Co. v. Tow, 71 Ga. App. 178, 30 S.E.2d 433 (1944).

Since equity follows the analogy of the law, when fraud is charged, the period of limitations applicable to an action for fraud is the same as that which would apply to an action for the land, that is seven years from the discovery of the fraud. Slade v. Barber, 200 Ga. 405, 37 S.E.2d 143 (1946).

When an unmarried man procures a life insurance policy on his own life in which his mother is named beneficiary, and the policy gives the insured the right to change the beneficiary at any time, and subsequently as a consideration for marriage he agrees to substitute his wife as beneficiary in the insurance policy and tells his wife that he has made the change, but later dies without ever having attempted to have the beneficiary changed, the mother is vested with title to the proceeds of the policy upon the death of the insured, and nothing that the insurer can do thereafter can destroy or impair the mother's title thereto; and a court of equity is required, in a contest between the mother and the wife, to award the proceeds of the insurance policy to the mother. Loyd v. Loyd, 203 Ga. 775, 48 S.E.2d 365 (1948).

Equity will not give relief when to do so would violate express provisions of a statute. Lewis v. Board of Educ., 183 Ga. 687, 189 S.E. 233 (1936).

Power to levy and collect taxes is exclusively a legislative function, and unless authorized by statute, a court of equity is without power to foreclose a lien for taxes and order a sale of the property; no such power having been conferred by statute on a court of equity in this state, the court erred in decreeing that land be sold by the sheriff for payment of state and county taxes. Kirk v. Bray, 181 Ga. 814, 184 S.E. 733 (1935).

Delay alone is never enough to show laches when there is applicable statute of limitations. Clover Realty Co. v. J.L. Todd Auction Co., 240 Ga. 124, 239 S.E.2d 682 (1977).

Challenge to zoning ordinance treated as appeal or certiorari for time limit purposes.

- Although suit in equity to declare zoning ordinance unconstitutional as applied to certain property is not an appeal either in form or in substance, it is nonetheless appropriate to treat it as an appeal or petition for certiorari when considering time constraints on its filing lest requirement of exhaustion be rendered wholly meaningless in that facts have completely changed since rezoning application was denied. Village Ctrs., Inc. v. DeKalb County, 248 Ga. 177, 281 S.E.2d 522 (1981).

Cited in Lowry v. City Inv. Co., 174 Ga. 454, 163 S.E. 208 (1932); A.J. Evans Mktg. Agency, Inc. v. Federated Growers' Credit Corp., 175 Ga. 294, 165 S.E. 114 (1932); Grice v. United States Fid. & Guar. Co., 187 Ga. 259, 200 S.E. 700 (1938); Liberty Mut. Ins. Co. v. Ragan, 191 Ga. 811, 14 S.E.2d 88 (1941); Rose v. Crane Heating Co., 198 Ga. 295, 31 S.E.2d 717 (1944); Consolidated Realty Invs., Inc. v. Gasque, 203 Ga. 790, 48 S.E.2d 510 (1948); Hughes v. Griner, 208 Ga. 47, 65 S.E.2d 24 (1951); Vinson v. Citizens & S. Nat'l Bank, 208 Ga. 813, 69 S.E.2d 866 (1952); Woo v. Markwalter, 210 Ga. 156, 78 S.E.2d 473 (1953); Bair v. Willis, 218 Ga. 563, 129 S.E.2d 774 (1963); Richards v. Johnson, 219 Ga. 771, 135 S.E.2d 881 (1964); Dunn v. Dunn, 221 Ga. 368, 144 S.E.2d 758 (1965); McDonald v. McDonald, 232 Ga. 190, 205 S.E.2d 850 (1974); Miles v. Andress, 229 Ga. App. 86, 493 S.E.2d 233 (1997); Vincent v. Longwater, 245 Ga. App. 516, 538 S.E.2d 164 (2000).

RESEARCH REFERENCES

Am. Jur. 2d.

- 27 Am. Jur. 2d, Equity, §§ 123, 124.

C.J.S.

- 30 C.J.S., Equity, § 103.

ALR.

- Jurisdiction of equity to protect personal rights; modern view, 175 A.L.R. 438.

23-1-7. Nature of equity - Seeks to do justice.

Equity seeks always to do complete justice. Hence, having the parties before the court rightfully, it will proceed to give full relief to all parties in reference to the subject matter of the action, provided the court has jurisdiction for that purpose.

(Orig. Code 1863, § 3018; Code 1868, § 3030; Code 1873, § 3085; Code 1882, § 3085; Civil Code 1895, § 3925; Civil Code 1910, § 4522; Code 1933, § 37-105.)

JUDICIAL DECISIONS

Maxim embodied in this section is a favorite maxim of equity. Henderson v. Lott, 163 Ga. 326, 136 S.E. 403 (1926); Roach v. Terry, 164 Ga. 421, 138 S.E. 902 (1927).

Rule that equity seeks always to do complete justice will not bring into equitable jurisdiction matters over which another court has exclusive jurisdiction. Benton v. Turk, 188 Ga. 710, 4 S.E.2d 580 (1939).

Equity, having first acquired jurisdiction, will retain it to exclusion of all other courts, and for all other purposes. Gay v. Crockett, 217 Ga. 288, 122 S.E.2d 241 (1961).

Retention of jurisdiction.

- When a court of equity obtains jurisdiction for one purpose it will retain it until full and satisfactory justice is rendered to all parties concerned. Kidd v. Finch, 188 Ga. 492, 4 S.E.2d 187 (1939).

The court of equity after taking jurisdiction for the grant of extraordinary relief will retain it for all purposes. McCord v. Walton, 192 Ga. 279, 14 S.E.2d 723 (1941).

When judge has exercised jurisdiction on the question of the sale of the property of wards for reinvestment in United States bonds, the judge has the right to retain jurisdiction for the purpose of passing upon the claim of the intervenor to a just and reasonable commission for producing the buyer of the property, thus rendering full and complete relief to all parties to the cause. Turner v. Prigmore, 202 Ga. 377, 43 S.E.2d 259 (1947).

Equity seeks to do complete justice, and to give full relief to all parties in reference to subject matter of suit, provided the court has jurisdiction for that purpose. Quitman Cooperage Co. v. People's First Nat'l Bank, 178 Ga. 90, 172 S.E. 17 (1933).

Equity seeks to do full justice but must do so within the parameters of the law; therefore, a temporary restraining order that acknowledged that students had no legal right to participate in graduation ceremony but ordered that they be allowed to do so anyway, so as to "do the right thing," was in error. Dolinger v. Driver, 269 Ga. 141, 498 S.E.2d 252 (1998).

It is one of the maxims of equity that it will not do justice by halves, and what constitutes its chief value is that it can bring before it all parties engaged in a transaction, and however diversified their interests and liabilities may be, it can frame a decree giving each complainant one's right, and holding each defendant to one's proper accountability. Matson v. Crowe, 193 Ga. 578, 19 S.E.2d 288 (1942).

When court has acquired equitable jurisdiction, it will grant complete relief as to all matters to which parties may be entitled under the pleadings and the proof, even though such relief may include legal rights and remedies. Latham v. Fowler, 192 Ga. 686, 16 S.E.2d 591 (1941).

When equity acquires jurisdiction for any purpose, it will retain jurisdiction to give full and complete relief, whether legal or equitable, as to all purposes relating to the subject matter. Kirk v. Hasty, 239 Ga. 362, 236 S.E.2d 667 (1977); Early v. Early, 243 Ga. 125, 252 S.E.2d 618 (1979).

Understanding suits in equity.

- To preserve a trust estate, to supervise its management, to hold the trustee to the line of duty, for the purpose of preserving its corpus for the benefit of the beneficiaries, is an elementary branch of equity jurisprudence. The judge of the superior court of each county has power, either in term or at chambers, to remove and appoint trustees. When a court of equity obtains jurisdiction for one purpose, it will proceed to give full relief to all parties with reference to the subject matter of the suit, when the court has jurisdiction for that purpose. Fine v. Saul, 183 Ga. 309, 188 S.E. 439 (1936).

Since equity has concurrent jurisdiction with courts of ordinary (now probate courts) in the administration of estates, when the court's interference is necessary for the full protection of the rights of parties at interest and since it is a recognized rule that, when the heirs at law get together and agree to divide the estate and appoint an agent and put the agent in possession of the property for that purpose, a bill may be filed against the agent by any one or more of the distributees, the same as against an administrator, it cannot be said that a petition seeking an order restraining the heir's agent from the alleged fraudulent acts and a receivership under direction of the court of equity was devoid of equity. Shingler v. Shingler, 184 Ga. 671, 192 S.E. 824 (1937).

In an action in equity, brought against the sole heir at law of a deceased person, to reform a deed executed by a decedent and to recover possession and damages in the nature of mesne profits from a tenant of the heir at law in possession of the property, and to cancel security deeds executed by the heir at law in favor of third persons, the element of the need for reformation of the deed constitutes a common nexus in which all the parties are interested, authorizing the joinder of all interested parties; and since the other relief, both legal and equitable, prayed against the other parties respectively, for recovery of possession and damages for mesne profits and for cancellation of the security deeds, is merely such relief as is needful to make complete the justice to be done by reforming the deed, the action is not multifarious. Mims v. Lifsey, 192 Ga. 366, 15 S.E.2d 440 (1941).

When the holder of a deed from a deceased person brings an action in equity against the sole heir at law of the decedent, there being no administration of the decedent's estate, to reform the deed so as to make the description in the deed include lands held adversely by the heir at law and the tenant for years, it is proper to join also as defendants persons to whom the heir at law has executed deeds to secure debt. It is proper in an action to reform an instrument to join as defendants all who are interested adversely to the reformation. Mims v. Lifsey, 192 Ga. 366, 15 S.E.2d 440 (1941).

When the complainants under their allegations were entitled in equity to an accounting, and the amount which by the accounting they sought to establish was due them, if at all, as remainder legatees under their mother's will, the right of the executor to sell the property, the right of the petitioners to have a partition, and their right to a judgment against the defendant personally all related to the same thing, to wit, the management by the defendant as trustee and executrix of property disposed of by their mother in her will, and a court of equity would in the same suit undertake to settle the other controversies growing out of the same subject matter, and grant the other relief indicated in the prayers relating to injunction and partition, although these, standing alone, could not be granted. Matson v. Crowe, 193 Ga. 578, 19 S.E.2d 288 (1942).

Suits in equity shall be tried in the county where a defendant resides against whom substantial relief is prayed; and one who would have equity must do equity. Hence equity, having the parties before the court rightfully, will proceed to give full relief to all parties in reference to the subject matter provided the court has jurisdiction thereof. Pearson v. George, 211 Ga. 18, 83 S.E.2d 593 (1954).

When court has jurisdiction for the purpose of giving injunctive relief against a nuisance, it could under the well-established law of this state retain it as to damages in order to do complete justice between the parties, and upon proper determination of the damages caused by each of the defendants could render judgment against them for their proportionate parts of the damage done. Vaughn v. Burnette, 211 Ga. 206, 84 S.E.2d 568 (1954).

Jurisdiction for final disposition of property.

- An equity court, by the continuing receivership, has jurisdiction to make a final disposition of the property according to the respective interests of the parties, and to this end can order a division by sale if necessary. Roberts v. Federal Land Bank, 180 Ga. 832, 181 S.E. 180 (1935).

As general rule court of equity will not intervene to enjoin collection of tax when no execution has been issued and levied on any of the property of the taxpayer, even though the taxing authorities may have demanded that the taxpayer pay the tax. Warren v. Suttles, 190 Ga. 311, 9 S.E.2d 172 (1940).

When plaintiff's petition for injunction against tax collector's interference with a boxing exhibition and collection of tax alleged that the plaintiff had been notified by the tax collector that the plaintiff would not permit the plaintiff to stage the plaintiff's boxing bout if the tax was not paid, that the tax collector would carry out the tax collector's threat if not enjoined, and that such conduct would cause the plaintiff irreparable injury and damage, equity had jurisdiction and authority to grant an injunction under the facts when the petition was presented and sanctioned, and fact that at the time of the hearing part of the relief sought, enjoining the tax collector from closing the plaintiff's boxing exhibition, was no longer appropriate for consideration since the exhibition had been held under the protection of a temporary restraining order should not have prevented the court from retaining jurisdiction of the case for the purpose of determining the legality of the alleged tax and granting a permanent injunction against its collection. Warren v. Suttles, 190 Ga. 311, 9 S.E.2d 172 (1940).

Action for land may be included in petition for equitable relief. Latham v. Fowler, 192 Ga. 686, 16 S.E.2d 591 (1941).

Cited in McKinney v. Powell, 149 Ga. 422, 100 S.E. 375 (1919); Calbeck v. Herrington, 169 Ga. 869, 152 S.E. 53 (1930); Georgia Creosoting Co. v. Moody, 41 Ga. App. 701, 154 S.E. 294 (1930); Holst v. City of La Grange, 175 Ga. 402, 165 S.E. 217 (1932); F.S. Royster Guano Co. v. Stedham, 178 Ga. 217, 172 S.E. 555 (1934); Justice v. Warner, 178 Ga. 579, 173 S.E. 703 (1934); Welch v. Williford, 182 Ga. 192, 185 S.E. 91 (1936); Voyles v. Federal Land Bank, 182 Ga. 569, 186 S.E. 405 (1936); Ellis v. Millen Hotel Co., 192 Ga. 66, 14 S.E.2d 565 (1941); Sangster v. Toledo Mfg. Co., 193 Ga. 685, 19 S.E.2d 723 (1942); Adcock v. Berry, 194 Ga. 243, 21 S.E.2d 605 (1942); Cummings v. Robinson, 194 Ga. 336, 21 S.E.2d 627 (1942); Pass v. Pass, 195 Ga. 155, 23 S.E.2d 697 (1942); Hughes v. Cobb, 195 Ga. 213, 23 S.E.2d 701 (1942); Robinson v. Murray, 198 Ga. 690, 32 S.E.2d 496 (1944); Fulmer v. Wilkins, 201 Ga. 322, 39 S.E.2d 405 (1946); Toler v. Goodin, 74 Ga. App. 468, 40 S.E.2d 214 (1946); Avary v. Avary, 202 Ga. 22, 41 S.E.2d 314 (1947); Parnell v. Wooten, 202 Ga. 443, 43 S.E.2d 673 (1947); Redmond v. Sinclair Ref. Co., 204 Ga. 699, 51 S.E.2d 409 (1949); Gaither v. Gaither, 206 Ga. 808, 58 S.E.2d 834 (1950); Salter v. Salter, 209 Ga. 90, 70 S.E.2d 453 (1952); Rountree v. Davis, 90 Ga. App. 223, 82 S.E.2d 716 (1954); Collins v. Dacus, 211 Ga. 779, 89 S.E.2d 198 (1955); Johnson v. Wilson, 212 Ga. 264, 91 S.E.2d 758 (1956); Lowry v. Rosenfeld, 213 Ga. 578, 100 S.E.2d 447 (1957); Ramsey v. Womack, 214 Ga. 722, 107 S.E.2d 180 (1959); Claxton v. Claxton, 214 Ga. 715, 107 S.E.2d 320 (1959); Brewton v. McLeod, 216 Ga. 686, 119 S.E.2d 105 (1961); Wright v. Florida-Georgia Tractor Co., 218 Ga. 824, 130 S.E.2d 736 (1963); Stith v. Willis, 219 Ga. 62, 131 S.E.2d 620 (1963); Simmons v. Watson, 221 Ga. 765, 147 S.E.2d 322 (1966); Harp v. Bacon, 222 Ga. 478, 150 S.E.2d 655 (1966); Georgia Power Co. v. City of Macon, 228 Ga. 641, 187 S.E.2d 262 (1972); Hill v. L/A Mgt. Corp., 234 Ga. 341, 216 S.E.2d 97 (1975); McArthur v. Southern Airways, Inc., 404 F. Supp. 508 (N.D. Ga. 1975); Gorman v. Gorman, 239 Ga. 312, 236 S.E.2d 652 (1977); Department of Natural Resources v. American Cyanamid Co., 239 Ga. 740, 238 S.E.2d 886 (1977); Harper v. Harper, 241 Ga. 19, 243 S.E.2d 74 (1978); Head v. Walker, 243 Ga. 108, 252 S.E.2d 440 (1979); Dunaway v. Clark, 536 F. Supp. 664 (S.D. Ga. 1982); Brown v. Brown, 265 Ga. 725, 462 S.E.2d 609 (1995); Smith v. Gwinnett County, 268 Ga. 179, 486 S.E.2d 151 (1997).

RESEARCH REFERENCES

Am. Jur. 2d.

- 27 Am. Jur. 2d, Equity, §§ 46 et seq., 248.

C.J.S.

- 30 C.J.S., Equity, § 68.

ALR.

- Right to protection against simulation of physical appearance or arrangement of place of business or vehicle, 28 A.L.R. 114.

Right under general prayer to relief inconsistent with prayer for specific relief, 30 A.L.R. 1175.

Retention of jurisdiction in suit in equity to determine whole controversy, including amount of loss or damage, after setting aside an award or finding by arbitrators or appraisers, 112 A.L.R. 9.

Right to reformation of contract or instrument as affected by intervening rights of third persons, 79 A.L.R.2d 1180.

23-1-8. Nature of equity - Considers done what ought to be done.

Equity considers that done which ought to be done and directs its relief accordingly.

(Orig. Code 1863, § 3019; Code 1868, § 3031; Code 1873, § 3086; Code 1882, § 3086; Civil Code 1895, § 3926; Civil Code 1910, § 4523; Code 1933, § 37-106.)

Law reviews.

- For annual survey of local government law, see 58 Mercer L. Rev. 267 (2006).

JUDICIAL DECISIONS

Equity treats as done that which in fairness ought to have been done. United States v. Ferguson, 409 F. Supp. 393 (S.D. Ga. 1975), aff'd, 529 F.2d 999 (5th Cir. 1976).

Prevention of forfeitures.

- Since equity considers that done which ought to be done, it is therefore recognized that in order to prevent forfeitures, which are not favored, equity will lay hold upon any expressed intention of an insured to designate an eligible beneficiary, or any inchoate effort to designate a substituted beneficiary in lieu of a deceased one, when death or illness of the insured prevents the filling of such vacancy. Hewell v. Atlanta Police Relief Ass'n, 184 Ga. 702, 192 S.E. 828 (1937).

When the plaintiffs are alleged to constitute the sole survivors of the class which could be designated as beneficiaries of the defendant relief association, and for whose benefit the certificate was taken out and maintained, equity in the exercise of its jurisdiction will account that done which ought to have been done if opportunity had been given, and in order to avoid a forfeiture will treat such children, the plaintiffs, as being in good conscience as much as the actual beneficiaries under the certificate as if the insured father had been afforded opportunity to name and had actually named them as such. Hewell v. Atlanta Police Relief Ass'n, 184 Ga. 702, 192 S.E. 828 (1937).

Equity in adoption proceeding.

- Since equity considers that done which ought to have been done, equity will decree that a child is entitled to the fruits of a legal adoption when the act of formal adoption had not been consummated. Toler v. Goodin, 200 Ga. 527, 37 S.E.2d 609 (1946).

This section sets out the general principle on which a court of equity may, in a proper case, allow inheritance under the so-called doctrine of virtual adoption. Toler v. Goodin, 200 Ga. 527, 37 S.E.2d 609 (1946).

Despite the death of the party against whom relief is sought, equity will grant relief and decree that to be done which ought to have been done. Holsomback v. Caldwell, 218 Ga. 393, 128 S.E.2d 47 (1962).

Equity in foreclosure proceedings.

- When to a proceeding to foreclose a deed to secure debt as an equitable mortgage, which prays for judgment for principal, interest, and attorney's fees, a debtor files a plea in which it is alleged that the petitioner held as collateral fire insurance policies with a loss-payable clause in favor of the petitioner aggregating more than the amount of the debt, which had become due and payable as the result of a fire some months before there was a default on the debt, and that the insurance could have been collected at any time, but was not collected due solely to the negligence of the petitioner who had made no demand for payment, and that the attorney's fees sought in the foreclosure proceeding would have been unnecessary had such collection been made, such plea alleged facts sufficient to show a breach of duty, both in law and in equity, upon the part of the creditor, which would prevent it from collecting attorney's fees and deny the creditor any relief in equity. Irwin v. Life & Cas. Ins. Co., 204 Ga. 582, 50 S.E.2d 354 (1948).

Equity in political offices.

- Even though an appointment may have been made to an office when the term of the incumbent had not expired, and in pursuance of the order of appointment the incumbent had been forcibly removed from the room or quarters of the incumbent's office and thereby deprived of the opportunity of exercising the duties of the office, such incumbent will in equity continue to be treated as the incumbent for the purpose of protecting the incumbent in the incumbent's right to function as such official, pending a judicial determination of the validity of such appointment. Partain v. Maddox, 227 Ga. 623, 182 S.E.2d 450 (1971).

Equity in giving of security.

- The court considers as actually having been performed acts which have been directed or which have agreed or intended to be done. Thus, an agreement to give security may, in a proper case, be deemed to have been executed by the giving of security. United States v. Ferguson, 409 F. Supp. 393 (S.D. Ga. 1975), aff'd, 529 F.2d 999 (5th Cir. 1976).

What should have been done must be determined.

- Equitable maxim, codified at O.C.G.A. § 23-1-8, that equity considers that done which ought to be done and directs its relief accordingly, cannot be fulfilled when that which should have been done still remains to be determined. Wallace v. Wallace, 301 Ga. 195, 800 S.E.2d 303 (2017).

There may be valid contract to adopt without the express use of term "adopt" in contract. Toler v. Goodin, 200 Ga. 527, 37 S.E.2d 609 (1946).

Language clearly showing intent to effect an adoption according to the law, considered under the attendant and surrounding circumstances though not containing precise legal phraseology, is sufficient to create a virtual adoption. Toler v. Goodin, 200 Ga. 527, 37 S.E.2d 609 (1946).

An oral agreement to adopt may be shown by the acts, conduct, and admissions of the parties, and in order to establish such a contract, the exact word "adopt" need not be used. Toler v. Goodin, 200 Ga. 527, 37 S.E.2d 609 (1946).

In a case of virtual adoption the alleged agreement must be proved so clearly, strongly, and satisfactorily as to leave no reasonable doubt in the minds of the jury. Toler v. Goodin, 200 Ga. 527, 37 S.E.2d 609 (1946).

An authenticated copy of an application of the parent for a homestead which contained the following question and answer, "If married, of whom does your family consist?" "My wife and adopted daughter and myself," was relevant in an action to prove a virtual adoption as illustrating whether there had been a contract to adopt the child, since it indicates that the child was living with the parents at that time. Toler v. Goodin, 200 Ga. 527, 37 S.E.2d 609 (1946).

A parol obligation of a person to adopt the child of another as one's own, accompanied by a virtual though not a statutory adoption, and acted upon by all parties concerned for many years and during the obligor's life, may be enforced in equity upon the death of the obligor by decreeing the child entitled as a child to the property of the obligor, undisposed of by will. Toler v. Goodin, 200 Ga. 527, 37 S.E.2d 609 (1946).

An agreement by a married couple that if the natural parent would relinquish all claims of all nature to the natural parent's child the couple would adopt the child as their own, would love the child and provide for the child fully all things essential to the child's welfare, and make the child their heir to inherit at their death as if the child had been their natural child, is sufficient to create a contract of adoption. Toler v. Goodin, 200 Ga. 527, 37 S.E.2d 609 (1946).

Equitable relief available under an indemnity contract.

- After the Chapter 11 debtor's officer settled a lawsuit against the debtor and the officer without informing the debtor's successor of the settlement, as equitable relief under O.C.G.A. § 23-1-8, the officer was reimbursed under an indemnification clause only for an amount the debtor had previously authorized for settlement. In re First Am. Health Care of Ga., Inc., 288 Bankr. 598 (Bankr. S.D. Ga. 2002).

Specific performance properly applied.

- Specific performance was the proper remedy since there was no adequate remedy at law given the nature of the stock in the small, family-owned business, and the explicit acknowledgment in the shareholders' buy-sell agreement that specific performance was the appropriate remedy in the event of a breach. Moreover, given the failure of all parties to strictly follow the terms of either the agreement or bylaws, an equitable remedy considered that done which ought to be done. Wallace v. Wallace, 345 Ga. App. 764, 813 S.E.2d 428 (2018), cert. denied, No. S18C1329, 2019 Ga. LEXIS 42, cert. denied, No. S18C1332, 2019 Ga. LEXIS 48 (Ga. 2019), cert. denied, 2019 U.S. LEXIS 6165, 205 L. Ed. 2d 30 (U.S. 2019).

Determining beneficiary under pension plan.

- Because a city employee asked for and completed forms given to the employee by the city's human resources department to change the beneficiary of the employee's retirement plan to the employee's brother, but was not given the correct form for that change by the human resources department, a trial court properly used the court's equity power to hold that the brother was entitled to the benefit. Westmoreland v. Westmoreland, 280 Ga. 33, 622 S.E.2d 328 (2005).

In pari delicto.

- Georgia law follows the well-settled maxim that equity seeks to do equity, O.C.G.A. § 23-1-8, and the equitable doctrine of in pari delicto is based on the principle that to give the plaintiff relief would contravene public morals and impair the good of society; hence, it should not be applied in a case in which to withhold relief would, to a greater extent, offend public morals. Hays v. Paul, Hastings, Janofsky & Walker LLP, F. Supp. 2d (N.D. Ga. Sept. 14, 2006).

Consistent with O.C.G.A. § 23-1-8, the in pari delicto defense was inapplicable because liquidators were pursuing claims of fraudulent transfer, conspiracy, and procuring breach of fiduciary duty for the benefit of innocent creditors. Am. Pegasus SPC v. Clear Skies Holding Co., LLC, F. Supp. 2d (N.D. Ga. Sept. 22, 2015).

Cited in Gilford v. Green, 33 Ga. App. 1, 125 S.E. 80 (1924); Richards v. Plaza Hotel, Inc., 171 Ga. 827, 156 S.E. 809 (1931); Rowe v. Cole, 176 Ga. 592, 168 S.E. 882 (1933); Biddle v. Papa, 180 Ga. 468, 179 S.E. 357 (1935); Rose v. Crane Heating Co., 198 Ga. 295, 31 S.E.2d 717 (1944); Shaw v. Miller, 215 Ga. 413, 110 S.E.2d 759 (1959); Bair v. Willis, 218 Ga. 563, 129 S.E.2d 774 (1963); Stith v. Willis, 219 Ga. 62, 131 S.E.2d 620 (1963); Jordan Co. v. Bethlehem Steel Corp., 309 F. Supp. 148 (S.D. Ga. 1970); McArthur v. Southern Airways, Inc., 404 F. Supp. 508 (N.D. Ga. 1975); Prince v. Black, 256 Ga. 79, 344 S.E.2d 411 (1986); Brown v. Brown, 265 Ga. 725, 462 S.E.2d 609 (1995).

RESEARCH REFERENCES

Am. Jur. 2d.

- 27 Am. Jur. 2d, Equity, § 126.

C.J.S.

- 30 C.J.S., Equity, § 106.

ALR.

- Constitutionality of statute conferring on chancery courts power to abate public nuisance, 22 A.L.R. 542; 75 A.L.R. 1298.

Power of equity in absence of statute to render deficiency judgment in foreclosure action, 34 A.L.R. 1015.

Validity and enforceability of restrictive covenants in contracts of employment, 52 A.L.R. 1362; 67 A.L.R. 1002; 98 A.L.R. 963.

Doctrine of equitable conversion in relation to taxation, 112 A.L.R. 23.

Right to reformation of contract or instrument as affected by intervening rights of third persons, 79 A.L.R.2d 1180.

Rule denying recovery of property to one who conveyed to defraud creditors as applicable where claim which motivated the conveyance was never established, 6 A.L.R.4th 862.

23-1-9. Nature of equity - Is equality.

In many cases, equality is equity in the distribution of equitable assets.

(Orig. Code 1863, § 3023; Code 1868, § 3035; Code 1873, § 3090; Code 1882, § 3090; Civil Code 1895, § 3930; Civil Code 1910, § 4527; Code 1933, § 37-110.)

Law reviews.

- For note, "Georgia Becomes A Quasi Community Property State," see 17 Ga. St. B.J. 134 (1981).

JUDICIAL DECISIONS

Cited in Trust Co. v. Kenny, 188 Ga. 243, 3 S.E.2d 553 (1939).

RESEARCH REFERENCES

Am. Jur. 2d.

- 27 Am. Jur. 2d, Equity, § 125.

C.J.S.

- 30 C.J.S., Equity, § 109.

23-1-10. Who would have equity must do equity.

He who would have equity must do equity and must give effect to all equitable rights of the other party respecting the subject matter of the action.

(Orig. Code 1863, § 3017; Code 1868, § 3029; Code 1873, § 3084; Code 1882, § 3084; Civil Code 1895, § 3924; Civil Code 1910, § 4521; Code 1933, § 37-104.)

Law reviews.

- For article discussing the historical background of the doctrine of tender and the application in Georgia of tender requirements, and proposing reforms, see 21 Mercer L. Rev. 413 (1969). For article discussing application of the principle that he who would have equity must do equity to taxpayer's suits, see 7 Ga. St. B.J. 305 (1971).

JUDICIAL DECISIONS

General Consideration

The equitable maxim which is embodied in this section is a favorite maxim in equity. Duke v. Ayers, 163 Ga. 444, 136 S.E. 410 (1927); Autry v. Southern Ry., 167 Ga. 136, 144 S.E. 741 (1928).

This section contains one of the oldest and best settled and most familiar maxims in equity. It is applicable in every type of case, including unfair competition. Eastman Kodak Co. v. Fotomat Corp., 317 F. Supp. 304 (N.D. Ga. 1969), appeal dismissed, 441 F.2d 1079 (5th Cir. 1971).

This section is the basis for the "clean hands" doctrine. Partain v. Maddox, 227 Ga. 623, 182 S.E.2d 450 (1971).

One who comes into a court of equity with unclean hands must be denied relief. Musgrove v. Musgrove, 213 Ga. 610, 100 S.E.2d 577 (1957).

One will not be permitted to take advantage of one's own wrong. Musgrove v. Musgrove, 213 Ga. 610, 100 S.E.2d 577 (1957).

Equity in assessment proceedings.

- When owners of property abutting upon streets attack an assessment, only on the ground that the assessment is excessive, the owners should pay or offer to pay what the owners admit to be due. City of Camilla v. Cochran, 160 Ga. 424, 128 S.E. 194 (1925).

Submission to jurisdiction.

- This section requires that anyone going into a court and asking its aid shall submit oneself to the jurisdiction of the court and subject oneself to the imposition of such terms as well established equitable principles would require. Charleston & W.C. Ry. v. Hughes, 105 Ga. 1, 30 S.E. 972, 70 Am. St. R. 17 (1898).

Equity requires accounting for improvements.

- When one cotenant comes into equity and seeks its aid to enforce one's title, equity, in decreeing the relief, will require one to account for the improvements. Holland Furnace Co. v. Lowe, 172 Ga. 815, 159 S.E. 277 (1931).

No evidence of inequitable conduct.

- When the LLC granted the condominium association an easement to a perpetual non-exclusive right to access the LLC's private roadway system, there was no evidence of any inequitable conduct on the part of the LLC, which had consistently denied that the shuttle bus's passage through the gate during rush hour constituted a default under the easement, in an attempt to trap or deceive the association through the estoppel certificate; thus, the association did not show that there remained an issue of material fact as to the LLC's reasonable reliance on the estoppel certificate in the LLC's conveyance of real property to a third party. One Buckhead Loop Condo. Ass'n v. Regent Tower Holdings, 341 Ga. App. 5, 798 S.E.2d 633 (2017).

As a general rule, equity will not grant relief to a party who comes into court with unclean hands, or is guilty of an illegal or immoral act, nor aid a grantor or the grantor's administrator in seeking to cancel a security deed which was executed by the grantor for the purpose of hindering, delaying or defrauding creditors; these rules stem from the just and salutary principle that one will not be permitted to profit by the grantor's own wrong, and apply when a party is seeking the aid of equity in the enforcement of executory contracts or its aid under an executed contract. Fuller v. Fuller, 211 Ga. 201, 84 S.E.2d 665 (1954).

One with unclean hands cannot obtain relief in equity. Morgan v. Wright, 219 Ga. 385, 133 S.E.2d 341 (1963).

The deliberate attempt to take another man's wife from him, and entering into an engagement with her to marry at a time when she could not lawfully marry, and giving a ring to further such an unlawful engagement is a defiance of public policy and constitutes the rankest sort of unclean hands. Morgan v. Wright, 219 Ga. 385, 133 S.E.2d 341 (1963).

Equity may declare a trust to exist under the circumstances specified in this section, but will not do so at the insistence of a party who lacks clean hands with respect to those matters concerning which one seeks relief. Griggs v. Griggs, 242 Ga. 96, 249 S.E.2d 566 (1978).

Worker could not contend that equity should forbid the employer from asserting the worker's illegal status, based on the employer's failure to require that the worker complete the U.S. Department of Justice, Bureau of Immigration and Customs Enforcement Employment Eligibility Verification Form, since the worker filled out an employment application and provided the employer with a Social Security number which belonged to someone else. Martines v. Worley & Sons Constr., 278 Ga. App. 26, 628 S.E.2d 113 (2006).

Unclean hands shown.

- In a post-divorce proceeding, a trial court did not err in refusing to hold a mother in contempt and by finding that the father came to court with unclean hands because the evidence showed that the mother did not obtain certain medical evaluations and treatments for the parties' children as previously ordered because the father had not paid child support, had not paid one-half of the medical expenses already incurred for the children, and the children's doctor refused to see the children anymore due to the father's belligerent conduct toward the doctor and staff, thus, the father did have unclean hands for failing to pay the expenses and by the conduct toward the doctor. Higdon v. Higdon, 321 Ga. App. 260, 739 S.E.2d 498 (2013).

Parent who caused property to be transferred to the parent's child to shield the property from the father's creditors was not entitled to judgment against the child because the parent had unclean hands, under O.C.G.A. § 23-1-10. Under O.C.G.A. § 18-2-74(a)(1), the transfer was fraudulent because the transfer was made with actual intent to hinder, delay, or defraud the parent's creditors. Roach v. Roach, 327 Ga. App. 513, 759 S.E.2d 587 (2014).

No unclean hands for violating unenforceable covenant.

- Former employer's contention that the trial court erred by refusing to consider evidence of the former employee's unclean hands was rejected because the court acted well within the court's broad discretion when the court determined that the employee could not have unclean hands for violating an unenforceable covenant. Fortress Investment Group, LLC v. Holsinger, 354 Ga. App. 405, 841 S.E.2d 55 (2020).

This principle is applicable when one in an equity suit seeks both legal and equitable relief. One who avails oneself of an equitable remedy is as much bound by this principle as one who is asserting in such a court a purely equitable right. Wilder v. City of Atlanta, 40 Ga. App. 364, 149 S.E. 656 (1929); Snell v. Spalding Foundry Co., 180 Ga. 582, 180 S.E. 218 (1935); Wright v. City of Metter, 192 Ga. 75, 14 S.E.2d 443 (1941).

One who would have equity must do equity, and give effect to all equitable rights in the other party respecting the subject matter of the suit. This principle is applicable when one in an equity suit seeks both legal and equitable relief. Bass v. Mayor of Milledgeville, 180 Ga. 156, 178 S.E. 529 (1934), appeal dismissed, 295 U.S. 721, 55 S. Ct. 926, 79 L. Ed. 1675 (1935).

Inapplicable to action at law.

- Equitable doctrine of unclean hands had no application to an action at law, and, in a suit seeking to recover on three promissory notes, a trial court was not authorized to reduce the amounts shown to be due and payable on the notes on account of its finding of unclean hands. Park v. Fortune Ptnr., Inc., 279 Ga. App. 268, 630 S.E.2d 871 (2006).

Relationship between acts required.

- Under Georgia law, the unclean hands doctrine does not attach to all prior bad acts. There must be a direct relationship between the equitable relief sought and the acts giving rise to the unclean hands. ABC Home Health Servs., Inc. v. IBM Corp., 158 F.R.D. 180 (S.D. Ga. 1994).

In a diversity contract dispute any relationship between the destruction of personal files on computer and software developer's equitable claims concerning Medicare reimbursements was merely tangential and would not support dismissal of developer's equitable counterclaims on the basis of unclean hands. ABC Home Health Servs., Inc. v. IBM Corp., 158 F.R.D. 180 (S.D. Ga. 1994).

Rule that one who would have equity must do equity refers to equitable rights respecting the subject matter of the action; it does not embrace outside matters. Atlanta Ass'n of Fire Ins. Agents v. McDonald, 181 Ga. 105, 181 S.E. 822 (1935).

The unclean hands maxim applies to equitable rights which relate directly to the cause of action; it does not embrace matters outside the subject matter of the action. Adams v. Crowell, 157 Ga. App. 576, 278 S.E.2d 151 (1981); Zappa v. Automotive Precision Mach., Inc., 205 Ga. App. 584, 423 S.E.2d 286 (1992).

In an action for specific performance, although it was found that the plaintiff's indebtedness had not been completely discharged, the clean hands doctrine did not apply because the court also found that the plaintiff was unaware of the existence or amount of the arrearages until the defendant testified about the arrearages at trial. Dobbs v. Dobbs, 270 Ga. 887, 515 S.E.2d 384 (1999).

Enforcement of third party rights.

- A plaintiff with unclean hands who has proper standing may still bring an action to enforce the rights of others and secure relief on their behalf, even though doing so may result in an indirect benefit to the unclean plaintiff. West v. West, 825 F. Supp. 1033 (N.D. Ga. 1992).

Unclean hands maxim which bars a complainant in equity from obtaining relief has reference to an inequity which inflects the cause of action so that to entertain it would be violative of conscience; it must relate directly to the transaction concerning which complaint is made. Atlanta Ass'n of Fire Ins. Agents v. McDonald, 181 Ga. 105, 181 S.E. 822 (1935).

Rule that equity refuses to interfere when both parties are at fault does not apply when the faults are unequal. Atlanta Ass'n of Fire Ins. Agents v. McDonald, 181 Ga. 105, 181 S.E. 822 (1935).

An inequity that causes the invocation of the "clean hands" rule must relate directly to the transaction concerning which complaint is made. The rule refers to equitable rights respecting the subject matter of the action, and it does not embrace outside matters. Partain v. Maddox, 227 Ga. 623, 182 S.E.2d 450 (1971).

When a constitutional officer's previous act in complying with the Governor's demand for an undated resignation letter is unrelated to the relief sought in a judicial action seeking rightful possession of the constitutional office, no unclean hands are involved. Partain v. Maddox, 227 Ga. 623, 182 S.E.2d 450 (1971).

When husband deeded land to former wife in order to avoid any alimony claim against it by his second wife, doctrine of unclean hands barred husband's suit seeking to compel former wife to reconvey land to him on theory that she committed fraud on him in obtaining the deeds to the land. Williams v. Williams, 255 Ga. 264, 336 S.E.2d 244 (1985).

Not applicable when subject matter is marriage, not divorce.

- Since the "subject matter" and "transaction concerning which relief is sought" was marriage between the parties, not a divorce action, application of the unclean hands doctrine was erroneous. Pryor v. Pryor, 263 Ga. 153, 429 S.E.2d 676 (1993).

Not applicable to child custody cases.

- Maxim of unclean hands was inapplicable to child custody case, and, in any event, the father acted in good faith picking up the child after receiving a telephone call from the home of the grandmother. Lynch v. Horton, 302 Ga. App. 597, 692 S.E.2d 34 (2010), cert. denied, 563 U.S. 988, 131 S. Ct. 2447, 179 L. Ed. 2d 1210 (2011).

Real estate contracts.

- Property owners were entitled to specific performance under O.C.G.A. § 23-2-130 of a settlement agreement by which a seller agreed to re-purchase their property for $1 million. The fact that the owners allegedly attempted to have a third party business avoid its separate contractual obligation owed to the seller did not relate to the enforcement of the settlement agreement and could not bar specific performance of the owners' contract with the seller. Hampton Island, LLC v. HAOP, LLC, 306 Ga. App. 542, 702 S.E.2d 770 (2010).

Quiet title action.

- Trial court did not err in refusing to deny property owners' petition to quiet title due to unclean hands because adjoining landowners used a street for activities other than ingress and egress only occasionally, and there was no evidence that the owners observed those other uses on the owners two or three visits to the property prior to purchasing the property. Goodson v. Ford, 290 Ga. 662, 725 S.E.2d 229 (2012).

Cited in Mayor of Montezuma v. Brown Bros., 168 Ga. 1, 147 S.E. 80 (1929); Sheffield v. Preacher, 175 Ga. 719, 165 S.E. 742 (1932); Chapman v. McPherson, 177 Ga. 471, 170 S.E. 481 (1933); Shepard v. Veal, 178 Ga. 535, 173 S.E. 644 (1934); Stephens v. National Life Ins. Co., 179 Ga. 619, 176 S.E. 772 (1934); Gulf Oil Corp. v. Suburban Realty Co., 183 Ga. 847, 190 S.E. 179 (1937); Lee v. O'Quinn, 184 Ga. 44, 190 S.E. 564 (1937); Cooper v. Peevy, 185 Ga. 805, 196 S.E. 705 (1938); Aiken v. Armistead, 186 Ga. 368, 198 S.E. 237 (1938); Bowers v. Dolen, 187 Ga. 653, 1 S.E.2d 734 (1939); Harton v. Federal Land Bank, 187 Ga. 700, 2 S.E.2d 62 (1939); Interstate Bond Co. v. Cullars, 189 Ga. 283, 3 S.E.2d 756 (1939); Aven v. Steiner Cancer Hosp., 189 Ga. 126, 5 S.E.2d 356 (1939); Fulmore v. Macon Fed. Savs. & Loan Ass'n, 191 Ga. 151, 11 S.E.2d 790 (1940); Georgia Baptist Orphans Home, Inc. v. Moon, 192 Ga. 81, 14 S.E.2d 590 (1941); McMullen v. Carlton, 192 Ga. 282, 14 S.E.2d 719 (1941); Tanner v. Wilson, 193 Ga. 211, 17 S.E.2d 581 (1941); Behr v. City of Macon, 194 Ga. 334, 21 S.E.2d 169 (1942); Bray v. Malcolm, 194 Ga. 593, 22 S.E.2d 126 (1942); Raines v. Shipley, 197 Ga. 448, 29 S.E.2d 588 (1944); Allen v. Allen, 198 Ga. 269, 31 S.E.2d 483 (1944); Doolittle v. Bagwell, 199 Ga. 155, 33 S.E.2d 437 (1945); Jackson v. Jackson, 202 Ga. 634, 44 S.E.2d 250 (1947); Puckett v. Reese, 203 Ga. 716, 48 S.E.2d 297 (1948); Allen v. Wade, 203 Ga. 753, 48 S.E.2d 538 (1948); Reardon v. Bland, 206 Ga. 633, 58 S.E.2d 377 (1950); Vinson v. Citizens & S. Nat'l Bank, 208 Ga. 813, 69 S.E.2d 866 (1952); Carter v. City of Toccoa, 210 Ga. 167, 78 S.E.2d 487 (1953); Payne v. Jones, 211 Ga. 322, 86 S.E.2d 3 (1955); Miron Motel, Inc. v. Smith, 211 Ga. 864, 89 S.E.2d 643 (1955); Miller v. Levenson, 212 Ga. 496, 93 S.E.2d 753 (1956); Hardy v. Savannah Apts., Inc., 217 F. Supp. 649 (S.D. Ga. 1962); Pearl Optical, Inc. v. Pearle Optical of Ga., Inc., 218 Ga. 701, 130 S.E.2d 223 (1963); Williamson v. Cullom, 218 Ga. 740, 130 S.E.2d 715 (1963); Derrick v. Campbell, 219 Ga. 795, 136 S.E.2d 381 (1964); Walker v. Burns, 220 Ga. 467, 139 S.E.2d 389 (1964); Budreau v. Crawford, 222 Ga. 716, 152 S.E.2d 398 (1966); Straughan v. Brown, 223 Ga. 592, 157 S.E.2d 256 (1967); Hall v. Heard, 223 Ga. 659, 157 S.E.2d 445 (1967); Cowart v. Gay, 223 Ga. 635, 157 S.E.2d 466 (1967); O'Kelley v. Evans, 224 Ga. 49, 159 S.E.2d 418 (1968); Holcomb v. Approved Bancredit Corp., 225 Ga. 271, 167 S.E.2d 655 (1969); Bloodworth v. Bloodworth, 225 Ga. 379, 169 S.E.2d 150 (1969); Kiker v. Hefner, 409 F.2d 1067 (5th Cir. 1969); Harding v. City of Decatur, 226 Ga. 474, 175 S.E.2d 507 (1970); Harper v. Harper, 229 Ga. 583, 193 S.E.2d 616 (1972); Adams v. Smith, 129 Ga. App. 850, 201 S.E.2d 639 (1973); Berry v. Government Nat'l Mtg. Ass'n, 231 Ga. 503, 202 S.E.2d 450 (1973); Hill v. L/A Mgt. Corp., 234 Ga. 341, 216 S.E.2d 97 (1975); McArthur v. Southern Airways, Inc., 404 F. Supp. 508 (N.D. Ga. 1975); Wright v. Intercounty Properties, Ltd., 238 Ga. 492, 233 S.E.2d 160 (1977); First Nat'l Bank v. Blum, 141 Ga. App. 485, 233 S.E.2d 835 (1977); Williams v. Whitfield, 242 Ga. 639, 250 S.E.2d 486 (1978); Sapp v. ABC Credit & Inv. Co., 243 Ga. 151, 253 S.E.2d 82 (1979); Bloodworth v. Sandersville Prod. Credit Ass'n, 245 Ga. 40, 262 S.E.2d 804 (1980); Everson v. Franklin Disct. Co., 248 Ga. 811, 285 S.E.2d 530 (1982); Bank of Danielsville v. Seagraves, 167 Ga. App. 135, 305 S.E.2d 790 (1983); Murawski v. Roland Well Drilling, Inc., 188 Ga. App. 760, 374 S.E.2d 207 (1988); Holland Elec., Heating & Plumbing Co. v. Holland Heating & Air Conditioning, Inc., 259 Ga. 256, 379 S.E.2d 404 (1989); Dixon v. Murphy, 259 Ga. 643, 385 S.E.2d 408 (1989); City of Duluth v. Riverbrooke Properties, Inc., 233 Ga. App. 46, 502 S.E.2d 806 (1998); Rose v. Cain, 247 Ga. App. 481, 544 S.E.2d 453 (2001); Schoenbaum Ltd. Co., LLC v. Lenox Pines, LLC, 262 Ga. App. 457, 585 S.E.2d 643 (2003); Bishop Eddie Long Ministries, Inc. v. Dillard, 272 Ga. App. 894, 613 S.E.2d 673 (2005); Wyatt Processing, LLC v. Bell Irrigation Inc., 298 Ga. App. 35, 679 S.E.2d 63 (2009); Wallace v. Wallace, 345 Ga. App. 764, 813 S.E.2d 428 (2018), cert. denied, No. S18C1329, 2019 Ga. LEXIS 42, cert. denied, No. S18C1332, 2019 Ga. LEXIS 48 (Ga. 2019), cert. denied, 2019 U.S. LEXIS 6165, 205 L. Ed. 2d 30 (U.S. 2019).

Jurisdiction

Jurisdiction.

- Suits in equity shall be tried in the county where a defendant resides against whom substantial relief is prayed; and the defendant who would have equity must do equity, hence equity, having the parties before the court rightfully, will proceed to give full relief to all parties in reference to the subject matter provided the court has jurisdiction thereof. Pearson v. George, 211 Ga. 18, 83 S.E.2d 593 (1954).

This section has no relation to the subject matter of a suit to cancel a judgment for alimony that is void for want of jurisdiction, and under which judgment the former wife has no equitable rights to which the former husband should give effect. Gaither v. Gaither, 205 Ga. 572, 54 S.E.2d 600 (1949).

Pleading and Practice

Section applicable when both legal and equitable relief sought.

- The principle established by this section is as well applicable when one in an equity suit seeks both legal and equitable relief, as when one seeks a purely equitable right. Montgomery v. City of Atlanta, 162 Ga. 534, 134 S.E. 152 (1926).

A plaintiff cannot come into equity without first paying or tendering any amount admitted to be due. Pass v. Pass, 195 Ga. 155, 23 S.E.2d 697 (1942).

Trial court properly granted the supplier summary judgment on the purchaser's wrongful foreclosure claim because it was undisputed that the purchaser accepted and failed to repay at least $6,000 of the loan proceeds and failed to tender any amount in connection with the purchaser's claim of wrongful foreclosure. Sure, Inc. v. Premier Petroleum, Inc., 343 Ga. App. 219, 807 S.E.2d 19 (2017).

Before equity will hearken unto a suitor's prayer for equitable relief, one must offer to do full and complete equity to one's adversary. Renfroe v. Butts, 192 Ga. 720, 16 S.E.2d 551 (1941).

A party is not obliged to return that which one will be entitled to retain, as a condition to a cancellation; so, if a plaintiff has received no more than one was entitled to, one's offer to account for the same in adjustment of the differences between the parties sufficiently meets the requirement that one who seeks equity must do equity. Smith v. Merck, 206 Ga. 361, 57 S.E.2d 326 (1950).

Deposit with court is not tender to lender.

- In a wrongful foreclosure action, the trial court erred enjoining the lender's foreclosure proceedings because the borrowers failed to tender the amount owed under the matured home equity line of credit (HELOC) agreement to the lender in order to avoid foreclosure. Deposit of the funds in the court's registry did not constitute a tender to the lender. Oconee Fed. S & L Ass'n v. Brown, 349 Ga. App. 54, 825 S.E.2d 456 (2019).

The mere untimely payment of premiums, standing alone, when such untimely payments were accepted by the insurer would not constitute a failure "to do equity." Continental Cas. Co. v. Union Camp Corp., 230 Ga. 8, 195 S.E.2d 417 (1973).

Equity refuses to aid any suitor who fails to do equity to the opposite party respecting the subject matter of the suit. Irwin v. Life & Cas. Ins. Co., 204 Ga. 582, 50 S.E.2d 354 (1948).

If the fault of one decidedly overbalances the other, equity may interfere. Atlanta Ass'n of Fire Ins. Agents v. McDonald, 181 Ga. 105, 181 S.E. 822 (1935).

In order to do equity, a plaintiff is not obliged to return that which one will be entitled to retain. Dumas v. Dumas, 206 Ga. 767, 58 S.E.2d 830 (1950).

Defendant should not be compelled to perform unless the defendant receives the agreed exchange which is a condition of the defendant's performance under the contract. Krauth v. Bagley, 243 Ga. 87, 252 S.E.2d 504 (1979).

Equity will not decree the cancellation of an instrument when anything of value has been received until repayment is either made or tendered, or the defendant has stated that, should a tender be made, it would be refused. Wilson v. McAteer, 206 Ga. 835, 59 S.E.2d 252 (1950).

When the plaintiff is seeking affirmative relief in a court of equity, the plaintiff cannot have the relief sought without observing the equities of the transaction. Atlanta Banking & Sav. Co. v. Johnson, 179 Ga. 313, 175 S.E. 904 (1934).

Unclean hands not shown.

- Plaintiff (1) did not lack clean hands in a suit wherein plaintiff successfully obtained a permanent injunction against defendant from engaging in a commercial business on defendant's residential property, and (2) did not violate the restrictive covenant by engaging in court reporting work on a home computer and receiving business mail at plaintiff's residence because such activities did not increase the traffic in the subdivision and did not have any effect on the value, status, stability, and residential character of plaintiff's home or the subdivision, unlike defendant's parking of cement trucks and other commercial vehicles at defendant's home. Roberts v. Lee, 289 Ga. App. 714, 658 S.E.2d 258 (2008).

Unclean hands issue not amendable to summary judgment.

- Denial of summary judgment on the plaintiff's affirmative unclean hands defense to the defendant's counterclaim for a prescriptive easement was affirmed because whether the defendant acted inequitably was a question of fact not amendable to summary judgment. Sorrow v. 380 Properties, LLC, 354 Ga. App. 118, 840 S.E.2d 470 (2020).

Lender's successor who sought equitable relief based on forged deed not entitled to relief.

- In an action by a lender's successor seeking equitable relief based on the lender's failure to obtain a signed security deed at the time of a refinancing, because a filed copy of the security deed bearing the purported signatures of the borrowers was forged, the successor had unclean hands, O.C.G.A. § 23-1-10, and was not entitled to relief. Bank of N.Y. Mellon v. Edmondson, 344 Ga. App. 823, 812 S.E.2d 299 (2018).

A party seeking specific performance of a contract must show substantial compliance with that party's part of the agreement in order to be entitled to a decree. Kirk v. First Ga. Inv. Corp., 239 Ga. 171, 236 S.E.2d 254 (1977).

Impact of subsequent default.

- When the plaintiff is not in default when the plaintiff files suit, the occurrence of a subsequent default of the plaintiff is not by itself a sufficient reason for denying specific performance. Jordan v. Flynt, 240 Ga. 359, 240 S.E.2d 858 (1977).

Payment of amount admittedly due.

- Under application of this maxim, before a borrower who has executed a deed to secure a debt can have affirmative equitable relief such as the setting aside of a sale by the creditor under exercise of a power contained in a security deed, and injunction against the creditor and persons claiming under the creditor, to prevent interference with the debtor's possession of the property, such debtor must pay or tender to the creditor the principal and interest due. Biggers v. Home Bldg. & Loan Ass'n, 179 Ga. 429, 176 S.E. 38 (1934); Redwine v. Frizzell, 184 Ga. 230, 190 S.E. 789 (1937).

One seeking to enjoin the enforcement of an execution, on the ground that usury has been computed thereon, must first offer to pay the amount admitted or shown to be due, before a court of equity would intervene in one's behalf. Sharpe v. City of Waycross, 185 Ga. 208, 194 S.E. 522 (1937).

When a petition seeking to enjoin the enforcement of a paving assessment execution of the ground of dormancy shows on its face, as a matter of law, that a portion of such execution has not become dormant and is still due and unpaid, such petition fails to set forth a cause of action for the relief sought, in the absence of any tender or offer to pay the sums shown to be due. Sharpe v. City of Waycross, 185 Ga. 208, 194 S.E. 522 (1937).

Pursuant to the basic principle of equity, in this section a borrower who has executed a deed to secure debt is not entitled to an injunction against a sale of the property under a power in the deed, unless the borrower first pays or tenders to the creditor the amount admittedly due. This is true notwithstanding any allegation that the defendant has breached some independent covenant. Bower v. Certain-Teed Prod. Corp., 216 Ga. 646, 119 S.E.2d 5 (1961); Wright v. Intercounty Properties, Ltd., 238 Ga. 492, 233 S.E.2d 160 (1977); P.B.R. Enters., Inc. v. Perren, 243 Ga. 280, 253 S.E.2d 765 (1979).

In order to enable plaintiffs to come into equity it is essential in the first instance that they should have paid or tendered the amount admitted to be due. Failure to pay or tender to the defendant the full amount before filing the petition stands as a bar to any of the relief sought, and the defect is fatal to the further prosecution of the action. State Mut. Ins. Co. v. Strickland, 218 Ga. 94, 126 S.E.2d 683 (1962).

A borrower who has executed a deed to secure debt is not entitled to an injunction against a sale of the property under a power in the deed, unless he first pays or tenders to the creditor the amount admittedly due. The same rule applies when one standing in the place of the borrower seeks an injunction to prevent a transferee or assignee of such deed from selling the property for the purpose of satisfying the secured debt. Crockett v. Oliver, 218 Ga. 620, 129 S.E.2d 806 (1963).

In a suit by plaintiff-debtor seeking cancellation of a note and security deed, the failure to offer payment or tender of the balance due on the loan or to offer any excuse for not doing so brings the plaintiff under the provisions of this section. Coile v. Finance Co. of Am., 221 Ga. 584, 146 S.E.2d 304 (1965).

Before one who has given a deed to secure one's debt can have set aside in equity a sale by the creditor in exercise of the power conferred by the deed, and injunction to prevent interference with the debtor's possession of the property conveyed by the deed, one must pay or tender to the creditor the amount of principal and interest due. Coile v. Finance Co. of Am., 221 Ga. 584, 146 S.E.2d 304 (1965).

Refusal of injunction when no payment.

- When one brings a petition in equity seeking to enjoin a sale under a power of sale contained in a security deed, which deed contains an acceleration clause, alleging as ground for injunction that one is entitled to a credit on the indebtedness secured thereby, "and that the proper application of said credit will liquidate all of the installments claimed to be in arrears, leaving nothing past due on said indebtedness," and when, on interlocutory hearing, it appears from the evidence that upon proper application of the alleged credit there would still be a considerable amount past due, and there is no offer to pay or tender to the grantee in the security deed of the amounts due thereunder, it is not error for the judge to refuse to grant an injunction. Brinson v. Federal Land Bank, 182 Ga. 477, 185 S.E. 828 (1936).

Benefits to opposite party prior to cancellation.

- Before a borrower who has executed to the same grantee two deeds to secure debts can have affirmative equitable relief to set aside a sale by the creditor under exercise of the power of sale contained in the deeds, and an injunction against the creditor and the persons claiming under the creditor to prevent interference with the debtor's possession of a portion of the property, such debtor must pay or tender to the creditor the principal and interest which the debtor admits to be due, and would not be relieved of this duty by reason of the fact that the creditor was demanding of the debtor more than the debtor owed. Harpe v. Stone, 212 Ga. 341, 92 S.E.2d 522 (1956).

Before an instrument can be canceled the benefits received thereunder must be returned or tendered to the opposite party. Brooks v. Southern Clays, Inc., 220 Ga. 152, 137 S.E.2d 630 (1964).

Before a borrower, who has executed a deed infected with usury, can have affirmative equitable relief, such as injunction to prevent exercise of the power of sale by the grantee in such security deed, one must pay or tender to the grantee the principal sum due. I.D.S. Homes Corp. v. Lucas, 228 Ga. 521, 186 S.E.2d 745 (1972).

An offer to restore whatever of value one has received under a contract is a condition precedent to bringing an action for cancellation or rescission of the contract, and such tender must be made before such action is commenced. Dimmick v. Pullen, 224 Ga. 452, 162 S.E.2d 427 (1968).

A tender of the past due payments under indebtedness evidenced by deeds to secure debt must be made when a complainant seeks the aid of equity in setting aside and cancelling a deed under a foreclosure sale. Keith v. Yarbrough, 231 Ga. 770, 204 S.E.2d 111 (1974).

Municipalities must also do equity.

- When a municipality makes proof of its claim to the superintendent of banks (now commissioner of banking and finance) on the basis of a creditor and obtains from the superintendent of banks one or more dividends on an equal basis with general depositors, before the municipality would be authorized to come into equity seeking to declare an implied trust to be impressed upon the general funds remaining in the hands of the superintendent of banks and priority over general depositors in the distribution of such funds, it would be necessary for the municipality to do equity by returning such portion of the dividends received by it as were derived from assessments against stockholders. Town of Douglasville v. Mobley, 169 Ga. 53, 149 S.E. 575 (1929).

Ready and willing to pay is not sufficient.

- One seeking equitable relief from the enforcement of a tax execution based upon an assessment allegedly excessive, or for other cause, but admitting, as here, that one owes a part of the tax covered by such execution, must, prior to the institution of an equitable action for cancellation and injunction, pay or offer to pay the amount of taxes admitted to be due, in order to obtain the relief sought. An allegation that one is "ready and willing to pay" an amount of tax admitted to be due is not an "offer" to pay as required by law. Zugar v. Scarbrough, 186 Ga. 310, 197 S.E. 854 (1938); Holloway v. De Vane, 212 Ga. 182, 91 S.E.2d 350 (1956).

Payment of certain taxes before seeking relief.

- One seeking relief from excessive tax levies, but admitting, either expressly or by necessary implication, that he owes part of the tax covered by such executions, must pay or offer to pay the amount of the taxes admitted to be due, in order to obtain the relief sought. Pierce Trading Co. v. City of Blackshear, 182 Ga. 649, 186 S.E. 721 (1936); Elder v. Home Bldg. & Loan Ass'n, 185 Ga. 258, 194 S.E. 745 (1937); Clisby v. City of Macon, 191 Ga. 749, 13 S.E.2d 772 (1941); Kiker v. Hefner, 224 Ga. 511, 162 S.E.2d 731 (1968); Adcock v. Sutton, 224 Ga. 505, 162 S.E.2d 732 (1968); Allen v. Thomas, 225 Ga. 650, 171 S.E.2d 132 (1969).

Petition seeking an injunction either to restrain tax sales or to prevent a continuation of the alleged discriminatory assessment practice, was fatally defective for its failure to allege a tender at least of the amounts which would have been due by the plaintiffs as taxes if their real estate had been assessed for taxation at the lowest basis of value applied to the more favorably treated personalty. Mayor of Savannah v. Fawcett, 186 Ga. 132, 197 S.E. 253 (1938).

In suit to cancel a tax deed upon the ground of excessive levy, seeking an accounting as to some of the defendants and general relief as to all of the defendants when it appeared from allegations of the petition that each of the defendants was liable to the plaintiffs for trespass upon the property in a sum greater than the amount of the taxes for which the property was sold, and that the plaintiffs were willing to do equity, the allegations in regard to excessive levy and the prayer for cancellation on that ground were not deficient for failure of the plaintiffs to allege a previous tender of the amount of the taxes. Zugar v. Scarbrough, 186 Ga. 310, 197 S.E. 854 (1938).

A tax sale that is not specifically attacked on the ground that the levy of the execution was excessive, but is attacked on the ground that the sheriff failed to sell the realty levied on according to the advertisement of sale, which recited that so much of the realty levied on would be sold as was sufficient to satisfy the executions, and instead sold the realty in bulk although the realty was capable of subdivision into lots or tracts less than the whole which could have been sold for the amount of the executions, would not prevent the application of this equitable principle. Durham v. Smith, 186 Ga. 565, 198 S.E. 734 (1938).

One who by inheritance succeeds to the interest of such original owner in the property will not be heard in equity when seeking to cancel the deed of the purchaser at such sale, on the ground that the levy was excessive, without paying or offering to pay all unpaid taxes due on that property when the ownership thereon was in the person from whom it was inherited. Lowe v. City of Atlanta, 191 Ga. 76, 11 S.E.2d 891 (1940), later appeal, 194 Ga. 317, 21 S.E.2d 171 (1942).

One seeking relief against collection of municipal taxes on the ground of excessiveness of the levies, or for other cause, but admitting, either expressly or by necessary implication, that one owes part of the tax covered by such executions, must pay or offer to pay the amount of the taxes admitted to be due, in order to obtain the relief sought. Kent v. Mayor of Alamo, 193 Ga. 445, 18 S.E.2d 769 (1942).

When a taxpayer makes a tax return of property subject to ad valorem tax, he admits that there is a liability for taxes on the property returned and the taxpayer must pay or offer to pay the amount of taxes admitted to be due, in order to obtain the relief from overassessment. Trust Inv. & Dev. Co. v. City of Marietta, 216 Ga. 788, 119 S.E.2d 568 (1961).

When there is no allegation in a petition that property owners have paid or offered to pay the city any amount as the taxes due on the property, the owners are for such failure in no position to apply to a court of equity to enjoin the city from selling their property under executions for taxes due. Smith v. City of E. Ellijay, 217 Ga. 364, 122 S.E.2d 112 (1961).

When a taxpayer seeks to prevent the collection of an ad valorem tax, and the taxpayer admits, either expressly or impliedly, that the taxpayer is liable for at least a part of the tax sought to be collected the taxpayer must first pay or offer to pay the amount of the tax legally due, before enjoining the tax's collection. Freeman v. Keaton, 223 Ga. 505, 156 S.E.2d 347 (1967).

Those who seek the aid of a court of equity to restrain and enjoin the taxing authorities of a county from collecting or attempting to collect taxes alleged to have been illegally assessed against the property of the petitioners, and alleging in their petition, and thus admitting thereby, that they owe some taxes for the year in question, must show that they have tendered and offered to pay the amount of taxes in fact due in order to obtain the relief sought. Freeman v. Keaton, 223 Ga. 505, 156 S.E.2d 347 (1967).

Application of equity in realty transactions.

- As a general rule a petition to a court of equity to cancel a deed as a cloud on the title of the grantor, brought by the executrices of the grantor's estate, on the basis that it is void as representing a sale by a wife of her separate estate to her husband, for a valuable consideration, without an order of the superior court of her domicile, when there is no offer to return the consideration recited and acknowledged in the deed to have been received, is demurrable (now motion to dismiss), but when it is alleged in an amendment to the petition that the consideration stated in the deed from the wife to the husband has been only partly paid to a stated amount, that the defendant has been in possession of the property so conveyed for a stated number of years, that the rents, issues, and profits for that period are at least a stated amount, and an offer is made to pay the defendant any difference between the consideration actually paid and the rents, issues, and profits, and the petition contains a prayer for general relief as well as for cancellation and injunction, such allegation by amendment is a sufficient compliance with the requirements of this section, and it is not necessary that a formal tender of the consideration stated in the deed be made. Franklin v. Cruce, 187 Ga. 58, 200 S.E. 135 (1938).

A borrower who has executed a deed to secure a debt is not entitled to an injunction against a sale of the property under a power in the deed, unless one first pays or tenders to the creditor the amount admittedly due. Oliver v. Slack, 192 Ga. 7, 14 S.E.2d 593 (1941); Cook v. Young, 225 Ga. 26, 165 S.E.2d 727 (1969).

In suit by wife for injunction against sale of property under deed, if the petition has shown upon its face, either expressly or impliedly, that any part of the purchase-money had been paid by or for the bank, or that any binding obligation for such payment had been made, it may be that the plaintiff could not maintain an action for equitable relief without averring a repayment of the sum or a tender thereof before suit, or alleging some valid reason for her failure to do so. Deen v. Baxley State Bank, 192 Ga. 300, 15 S.E.2d 194 (1941).

When vendees of land may have been excused from tendering the correct amount, or any amount, to the vendor before suit for specific performance, this does not relieve the vendor from offering in their pleadings to pay the amount which is due or the amount which might be found due by decree of the court. Lively v. Munday, 201 Ga. 409, 40 S.E.2d 62 (1946).

In a suit by a purchaser for specific performance of a contract for the sale of land, it should be made to appear that before institution of the action the plaintiff had paid or tendered the purchase-money according to the contract, or that tender had been waived by the defendant. Washington Mfg. Co. v. Wickersham, 201 Ga. 635, 40 S.E.2d 206 (1946).

Purchaser seeking specific performance of contract of purchase of realty is required to do equity by tendering the amount admittedly due under the contract in order to obtain the relief sought. Shepard v. Gettys, 206 Ga. 392, 57 S.E.2d 272 (1950).

When purchaser seeking performance of contract of purchase of realty offered to do equity by paying the full amount of the purchase price, but the defendant repudiated the contract and declared the defendant's intentions not to carry out the contract, the defendant's repudiation was a waiver of tender, and under the law relieved the petitioner of any obligation to tender. Shepard v. Gettys, 206 Ga. 392, 57 S.E.2d 272 (1950).

Trial court did not err by dismissing a homeowner's claim against the homeowner's mortgage lender for injunctive relief following foreclosure of the homeowner's home because under application of the maxim that one who would have equity must do equity, O.C.G.A. § 23-1-10, the owner was required to tender the amount due under the security deed and note. Stewart v. SunTrust Mortg., Inc., 331 Ga. App. 635, 770 S.E.2d 892 (2015).

When one party in default.

- Since a defendant is not required to perform under the terms of a contract if the plaintiff is currently in default, specific performance may not be decreed against appellee unless it is conditioned on appellant's curing of any default on the appellant's part, but if the decree is so conditioned, this section will be satisfied. Jordan v. Flynt, 240 Ga. 359, 240 S.E.2d 858 (1977); Krauth v. Bagley, 243 Ga. 87, 252 S.E.2d 504 (1979).

The decree of specific performance is improper when the plaintiff was in default at the time suit was filed, the plaintiff remains in default at the time of the decree, and the decree of specific performance is not conditional on the plaintiff curing the plaintiff's default. Jordan v. Flynt, 240 Ga. 359, 240 S.E.2d 858 (1977).

Plaintiff defaulting after filing suit.

- When the plaintiff is not in default when the plaintiff files suit, the occurrence of a subsequent default of the plaintiff is not by itself a sufficient reason for denying specific performance. Krauth v. Bagley, 243 Ga. 87, 252 S.E.2d 504 (1979).

Cancellation of deed when parties not in compliance

- Petition for cancellation of deed was not subject to demurrer (now motion to dismiss) because the petitioner failed to tender to the defendant moneys paid for taxes, improvements, interest, and payment on loan, as well as the consideration paid by the defendant to the plaintiff, when the petition alleged that no part of the consideration named in the deed had been paid and that the rent collected by the defendant was enough to have paid the installments and interest due against that property, and there was nothing in the record to indicate that any improvements were made by the defendant, or any taxes paid by the defendant. Wellborn v. Johnson, 204 Ga. 389, 50 S.E.2d 16 (1948).

Prerequisites to recovery following tax sale.

- While ordinarily, before one would be entitled to set aside a tax sale on the grounds that the levy under the execution was excessive, one must tender to the purchaser at such sale the amount paid by such purchaser at the sale, no such tender is required when the petition alleges that the purchaser had not paid any part of the amount of its bid to the sheriff. Bibb County v. Elkan, 184 Ga. 520, 192 S.E. 7 (1937); Durham v. Smith, 186 Ga. 565, 198 S.E. 734 (1938).

Generally, equity will not cancel a conveyance under which anything has been received, until repayment is made. An exception to the rule requiring tender is when the petition alleges that the defendant has been in possession, receiving the rents and profits of the premises conveyed, and prays for an accounting therefor by the defendant, and that the correct amount due the defendant be declared and set up. Harrell v. Burch, 195 Ga. 96, 23 S.E.2d 434 (1942).

Uncertainity of tax execution impacting equity.

- Allegations of a petition that the petitioner's mutual savings and loan association has been unable to ascertain the exact amount that a tax execution should have issued for, and that the taxing authorities of the city have "refused to ascertain the exact amount legally due by" petitioner, when considered in the light of the fact that the city contends that the total amount of the execution is the amount "legally due" and that the ascertainment of the amount for which the petitioner contends the execution should have issued is a mere matter of mathematical calculation, based upon the valuation of the property which the petitioner admits is legally taxable and the tax rate applicable thereto, do not allege a sufficient reason for the failure of the petitioner to pay or offer to pay the amount admittedly due. Elder v. Home Bldg. & Loan Ass'n, 185 Ga. 258, 194 S.E. 745 (1937).

Denial of relief in equity.

- When to a proceeding to foreclose a deed to secure debt as an equitable mortgage, which prays for judgment for principal, interest, and attorney's fees, a debtor files a plea in which it is alleged that the petitioner held as collateral fire insurance policies with a loss-payable clause in favor of the petitioner aggregating more than the amount of the debt, which had become due and payable as the result of a fire some months before there was a default on the debt, and that the insurance could have been collected at any time, but was not collected due solely to the negligence of the petitioner who had made no demand for payment, and that the attorney's fees sought in the foreclosure proceeding would have been unnecessary had such collection been made, such plea alleged facts sufficient to show a breach of duty, both in law and in equity, upon the part of the creditor, which would prevent it from collecting attorney's fees and deny the creditor any relief in equity. Irwin v. Life & Cas. Ins. Co., 204 Ga. 582, 50 S.E.2d 354 (1948).

Payment of additional expenses.

- When the creditor has negligently failed to perform the creditor's duty, which results in default on the main debt, the resulting injury or additional expense should be paid by the creditor rather than by the debtors. Irwin v. Life & Cas. Ins. Co., 204 Ga. 582, 50 S.E.2d 354 (1948).

Specific performance denied.

- In a suit for specific performance, the trial court erred by granting summary judgment to the plaintiff because numerous fact issues remained, including whether the plaintiff made the requisite tender of the necessary documents and payment, whether the plaintiff's execution of corporate loan documents constituted a breach of the agreement and, if so, whether the breach was material, whether unclean hands barred the plaintiff's specific performance claim, and other issues. Krieger v. Bonds, 333 Ga. App. 19, 775 S.E.2d 264 (2015).

RESEARCH REFERENCES

Am. Jur. 2d.

- 27 Am. Jur. 2d, Equity, § 131 et seq.

C.J.S.

- 30 C.J.S., Equity, § 90 et seq.

ALR.

- He who comes into equity must come with clean hands, 4 A.L.R. 44.

Right of victim of practical joke to recover against its perpetrator, 9 A.L.R. 364.

Unfitness as affecting right to restoration by mandamus to office from which one has been illegally removed, 36 A.L.R. 508.

Rule that denies remedy in case of an illegal contract as applicable to an action of conversion, replevin, or detinue for property possession of which was obtained by defendant, or by a third person through whom he claims, as the result of such a contract with the plaintiff or his predecessor in interest, 132 A.L.R. 619.

Rule denying relief to one who conveyed his property to defraud his creditors as applicable where the threatened claim which occasioned the conveyance was paid or was never established, 21 A.L.R.2d 589.

Vendee's liability for use and occupancy of premises, where vendor disaffirms an unenforceable land contract, 49 A.L.R.2d 1169.

Purchaser's misrepresentations as to intended use of real property as ground for vendor's equitable relief from contract and deed, 35 A.L.R.3d 1369.

Rule denying recovery of property to one who conveyed to defraud creditors as applicable where claim which motivated the conveyance was never established, 6 A.L.R.4th 862.

23-1-11. Effect of equal equities; effect of unequal equities.

Where equities are equal, the law shall prevail. If equities are unequal, the superior equity shall prevail. Superior diligence as to time will create such inequality.

(Orig. Code 1863, § 3020; Code 1868, § 3032; Code 1873, § 3087; Code 1882, § 3087; Civil Code 1895, § 3927; Civil Code 1910, § 4524; Code 1933, § 37-107.)

Law reviews.

- For note, the voluntary-payment doctrine in Georgia, see 16 Ga. L. Rev. 893 (1982).

JUDICIAL DECISIONS

Superior equity entitled to relief.

- When considering all the facts presented in the case, the equities in favor of lot owners were superior to those of a county, the trial court abused the court's discretion in ordering equitable relief permitting the county to disconnect water service to the subdivision. Cantrell v. Henry County, 250 Ga. 822, 301 S.E.2d 870 (1983).

Cited in Biddle v. Papa, 180 Ga. 468, 179 S.E. 357 (1935); Rose v. Crane Heating Co., 198 Ga. 295, 31 S.E.2d 717 (1944); Jordan Co. v. Bethlehem Steel Corp., 309 F. Supp. 148 (S.D. Ga. 1970).

RESEARCH REFERENCES

Am. Jur. 2d.

- 27 Am. Jur. 2d, Equity, § 150.

C.J.S.

- 30 C.J.S., Equity, §§ 110, 111.

23-1-12. Equity of misled party superior.

The equity of a party who has been misled is superior to that of the person who willfully misleads such party.

(Orig. Code 1863, § 3022; Code 1868, § 3034; Code 1873, § 3089; Code 1882, § 3089; Civil Code 1895, § 3929; Civil Code 1910, § 4526; Code 1933, § 37-109.)

JUDICIAL DECISIONS

Cited in Frye v. Sims, 144 Ga. 74, 86 S.E. 249 (1915); Brown v. Brown, 209 Ga. 620, 75 S.E.2d 13 (1953); Levy v. Empire Ins. Co., 379 F.2d 860 (5th Cir. 1967).

RESEARCH REFERENCES

Am. Jur. 2d.

- 27 Am. Jur. 2d, Equity, § 20.

C.J.S.

- 30 C.J.S., Equity, § 48 et seq.

ALR.

- Right of victim of practical joke to recover against its perpetrator, 9 A.L.R. 364.

23-1-13. Volunteer's equity inferior.

The equity under trust or contract for value is superior to that of a mere volunteer.

(Orig. Code 1863, § 3021; Code 1868, § 3033; Code 1873, § 3088; Code 1882, § 3088; Civil Code 1895, § 3928; Civil Code 1910, § 4525; Code 1933, § 37-108.)

JUDICIAL DECISIONS

A donee claiming land under a deed of gift stands in the shoes of the donee's grantor. Hughes v. Cobb, 195 Ga. 213, 23 S.E.2d 701 (1942).

Cited in Payton v. Payton, 148 Ga. 486, 97 S.E. 69 (1918); Cain v. Varnadore, 171 Ga. 497, 156 S.E. 216 (1930).

RESEARCH REFERENCES

C.J.S.

- 30 C.J.S., Equity, § 89.

ALR.

- Relaxation of common-law rule regarding recovery of voluntary payment, 75 A.L.R. 658.

Right to reformation of contract or instrument as affected by intervening rights of third persons, 79 A.L.R.2d 1180.

23-1-14. Who bears loss from act of third party.

When one of two innocent persons must suffer by the act of a third person, he who put it in the power of the third person to inflict the injury shall bear the loss.

(Civil Code 1895, § 3940; Civil Code 1910, § 4537; Code 1933, § 37-113.)

History of section.

- The language of this Code section is derived in part from the decision in Blaisdell v. Bohr, 77 Ga. 381 (1886).

JUDICIAL DECISIONS

General Consideration

This section is limited in its application to cases in which the party chargeable makes the third party the party's real or apparent agent, cases in which the party provides the means intentionally, or for a dishonest purpose, or negligently, and cases in which the party derives a benefit from the fraud of the third party. Nowell v. Mayor of Monroe, 177 Ga. 648, 171 S.E. 136, answer conformed to, 47 Ga. App. 665, 171 S.E. 143 (1933).

This section does not govern the great majority of cases when one innocently, for an honest purpose and with reasonable care, furnishes to a third party the means by which one perpetrates a fraud from which one who provides the means derives no benefit. Nowell v. Mayor of Monroe, 177 Ga. 648, 171 S.E. 136 (1933).

Conversion cases.

- The principle stated in O.C.G.A. § 23-1-14 is applicable in conversion cases. Atlanta Classic Cars, Inc. v. Chih Hung USA Auto Corp., 209 Ga. App. 908, 439 S.E.2d 498 (1993).

When items stolen from an electric company were sold to a supply company, the electric company was not entitled to summary judgment on its conversion claim against the supply company and its principal because of the equitable doctrine codified at O.C.G.A. § 23-1-14, providing that, when one of two innocent persons must suffer by the act of a third person, the individual who put it in the power of the third person to inflict the injury shall bear the loss as there were genuine fact issues as to whether the principal was innocent and whether the electric company's inattentiveness allowed its employee to steal the items with impunity. Fed. Ins. Co. v. Westside Supply Co., 264 Ga. App. 240, 590 S.E.2d 224 (2003).

Liability of auctioneer for conversion.

- The liability of an auctioneer for conversion does not extend to a case in which it is the true owner who originally enabled the auctioneer's principal to commit the underlying conversion and the auctioneer subsequently acts without knowledge of the principal's conversion. Benton v. Duvall Livestock Mktg., Inc., 201 Ga. App. 430, 411 S.E.2d 307 (1991).

This section does not apply when no fault or negligence is imputable to the party sought to be held thereby. Nowell v. Mayor of Monroe, 177 Ga. 648, 171 S.E. 136, answer conformed to, 47 Ga. App. 665, 171 S.E. 143 (1933).

Liability generally.

- When one of two innocent persons must bear a loss, the one who occasioned it or one's representative cannot obtain affirmative relief in a court for the purpose of placing the loss upon the other party, who was equally innocent. Atlanta Banking & Sav. Co. v. Johnson, 179 Ga. 313, 175 S.E. 904 (1934).

When a loss must be suffered which results from the acts of one of two people, i.e., the act of the owner in delivering a stock power signed in blank, and the act of the corporate officers in accepting from the broker an unauthorized power, it must fall upon the one who first trusted the defaulting broker. Frye v. Commonwealth Inv. Co., 107 Ga. App. 739, 131 S.E.2d 569, aff'd, 219 Ga. 498, 134 S.E.2d 39 (1963).

As between one of two innocent parties who must suffer from a fraud of a third, one who furnished the means to commit the fraud, or whose negligence enables the third party to commit it, must bear the loss. McDonald v. Peoples Auto. Loan & Fin. Corp., 115 Ga. App. 483, 154 S.E.2d 886 (1967).

Application of equity when agents commit fraud.

- Equity required that as between the lender and the companies, the companies had to bear the loss for any alleged fraud by their agents. R.W. Holdco, Inc. v. SCI/RW Holdco, Inc., 250 Ga. App. 414, 551 S.E.2d 826 (2001).

Liability when fraud committed.

- By failing to file a lien, the pawnbroker enabled the automobile owners to perpetrate the fraud and must, therefore, bear the loss pursuant to this section. Cobb Ctr. Pawn & Jewelry Brokers, Inc. v. Gordon, 242 Ga. App. 73, 529 S.E.2d 138 (2000).

The law does not afford relief to one who suffers by not using the ordinary means of information that may be at hand, whether one's neglect be due to indifference or credulity. Braselton Bros. v. Better Maid Dairy Prods., Inc., 113 Ga. App. 382, 148 S.E.2d 71, rev'd on other grounds, 222 Ga. 472, 150 S.E.2d 620 (1966).

No legal duty by franchisor to consumer.

- In a suit brought by a customer asserting conversion against an automobile franchisor and its financial company, the trial court properly granted summary judgment to the franchisor and the financial company as the business entities owned no legal duty to the consumer to prevent the franchisee from presenting an unreasonable risk of harm to the customer. As such, the customer could not predicate liability for conversion under O.C.G.A. § 23-1-14 as a matter of law. DaimlerChrysler Motors Co. v. Clemente, 294 Ga. App. 38, 668 S.E.2d 737 (2008).

Cited in Milner v. First Nat'l Bank, 38 Ga. App. 668, 145 S.E. 101 (1928); Moseley v. Phoenix Mut. Life Ins. Co., 167 Ga. 491, 145 S.E. 877 (1928); Anchor Duck Mills v. Harp, 40 Ga. App. 563, 150 S.E. 572 (1929); Skinner v. Stewart Plumbing Co., 42 Ga. App. 42, 155 S.E. 97 (1930); Lilly v. Citizens' Bank & Trust Co., 44 Ga. App. 653, 162 S.E. 639 (1932); Nowell v. Mayor of Monroe, 177 Ga. 648, 171 S.E. 136 (1933); Capital Auto. Co. v. Ward, 54 Ga. App. 873, 189 S.E. 713 (1936); Nightingale v. Juniata College, 186 Ga. 365, 197 S.E. 831 (1938); E. Frederics, Inc. v. Felton Beauty Supply Co., 58 Ga. App. 320, 198 S.E. 324 (1938); Peoples Bank v. Jones, 193 Ga. 720, 20 S.E.2d 74 (1942); Sterchi Bros. Stores v. Clark, 68 Ga. App. 259, 22 S.E.2d 740 (1942); Rose v. Crane Heating Co., 198 Ga. 295, 31 S.E.2d 717 (1944); Townsend v. Tattnall Bank, 76 Ga. App. 500, 46 S.E.2d 607 (1948); Berger v. Noble, 81 Ga. App. 34, 57 S.E.2d 844 (1950); Moore v. Bank of Dahlonega, 82 Ga. App. 142, 60 S.E.2d 507 (1950); Burgess v. Simmons, 207 Ga. 291, 61 S.E.2d 410 (1950); East Atlanta Bank v. Nicholson, 83 Ga. App. 557, 63 S.E.2d 699 (1951); Milner v. Ingram & Le Grand Lumber Co., 86 Ga. App. 543, 71 S.E.2d 786 (1952); Richards v. Dye, 89 Ga. App. 376, 79 S.E.2d 548 (1953); Cesaroni v. Savannah Bank & Trust Co., 90 Ga. App. 107, 82 S.E.2d 172 (1954); National Nu Grape Co. v. Citizens & S. Nat'l Bank, 94 Ga. App. 5, 93 S.E.2d 381 (1956); Pioneer Neon Supply Co. v. Johnson & Johnson Constr. Co., 95 Ga. App. 565, 98 S.E.2d 156 (1957); Dealers' Disct. Corp. v. Trammell, 98 Ga. App. 748, 106 S.E.2d 850 (1958); Weiss v. Johnson & Johnson Constr. Co., 98 Ga. App. 858, 107 S.E.2d 708 (1959); Birkett L. Williams Co. v. Smith, 353 F.2d 60 (5th Cir. 1965); Levy v. Empire Ins. Co., 379 F.2d 860 (5th Cir. 1967); Weiss v. Moody, 121 Ga. App. 682, 175 S.E.2d 82 (1970); International Harvester Credit Corp. v. Commercial Credit Equip. Corp., 125 Ga. App. 477, 188 S.E.2d 110 (1972); Mayor of Athens v. Gregory, 231 Ga. 710, 203 S.E.2d 507 (1974); Jackson's Atlanta Ready Mix Concrete Co. v. Industrial Tractor Parts Co., 139 Ga. App. 422, 228 S.E.2d 324 (1976); Georgia Ins. Agencies, Inc. v. Sentry Indem. Co., 152 Ga. App. 728, 263 S.E.2d 702 (1979); Palmer v. Forrest, Mackey & Assocs., 251 Ga. 304, 304 S.E.2d 704 (1983); Bank of Danielsville v. Seagraves, 167 Ga. App. 135, 305 S.E.2d 790 (1983); Lamb v. Thalimer Enters., Inc., 193 Ga. App. 70, 386 S.E.2d 912 (1989); Brinkley v. Bosch Olds-Buick-GMC, Inc., 199 Ga. App. 663, 405 S.E.2d 883 (1991); Northwest Carpets, Inc. v. First Nat'l Bank, 280 Ga. 535, 630 S.E.2d 407 (2006).

Fraud Generally

One of the essential elements of a cause of action for the common-law tort of deceit based upon fraud is the plaintiff's right to rely upon the representations. Braselton Bros. v. Better Maid Dairy Prods., Inc., 113 Ga. App. 382, 148 S.E.2d 71, rev'd on other grounds, 222 Ga. 472, 150 S.E.2d 620 (1966).

The master could be held liable for the servant's fraudulent presentation of invoices and receiving payment for more goods than were actually delivered by reason of having clothed the servant with apparent authority and upon the equitable principle contained in this section that as between two innocent persons that the master who put it in the power of the male-factor to inflict the loss should bear it. Lecroy v. Acme Meat Co., 125 Ga. App. 566, 188 S.E.2d 255 (1972).

Under ordinary conditions, in cases when a fraud has been committed by an agent, this rule (contained in this section) has been invoked against the agent's principal for the reason that the employer, by clothing the agent with apparent authority to act for the principal, has made the accomplishment of the fraud possible. But the doctrine applies with equal force against the defrauded third person when it appears the third party could have easily detected the deceit and neglected to do so for, under such circumstances, the third party's fault must be regarded as the proximate and efficient cause of the loss. Braselton Bros. v. Better Maid Dairy Prods., Inc., 113 Ga. App. 382, 148 S.E.2d 71, rev'd on other grounds, 222 Ga. 472, 150 S.E.2d 620 (1966).

A principal who puts a servant or other agent in a position which enables the agent while apparently acting within the agent's authority, to commit a fraud upon third persons is subject to liability to such third persons for the fraud. Braselton Bros. v. Better Maid Dairy Prods., Inc., 113 Ga. App. 382, 148 S.E.2d 71, rev'd on other grounds, 222 Ga. 472, 150 S.E.2d 620 (1966).

Misrepresentations are not actionable unless the plaintiff was justified in relying upon the misrepresentations in the exercise of common prudence and diligence. The misrepresentations must have been made under such circumstances that the injured party had a right to rely on the misrepresentations. Braselton Bros. v. Better Maid Dairy Prods., Inc., 113 Ga. App. 382, 148 S.E.2d 71, rev'd on other grounds, 222 Ga. 472, 150 S.E.2d 620 (1966).

A person who otherwise would be liable to another for the misrepresentations of one apparently acting for that person is not relieved from liability by the fact that the servant or agent acts entirely for one's own purposes, unless the other has notice of this. Braselton Bros. v. Better Maid Dairy Prods., Inc., 113 Ga. App. 382, 148 S.E.2d 71, rev'd on other grounds, 222 Ga. 472, 150 S.E.2d 620 (1966).

Equitable Estoppel

Application to sale of automobile.

- When the owner of an automobile offers it for sale at an auction, and it is unconditionally delivered to such purchaser, the seller accepting a check for the purchase price, and such purchaser sells it for a valuable consideration to a third person who has no notice of the giving of the check, the title of the original owner is divested or the original owner is estopped from asserting it as against the innocent third-party purchaser although the check is unpaid and returned as worthless. Blount v. Bainbridge, 79 Ga. App. 99, 53 S.E.2d 122 (1949).

When the owner of an automobile voluntarily relinquished possession of it to a third person who gave him a worthless check, the owner is precluded from disputing, as against a bona fide purchaser, the existence of any title or power of sale, which through the original owner's own lack of caution, negligence or mistaken confidence, the original owner caused or allowed to appear to be vested in the third person with whom the innocent purchaser dealt. Equitable Credit & Disct. Co. v. Murray, 79 Ga. App. 795, 54 S.E.2d 650 (1949).

Application to agreement between spouses and innocent third party.

- Wife's transfer and delivery of stock certificate to her husband operates to invest the husband with such external indicia of ownership that his pledge to an innocent lender is, on the principle of estoppel, binding upon her. The private understanding between a wife and her husband that she was merely lending the stock to him does not affect the right of the bank to hold the stock as security for a loan when the bank acted innocently and without knowledge of such agreement. Groover v. Savannah Bank & Trust Co., 186 Ga. 476, 198 S.E. 217 (1938).

Mistaken identity.

- When the defendant loan company made check payable to name given by the person who made application for a loan, delivered the check to that person, and did not question the person's identity, the loan company and not the plaintiff who subsequently cashed the check for payee, knowing the payee by the name thereon, was responsible for the mistaken identity, if any, of the person to whom it issued and delivered the check. Peoples Loan & Sav. Co. v. Pardue, 56 Ga. App. 632, 193 S.E. 486 (1937).

Sales to innocent third parties.

- Rule that when an owner has given to another such evidence of the right of selling the owner's goods as, according to the custom of trade or the common understanding of the world, usually accompanies the authority of disposal, or has given the external indicia of the right of disposing of the owner's property, a sale to an innocent purchaser divests the true owner's title, is merely a special application of the rule embodied in this section that, "When one of two innocent persons must suffer by the act of a third person, he who put it in the power of the third person to inflict the injury shall bear the loss." Cook Motor Co. v. Richardson, 103 Ga. App. 129, 118 S.E.2d 502 (1961).

Application to contractors.

- In the general contractor's action against the materials provider relating to the provider's request for payment under a payment bond, the general contractor's claim that it was entitled, under equitable estoppel provided in O.C.G.A. § 23-1-14, to rely on the incorrect contract price stated in the provider's notice to the contractor failed; the provider's statutory notice to the contractor was not what put the subcontractor in a position to fail to complete its work or to fail in paying the provider for materials, which was the basis of the claim against the payment bond. Sierra Craft, Inc. v. T. D. Farrell Constr., Inc., 282 Ga. App. 377, 638 S.E.2d 815 (2006), cert. denied, No. S07C0460, 2007 Ga. LEXIS 145 (Ga. 2007).

RESEARCH REFERENCES

Am. Jur. 2d.

- 27 Am. Jur. 2d, Equity, §§ 146, 147.

ALR.

- Propriety of suit in equity by or against several insurers under fire policies covering same risk, 98 A.L.R. 181.

Who must bear loss as between drawer induced by fraud of employee or agent to issue check payable to nonexisting person or a person having no interest in the proceeds thereof, and one who cashes or pays it on the forged endorsement by such employee or agent of the name of such ostensible payee, 99 A.L.R. 439.

Relative rights as between purchaser of chattel from one who had previously bought it with stolen money, and victim of the theft, 62 A.L.R.2d 537.

Right to reformation of contract or instrument as affected by intervening rights of third persons, 79 A.L.R.2d 1180.

23-1-15. Where both parties equally at fault; where fault is unequal.

When both parties are equally at fault, equity will not interfere but will leave them where it finds them. The rule is otherwise if the fault of one decidedly overbalances that of the other.

(Orig. Code 1863, § 3026; Code 1868, § 3038; Code 1873, § 3093; Code 1882, § 3093; Civil Code 1895, § 3937; Civil Code 1910, § 4534; Code 1933, § 37-112.)

Law reviews.

- For note, the voluntary-payment doctrine in Georgia, see 16 Ga. L. Rev. 893 (1982).

JUDICIAL DECISIONS

General Consideration

As a general rule, equity will not grant relief to a party who comes into court with unclean hands, or is guilty of an illegal or immoral act, nor aid a grantor or the grantor's administrator in seeking to cancel a security deed which was executed by the grantor for the purpose of hindering, delaying or defrauding creditors; these rules stem from the just and salutary principle that one will not be permitted to profit by one's own wrong, and apply when a party is seeking the aid of equity in the enforcement of executory contracts or its aid under an executed contract. Fuller v. Fuller, 211 Ga. 201, 84 S.E.2d 665 (1954).

When both parties are at fault.

- O.C.G.A. § 23-1-15, states that when both parties are equally at fault, equity will not interfere but will leave them where it finds them. The rule is otherwise if the fault of one decidedly overbalances that of the other. Levine v. SunTrust Robinson Humphrey, 321 Ga. App. 268, 740 S.E.2d 672 (2013).

Cited in Felder v. Paulk, 165 Ga. 135, 139 S.E. 873 (1927); Nowell v. Mayor of Monroe, 177 Ga. 648, 171 S.E. 136 (1933); Harrell v. Fiveash, 182 Ga. 324, 185 S.E. 327 (1936); Turner v. Davidson, 183 Ga. 404, 188 S.E. 828 (1936); Roberts v. Roberts, 55 Ga. App. 456, 190 S.E. 442 (1937); Gibbs v. H.T. Henning Co., 189 Ga. 675, 7 S.E.2d 238 (1940); Townsend v. Tattnall Bank, 76 Ga. App. 500, 46 S.E.2d 607 (1948); Clifton v. Dunn, 208 Ga. 326, 66 S.E.2d 735 (1951); Pearl Optical, Inc. v. Pearle Optical of Ga., Inc., 218 Ga. 701, 130 S.E.2d 223 (1963); Oliver v. Forshee, 224 Ga. 200, 160 S.E.2d 828 (1968); Adams v. Smith, 129 Ga. App. 850, 201 S.E.2d 639 (1973); Daubresse v. Smithey, 231 Ga. 725, 204 S.E.2d 133 (1974); Griggs v. Griggs, 242 Ga. 96, 249 S.E.2d 566 (1978); Head v. Walker, 243 Ga. 108, 252 S.E.2d 440 (1979); Holmes v. Henderson, 274 Ga. 8, 549 S.E.2d 81 (2001).

Equal Fault

In fraudulent transactions equity leaves both parties just as it finds them. Harrell v. Fiveash, 182 Ga. 362, 185 S.E. 327 (1936).

If two parties engage in a fraudulent transfer and are in pari delicto, equity will leave the parties where it finds them. Laxton v. Laxton, 234 Ga. App. 221, 507 S.E.2d 146 (1998).

Equal fault rule not applicable when questions of fact present.

- In a negligence and breach of trust action, because there were questions of fact about the relative fault of each party the equity maxim of when two parties are equally at fault, one may not recover from the other did not apply. Levine v. SunTrust Robinson Humphrey, 321 Ga. App. 268, 740 S.E.2d 672 (2013).

Neither a court of law nor a court of equity will lend its aid to a party when it affirmatively appears that the plaintiff and defendant are in pari delicto. Nash v. Jones, 224 Ga. 372, 162 S.E.2d 392 (1968).

Illustrative Cases

Rule that equity refuses to interfere where both parties are at fault does not apply when the faults are unequal. Atlanta Ass'n of Fire Ins. Agents v. McDonald, 181 Ga. 105, 181 S.E. 822 (1935).

If the fault of one decidedly overbalances the other, equity may interfere. Atlanta Ass'n of Fire Ins. Agents v. McDonald, 181 Ga. 105, 181 S.E. 822 (1935).

No claim to nonjudicial foreclosure sale.

- The son had no claim to the proceeds of a nonjudicial foreclosure sale conducted by his father when the son had executed a promissory note and deed to his father for the express purpose of delaying, hindering, or defrauding a potential judgment creditor, and thus had unclean hands, and the evidence showed that the proceeds did not exceed the amount of the promissory note, interest, advertising costs, and attorney fees. Laxton v. Laxton, 234 Ga. App. 221, 507 S.E.2d 146 (1998).

Transaction fraudulent at inception requires leaving parties where it finds them.

- When transaction upon which suit was instituted was fraudulent in its inception, and petitioner's testator and the defendant were in pari delicto, equity will not interfere, but will leave the parties where it finds them. Roberts v. Roberts, 182 Ga. 568, 186 S.E. 192 (1936).

Two parties violating penal statutes.

- When one is engaged with another in the simultaneous and willful violation of the same penal statute, one cannot recover damages for injuries inflicted upon that person through the negligence of one's joint wrongdoer unless the violation of the statute was not a contributing cause of the injuries; this is based upon the principle that the parties are in pari delicto, that what each does is the act of the other and that to permit a recovery under such circumstances would be in violation of public policy. Gaines v. Wolcott, 119 Ga. App. 313, 167 S.E.2d 366 (1969).

Enforcement of sham contracts.

- An executed contract, such as an absolute conveyance purporting on its face to be a deed for the sale of land, though in fact a "mere sham" and made for the purpose of delaying or defrauding a creditor, is binding upon the maker, and one is estopped from impeaching it. Langan v. Langan, 224 Ga. 399, 162 S.E.2d 405 (1968).

Retention of fruits of unlawful transaction.

- A husband who, in order to delay or defeat the collection of a claim for alimony or other lawful demands against him, conveyed land to another person and put that person in possession, could not maintain against the latter an action for the breach of a bond given by him to reconvey the land whenever so required. This is so, not because the law is disposed to aid one of the wrongdoers in retaining the fruits of the unlawful transaction, but because it denies the benefit of its remedies to the other. Langan v. Langan, 224 Ga. 399, 162 S.E.2d 405 (1968).

RESEARCH REFERENCES

C.J.S.

- 30 C.J.S., Equity, § 89.

ALR.

- Illicit sexual relations between man and woman as affecting right of either to recover money paid or property transferred to other, 120 A.L.R. 475.

Right of partner or joint adventurer to accounting where firm business or transactions are illegal, 32 A.L.R.2d 1345.

Right to reformation of contract or instrument as affected by intervening rights of third persons, 79 A.L.R.2d 1180.

Negligence in executing contract as affecting right to have it reformed, 81 A.L.R.2d 7.

Right of action for injury to or death of woman who consented to illegal abortion, 36 A.L.R.3d 630.

23-1-16. Taking with notice of equity.

He who takes with notice of an equity takes subject to that equity.

(Orig. Code 1863, § 3024; Code 1868, § 3036; Code 1873, § 3091; Code 1882, § 3091; Civil Code 1895, § 3932; Civil Code 1910, § 4529; Code 1933, § 37-115.)

JUDICIAL DECISIONS

Ordinarily proof of notice will avail nothing unless a party can couple such proof of notice with proof of a right, title, equity, claim or interest in the land in controversy. Hicks v. Smith, 205 Ga. 614, 54 S.E.2d 407 (1949).

When a successor tenant in common acquired the tenant's interest by deed of gift, the tenant took, not as a bona fide purchaser, but with notice of whatever equities the other original tenant in common had in the property. Bowers v. Bowers, 208 Ga. 85, 65 S.E.2d 153 (1951).

If after notice that one has made a contract to pass title to another to certain property, a third person cuts in, buys it, and takes a conveyance thereto, such person stands in the place of one's vendor, and a court of equity, if it would decree specific performance of the contract by one's vendor, will render a like decree against that one. Pace v. Pace, 220 Ga. 66, 137 S.E.2d 28 (1964).

Construction with O.C.G.A.

§ 23-6-64. - Findings entered by a special master, which determined that the disputed portion of an alley belonged to a landowner, and not the neighbors, by operation of the landowner's prior recorded deed, was not clearly erroneous, as: (1) the landowner received the property via a valid deed; (2) the neighbors failed to put the landowner on notice of their claim; and (3) the neighbors' claim of possession and use was insufficient. Cernonok v. Kane, 280 Ga. 272, 627 S.E.2d 14 (2006).

Notice of restrictive covenant.

- Successor landowners were liable for breach of a restrictive covenant because, as buyers, they were charged with notice of the covenant in a recorded agreement, which required them to build a fence upon development of the property. Lesser v. Doughtie, 300 Ga. App. 805, 686 S.E.2d 416 (2009).

Genuine issue of fact as to inquiry notice of unrecorded deed.

- Trial court erred by granting summary judgment to the plaintiff because the record showed that there was an issue of fact as to whether the defendants' possession of the property put the plaintiff on inquiry notice of the defendants' title despite the defendants' deed not being recorded. Caraway v. Spillers, 332 Ga. App. 588, 774 S.E.2d 162 (2015).

Restrictive covenants in deed enforceable in equity.

- In a quiet title action commenced by a property purchaser, the restrictive covenants in a deed limiting the use of the land for a gas station were held enforceable in equity regardless of whether or not the burdens and benefits of the covenants ran with the land or were held in gross because it was undisputed that the purchaser had notice of them when it purchased the property. North Bay Avalon, LLLP v. Speedway, LLC, 340 Ga. App. 899, 797 S.E.2d 510 (2017).

Cited in Waynesboro Planing Mill v. Augusta Veneer Co., 35 Ga. App. 686, 134 S.E. 790 (1926); Voyles v. Carr, 173 Ga. 627, 160 S.E. 801 (1931); Carmichael Title Co. v. Yaarab Temple Bldg. Co., 177 Ga. 318, 170 S.E. 294 (1933); Toms v. Knighton, 199 Ga. 858, 36 S.E.2d 315 (1945); Shirling v. Hester, 201 Ga. 706, 40 S.E.2d 743 (1946); Smith v. Lanier, 202 Ga. 165, 42 S.E.2d 495 (1947); Stembridge v. Smith, 213 Ga. 227, 98 S.E.2d 609 (1957); Dollar v. Dollar, 214 Ga. 499, 105 S.E.2d 736 (1958); Williamson v. Floyd County Wildlife Ass'n, 215 Ga. 789, 113 S.E.2d 626 (1960); Bacote v. Wyckoff, 251 Ga. 862, 310 S.E.2d 520 (1984); Southeast Toyota Distribs., Inc. v. Fellton, 212 Ga. App. 23, 440 S.E.2d 708 (1994).

RESEARCH REFERENCES

Am. Jur. 2d.

- 27 Am. Jur. 2d, Equity, §§ 139, 167.

ALR.

- Right of one who, with knowledge of outstanding equity, derived his interest in real property from or through a bona fide purchaser, to same protection as latter, 63 A.L.R. 1362.

Check given in land transaction as sufficient writing to satisfy statute of frauds, 9 A.L.R.4th 1009.

23-1-17. Scope of notice; ignorance due to negligence.

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.

(Civil Code 1895, § 3933; Civil Code 1910, § 4530; Code 1933, § 37-116.)

History of section.

- This section is derived from the decisions in Hunt v. Dunn, 74 Ga. 120 (1884) and Schmidt v. Block, 76 Ga. 823 (1886).

Law reviews.

- For article, "A Comprehensive Analysis of Georgia RICO," see 9 Ga. St. U.L. Rev. 537 (1993). For article, "Noticing the Bankruptcy Sale: The Purchased Property May Not Be as 'Free and Clear of All Liens, Claims and Encumberances' as You Think," see 15 (No. 5) Ga. St. B.J. 12 (2010). For article, "Eleventh Circuit Survey: January 1, 2013 - December 31, 2013: Casenote: The Decline and Fall of Constructive Notice," see 65 Mercer L. Rev. 1203 (2014).

JUDICIAL DECISIONS

General Consideration

Application of section to waiver clause in contracts of insurance.

- The provisions of this section have no application to the subject of waiver, as related to conditions imposing forfeitures in contracts of insurance. Prudential Ins. Co. of Am. v. Perry, 121 Ga. App. 618, 174 S.E.2d 570 (1970); Shield Ins. Co. v. Kitt, 143 Ga. App. 48, 237 S.E.2d 515 (1977), rev'd on other grounds, 240 Ga. 619, 241 S.E.2d 824 (1978).

Actual notice.

- Actual notice is shown, when the proof, positive or presumptive, authorizes the clear and satisfactory conclusion, that the purchaser had knowledge of the incumbrance, or would have had it, if he had not willfully declined to search for it, and thus his conscience is affected by it; and constructive notice, is that which arises out of a legal inference, or presumption strictly speaking, such as notice from a register, record, or some such matter; and which does not affect the conscience of the purchaser, because, notwithstanding the legal presumption, he may never have had absolute knowledge of the record or been put upon inquiry in relation to it. Citizens & S. Bank v. Morris State Bldg. Corp., 243 Ga. 169, 253 S.E.2d 89 (1979).

Existence of notice determined by jury.

- The question as to whether the defendant had actual notice, or as to whether the circumstances were sufficient to put him on notice, of the state of the title to certain property, were questions to be determined by the jury. Dollar v. Dollar, 214 Ga. 499, 105 S.E.2d 736 (1958).

General reputation is not notice of fact.

- While general reputation or notoriety of a proven fact may be admissible in evidence, to be considered by the jury, with other evidence, on the question of notice of such fact, such reputation or notoriety in the community is not itself notice of the fact. Roebuck v. Payne, 109 Ga. App. 525, 136 S.E.2d 399 (1964).

Construction with O.C.G.A.

§ 23-6-64. - Findings entered by a special master, which determined that the disputed portion of an alley belonged to a landowner, and not the neighbors, by operation of the landowner's prior recorded deed, was not clearly erroneous, as: (1) the landowner received the property via a valid deed; (2) the neighbors failed to put the landowner on notice of their claim; and (3) the neighbors' claim of possession and use was insufficient. Cernonok v. Kane, 280 Ga. 272, 627 S.E.2d 14 (2006).

Inquiry notice based on possession.

- Trial court erred by granting summary judgment to the plaintiff because the record showed that there was an issue of fact as to whether the defendants' possession of the property put the plaintiff on inquiry notice of the defendants' title despite the defendants' deed not being recorded. Caraway v. Spillers, 332 Ga. App. 588, 774 S.E.2d 162 (2015).

Cited in North Ga. Trust & Banking Co. v. Hulme, 35 Ga. App. 627, 134 S.E. 200 (1926); Planing Mill v. Augusta Veneer Co., 35 Ga. App. 686, 134 S.E. 790 (1926); Darden v. Washington, 35 Ga. App. 777, 134 S.E. 813 (1926); Fender v. Hodges, 38 Ga. App. 78, 142 S.E. 753 (1928); Todd v. Lewis, 169 Ga. 1, 149 S.E. 562 (1929); Investor's Syndicate v. Thompson, 172 Ga. 203, 158 S.E. 20 (1931); Mathis v. Mathis, 42 Ga. App. 1, 155 S.E. 88 (1930); United Eng'rs & Constructors, Inc. v. Fiat Metal Mfg. Co., 175 Ga. 509, 165 S.E. 609 (1932); Georgia R.R. Bank & Trust Co. v. Liberty Nat'l Bank & Trust Co., 180 Ga. 4, 177 S.E. 803 (1934); Shaw v. National Life Ins. Co., 51 Ga. App. 794, 181 S.E. 872 (1935); Fite v. Walker, 183 Ga. 46, 187 S.E. 95 (1936); H.C. Witmer Co. v. Petty, 54 Ga. App. 377, 187 S.E. 908 (1936); Rowe v. Cole, 183 Ga. 477, 188 S.E. 668 (1936); Heath v. Davis, 184 Ga. 704, 192 S.E. 727 (1937); Mutual Benefit Health & Accident Ass'n v. Hulme, 57 Ga. App. 876, 197 S.E. 85 (1938); Groover v. Savannah Bank & Trust Co., 186 Ga. 476, 198 S.E. 217 (1938); Georgia State Sav. Ass'n v. Wilson, 189 Ga. 21, 5 S.E.2d 14 (1939); Lewis v. Patterson, 191 Ga. 348, 12 S.E.2d 593 (1940); Federal Land Bank v. Drake, 64 Ga. App. 684, 14 S.E.2d 178 (1941); Pound v. Faulkner, 193 Ga. 413, 18 S.E.2d 749 (1942); Joel v. Publix-Lucas Theater, Inc., 193 Ga. 531, 19 S.E.2d 730 (1942); Hall v. Turner, 198 Ga. 763, 32 S.E.2d 829 (1945); Cooper v. Aycock, 199 Ga. 658, 34 S.E.2d 895 (1945); Wren v. Wren, 199 Ga. 851, 36 S.E.2d 77 (1945); Toms v. Knighton, 199 Ga. 858, 36 S.E.2d 315 (1945); Kilby v. Sawtell, 203 Ga. 256, 46 S.E.2d 117 (1948); Adler v. Adler Co., 205 Ga. 818, 55 S.E.2d 13 (1949); Ogletree v. West Lumber Co., 208 Ga. 43, 64 S.E.2d 894 (1951); United States v. West, 132 F. Supp. 934 (N.D. Ga. 1955); Exchange Ins. Ass'n v. Mathews, 93 Ga. App. 470, 92 S.E.2d 121 (1956); Ballentine Motors of Ga., Inc. v. Nimmons, 93 Ga. App. 708, 92 S.E.2d 714 (1956); Peoples Loan & Fin. Corp. v. Halbeisen Motors Co., 271 F.2d 538 (5th Cir. 1959); Dixie Belle Mills, Inc. v. Specialty Mach. Co., 217 Ga. 104, 120 S.E.2d 771 (1961); Frye v. Commonwealth Inv. Co., 107 Ga. App. 739, 131 S.E.2d 569 (1963); Cohen v. Gotlieb, 108 Ga. App. 122, 132 S.E.2d 93 (1963); Kamlapat v. Purvis-Wade Carpet Mills, 112 Ga. App. 781, 146 S.E.2d 138 (1965); D.H. Overmyer Co. v. Joe Summers Roofing Co., 120 Ga. App. 188, 169 S.E.2d 821 (1969); Buffalo Ins. Co. v. Star Photo Finishing Co., 120 Ga. App. 697, 172 S.E.2d 159 (1969); Robinson v. Transcontinental Gas Pipe Line Corp., 306 F. Supp. 201 (N.D. Ga. 1969); Hodges v. Youmans, 122 Ga. App. 487, 177 S.E.2d 577 (1970); Goldman v. Hart, 134 Ga. App. 422, 214 S.E.2d 670 (1975); Brannon v. First Nat'l Bank, 137 Ga. App. 275, 223 S.E.2d 473 (1976); Crymes v. Ryland Group, Inc., 143 Ga. App. 436, 238 S.E.2d 764 (1977); Bohannon v. Manhattan Life Ins. Co., 555 F.2d 1205 (5th Cir. 1977); Gulden v. Newberry Wrecker Serv., Inc., 154 Ga. App. 130, 267 S.E.2d 763 (1980); Palmetto Capital Corp. v. Smith, 284 Ga. App. 819, 645 S.E.2d 9 (2007); Wells Fargo Bank, N.A. v. Gordon, 292 Ga. 474, 749 S.E.2d 368 (2013).

Scope of Notice

Effect of notice sufficient to excite attention.

- Whatever is notice enough to excite attention and put the party on his guard and call for inquiry, is also notice of everything to which it is afterwards found that such inquiry might have led, although all was unknown for want of investigation; that is, where a person has sufficient information to lead him to a fact, he shall be deemed cognizant of it. Southern Ry. v. Watson, 74 Ga. App. 317, 39 S.E.2d 707 (1946).

Failure to take any action with respect to notice sufficient to excite inquiry justifies a presumption against the existence or validity of the right which one later seeks to assert, or justifies the presumption that if one ever possessed such a right it has been abandoned or waived or has been satisfied. Cohen v. Glass, 225 Ga. 646, 171 S.E.2d 118 (1969).

Where the plaintiff contended that the defendant had actual notice of his claim of equitable title to the property because of testimony of the plaintiff delivered in the defendant's presence in the court of ordinary (now probate court), the rule announced by this section that one having only such notice as would excite attention and put one on inquiry would be chargeable with notice of everything to which such inquiry might have led, was not directly involved, and if a charge of this principle was desired, a written request therefor should have been made. Dollar v. Dollar, 214 Ga. 499, 105 S.E.2d 736 (1958).

A purchaser, having knowledge such as would lead a reasonable man to make inquiries which would disclose facts sufficient to bar the rights of his grantor, is himself barred. Hendrix v. W.R. Altman Lumber Co., 145 F.2d 501 (5th Cir. 1944).

Where defendant loan association had notice of the plaintiff's equity in the land at and before the time the association took its security deed from another person, such security deed was subject to cancellation as between the plaintiff and the association, whether or not it might still be treated as valid against the grantor to the extent of the latter's interest. Fulmore v. Macon Fed. Savs. & Loan Ass'n, 191 Ga. 151, 11 S.E.2d 790 (1940).

Where a clerk sought to renew his bond in a manner not recognized by law, this irregularity alone was sufficient to put the mayor and council on inquiry and to affect them with constructive knowledge of every condition and circumstance which a proper inquiry would have disclosed, including the fact that the only contract actually proposed by the company was one which should embrace the terms of the continuation certificate. Nowell v. Mayor of Monroe, 177 Ga. 648, 171 S.E. 136, answer conformed to, 47 Ga. App. 665, 171 S.E. 143 (1933).

A municipality is charged, as a matter of law, with notice that a clerk and treasurer as agent of a fidelity company cannot consummate a valid contract in the nature of an official bond without a writing signed by the company. Nowell v. Mayor of Monroe, 177 Ga. 648, 171 S.E. 136 (1933).

Whether a judge's statement is intended merely as a finding on an issue of fact or as a ruling that under the evidence the party was charged with knowledge as a matter of law; the evidence may be sufficient to authorize a finding of notice. Alropa Corp. v. Snyder, 182 Ga. 305, 185 S.E. 352 (1936).

When parties are furnished with a list of the jury, it is their duty, if they know that any of the jurors are disqualified, to call attention to the same, or the disqualification will be held to have been waived; if they have reasonable grounds to suspect that any of the jurors are disqualified, it is their duty to call attention to the fact, so that due inquiry may be made of the panel. Kennedy v. State, 191 Ga. 22, 11 S.E.2d 179 (1940).

The court did not err in overruling ground of motion for new trial based on alleged disqualification of juror whose mind, it was claimed, was not perfectly impartial between the state and the accused, where on consideration of the evidence introduced by the defendant and the state in reference to this ground, the judge was authorized to find that the juror was not disqualified as contended. Kennedy v. State, 191 Ga. 22, 11 S.E.2d 179 (1940).

Lease between a debtor and a county, which was recorded in county records, was properly attested, and contained a full legal description of real property, and which referred to a trust indenture 27 times, provided constructive notice to a bona fide purchaser of the unrecorded indenture and the mortgage lien it created and gave rise to a duty to inquire further, which would have lead to discovery of the unrecorded lien. Thus, because the mortgage lien was enforceable against a bona fide purchaser under Georgia law, it was not avoidable by a Chapter 11 trustee or a debtor in possession. Detention Mgmt., LLC v. UMB Bank, NA (In re Mun. Corr., LLC), 501 Bankr. 119 (Bankr. N.D. Ga. 2013).

Effect of unattested signature.

- Trustee could not avoid a creditor's security interests under 11 U.S.C. § 544 because a security deed provided constructive notice of the creditor's interest in the properties despite the fact that the nondebtor wife's signature was not attested in compliance with Georgia law. MacArthur v. Am. Gen. Fin. Servs. (In re MacArthur), 430 Bankr. 300 (Bankr. N.D. Ga. 2010).

Where the vendor of an interest in real property is in prison the vendee is put on notice of the lien for costs, or notice of a fact which, if diligently investigated, would have disclosed the lien. Pound v. Faulkner, 193 Ga. 413, 18 S.E.2d 749 (1942).

A recorded deed, in order to operate as a constructive notice to a bona fide purchaser of land, must be a link in the purchaser's chain of title. Real Estate Operators, Inc. v. McMahon, 171 Ga. 454, 155 S.E. 755 (1930).

The proper recording of a security deed is notice to the entire world of its lien from that date and such notice continues until it is properly canceled of record. Rossville Fed. Sav. & Loan Ass'n v. Chase Manhattan Bank, 223 Ga. 188, 154 S.E.2d 243 (1967).

One claiming title to lands is chargeable with notice of every matter which appears in his deed, and of any matters which appear on the face of any deed, decree, or other instrument forming an essential link in the chain of instruments through which he deraigns title, and of whatever matters he would have learned by any inquiry which the recitals of those instruments made it his duty to pursue. Henson v. Bridges, 218 Ga. 6, 126 S.E.2d 226 (1962).

Where the security deed was accepted after being expressly told by petitioner of his equitable interest in the land (as to which there was evidence though conflicting), the fact that the records were fully examined and did not disclose any such equitable interest, but did disclose the legal title of the grantor in the security deed, would not excuse failure of the grantee in the security deed to make inquiry of the petitioner as to the facts upon which he based his claim of interest. Bell v. Bell, 178 Ga. 225, 172 S.E. 566 (1934).

The continued possession of a grantor who executes an absolute deed demands that one who purchases from the grantee inquire into the right of his occupancy. Chandler v. Georgia Chem. Works, 182 Ga. 419, 185 S.E. 787 (1936).

Where an inquiry made by the prospective purchaser of defendant, or an examination by him of the public records of the county, would have resulted in the discovery of unpaid retention of title contract, is sufficient notice. Shippen v. Georgia Power Co., 172 Ga. 913, 159 S.E. 268 (1931).

The possession of the tenant being the possession of the landlord, and the landlord having apparently executed an absolute deed conveying to another, and that deed being recorded, purchaser would be authorized to assume that, as a matter of law, the possession of the tenant was held under the grantee, and not adversely to the latter's title. Chestnut v. Weekes, 180 Ga. 701, 180 S.E. 716 (1935).

A purchaser who was informed by reservation in his deed of the existence of a contract for the removal of timber from said land, was chargeable with notice of the terms of such contract. Hendrix v. W.R. Altman Lumber Co., 145 F.2d 501 (5th Cir. 1944).

That a recorded security deed from a grantor to the grantee contained an incorrect land lot designation did not mean that a mortgagee of the property was not on notice of the deed under O.C.G.A. § 44-2-2(b) because the incorporation of the subdivision plat in the deed provided a key to locating the property. Therefore, the grantee's deed was valid. Deljoo v. SunTrust Mortg., Inc., 284 Ga. 438, 668 S.E.2d 245 (2008).

Constructive and inquiry notice.

- Purchasers of land are charged with constructive notice of recorded instruments and also recognizes the concept of inquiry notice. For a discussion of the balance between these concepts, see Stearns Bank, N.A. v. Rent-A-Tent, Inc. (In re Rent A Tent, Inc.), 468 Bankr. 442 (Bankr. N.D. Ga. 2012).

Validation order issued by a superior court authorizing a county to incur indebtedness did not give notice to a purchaser of the existence of a trust indenture or any interest of a bond trustee in real property as a matter of constructive or inquiry notice as a title examiner did not have to investigate pleadings and orders in litigation in which the seller of property was a party. Detention Mgmt., LLC v. UMB Bank, NA (In re Mun. Corr., LLC), 501 Bankr. 119 (Bankr. N.D. Ga. 2013).

Even though recorded, an unsigned security deed did not provide constructive notice to a bona fide purchaser under O.C.G.A. §§ 44-5-30 and44-14-33 as in effect in 2014 when the security deed was recorded. However, the security deed referenced and incorporated a waiver, which was properly executed and attested, and the waiver referenced and incorporated the security deed and, thus, the security deed and waiver were effective under Georgia law to provide inquiry notice to a subsequent purchaser and, accordingly, the trustee could not avoid the defendant's interest because the trustee did not qualify as a bona fide purchaser of real property. Kelley v. USAA Fed. Sav. Bank (In re Jones), 580 Bankr. 916 (Bankr. M.D. Ga. 2017).

Chapter 7 trustee, as a bona fide purchaser for value, could not take the property at issue free of the creditor's security deed as to the debtor wife's interest in the property because the recording of the security deed provided constructive notice to the trustee of the creditor's interest in the property. Pettie v. RBC Mortg. Co. (In re Jackson), Bankr. (Bankr. N.D. Ga. Sept. 17, 2019).

The knowledge chargeable to a party after he is put on inquiry is not limited to such knowledge only as would be gained by an examination of the public records. Dyal v. McLean, 188 Ga. 229, 3 S.E.2d 571 (1939); Collins v. Freeman, 226 Ga. 610, 176 S.E.2d 704 (1970).

Inquiry notice.

- Where a Chapter 7 debtor purchased a home and paid off a bank's existing security interest with funds borrowed from a creditor, the creditor's security deeds, which were recorded along with the debtor's warranty deed several weeks after the closing of the home purchase and the creditor's loan, were perfected at the time they were executed and delivered within the meaning of 11 U.S.C. § 547(e)(1)(A) because a bona fide purchaser would have had inquiry notice of them at all times prior to their recordation based on the debtor's absence of record title and the existence of the cancelled security deed on the property in favor of the bank. Watts v. Argent Mortg. Co., LLC (In re Hunt), Bankr. (Bankr. N.D. Ga. Feb. 23, 2007).

In a case in which a Chapter 7 trustee sought to avoid two security deeds the debtor gave to a mortgage company on the ground that the security interests were made within 90 days of the filing of the debtor's bankruptcy case and were therefore avoidable under 11 U.S.C. § 547(b)(4)(A), the trustee failed. The mortgage company's security deeds were perfected from July 14, 2004, the date a hypothetical bona fide purchaser would have had such notice, as set forth in O.C.G.A. § 23-1-17, and the date of perfection was within 10 days of the date of the transfer of property; accordingly, the transfer was made before the 90-day reachback period commenced on July 20, 2004, and the trustee could not avoid the deeds. Watts v. Argent Mortg. Co., LLC (In re Hunt), F.3d (11th Cir. Dec. 18, 2008)(Unpublished).

Owner of property adjacent to a bankruptcy debtor's private airport had an express easement to use the airport, even though the easement was not recorded until after the debtor purchased the airport, since the debtor had sufficient notice of the easement through visible indications such as taxiways and roads and the owner's use of the airport. Flyboy Aviation Props., LLC v. Franck, 501 Bankr. 808 (Bankr. N.D. Ga. 2013).

Under Georgia law, a fixture filing contained sufficient information to put a purchaser on notice of the existence of a bond trustee's prior unrecorded interest in the real property under an indenture, and the references in the fixture filing to the assignment and pledge of the debtor's interest would excite the attention of a purchaser and trigger the duty to inquire further into the interest held by the bond trustee. That inquiry would include an examination of the indenture that would give the purchaser notice of the bond trustee's mortgage and, thus, the mortgage lien was enforceable against a bona fide purchaser, and the mortgage lien was not avoidable under the Bankruptcy Code. Detention Mgmt., LLC v. UMB Bank, NA (In re Mun. Corr., LLC), 501 Bankr. 119 (Bankr. N.D. Ga. 2013).

No duty to inquire arose.

- In a declaratory judgment action brought by the purchasers of certain real property to remove a cloud from the purchasers' title asserted by a bank who had obtained a writ of fieri facias (the lien) against one of the sellers, the trial court erred by granting summary judgment to the bank and holding that the purchasers had a duty to inquire as to prior names used by that seller. The purchasers provided expert testimony that the lien using that seller's married name had not been recorded and, in turn, the bank failed to present any evidence to dispute the affidavits of the purchasers' witnesses or to cite to any authority which imposed a duty on the purchasers or the purchasers' agents to investigate prior or alternative names of that seller when nothing occurred prior to or during the closing that created a duty to inquire and that seller had falsely sworn under oath that the property was not subject to any encumbrances or liens and that there were no outstanding judgments. Gallagher v. Buckhead Cmty. Bank, 299 Ga. App. 622, 683 S.E.2d 50 (2009), cert. denied, No. S09C2080, 2010 Ga. LEXIS 2 (Ga. 2010).

Chapter 7 trustee was a bona fide purchaser for value as of the petition date under Georgia law as no security deed was of record in the debtors' chain of title and there was nothing in the record to put the trustee on inquiry notice of the existence of a bank's unrecorded security deed and, thus, the trustee could avoid the bank's security deed under 11 U.S.C. § 544(a)(3) and recover the property for the benefit of the estate under 11 U.S.C. § 550. The court rejected the bank's argument that the bank should be equitably subrogated to the rights of a prior lender whose loan was satisfied by the bank's loan because even if the bank was correct, a subrogee could have no greater rights than the party to whose rights it was subrogated, and the lender cancelled the lender's security deed prior to the petition date so that any subrogated rights of the bank were terminated at the same time. Ogiers v. Wells Fargo Bank, N.A. (In re Phillips), 465 Bankr. 336 (Bankr. N.D. Ga. 2012).

Although a county failed to comply with O.C.G.A. § 36-9-2 by recording a transfer in the minutes when the county conveyed the county's interest in property the county had formerly acquired by eminent domain to the county development authority, a subsequent purchaser was a bona fide purchaser without notice of this irregularity under O.C.G.A. § 23-1-20. Knowledge of the county's ownership was insufficient to excite inquiry. Darling Int'l, Inc. v. Carter, 294 Ga. 455, 754 S.E.2d 347 (2014).

With respect to the issue of whether a Chapter 7 trustee was a bona fide purchaser under 11 U.S.C. § 544 of the debtor husband's interest, the fact that a corrective deed was cross-indexed with a special warranty deed did not pull the corrective deed into the property's chain of title. A bank's analogy to recordable affidavits under Georgia law was inapposite because, setting aside that the statute applied specifically to affidavits containing particular information, nothing in that statute stated that cross-indexing a recordable affidavit made the affidavit part of a property's chain of title. Bank of Am., N.A. v. Adams (In re Adams), 583 Bankr. 541 (Bankr. N.D. Ga. 2018).

Genuine issue of fact as to inquiry notice of unrecorded deed.

- Trial court erred by granting summary judgment to the plaintiff because the record showed that there was an issue of fact as to whether the defendants' possession of the property put the plaintiff on inquiry notice of the defendants' title despite the defendants' deed not being recorded. Caraway v. Spillers, 332 Ga. App. 588, 774 S.E.2d 162 (2015).

Notice of need to confirm guardian's authority to convey children's interest.

- Trial court did not err in denying purchasers and the holders of two outstanding security deeds bona fide purchaser status because a quitclaim deed showed on the deed's face that a parent signed the deed as the children's purported "guardian"; thus, the designation of a "guardian" in the chain of title put the purchasers and holders on notice of the need to confirm the parent's legal authority to convey the children's interest in the property. Chase Manhattan Mortg. Corp. v. Shelton, 290 Ga. 544, 722 S.E.2d 743 (2012).

Knowledge chargeable to a party, after he is put on notice, extends to such knowledge as diligent inquiry would have disclosed. Howell v. United States, 519 F. Supp. 298 (N.D. Ga. 1981).

Once prospective purchaser of property finds person in actual, open, visible, exclusive, and unambiguous possession of the property, he has an affirmative duty to inquire of the possessor concerning his rights in the premises and as a consequence of his failure to do so, he may not prevail as a purchaser for value without notice. Bacote v. Wyckoff, 251 Ga. 862, 310 S.E.2d 520 (1984).

Chapter 7 trustee was not entitled to sell a debtor's property because the trustee was not a bona fide purchaser without notice; an examination of the deed book and page numbers used in transfers and assignments would have alerted a hypothetical purchaser to the uncertainty concerning the status of both assignees' interest in the property. The trustee's powers under 11 U.S.C. § 544(a)(3) did not cut off the first assignee's rights to seek reformation of the mistakenly cancelled first deed because the second assignee's quitclaim release of the instrument assigned to the first assignee was sufficient to constitute notice that would excite attention and put a party on inquiry under O.C.G.A. § 23-1-17. Household Fin. Servs. v. Neighbors (In re Neighbors), Bankr. (Bankr. S.D. Ga. Oct. 11, 2006).

Negligence

Equity requires diligence, and will not do for one that which he could have done for himself but for his own negligence. Glens Falls Indem. Co. v. Liberty Mut. Ins. Co., 202 Ga. App. 752, 44 S.E.2d 543 (1947).

An equitable action to cancel a deed on the ground of fraud, which clearly shows that the complainant failed to use even slight diligence to discover the fraud, fails to allege a cause of action. Equity will not grant relief to one whose long delay renders the ascertainment of the truth difficult, though no legal limitation bars the action. Whitfield v. Whitfield, 204 Ga. 64, 48 S.E.2d 852 (1948).

Where a creditor did not exercise diligence before he accepted a warranty deed in satisfaction of his debt, under this section, he was chargeable with the knowledge that timber had been cut from the land. Westbrook v. Beusse, 79 Ga. App. 654, 54 S.E.2d 693 (1949).

If by negligence one voluntarily remains ignorant of a fact materially affecting his interest and subsequently loses a right or property, he should not expect equity to do that for him which he refuses to do for himself. Cohen v. Glass, 225 Ga. 646, 171 S.E.2d 118 (1969).

Negligent ignorance is equivalent to knowledge. Southern Ry. v. Watson, 74 Ga. App. 317, 39 S.E.2d 707 (1946).

And equity will not relieve a person from his erroneous acts or omissions resulting from his own negligence. Mangham v. Hotel & Restaurant Supply Co., 107 Ga. App. 619, 131 S.E.2d 74 (1963).

In the sale of real estate and where there are no confidential relations alleged, the law will not protect a party in his own negligence. Westbrook v. Beusse, 79 Ga. App. 654, 54 S.E.2d 693 (1949).

Where two contracting parties deal at arms length with one another, and a written instrument is entered into and signed, and there is no evidence of artifice or fraud, and each party had ample opportunity to inform himself as to the amounts claimed due, and a party negligently omitted to take such precautions as would reasonably serve to protect himself, the defense of mistake of fact, if there is one - is obviously caused by the party's own neglect and is not available as a defense. Berry v. Atlas Metals, Inc., 152 Ga. App. 437, 263 S.E.2d 179 (1979).

Where a purchaser has knowledge of any fact sufficient to put a prudent man upon an inquiry which, if prosecuted with ordinary diligence, would lead to actual notice of some right or title in conflict with that he is about to purchase, it is his duty to make the inquiry; and, if he does not make it, he is guilty of bad faith or negligence to such extent that the law will presume that he made it, and will charge him with the actual notice he would have received if he had made it. Commodity Credit Corp. v. Wells, 188 Ga. 287, 3 S.E.2d 642 (1939).

The fact that the attorneys for the purchaser, and therefore the purchaser, have actual knowledge of the pendency of a suit for a money judgment in a tort action will not charge them with notice of the rendition of a judgment in that case, where no execution had been issued and recorded as provided by the statute, and they will not be chargeable with negligence, and therefore with notice, because they did not examine the papers in the suit, examine the bar docket, examine the minutes of the court, or make inquiry of plaintiff's counsel in that case, for: "What the law requires . . . to put innocent third parties upon notice of the existence of a judgment lien is an entry of the execution upon a certain record in the office of the clerk of the superior court. Where there is a failure to make such record, third parties are not charged with any duty to make an investigation or inquiry in relation to the existence of such a lien against their vendor." Jackson v. Faver, 210 Ga. 58, 77 S.E.2d 728 (1953).

Once a cab company had knowledge that the diagnosis of a physician showed a cab operator-employee was subject to recurring loss of consciousness which rendered it dangerous for him to drive, mere failure of the cab company to ascertain whether or not he had made a recovery would fall under the head of "negligent ignorance" which would be insufficient to relieve it from liability for the unfortunate consequences following upon a seizure while the defendant was operating the taxicab. Jackson v. Co-op Cab Co., 102 Ga. App. 688, 117 S.E.2d 627 (1960).

Notice which would charge a purchaser of personal property with negligence in not discovering a defect in the vendor's title, which the vendor impliedly warranted in the sale, is not the constructive notice derived from the record in the clerk's office as required by law of instruments affecting the title to property, before a purchaser can be charged with negligence in failing to discover a defect in the vendor's title to the property sold, the purchaser must have had actual notice of the defect, or notice of a fact sufficient to put the purchaser upon inquiry as to the state of the title to the property. Perrin v. Reardon, 44 Ga. App. 823, 163 S.E. 300 (1932).

The failure of a petitioner to know the content defining the coverage of its insurance contract or to compare the facts and circumstances surrounding the injury to ascertain if it was covered thereby, and its failure to inquire of the employer or the industrial board (Board of Worker's Compensation) as to the existence of an insurance contract with another insurance carrier that covered the injury, amounted to negligence on the part of the petitioner, and would not constitute such a mistake of fact as would render the agreement and the payments thereunder involuntary and, therefore, a basis for subrogation. Glens Falls Indem. Co. v. Liberty Mut. Ins. Co., 202 Ga. 752, 44 S.E.2d 543 (1947).

Subrogation for voluntary payments is not allowed. Subrogation will be allowed, (1) where there are existing circumstances which in equity amount to an implied agreement for subrogation; or (2) where there is an agreement with either the debtor or the creditor whereby one making the payment will be subrogated to the rights and remedies of the original creditor. Glens Falls Indem. Co. v. Liberty Mut. Ins. Co., 202 Ga. App. 752, 44 S.E.2d 543 (1947).

One failing to inform himself, but having equal opportunity of learning the truth, must suffer the consequences of his neglect. Rustin Stamp & Coin Shop, Inc. v. Ray Bros. Roofing & Sheet Metal Co., 175 Ga. App. 30, 332 S.E.2d 341 (1985).

Where purchaser was under constructive notice as to the legal description of his own deed, which incorporated the recorded plat by reference, and as to the ownership of the lot he believed he was buying but that was owned by another, his failure to conduct a title examination was the sole proximate cause of injuries and his negligence action was barred. Reidling v. Holcomb, 225 Ga. App. 229, 483 S.E.2d 624 (1997).

RESEARCH REFERENCES

Am. Jur. 2d.

- 27 Am. Jur. 2d, Equity, §§ 145, 167.

C.J.S.

- 37 C.J.S., Fraud, § 28 et seq.

ALR.

- Possession of land by cotenant after acquisition of interest of another cotenant as notice to subsequent purchaser from or creditor of latter, 162 A.L.R. 209.

What constitutes notice to subsequent purchaser of real property of option to purchase contained in unrecorded lease, 17 A.L.R.2d 331.

Right to reformation of contract or instrument as affected by intervening rights of third persons, 79 A.L.R.2d 1180.

Right of vendee under executory land contract to lien for amount paid on purchase price as against subsequent creditors of or purchasers from vendor, 82 A.L.R.3d 1040.

23-1-18. Pending action as notice; effect on purchaser.

Decrees ordinarily bind only parties and their privies; but a pending action shall be a general notice of an equity or claim to all the world from the time the action is filed and docketed. If the same is duly prosecuted and is not collusive, one who purchases pending the final outcome of the litigation shall be affected by the decree rendered therein.

(Civil Code 1895, § 3936; Civil Code 1910, § 4533; Code 1933, § 37-117.)

History of section.

- This section is derived from the decisions in Carmichael v. Foster, 69 Ga. 372 (1882), Wilson v. Wright, 72 Ga. 848 (1884), and Weems v. Harrold, Johnson & Co., 75 Ga. 866 (1885).

JUDICIAL DECISIONS

General Consideration

This section did not apply to an action in which purchasers of a farm sued their vendor's former partner to recover horses that the former partner was awarded in a lawsuit against the vendor and which the former partner obtained as the result of a levy on the judgment. Russell v. Lawrence, 234 Ga. App. 612, 507 S.E.2d 161 (1998).

Cited in Bennett v. Stokey, 164 Ga. 694, 139 S.E. 346 (1927); Plainville Brick Co. v. Williams, 170 Ga. 75, 152 S.E.2d 85 (1930); Jackson v. Massachusetts Mut. Life Ins. Co., 183 Ga. 659, 189 S.E. 243 (1936); A.B. Farquhar Co. v. Myers, 194 Ga. 220, 21 S.E.2d 432 (1942); Foster v. Rowland, 194 Ga. 845, 22 S.E.2d 777 (1942); Fleminster v. Billups, 202 Ga. 132, 42 S.E.2d 376 (1947); Wilson v. Blake Perry Realty Co., 219 Ga. 57, 131 S.E.2d 555 (1963).

Doctrine of Lis Pendens

1. In General

Purpose of doctrine of lis pendens.

- Lis pendens, whether it be from the common law as provided in this section or by statute (T. 44, Ch. 14, Art. 9), has for its purpose the protection of innocent purchasers of real property involved in pending litigation. Patent Scaffolding Co. v. Byers, 220 Ga. 426, 139 S.E.2d 332 (1964).

Lis pendens is the jurisdiction, power, or control which courts acquire over property involved in a suit, pending the continuance of the action, and until the final judgment therein. Coleman v. Law, 170 Ga. 906, 154 S.E. 445 (1930).

The underlying, if not the sole, object of the maxim "pendente lite nihil innoverture," is to keep the subject of the suit or res within the power of the court until the judgment or decree shall be entered, and thus to make it possible for courts of justice to give effect to their judgments and decrees. Carmichael Tile Co. v. Yaarab Temple Bldg. Co., 177 Ga. 318, 170 S.E. 294 (1933).

While special circumstances may alter the rule, it is the general rule that where the rights of the plaintiff to the property in question are secured under the rule of lis pendens, the judge in the exercise of his discretion may refuse an interlocutory injunction. Ingram & Le Grand Lumber Co. v. McAllister, 188 Ga. 626, 4 S.E.2d 558 (1939).

An application in the court of ordinary (now probate court) to probate a will, which, although denied for lack of evidence to prove it, was still pending therein, was not a suit within the meaning of the law of lis pendens, and did not operate so as to affect the title of one who purchased at the sale of the administrator, the appointment and sale taking place subsequently to an order of the ordinary (now probate judge) denying probate, although the will on the original application was thereafter duly probated. Scarborough v. Long, 186 Ga. 412, 197 S.E. 796, cert. denied, 305 U.S. 637, 59 S. Ct. 107, 83 L. Ed. 410 (1938).

To the existence of a valid and effective lis pendens, it is essential that three elements be present: the property must be of a character to be subject to the rule; the court must have jurisdiction both of the person and the subject matter, and the property involved must be sufficiently described in the pleadings. Walker v. Houston, 176 Ga. 878, 169 S.E. 107 (1933); Carmichael Tile Co. v. Yaarab Temple Bldg. Co., 177 Ga. 318, 170 S.E. 294 (1933); Ingram & Le Grand Lumber Co. v. McAllister, 188 Ga. 626, 4 S.E.2d 558 (1939).

The general rule is that lis pendens, duly prosecuted, and not collusive, is notice to purchaser so as to affect and bind his interest by the decree. Ingram & Le Grand Lumber Co. v. McAllister, 188 Ga. 626, 4 S.E.2d 558 (1939).

Lis pendens in itself does not create a lien of any kind, but merely charges the purchaser with notice of the pending action. If the judgment in the pending action does not create a lien on the property, certainly notice of the action will not. Carmichael Tile Co. v. Yaarab Temple Bldg. Co., 177 Ga. 318, 170 S.E. 294 (1933).

2. Application of Doctrine

The doctrine of lis pendens applies to a suit brought by a creditor to prevent his debtor from conveying his property away with the fraudulent intent to hinder, delay, or defraud the creditor. Coleman v. Law, 170 Ga. 906, 154 S.E. 445 (1930).

Actions to reach property which has been fraudulently conveyed and suits to subject specific property to the payment of debts come within the doctrine of lis pendens. Coleman v. Law, 170 Ga. 906, 154 S.E. 445 (1930).

The rule of lis pendens applies to a creditor's suit to set aside a fraudulent conveyance made to defeat the creditor, so that the purchasers or other persons, acquiring interests pendente lite, take title subject to the decree in the suit. Coleman v. Law, 170 Ga. 906, 154 S.E. 445 (1930); Walker v. Houston, 176 Ga. 878, 169 S.E. 107 (1933).

The doctrine of lis pendens, properly understood and applied, will prevent a stranger from dealing with any of the parties to a pending proceeding in which a title to, or an interest in, or a lien upon designated and described real property is sought to be enforced after the proceeding is filed, and before the final decree, so as to acquire any interest in the premises involved capable of withstanding the force of the decree, or frustrating its full legal effect. Atlanta Nat'l Bank v. Brown, 173 Ga. 213, 159 S.E. 874 (1931).

If a lessee for sawmill purposes of growing trees sells the same on a valuable consideration, and afterwards colludes with a third person, who at the time of the sale has a suit pending against such lessee to establish and enforce an outstanding equitable interest in the trees, and so colluding accepts a valuable consideration from the third person, and on the basis thereof allows a consent verdict and decree for the plaintiff without trial of the issues in the case, such verdict and decree will be subject to collateral attack by the vendee as void on the ground of fraud, and will not be protected on the principle of lis pendens. In such a situation such third person should be treated as a subsequent purchaser, and not as one whose original claim became adjudicated in his favor. Ingram & Le Grand Lumber Co. v. Burgin Lumber Co., 193 Ga. 404, 18 S.E.2d 774 (1942).

A suit for specific performance of a contract for the sale of land is "notice" of the claim that the plaintiff sets up therein, from the time it is commenced and docketed; and if duly prosecuted and not collusive, one purchasing the land pending the suit is affected by the final decree rendered therein, though the suit is in a county other than the one in which the land is located. Walker v. Houston, 176 Ga. 878, 169 S.E. 107 (1933).

Lis pendens does not apply to choses in action. Shadburn Banking Co. v. Streetman, 180 Ga. 500, 179 S.E. 377 (1935).

Restrictive covenants.

- A lis pendens notice stating a claim to a contract right to buy certain lots in a subdivision serves as notice to future purchasers of other lots in the subdivision that the lots described in the lis pendens notice are not encumbered by restrictive covenants recorded after the contract but before the sale of the other lots. Puryear v. Deakins, 258 Ga. 618, 373 S.E.2d 15 (1988).

RESEARCH REFERENCES

17 Am. Jur. Pleading and Practice Forms, Lis Pendens, § 2 et seq.

C.J.S.

- 54 C.J.S., Lis Pendens, §§ 2, 38.

ALR.

- Judgment in favor of less than all parties to contract as bar to action against other parties, 2 A.L.R. 124.

Statute requiring filing of formal notice of lis pendens in certain classes of cases as affecting common-law doctrine of lis pendens in other cases, 10 A.L.R. 306.

Judgment in action on commercial paper as affecting party to the paper who was not party to the suit, 34 A.L.R. 152.

Sufficiency of notice or knowledge of pendency of action against covenantee or his privy in order to bind the covenantor by judgment, 34 A.L.R. 1429.

Conclusiveness of decree assessing stockholders of insolvent corporation as against nonresident stockholders not personally served within the state in which it was rendered, 48 A.L.R. 669, 175 A.L.R. 1419.

Lis pendens as affecting property in county or district other than that in which action is pending, 71 A.L.R. 1085.

Doctrine of lis pendens as applied against one who takes deed pending action pursuant to executory contract entered into before action commenced, 93 A.L.R. 404.

Judgment as conclusive as against, or in favor of one not a party of record or privy to a party, who prosecuted or defended suit on behalf and in the name of party, or assisted him or participated with him in its prosecution or defense, 139 A.L.R. 9.

Decree on bill of review reversing prior decree as affecting purchaser or mortgagee of real property in the interval between the original decree and the filing of the bill of review, 150 A.L.R. 676.

Necessity of filing notice of lis pendens in suit to contest a will, 159 A.L.R. 386.

Judgment in death action as precluding subsequent personal injury action by potential beneficiary of death action, or vice versa, 94 A.L.R.3d 676.

23-1-19. Sale to one without notice; sale by one without notice.

If one with notice sells to one without notice, the latter shall be protected. If one without notice sells to one with notice, the latter shall be protected, as otherwise a bona fide purchaser might be deprived of selling his property for full value.

(Civil Code 1895, § 3938; Civil Code 1910, § 4535; Code 1933, § 37-114.)

History of section.

- This section is derived from the decision in Collins v. Heath, 34 Ga. 443 (1866).

Cross references.

- Power of person possessing voidable title to transfer goods to good faith purchaser for value, § 11-2-403.

JUDICIAL DECISIONS

General Consideration

Bona fide purchaser obtains good title notwithstanding forgery in chain of title.

- Bonner v. Norwest Bank Inc., 275 Ga. 620 (2002), is inconsistent with the Second Refuge Church Inc. v. Lollar, 282 Ga. 721 (2007), line of cases and is overruled to the extent that the case extends the bona fide purchaser for value doctrine to those acquiring title under a grantee in a forged deed; Mabra v. Deutsche Bank Inc., 277 Ga. App. 764, (2006), is likewise overruled as Mabra also runs contrary to the Lollar line of cases, which does not recognize that the bona fide purchaser for value doctrine may apply when forgery occurs between spouses. Brock v. Yale Mortg. Corp., 287 Ga. 849, 700 S.E.2d 583 (2010).

Cited in Malsby & Co. v. Widincamp, 24 Ga. App. 737, 102 S.E. 178 (1920); Luke v. Ashburn Bank, 40 Ga. App. 802, 151 S.E. 562 (1930); Gamble v. Brooks, 170 Ga. 662, 153 S.E. 759 (1930); Ryals v. Lindsay, 176 Ga. 7, 167 S.E. 284 (1932); Jones v. Edwards, 177 Ga. 723, 171 S.E. 285 (1933); Chestnut v. Weekes, 183 Ga. 367, 188 S.E. 714 (1936); Reynolds v. Smith, 186 Ga. 838, 199 S.E. 137 (1938); Lewis v. Patterson, 191 Ga. 348, 12 S.E.2d 593 (1940); Taylor v. Perdue, 206 Ga. 763, 58 S.E.2d 902 (1950); Fraser v. Dolvin, 199 Ga. 638, 34 S.E.2d 875 (1945); Mathis v. Blanks, 212 Ga. 226, 91 S.E.2d 509 (1956); Arnold v. Conner, 100 Ga. App. 503, 111 S.E.2d 638 (1959); Murray v. Johnson, 222 Ga. 788, 152 S.E.2d 739 (1966); Leachman v. Cobb Dev. Co., 226 Ga. 103, 172 S.E.2d 688 (1970); Jones v. Childs, 141 Ga. App. 552, 234 S.E.2d 87 (1977); Citizens & S. Bank v. Morris State Bldg. Corp., 243 Ga. 169, 253 S.E.2d 89 (1979); Bloodworth v. Sandersville Prod. Credit Ass'n, 245 Ga. 40, 262 S.E.2d 804 (1980); DOT v. Brooks, 254 Ga. 303, 328 S.E.2d 705 (1985); Anderson v. Streck, 190 Ga. App. 224, 378 S.E.2d 526 (1989); Dime Savs. Bank v. Sandy Springs Assocs., 261 Ga. 485, 405 S.E.2d 491 (1991); Farris v. Nationsbanc Mtg. Corp., 268 Ga. 769, 493 S.E.2d 143 (1997).

Sale to One Without Notice

A presumption of good faith attaches to one who is a purchaser for value, which remains until overcome by proof. Patellis v. Tanner, 199 Ga. 304, 34 S.E.2d 84 (1945).

A son shown to have been born subsequently to the execution of a will is not entitled to recover in ejectment against a purchaser for a valid consideration who relied on the judgment of the court of ordinary (now probate court) probating the will in solemn form, and who purchased prior to any proceeding to set aside such judgment. Mitchell v. Arnall, 203 Ga. 384, 47 S.E.2d 258 (1948).

Where an administrator sells his decedent's estate at public outcry and he buys back as an individual the property on the same day that he as administrator conveyed it away, the fact that the deeds were made on the same day and recited the same consideration does not amount to a void administrator's sale, and notice of the alleged fraud is not presumed. When later purchasers of the land pay value in money for the land purchased, they are presumed to be bona fide purchasers without notice. Thomas v. Couch, 171 Ga. 602, 156 S.E. 206 (1930).

It was not error to refuse to charge the principle that, when one attests a deed with full knowledge of its contents, he is estopped to assert an interest in the land conveyed outstanding in himself against the grantee; the evidence that a witness to petitioner's tax deed was an agent of the owner and grantor of the defendant did not authorize it, and even if the act and knowledge of the agent were attributed to the owner, defendant, without notice thereof, would not be bound. McDonald v. Wimpy, 206 Ga. 270, 56 S.E.2d 524 (1949).

A purchaser of real estate is not bound by recitals in a deed executed by his grantor to realty not embraced in his purchase, and which therefore does not constitute a muniment in his chain of title. Thompson v. Randall, 173 Ga. 696, 161 S.E. 377 (1931).

A bona fide sale of property, not made to hinder, delay, or defraud creditors, is not rendered invalid because the vendor may have been insolvent at the time. Wells v. Blitch, 184 Ga. 616, 192 S.E. 209 (1937).

Sale of real estate to innocent purchaser divests title of heirs.

- Superior court did not err in granting a purchaser summary judgment in an administrator's action alleging that the purchaser aided and abetted an executor's breach of fiduciary duties when it bought properties from the executor but did not meet its burden of proving payment merely by producing recitations of the alleged consideration; the probate court's order authorizing the executor to disburse estate property was valid on its face, the sale did not violate the terms of the power of sale in a testatrix's will, and the sale of real estate to an innocent purchaser divested the title of the heirs, although there could be irregularities. Witcher v. JSD Props., LLC, 286 Ga. 717, 690 S.E.2d 855 (2010).

Prior possession of land is not notice to a purchaser.

- Possession of real property which will charge a purchaser with notice is possession at the time the purchaser obtains his title. McDonald v. Taylor, 200 Ga. 445, 37 S.E.2d 336 (1946).

The rule in this section is subject to a notable exception; and that is, a conveyance is not protected when made back to a former owner who had notice of the equity, and who did not originally derive title through a bona fide holder. Thompson v. Randall, 173 Ga. 696, 161 S.E. 377 (1931).

Impact of forgery upon bona fide purchaser.

- Trial court erred in holding that a mortgage company had a valid security interest as to the other one-half undivided interest in certain property because the company could not acquire a valid security interest in the entire property by virtue of the company's status, if any, as a bona fide purchaser for value; a bona fide purchaser for value, or a security deed holder occupying such position, obtains good title notwithstanding a forgery in the chain of title. Brock v. Yale Mortg. Corp., 287 Ga. 849, 700 S.E.2d 583 (2010).

A 2003 warranty deed that operated to release a prior lender's security interest in the property was not a forgery but was signed by someone fraudulently assuming the authority of an officer of the prior lender and was regular on the deed's face. Therefore, a subsequent lender that foreclosed on the property and purchased the property at the foreclosure sale was a bona fide purchaser for value entitled to take the property free of the prior lender's security interest. Deutsche Bank Nat'l Trust Co. v. JP Morgan Chase Bank, N.A., 307 Ga. App. 307, 704 S.E.2d 823 (2010).

Purchasers entitled to protection of bona fide purchaser for value.

- There was no error in the trial court's grant of summary judgment to a bank and nursery in a daughter's action to cancel deeds executed by her mother before her death to the bank and the nursery because they were entitled to the protection of bona fide purchaser for value under O.C.G.A. §§ 23-1-19 and23-1-20; the title search showed that the property was transferred to the mother via the will of the daughter's father through a trustees deed of distribution from the remainder trust to the primary beneficiary of the trust, and there was nothing in the chain of title or the trust instruments that would put either the bank or nursery on notice that there were any issues affecting title to the properties because the wording of the trusts allowed the trustees to sell or dispose of any property, at any time, for reasons the trustees deemed best, for the benefit of the mother. Kitchings v. Ameris Bank, 309 Ga. App. 837, 711 S.E.2d 392 (2011).

Agreement to supply water did not obligate purchaser without notice.

- Even if an agreement between property owners providing that the property with a well would supply water to the adjacent property was a covenant running with the land, a later purchaser of the well property did not have actual or constructive notice of that agreement and was not bound by that agreement because the agreement was recorded outside the chain of title. McLeod v. Clements, 297 Ga. 371, 774 S.E.2d 102 (2015).

Sale by One Without Notice

Protection of purchaser with notice predicated on bona fides of vendor.

- A purchaser of land with notice of outstanding equities, from one who was without notice thereof and was entitled to status of bona fide purchaser, will be protected in his title on account of the bona fides of his vendor, and it is wholly immaterial of what nature the equity is, whether it is a lien, or an encumbrance, or a trust, or any other claim; for a bona fide purchaser of an estate, for a valuable consideration, purges away the equity from the estate in the hands of all persons who may derive title to it. Thompson v. Randall, 173 Ga. 696, 161 S.E. 377 (1931).

A deed of prior date loses its priority over a subsequent deed from the same vendor, which is based on a valuable consideration, taken without notice of the existence of the first and is the second deed being the first to go to record in the office of the clerk of the superior court of the county where the land lies, and even if the vendee in the second deed took with notice, a grantee of the latter who took without notice would be protected. Patellis v. Tanner, 199 Ga. 304, 34 S.E.2d 84 (1945).

RESEARCH REFERENCES

ALR.

- Pledgee of corporate stock as security for an antecedent debt as a bona fide purchaser within the rule which protects such purchasers against the equities of third persons, 9 A.L.R. 1619.

Right of one who, with knowledge of outstanding equity, derived his interest in real property from or through a bona fide purchaser, to same protection as latter, 63 A.L.R. 1362.

Bona fides of purchaser of bill or note on an executory consideration, 100 A.L.R. 1357.

Reputation in the community as to title to or interest in land as charging one with notice or putting him on inquiry, as regards his status as innocent purchaser or mortgagee, 109 A.L.R. 746.

What constitutes notice to subsequent purchaser of real property of option to purchase contained in unrecorded lease, 17 A.L.R.2d 331.

Motor vehicle certificate of title or similar document as, in hands of one other than legal owner, indicia of ownership justifying reliance by subsequent purchaser or mortgagee without actual notice of other interests, 18 A.L.R.2d 813.

Rights as between purchaser of timber and subsequent vendee of land, 18 A.L.R.2d 1150.

Relative rights in real property as between purchasers from or through decedent's heirs or devisees and unknown surviving spouse, 39 A.L.R.2d 1082.

Knowledge or notice of inadequacy of consideration for conveyance in chain of title as affecting bona fide status of purchaser, 42 A.L.R.2d 1088.

Relative rights as between purchaser of chattel from one who had previously bought it with stolen money, and victim of the theft, 62 A.L.R.2d 537.

Right of vendee under executory land contract to lien for amount paid on purchase price as against subsequent creditors of or purchasers from vendor, 82 A.L.R.3d 1040.

23-1-20. Interference with bona fide purchaser.

A bona fide purchaser for value without notice of an equity will not be interfered with by equity.

(Orig. Code 1863, § 3025; Code 1868, § 3037; Code 1873, § 3092; Code 1882, § 3092; Civil Code 1895, § 3934; Civil Code 1910, § 4531; Code 1933, § 37-111.)

Law reviews.

- For note, "Vesting Title in a Murderer: Where is the Equity in the Georgia Supreme Court's Interpretation of the Slayer Statute in Levenson?," see 45 Ga. L. Rev. 877 (2011).

JUDICIAL DECISIONS

Section constitutes mandatory charge to jury.

- Where this section is applicable to a case, and warranted both by the pleadings and the evidence, it should be given as a charge to the jury, even in the absence of a request. Anderson v. Barron, 208 Ga. 785, 69 S.E.2d 874 (1952).

Bona fide purchaser obtains good title notwithstanding forgery in chain of title.

- Trial court erred in holding that a mortgage company had a valid security interest as to the other one-half undivided interest in certain property because the company could not acquire a valid security interest in the entire property by virtue of the company's status, if any, as a bona fide purchaser for value; a bona fide purchaser for value, or a security deed holder occupying such position, obtains good title notwithstanding a forgery in the chain of title. Brock v. Yale Mortg. Corp., 287 Ga. 849, 700 S.E.2d 583 (2010).

Bonner v. Norwest Bank Inc., 275 Ga. 620 (2002), is inconsistent with the Second Refuge Church Inc. v. Lollar, 282 Ga. 721 (2007), line of cases and is overruled to the extent that the case extends the bona fide purchaser for value doctrine to those acquiring title under a grantee in a forged deed; Mabra v. Deutsche Bank Inc., 277 Ga. App. 764 (2006), is likewise overruled as Mabra also runs contrary to the Lollar line of cases, which does not recognize that the bona fide purchaser for value doctrine may apply when forgery occurs between spouses. Brock v. Yale Mortg. Corp., 287 Ga. 849, 700 S.E.2d 583 (2010).

A bona fide purchaser without notice acquires an unqualified legal right and title to the property purchased; and a court of equity has no jurisdiction to interfere with such vested legal right and title. Gamble v. Brooks, 170 Ga. 662, 153 S.E. 759 (1930); Jenkins v. Sosebee, 74 Bankr. 440 (Bankr. N.D. Ga. 1987).

Therefore, a bona fide purchaser for value, and without notice of an equity, will not be interfered with by a court of equity and this doctrine proceeds on the idea that the equity of the innocent purchaser is superior to that of the cestui que trust, who stands silently by and permits such purchaser to act to his own injury, or who is guilty of laches in not sooner asserting a mere secret equity. Gamble v. Brooks, 170 Ga. 662, 153 S.E. 759 (1930).

Plaintiff may not reform his deed because of mutual mistake, third party acquired her title subsequently to that deed and is an innocent purchaser without notice of such mistake. Cox v. Zucker, 214 Ga. 44, 102 S.E.2d 580 (1958).

Where the absolute title to property is apparently in a vendor or mortgagor, the vendee or mortgagee is protected, unless the one seeking to set up a lien or trust against the property can show that the vendee or mortgagee had notice of trust funds having gone into the property. Tattnall Bank v. Harvey, 186 Ga. 752, 198 S.E. 724 (1938).

Reformation of agreement was not permitted against bona fide purchaser of promissory note.

- In a suit on a promissory note by a lender's assignee, although some evidence supported the borrowers' claim that terms in a Forbearance Agreement (FA) binding the guarantors were the product of mutual mistake and release of the guarantors was intended, the trial court erred in reforming the FA because the borrowers had not overcome the presumption that the assignee was a bona fide purchaser for value without notice of the mistake. Hamilton State Bank v. Kelly Capital Invs., LLC, 335 Ga. App. 252, 779 S.E.2d 757 (2015).

While it is the rule that a bona fide purchaser of property in which trust funds have been invested is protected, the beneficiary of a trust estate may at his option, within a reasonable time, "affirm or reject an unauthorized investment by the trustee," and equity will aid the beneficiary in recovering the funds or property, or enforcing a lien for the wrongfully used funds, provided that the assets can be traced and remain in the hands of a person "affected with notice of the misapplication." Tattnall Bank v. Harvey, 186 Ga. 752, 198 S.E. 724 (1938).

While proof of payment of the purchase money alone raises a presumption of good faith, and carries the burden of claimant, where no testimony was introduced to prove that the consideration recited in the deed was in fact paid, nor was it otherwise proved to have been paid, the recital of the consideration in the deed and the recital therein that it was paid does not carry the burden of proving payment of the purchase money. Pound v. Faulkner, 193 Ga. 413, 18 S.E.2d 749 (1942).

The fact that the owner of the automobile, estranged from her husband, negligently allowed her husband to get possession of the keys and the automobile and to thereafter drive it to another city and sell it to a dealer in automobiles of the same make was not such an act as clothed the husband, who had no interest therein, with the external indicia of ownership and right of disposition, so as to enable him to pass the dealer such title to the automobile that the dealer could in turn give to a third-party purchaser clear title which would defeat the right of the true owner to recover the same in a trover action, nor did the act require a finding that the third-party purchaser was a bona fide purchaser for value without notice of any infirmity in the title to the automobile. Arnold v. Conner, 100 Ga. App. 503, 111 S.E.2d 638 (1959).

Where one purchases land at an administrator's sale duly authorized by order of the court of ordinary (now probate court), which land was in the possession of such administrator, his deed will not be canceled on the petition of parties claiming an equitable title to such land, of which equity the purchaser had no notice. Beecher v. Carter, 189 Ga. 234, 5 S.E.2d 648 (1939).

Where a purchaser of land from one in possession, who holds a deed thereto which is absolute on its face, has paid the purchase price and taken possession, parties claiming an equity therein of which the purchaser had no notice are not entitled to have the purchaser's deed canceled. Beecher v. Carter, 189 Ga. 234, 5 S.E.2d 648 (1939).

Where third-party purchasers of chattels were bona fide purchasers for value without notice of the chattel mortgages, it is not error to sustain their general demurrers (now motions to dismiss) to the mortgagee's petition for equitable foreclosure. Morris & Eckels Co. v. Fulton Nat'l Bank, 208 Ga. 222, 65 S.E.2d 815 (1951).

A purchaser of real estate is not bound by recitals in a deed executed by his grantor to realty not embraced in his purchase, and which, therefore, does not constitute a muniment in his chain of title. Thompson v. Randall, 173 Ga. 696, 161 S.E. 377 (1931).

Purchaser must retain bona fides until purchase money actually paid.

- It is a rule in equity that a bona fide purchaser without notice, to be entitled to protection, must be so, not only at the time of the contract or conveyance, but until the purchase money is actually paid. Ross v. Rambo, 195 Ga. 100, 23 S.E.2d 687 (1942).

A partial payment of the purchase money before notice of the equitable title of the true owners, although not sufficient to invest the vendee with the character of a bona fide purchaser as regards the entire estate purchased, will entitle him to invoke the aid of the equitable principle that he who asks equity must do equity and to be reimbursed for the amount actually paid before. Ross v. Rambo, 195 Ga. 100, 23 S.E.2d 687 (1942).

Bona fide purchaser not found when purchased with notice of quiet title action.

- Investment company was not entitled to the protection accorded to bona fide purchasers because the company admitted that the company had actual knowledge of the quiet title action filed by a bank as well as the recorded lis pendens before purchasing the subject property at a foreclosure sale; because a grantee's security deed was recorded with the maturity date clearly set forth, the company was on constructive notice that the date of the reversion of the title interest, pursuant to O.C.G.A. § 44-14-80(a)(1), had occurred before the foreclosure sale. MPP Invs., Inc. v. Cherokee Bank, N.A., 288 Ga. 558, 707 S.E.2d 485 (2011).

Purchasers entitled to protection of bona fide purchaser for value.

- There was no error in the trial court's grant of summary judgment to a bank and nursery in a daughter's action to cancel deeds executed by her mother before her death to the bank and the nursery because they were entitled to the protection of bona fide purchaser for value under O.C.G.A. §§ 23-1-19 and23-1-20; the title search showed that the property was transferred to the mother via the will of the daughter's father through a trustees deed of distribution from the remainder trust to the primary beneficiary of the trust, and there was nothing in the chain of title or the trust instruments that would put either the bank or nursery on notice that there were any issues affecting title to the properties because the wording of the trusts allowed the trustees to sell or dispose of any property, at any time, for reasons the trustees deemed best, for the benefit of the mother. Kitchings v. Ameris Bank, 309 Ga. App. 837, 711 S.E.2d 392 (2011).

Although a county failed to comply with O.C.G.A. § 36-9-2 by recording a transfer in the minutes when the county conveyed the county's interest in property the county had formerly acquired by eminent domain to the county development authority, a subsequent purchaser was a bona fide purchaser without notice of this irregularity under O.C.G.A. § 23-1-20, so that the county's title was superior to that of the condemnee's heirs, who sought to repurchase the property under O.C.G.A. § 36-9-3(g)(3)(B). Darling Int'l, Inc. v. Carter, 294 Ga. 455, 754 S.E.2d 347 (2014).

Bona fide purchaser status properly denied.

- Trial court did not err in denying purchasers and the holders of two outstanding security deeds bona fide purchaser status because a quitclaim deed showed on the deed's face that a parent signed the deed as the children's purported "guardian"; thus, the designation of a "guardian" in the chain of title put the purchasers and holders on notice of the need to confirm the parent's legal authority to convey the children's interest in the property. Chase Manhattan Mortg. Corp. v. Shelton, 290 Ga. 544, 722 S.E.2d 743 (2012).

Cited in Long v. Atlanta Trust Co., 164 Ga. 21, 137 S.E. 394 (1927); Rountree v. Davis, 90 Ga. App. 223, 82 S.E.2d 716 (1954); Mathis v. Blanks, 212 Ga. 226, 91 S.E.2d 509 (1956); Ayers v. Carden, 212 Ga. 510, 93 S.E.2d 694 (1956); W.L. Schautz Co. v. Duncan Hosiery Mills, Inc., 218 Ga. 729, 130 S.E.2d 496 (1963); Todd v. Conner, 220 Ga. 173, 137 S.E.2d 614 (1964); DOT v. Brooks, 254 Ga. 303, 328 S.E.2d 705 (1985); Anderson v. Streck, 190 Ga. App. 224, 378 S.E.2d 526 (1989); Dime Savs. Bank v. Sandy Springs Assocs., 261 Ga. 485, 405 S.E.2d 491 (1991); Tower Fin. Servs., Inc. v. Smith, 204 Ga. App. 910, 423 S.E.2d 257 (1992); Farris v. Nationsbanc Mtg. Corp., 268 Ga. 769, 493 S.E.2d 143 (1997).

RESEARCH REFERENCES

ALR.

- Pledgee of corporate stock as security for an antecedent debt as a bona fide purchaser within the rule which protects such purchasers against the equities of third persons, 9 A.L.R. 1619.

Right of one who, with knowledge of outstanding equity, derived his interest in real property from or through a bona fide purchaser, to same protection as latter, 63 A.L.R. 1362.

Bona fides of purchaser of bill or note on an executory consideration, 100 A.L.R. 1357.

What constitutes notice to subsequent purchaser of real property of option to purchase contained in unrecorded lease, 17 A.L.R.2d 331.

Motor vehicle certificate of title or similar document as, in hands of one other than legal owner, indicia of ownership justifying reliance by subsequent purchaser or mortgagee without actual notice of other interest, 18 A.L.R.2d 813.

Rights as between purchaser of timber and subsequent vendee of land, 18 A.L.R.2d 1150.

Relative rights in real property as between purchasers from or through decedent's heirs or devisees and unknown surviving spouse, 39 A.L.R.2d 1082.

Extension of time or forbearance to sue as consideration constituting mortgagee bona fide purchaser, 39 A.L.R.2d 1088.

Knowledge or notice of inadequacy of consideration for conveyance in chain of title as affecting bona fide status of purchaser, 42 A.L.R.2d 1088.

Relative rights as between purchaser of chattel from one who had previously bought it with stolen money, and victim of the theft, 62 A.L.R.2d 537.

Right to reformation of contract or instrument as affected by intervening rights of third persons, 79 A.L.R.2d 1180.

Right to follow chattel into hands of purchaser who took in payment of preexisting debt, 11 A.L.R.3d 1028.

Right of vendee under executory land contract to lien for amount paid on purchase price as against subsequent creditors of or purchasers from vendor, 82 A.L.R.3d 1040.

23-1-21. Compulsion to litigate.

Equity will not force persons to litigate in order to have done what they ought to do and are willing to do voluntarily.

(Civil Code 1895, § 3935; Civil Code 1910, § 4532; Code 1933, § 37-118.)

History of section.

- This section is derived from the decisions in Sperry & Niles v. Haslam, 57 Ga. 412 (1876) and Blalock v. Newhill, 78 Ga. 245, 1 S.E. 383 (1887).

JUDICIAL DECISIONS

Cited in Rowe v. Cole, 176 Ga. 592, 168 S.E. 882 (1933); Robertson v. Webster, 79 Ga. App. 30, 52 S.E.2d 511 (1949); Bell v. Fine Prods. Co., 139 Ga. App. 878, 229 S.E.2d 808 (1976).

RESEARCH REFERENCES

Am. Jur. 2d.

- 27 Am. Jur. 2d, Equity, § 15.

ALR.

- Mistake in lease as ground for relief, 26 A.L.R. 472.

23-1-22. Interference with creditor.

A diligent creditor shall not needlessly be interfered with in the prosecution of his legal remedies.

(Civil Code 1895, § 3942; Civil Code 1910, § 4539; Code 1933, § 37-121.)

History of section.

- This section is derived from the decision in Burgwyn Bros. Tobacco Co. v. Bentley & Co., 90 Ga. 508, 16 S.E. 216 (1892).

JUDICIAL DECISIONS

Compulsion to litigate generally.

- Where grievance is not that Public Service Commission refuses to hear and act upon an application of the telephone company for increased rates, but that the commission, having so heard and acted thereon, has fixed rates that are confiscatory, mandamus could merely require that the commission act again in the exercise of that discretion vested in it by law. If the evidence shows that the rates ordered will result in confiscation, equity has jurisdiction to render the judgment complained of. Rates that are unjustly and unreasonably low are confiscatory. Southern Bell Tel. & Tel. Co. v. Georgia Pub. Serv. Comm'n, 203 Ga. 832, 49 S.E.2d 38 (1948).

Remedy not "needlessly" interfered with.

- O.C.G.A. § 23-1-22 did not provide grounds for refusing to allow a debtor corporation to assert an alter ego cause of action against its former principal or for allowing a creditor to bring an alter ego action against the former principal in state court as the creditor's chosen remedy was interfered with only because, in bankruptcy, all unsecured creditors with like claims were to be treated equally. Baillie Lumber Co. v. Thompson, 279 Ga. 288, 612 S.E.2d 296 (2005).

Cited in Saul v. Vaughn & Co., 240 Ga. 301, 241 S.E.2d 180 (1977).

23-1-23. Construction of conditions; relief against forfeitures.

Where the rules of construction will allow, equity seeks always to construe conditions subsequent into covenants and to relieve against forfeitures.

(Orig. Code 1863, § 3048; Code 1868, § 3060; Code 1873, § 3115; Code 1882, § 3115; Civil Code 1895, § 3971; Civil Code 1910, § 4568; Code 1933, § 37-216.)

JUDICIAL DECISIONS

General Consideration

Construction generally.

- Where there are no express words of defeasance, forfeiture, or reversion, words in a deed will be construed as words of covenant and not words of condition. The remedy for a breach by one having the right to enforce the same is an action for damages and not a forfeiture of the estate for condition broken. Fulford v. Fulford, 225 Ga. 9, 165 S.E.2d 848 (1969); Kitchens v. Atlantic Steel Co., 123 Ga. App. 812, 182 S.E.2d 530 (1971), aff'd, 228 Ga. 708, 187 S.E.2d 824 (1972).

Lease provision requiring lessor to modify building in accordance with blueprint and city requirements was a covenant, and not words of condition; and the remedy for a breach was an action for damages, and not a forfeiture of the estate for condition broken. Fulton County v. Collum Properties, Inc., 193 Ga. App. 774, 388 S.E.2d 916 (1989).

Cited in Grantham v. Royal Ins. Co., 34 Ga. App. 415, 130 S.E. 589, cert. denied, 34 Ga. App. 836 (1925); Hardeman v. Ellis, 162 Ga. 664, 135 S.E. 195 (1926); A.C. Alexander Lumber Co. v. Bagley, 184 Ga. 352, 191 S.E. 446 (1937); Crisp County Lumber Co. v. Bridges, 187 Ga. 484, 200 S.E. 777 (1939); Golden v. National Life & Accident Ins. Co., 189 Ga. 79, 5 S.E.2d 198 (1939); Simpson v. Blanchard, 73 Ga. App. 843, 38 S.E.2d 634 (1946); Churches Homes for Bus. Girls, Inc. v. Manget Found., Inc., 110 Ga. App. 539, 139 S.E.2d 138 (1964); White v. Turbidy, 227 Ga. 825, 183 S.E.2d 363 (1971); Kiser v. Warner Robins Air Park Estates, Inc., 237 Ga. 385, 228 S.E.2d 795 (1976).

Construction Generally

Determination of condition precedent or subsequent.

- While it is not always easy to determine whether the condition created by the terms of a conveyance is precedent or subsequent, the general rule is that, if the act or condition required does not necessarily precede the vesting of the estate, but may accompany or follow it, and if the act may as well be done after as before vesting of the estate, or if from the nature of the act to be performed, it is evidently the intention of the parties that the estate shall vest and the grantee perform the act taking possession, then the condition is subsequent. Gordon v. Whittle, 206 Ga. 339, 57 S.E.2d 169 (1950).

If, upon a strict construction of a deed in its entirety (there being no express words of defeasance), it should be doubtful whether the instrument created an estate upon condition subsequent, or the words employed imported covenant, the latter construction should be adopted. Fulford v. Fulford, 225 Ga. 9, 165 S.E.2d 848 (1969).

Where a deed purports to convey a fee simple title and there is no provision in the deed for a forfeiture of the estate or a reversion to the grantor in the event the grantee conveyed the property to another without the consent of his brothers, restrictive words in the deed are words of covenant and not a condition subsequent. Fulford v. Fulford, 225 Ga. 9, 165 S.E.2d 848 (1969).

A deed will not be construed as a grant on condition subsequent unless the language used by express terms creates an estate on condition or unless the intent of the grantor to create a conditional estate is manifest from a reading of the entire instrument. Gordon v. Whittle, 206 Ga. 339, 57 S.E.2d 169 (1950); Fulford v. Fulford, 225 Ga. 9, 165 S.E.2d 848 (1969); Floyd v. Hoover, 141 Ga. App. 588, 234 S.E.2d 89 (1977).

Deed that the grantor, in consideration of payment by grantees of certain indebtedness and of their support and maintenance of him during the remainder of his life, conveyed the described premises, did not create a condition subsequent which, upon the failure of the grantees to support and maintain the grantor, would result in a forfeiture of the estate conveyed, but such language created a covenant binding the grantees therein to perform; upon their failure to perform, if the grantor had been in life, he might have rescinded the contract by restoring to the grantees that part of the consideration represented by the payment of his indebtedness, offset by any profits they might have derived from the conveyance to them. Jones v. Reid, 184 Ga. 764, 193 S.E. 235 (1937).

Provision in deed that title "reverts back to the grantor if the grantee denies grantor her right to live on said property with him as his wife or without him" created a valid condition subsequent, and stipulated in terms that a breach of such condition by the grantee husband would cause the title to revert; and this would give to the grantor wife the right of reentry; however, if performance by the husband of such a condition subsequent was made impossible by acts or conduct on the part of the wife herself, the rule would be otherwise. Turner v. Turner, 186 Ga. 223, 197 S.E. 771 (1938).

Forfeitures

Courts do not generally favor forfeitures and this rule is applicable to insurance contracts. Cotton States Mut. Ins. Co. v. Torrance, 110 Ga. App. 4, 137 S.E.2d 551 (1964), aff'd, 220 Ga. 639, 140 S.E.2d 840 (1965).

But while forfeitures are not favored, they are not altogether prohibited in this state. Cotton States Mut. Ins. Co. v. Torrance, 110 Ga. App. 4, 137 S.E.2d 551 (1964), aff'd, 220 Ga. 639, 140 S.E.2d 840 (1965).

Conditions subsequent in deeds, although not favored, will be enforced by the court when they are clearly created and are not inconsistent with the other terms of the conveyance, and are not rendered impossible by the act of God or by the subsequent conduct of the grantor. Evans v. Brown, 196 Ga. 634, 27 S.E.2d 300 (1943).

While forfeitures are not unlawful, the law does not favor them, and all ambiguities in a contract are to be resolved against their existence; but where a contract in unmistakable terms provides for a forfeiture, and is otherwise free from legal infirmity, neither a court of law nor a court of equity will relieve against the forfeiture. Cotton States Mut. Ins. Co. v. Torrance, 110 Ga. App. 4, 137 S.E.2d 551 (1964), aff'd, 220 Ga. 639, 140 S.E.2d 840 (1965).

The condition subsequent, with right of reentry, and forfeiture of the estate conveyed grantee, is not void because it could work a forfeiture. If a valid limitation imposed against alienation is interwoven with, so as to constitute a part of, the grant itself, the grant will be treated as a defeasible estate, and upon the inhibition being violated the estate conveyed is forfeited and terminates. Floyd v. Hoover, 141 Ga. App. 588, 234 S.E.2d 89 (1977).

Conditions in a deed which tend to destroy an estate are not favored in law and such conditions must be strictly construed against forfeiture. Kitchens v. Atlantic Steel Co., 123 Ga. App. 812, 182 S.E.2d 530 (1971), aff'd, 228 Ga. 708, 187 S.E.2d 824 (1972).

Where there is a breach of a covenant which authorizes the forfeiture of the lease, the prompt assertion thereof by the lessor will operate to defeat the lessee's privilege to renew, however, forfeitures by acts of a party to a lease because of a breach of a covenant or condition are not favored by the courts. Pritchett v. King, 56 Ga. App. 788, 194 S.E. 44 (1937).

The general rule is that the breach by a lessee of the covenants or stipulations on his part contained in the lease does not work a forfeiture of the term in the absence of an express proviso to that effect in the lease, the lessor's remedy being by way of a claim for damages. Pritchett v. King, 56 Ga. App. 788, 194 S.E. 44 (1937).

Where a contract does not provide in express terms for a forfeiture upon a breach of the covenant, the presumption is that the lessor will be content with such right as is conferred by the ordinary remedies. Pritchett v. King, 56 Ga. App. 788, 194 S.E. 44 (1937).

RESEARCH REFERENCES

Am. Jur. 2d.

- 27 Am. Jur. 2d, Equity, §§ 74-83.

C.J.S.

- 30 C.J.S., Equity, § 56 et seq.

ALR.

- Distinction between condition and covenant in grant of land for church purposes, 7 A.L.R. 1429.

Relief of purchaser against forfeiture of land contract, 40 A.L.R. 182.

Constitutionality of statute relieving against forfeiture of bail or recognizance, 43 A.L.R. 1233.

Continued use of property for burial purposes as a condition subsequent of a conveyance of dedication of land for that purpose, 47 A.L.R. 1174.

Covenant in mining lease to develop property as affected by provisions for delay rental, 67 A.L.R. 221.

Commencement of development within fixed term as extending term of oil and gas lease, 67 A.L.R. 526.

Validity and effect of covenant by lessee, as regards his activities after expiration of lease, 122 A.L.R. 1031.

Execution of new lease as within contemplation of option for extension or renewal of lease, 172 A.L.R. 1205.

Mistake, accident, inadvertence, etc., as ground for relief from termination or forfeiture of oil or gas lease for failure to complete well, commence drilling, or pay rental, strictly on time, 5 A.L.R.2d 993.

Relief against forfeiture of lease for nonpayment of rent, 31 A.L.R.2d 321.

Waiver of, or estoppel to assert, condition subsequent or its breach, 39 A.L.R.2d 1116.

Enforcement of, or waiver of or estoppel to assert, forfeiture clause of lease made or held by cotenants as lessors, 50 A.L.R.2d 1365.

23-1-24. When election between benefits compelled.

A case of election arises whenever a person is entitled to one of two benefits, to each of which he has legal title; but the enforcement of both would be unconscionable and inequitable to others having claims upon the same property or fund. In such cases equity may compel an election.

(Orig. Code 1863, § 3092; Code 1868, § 3104; Code 1873, § 3161; Code 1882, § 3161; Civil Code 1895, § 4012; Civil Code 1910, § 4609; Code 1933, § 37-501.)

Cross references.

- Elections relating to deeds, § 44-5-37.

Elections relating to wills, § 53-2-111 et seq.

JUDICIAL DECISIONS

General Consideration

For discussion of doctrine of election by legatee, see State Banking Co. v. Hinton, 178 Ga. 68, 172 S.E. 42 (1933).

Sections53-2-111,53-2-112 and this section must be construed together, and be considered in the light of the decisions of the Supreme Court and equitable rules as to when a legatee will be compelled to elect. Rieves v. Smith, 184 Ga. 657, 192 S.E. 372 (1937).

While the general basis and effect of the doctrine of election is stated in broad and general terms by § 53-2-111, and if a legatee accepts a benefit under the will he must adopt the whole contents of the instrument, conforming to all its provisions, and renouncing any right inconsistent with it, such a case for an election does not arise except where the conditions stated in § 53-2-112 and this section exist. Rieves v. Smith, 184 Ga. 657, 192 S.E. 372 (1937).

The principles stated in § 18-2-2 and this section do not mean that a creditor having a priority against a fund in court can be required to relinquish his direct claim thereon, and proceed at his own additional expense with delay in an independent suit upon an indemnifying bond from the debtor, which does not by its terms protect the creditor seeking to compel such election. Savannah Bank & Trust Co. v. Meldrim, 195 Ga. 765, 25 S.E.2d 567 (1943).

Determination of ownership required prior to election.

- A plaintiff would not be compelled to elect between a legacy and a "mere claim" to property until after there has been an adjudication of the question whether or not he is in fact the owner of an interest in the property disposed of by the will, and then only in the event this issue is determined in his favor; since, if he were first compelled to elect, and he should for any reason fail in the trial to establish his claim, there would be no defeated or disappointed legatees to compensate, but, on the contrary, the other legatees would get the very property he claimed. Rieves v. Smith, 184 Ga. 657, 192 S.E. 372 (1937).

Cited in Federal Land Bank v. Farmers' & Merchants' Bank, 177 Ga. 505, 170 S.E. 504 (1933); State Banking Co. v. Hinton, 178 Ga. 68, 172 S.E. 42 (1933); Head v. Scruggs, 178 Ga. 324, 173 S.E. 113 (1934); Brown v. Smith, 50 Ga. App. 332, 178 S.E. 180 (1935); Irwin v. Willis, 202 Ga. 463, 43 S.E.2d 691 (1947).

Compulsion to Elect

Election is choice between proffered benefit and retention of own property.

- An "election" in equity is a choice which a person is compelled to make between the acceptance of a benefit under an instrument and the retention of his own property which is attempted to be disposed of by that instrument. Rieves v. Smith, 184 Ga. 657, 192 S.E. 372 (1937).

The doctrine of election as applied to wills, against one claiming inconsistent benefits, arises when the testator "has attempted to give property not his own, and has given a benefit to a person to whom that property belongs," in which case "the devisee or legatee shall elect either to take under or against the will." It is applicable where the instrument confers upon one a benefit while attempting to dispose of his own property, in which event such person must elect whether to accept the benefit under the instrument or retain his property. However, this doctrine does not apply where testamentary disposition describes no specific property so as to identify it with that of the claimant, but describes the property only generally, as "all my real and personal property and all property of every kind and character owned by me at my death," since the testator would be presumed to have intended to bequeath only what he actually owned and could lawfully dispose of. First Nat'l Bank & Trust Co. v. Roberts, 187 Ga. 472, 1 S.E.2d 12 (1939).

A case of election only arises when a person is entitled to one of two benefits to each of which he has the legal title, and an election can exist only where there is a choice between two or more inconsistent remedies actually existing at the time of election. Rieves v. Smith, 184 Ga. 657, 192 S.E. 372 (1937).

The choice is compulsory between two inconsistent rights or claims where there is a clear intention of the testator that the beneficiary shall not enjoy both. Rieves v. Smith, 184 Ga. 657, 192 S.E. 372 (1937).

Where a testator, after devising property owned by him to one beneficiary, assumes to devise to another property belonging to the first devisee, the devisee of the property owned by the testator, if he accepts the devise with knowledge of the facts, is precluded from asserting a claim to his own property devised to the other beneficiary. The beneficiary must elect between keeping his own and taking what is given by the will. Rieves v. Smith, 184 Ga. 657, 192 S.E. 372 (1937).

The fact that a sheriff who had collected taxes which were unaccounted for, had given a bond with a surety, conditioned on the faithful performance of his duties, would not create a case for compulsory election, so as to require the county officials claiming the tax moneys to relinquish, for the benefit of a creditor bank, their direct claim of priority from the funds of the decedent in the registry of the court, and to proceed, with delay and additional expense, by a suit on the bond. Savannah Bank & Trust Co. v. Meldrim, 195 Ga. 765, 25 S.E.2d 567 (1943).

RESEARCH REFERENCES

C.J.S.

- 28 C.J.S., Election of Remedies, § 2.

ALR.

- A provision in land contract for pecuniary forfeiture or penalty by a party is default as affecting the right of the other party to specific performance, 32 A.L.R. 584, 98 A.L.R. 877.

Election of remedies: inconsistency of action for damages for fraud and suit to establish constructive trust based on same transaction, 43 A.L.R. 177.

Attempt to reform contract as election of remedies precluding action to enforce contract as written or vice versa, 49 A.L.R. 1513.

Revocation of election to take under or contrary to will, 81 A.L.R. 740, 71 A.L.R.2d 942.

Election of remedies by owner against public authority or corporation having power of eminent domain which unauthorizedly enters land without instituting valid eminent domain proceedings, 101 A.L.R. 373.

What amounts to widow's election as between antenuptial or postnuptial settlement and husband's will or her rights under statute of descent and distribution, or attack by her upon such settlement, 117 A.L.R. 1001.

Judgment for debt without foreclosure of mortgage securing it as affecting mortgage, or right to foreclose the same, where no execution or attachment is levied under the judgment, 121 A.L.R. 917.

Bank depositor's act in seeking restitution from third person to whom, or for benefit of whom, the bank has paid out the deposit, as election of remedy precluding action against bank, 144 A.L.R. 1440.

Revocation or withdrawal of election to take under or against will, 71 A.L.R.2d 942.

Notice of rescission as irrevocable election when other party refuses to assent thereto, 1 A.L.R.2d 1084.

Conclusive election of remedies as predicated on commencement of action, or its prosecution short of judgment on the merits, 6 A.L.R.2d 10.

Election to take against will as extinguishing power of appointment, 38 A.L.R.2d 977.

Factors considered in making election for incompetent to take under or against will, 3 A.L.R.3d 6.

Time within which election must be made for incompetent to take under or against will, 3 A.L.R.3d 119.

Conflict of laws regarding election for or against will, and effect in one jurisdiction of election in another, 69 A.L.R.3d 1081.

23-1-25. Laches.

Equity gives no relief to one whose long delay renders the ascertainment of the truth difficult, even when no legal limitation bars the right.

(Orig. Code 1863, § 3027; Code 1868, § 3039; Code 1873, § 3094; Code 1882, § 3094; Civil Code 1895, § 3939; Civil Code 1910, § 4536; Code 1933, § 37-119.)

Cross references.

- Authority of courts of equity to interpose equitable bar owing to lapse of time and laches of complainant, § 9-3-3.

Tolling of limitations due to fraud of defendant or those under whom he claims, § 9-3-96.

JUDICIAL DECISIONS

General Consideration

The equitable doctrine of laches is not applicable to suits at law. Columbus Bank & Trust Co. v. Dempsey, 120 Ga. App. 5, 169 S.E.2d 349 (1969).

Equity will relieve against mutual mistake, but only at the instance of a complainant who moves with reasonable diligence. What is a reasonable time must necessarily depend upon the peculiar facts and environments of the particular case. Parker v. Fisher, 207 Ga. 3, 59 S.E.2d 715 (1950).

And if both parties are equally to blame for delay, neither should be allowed to invoke the rule of laches in order to gain advantage over his adversary. City of McRae v. Folsom, 191 Ga. 272, 11 S.E.2d 900 (1940); Davis v. Newton, 217 Ga. 75, 121 S.E.2d 153 (1961).

Generally, doctrine of laches will be invoked only when there will be prejudice to a party's position. Ansley Park Plumbing & Heating Co. v. Mikart, Inc., 9 Bankr. 144 (Bankr. N.D. Ga. 1981).

Quiet title action.

- Trial court did not err in refusing to deny property owners' petition to quiet title due to laches because the owners acquired their property on April 21, 2000, and over the next several years, the owners made repeated requests to adjoining landowners to stop using the street for anything other than access from the owners' driveways to the highway, but the adjoining landowners refused; the adjoining landowners identified no change in circumstance during the intervening years that would qualify as prejudice. Goodson v. Ford, 290 Ga. 662, 725 S.E.2d 229 (2012).

Laches does not apply to uncollected child support.

- Judgment forgiving a father's child support arrearage based on the mother's delay in making the claim was reversed because laches does not apply to claims for uncollected child support and the dormancy statute, O.C.G.A. § 9-12-60(a), did not apply to child support orders entered after July 1, 1997, such as the one involved in the case. Wynn v. Craven, 301 Ga. 30, 799 S.E.2d 172 (2017).

Cited in Griffin v. Haden, 172 Ga. 478, 157 S.E. 686 (1931); Freeney v. Pape, 185 Ga. 1, 194 S.E. 515 (1937); Kinney v. Mayor of Milledgeville, 185 Ga. 866, 196 S.E. 467 (1938); Wright v. City of Metter, 192 Ga. 75, 14 S.E.2d 443 (1941); Miller v. Everett, 192 Ga. 26, 14 S.E.2d 449 (1941); Grant v. Hart, 192 Ga. 153, 14 S.E.2d 860 (1941); Gunby v. Turner, 194 Ga. 378, 21 S.E.2d 640 (1942); Lankford v. Holton, 195 Ga. 317, 24 S.E.2d 292 (1943); Williams v. Porter, 202 Ga. 113, 42 S.E.2d 475 (1947); Larkins v. Boyd, 205 Ga. 69, 52 S.E.2d 307 (1949); Calhoun County v. Early County, 205 Ga. 169, 52 S.E.2d 854 (1949); Gay v. Radford, 207 Ga. 38, 59 S.E.2d 915 (1950); Flannagan v. Clark, 207 Ga. 345, 61 S.E.2d 485 (1950); Barron v. Darden, 207 Ga. 350, 61 S.E.2d 497 (1950); Vinson v. Citizens & S. Nat'l Bank, 208 Ga. 813, 69 S.E.2d 866 (1952); Todd v. Bivins, 215 Ga. 402, 110 S.E.2d 768 (1959); Consumers Fin. Corp. v. Lamb, 218 Ga. 343, 127 S.E.2d 914 (1962); Fuller v. Fuller, 107 Ga. App. 429, 130 S.E.2d 520 (1963); Blackstock v. Murphy, 220 Ga. 661, 140 S.E.2d 902 (1965); Brown v. Granite Holding Corp., 221 Ga. 560, 146 S.E.2d 289 (1965); Fuller v. McBurrows, 229 Ga. 422, 192 S.E.2d 144 (1972); Gauker v. Eubanks, 230 Ga. 893, 199 S.E.2d 771 (1973); Sikes v. Sikes, 231 Ga. 105, 200 S.E.2d 259 (1973); Wilson v. Passmore, 240 Ga. 716, 242 S.E.2d 124 (1978); Sakas v. Jessee, 202 Ga. App. 838, 415 S.E.2d 670 (1992); Troup v. Loden, 266 Ga. 650, 469 S.E.2d 664 (1996); Hall v. Trubey, 269 Ga. 197, 498 S.E.2d 258 (1998); City of Duluth v. Riverbrooke Properties, Inc., 233 Ga. App. 46, 502 S.E.2d 806 (1998); Parker v. Shreve, 244 Ga. App. 350, 535 S.E.2d 332 (2000).

Equitable Demands Must Be Asserted Within Reasonable Time

There is no principle of equity sounder, more conservative and more prolific, in all the fruits of peace, than this: that he who slumbers over his rights, with no impediment to his asserting them, until the evidence upon which a counterclaim is founded, may from lapse of time, be presumed to be lost; until the generation cognizant of the transactions between the parties, has passed away, and until original actors are in their graves, and their affairs are left to representatives - the law, in the exercise of an equitable sovereignty, presumes it to be unjust, that under such circumstances, a complainant should be heard; and in nine cases out of ten, it is unjust in fact, as well as in theory. The principle upon which courts of equity proceed in such cases, is, that the lateness of the demand, arising from lapse of time, is presumptive evidence against its justice. Welch v. Welch, 215 Ga. 198, 109 S.E.2d 757 (1959).

Equity will not aid in the enforcement of stale demands. Cannon v. Fulton Nat'l Bank, 206 Ga. 609, 57 S.E.2d 917 (1950); Phillips v. Hayes, 212 Ga. 148, 81 S.E.2d 19 (1956); Welch v. Welch, 215 Ga. 198, 109 S.E.2d 757 (1959).

Defendant's suit is properly barred by laches when defendant's claim of a resulting trust in a house is based on payments made 35 years ago to a person who is the sole record owner and is now dead. Stone v. Williams, 265 Ga. 480, 458 S.E.2d 343 (1995).

The rule that equity will not aid in the enforcement of stale demands applies to accounts. Cannon v. Fulton Nat'l Bank, 206 Ga. 609, 57 S.E.2d 917 (1950).

In a suit to rescind the sale of land, the plaintiff's voluntary failure to bring suit for three years after being fully cognizant of the fraud committed seven years prior thereto is such laches as will bar his action. Hillis v. Clark, 222 Ga. 604, 150 S.E.2d 922 (1966).

Where no legal redemption of the land is alleged, or claimed, but the redemption is entirely an equitable one, persons claiming thereunder must assert their equitable demands within a reasonable time, for since equity rewards the vigilant, not the slothful, where the delay is such as to render the ascertainment of the truth difficult, equity will give no relief. Slade v. Barber, 200 Ga. 405, 37 S.E.2d 143 (1946).

Even after the dissolution of a partnership, the statute of limitations does not begin to run in favor of one partner against another until the partnership affairs, as to debtors and creditors of the firm, have been wound up and settled, or, at least, a sufficient time has elapsed since the dissolution to raise the presumption that such was the fact, nor, while there are outstanding assets and liabilities, will a partner be barred as against his copartner, on the principle of stale demands. Powell v. Powell, 171 Ga. 840, 156 S.E. 677 (1931), later appeal, 179 Ga. 817, 177 S.E. 566 (1934).

There is no absolute rule as to what constitutes laches or staleness of demand, and no one decision constitutes a precedent in the strict sense for another. Each case is to be determined according to its own particular circumstances. Laches is not, like limitations, a mere matter of time, but principally a question of the inequity of permitting the claim to be enforced, an inequity founded on some intermediate change in conditions. Bleckley v. Bleckley, 189 Ga. 47, 5 S.E.2d 206 (1939); Yablon v. Metropolitan Life Ins. Co., 200 Ga. 693, 38 S.E.2d 534 (1946).

Laches is not, like limitations, a mere matter of time. but is principally a question of the inequity of permitting the claim to be enforced, an inequity founded on some intermediate change in conditions. Cooper v. Aycock, 199 Ga. 658, 34 S.E.2d 895 (1945).

Mere lapse of time is usually insufficient to activate the doctrine of laches. Ansley Park Plumbing & Heating Co. v. Mikart, Inc., 9 Bankr. 144 (Bankr. N.D. Ga. 1981).

And in determining whether there has been laches, there are various things to be considered, notably the duration of the delay in asserting the claim, and the sufficiency of the excuse offered in extenuation of the delay, whether plaintiff acquiesced in the assertion or operation of the corresponding adverse claim, the character of the evidence by which plaintiff's right is sought to be established, whether during the delay the evidence of the matters in dispute has been lost or become obscured or the conditions have so changed as to render the enforcement of the right inequitable, whether third persons have acquired intervening rights. Citizens' & S. Nat'l Bank v. Ellis, 171 Ga. 717, 156 S.E. 603 (1931); Johnson v. Sears, 199 Ga. 432, 34 S.E.2d 541 (1945); Cooper v. Aycock, 199 Ga. 658, 34 S.E.2d 895 (1945); Parker v. Fisher, 207 Ga. 3, 59 S.E.2d 715 (1950); Welch v. Welch, 215 Ga. 198, 109 S.E.2d 757 (1959); Erhart v. Brooks, 231 Ga. 272, 201 S.E.2d 464 (1973).

Delay in bringing suit must not be such as to preclude the court from arriving at a safe conclusion as to the truth of the matters in controversy, and thus make the doing of equity either doubtful or impossible, due to loss or obscuration of evidence of the transaction in issue, or where the lapse of time has been sufficient to create or justify a presumption that, if the plaintiff was ever possessed of a right, it had been abandoned, waived, or satisfied. Citizens' & S. Nat'l Bank v. Ellis, 171 Ga. 717, 156 S.E. 603 (1931); Flemister v. Billups, 202 Ga. 132, 42 S.E.2d 376 (1947); Welch v. Welch, 215 Ga. 198, 109 S.E.2d 757 (1959).

While most frequently the bar of laches is applied in instances where the long delay has rendered the ascertainment of the truth difficult, the doctrine does not rest on that premise alone. Johnson v. Sears, 199 Ga. 432, 34 S.E.2d 541 (1945).

An unreasonable delay until the death of essential witnesses, which practically precludes the court from arriving at a safe conclusion as to the truth of the matters in controversy, and which make the doing of equity either doubtful or impossible, due to loss or obscuration of evidence of the transaction in issue, will bar the action. Stephens v. Walker, 193 Ga. 330, 18 S.E.2d 537 (1942).

While most frequently the bar of laches is applied in instances where the long delay has rendered the ascertainment of the truth difficult, the doctrine does not rest on that premise alone. Bryan v. Willingham-Little Stone Co., 194 Ga. 563, 22 S.E.2d 40 (1942).

Petition showing affirmatively that the plaintiffs were guilty of laches in not seeking for 18 years the cancellation of deeds conveying property in their mother's estate was properly dismissed on general demurrer (now motion to dismiss). Johnson v. Sears, 199 Ga. 432, 34 S.E.2d 541 (1945).

A delay of 40 years or more, and the death of essential witnesses, when the truth of matters in controversy cannot be fairly established, makes the doing of equity either doubtful or impossible, and will bar the action. Slade v. Barber, 200 Ga. 405, 37 S.E.2d 143 (1946).

Death of essential witnesses, which may preclude the court from arriving at a safe conclusion as to the truth of matters in controversy, and which makes the doing of equity doubtful or impossible, will bar the action. Whitfield v. Whitfield, 204 Ga. 64, 48 S.E.2d 852 (1948).

To charge a party with laches in delaying to assert a right, an opportunity to have acted sooner must have existed; if he acted at the first possible opportunity, he is not culpable. Cooper v. Aycock, 199 Ga. 658, 34 S.E.2d 895 (1945).

In a suit to cancel a deed on the ground of the grantor's insanity, when no reason appeared why the plaintiffs did not know, or by the slightest diligence could not have known, of the substantial facts, so as to bring the suit within a reasonable time after the deed was executed and after the grantor's death, the action was properly dismissed on demurrer (now motion to dismiss) on the ground that it was stale and that the plaintiffs were in laches. Hillis v. Clark, 222 Ga. 604, 150 S.E.2d 922 (1966).

To prevail on a plea of laches, it is essential that the pleading party prove harm caused him by the delay. Clover Realty Co. v. J.L. Todd Auction Co., 240 Ga. 124, 239 S.E.2d 682 (1977).

The defendant's plea of laches in a suit brought to enjoin the defendant from extending a parking area onto land zoned for single family dwellings, cannot be sustained, where no facts are alleged to show any prejudice to the defendant, or that the ascertainment of the truth is made more difficult by any delay on the part of the plaintiffs to immediately seek relief against the defendant for the unlawful use of his property. Palmer v. Tomlinson, 217 Ga. 399, 122 S.E.2d 578 (1961).

Delay alone is never enough to show laches where there is an applicable statute of limitations. Clover Realty Co. v. J.L. Todd Auction Co., 240 Ga. 124, 239 S.E.2d 682 (1977).

And a delay is excusable when it was induced by the adverse party; he cannot take advantage of a delay which he himself has caused or to which he has contributed. City of McRae v. Folsom, 191 Ga. 272, 11 S.E.2d 900 (1940).

Constructive trust denied due to laches.

- Former wife was not entitled to impose a constructive trust on her former husband's military pension pursuant to O.C.G.A. § 53-12-132 because she failed to object to the absence of any provision for the pension in their divorce decree for 12 years and failed to bring suit until 5 years after payments allegedly became due. Davis v. Davis, 310 Ga. App. 512, 713 S.E.2d 694 (2011).

Laches Based on Inequity

Laches is not, like limitations, a mere matter of time, but principally a question of the inequity of permitting the claim to be enforced, an inequity founded on some intermediate change in conditions. Yablon v. Metropolitan Life Ins. Co., 200 Ga. 693, 38 S.E.2d 534 (1946); Whitfield v. Whitfield, 204 Ga. 64, 48 S.E.2d 852 (1948).

Laches does not arise from mere lapse of time. Columbus Bank & Trust Co. v. Dempsey, 120 Ga. App. 5, 169 S.E.2d 349 (1969).

And in fixing the time when the bar of laches may be interposed, the court does not measure altogether by the lapse of time, because this section declares that: "Equity gives no relief to one whose long delay renders the ascertainment of the truth difficult, though no legal limitation bars the right." Bass v. Mayor of Milledgeville, 180 Ga. 156, 178 S.E. 529 (1934), appeal dismissed, 295 U.S. 721, 55 S. Ct. 926, 79 L. Ed. 1675 (1935).

Laches is an equitable doctrine which is independent of the statute of limitations, and as to the lapse of time necessary for invoking the doctrine of laches, such time may or may not correspond with the time specified in the statute of limitations. Prudential Ins. Co. v. Sailors, 69 Ga. App. 628, 26 S.E.2d 557 (1943); Johnson v. Sears, 199 Ga. 432, 34 S.E.2d 541 (1945).

But courts of equity may act in obedience and analogy to statutes of limitation.

- While the equitable doctrine of laches operates independently of any statute of limitations, courts of equity usually act in obedience and in analogy to the statutes of limitations, in cases where it would not be unjust and inequitable to do so. Cooper v. Aycock, 199 Ga. 658, 34 S.E.2d 895 (1945).

Lapse of time is an important element of laches; yet, unless a case falls within the operation of a statute of limitations, there is no fixed period within which a person must assert his claim or be barred by laches; the length of time depends on the circumstances of the particular case. Cooper v. Aycock, 199 Ga. 658, 34 S.E.2d 895 (1945).

The period from which laches is determined is fixed in equity cases according to the circumstances of each case. Bryan v. Willingham-Little Stone Co., 194 Ga. 563, 22 S.E.2d 40 (1942).

The doctrine of laches not only forbids relief to one whose long delay renders the ascertainment of truth difficult, though no legal limitation bars the right, but also authorizes equity to interpose an equitable bar, whenever, from the lapse of time and laches of the complainant, it would be inequitable to allow a party to enforce his legal rights. Goodwin v. First Baptist Church, 225 Ga. 448, 169 S.E.2d 334 (1969), later appeal, 226 Ga. 524, 175 S.E.2d 868 (1970).

In an equitable suit to obtain possession of lands, under a rule analogous to the rule of law permitting title by adverse possession to be acquired in seven years under color of title, claimants would be barred after such time by their laches. Slade v. Barber, 200 Ga. 405, 37 S.E.2d 143 (1946).

On an equitable petition seeking merely a cancellation of a deed, although "equity follows the analogy of the law" in allowing the seven-year period of limitation, this time is permitted only if there are no special circumstances demanding an earlier application, and where such circumstances exist, calling for an interposition of the equitable doctrine of laches, equity will refuse relief to one whose long delay renders the ascertainment of the truth difficult, though no legal limitation bars the right. Stephens v. Walker, 193 Ga. 330, 18 S.E.2d 537 (1942).

The rules of limitation do not apply if the defendant, or those under whom he claims, has been guilty of a fraud by which the plaintiff shall have been debarred or deterred from his action. In such a case the period of limitation shall run only from the time of the discovery of the fraud, and equity applies a similar rule as to laches. Stephens v. Walker, 193 Ga. 330, 18 S.E.2d 537 (1942).

The statute of limitations is a statute of repose. When a person is defrauded, and has knowledge of the fraud, he must ask redress, if at all, within the period of limitation. If he waits for a longer period, he is bound by his laches. Slade v. Barber, 200 Ga. 405, 37 S.E.2d 143 (1946).

Fraud, which should have been discovered if usual and reasonable diligence had been exercised, is not a good reply to the statute of limitations. Slade v. Barber, 200 Ga. 405, 37 S.E.2d 143 (1946).

A general allegation of fraud amounts to nothing.

- It is necessary that the complainant show, by specifications, wherein the fraud consists in order to prevent the application of laches against him. Issuable facts must be charged. Welch v. Welch, 215 Ga. 198, 109 S.E.2d 757 (1959).

Measure of delay.

- Period of the delay in bringing suit to decide if it is barred by laches is measured from the time the cause of action was possessed by the party charged with laches or his privies. Chapman v. McClelland, 248 Ga. 725, 286 S.E.2d 290 (1982).

Pleading and Practice

Defense of laches must be alleged.

- A petition is not demurrable (now subject to motion to dismiss) on the ground of laches on the part of the petitioner, where nothing in the petition authorizes the inference that there was any delay on the petitioner's part, suit being brought within the statute of limitations, which rendered the ascertainment of the truth more difficult, or in any way hindered the defendant city in making its defense. Vickers v. City of Fitzgerald, 216 Ga. 476, 117 S.E.2d 316 (1960), overruled on other grounds, City of Chamblee v. Maxwell, 264 Ga. 635, 452 S.E.2d 488 (1994).

Laches is an equitable defense, and a petition for equitable relief is not subject to demurrer (now motion to dismiss) on the ground of laches unless the allegations of fact affirmatively show such defense. Henderson v. Henderson, 219 Ga. 310, 133 S.E.2d 251 (1963).

And plaintiff must prove absence of laches.

- Where the petition affirmatively shows that there has been unusual and unreasonable delay in bringing the action, it is incumbent upon the plaintiffs to show that they were not guilty of laches. Hillis v. Clark, 222 Ga. 604, 150 S.E.2d 922 (1966).

It is incumbent on the plaintiff, in order to repel the presumption of unreasonable delay, to allege in his petition the impediments to an earlier prosecution of his claim. Parker v. Fisher, 207 Ga. 3, 59 S.E.2d 715 (1950).

Where it cannot be said as a matter of law that the plaintiff was dilatory in asserting his claim, then the defense of laches is a question for the jury and summary judgment cannot be granted the defendant on the issue. Davidson Mineral Properties, Inc. v. Gifford-Hill & Co., 235 Ga. 176, 219 S.E.2d 133 (1975).

Application to mandamus.

- Supreme Court of Georgia concluded that case law supporting that a mandamus action can be barred by gross laches is the correct rule; thus, Crow v. McCallum, 215 Ga. 692, 696 (113 S.E. 203) (1960), and its progeny, were wrongly decided and overruled. Marsh v. Clarke County Sch. Dist., 292 Ga. 28, 732 S.E.2d 443 (2012).

A plaintiff's right to recover his share of the remainder estate is a plain statutory right not subject to the bar of laches. Perkins v. First Nat'l Bank, 221 Ga. 82, 143 S.E.2d 474 (1965).

One in possession of land is not chargeable with laches in failing to bring suit to cancel deeds. Marietta Realty & Dev. Co. v. Reynolds, 189 Ga. 147, 5 S.E.2d 347 (1939); Davis v. Newton, 217 Ga. 75, 121 S.E.2d 153 (1961).

One who is in possession of property under a claim of ownership will not be guilty of laches for delay in resorting to a court of equity to establish his rights. Davis v. Newton, 215 Ga. 58, 108 S.E.2d 809 (1959).

Affirmative defense relevant.

- Trial court's denial of a decedent's father's motion for partial summary judgment pursuant to O.C.G.A. § 9-11-56 in an action against the decedent's mother and the estate administrator was proper, because the defense of laches under O.C.G.A. § 23-1-25 was appropriate in defense of the father's request for imposition of a constructive trust on an annuity that was purchased with the wrongful death settlement proceeds, and the defense of advice of counsel under O.C.G.A. § 15-19-17 against the father's claim of breach of fiduciary duty was relevant to the mother's state of mind. Rhone v. Bolden, 270 Ga. App. 712, 608 S.E.2d 22 (2004).

RESEARCH REFERENCES

Am. Jur. 2d.

- 27 Am. Jur. 2d, Equity, §§ 93, 152-156, 159-176.

C.J.S.

- 30 C.J.S., Equity, § 100. 31 C.J.S., Equity, § 113 et seq.

ALR.

- Laches as affecting right of corporation or its stockholders to relief against directors for violations of trust, 10 A.L.R. 370.

Laches as preventing recovery of property diverted from one religious sect or denomination to another, 18 A.L.R. 692.

Check in payment of interest or installment of principal as tolling statute of limitations, 28 A.L.R. 84, 125 A.L.R. 271.

Institution of suit as relieving one of charge of laches precluding relief in equity, 43 A.L.R. 921.

Effect of recovery of judgment on unfiled or abandoned claim after expiration of time allowed for filing claim against estate, 60 A.L.R. 736.

What amounts to laches or delay on part of wife or widow in attacking antenuptial settlement which will prevent relief, 74 A.L.R. 559.

Right to equitable relief from usury as affected by laches, 111 A.L.R. 126.

Applicability of statute of limitations or doctrine of laches as between husband and wife, 121 A.L.R. 1382.

Statute of limitations or presumption of payment from lapse of time as ground for affirmative relief from debt or lien, 164 A.L.R. 1387.

Workers' compensation: time and jurisdiction for review, reopening, modification, or reinstatement of award or agreement, 165 A.L.R. 9.

Pleading laches, 173 A.L.R. 326.

Delay of stockholders in exercising their right to convert their stock into other class of stock or corporate obligation, 10 A.L.R.2d 587.

Laches or delay in bringing suit as affecting right to enforce restrictive building covenant, 25 A.L.R.5th 233.

Applicability of statute of limitations or laches to quo warranto proceedings, 26 A.L.R.2d 828.

Laches as precluding cancellation of or other relief against release for personal injuries, 34 A.L.R.2d 1314.

What constitutes sufficient repudiation of express trust by trustee to cause statute of limitations to run, 54 A.L.R.2d 13.

Delay in asserting contractual right to arbitration as precluding enforcement thereof, 25 A.L.R.3d 1171.

Estoppel or laches precluding lawful spouse from asserting rights in decedent's estate as against putative spouse, 81 A.L.R.3d 110.

Applicability of statute of limitations or doctrine of laches to proceeding to revoke or suspend license to practice medicine, 51 A.L.R.4th 1147.

CHAPTER 2 GROUNDS FOR EQUITABLE RELIEF

Article 1 General Provisions.
Article 2 Accident and Mistake.
Article 3 Fraud.
Article 4 Accounting of Contribution; Apportionment; Setoff.
Article 5 Administration of Assets Generally.
Article 6 Exercise of Powers of Appointment and Sale.
Article 7 Nonperformance of Contract.

ARTICLE 1 GENERAL PROVISIONS

Cross references.

- Issuance of injunction to prevent nuisance, § 41-2-4.

JUDICIAL DECISIONS

General Consideration

Editor's notes.

- All of the following annotations are taken from cases decided under former Code Section 23-2-1, repealed in 1986.

Equity may set aside a void judgment, where diligence is proven. Norris v. Pollard, 75 Ga. 358 (1885).

Judgment cannot be attacked collaterally. Fricks v. Miller, 41 Ga. 274 (1870).

Even on ground that it was procured through accident or mistake. Brooke v. F & M Bank, 27 Ga. App. 250, 108 S.E. 135 (1921).

A court of equity will not lend its aid to a party to a contract founded upon an illegal or immoral consideration; if the contract is executed, it will be left to stand, and if it be executory, neither party can enforce it. Fender v. Crosby, 209 Ga. 896, 76 S.E.2d 769 (1953).

Equitable relief requires showing of inadequate remedy at law.

- One invoking equitable relief against verdicts, as well as against judgments, should meet the usual requirement as to showing that his relief at law would be less adequate than his relief at equity. Gentle v. Georgia Power Co., 179 Ga. 853, 177 S.E. 690 (1934).

Equitable interference after verdict at law prohibited except in cases of fraud, etc.

- The general rule is, that courts will not interfere after verdict at law, except in cases of fraud, or surprise, or in extraordinary cases where manifest injustice would be done; nor where the party might have defended himself fully at law and neglected it. Poole v. McEntire, 209 Ga. 659, 75 S.E.2d 20 (1953).

A person is generally committed to the contents of an instrument which he signs, even though he did not have actual knowledge thereof, in the absence of fraud or some other circumstances relieving him of the imputation of inexcusable indifference or neglect. Bach v. Phillips, 200 Ga. 308, 37 S.E.2d 407 (1946).

Absence of counsel, when caused by illness may be sufficient ground to set aside a judgment. Clark v. Ramsay, 138 Ga. 726, 75 S.E. 1128 (1912).

As may absence of a party. McCall v. Miller, 120 Ga. 262, 47 S.E. 920 (1904).

The general rule that an infant is bound by a judgment rendered in a suit in which he is represented by a next friend, to the same extent as though he were an adult, is subject to an exception in case of fraud, collusion, or like conduct on the part of the next friend, in which case the judgment may be set aside at the instance of the minor, even though it may be a consent judgment. Nelson v. Estill, 190 Ga. 235, 9 S.E.2d 73 (1940).

A decree adversely affecting the interests of minors, even though it be entered by consent of their father as next friend, may, if induced by fraud, duress, or the like, be set aside at their instance in a proper proceeding, and for that purpose they may sue by their mother as next friend. Nelson v. Estill, 190 Ga. 235, 9 S.E.2d 73 (1940).

Judgment taken in absence of party pursuant to agreed on continuance.

- Where the parties agreed to continue the case, and for this reason a party fails to appear, he may have a judgment thus taken set aside. Southern Ry. v. Planters Fertilizer Co., 134 Ga. 527, 68 S.E. 95 (1910).

Affidavit of illegality is not proper remedy to arrest execution and set aside judgment by default. Tumlin v. O'Bryan & Bros., 68 Ga. 65 (1881).

Nor judgment procured by fraud. Ray v. Hixon, 107 Ga. 768, 33 S.E. 692 (1899).

Cited in Bryant v. Bush, 165 Ga. 252, 140 S.E. 366 (1927); Ellis v. Ellis, 174 Ga. 559, 163 S.E. 155 (1932); Walker v. Hall, 176 Ga. 12, 166 S.E. 757 (1932); Nolan v. Southland Loan & Inv. Co., 177 Ga. 59, 169 S.E. 370 (1933); Huson Ice & Coal Co. v. City of Covington, 178 Ga. 6, 172 S.E. 56 (1933); Jackson Disct. Co. v. Merck, 178 Ga. 660, 173 S.E. 647 (1934); Lovelace v. Lovelace, 179 Ga. 822, 177 S.E. 685 (1934); Gentle v. Georgia Power Co., 179 Ga. 853, 177 S.E. 690 (1934); Stroup v. Imes, 185 Ga. 422, 195 S.E. 411 (1938); Haygood v. Haygood, 190 Ga. 445, 9 S.E.2d 834 (1940); Hadden v. Willingham Auto. Fin. Corp., 67 Ga. App. 444, 20 S.E.2d 436 (1942); Bainbridge Farm Co. v. Bower, 194 Ga. 304, 21 S.E.2d 224 (1942); Rucker v. Upshaw, 199 Ga. 529, 34 S.E.2d 602 (1945); Hanleiter v. Spearman, 200 Ga. 289, 36 S.E.2d 780 (1946); Morris Plan Bank v. Simmons, 201 Ga. 157, 39 S.E.2d 166 (1946); Saliba v. Saliba, 202 Ga. 279, 42 S.E.2d 748 (1947); Hogg v. Hogg, 206 Ga. 691, 58 S.E.2d 403 (1950); Conway v. Gower, 208 Ga. 348, 66 S.E.2d 740 (1951); Poole v. McEntire, 209 Ga. 659, 75 S.E.2d 20 (1953); Johnson v. Johnson, 210 Ga. 795, 82 S.E.2d 831 (1954); Nuckolls v. Merritt, 216 Ga. 35, 114 S.E.2d 427 (1960); Hester v. Dixie Fin. Corp., 109 Ga. App. 204, 135 S.E.2d 504 (1964); Tripp v. Conner, 220 Ga. 2, 136 S.E.2d 744 (1964); Tucker v. Tucker, 221 Ga. 128, 143 S.E.2d 639 (1965); Saturday v. Saturday, 113 Ga. App. 251, 147 S.E.2d 798 (1966); Echols v. Tower Credit Corp., 223 Ga. 307, 154 S.E.2d 617 (1967); McSherry v. Israel, 223 Ga. 472, 156 S.E.2d 33 (1967); Kitchens v. Clay, 224 Ga. 325, 161 S.E.2d 828 (1968); Northern Freight Lines v. Fireman's Fund Ins. Cos., 121 Ga. App. 786, 175 S.E.2d 104 (1970); Lewis v. Lewis, 124 Ga. App. 579, 184 S.E.2d 672 (1971); Aetna Fin. Co. v. Pair, 141 Ga. App. 243, 233 S.E.2d 218 (1977); Wilson v. Passmore, 240 Ga. 716, 242 S.E.2d 124 (1978); Cooper v. Mesh, 247 Ga. 82, 274 S.E.2d 335 (1981).

Negligence

Before equity will interfere to grant relief against a judgment at law, three things must concur: ignorance of the defense sought to be set up at the time the judgment at law was rendered, without negligence being imputable to the complainant, and a want of adequate relief at law. Beddingfield v. Old Nat'l Bank & Trust Co., 175 Ga. 172, 165 S.E. 61 (1932).

There is no relief from a judgment that could have been prevented but for the negligence of the party. Beddingfield v. Old Nat'l Bank & Trust Co., 175 Ga. 172, 165 S.E. 61 (1932).

Equity will not reward negligence.

- Where a defendant in a pending lawsuit negligently fails to make his defense, equity will not intervene to grant him any relief from a judgment obtained against him in consequence of his negligence. West v. Downer, 218 Ga. 235, 127 S.E.2d 359 (1962); Stratton v. Bingham, 238 Ga. 287, 232 S.E.2d 560 (1977).

When a party moving to set aside a judgment, during the term it was rendered, has been legally served with the suit and does not show that an alleged fraud practiced on him by the defendant prevented him from making his defense and having his day in court, it is beyond a court's power to grant the motion. Hirsch v. Collier, 104 Ga. App. 271, 121 S.E.2d 318 (1961).

Equity will not intervene to set aside a judgment of a court of competent jurisdiction, which might have been prevented except for the negligence of the complaining party. W.T. Rawleigh Co. v. Seagraves, 178 Ga. 459, 173 S.E. 167 (1934).

If a party has a good defense at law, and from negligence fails to set it up at the proper time, he must take the consequences of his own laches; he cannot go into equity to be relieved from the consequences of such negligence. Peacock v. Walker, 213 Ga. 628, 100 S.E.2d 575 (1957).

The judgment probating a will in solemn form cannot be set aside on any ground which by due diligence could have been ascertained and pleaded as a defense against probate. Smith v. Smith, 225 Ga. 799, 171 S.E.2d 524 (1969).

As qualification of the rule controlling the setting aside of judgments or prerequisites to its exercise it must appear that it was not due to defendant's negligence that the fraud was perpetrated, and that due diligence would not have prevented the fraud. Hirsch v. Collier, 104 Ga. App. 271, 121 S.E.2d 318 (1961), later appeal, 106 Ga. App. 652, 127 S.E.2d 859 (1962).

To authorize setting aside a judgment after the term at which it was rendered, the actions of the adverse party that cause a party's failure to appear and defend must be of such character to show that reliance on them did not amount to laches or negligence. Hirsch v. Collier, 104 Ga. App. 271, 121 S.E.2d 318 (1961), later appeal, 106 Ga. App. 652, 127 S.E.2d 859 (1962).

The failure of a defendant to attend and defend a suit against him cannot be relieved in equity upon the ground that he was advised by his attorney that the case would not be tried until a later term, where it is merely shown that such advice was based upon an incorrect and unwarranted assumption that the remainder of the term would be devoted to the trial of criminal cases. In such a case the erroneous assumption on the part of the attorney would be imputable to the client, and would afford no equitable ground for excusing his absence. W.T. Rawleigh Co. v. Seagraves, 178 Ga. 459, 173 S.E. 167 (1934).

Where an administrator was sued upon an instrument alleged to have been executed by his intestate, and he did not know the instrument to be genuine, he should have exercised diligence to determine this fact before permitting judgment against him, and, where he knew or had reasonable cause to believe that the instrument would be introduced in evidence at the trial upon another defense which he had filed, when he would have a sufficient opportunity to discover the truth as to its genuineness, and he failed to avail himself of this opportunity and was absent from the trial only because of an unwarranted assumption by his attorney as to the time when the case would be tried, with the result that judgment was rendered against him, he cannot obtain the aid of a court of equity to set aside the judgment upon the ground that the instrument was a forgery and that he was ignorant of this defense at the time the judgment was rendered. In such case the failure to discover the defense before judgment cannot be accounted as an accident or misfortune, but is chargeable to the defendant as negligence, barring any claim for relief in equity. W.T. Rawleigh Co. v. Seagraves, 178 Ga. 459, 173 S.E. 167 (1934).

Where a wife voluntarily signed an acknowledgment of service and waiver of process with respect to a suit for divorce that was later to be prepared and filed against her by her husband, and after having signed such acknowledgment and waiver, left the state and made no investigation whatever as to the contents of the suit, which, as filed sought not only a divorce but also custody of the minor child of the parties, with judgment rendered accordingly as to both matters in favor of the husband, the wife's petition in equity to set aside the judgment showed such negligence on the part of the wife in failing to acquaint herself with the contents of the suit as to bar her right to equitable relief sought, and the court did not err in dismissing the petition despite the wife's allegation that there was a breach of an agreement by the husband that he would not seek custody in the suit. Bach v. Phillips, 200 Ga. 308, 37 S.E.2d 407 (1946).

In order to set aside an award of the full workmen's compensation board (now Board of Workers' Compensation) which was entered pursuant to an agreement between the parties, because of fraud, accident or mistake, this fraud, accident or mistake is the same as is set forth in this section, and is not available where the person seeking to set aside the award has been guilty of fraud or negligence himself. Where an agreement signed by the claimant which is said to have been procured by fraud stated not only that the claimant did not suffer an injury which arose out of and in the course of her employment, but stated that she was not entitled to any compensation, such language being clear and understandable and it is not alleged that the claimant was prohibited from reading such agreement or that she did not read it, therefore, it must be concluded that the claimant was either negligent in failing to read such agreement or that she was negligent in signing it if some part of it was untrue and she had read it. McCord v. Employers Liab. Assurance Corp., 96 Ga. App. 35, 99 S.E.2d 327 (1957).

Equity will not set aside judgment on the ground that a party and his attorney were prevented from attending the court by a statement previously made to them by the justice of the peace that case would not be tried on date actually set, but on the next day absent fraud on the opposite party or his counsel and any meritorious defense against the recovery had by the verdict. Dorsey v. Griffin, 173 Ga. 802, 161 S.E. 601 (1931).

Negligent delay in seeking to set judgment aside.

- Where the complainants negligently allowed three years to pass without seeking to set aside the judgment complained of at law, equity will not grant them any relief. Field v. Jordan, 124 Ga. 685, 52 S.E. 885 (1906).

Where failure to secure witnesses was due to negligence, equity will not grant relief. McCaulis v. Duval, 69 Ga. 744 (1882).

Equity will not, by injunction, restrain the enforcement of a judgment when the defendant had notice of such judgment within the period of limitations, and negligently failed to take any action to have such judgment vacated or set aside within the time provided by law. Turner v. Avant, 205 Ga. 426, 54 S.E.2d 269 (1949).

Fraud

Fraud generally.

- The word fraud in this section may be construed to include duress. Duress is but a species of fraud where one is induced contrary to one's will from presenting a defense to a suit. Frost v. Frost, 235 Ga. 672, 221 S.E.2d 567 (1975).

Fraud in the procurement of a judgment to be set aside must have been actual and positive, done with knowledge, and not merely constructive fraud, committed in ignorance of the true facts. Rivers v. Alsup, 188 Ga. 75, 2 S.E.2d 632 (1939).

Deceitful practices in depriving or endeavoring to deprive another of his known right by means of some artful device or plan contrary to plain rules of common honesty constitute fraud. By this term is meant fraud perpetrated by some artifice or contrivance of the party or person benefited, whereby in the course of the trial, or in entering judgment, the injured party or the court has been imposed upon or betrayed into inattention or deceived. Johnson v. Bogdis, 205 Ga. 535, 54 S.E.2d 620 (1949), later appeal, 207 Ga. 650, 63 S.E.2d 658 (1951).

To determine whether equity will set aside award for fraud, this section, §§ 23-1-20 and23-2-60 must be construed together. Tinsley v. Maddox, 176 Ga. 471, 168 S.E. 297 (1933).

The judicial power to set aside a judgment for fraud is recognized in this section. Hirsch v. Collier, 104 Ga. App. 271, 121 S.E.2d 318 (1961).

The power to set aside a judgment for fraud may be exercised by courts having equity jurisdiction when proper grounds are shown. Hirsch v. Collier, 104 Ga. App. 271, 121 S.E.2d 318 (1961).

A federal district court could set aside for fraud a judgment of the court of ordinary (now probate court) discharging a guardian. Park v. Park, 37 F. Supp. 185 (N.D. Ga. 1941), later appeal, 123 F.2d 370 (5th Cir. 1941).

A proceeding to set aside for fraud a judgment of a court of ordinary (now probate court) discharging a guardian is authorized and could be maintained in the superior courts of the State of Georgia, and this without recourse to the court of ordinary which granted the judgment of discharge. Park v. Park, 37 F. Supp. 185 (N.D. Ga. 1941).

A party must be vigilant to detect fraud. One who has been negligent and inactive cannot obtain relief. Hirsch v. Collier, 104 Ga. App. 271, 121 S.E.2d 318 (1961), later appeal, 106 Ga. App. 652, 127 S.E.2d 859 (1962).

And fraud must be specifically alleged.

- To set aside an award for fraud, it is not sufficient to state the fraud in general terms, but such facts of fraud must be so stated that the court may see the illegality. Tinsley v. Maddox, 176 Ga. 471, 168 S.E. 297 (1933).

When a party moving to set aside a judgment, during the term it was rendered, has been legally served with the suit and does not show that an alleged fraud practiced on him by the defendant prevented him from making his defense and having his day in court, it is beyond a court's power to grant the motion. Hirsch v. Collier, 104 Ga. App. 271, 121 S.E.2d 318 (1961).

While a court of equity in a proper case will set aside a judgment which is procured by fraud, such fraud must be one other than false and untrue testimony. Hutchings v. Roquemore, 171 Ga. 359, 155 S.E. 675 (1930).

Fraud authorizing setting aside a judgment must come from the adverse party. Tinsley v. Maddox, 176 Ga. 471, 168 S.E. 297 (1933).

While a court of equity has authority to annul and set aside a judgment obtained by fraud, accident or mistake, it must be made to appear in an action therefor, where fraud is claimed, that the fraud was perpetrated by the adverse party, his counsel or agent. Pike v. Andrews, 210 Ga. 553, 81 S.E.2d 817 (1954).

Fraud that will authorize equity to set aside an award is fraud extrinsic or collateral to the matter tried by the first court, and not a fraud which was in issue in that suit; or it must be fraud or deception practiced on the unsuccessful party, by which he was prevented from exhibiting fully his case, and by which there has never been a real contest before court on the subject matter of the suit. Tinsley v. Maddox, 176 Ga. 471, 168 S.E. 297 (1933); Pike v. Andrews, 210 Ga. 553, 81 S.E.2d 817 (1954).

Before fraud will authorize a court of equity to vacate and set aside a judgment of a court having jurisdiction, it must appear that the fraud complained of was perpetrated by the prevailing party, his attorney or his agents. Poole v. McEntire, 209 Ga. 659, 75 S.E.2d 20 (1953); Pike v. Andrews, 210 Ga. 553, 81 S.E.2d 817 (1954).

The frauds for which the court may set aside a former judgment between the same parties do not include fraud in procuring a judgment by false testimony unless it is shown, among other things, that the witness has been convicted of perjury. Elliott v. Marshall, 182 Ga. 513, 185 S.E. 831 (1936).

A court of equity will not set aside a judgment, although obtained by willful and corrupt perjury, unless it appears that the perjurer has been convicted of such perjury, and unless it appears that a judgment could not have been rendered without the perjured testimony. Hutchings v. Roquemore, 171 Ga. 359, 155 S.E. 675 (1930).

Misrepresentation is one of the grounds on which equitable relief may be invoked in regard to judgments. Johnson v. Bogdis, 205 Ga. 535, 54 S.E.2d 620 (1949), later appeal, 207 Ga. 650, 63 S.E.2d 658 (1951).

When one party does give the other assurances upon which he can reasonably rely, that the suit will be dismissed or judgment will not be taken, and then procures a judgment taking advantage of the trust and confidence of the other party, the party misled, who is not himself negligent, has a ground to set aside the judgment. Hirsch v. Collier, 104 Ga. App. 271, 121 S.E.2d 318 (1961), later appeal, 106 Ga. App. 652, 127 S.E.2d 859 (1962).

A petition in equity seeking to set aside a judgment dismissing petitioner's suit at law on general demurrer (now motion to dismiss), by consent of one of petitioner's attorneys and counsel for defendant, on the ground of false representations made by defendant's counsel to induce petitioner's counsel to consent to the judgment, which failed to allege that petitioner's counsel consented to the judgment in violation of express instructions of which the defendant or her counsel had notice or knowledge, failed to set forth a cause of action for equitable relief, and it was not error to dismiss the petition on general demurrer (now motion to dismiss). Pike v. Andrews, 210 Ga. 553, 81 S.E.2d 817 (1954).

Effect of fraud perpetrated by third-party stranger.

- One who has obtained a judgment at law and who is not chargeable with fraud, will not be interfered with by a court of equity for the mere reason that a stranger perpetrated a fraud which prevented the other party to the judgment from interposing a defense. Beddingfield v. Old Nat'l Bank & Trust Co., 175 Ga. 172, 165 S.E. 61 (1932).

One who has obtained a judgment at law according to the prescribed method, and who is not chargeable with any conduct which would amount to fraud or imposition upon the adverse party in relation to the judgment, will not be interfered with by a court of equity for the mere reason that a stranger perpetrated a fraud which prevented the other party to the judgment from interposing a defense. Pike v. Andrews, 210 Ga. 553, 81 S.E.2d 817 (1954).

The mere failure of a party to disclose to the court or to his adversary matters which would defeat his own claim or defense is not such fraud as will justify or require a vacation of the judgment. Buice v. T. & B. Bldrs., Inc., 219 Ga. 259, 132 S.E.2d 784 (1963).

Suppression of a material fact may constitute fraud such as will justify equity to set aside judgment obtained by it. Capital Bank v. Rutherford, 70 Ga. 57 (1883).

But it must be committed on complainant, or his agent. Mahan v. Cavender, 77 Ga. 118 (1886); Lanier v. Nunnally & Co., 128 Ga. 358, 57 S.E. 689 (1907).

Setting aside fraudulent registration of title to land.

- In cases of fraud or forgery, the decree registering title in the name of an applicant for registration is not a bar to a proceeding by the true owner to set aside such registration, if he moves in seven years. Rock Run Iron Co. v. Miller, 156 Ga. 136, 118 S.E. 670 (1923).

Mistake of Fact

Allegations of mistake of fact constitute cause of action to set aside judgment.

- Where, due to a mistake of fact unmixed with negligence, the condemnation proceeding for a public road was conducted throughout upon the theory that the road would be paved at approximately grade level, thus improving rather than damaging the remaining abutting property, and there was nothing to indicate that a fill of from 25 to 40 feet would be made in front of the remaining property which would damage it in the amount of approximately $20,000.00, a petition in equity, alleging these facts and alleging that the mistake prevented the owners from proving this consequential damage, alleged a cause of action to set aside the award and the judgment of condemnation and to recover the full damages. Whipple v. County of Houston, 214 Ga. 532, 105 S.E.2d 898 (1958).

Acceptance of disqualified jurors, due to the fact that they failed to report their relationship to plaintiff, amounts to such a mistake as will authorize a court of equity to set aside the verdict rendered in the law court and order a new trial. Gulf Ref. Co. v. Miller, 151 Ga. 721, 108 S.E. 25 (1921).

Duress

Allegations of duress as acceptable basis to set judgment aside.

- A party who has been prevented by duress from defending a suit against him may be relieved from the judgment. Hirsch v. Collier, 104 Ga. App. 271, 121 S.E.2d 318 (1961).

Ignorance Generally

Ignorance insufficient as basis to set judgment aside.

- A person who, through ignorance, allows a judgment to go against him, cannot afterwards have it set aside, even on the ground of fraud, if he himself has not exercised ordinary diligence in the premises. Hoke v. Walraven, 57 Ga. App. 106, 194 S.E. 610 (1937).

A court will not relieve against a judgment at law, unless the defendant in the judgment can show he had a good defense of which he was entirely ignorant while the suit at law was pending against him; or unless he was prevented from availing himself of his defense, by fraud, or accident, or the act of the adverse party, unmixed with negligence, or fault on his part. Felker v. Johnson, 189 Ga. 797, 7 S.E.2d 668 (1940).

A judgment will not be set aside in a court of equity on the ground that the defendant had a good defense of which he was entirely ignorant, unless it appears that his ignorance of such defense and his failure to assert it were unmixed with any fault or negligence on his part. W.T. Rawleigh Co. v. Seagraves, 178 Ga. 459, 173 S.E. 167 (1934).

Failure to Present Meritorious Defense

Presentation of meritorious defense required.

- Where petition fails to allege that petitioner had filed a meritorious defense to the case in which judgment was rendered against him in the justice court, a court will not interfere to set aside such judgment. Dorsey v. Griffin, 173 Ga. 802, 161 S.E. 601 (1931).

Where no defense was offered, equity will not grant relief. Cohen v. Meador, 137 Ga. 551, 73 S.E. 749 (1912); Garrett v. Thornton, 157 Ga. 487, 121 S.E. 820 (1924).

Where defendant negligently fails to make his defense, equity will not grant any relief. Cleckley v. Beall, Spears & Co., 37 Ga. 583 (1868); Redwine v. McAfee, 101 Ga. 701, 29 S.E. 428 (1897); Graham v. Graham, 137 Ga. 668, 74 S.E. 426 (1912).

Two things are required to constitute a meritorious bill in equity to set aside a judgment rendered in a court having jurisdiction on account of accident, mistake or fraud: first, that the complainant had a good defense to the action at law; and secondly, that the failure to make that defense there was owing, not to any negligence or fault in the complainant, but to fault of the defendants or their attorney. Russell v. Hoge, 217 Ga. 814, 125 S.E.2d 648 (1962).

In equitable proceedings to set aside a judgment rendered in a court of law on account of accident, mistake, or fraud, the plaintiff is required to set out a meritorious defense to the action in which he seeks to set aside the judgment. This does not mean that, in a direct equitable proceeding to set aside a judgment of a court of ordinary or a court of law on the ground that such court or courts had no jurisdiction of the subject matter or of the person, and that said judgment is void, it is necessary to plead a meritorious defense. Foster v. Foster, 207 Ga. 519, 63 S.E.2d 318 (1951).

But mere failure to make a defense affords no grounds to set aside an award. Tinsley v. Maddox, 176 Ga. 471, 168 S.E. 297 (1933).

A judgment obtained against an executor cannot be set aside in equity by legatees on ground that there was a good defense which executor failed to set up, unless it be also shown that there was accident, mistake, fraud, or corrupt complicity between executor and plaintiff. Tinsley v. Maddox, 176 Ga. 471, 168 S.E. 297 (1933).

To have a judgment set aside, a plaintiff must have a good defense of which he was entirely ignorant, or he must be prevented from making the defense because of fraud or accident, or the act of the adverse party, unmixed with fraud or negligence on his own part. The allegation that the plaintiff had no notice that he was being sued is not sufficient ground to set aside the judgment, the opposite party having complied with the law as to service. Milam v. Busey, 96 Ga. App. 88, 99 S.E.2d 325 (1957).

Failure to plead equitable defense in city court.

- A judgment of a city court will not be set aside merely because the defendant failed to plead his equitable defenses thereto. Gentle v. Atlas Sav. & Loan Ass'n, 105 Ga. 406, 31 S.E. 544 (1898).

What plaintiff must prove.

- Plaintiff must prove that he has a good defense. Clark v. Ramsey, 143 Ga. 729, 85 S.E. 869 (1915).

Plaintiff must prove that he exercised due diligence, and the manner that his omission to assert his defense occurred. Simmons v. Martin, 53 Ga. 620 (1875).

RESEARCH REFERENCES

Am. Jur. 2d.

- 27 Am. Jur. 2d, Equity, §§ 224, 244, 251.

C.J.S.

- 31 C.J.S., Equity, § 622 et seq.

ALR.

- Setting aside default judgment for failure of statutory agent on whom process was served to notify defendant, 20 A.L.R.2d 1179.

Right of successful party to have judgment in his favor vacated or set aside on grounds of mistake, inadvertence, excusable neglect, or the like, 40 A.L.R.2d 1127.

Appealability of order vacating, or refusing to vacate, approval of settlement of infant's tort claim, 77 A.L.R.2d 801.

Consent as ground of vacating judgment, or granting new trial, in civil case, after expiration of term or time prescribed by statute or rules of court, 3 A.L.R.3d 1191.

Opening default or default judgment claimed to have been obtained because of attorney's mistake as to time or place of appearance, trial, or filing of necessary papers, 21 A.L.R.3d 1255.

Liability insurer's right to open or set aside, or contest matters relating to merits of, judgment against insured, entered in action in which insurer did not appear or defend, 27 A.L.R.3d 350.

Fraud in obtaining or maintaining default judgment as ground for vacating or setting aside in state courts, 78 A.L.R.3d 150.

Power of successor judge taking office during term time to vacate, set aside, or annul judgment entered by his or her predecessor, 51 A.L.R.5th 747.

23-2-1. When equity will set aside judgment.

Reserved. Repealed by Ga. L. 1986, p. 294, § 3, effective March 26, 1986.

Editor's notes.

- This Code section was based on Orig. Code 1863, § 3062; Code 1868, § 3074; Code 1873, § 3129; Code 1882, § 3129; Civil Code 1895, § 3988; Civil Code 1910, § 4585; Code 1933, § 37-220.

RESEARCH REFERENCES

ALR.

- Right of infant to set aside consent judgment in action for personal injuries, 20 A.L.R. 1249.

Nonresidence of one or both parties as affecting jurisdiction of court of suit or proceeding to annul divorce decree rendered in same state, 33 A.L.R. 469.

Mental incompetency at the time of rendition of judgment in civil action as ground of attack upon it, 34 A.L.R. 221, 140 A.L.R. 1336.

Criterion of extrinsic fraud as distinguished from intrinsic fraud, as regards relief from judgment on ground of fraud, 88 A.L.R. 1201.

Retention of jurisdiction in suit in equity to determine whole controversy, including amount of loss or damage, after setting aside an award or finding by arbitrators or appraisers, 112 A.L.R. 9.

'Rightness' of judgment as open for consideration in suit in equity to complete or effectuate it, 139 A.L.R. 1507.

Constructive service of process in action against nonresident to set aside judgment, 163 A.L.R. 504.

Misinformation by judge or clerk of court as to status of case or time of trial or hearing as ground for relief from judgment, 164 A.L.R. 537.

Power of successor judge taking office during termtime to vacate, etc., judgment entered by his predecessor, 11 A.L.R.2d 1117.

Setting aside default judgment for failure of statutory agent on whom process was served to notify defendant, 20 A.L.R.2d 1179.

Right of successful party to have judgment in his favor vacated or set aside on grounds of mistake, inadvertence, excusable neglect, or the like, 40 A.L.R.2d 1127.

Appealability of order vacating, or refusing to vacate, approval of settlement of infant's tort claim, 77 A.L.R.2d 801.

Consent as ground of vacating judgment, or granting new trial, in civil case, after expiration of term or time prescribed by statute or rules of court, 3 A.L.R.3d 1191.

Opening default or default judgment claimed to have been obtained because of attorney's mistake as to time or place of appearance, trial, or filing of necessary papers, 21 A.L.R.3d 1255.

Liability insurer's right to open or set aside, or contest matters relating to merits of, judgment against insured, entered in action in which insurer did not appear or defend, 27 A.L.R.3d 350.

Fraud in obtaining or maintaining default judgment as ground for vacating or setting aside in state courts, 78 A.L.R.3d 150.

23-2-2. Setting aside sale or contract for inadequate consideration.

Great inadequacy of consideration, joined with great disparity of mental ability in contracting a bargain, may justify equity in setting aside a sale or other contract.

(Orig. Code 1863, § 3110; Code 1868, § 3122; Code 1873, § 3179; Code 1882, § 3179; Civil Code 1895, § 4033; Civil Code 1910, § 4630; Code 1933, § 37-710.)

Cross references.

- For further provisions regarding inadequacy of consideration, see § 13-3-46.

Law reviews.

- For article discussing effect of contracts involving fraud or inadequate consideration, see 4 Ga. L. Rev. 469 (1970).

JUDICIAL DECISIONS

General Consideration

Cited in Thompson v. Thompson, 190 Ga. 264, 9 S.E.2d 80 (1940); Armour v. Lunsford, 192 Ga. 598, 15 S.E.2d 886 (1941); Livingston v. Barnett, 193 Ga. 640, 19 S.E.2d 385 (1942); Jones v. Hogans, 197 Ga. 404, 29 S.E.2d 568 (1944); Scott v. Gillis, 202 Ga. 220, 43 S.E.2d 95 (1947); Johnson v. Boyd, 202 Ga. 531, 43 S.E.2d 524 (1947); Pacific Nat'l Fire Ins. Co. v. Beavers, 87 Ga. App. 294, 73 S.E.2d 765 (1952); Tillman v. Byrd, 211 Ga. 918, 89 S.E.2d 479 (1955); Sheppard v. Broome, 214 Ga. 659, 107 S.E.2d 219 (1959); Brogdon v. Purvis, 220 Ga. 28, 136 S.E.2d 719 (1964); Hobbs v. Clark, 221 Ga. 558, 146 S.E.2d 271 (1965); Norman v. Van Gerpen, 221 Ga. 698, 146 S.E.2d 769 (1966); Fender v. Fender, 226 Ga. 129, 173 S.E.2d 211 (1970); Titshaw v. Carnes, 226 Ga. 430, 175 S.E.2d 541 (1970); Fender v. Fender, 228 Ga. 202, 184 S.E.2d 590 (1971); Mullinax v. Shaw, 143 Ga. App. 657, 239 S.E.2d 547 (1977); Guillebeau v. Yeargin, 254 Ga. 490, 330 S.E.2d 585 (1985); Kimbrell v. Connor, 218 Ga. App. 812, 463 S.E.2d 376 (1995).

Applicability of Section

Applicability of section.

- Before it is applicable, this section requires great inadequacy of consideration joined with great disparity of mental ability. It follows, therefore, that both must exist. Bailey v. Williams, 215 Ga. 395, 110 S.E.2d 673 (1959).

Under the principle enunciated in this section, a deed may be set aside in equity, on proof of the two elements stated (in this section), without proof of anything else as to fraud. Sutton v. McMillan, 213 Ga. 90, 97 S.E.2d 139 (1957); Titshaw v. Carnes, 224 Ga. 57, 159 S.E.2d 420 (1968); Jackson v. Rich, 227 Ga. 149, 179 S.E.2d 256 (1971); Harrell v. Wilson, 233 Ga. 899, 213 S.E.2d 871 (1975).

Generally, this section is applied in those instances where great mental disparity is relied upon by one of the parties to the contract. Moore v. Wells, 212 Ga. 446, 93 S.E.2d 731 (1956).

The principle of this section is applicable whether the consideration be the payment of a sum of money or the rendition of services. Fuller v. Stone, 207 Ga. 355, 61 S.E.2d 467 (1950).

Failure to show disparity of mental ability in foreclosure sale contract.

- Superior court did not err in granting a purchaser summary judgment in the purchaser's action seeking specific performance pursuant to O.C.G.A. § 23-2-131 requiring a mortgage company to deliver a deed conveying certain property because the company failed to demonstrate any merit in the company's contention that the superior court improperly refused to invoke the court's equitable power to relieve the company from performing under the foreclosure sale contract on the ground that the opening bid the company set forth was a mistake; although the company complained that the high bid was inadequate, the company failed to establish how that complaint allowed for the company to avoid the foreclosure sale contract, and the company did not cite any evidence authorizing a finding of any such disparity between the company and the purchaser. Decision One Mortg. Co., LLC v. Victor Warren Props., Inc., 304 Ga. App. 423, 696 S.E.2d 145 (2010).

Inadequate Consideration and Mental Disparity Generally

1. In General

Want of consideration for a conveyance, coupled with mental weakness or old age and undue influence, will authorize equitable relief under this section. Harden v. Weaver, 184 Ga. 652, 192 S.E. 384 (1937).

"Great inadequacy of consideration, joined with great disparity of mental ability in contracting a bargain, may justify equity in setting aside a sale or other contract." Under that principle, a deed may be set aside in equity, on proof of the two elements stated, "without proof of anything else" as to fraud. A fortiori, the same rule would apply with at least equal force in case of such mental disparity and a total absence of consideration. Stow v. Hargrove, 203 Ga. 735, 48 S.E.2d 454 (1948).

Conflict as to issue of disparate mental ability.

- Where, in a wrongful death action, a railroad argued there was no evidence presented to show a disparate mental ability between anyone representing the railroad on the one hand and the plaintiffs on the other at the time of their signing of a contract of release, but plaintiffs showed that they were in a highly emotional state following the death of their son and that treatment for their stress included valium, and a psychologist, who tested the plaintiffs found their I.Q. levels to be in the "mentally defective" range, while the railroad agent involved, on the other hand, was college educated and had some 20 years' experience in claims investigation and settlement, under the "any evidence" standard, the railroad was not entitled to a directed verdict. Southern Ry. v. Lawson, 256 Ga. 798, 353 S.E.2d 491 (1987).

2. Fraud

Fraud in the procurement renders contract void.

- As between the original parties thereto, fraud in its procurement voids a contract, and this upon the theory that, the consent of the parties being necessary to the binding force of a contract, if one, apparently consenting by the execution of a written contract, can show that he did not in fact consent to its terms as therein expressed, but that his apparent consent was induced by false and fraudulent practices, by means of which he was overreached by the other party, and, without negligence upon his own part, really deceived as to the terms of the contract, he would be entitled to be relieved from its apparent obligations. McKaig v. Hardy, 196 Ga. 582, 27 S.E.2d 11 (1943).

Where the grantor of an "improvident or profuse" deed was not wholly incapable of entering into such a contract, but was possessed of little or no will power and was greatly under the influence of the nephew to whom the deed was executed, an inference of fraud could have been drawn by the jury, and, the evidence for the defendant grantee not being such as to rebut the inference as a matter of law, the court was authorized to charge the jury upon the subject of fraud. Stanley v. Stanley, 175 Ga. 139, 175 S.E. 496 (1934).

As against one who by fraud during the lifetime of deceased husband induced the latter to execute to him a deed to realty, equity will afford the widow, as personal representative, a remedy to cancel and set aside the deed and incidentally to preserve and apply rents issuing from such realty. Ealy v. Tolbert, 209 Ga. 575, 74 S.E.2d 867, later appeal, 210 Ga. 96, 78 S.E.2d 26 (1953).

3. Insanity

Where the maker is insane and the other party sane, there would be great mental disparity. The law however, presumes one to be sane. Norwood v. Norwood, 207 Ga. 148, 60 S.E.2d 449 (1950).

4. Weakness of Mind

Weakness of mind not amounting to imbecility insufficient mental incapacity to justify setting deed aside.

- The law recognizes that there is "some disparity of mental ability between all persons who deal with each other," and "weakness of mind not amounting to imbecility is not sufficient mental incapacity to justify setting a deed aside." Bailey v. Williams, 215 Ga. 395, 110 S.E.2d 673 (1959); Thomas v. Garrett, 265 Ga. 395, 456 S.E.2d 573 (1995).

5. Grief

Statement that person was "almost crazy with grief".

- In action for cancellation or rescission of deed, the mere statement that the plaintiff was "almost crazy with grief over the recent death of her son" shows neither a mental incapacity to execute the instrument nor a "great disparity of mental ability" between the parties, such as would authorize the interference of equity on account of a "great inadequacy" of consideration, even if a "great inadequacy" had been sufficiently alleged. Hutchinson v. King, 192 Ga. 402, 15 S.E.2d 523 (1941).

Will executed within days of spouse's death.

- Trial court did not err in charging the jury under O.C.G.A. § 23-2-2 in a suit by an 83-year old plaintiff to recover property from defendants, her brother-in-law and his wife, because the evidence showed that defendants took plaintiff to her bank and to a lawyer 10 days after her husband died, where she deeded her entire estate to them. Mullis v. Mullis, 245 Ga. App. 845, 539 S.E.2d 189 (2000).

6. Intoxication

Where a party at the time of entering into a contract or executing an instrument is intoxicated to such a degree as to deprive him of his reason and to disqualify his mind to apprehend the nature of his act and its probable consequences, a court of equity may grant relief by rescission and cancellation. Equity will grant relief where the transfer of a valuable property has been fraudulently extorted, for a grossly inadequate consideration, from a person while in such a state of intoxication as to render him incapable of transacting business. McKaig v. Hardy, 196 Ga. 582, 27 S.E.2d 11 (1943); Ealy v. Tolbert, 209 Ga. 575, 74 S.E.2d 867, later appeal, 210 Ga. 96, 78 S.E.2d 26 (1953).

Equity will grant relief where the transfer of a valuable property has been fraudulently extorted, for a grossly inadequate consideration, from a person while in such a state of intoxication as to render him incapable of transacting business. Ealy v. Tolbert, 209 Ga. 575, 74 S.E.2d 867, later appeal, 210 Ga. 96, 78 S.E.2d 26 (1953).

Valuation of Consideration

Questions of value are peculiarly for the determination of the jury where there is any data in evidence upon which they may legitimately exercise their "own knowledge or ideas." Brinson v. Hester, 185 Ga. 761, 196 S.E. 412 (1938).

Pleading and Practice

Evidence of confidential relationships raises presumption of undue influence.

- Where evidence is presented of a confidential relationship, the grantor being of weaker mentality and the grantee occupying the dominant position, an issue of fact is raised as to undue influence. Fletcher v. Fletcher, 242 Ga. 158, 249 S.E.2d 530 (1978).

Charge to jury.

- Where the sole question was whether the transaction was an outright sale or a loan of money, and not a question of one party overreaching the other party the court did not err in not charging this section with respect to great inadequacy of consideration and great disparity of mental ability between the contracting parties. Batts v. Bedingfield, 204 Ga. 160, 48 S.E.2d 848 (1948).

In an action to set aside a deed, an instruction that the jury might set aside a deed if it found the mental ability of one party merely less than the mental ability of the person with whom he or she was being compared was erroneous and, further, the giving of the charge was error because there was no evidence to warrant it. Godwin v. Godwin, 265 Ga. 891, 463 S.E.2d 685 (1995).

RESEARCH REFERENCES

Am. Jur. 2d.

- 25 Am. Jur. 2d, Duress and Undue Influence, § 35 et seq. 27 Am. Jur. 2d, Equity, § 20. 37 Am. Jur. 2d, Fraud and Deceit, § 23.

C.J.S.

- 37 C.J.S., Fraud, §§ 1, 60, 67.

23-2-3. Payment of lost bonds or notes.

In cases of lost bonds or negotiable securities, the court may decree that payment shall be made, provided indemnity is given against liability or loss resulting from such payment.

(Orig. Code 1863, § 3046; Code 1868, § 3058; Code 1873, § 3113; Code 1882, § 3113; Civil Code 1895, § 3969; Civil Code 1910, § 4566; Code 1933, § 37-214.)

Law reviews.

- For note, the voluntary-payment doctrine in Georgia, see 16 Ga. L. Rev. 893 (1982).

ARTICLE 2 ACCIDENT AND MISTAKE

Cross references.

- Pleading requirements in actions involving mistake, § 9-11-9.

Effect of mistake on enforcement of contract, § 13-5-4.

23-2-20. Which accidents relievable in equity.

An accident relievable in equity is an occurrence, not the result of negligence or misconduct of the party seeking relief in relation to a contract, as was not anticipated by the parties when the contract was entered into, which gives an undue advantage to one of them over another in a court of law.

(Orig. Code 1863, § 3045; Code 1868, § 3057; Code 1873, § 3112; Code 1882, § 3112; Civil Code 1895, § 3968; Civil Code 1910, § 4565; Code 1933, § 37-201.)

JUDICIAL DECISIONS

An accident in its strict sense implies the absence of negligence for which no one would be liable. Richter v. Atlantic Co., 65 Ga. App. 605, 16 S.E.2d 259 (1941).

In its proper use the term accident excludes negligence; that is, an accident is an event which occurs without the fault, carelessness, or want of proper circumspection of the person affected, or which could not have been avoided by the use of that kind and degree of care necessary to the exigency and in the circumstances in which he was placed. Richter v. Atlantic Co., 65 Ga. App. 605, 16 S.E.2d 259 (1941).

Voluntary dismissal of claims with prejudice was not a contract and, thus, this section and § 23-2-21 did not apply to authorize setting aside the dismissal. Kent v. State Farm Mut. Auto. Ins. Co., 233 Ga. App. 564, 504 S.E.2d 710 (1998).

Cited in Williamson v. Floyd County Wildlife Ass'n, 215 Ga. 789, 113 S.E.2d 626 (1960); Tripp v. Conner, 220 Ga. 2, 136 S.E.2d 744 (1964); Finch v. McAloney, 222 Ga. 174, 149 S.E.2d 100 (1966); Gay v. AMOCO, 115 Ga. App. 18, 153 S.E.2d 612 (1967); Humble Oil & Ref. Co. v. Mitchell, 230 Ga. 323, 197 S.E.2d 126 (1973); Kidd v. Kidd, 237 Ga. 232, 227 S.E.2d 259 (1976); Rose v. Cain, 247 Ga. App. 481, 544 S.E.2d 453 (2001); Beasley v. Wachovia Bank, 277 Ga. App. 698, 627 S.E.2d 417 (2006).

RESEARCH REFERENCES

Am. Jur. 2d.

- 27 Am. Jur. 2d, Equity, § 44.

C.J.S.

- 30 C.J.S., Equity, § 44 et seq.

ALR.

- Right to recover back in an action at law money paid upon an existing judgment, procured by or grounded on fraud or mistake, 9 A.L.R. 400.

Insurance: death or injury resulting from insured's voluntary act as caused by accident or accidental means, 42 A.L.R. 243, 45 A.L.R. 1528, 71 A.L.R. 1437, 111 A.L.R. 628.

Mistake, accident, inadvertence, etc., as ground for relief from termination or forfeiture of oil or gas lease for failure to complete well, commence drilling, or pay rental, strictly on time, 5 A.L.R.2d 993.

Rupture of blood vessel following exertion or exercise as within terms of accident provision of insurance policy, 35 A.L.R.2d 1105.

Power of equity court to reach or to sequester, for seizure and sale, beneficial equitable interests in corporate stock shares, 42 A.L.R.2d 920.

Repeated absorption of poisonous substance as "accident" within coverage clause of comprehensive general liability policy, 49 A.L.R.2d 1263.

Accident insurance: death or injury intentionally inflicted by another as due to accident or accidental means, 49 A.L.R.3d 673.

23-2-21. What mistakes relievable in equity; power to relieve to be exercised cautiously.

  1. A mistake relievable in equity is some unintentional act, omission, or error arising from ignorance, surprise, imposition, or misplaced confidence.
  2. Mistakes may be either of law or of fact.
  3. The power to relieve mistakes shall be exercised with caution; to justify it, the evidence shall be clear, unequivocal, and decisive as to the mistake.

(Orig. Code 1863, §§ 3050, 3053; Code 1868, §§ 3062, 3065; Code 1873, §§ 3117, 3120; Code 1882, §§ 3117, 3120; Civil Code 1895, §§ 3973, 3977; Civil Code 1910, §§ 4570, 4574; Code 1933, §§ 37-202, 37-203.)

Cross references.

- Form of complaint for money paid by mistake, § 9-11-107.

Law reviews.

- For note, the voluntary-payment doctrine in Georgia, see 16 Ga. L. Rev. 893 (1982).

JUDICIAL DECISIONS

General Consideration

A mistake, either of law or fact, is cognizable in equity and affords a remedy therein by reformation of the instrument so as to make it express the true intention of the parties, on a proper cause being made; but such a jurisdiction will always be cautiously exercised, and to justify it the evidence must be clear, unequivocal, and decisive. Yablon v. Metropolitan Life Ins. Co., 200 Ga. 693, 38 S.E.2d 534 (1946); Prince v. Friedman, 202 Ga. 136, 42 S.E.2d 434 (1947).

Reformation as applied to a contract is remedy cognizable in equity for the purpose of correcting an instrument so as to make it express the true intention of the parties, where from some cause, such as fraud, accident, or mistake it does not express such intention. The remedy is not available for the purpose of making a new and different contract for the parties, but is confined to establishment of the actual agreement. Deck v. Shields, 195 Ga. 697, 25 S.E.2d 514 (1943).

The power in equity to relieve mistakes should be exercised with caution, and the evidence shall be clear, unequivocal and decisive as to the mistake. Thomaston v. Fort Wayne Pools, Inc., 181 Ga. App. 541, 352 S.E.2d 794 (1987).

Mistake defined.

- Mistake, within the meaning of equity, is an erroneous mental condition, conception, or conviction, induced by ignorance, misapprehension, or misunderstanding of the truth, but without negligence and resulting in some act or omission done or suffered erroneously by one or both of the parties to a transaction, but without its erroneous character being intended or known at the time. Callan Court Co. v. Citizens & S. Nat'l Bank, 184 Ga. 87, 190 S.E. 831 (1937); Whipple v. County of Houston, 214 Ga. 532, 105 S.E.2d 898 (1958).

Mistake is internal; it is a mental condition, a conception, a conviction of the understanding; erroneous indeed, but nonetheless a conviction which influences the will and leads to some outward physical manifestation. Its operation is ordinarily, though not always, affirmative the doing of some act which would not have been done in the absence of the particular conception or conviction which influenced the free action of the will. Its essential requisite is ignorance. Callan Court Co. v. Citizens & S. Nat'l Bank, 184 Ga. 87, 190 S.E. 831 (1937).

The essential element of a mistake is a mental condition or conception or conviction of the understanding. This mental condition may be either a passive state or an active conviction. When merely passive, it may consist of an unconsciousness, an ignorance, or a forgetfulness; when active, it must be a belief. In the first of these two conditions, the unconsciousness, ignorance, or forgetfulness may be either of a fact which is present and now existing, or of a fact which is past and has existed; they must always concern a fact material to the transaction. In the second condition, the belief may be either that a certain matter or thing exists at the present time which really does not exist; or that certain matter or thing existed at some time which did not really exist. All possible forms of mistake of fact are embraced within this description; and all particular errors which fall under any of these conditions are mistakes of fact which furnish an occasion for equitable relief. Callan Court Co. v. Citizens & S. Nat'l Bank, 184 Ga. 87, 190 S.E. 831 (1937).

Mistake of fact is a mistake not caused by the neglect of a legal duty on the part of the person making the mistake, and consisting in, an unconscious ignorance or forgetfulness of a fact, past or present, material to the contract; or belief in the present existence of a thing material to the contract which does not exist, or in the past existence of such a thing which has not existed. Callan Court Co. v. Citizens & S. Nat'l Bank, 184 Ga. 87, 190 S.E. 831 (1937).

Mistake is distinguished from fraud, fraudulent representations, or fraudulent concealments, by the absence of knowledge and intention, which in legal fraud are actually present, and in constructive fraud are theoretically present, as necessary elements. It is also distinguished from that inattention or absence of thought which are inherent in negligence. The erroneous conception or conviction of the understanding which constitutes the equitable notion of mistake has nothing in common with negligence; equity will not relieve a person from his erroneous acts or omissions resulting from his own negligence. Callan Court Co. v. Citizens & S. Nat'l Bank, 184 Ga. 87, 190 S.E. 831 (1937).

If equity can reform a contract for sale of land, it can also reform the deed to the land. West Lumber Co. v. Moore, 179 Ga. 302, 175 S.E. 642 (1935).

Question of fact as to whether reformation warranted.

- Trial court erred in granting summary judgment to the borrowers on the bank's claim for equitable reformation of the security deeds because evidence included the fact that a portion of the 2003 loan paid off a joint debt previously secured by the property and the borrowers subsequently represented to the bankruptcy court that the debt secured by the property was jointly owed, which created a question of fact as to whether the debt was secured by the real property at issue. Bank of Am., N.A. v. Cuneo, 332 Ga. App. 73, 770 S.E.2d 48 (2015).

Reformation of lease agreement denied.

- In an action seeking reformation of a lease agreement to include an option to purchase, the trial court properly granted the defendant's motion for directed verdict at the close of the plaintiff's evidence, where there was no evidence of mutual mistake, there was likewise no evidence of fraud or inequitable conduct in the record, it was undisputed that plaintiff did not read the lease agreement until months after he signed it, and the record did not demonstrate that a confidential relationship existed between the parties, but rather showed that they were friends engaged in an arms' length transaction. A.J. Concrete Pumping, Inc. v. Richard O'Brien Equip. Sales, Inc., 256 Ga. 795, 353 S.E.2d 496 (1987).

No mutual mistake because contract addressed disputed subject.

- Parties to a business buyout agreement failed to show mutual mistake regarding the validity of a proposed lease assignment because the parties specifically contemplated that the original office building lease or assignment might have to be changed, that the assignment might never occur even with the best efforts of the parties, and that any risk in that regard would be assumed by the buying parties. Extremity Healthcare, Inc. v. Access to Care America, LLC, 339 Ga. App. 246, 793 S.E.2d 529 (2016).

Cited in Sapp v. Ritch, 169 Ga. 33, 149 S.E. 636 (1929); West Lumber Co. v. Moore, 179 Ga. 302, 175 S.E. 642 (1935); Bender v. Randall Bros., 189 Ga. 197, 5 S.E.2d 889 (1939); Gibbs v. H.T. Henning Co., 189 Ga. 675, 7 S.E.2d 238 (1940); Sawyer Coal & Ice Co. v. Kinnett-Odom Co., 192 Ga. 166, 14 S.E.2d 879 (1941); Deck v. Shields, 195 Ga. 697, 25 S.E.2d 514 (1943); Lane v. Howard, 201 Ga. 616, 40 S.E.2d 537 (1946); McCullough v. Kirby, 204 Ga. 738, 51 S.E.2d 812 (1949); Hood v. Connell, 204 Ga. 782, 51 S.E.2d 853 (1949); Minor v. Fincher, 206 Ga. 721, 58 S.E.2d 389 (1950); Scurry v. Cook, 206 Ga. 876, 59 S.E.2d 371 (1950); Altman v. Strouse, 210 Ga. 282, 79 S.E.2d 801 (1954); Miller v. Shaw, 212 Ga. 302, 92 S.E.2d 98 (1956); Whipple v. County of Houston, 214 Ga. 532, 105 S.E.2d 898 (1958); White County v. Wooten, 219 Ga. 236, 132 S.E.2d 653 (1963); Tripp v. Conner, 220 Ga. 2, 136 S.E.2d 744 (1964); Farmers Whse. of Pelham, Inc. v. Collins, 220 Ga. 141, 137 S.E.2d 619 (1964); Finch v. McAloney, 222 Ga. 174, 149 S.E.2d 100 (1966); Bonner v. Cotton, 223 Ga. 843, 159 S.E.2d 61 (1968); Hartford Accident & Indem. Co. v. Walka Mt. Camp No. 565, Woodmen of the World, Inc., 224 Ga. 194, 160 S.E.2d 833 (1968); William H. Benton Co. v. Irvindale Dairies, Inc., 224 Ga. 780, 164 S.E.2d 819 (1968); B.L. Ivey Constr. Co. v. Pilot Fire & Cas. Co., 295 F. Supp. 840 (N.D. Ga. 1968); Lewis v. Williford, 235 Ga. 558, 221 S.E.2d 14 (1975); Martin v. Heard, 239 Ga. 816, 238 S.E.2d 899 (1977); Roberts v. Gunter, 251 Ga. 276, 304 S.E.2d 369 (1983); Atkinson v. Atkinson, 254 Ga. 70, 326 S.E.2d 206 (1985); Fulghum v. Kelly, 255 Ga. 652, 340 S.E.2d 589 (1986); Mag Mut. Ins. Co. v. Gatewood, 186 Ga. App. 169, 367 S.E.2d 63 (1988); Rose v. Cain, 247 Ga. App. 481, 544 S.E.2d 453 (2001).

Mutual Mistake

Equity will not reform a contract on the ground of mistake, unless it be a mutual one or unless there be a mistake on one side and fraud on the other. Rawson v. Brosnan, 187 Ga. 624, 1 S.E.2d 423 (1939); Yablon v. Metropolitan Life Ins. Co., 200 Ga. 693, 38 S.E.2d 534 (1946).

Equity will not decree the reformation of an instrument because of mistake of one of the parties alone unmixed with any fraud or knowledge on the part of the other equivalent to mutual mistake. For a mistake to be relievable in equity by reformation, it must be mutual, or else mistake on the part of one to the contract and fraud on the part of the other. Yablon v. Metropolitan Life Ins. Co., 200 Ga. 693, 38 S.E.2d 534 (1946); Prince v. Friedman, 202 Ga. 136, 42 S.E.2d 434 (1947).

A court of equity will reform a contract of sale when, from mutual mistake or mistake common to both parties, an instrument does not express the true agreement of the parties. Equity will also reform an instrument where there is mistake on one side, and fraud or inequitable conduct on the other. Prince v. Friedman, 202 Ga. 136, 42 S.E.2d 434 (1947).

To enable a court to reform an agreement evidenced by writing on the ground of mistake, it must affirmatively appear that the mistake was common to both parties, and that the writing, as executed, expresses the contract as understood by both parties. Prince v. Friedman, 202 Ga. 136, 42 S.E.2d 434 (1947).

If a writing has been executed with a view of obtaining a particular object, and by mistake it has been so drawn as not to have the contemplated operations at law, chancery (now equity) will reform the instrument, so that it will fulfill the intention of the parties. Agreements, whether executed or executory, within or without the statute of frauds, whether for the conveyance of real or personal property, will be reformed by courts of equity, on the ground of mistake. Head v. Stephens, 215 Ga. 184, 109 S.E.2d 772 (1959), later appeal, 218 Ga. 191, 126 S.E.2d 623 (1962).

"An honest mistake of the law as to the effect of an instrument on the part of both contracting parties, when such mistake operates as a gross injustice to one, and gives an unconscientious advantage to the other, may be relieved in equity." Fidelity & Deposit Co. v. State Hwy. Dep't, 174 Ga. 443, 163 S.E. 174 (1932).

The rule is well settled that a simple mistake by a party as to the legal effect of an agreement which he executes, or as to the legal result of an act which he performs, is no ground for either defensive or affirmative relief. Callan Court Co. v. Citizens & S. Nat'l Bank, 184 Ga. 87, 190 S.E. 831 (1937).

Where a defendant has been served and a judgment is rendered against him by fraud, accident, or mistake, without fault or negligence on his part, a petition in equity to set aside the judgment will lie. Dollar v. Fred W. Amend Co., 184 Ga. 432, 191 S.E. 696 (1937).

Where, due to a mistake of fact unmixed with negligence, the condemnation proceeding for a public road was conducted throughout upon the theory that the road would be paved at approximately grade level, thus improving rather than damaging the remaining abutting property, and there was nothing to indicate that a fill of from 25 to 40 feet would be made in front of the remaining property which would damage it in the amount of approximately $20,000.00, a petition in equity, alleging these facts and alleging that the mistake prevented the owners from proving this consequential damage, alleged a cause of action to set aside the award and the judgment of condemnation and to recover the full damages. Whipple v. County of Houston, 214 Ga. 532, 105 S.E.2d 898 (1958).

Because the plaintiff had opportunity to examine a second written tolling agreement before he executed it, and because there was no suggestion that the alleged mistake in the agreement was anything other than a unilateral mistake on the part of the plaintiff, the plaintiff's own negligence resulted in there being no basis for reforming the parties' second written tolling agreement. Frame v. Hunter, Maclean, Exley & Dunn, P.C., 236 Ga. App. 226, 511 S.E.2d 585 (1999).

Mistake of draftsman acting by direction of only one party as unilateral mistake.

- In some jurisdictions it is held that the mistake of a draftsman or scrivener, acting by direction of only one of the parties, is a unilateral mistake, and is one which will not warrant reformation. Such appears to be the rule in this state. Yablon v. Metropolitan Life Ins. Co., 200 Ga. 693, 38 S.E.2d 534 (1946).

Plea of the defendant to action on note given by him to former partner on dissolution of partnership, alleging mutual mistake in calculating the earnings of the business, failed to allege a mistake as contemplated by law, and the court did not err in dismissing the plea and in directing the verdict for the plaintiff. Hargrove v. Bledsoe, 78 Ga. App. 107, 50 S.E.2d 223 (1948).

Wrong property foreclosed upon.

- Because a mutual mistake of law was not a valid reason to nullify the parties' choice of Delaware law in order to uphold a right of first refusal, the parties' settlement agreement was not subject to reformation due to an alleged mutual mistake. Thus, under Delaware law, the right was properly declared invalid under the rule against perpetuities. CS-Lakeview at Gwinnett, Inc. v. Simon Prop. Group, Inc., 283 Ga. 426, 659 S.E.2d 359 (2008).

Trial court properly reformed security deed and declared that suing lender had first priority over certain tract of land since there was no doubt that parties intended for the tract to have been subject to the security deed alone; trial court also properly directed verdict in favor of suing lender as to its claim for rescission and cancellation of the deed it obtained when it mistakenly foreclosed on the wrong tract, as such relief was the proper remedy. DeGolyer v. Green Tree Servicing, LLC, 291 Ga. App. 444, 662 S.E.2d 141 (2008).

No specific mutual mistake alleged.

- Plaintiff's claim for reformation of a settlement agreement failed since the claim did not allege fraud by the defendants and did not identify any specific mutual mistake. Rohrig Invs., LP v. Knuckle P'ship, LLLP (In re Rohrig Invs., LP), 584 Bankr. 382 (Bankr. N.D. Ga. 2018).

Reformation of a bond was warranted based on mutual mistake.

- Reformation of a bond was warranted based on mutual mistake since it was clear that a bank of which a bankruptcy debtor was the parent company was intended to be a named insured under the bond which named only the debtor as an insured; the bank was a named insured on a prior bond which the current bond was intended to replace, the bank was a named insured on the bond application, and the bank paid the bond premium. Lubin v. Cincinnati Ins. Co., F. Supp. 2d (N.D. Ga. Dec. 17, 2010), aff'd, 677 F.3d 1039 (11th Cir. 2012).

Summary judgment improper if questions of fact remained regarding whether quitclaim deed was contrary to parties' agreement.

- Trial court erred in granting a son's motion for summary judgment as to a parent's counterclaim seeking to eject the son from a home and to have a quitclaim deed rescinded or reformed because material questions of fact remained regarding whether the terms of the quitclaim deed were, by mutual mistake, contrary to the agreement of the parties; the parent's deposition testimony could reasonably be construed to signify that the parent expressed the parent's willingness to convey the property only if the parent retained a life estate and that the son accepted the conveyance subject to that condition. Hall v. Hall, 303 Ga. App. 434, 693 S.E.2d 624 (2010).

Ignorance of Fact

Ignorance of fact will not justify the recission of a contract. Prince v. Friedman, 202 Ga. 136, 42 S.E.2d 434 (1947).

Reasonable Diligence

Reasonable diligence of complainant required.

- Equity will relieve against mutual mistake, but only at the instance of a complainant who moves with reasonable diligence. What is a reasonable time must necessarily depend upon the peculiar facts and environments of the particular case. Parker v. Fisher, 207 Ga. 3, 59 S.E.2d 715 (1950).

Equity will grant no relief to one who by the exercise of ordinary diligence, could have prevented the injury complained of. Prince v. Friedman, 202 Ga. 136, 42 S.E.2d 434 (1947); Barham v. United States, 715 F. Supp. 1091 (M.D. Ga. 1989).

Failure of insured to read policy insufficient as proof of lack of ordinary diligence.

- A mere failure of an insured to read his policy of insurance does not amount to such laches as will debar him from having such policy reformed for mistake therein. A policy of insurance is issued by the insurer and signed by him or his agent. It is not contemplated that the insured shall sign it. In the insurer's promise to deliver an accurate policy, according to his oral agreement with the insured, the insured has a just expectation that there will be no designed variance. Georgia Farm Bureau Mut. Ins. Co. v. Wall, 242 Ga. 176, 249 S.E.2d 588 (1978).

Pleading and Practice

Grounds of mistake must be fully alleged.

- When a defendant, in a court of law, seeks to avoid his contract on the ground of mistake, he must, by his pleadings, allege the grounds of the mistake, as fully as he is required to do in a court of equity to entitle him to relief. Hargrove v. Bledsoe, 78 Ga. App. 107, 50 S.E.2d 223 (1948).

The rules of pleading in this state require that allegations of mistake should be set forth with considerable definiteness and certainty, and that such general allegations as that certain matters were left out of or included in the contract as written "by mutual mistake of the parties" are not sufficient. Wheeler v. Poole, 204 Ga. 477, 50 S.E.2d 326 (1948).

And evidence of mistake must be clear, unequivocal and decisive.

- To authorize a verdict reforming a deed upon the ground of mutual mistake, the evidence, like the petition, should at least by inference show the particular mistake and illustrate how it occurred; and the evidence must be clear, unequivocal, and decisive as to the mistake. Helton v. Shellnut, 186 Ga. 185, 197 S.E. 287 (1938).

Where the court did charge in language identical to that of this section, it is not subject to the criticism that it erred in its charge to the jury that they must decide the question of mistake by a preponderance of the testimony, whereas the law provides that the evidence must be clear, unequivocal, and decisive as to the mistake. Fidelity & Deposit Co. v. State Hwy. Dep't, 174 Ga. 443, 163 S.E. 174 (1932).

It was error for the court to instruct the jury that the party seeking reformation of the description in a deed could establish his right thereto by a preponderance of the evidence only. Carroll v. Craig, 214 Ga. 257, 104 S.E.2d 215 (1958).

In a diversity based suit in equity to set aside or deny res judicata effect to a prior state court judgment on the grounds of fraud and mutual mistake, the plaintiffs had to prove their claims by something more than a mere preponderance of the evidence. The evidence had to preponderate in the plaintiffs' favor, but it also had to be of "clear, unequivocal, and decisive" quality. Ahrens v. Katz, 595 F. Supp. 1108 (N.D. Ga. 1984).

In an action seeking cancellation of a warranty deed to a trustee, the beneficiary's testimony that he could not remember the execution of the deed did not demand a finding that the deed should be cancelled on the ground of legal mistake. Ivey v. Ivey, 266 Ga. 143, 465 S.E.2d 434 (1996).

Court would not construe an agreement and a deed together as creating a fee simple subject to a condition subsequent because a month-long gap between the execution of the agreement and the deed was too great of a gap in time to deem the documents as being executed contemporaneously. Nor would the court reform the documents to do so as the creditor failed to demonstrate a mistake of present or past fact relievable in equity, either by rescission or reformation. Kelley v. McCormack (In re Mitchell), 548 Bankr. 862 (Bankr. M.D. Ga. 2016).

Parol evidence.

- Before decreeing reformation, a court requires that the parol evidence of a mistake and of an alleged modification of a contract must be most clear and convincing. Georgia Farm Bureau Mut. Ins. Co. v. Wall, 242 Ga. 176, 249 S.E.2d 588 (1978).

In a suit for reformation of contract based upon alleged mutual mistake, the parol evidence rule does not bar introduction of testimony as to the oral agreement reached by the parties which the writing was intended to reflect. Georgia Farm Bureau Mut. Ins. Co. v. Wall, 242 Ga. 176, 249 S.E.2d 588 (1978).

Where petition alleges that parties to a deed orally agreed that the consideration was to be $850.00 cash for the plaintiff's equity and that the defendants were to assume and pay certain loans on the property, and that, due to a mutual mistake of law as to the effect of a recital of a nominal consideration in a deed, the deed fails to state the true consideration agreed upon by the parties, the fact that the agreement is not in writing will not bar a recovery, since what is sought to be enforced is not an oral agreement barred by the statute of frauds, but to reduce to writing the true agreement between the parties to prevent an unconscionable advantage to one of the parties to a contract. Head v. Stephens, 215 Ga. 184, 109 S.E.2d 772 (1959), later appeal, 218 Ga. 191, 126 S.E.2d 623 (1962).

Parol evidence can be offered to prove mistake. Vann v. Williams, 165 Ga. App. 457, 299 S.E.2d 908 (1983).

A docketing error made in the clerk's office amounts to an accident or mistake relievable in equity so far as the defendant is concerned, provided the failure to answer is attributable thereto, without fault or negligence on its part. Dollar v. Fred W. Amend Co., 184 Ga. 432, 191 S.E. 696 (1937).

A mere mistake in judgment or opinion as to the value of property does not authorize interference by the courts. Hargrove v. Bledsoe, 78 Ga. App. 107, 50 S.E.2d 223 (1948).

RESEARCH REFERENCES

Am. Jur. 2d.

- 27 Am. Jur. 2d, Equity, §§ 29, 30.

C.J.S.

- 30 C.J.S., Equity, § 44 et seq.

ALR.

- Relief from contract of sale because of mistake as to amount of commodity which it calls for, 31 A.L.R. 384.

Recovery back of public money paid by mistake, 63 A.L.R. 1346.

Misrepresentation or mistake as to whether corporate stock is assessable as one of law or of fact, 65 A.L.R. 1256.

Mistake as to law of another state or country as one of law or of fact, 73 A.L.R. 1260.

Good faith in receiving payment made under mistake of fact as affecting its recovery, 87 A.L.R. 649.

Conscious ignorance of fact, as distinguished from mistake of fact, as ground for reformation of contract, 137 A.L.R. 908.

Mistake by one party to contract as to identity of other party who acted in good faith, 147 A.L.R. 1171.

Right to refund or recovery back of taxes paid on property not owned by taxpayer, 165 A.L.R. 879.

What constitutes change of position by payee so as to preclude recovery of payment made under mistake, 40 A.L.R.2d 997.

Compensation for improvements made or placed on premises of another by mistake, 57 A.L.R.2d 263.

Right of tenant to recover rentals previously paid to one mistakenly believed to be owner of property, 57 A.L.R.2d 350.

Recovery back by employer of compensation paid to employee as result of mistake or the employee's fraud, 88 A.L.R.2d 1437.

Reformation of property insurance policy to correctly identify the person or interest insured, 25 A.L.R.2d 580.

What constitutes mistake in the identity of one of the parties to warrant annulment of marriage, 50 A.L.R.3d 1295.

23-2-22. Mistake of law in instrument - By contracting parties.

An honest mistake of the law as to the effect of an instrument on the part of both contracting parties, when the mistake operates as a gross injustice to one and gives an unconscionable advantage to the other, may be relieved in equity.

(Orig. Code 1863, § 3055; Code 1868, § 3067; Code 1873, § 3122; Code 1882, § 3122; Civil Code 1895, § 3979; Civil Code 1910, § 4576; Code 1933, § 37-204.)

Law reviews.

- For annual survey of recent developments, see 38 Mercer L. Rev. 473 (1986).

JUDICIAL DECISIONS

Equity will relieve against mutual mistake, but only at the instance of a complainant who moves with reasonable diligence. What is a reasonable time must necessarily depend upon the peculiar facts and environments of the particular case. Parker v. Fisher, 207 Ga. 3, 59 S.E.2d 715 (1950).

O.C.G.A. § 23-2-22 was inapplicable to a company's counterclaim to recover payments under a purchase agreement as O.C.G.A. § 23-2-22 offered relief following a mistake of law; the company made the payments in ignorance of the law and O.C.G.A. § 13-1-13 prohibited recovery of the payments voluntarily made in ignorance of the law. Wallis v. B & A Construction Co., 273 Ga. App. 68, 614 S.E.2d 193 (2005).

Contract not reformed based on mutual mistake of law.

- Because a mutual mistake of law was not a valid reason to nullify the parties' choice of Delaware law in order to uphold a right of first refusal, the parties' settlement agreement was not subject to reformation due to an alleged mutual mistake. Thus, under Delaware law, the right was properly declared invalid under the rule against perpetuities. CS-Lakeview at Gwinnett, Inc. v. Simon Prop. Group, Inc., 283 Ga. 426, 659 S.E.2d 359 (2008).

Parol evidence can be offered to prove mistake. Vann v. Williams, 165 Ga. App. 457, 299 S.E.2d 908 (1983).

Admissibility of parol evidence.

- See Posey v. Medical Center-West, Inc., 257 Ga. 55, 354 S.E.2d 417 (1987) (release of tort feasor from liability).

Standing to seek reformation of liability contract.

- In certifying certain questions to the Georgia Supreme Court, the federal Court of Appeals concluded that it is an open question of Georgia law whether a person injured by a municipality has a beneficial interest in the municipality's liability contract sufficient to provide standing to seek reformation. Florida Int'l Indem. Co. v. City of Metter, 952 F.2d 1297 (11th Cir. 1992), aff'd, 984 F.2d 1138 (11th Cir. 1993).

In tort action, reformation warranted if mutual mistake.

- Where an insured signed a general release believing that it would not affect her claim against her underinsured motorist carrier, reformation of the release would be warranted if mutual mistake of law could be proved. Superior Ins. Co. v. Dawkins, 229 Ga. App. 45, 494 S.E.2d 208 (1997).

Reformation claim barred by res judicata.

- Despite a payee's argument that a reformation claim could not have previously been filed because neither party foresaw that a contract claim could have been disposed of as it was, that argument was rejected as spurious, and because this argument ignored the fact that the payee filed a prior quantum meruit claim, which was predicated on the lack of an enforceable contract; hence, the payor obviously anticipated that the contract might not be entirely enforceable, and having done so, could have recognized the need to bring a reformation claim in the earlier action. ChoicePoint Servs. v. Hiers, 284 Ga. App. 640, 644 S.E.2d 456 (2007), cert. denied, No. S07C1166, 2007 Ga. LEXIS 499 (Ga. 2007).

Cited in State Highway Dep't v. Fidelity & Deposit Co., 168 Ga. 288, 147 S.E. 522 (1929); Sapp v. Ritch, 169 Ga. 33, 149 S.E. 636 (1929); Gibbs v. H.T. Henning Co., 189 Ga. 675, 7 S.E.2d 238 (1940); Hutchinson v. King, 192 Ga. 402, 15 S.E.2d 523 (1941); Miller v. Shaw, 212 Ga. 302, 92 S.E.2d 98 (1956); Stein Steel & Supply Co. v. K. & L. Enters., Inc., 97 Ga. App. 71, 102 S.E.2d 99 (1958); Seaboard Constr. Co. v. Clifton, 121 Ga. App. 247, 173 S.E.2d 436 (1970); Atkinson v. Atkinson, 254 Ga. 70, 326 S.E.2d 206 (1985); Fulghum v. Kelly, 255 Ga. 652, 340 S.E.2d 589 (1986).

RESEARCH REFERENCES

Am. Jur. 2d.

- 27 Am. Jur. 2d, Equity, §§ 36-38, 40-42.

ALR.

- Mistake in lease as ground for relief, 26 A.L.R. 472.

Right to reformation of conveyance as depending upon consideration, 69 A.L.R. 423, 128 A.L.R. 1299.

Mistake as to law of another state or country as one of law or of fact, 73 A.L.R. 1260.

Avoidance on ground of fraud, mistake, duress, or mental incompetency of otherwise validly effected change of beneficiaries of insurance policies, 105 A.L.R. 950.

Misrepresentation as to matters of foreign law as actionable, 24 A.L.R.2d 1039.

Negligence in executing contract as affecting right to have it reformed, 81 A.L.R.2d 7.

23-2-23. Mistake of law in instrument - By agent.

A mistake of law by the draftsman or other agent, by which the contract, as executed, does not fulfill or violates the manifest intention of the parties to the agreement, may be relieved in equity.

(Orig. Code 1863, § 3056; Code 1868, § 3068; Code 1873, § 3123; Code 1882, § 3123; Civil Code 1895, § 3980; Civil Code 1910, § 4577; Code 1933, § 37-205.)

JUDICIAL DECISIONS

Equity will relieve against mutual mistake, but only at the instance of a complainant who moves with reasonable diligence. What is a reasonable time must necessarily depend upon the peculiar facts and environments of the particular case. Parker v. Fisher, 207 Ga. 3, 59 S.E.2d 715 (1950).

Standing to seek reformation of liability contract.

- In certifying certain questions to the Georgia Supreme Court, the federal Court of Appeals concluded that it is an open question of Georgia law whether a person injured by a municipality has a beneficial interest in the municipality's liability contract sufficient to provide standing to seek reformation. Florida Int'l Indem. Co. v. City of Metter, 952 F.2d 1297 (11th Cir. 1992), aff'd, 984 F.2d 1138 (11th Cir. 1993).

Allegations of inadequate description by draftsman states case for reformation.

- Where a petition is brought by assignee for reformation of a written lease and option agreement, alleging a valuable consideration, and that permanent improvements had been made on the property involved, and that an alleged inadequate description of the property had been made by mistake of the draftsman, it having been the intention of the parties that the description contended for be inserted in the agreement, and further alleging that unless so reformed an unconscionable advantage would be acquired by the defendant, such allegations state a case for reformation of the lease and option agreement. Martin v. Oakhurst Dev. Corp., 197 Ga. 288, 29 S.E.2d 179 (1944).

A petition for reformation of a written contract will lie where by mistake of the scrivener and by oversight of the parties, the writing does not embody or fully express the real contract of the parties. McLoon v. McLoon, 220 Ga. 18, 136 S.E.2d 740 (1964).

Cited in Bender v. Randall Bros., 189 Ga. 197, 5 S.E.2d 889 (1939); Gibbs v. H.T. Henning Co., 189 Ga. 675, 7 S.E.2d 238 (1940); Redmond v. Sinclair Ref. Co., 204 Ga. 699, 51 S.E.2d 409 (1949); Sheldon v. Hargrose, 213 Ga. 672, 100 S.E.2d 898 (1957); Flagg v. Hedrick, 215 Ga. 16, 108 S.E.2d 703 (1959); Robinson v. Wright, 217 Ga. 199, 121 S.E.2d 640 (1961); Seaboard Constr. Co. v. Clifton, 121 Ga. App. 247, 173 S.E.2d 436 (1970).

RESEARCH REFERENCES

Am. Jur. 2d.

- 27 Am. Jur. 2d, Equity, §§ 35, 36.

C.J.S.

- 30 C.J.S., Equity, § 44 et seq.

ALR.

- Relief in equity from mistake of law, 75 A.L.R. 896.

23-2-24. When mistake of fact relieved.

In all cases of a mistake of fact material to the contract or other matter affected by it, if the complaining party applies within a reasonable time, equity will grant relief.

(Orig. Code 1863, § 3058; Code 1868, § 3070; Code 1873, § 3125; Code 1882, § 3125; Civil Code 1895, § 3983; Civil Code 1910, § 4580; Code 1933, § 37-206.)

JUDICIAL DECISIONS

Relief of mistake of fact generally.

- Although equity will not reform a written contract because of mistake as to the contents of the writing on the part of the complaining party, who is able to read but fails to do so, where no sufficient excuse appears as to why such party did not read the contract, such principle has not been extended to cases in which it is sought to reform written instruments on the ground of mutual mistake of fact. Sheldon v. Hargrose, 213 Ga. 672, 100 S.E.2d 898 (1957).

Even where money is paid under a mistake of fact or in ignorance of facts, it cannot be recovered, unless the circumstances are such that the party receiving it ought not, in equity and good conscience, to be allowed to retain it. The expression, "in equity and good conscience," refers only to the acts and intentions of the person receiving the money as affecting the other party to the transaction. If he has acted in good faith and in good conscience with the person paying the money, he is entitled to retain it, even if his actions and intentions may not have been in good faith and in good conscience as regards other persons not connected with the transaction. Bryant v. Guaranty Life Ins. Co., 40 Ga. App. 573, 150 S.E. 596 (1929).

Where, due to a mistake of fact unmixed with negligence, the condemnation proceeding for a public road was conducted throughout upon the theory that the road would be paved at approximately grade level, thus improving rather than damaging the remaining abutting property, and there was nothing to indicate that a fill of from 25 to 40 feet would be made in front of the remaining property which would damage it in the amount of approximately $20,000.00, a petition in equity, alleging these facts and alleging that the mistake prevented the owners from proving this consequential damage, alleged a cause of action to set aside the award and the judgment of condemnation and to recover the full damages. Whipple v. County of Houston, 214 Ga. 532, 105 S.E.2d 898 (1958).

A contractor who has bid for the excavation of highway sites on a basis of "unclassified material" may not, under the guise of mistake of fact, seek additional compensation in an action at law because the material excavated contained a higher percentage of rock than it expected, even though its only information at the time of the bid was results of test borings made available to it by the highway department (now Department of Transportation), where it was specifically stipulated that the data were not guaranteed and did not bind the department; where the department furnished all information which it had available, made no attempt to conceal actual conditions, and stipulated the provisional character of its tests, where the contractor had equal opportunity with the department to conduct its own investigation, and where the parties with knowledge of these facts elected to contract on a basis of material moved rather than to contract on a basis of the percentage of dirt and rock after removal. State Hwy. Dep't v. MacDougald Constr. Co., 102 Ga. App. 254, 115 S.E.2d 863 (1960).

Where a deed fixes the northern boundary of a tract of land as a certain public road, the legal effect of such description, in the absence of a contrary intention being manifested in the instrument, is that the road open and actually in use by the public is the road intended by the parties, rather than the site of an old road, and the language, being unambiguous, cannot be aided by extrinsic evidence to extend the boundary to the old-road site, the sole remedy for such purpose being reformation of the deed. Miller v. Rackley, 199 Ga. 370, 34 S.E.2d 438 (1945).

A defense of mistake of fact is not available to one who relies on a unilateral mistake, especially where the mistake, if there is one, is caused by the party's own negligence. Hyman v. Horwitz, 148 Ga. App. 647, 252 S.E.2d 74 (1979).

Evidence of mistake must be clear, etc.

- A mistake, either of law or fact, is cognizable in equity and affords a remedy therein by reformation of the instrument so as to make it express the true intention of the parties, on a proper cause being made; but such a jurisdiction will always be cautiously exercised, and to justify it the evidence must be clear, unequivocal, and decisive. Yablon v. Metropolitan Life Ins. Co., 200 Ga. 693, 38 S.E.2d 534 (1946).

Use of extrinsic evidence.

- If the description in a deed is unambiguous, extrinsic evidence cannot be resorted to, except for the purpose of reforming the deed so as to make it express the real intention of the parties and correct a mutual mistake of fact. Miller v. Rackley, 199 Ga. 370, 34 S.E.2d 438 (1945).

Standing to seek reformation of liability contract.

- In certifying certain questions to the Georgia Supreme Court, the federal Court of Appeals concluded that it is an open question of Georgia law whether a person injured by a municipality has a beneficial interest in the municipality's liability contract sufficient to provide standing to seek reformation. Florida Int'l Indem. Co. v. City of Metter, 952 F.2d 1297 (11th Cir. 1992), aff'd, 984 F.2d 1138 (11th Cir. 1993).

Affirmation of contract barred rescission.

- The plaintiffs were not entitled to rescission of their purchase of a house on the basis of a mistake of fact arising from a water line easement since their conduct in rebuilding the house with improvements following a tornado showed that they intended to treat the home as their own and was indicative of their affirmation of the contract. Aliabadi v. McCar Dev. Corp., 249 Ga. App. 309, 547 S.E.2d 607 (2001).

Cited in Paris v. Treadaway, 173 Ga. 639, 160 S.E. 797 (1931); Young v. Hirsch, 187 Ga. 1, 199 S.E. 179 (1938); Bender v. Randall Bros., 189 Ga. 197, 5 S.E.2d 889 (1939); Orient Ins. Co. v. Dunlap, 193 Ga. 241, 17 S.E.2d 703 (1941); City of Jefferson v. Trustees of Martin Inst., 199 Ga. 71, 33 S.E.2d 354 (1945); Hargrove v. Bledsoe, 78 Ga. App. 107, 50 S.E.2d 223 (1948); Peerless Cas. Co. v. Housing Auth., 228 F.2d 376 (5th Cir. 1955); Robinson v. Wright, 217 Ga. 199, 121 S.E.2d 640 (1961); Eastside Carpet Mills, Inc. v. Dodd, 144 Ga. App. 580, 241 S.E.2d 466 (1978); Crane v. Adams-Cates Co., 256 Ga. 407, 350 S.E.2d 767 (1986); Rose v. Cain, 247 Ga. App. 481, 544 S.E.2d 453 (2001).

RESEARCH REFERENCES

Am. Jur. 2d.

- 27 Am. Jur. 2d, Equity, §§ 31, 32.

C.J.S.

- 30 C.J.S., Equity, § 44 et seq.

ALR.

- Ignorance of, or mistake as to, terms of existing mortgage upon the property as ground for relief from a contract for the purchase of real property, 26 A.L.R. 528.

Relief from contract of sale because of mistake as to amount of commodity which it calls for, 31 A.L.R. 384.

Good faith in receiving payment made under mistake of fact as affecting its recovery, 87 A.L.R. 649.

Property rights in respect of building, fence, or other structure placed upon another's land through mistake as to boundary or location, 130 A.L.R. 1034.

Conscious ignorance of fact, as distinguished from mistake of fact, as ground for reformation of contract, 137 A.L.R. 908.

Reformation on ground of mutual mistake regarding character or extent of estate or title imported by language used in instrument, 141 A.L.R. 826.

Mistake as to existence, practicability of removal, or amount of minerals as ground for relief from mineral lease, 163 A.L.R. 878.

Measure and items of recovery for improvements mistakenly placed or made on land of another, 24 A.L.R.2d 11.

Recovery back by employer of compensation paid to employee as result of mistake or the employee's fraud, 88 A.L.R.2d 1437.

Reformation of property insurance policy to correctly identify the person or interest insured, 25 A.L.R.3d 580.

Vendor and purchaser: mutual mistake as to physical condition of realty as ground for rescission, 50 A.L.R.3d 1188.

What constitutes mistake in the identity of one of the parties to warrant annulment of marriage, 50 A.L.R.3d 1295.

When statute of limitations begins to run against action to recover money paid by mistake, 79 A.L.R.3d 754.

Right of insurer under health or hospitalization policy to restitution of payments made under mistake, 79 A.L.R.3d 1113.

23-2-25. Form of conveyance contrary to intent.

If the form of conveyance is, by accident or mistake, contrary to the intention of the parties in their contract, equity shall interfere to make it conform thereto.

(Orig. Code 1863, § 3047; Code 1868, § 3059; Code 1873, § 3114; Code 1882, § 3114; Civil Code 1895, § 3970; Civil Code 1910, § 4567; Code 1933, § 37-215.)

Law reviews.

- For comment advocating principle that grantee may obtain reformation of deed of gift over opposition of heirs of grantor, see 25 Ga. B.J. 445 (1963).

JUDICIAL DECISIONS

Reformation as applied to a contract is a remedy cognizable in equity for the purpose of correcting an instrument so as to make it express the true intention of the parties, where from some cause, such as fraud, accident, or mistake it does not express such intention. The remedy is not available for the purpose of making a new and different contract for the parties, but is confined to establishment of the actual agreement. Deck v. Shields, 195 Ga. 697, 25 S.E.2d 514 (1943).

An IRS objection to the proposed reformation of certain deeds to reflect that all parties to the transfer of a Georgia nursing home had intended an omitted tract to be included within the description was rejected despite the IRS's insistence that a lien filed pursuant to 26 U.S.C. § 6321 was effective to encumber the omitted tract because all criteria for reformation pursuant to O.C.G.A. § 23-2-25 were met. Nat'l Assistance Bureau, Inc. v. Macon Mem'l Intermediate Care Home, Inc., F. Supp. 2d (M.D. Ga. June 8, 2009).

Where the form of the conveyance or instrument is, by mutual mistake, contrary to the intention of the parties equity will interfere to make it conform thereto. In such cases, it is wholly immaterial from what cause the defective execution of the intent of the parties originated. Hill v. Agnew, 199 Ga. 644, 34 S.E.2d 702 (1945); Sheldon v. Hargrose, 213 Ga. 672, 100 S.E.2d 898 (1957).

Where personal property is sold, and a bill of sale with warranty of title is executed by the vendor, and the property is again sold with warranty of title, the last vendee and his vendor may join in an equitable petition against the original vendor, having for its purpose the reformation of the original bill of sale by including certain items of property omitted therefrom by mutual mistake. Chapman v. Cassels Co., 180 Ga. 349, 179 S.E. 91 (1935).

Where the plaintiffs sued as remaindermen to recover undivided interests in land after death of the life tenant, relying on a deed which by its terms plainly vested in them the remainder interest claimed, and the defendant contended that the deed had been so reformed by an equitable decree for reformation of the deed, rendered 50 years earlier, as to vest the fee-simple title in the person originally named as life tenant, from whom he purchased, the so-called decree of reformation was void, for the reason that it was based upon a petition that did not state a cause of action for reformation, and did not contain enough to amend by as related to such relief, therefore the evidence demanded a verdict for the plaintiffs. Deck v. Shields, 195 Ga. 697, 25 S.E.2d 514 (1943).

Where a petition is brought by assignee for reformation of a written lease and option agreement, alleging a valuable consideration, and that permanent improvements had been made on the property involved, and that an alleged inadequate description of the property had been made by mistake of the scrivener, it having been the intention of the parties that the description contended for be inserted in the agreement, and further alleging that unless so reformed an unconscionable advantage would be acquired by the defendant, such allegations state a case for reformation of the lease and option agreement. Martin v. Oakhurst Dev. Corp., 197 Ga. 288, 29 S.E.2d 179 (1944).

In action for specific performance of option agreement to convey land, plaintiff may have description of land reformed so as to fulfill parties' intention. Martin v. Oakhurst Dev. Corp., 197 Ga. 288, 29 S.E.2d 179 (1944).

Wrong property foreclosed upon.

- Trial court properly reformed security deed and declared that suing lender had first priority over certain tract of land since there was no doubt that parties intended for the tract to have been subject to the security deed alone; trial court also properly directed verdict in favor of suing lender as to its claim for rescission and cancellation of the deed it obtained when it mistakenly foreclosed on the wrong tract, as such relief was the proper remedy. DeGolyer v. Green Tree Servicing, LLC, 291 Ga. App. 444, 662 S.E.2d 141 (2008).

Judgment creditor had no right to intervene in action for reformation of a deed.

- Trial court abused the court's discretion in allowing a borrower's judgment creditor to intervene as a matter of right pursuant to O.C.G.A. § 9-11-24 in the borrower's action against the lender for reformation of a deed pursuant to O.C.G.A. § 23-2-25. The creditor had no interest directly relating to the subject matter of the suit and had other remedies. Potter's Props., LLC v. VNS Corp., 306 Ga. App. 621, 703 S.E.2d 79 (2010).

Question of fact as to whether reformation warranted.

- Trial court erred in granting summary judgment to the borrowers on the bank's claim for equitable reformation of the security deeds because evidence included the fact that a portion of the 2003 loan paid off a joint debt previously secured by the property and the borrowers subsequently represented to the bankruptcy court that the debt secured by the property was jointly owed, which created a question of fact as to whether the debt was secured by the real property at issue. Bank of Am., N.A. v. Cuneo, 332 Ga. App. 73, 770 S.E.2d 48 (2015).

Reformation not warranted.

- Creditor could not prevail on the creditor's claim for equitable reformation of a security deed executed by a debtor that did not own the property because nothing in the chain of title provided constructive notice to a potential purchaser of the property of the creditor's equitable interest in the property. Stearns Bank, N.A. v. Rent-A-Tent, Inc. (In re Rent A Tent, Inc.), 468 Bankr. 442 (Bankr. N.D. Ga. 2012).

Court would not construe an agreement and a deed together as creating a fee simple subject to a condition subsequent because a month-long gap between the execution of the agreement and the deed was too great of a gap in time to deem the documents as being executed contemporaneously. Nor would the court reform the documents to do so as the creditor failed to demonstrate a mistake of present or past fact relievable in equity, either by rescission or reformation. Kelley v. McCormack (In re Mitchell), 548 Bankr. 862 (Bankr. M.D. Ga. 2016).

Taking as true for purposes of a Chapter 7 trustee's motion for judgment on the pleadings a bank's contention that the parties involved in the sale, financing, and purchase of the property at issue intended that the property be conveyed to the debtor wife alone and intended that the security deed encumber the entire property rather than only an undivided one-half interest, the bank was not entitled to reformation of a special warranty deed (SWD) under Georgia law because as a security deed grantee, it was not an original party to the SWD or in privity with any party to the SWD. Bank of Am., N.A. v. Adams (In re Adams), 583 Bankr. 541 (Bankr. N.D. Ga. 2018).

Reformation warranted.

- Creditor prevailed on the creditor's claim for equitable reformation of a security deed executed by a debtor that did not own the property because a later modification of the deed was filed and was within the chain of title for the property, providing any potential purchaser of the property constructive notice of the creditor's equitable interest in the property. Stearns Bank, N.A. v. Rent-A-Tent, Inc. (In re Rent A Tent, Inc.), 468 Bankr. 442 (Bankr. N.D. Ga. 2012).

Reformation was appropriate under Georgia law as it was clear that both a Chapter 13 debtor and a bank intended the legal description in a security deed to include tract two only, and that a mutual mistake occurred due to a scrivener's error. There was no prejudice to the debtor as the trustee required the debtor to propose a Chapter 13 plan as though the deed had been reformed; further, prejudice due to the loss of debtor's house was not grounds to deny reformation as the debtor contracted and intended to pledge tract two as collateral, the debtor had the use of the loan proceeds, and the debtor used funds to satisfy an earlier debt on the tract. Deutsche Bank Nat'l Trust Co. v. Thompson (In re Thompson), 499 Bankr. 908 (Bankr. S.D. Ga. 2013).

Trial court did not err in granting summary judgment to the bank as to the bank's claim for reformation to include a mistakenly omitted signature on the security deed as the borrowers had not suffered prejudice where the borrowers received a loan and used part of that loan to satisfy an earlier loan from another lender relating to the property, and the borrowers failed to show that the borrowers would suffer any prejudice if the deed were reformed. Vibert v. Bank of America, N.A., 327 Ga. App. 782, 761 S.E.2d 162 (2014).

Bankruptcy court did not commit clear error in reforming a security deed and cancelling a quitclaim deed due to the parties' mutual mistake because the undisputed facts showed that the Chapter 13 debtor and the lender intended for the security deed's legal description to include one tract and not three tracts. Thompson v. Deutsche Bank Nat'l Trust Co. (In re Thompson), F. Supp. 2d (S.D. Ga. Aug. 11, 2014).

Lenders were entitled to equitable reformation as the evidence demonstrated that the parties had earlier attempted to modify the security deed to include both parcels in the legal description attached to the security deed and to establish both parcels as security for the subject loan. Black v. Nationstar Mortgage, LLC, 344 Ga. App. 217, 809 S.E.2d 487 (2018).

Cited in Cheatham v. Palmer, 178 Ga. 223, 172 S.E. 462 (1934); McCollum v. Loveless, 187 Ga. 262, 200 S.E. 115 (1938); Bender v. Randall Bros., 189 Ga. 197, 5 S.E.2d 889 (1939); Gibbs v. H.T. Henning Co., 189 Ga. 675, 7 S.E.2d 238 (1940); Redmond v. Sinclair Ref. Co., 204 Ga. 699, 51 S.E.2d 409 (1949); Srochi v. Postell, 206 Ga. 59, 55 S.E.2d 603 (1949); Flagg v. Hedrick, 215 Ga. 16, 108 S.E.2d 703 (1959); Polk v. Sherod, 240 Ga. 680, 242 S.E.2d 157 (1978); Curry v. Curry, 267 Ga. 66, 473 S.E.2d 760 (1996); Vance v. Jackson, 233 Ga. App. 480, 504 S.E.2d 529 (1998).

RESEARCH REFERENCES

ALR.

- Does right of grantor to maintain a suit in equity to set aside his conveyance for cause survive to his heir, 33 A.L.R. 51.

Power of equity in absence of statute to render deficiency judgment in foreclosure action, 34 A.L.R. 1015.

Right to reformation of contract or instrument as affected by intervening rights of third persons, 44 A.L.R. 78, 79 A.L.R.2d 1180.

Right to reformation of conveyance as depending upon consideration, 69 A.L.R. 423, 128 A.L.R. 1299.

Right of present claimant of title as against original or intermediate grantor to reformation to correct error in description common to conveyances in chain of title, 89 A.L.R. 1444.

Reformation on ground of mutual mistake regarding character or extent of estate or title imported by language used in instrument, 141 A.L.R. 826.

Right to reformation of contract or instrument as affected by intervening rights of third persons, 79 A.L.R.2d 1180.

Incontestable clause as applicable to suit to reform insurance policy, 7 A.L.R.2d 504.

23-2-26. Accident or mistake in execution of power.

Accident or mistake in the execution of a power or causing the defective execution of the power will be remedied in equity.

(Orig. Code 1863, § 3061; Code 1868, § 3073; Code 1873, § 3128; Code 1882, § 3128; Civil Code 1895, § 3986; Civil Code 1910, § 4583; Code 1933, § 37-218.)

RESEARCH REFERENCES

ALR.

- Mistake by one party to contract as to identity of other party who acted in good faith, 147 A.L.R. 1171.

23-2-27. When equitable interference not authorized - Mere ignorance of law.

Mere ignorance of the law on the part of the party himself, where the facts are all known and there is no misplaced confidence and no artifice, deception, or fraudulent practice is used by the other party either to induce the mistake of law or to prevent its correction, shall not authorize the intervention of equity.

(Orig. Code 1863, § 3054; Code 1868, § 3066; Code 1873, § 3121; Code 1882, § 3121; Civil Code 1895, § 3978; Civil Code 1910, § 4575; Code 1933, § 37-209.)

JUDICIAL DECISIONS

This section does not prevent the granting of relief where all the facts are not known by reason of the fraud of one of the parties. Wellborn v. Johnson, 204 Ga. 389, 50 S.E.2d 16 (1948).

This section has no application to a mutual mistake of law by both parties. Superior Ins. Co. v. Dawkins, 229 Ga. App. 45, 494 S.E.2d 208 (1997).

Because a mutual mistake of law was not a valid reason to nullify the parties' choice of Delaware law in order to uphold a right of first refusal, the parties' settlement agreement was not subject to reformation due to an alleged mutual mistake. Thus, under Delaware law, the right was properly declared invalid under the rule against perpetuities. CS-Lakeview at Gwinnett, Inc. v. Simon Prop. Group, Inc., 283 Ga. 426, 659 S.E.2d 359 (2008).

Equitable relief requires inequitable conduct by other party.

- Equity has jurisdiction to reform a written instrument where there has been ignorance or mistake on the part of one of the parties, accompanied by fraud or inequitable conduct on the part of the other party. Wellborn v. Johnson, 204 Ga. 389, 50 S.E.2d 16 (1948).

If the fraud or inequitable conduct complained of consists of an alleged misrepresentation of fact, it is immaterial whether the party making the misrepresentation knows it to be false or not; it is nonetheless fraud in law, even though not fraud in fact. Wellborn v. Johnson, 204 Ga. 389, 50 S.E.2d 16 (1948).

A simple mistake by a party as to the legal effect of an agreement which he executes, or as to the legal result of an act which he performs, is no ground for either defensive or affirmative relief. Robbins v. National Bank, 241 Ga. 538, 246 S.E.2d 660 (1978).

Mistake in opinion or mental conclusion not ground for relief.

- Mistake of a past or present fact may warrant equitable relief, but a mistake in opinion or mental conclusion as to an uncertain future event is not ground for relief. Atkinson v. Atkinson, 254 Ga. 70, 326 S.E.2d 206 (1985).

Cited in Sapp v. Ritch, 169 Ga. 33, 149 S.E. 636 (1929); Paris v. Treadaway, 173 Ga. 639, 160 S.E. 797 (1931); Dunson v. First Nat'l Bank, 175 Ga. 79, 164 S.E. 815 (1932); Nalley v. New York Life Ins. Co., 48 F. Supp. 470 (N.D. Ga. 1943); Wood v. Claxton, 199 Ga. 809, 35 S.E.2d 455 (1945); Stein Steel & Supply Co. v. K. & L. Enters., Inc., 97 Ga. App. 71, 102 S.E.2d 99 (1958).

RESEARCH REFERENCES

Am. Jur. 2d.

- 27 Am. Jur. 2d, Equity, § 34.

C.J.S.

- 30 C.J.S., Equity, § 44 et seq.

ALR.

- Ignorance of legal right to avoid contract or conveyance made during infancy as affecting ratification thereof upon attaining majority, 5 A.L.R. 137.

Right to cancellation in equity of an instrument not invalid on its face in which one is named as a party without his consent, 51 A.L.R. 867.

Misrepresentation as to tax law as within rule that party to contract or other instrument may not rely upon misrepresentations as to matters of law, 153 A.L.R. 538.

Misrepresentation as to matters of foreign law as actionable, 24 A.L.R.2d 1039.

23-2-28. When equitable interference not authorized - Mutual ignorance of fact; mistake in judgment of value.

Ignorance of a fact by both parties shall not justify the interference of equity; nor shall a mistake in judgment or opinion merely as to the value of property authorize such interference.

(Orig. Code 1863, § 3060; Code 1868, § 3072; Code 1873, § 3127; Code 1882, § 3127; Civil Code 1895, § 3985; Civil Code 1910, § 4582; Code 1933, § 37-210.)

JUDICIAL DECISIONS

Lack of knowledge is not considered a mistake of fact for purposes of reformation. B.L. Ivey Constr. Co. v. Pilot Fire & Cas. Co., 295 F. Supp. 840 (N.D. Ga. 1968).

A mere mistake in judgment or opinion as to the value of property does not authorize interference by the courts. Hargrove v. Bledsoe, 78 Ga. App. 107, 50 S.E.2d 223 (1948).

Cited in Beddingfield v. Old Nat'l Bank & Trust Co., 175 Ga. 172, 165 S.E. 61 (1932); Dobbs v. Perlman, 59 Ga. App. 770, 2 S.E.2d 109 (1939); Sawyer Coal & Ice Co. v. Kinnett-Odom Co., 192 Ga. 166, 14 S.E.2d 879 (1941); Orient Ins. Co. v. Dunlap, 193 Ga. 241, 17 S.E.2d 703 (1941); Nalley v. New York Life Ins. Co., 48 F. Supp. 470 (N.D. Ga. 1943); City of Jefferson v. Trustees of Martin Inst., 199 Ga. 71, 33 S.E.2d 354 (1945); Wheeler v. Poole, 204 Ga. 477, 50 S.E.2d 326 (1948); Adler v. Adler Co., 205 Ga. 818, 55 S.E.2d 13 (1949); James v. Tarpley, 209 Ga. 421, 73 S.E.2d 188 (1952); Cline v. Schuster, 221 Ga. 653, 146 S.E.2d 732 (1966); Long v. Walls, 226 Ga. 737, 177 S.E.2d 373 (1970).

RESEARCH REFERENCES

Am. Jur. 2d.

- 27 Am. Jur. 2d, Equity, § 22.

C.J.S.

- 30 C.J.S., Equity, § 44 et seq.

ALR.

- Conscious ignorance of fact, as distinguished from mistake of fact, as ground for reformation of contract, 137 A.L.R. 908.

Relief, by way of rescission or adjustment of purchase price, for mutual mistake as to quantity of land, where contract of sale fixes compensation at a specified rate per acre or other area unit, 153 A.L.R. 4.

Mistake as to existence, practicability of removal, or amount of minerals as ground for relief from mineral lease, 163 A.L.R. 878.

Relief by way of rescission or adjustment of purchase price for mutual mistake as to quantity of land, where the sale is in gross, 1 A.L.R.2d 9.

Effect, as between stockbroker and customer, of broker's mistaken sale of security other than that intended by customer, 48 A.L.R.3d 513.

Vendor and purchaser: mutual mistake as to physical condition of realty as ground for rescission, 50 A.L.R.3d 1188.

Modern status of rules as to avoidance of release of personal injury claim on ground of mistake as to nature and extent of injuries, 13 A.L.R.4th 686.

23-2-29. When equitable interference not authorized - Failure to exercise diligence; ignorance of fact absent fraud.

If a party, by reasonable diligence, could have had knowledge of the truth, equity shall not grant relief; nor shall the ignorance of a fact known to the opposite party justify an interference if there has been no misplaced confidence, misrepresentation, or other fraudulent act.

(Orig. Code 1863, § 3059; Code 1868, § 3071; Code 1873, § 3126; Code 1882, § 3126; Civil Code 1895, § 3984; Civil Code 1910, § 4581; Code 1933, § 37-211.)

Law reviews.

- For article, "Limitations on the Meaning and Impact of DeGarmo v. DeGarmo," see 4 Ga. St. B.J. 20 (1998).

JUDICIAL DECISIONS

General Consideration

This section was not intended to lodge any arbitrary discretion in judge or jury to deny reformation on the ground that the party seeking relief could by reasonable diligence have had knowledge of the mistake. Bender v. Randall Bros., 189 Ga. 197, 5 S.E.2d 889 (1939).

Elements essential to equitable relief.

- Two essential elements must affirmatively appear before a court of equity will be authorized to relieve a purchaser from his bid because of mistake of fact; the exercise of ordinary diligence in discovering the truth, and the fact that the relief will not prejudicially affect the rights of anyone. Kurfees v. Davis, 178 Ga. 429, 173 S.E. 157 (1934).

Equity will not relieve a person from his erroneous acts or omissions resulting from his own negligence. Mangham v. Hotel & Restaurant Supply Co., 107 Ga. App. 619, 131 S.E.2d 74 (1963).

No basis for reformation.

- Any possible violation of a fiduciary bond which remained between a city and a law firm as a result of a prior attorney-client relationship provided no basis for reforming an amended lease because there was no indication that the law firm was a party to its attorney's alleged duplicity and there was no proof in the record of any occurrence which prevented the city from reading the amended lease prior to executing the document. City of College Park v. Sheraton Savannah Corp., 235 Ga. App. 561, 509 S.E.2d 371 (1998).

An insurer was entitled to reformation of a policy where coverage of a vehicle was extended at the insured's request, after the vehicle was involved in an accident; even though the insurer could have inquired before extending the coverage, the insured was not prejudiced by the insurer's action and would obtain a windfall absent reformation of the contract. Cotton States Mut. Ins. Co. v. Woodruff, 215 Ga. App. 511, 451 S.E.2d 106 (1994).

Specific performance warranted in foreclosure sale.

- Superior court did not err in granting a purchaser summary judgment in the purchaser's action seeking specific performance pursuant to O.C.G.A. § 23-2-131 and requiring a mortgage company to deliver a deed conveying certain property because the company failed to demonstrate any merit in the company's contention that the superior court improperly refused to invoke the court's equitable power to relieve the company from performing under the foreclosure sale contract on the ground that the opening bid the company set forth was a mistake. Because the dollar amount of the high bid at the foreclosure sale alone made it immediately apparent that there had been a mistake, a reasonable inference arose that had reasonable diligence been employed before the foreclosure sale, the alleged unilateral mistake would not have occurred. Decision One Mortg. Co., LLC v. Victor Warren Props., Inc., 304 Ga. App. 423, 696 S.E.2d 145 (2010).

Equitable interference not authorized in quiet title action.

- Trial court did not err in granting a bank and purchasers summary judgment in a son's action to quiet title to a parcel of land because the son did not act with reasonable diligence to verify that a house was located on the land that the son received under a deed, and the purchasers would be prejudiced if the son were granted relief. Haffner v. Davis, 290 Ga. 753, 725 S.E.2d 286 (2012).

Constructive trust denied due to laches.

- Former wife was not entitled to impose a constructive trust on her former husband's military pension pursuant to O.C.G.A. § 53-12-132 because she failed to object to the absence of any provision for the pension in their divorce decree for 12 years and failed to bring suit until 5 years after payments allegedly became due. Davis v. Davis, 310 Ga. App. 512, 713 S.E.2d 694 (2011).

Cited in Harrison v. Hester, 160 Ga. 865, 129 S.E. 528 (1925); Paris v. Treadaway, 173 Ga. 639, 160 S.E. 797 (1931); McCommons v. Greene County, 53 Ga. App. 171, 184 S.E. 897 (1936); Dobbs v. Perlman, 59 Ga. App. 770, 2 S.E.2d 109 (1939); J. Kuniansky, Inc. v. Ware, 192 Ga. 488, 15 S.E.2d 783 (1941); Hill v. Agnew, 202 Ga. 759, 44 S.E.2d 653 (1947); Loyd v. Loyd, 203 Ga. 775, 48 S.E.2d 365 (1948); Whitfield v. Whitfield, 204 Ga. 64, 48 S.E.2d 852 (1948); Tillman v. Byrd, 211 Ga. 918, 89 S.E.2d 479 (1955); Peerless Cas. Co. v. Housing Auth., 228 F.2d 376 (5th Cir. 1955); Charles v. Simmons, 215 Ga. 794, 113 S.E.2d 604 (1960); Dixie Belle Mills, Inc. v. Specialty Mach. Co., 217 Ga. 104, 120 S.E.2d 771 (1961); Cline v. Schuster, 221 Ga. 653, 146 S.E.2d 732 (1966); Vinson v. Citizens & S. Nat'l Bank, 223 Ga. 54, 153 S.E.2d 436 (1967); D.H. Overmyer Co. v. Joe Summers Roofing Co., 120 Ga. App. 188, 169 S.E.2d 821 (1969); Sikes v. Sikes, 231 Ga. 105, 200 S.E.2d 259 (1973); Martin v. Heard, 239 Ga. 816, 238 S.E.2d 899 (1977); Garden of Eden, Inc. v. Eastern Sav. Bank, 244 Ga. 63, 257 S.E.2d 897 (1979); FDIC v. Lattimore Land Corp., 656 F.2d 139 (5th Cir. 1981); Gulf Life Ins. Co. v. Folsom, 256 Ga. 400, 349 S.E.2d 368 (1986); Beasley v. Wachovia Bank, 277 Ga. App. 698, 627 S.E.2d 417 (2006); Levenson v. Word, 294 Ga. App. 104, 668 S.E.2d 763 (2008).

Reasonable Diligence

1. In General

Courts of equity grant relief only in favor of the diligent. City of Jefferson v. Trustees of Martin Inst., 199 Ga. 71, 33 S.E.2d 354 (1945).

The standard is one of reasonable diligence, and the defrauded party is not bound to exhaust all means at his command to ascertain the truth before relying upon the representations. Funding Sys. Leasing Corp. v. Pugh, 530 F.2d 91 (5th Cir. 1976).

Equity requires diligence in the protection of one's own rights. Phillips v. Hayes, 212 Ga. 148, 91 S.E.2d 19 (1956).

Equity requires diligence, and will not do for one that which he could have done for himself but for his own negligence. Glens Falls Indem. Co. v. Liberty Mut. Ins. Co., 202 Ga. App. 752, 44 S.E.2d 543 (1947).

While equity will, on reasonable application, and under proper circumstances, relieve a party from the injurious consequences of an act done under a mistake of fact, it will not do so if such party could, by reasonable diligence, have ascertained the truth as to the matter concerning which the mistake was made. Adler v. Adler Co., 205 Ga. 818, 55 S.E.2d 139 (1949).

The duty rests upon a party who seeks to rescind a contract on the ground of fraud, to make such effort to discover the fraud as would in law amount to ordinary diligence. Tingle v. Seignious, 212 Ga. 71, 90 S.E.2d 408 (1955).

If one has made a bad bargain by her failure to acquaint herself with facts which were easily ascertainable, a court of equity will not aid her in rescinding her contract to purchase by decreeing a cancellation of it. Tingle v. Seignious, 212 Ga. 71, 90 S.E.2d 408 (1955).

While § 23-2-31 provides that equity may rescind and cancel a written contract upon the ground of mistake of fact material to the contract of one party only, ignorance of fact is no cause for rescinding a contract; and where by reasonable diligence the plaintiff could have ascertained the extent of his injuries, and there was no necessity for his rushing into a settlement, § 9-3-33 giving him two years in which to bring an action to recover for such injuries, a court of equity will not relieve him from the injurious, unwise, or disadvantageous consequences of his own act in executing a release. James v. Tarpley, 209 Ga. 421, 73 S.E.2d 188 (1952).

Where two contracting parties deal at arms length with one another, and a written instrument is entered into and signed, and there is no evidence of artifice or fraud, and each party had ample opportunity to inform himself as to the amounts claimed due, and a party negligently omitted to take such precautions as would reasonably serve to protect himself, the defense of mistake of fact, if there is one, is obviously caused by the party's own neglect and is not available as a defense. Berry v. Atlas Metals, Inc., 152 Ga. App. 437, 263 S.E.2d 179 (1979).

A court of equity will not relieve a vendor of land from his own negligence in not ascertaining facts which he could have ascertained by diligence, the vendee using no artifice or fraudulent scheme in order to prevent the vendor from ascertaining facts which might have prevented him from executing the deed sought to be canceled on account of the alleged fraud on the part of the vendee. Browning v. Richardson, 181 Ga. 413, 182 S.E. 516 (1935).

A contractor who has bid for the excavation of highway sites on a basis of "unclassified material" may not, under the guise of mistake of fact, seek additional compensation in an action at law because the material excavated contained a higher percentage of rock than it expected, even though its only information at the time of the bid was results of test borings made available to it by the highway department (now Department of Transportation), where it was specifically stipulated that the data were not guaranteed and did not bind the department; where the department furnished all information which it had available, made no attempt to conceal actual conditions, and stipulated the provisional character of its tests, where the contractor had equal opportunity with the department to conduct its own investigation, and where the parties with knowledge of these facts elected to contract on a basis of material moved rather than to contract on a basis of the percentage of dirt and rock after removal. State Hwy. Dep't v. MacDougald Constr. Co., 102 Ga. App. 254, 115 S.E.2d 863 (1960).

Materialmen are charged with knowledge of the premises upon which they filed their claim of lien, with knowledge of the premises to which they delivered the materials, and where they knew that these premises differed, in plenty of time to properly record a claim of lien as required by law, they cannot seek the aid of a court of equity to relieve them from their own negligence. King v. Rutledge, 208 Ga. 172, 65 S.E.2d 801 (1951).

Plaintiff's petition to cancel and declare void her acknowledgement of service and to set aside the judgment probating a will on the alleged ground of fraud failed to state a cause of action for the relief sought, since the plaintiff by an exercise of the slightest degree of diligence could have ascertained and asserted in the probate proceeding the falsity of the act upon which she relied to set aside the probate judgment. Ingram v. Rooks, 221 Ga. 701, 146 S.E.2d 743 (1966).

Where the terms of an instrument express the intent of the parties at the time the contract is made, as they are then informed, in the absence of any allegation of fraud, misrepresentation, or misplaced confidence, equity will not interfere to relieve on account of ignorance of a fact by one of the parties, if by the exercise of due diligence he might have ascertained the truth. Hargrove v. Bledsoe, 78 Ga. App. 107, 50 S.E.2d 223 (1948).

While the doctrine of caveat emptor would charge the purchaser with looking out for the title which the seller had to the tract offered for sale as his, it would not charge him with looking out for the boundaries of that tract when the seller undertook to locate and point them out, thus professing to know them sufficiently to enable them to furnish this information to purchasers instead of leaving the latter to their own resources in acquiring the information. Bonner v. Cotton, 223 Ga. 843, 159 S.E.2d 61 (1968).

Reformation of a deed.

- Trial court properly ordered reformation of a deed of assent to include an entire eight acre tract of land as opposed to only a partial strip because reformation was not barred by the seven-year statute of limitations since the seller was not prejudiced as the deed should have been corrected previously, thus, equitable relief under O.C.G.A. § 23-2-32(b) was appropriate. Ehlers v. Upper West Side, LLC, 292 Ga. 151, 733 S.E.2d 723 (2012).

2. Duty to Read Written Instruments

One executing a contract or deed has the duty to read it and that negligence in not reading it before it is sent to one who acted in good faith can bar reformation by the negligent party. B.L. Ivey Constr. Co. v. Pilot Fire & Cas. Co., 295 F. Supp. 840 (N.D. Ga. 1968).

Because there was no fraud that prevented siblings from reading a deed presented to them by their brother, which he allegedly represented as an easement, and no fiduciary relationship upon which they could have justifiably relied, the siblings should have discovered the alleged fraud when they signed the deed, and the seven-year statute of limitations expired seven years later. McCall v. Williams, 326 Ga. App. 99, 756 S.E.2d 217 (2014).

One about to sign a written instrument cannot rely blindly upon the representations of other parties as to its contents, and if, without an emergency or fraud inducing him not to read it, he signs without reading, he cannot hold the other party responsible for his statements, though they be false. Livingston v. Barnett, 193 Ga. 640, 19 S.E.2d 385 (1942).

Where one, while negotiating for the purchase of realty, has an opportunity to examine it before agreeing to buy, but fails to do so and voluntarily relies on statements made by the seller concerning its character and value, a written contract to sell and purchase the property subsequently executed by the contracting parties will not, on petition therefor by the purchaser, be rescinded and set aside because of the falsity of such statements, unless some fraud or artifice was practiced by the seller to prevent such examination by the purchaser; and this is true although the purchaser in agreeing to buy relied upon the seller's representations as to the character and value of the property as being true, and in consequence of such reliance acted to his injury. Tingle v. Seignious, 212 Ga. 71, 90 S.E.2d 408 (1955).

Any representation, act, or artifice intended to deceive, and which does deceive another, is such a fraud as may authorize cancellation of a written contract, but a party to a contract who can read must read or show a legal excuse for not doing so, and ordinarily, if fraud is the excuse, it must be such fraud as prevents the party from reading; nor in such case will a mere fraudulent statement by the opposite party or his agent as to the contents of the writing furnish a legal excuse. And where the contract is a deed to land, the rule will generally apply to the grantee as well as the grantor. Livingston v. Barnett, 193 Ga. 640, 19 S.E.2d 385 (1942).

Where two contracting parties deal with each other at arms' length and on equal terms, and where there is no such confidential relation between them as to justify special confidence reposed by one in the other, a written instrument entered into between them cannot be set aside upon the ground that the party seeking to be relieved was induced to enter in and sign the instrument in consequence of fraudulent representations as to its contents upon the part of the adverse party, when it appears that the party signing could read, that there was nothing to prevent him from reading the instrument, but that he did not do so, that there was no sufficient excuse for his failing to do so, but he signed after he had full opportunity to inform himself as to the terms of the instrument by reading it, but negligently omitted to read the same, when he could thus have informed himself of its contents. Livingston v. Barnett, 193 Ga. 640, 19 S.E.2d 385 (1942).

Where plaintiff signed a deed which was read to her by an attorney which she did not read herself, and there was no evidence that there were emergency circumstances of disabilities preventing her from reading the deed, the mere fact that the plaintiff signed the deed in a room where the shades were not put up and the blinds were not open, where it does not appear that she could not have raised the shades nor opened the blinds and let in sufficient light by which she could read the deed, is insufficient as an excuse for her not reading the deed and becoming acquainted with its contents before she signed it. McCommons v. Greene County, 53 Ga. App. 171, 184 S.E. 897 (1936).

Equity will grant no relief in favor of one who buys land when he fails to exercise any diligence for his protection and asserts that he blindly relied on the representations of the seller as to matters of which he could have informed himself, and the same is true in the purchase of a stock of merchandise and fixtures. Holmes v. Walker, 207 Ga. 582, 63 S.E.2d 359 (1951).

While the inability of a plaintiff vendor, in an alleged fraudulent land sale case, to read the English language would be a circumstance which should be considered in determining whether or not he has been defrauded, the fact of such inability is not of itself sufficient to authorize the rescission of a contract. Robertson v. Panlos, 208 Ga. 116, 65 S.E.2d 400 (1951).

As a general rule, fraud voids all contracts; however, this rule is not applied in its entirety and without reservation to written contracts, for the reason that misrepresentations and false statements will not be heard in contradiction of the terms of a valid written instrument, unless it should appear that the party signing the same has been induced to sign by a fraud, trickery, artifice, or emergency happening at the time of such signing. Livingston v. Barnett, 193 Ga. 640, 19 S.E.2d 385 (1942).

RESEARCH REFERENCES

Am. Jur. 2d.

- 27 Am. Jur. 2d, Equity, §§ 22, 34, 43, 45, 82.

C.J.S.

- 30 C.J.S., Equity, § 47.

ALR.

- Negligence in executing contract as affecting right to have it reformed, 81 A.L.R.2d 7.

23-2-30. Reformation and execution of contract in case of mistake distinguished.

A distinction exists between reforming a contract and executing a contract in case of mistake. To authorize the former, the court shall be satisfied by the evidence that the mistake was mutual; but the court may refuse to act in the latter case if the mistake is confined to the party refusing to execute.

(Orig. Code 1863, § 3057; Code 1868, § 3069; Code 1873, § 3124; Code 1882, § 3124; Civil Code 1895, § 3981; Civil Code 1910, § 4578; Code 1933, § 37-208.)

JUDICIAL DECISIONS

General Consideration

The relief accorded by this section is relief which can be granted only by equity; in a simple action at law on a promissory note it is unavailable. Franklin v. Sea Island Bank, 111 Ga. App. 182, 141 S.E.2d 121 (1965).

Cited in Wachovia Bank & Trust Co. v. Jones, 166 Ga. 747, 144 S.E. 256 (1928); Paris v. Treadaway, 173 Ga. 639, 160 S.E. 797 (1931); Cheatham v. Palmer, 178 Ga. 223, 172 S.E. 462 (1934); Sawyer Coal & Ice Co. v. Kinnett-Odom Co., 192 Ga. 166, 14 S.E.2d 879 (1941); Orient Ins. Co. v. Dunlap, 193 Ga. 241, 17 S.E.2d 703 (1941); Wheeler v. Poole, 204 Ga. 477, 50 S.E.2d 326 (1948); William H. Benton Co. v. Irvindale Dairies, Inc., 224 Ga. 780, 164 S.E.2d 819 (1968); Hurst v. McDaniel, 159 Ga. App. 702, 285 S.E.2d 40 (1981); Fulghum v. Kelly, 255 Ga. 652, 340 S.E.2d 589 (1986); Brannen v. Gulf Life Ins. Co., 201 Ga. App. 241, 410 S.E.2d 763 (1991); Curry v. Curry, 267 Ga. 66, 473 S.E.2d 760 (1996).

Reformation of Contract

Reformation requires mutual mistake.

- Equity will not reform a written contract on account of a mistake unless the mistake was one of both parties. Some particular mutual mistake and how it occurred must be alleged and plainly shown. Rawson v. Brosnan, 187 Ga. 624, 1 S.E.2d 423 (1939).

Equity in a proper case may reform a written contract because of fraud on one side and mistake on the other; a contract may also be reformed for a mistake of both parties, but the evidence must show that the mistake was mutual. Helton v. Shellnut, 186 Ga. 185, 197 S.E. 287 (1938).

A petition for reformation of a written contract will lie where by mistake of the draftsman and by oversight of the parties, the writing does not embody or fully express the real contract of the parties. McLoon v. McLoon, 220 Ga. 18, 136 S.E.2d 740 (1964).

Reformation as applied to a contract is a remedy cognizable in equity for the purpose of correcting an instrument so as to make it express the true intention of the parties, where from some cause, such as fraud, accident, or mistake it does not express such intention. The remedy is not available for the purpose of making a new and different contract for the parties, but is confined to establishment of the actual agreement. Deck v. Shields, 195 Ga. 697, 25 S.E.2d 514 (1943).

Although equity will not reform a written contract because of mistake as to the contents of the writing on the part of the complaining party, who is able to read but fails to do so, where no sufficient excuse appears as to why such party did not read the contract, such principle has not been extended to cases in which it is sought to reform written instruments on the ground of mutual mistake of fact. In all cases where the form of the conveyance or instrument is, by mutual mistake, contrary to the intention of the parties in their contract, equity will interfere to make it conform thereto. Eaton Yale & Towne, Inc. v. Strickland, 228 Ga. 430, 185 S.E.2d 923 (1971).

A mistake in reference to the description of land conveyed on the part of one grantee, acting on behalf of other grantees who were absent, is a mistake on the part of all of them; and where the same mistake was made by the grantor, there would be a mistake of all the parties, within the rule as to mutuality. Lifsey v. Mims, 193 Ga. 780, 20 S.E.2d 32 (1942).

The mere failure to discover a conflict between the terms of an oral contract as to what a policy of insurance is to contain and what it actually contains until after a loss occurs is a circumstance to be considered by the jury in determining the truth of the issue, but such failure to discover the discrepancy will not bar the reformation of the contract as a matter of law. Georgia Farm Bureau Mut. Ins. Co. v. Wall, 242 Ga. 176, 249 S.E.2d 588 (1978).

Insurance contracts are not immune to suits for reformation, even where the insurance company was acting through an agent whose actions may have been unauthorized. Georgia Farm Bureau Mut. Ins. Co. v. Wall, 242 Ga. 176, 249 S.E.2d 588 (1978).

The failure of a party to read a contract which is not signed by that party, such as a policy of insurance, does not bar reformation as a matter of law. Georgia Farm Bureau Mut. Ins. Co. v. Wall, 242 Ga. 176, 249 S.E.2d 588 (1978).

Proof of Mistake

Where mistake is relied on, the petition must allege the particular mistake and show how it occurred. Helton v. Shellnut, 186 Ga. 185, 197 S.E. 287 (1938).

Evidence of mistake must be clear, decisive, etc.

- To authorize a verdict reforming a deed upon the ground of mutual mistake, the evidence, like the petition, should at least by inference show the particular mistake and illustrate how it occurred; and the evidence must be clear, unequivocal, and decisive as to the mistake. Helton v. Shellnut, 186 Ga. 185, 197 S.E. 287 (1938).

RESEARCH REFERENCES

Am. Jur. 2d.

- 27A Am. Jur. 2d, Equity, §§ 36 et seq., 53 et seq.

21A Am. Jur. Pleading and Practice Forms, Reformation of Instruments, § 26 et seq.

C.J.S.

- 30A C.J.S., Equity, §§ 41 et seq., 91.

76 C.J.S., Reformation of Instruments, § 1 et seq.

ALR.

- Mistake in lease as ground for relief, 26 A.L.R. 472.

Relief from contract of sale because of mistake as to amount of commodity which it calls for, 31 A.L.R. 384.

Right to reformation of contract or instrument as affected by intervening rights of third persons, 44 A.L.R. 78, 79 A.L.R.2d 1180.

Attempt to reform contract as election of remedies precluding action to enforce contract as written or vice versa, 49 A.L.R. 1513.

Right to reformation of conveyance as depending upon consideration, 69 A.L.R. 423, 128 A.L.R. 1299.

Mistaken belief that contract bound one's principal, and not himself personally, as ground for reformation, 71 A.L.R. 1307.

Reformation of memorandum relied upon to take an oral contract out of the statute of frauds, 73 A.L.R. 99.

Effect of alteration intended merely to correct mistake in instrument so as to conform it to original understanding, 73 A.L.R. 652.

Right of present claimant of title as against original or intermediate grantor to reformation to correct error in description common to conveyances in chain of title, 89 A.L.R. 1444.

Jurisdiction of court of law to avoid or reform release of claim for personal injuries on ground of mutual mistake, 96 A.L.R. 1144.

When does limitation or laches commence to run against suit to reform an instrument, 106 A.L.R. 1338.

Right of third person entitled to maintain an action at law on a contract between other parties, or to garnish indebtedness thereunder, to maintain a suit for its reformation, 112 A.L.R. 909.

Right of insurer to reformation of policy or other relief because of its own error, not due to misrepresentation by insured, in computing premiums, indemnity, or other benefits or options under policy, 125 A.L.R. 1058.

Reformation of instrument on ground of mutual mistake as to legal significance of the terms used, 135 A.L.R. 1452.

Reformation on ground of mutual mistake regarding character or extent of estate or title imported by language used in instrument, 141 A.L.R. 826.

Mistake by one party to contract as to identity of other party who acted in good faith, 147 A.L.R. 1171.

Mistake as to existence, practicability of removal, or amount of minerals as ground for relief from mineral lease, 163 A.L.R. 878.

Right, after foreclosure, to reformation on ground of erroneous description originating in mortgage, 172 A.L.R. 655.

Incontestable clause as applicable to suit to reform insurance policy, 7 A.L.R.2d 504.

Negligence in executing contract as affecting right to have it reformed, 81 A.L.R.2d 7.

Reformation of property insurance policy to correctly identify the person or interest insured, 25 A.L.R.3d 580.

Reformation of insurance policy to correctly identify risks and causes of loss, 32 A.L.R.3d 661.

Reformation of usurious contract, 74 A.L.R.3d 1239.

23-2-31. Rescission for unilateral mistake of fact.

Equity will not reform a written contract unless the mistake is shown to be the mistake of both parties; but it may rescind and cancel upon the ground of mistake of fact material to the contract of one party only.

(Civil Code 1895, § 3982; Civil Code 1910, § 4579; Code 1933, § 37-207.)

History of section.

- This section is derived from the decision in Werner v. Rawson, 89 Ga. 619, 15 S.E. 813 (1892).

Law reviews.

- For article, "Limitations on the Meaning and Impact of DeGarmo v. DeGarmo," see 4 Ga. St. B.J. 20 (1998).

JUDICIAL DECISIONS

General Consideration

The relief accorded by this section is relief which can be granted only by equity; in a simple action at law on a promissory note it is unavailable. Franklin v. Sea Island Bank, 111 Ga. App. 182, 141 S.E.2d 121 (1965).

Cited in Brown v. Carmichael, 149 Ga. 548, 101 S.E. 124 (1919); Hooper v. Rucker, 153 Ga. 306, 111 S.E. 901 (1922); Edwards v. Rozar, 155 Ga. 170, 116 S.E. 313 (1923); Williams v. Williams, 155 Ga. 622, 118 S.E. 195 (1923); Paris v. Treadaway, 173 Ga. 639, 160 S.E. 797 (1931); Sawyer Coal & Ice Co. v. Kinnett-Odom Co., 192 Ga. 166, 14 S.E.2d 879 (1941); Orient Ins. Co. v. Dunlap, 193 Ga. 241, 17 S.E.2d 703 (1941); Brooks v. Northwestern Mut. Life Ins. Co., 193 Ga. 522, 18 S.E.2d 860 (1942); Nalley v. New York Life Ins. Co., 48 F. Supp. 470 (N.D. Ga. 1943); Scott v. Gillis, 202 Ga. 220, 43 S.E.2d 95 (1947); Findley v. City of Vidalia, 204 Ga. 279, 49 S.E.2d 658 (1948); Wheeler v. Poole, 204 Ga. 477, 50 S.E.2d 326 (1948); Hood v. Connell, 204 Ga. 782, 51 S.E.2d 853 (1949); Jackson v. Brown, 209 Ga. 78, 70 S.E.2d 756 (1952); Farmers Whse. of Pelham, Inc. v. Collins, 220 Ga. 141, 137 S.E.2d 619 (1964); Cline v. Schuster, 221 Ga. 653, 146 S.E.2d 732 (1966); Westbrook v. Nationwide Ins. Co., 113 Ga. App. 299, 147 S.E.2d 819 (1966); Hartford Accident & Indem. Co. v. Walka Mt. Camp No. 565, Woodmen of World, Inc., 224 Ga. 194, 160 S.E.2d 833 (1968); William H. Benton Co. v. Irvindale Dairies, Inc., 224 Ga. 780, 164 S.E.2d 819 (1968); Seaboard Constr. Co. v. Clifton, 121 Ga. App. 247, 173 S.E.2d 436 (1970); Citizens Bank v. Barber, 123 Ga. App. 507, 181 S.E.2d 545 (1971).

Reformation

Where mistake is relied on, the petition must allege the particular mistake and show how it occurred. Helton v. Shellnut, 186 Ga. 185, 197 S.E. 287 (1938).

The fact that a complainant does not in express terms allege that an instrument was erroneously executed through mutual mistake does not render it insufficient in law, if it alleges facts from which such a conclusion is reasonably deducible. Steadham v. Cobb, 183 Ga. 30, 196 S.E. 730 (1938).

A mistake that will justify reformation must be a mutual mistake. McCullough v. Kirby, 204 Ga. 738, 51 S.E.2d 812 (1949).

Mutual mistake can lead to reformation.

- Where the intent of the parties and their mutual mistake in having failed to notice the discrepancy between that intent and the written document was established by the evidence, the fact that the discrepancy resulted from the landlord's error as scrivener did not preclude reformation of the lease. Zaimis v. Sharis, 275 Ga. 532, 570 S.E.2d 313 (2002).

Equity will not reform a written contract on account of a mistake unless the mistake was one of both parties; some particular mutual mistake and how it occurred must be alleged and plainly shown. Rawson v. Brosnan, 187 Ga. 624, 1 S.E.2d 423 (1939).

Rescission

1. Insolvency

Insolvency as basis for rescission of contract.

- The grantor may maintain an equitable action to rescind the contract if the grantee is insolvent, or where fraud is employed by the grantee in the procurement of the deed, or there are other special facts which would make rescission by the grantor an appropriate relief. Although insolvency is frequently relied upon, breach of a contract for care and maintenance of the grantor upon the property conveyed present such special facts as authorize rescission. Head v. Walker, 243 Ga. 108, 252 S.E.2d 440 (1979).

While an absolute deed of conveyance will not be canceled, at the instance of the grantor, merely because of a breach by the grantee of a promise made by him, in consideration of which the deed was executed, and the remedy of the grantor in such a case is a suit for damages for such breach, yet where the grantee was insolvent, and 49 shares of stock were transferred to her in consideration of her learning the plaintiff's business and assisting in its operation, which service she failed and refused to render to the plaintiff, equity would decree a cancellation of the stock certificate and restore the same to the grantor. McGhee v. Minor, 188 Ga. 635, 4 S.E.2d 565 (1939).

2. Ignorance of Fact

Ignorance of fact insufficient as basis for rescission of contract.

- While this section provides that equity may rescind and cancel a written contract upon the ground of mistake of fact material to the contract of one party only, ignorance of fact is no cause for rescinding a contract; and where by reasonable diligence the plaintiff could have ascertained the extent of his injuries, and there was no necessity for his rushing into a settlement, § 9-3-33 giving him two years in which to bring an action to recover for such injuries, a court of equity will not relieve him from the injurious, unwise, or disadvantageous consequences of his own act in executing a release. James v. Tarpley, 209 Ga. 421, 73 S.E.2d 188 (1952).

A contractor who has bid for the excavation of highway sites on a basis of "unclassified material" may not, under the guise of mistake of fact, seek additional compensation in an action at law because the material excavated contained a higher percentage of rock than it expected, even though its only information at the time of the bid was results of test borings made available to it by the highway department (now Department of Transportation), where it was specifically stipulated that the data were not guaranteed and did not bind the department; where the department furnished all information which it had available, made no attempt to conceal actual conditions, and stipulated the provisional character of its tests, where the contractor had equal opportunity with the department to conduct its own investigation, and where the parties with knowledge of these facts elected to contract on a basis of material moved rather than to contract on a basis of the percentage of dirt and rock after removal. State Hwy. Dep't v. MacDougald Constr. Co., 102 Ga. App. 254, 115 S.E.2d 863 (1960).

Where the intention of both the insurer and the insured as to the amount of the premium is expressed in the application, as corrected by the insurer as therein authorized, to be $302.90 per quarter, a mistake of the draftsman of the insurer in writing into the policy at another place the amount of the premium as being $750.48 per year, instead of what the insurer claims to have been intended, $750.48 per quarter, is obviously the unilateral mistake of the insurer alone, and there is neither mutuality nor fraud that would authorize reformation to conform with what the insurer claims to have been intended. Davis v. United Am. Life Ins. Co., 215 Ga. 521, 111 S.E.2d 488 (1959).

Wrong property foreclosed upon.

- Trial court properly reformed security deed and declared that suing lender had first priority over certain tract of land since there was no doubt that parties intended for the tract to have been subject to the security deed alone; trial court also properly directed verdict in favor of suing lender as to its claim for rescission and cancellation of the deed it obtained when it mistakenly foreclosed on the wrong tract, as such relief was the proper remedy. DeGolyer v. Green Tree Servicing, LLC, 291 Ga. App. 444, 662 S.E.2d 141 (2008).

Mistake.

- In a breach of contract action regarding a loan contract between the lender and its debtor, the debtor's failure to cite to facts in the record establishing that the $4,500 note was paid in full led to the conclusion that it was not, and the fact that the debtor might have made payments in excess of $25,000 regarding all the outstanding loans with the lender did not in and of itself prove that the $4,500 loan had been paid off. Jenkins v. Sallie Mae, Inc., 286 Ga. App. 502, 649 S.E.2d 802 (2007).

3. Proof

Equitable relief for unilateral mistake requires evidence of fraud.

- Equity will grant appropriate relief for a mistake of fact by one party, accompanied by fraud on the part of the other, just as in cases where there is mutual mistake. J. Kuniansky, Inc. v. Ware, 192 Ga. 488, 15 S.E.2d 783 (1941).

4. Clerical Error

Error resulting in seven percent discrepancy in amount of bid.

- Contractor was entitled to rescind its construction bid for a church building, where a clerical error had resulted in a seven percent discrepancy in the amount of the bid, notwithstanding bidding instructions which prohibited the contractor from withdrawing the bid on the ground of "negligence." First Baptist Church v. Barber Contracting Co., 189 Ga. App. 804, 377 S.E.2d 717 (1989).

RESEARCH REFERENCES

Am. Jur. 2d.

- 27 Am. Jur. 2d, Equity, §§ 33, 35, 39.

C.J.S.

- 30 C.J.S., Equity, § 44 et seq.

ALR.

- Rescission of sale of corporate stock on account of mutual mistake due to error in corporate books, 5 A.L.R. 255.

Relief from contract of sale because of mistake as to amount of commodity which it calls for, 31 A.L.R. 384.

Right to reformation of contract or instrument as affected by intervening rights of third persons, 44 A.L.R. 78, 79 A.L.R.2d 1180.

Right to cancellation in equity of an instrument not invalid on its face in which one is named as a party without his consent, 51 A.L.R. 867.

Unilateral mistake as basis of bill in equity to rescind the contract, 59 A.L.R. 809.

Mistaken belief that contract bound one's principal, and not himself personally, as ground for reformation, 71 A.L.R. 1307.

Reformation of memorandum relied upon to take an oral contract out of the statute of frauds, 73 A.L.R. 99.

Right of present claimant of title as against original or intermediate grantor to reformation to correct error in description common to conveyances in chain of title, 89 A.L.R. 1444.

Right of vendor in contract for sale or exchange of real property to bring suit for forfeiture, foreclosure, or rescission, or to quiet title or recover possession, without first giving notice, or making demand for possession, 94 A.L.R. 1239.

Action involving rescission or right to rescind contract and to recover amount paid thereunder as one at law or in equity, 95 A.L.R. 1000.

Jurisdiction of court of law to avoid or reform release of claim for personal injuries on ground of mutual mistake, 96 A.L.R. 1144.

Avoidance on ground of fraud, mistake, duress, or mental incompetency of otherwise validly effected change of beneficiaries of insurance policies, 105 A.L.R. 950.

Assignability of right to rescind or of right to return of money or other property as incident of rescission, 110 A.L.R. 849, 162 A.L.R. 743.

Right of third person entitled to maintain an action at law on a contract between other parties, or to garnish indebtedness thereunder, to maintain a suit for its reformation, 112 A.L.R. 909.

Rescission of contract as affecting right to recover damages for fraud in procuring it, 120 A.L.R. 1154.

Concealment of fact that one of parties to land contract was acting for third person, or misrepresentation as to identity of party for whom he was acting as reason for denying specific performance, or for rescission of contract, 121 A.L.R. 1162.

Right of insurer to reformation of policy or other relief because of its own error, not due to misrepresentation by insured, in computing premiums, indemnity, or other benefits or options under policy, 125 A.L.R. 1058.

Reformation on ground of mutual mistake regarding character or extent of estate or title imported by language used in instrument, 141 A.L.R. 826.

Mistake by one party to contract as to identity of other party who acted in good faith, 147 A.L.R. 1171.

Partial rescission of contract, 148 A.L.R. 417.

Mistake as to existence, practicability of removal, or amount of minerals as ground for relief from mineral lease, 163 A.L.R. 878.

Relief by way of rescission or adjustment of purchase price for mutual mistake as to quantity of land, where the sale is in gross, 1 A.L.R.2d 9.

Mistake, accident, inadvertence, etc., as ground for relief from termination or forfeiture of oil or gas lease for failure to complete well, commence drilling, or pay rental, strictly on time, 5 A.L.R.2d 993.

Venue of action for rescission or cancellation of contract relating to interests in land, 77 A.L.R.2d 1014.

Negligence in executing contract as affecting right to have it reformed, 81 A.L.R.2d 7.

Reformation of property insurance policy to correctly identify the person or interest insured, 25 A.L.R.3d 580.

Right of bank certifying check or note by mistake to cancel, or avoid effect of, certification, 25 A.L.R.3d 1367.

Vendor and purchaser: mutual mistake as to physical condition of realty as ground for rescission, 50 A.L.R.3d 1188.

Reformation of usurious contract, 74 A.L.R.3d 1239.

23-2-32. When negligent complainant granted relief.

  1. The negligence of the complaining party, preventing relief in equity, is that want of reasonable prudence, the absence of which would be a violation of legal duty.
  2. Relief may be granted even in cases of negligence by the complainant if it appears that the other party has not been prejudiced thereby.

(Civil Code 1895, § 3974; Civil Code 1910, § 4571; Code 1933, § 37-212.)

History of section.

- This section is derived from the decision in Werner v. Rawson, 89 Ga. 619, 15 S.E. 813 (1892).

Law reviews.

- For article, "Limitations on the Meaning and Impact of DeGarmo v. DeGarmo," see 4 Ga. St. B.J. 20 (1998).

JUDICIAL DECISIONS

This section is a codification from the decision of Werner v. Rawson, 89 Ga. 619, 15 S.E. 813 (1892). McCollum v. Loveless, 187 Ga. 262, 200 S.E. 115 (1938); Livingston v. Barnett, 193 Ga. 640, 19 S.E.2d 385 (1942); Hargrove v. Bledsoe, 78 Ga. App. 107, 50 S.E.2d 223 (1948).

This section does not entitle a party to relief against the consequences of gross and inexcusable negligence in signing his name to a plain and unambiguous written instrument, when no fraud, artifice, or misrepresentation was employed to induce him to sign it, and when there is nothing to show that it did not embody the identical agreement which the other party actually intended to make. Holton Dodge, Inc. v. Baird, 118 Ga. App. 316, 163 S.E.2d 346 (1968).

Equity will not reform a written contract because of mistake as to the contents of the writing on the part of the complaining party (who was able to read), and fraud of the other which consists only in making false representations as to such contents, on which the complaining party relied as true because of confidence in the party making them; no fiduciary or confidential relation existed between the parties, and no sufficient excuse appears why the complaining party did not read the contract. This doctrine does not apply if the party seeking relief shows some good excuse for not reading the instrument. Livingston v. Barnett, 193 Ga. 640, 19 S.E.2d 385 (1942).

Where no confidential relationship between the parties is alleged, a court of equity will not relieve a vendor of land from his own negligence in not ascertaining facts which he could have ascertained by diligence, the vendee using no artifice or fraudulent scheme in order to prevent the vendor from ascertaining facts which might have prevented him from executing the deed sought to be canceled. Jackson v. Brown, 209 Ga. 78, 70 S.E.2d 756 (1952).

Petition of negligent complainant subject to motion to dismiss.

- This section does not save a petition from a demurrer (now motion to dismiss) where the allegations, construed on demurrer (now motion to dismiss) most strongly against the petitioner, show affirmatively that the petitioner was guilty of negligence amounting to a violation of legal duty, and it does not appear that the other party was not prejudiced thereby. Glens Falls Indem. Co. v. Liberty Mut. Ins. Co., 202 Ga. App. 752, 44 S.E.2d 543 (1947).

But it is not essential that complainants should be clear of all vestige of fault or negligence on their part. Dollar v. Fred W. Amend Co., 184 Ga. 432, 191 S.E. 696 (1937).

And the negligence of the party complaining will not defeat his right to reformation, if the other party has not been prejudiced thereby. Sheldon v. Hargrose, 213 Ga. 672, 100 S.E.2d 898 (1957).

A petition which alleges that an instrument in the form of a deed, which was signed by an elderly, illiterate man who thought he was executing a will, and prays for cancellation on the ground of mistake does not show, on its face, negligence amounting to a violation of a legal duty so as to render the petition demurrable (now subject to motion to dismiss). Jackson v. Jackson, 202 Ga. 634, 44 S.E.2d 250 (1947).

Reformation of a deed.

- Trial court properly ordered reformation of a deed of assent to include an entire eight acre tract of land as opposed to only a partial strip because reformation was not barred by the seven-year statute of limitations since the seller was not prejudiced as the deed should have been corrected previously, thus, equitable relief under O.C.G.A. § 23-2-32(b) was appropriate. Ehlers v. Upper West Side, LLC, 292 Ga. 151, 733 S.E.2d 723 (2012).

Rescission notwithstanding prohibition of bid withdrawal for negligence.

- Contractor was entitled to rescind its construction bid for a church building, where a clerical error had resulted in a seven percent discrepancy in the amount of the bid, notwithstanding bidding instructions which prohibited the contractor from withdrawing the bid on the ground of "negligence." First Baptist Church v. Barber Contracting Co., 189 Ga. App. 804, 377 S.E.2d 717 (1989).

Lack of diligence constitutes negligence.

- Where both the appellant and counsel for the appellant could have with reasonable diligence discovered that the note in question bore interest from the date of its execution, the failure to exercise such diligence was negligence, which precluded reformation on ground of mutual mistake, since the appellee has been prejudiced by that negligence. Cox v. Smith, 244 Ga. 280, 260 S.E.2d 310 (1979).

Questions of fact as to diligence prevented judgment of reformation.

- In a suit by a shopping center mortgagee against an insurer and banks seeking damages after the insurer paid the mortgagor insurance proceeds for hail damage to the premises (and the mortgagor's agent fraudulently endorsed the check), the mortgagee was not entitled to summary judgment on the mortgagee's reformation claim based on its listing as a mortgagee/payee on the application and proof of loss form, but not in the policy, because there were issues as to its diligence in reviewing the policy. Auto-Owners Ins. Co. v. Hale Haven Props., 346 Ga. App. 39, 815 S.E.2d 574 (2018), cert. denied, No. S18C1423, 2019 Ga. LEXIS 75, cert. denied, No. S18C1418, 2019 Ga. LEXIS 88, cert. denied, No. S18C1421, 2019 Ga. LEXIS 92 (Ga. 2019), cert. denied, No. S18C1417, 2019 Ga. LEXIS 93 (Ga. 2019).

Courts of equity grant relief only in favor of the diligent, and equity does not relieve from a judgment which could have been prevented except for negligence on the part of the complaining party. West v. Downer, 218 Ga. 235, 127 S.E.2d 359 (1962).

The failure of a petitioner to know the content defining the coverage of its insurance contract or to compare the facts and circumstances surrounding the injury to ascertain if it was covered thereby, and its failure to inquire of the employer or the Industrial Board (now Board of Workers' Compensation) as to the existence of an insurance contract with another insurance carrier that covered the injury, amounted to negligence on the part of the petitioner, and would not constitute such a mistake of fact as would render the agreement and the payments thereunder involuntary and, therefore, a basis for subrogation. Glens Falls Indem. Co. v. Liberty Mut. Ins. Co., 202 Ga. 752, 44 S.E.2d 543 (1947).

An insurer was entitled to reformation of a policy where coverage of a vehicle was extended at the insured's request, after the vehicle was involved in an accident; even though the insurer could have inquired before extending the coverage, the insured was not prejudiced by the insurer's action and would obtain a windfall absent reformation of the contract. Cotton States Mut. Ins. Co. v. Woodruff, 215 Ga. App. 511, 451 S.E.2d 106 (1994).

Recovery of payment mistakenly paid.

- In an action for money had and received, the plaintiff generally can recover a payment mistakenly made when that mistake was caused by his lack of diligence or his negligence in ascertaining the true facts and the other party would not be prejudiced by refunding the payment, subject to a weighing of the equities between the parties by the trier of fact. Gulf Life Ins. Co. v. Folsom, 256 Ga. 400, 349 S.E.2d 368 (1986) (relying solely on computer records); Graham v. Hogan, 185 Ga. App. 842, 366 S.E.2d 219 (1988).

Summary judgment for a retirement system was reversed because there were fact issues as to voluntary payment under O.C.G.A. § 13-1-13, and as to equitable estoppel under O.C.G.A. § 23-2-32, after the son claimed that the mother told the son that the benefits would continue to be paid after the mother's death; details of how the retirement system discovered the mother's death were needed to resolve the possibility that the son retained and spent the money in good faith. Applebury v. Teachers' Ret. Sys., 275 Ga. App. 194, 620 S.E.2d 452 (2005).

The voluntary payment doctrine did not bar a city's unjust enrichment and conversion claims filed against a construction contractor, as the contractor failed to show that: (1) a genuine issue of material fact remained over whether the city was negligent in ascertaining the true facts; and (2) any prejudice would result if the mistaken duplicate payment the city made to the contractor were returned to the city. D & H Constr. Co. v. City of Woodstock, 284 Ga. App. 314, 643 S.E.2d 826 (2007).

Defendants not prejudiced, plaintiff's alleged negligence no defense to claim for money had and received.

- Lawyer falsely told clients that the clients' lawsuit was settled, paid the clients money the lawyer obtained by kiting checks from the law firm's bank accounts, and defrauded a relative into lending the lawyer money to cover the shortage in the accounts. As the relative's failure to fully investigate the facts before making the loan did not prejudice the clients, any negligence on the relative's part was not a defense under O.C.G.A. § 23-2-32 to the relative's claim against the clients for money had and received. Haugabook v. Crisler, 297 Ga. App. 428, 677 S.E.2d 355 (2009).

Considerations by jury in claim for money had and received.

- The equities to be considered by the jury in the case of a claim for money had and received are: (1) the degree of negligence on the plaintiff's part in erroneously paying over the money, (2) the level of good faith with which the defendant acted in receiving and retaining the money, and (3) prejudice, i.e., whether the defendant's position has so changed that it would be unfair to require him to pay the money back. Gulf Life Ins. Co. v. Folsom, 907 F.2d 1115 (11th Cir. 1990).

In an action for money had and received, where the plaintiff was negligent, the plaintiff is entitled to get his money back - unless the jury decides that he doesn't deserve it back or that the defendant deserves to keep it. Gulf Life Ins. Co. v. Folsom, 907 F.2d 1115 (11th Cir. 1990).

Effect of material change of position by payee of funds sought to be recovered.

- The superior court did not err in ruling that a recipient of Medicaid reimbursement funds had so changed its position in reliance on its hospital-based classification during the period in question that it would be unjust to require it to refund the monies in question. Department of Medical Assistance v. Presbyterian Home, Inc., 200 Ga. App. 885, 409 S.E.2d 881 (1991), cert. denied, No. S91C1697, 1992 Ga. LEXIS 357 (1992).

Payment of late charges.

- The voluntary payment doctrine barred claims for recovery of late fees paid by cable television subscribers under a service agreement with the cable company which stated that a late fee would be charged to a customer's account if payment was not received by the due date. Telescripps Cable Co. v. Welsh, 247 Ga. App. 282, 542 S.E.2d 640 (2000).

Wrong property foreclosed upon.

- Trial court properly reformed security deed and declared that suing lender had first priority over certain tract of land since there was no doubt that parties intended for the tract to have been subject to the security deed alone; trial court also properly directed verdict in favor of suing lender as to its claim for rescission and cancellation of the deed it obtained when it mistakenly foreclosed on the wrong tract, as such relief was the proper remedy. DeGolyer v. Green Tree Servicing, LLC, 291 Ga. App. 444, 662 S.E.2d 141 (2008).

Company required to honor bid price on foreclosed property.

- Superior court did not err in granting a purchaser summary judgment in its action seeking specific performance pursuant to O.C.G.A. § 23-2-131 requiring a mortgage company to deliver a deed conveying certain property because the company failed to demonstrate any merit in the company's contention that the superior court improperly refused to invoke the court's equitable power to relieve the company from performing under the foreclosure sale contract on the ground that the opening bid it set forth was a mistake. O.C.G.A. § 23-2-32(b) did not provide relief from the foreclosure sale contract because the company failed to show how the purchaser would not be prejudiced if the company were granted relief and the record was void of any evidence that there was no difference between the contract price and the fair market value of the real property. Decision One Mortg. Co., LLC v. Victor Warren Props., Inc., 304 Ga. App. 423, 696 S.E.2d 145 (2010).

O.C.G.A. § 23-2-32(b) did not apply to a son's action to quiet title to a parcel of land because the original grantor, the son's father, no longer owned the land, and buyers of the land were bona fide purchasers who had no notice of the mistake in the deed until two years after the purchasers' purchased the property from the bank. Haffner v. Davis, 290 Ga. 753, 725 S.E.2d 286 (2012).

Denial of request for reformation of contract held proper.

- Trial court properly entered judgment in favor of a purchaser in a bank's action seeking reformation of a security deed and cancellation of the levy and sale of two lots; while O.C.G.A. § 23-2-32(b) stated that relief could be granted even in cases of negligence by the complainant if it appears that the other party has not been prejudiced thereby, the purchaser had begun making repairs and improving the property, and had spent $12,410 and continued to incur expenses, and thus, the trial court's finding that the purchaser would be prejudiced by the reformation sought by the bank was not clearly erroneous. First Nat'l Bank v. Carr, 260 Ga. App. 439, 579 S.E.2d 863 (2003).

Constructive trust denied due to laches.

- Former wife was not entitled to impose a constructive trust on her former husband's military pension pursuant to O.C.G.A. § 53-12-132 because she failed to object to the absence of any provision for the pension in their divorce decree for 12 years and failed to bring suit until five years after payments allegedly became due. Davis v. Davis, 310 Ga. App. 512, 713 S.E.2d 694 (2011).

Cited in Harrison v. Hester, 160 Ga. 865, 129 S.E. 528 (1925); Crim v. Alston, 169 Ga. 852, 151 S.E. 807 (1930); Chapman v. Cassels Co., 180 Ga. 349, 179 S.E. 91 (1935); Young v. Hirsch, 187 Ga. 1, 199 S.E. 179 (1938); J. Kuniansky, Inc. v. Ware, 192 Ga. 488, 15 S.E.2d 783 (1941); Scott v. Gillis, 202 Ga. 220, 43 S.E.2d 95 (1947); Mulkey v. Spicer, 202 Ga. 592, 43 S.E.2d 661 (1947); Tillman v. Byrd, 211 Ga. 918, 89 S.E.2d 479 (1955); Flagg v. Hedrick, 215 Ga. 16, 108 S.E.2d 703 (1959); Cline v. Schuster, 221 Ga. 653, 146 S.E.2d 732 (1966); Finch v. McAloney, 222 Ga. 174, 149 S.E.2d 100 (1966); Vinson v. Citizens & S. Nat'l Bank, 223 Ga. 54, 153 S.E.2d 436 (1967); Long v. Walls, 226 Ga. 737, 177 S.E.2d 373 (1970); Eaton Yale & Towne, Inc. v. Strickland, 228 Ga. 430, 185 S.E.2d 923 (1971); J.C. Penney Co. v. West, 140 Ga. App. 110, 230 S.E.2d 66 (1976); Funding Sys. Leasing Corp. v. Pugh, 530 F.2d 91 (5th Cir. 1976); Garden of Eden, Inc. v. Eastern Sav. Bank, 244 Ga. 63, 257 S.E.2d 897 (1979); FDIC v. Lattimore Land Corp., 656 F.2d 139 (5th Cir. 1981); Atkinson v. Atkinson, 254 Ga. 70, 326 S.E.2d 206 (1985); Crane v. Adams-Cates Co., 256 Ga. 407, 350 S.E.2d 767 (1986); Brannen v. Gulf Life Ins. Co., 201 Ga. App. 241, 410 S.E.2d 763 (1991); Baghdady v. Central Life Ins. Co., 224 Ga. App. 170, 480 S.E.2d 221 (1996); Beasley v. Wachovia Bank, 277 Ga. App. 698, 627 S.E.2d 417 (2006); Levenson v. Word, 294 Ga. App. 104, 668 S.E.2d 763 (2008).

RESEARCH REFERENCES

Am. Jur. 2d.

- 27 Am. Jur. 2d, Equity, §§ 22, 34, 43, 45, 82.

C.J.S.

- 30 C.J.S., Equity, § 47. 37 C.J.S., Fraud, § 28 et seq.

ALR.

- Liability of publisher for mistake in advertisement, 10 A.L.R.2d 686.

Negligence in executing contract as affecting right to have it reformed, 81 A.L.R.2d 7.

23-2-33. Mere volunteers, in general; exception for executed contracts.

Equity will not interfere to relieve against accidents or mistakes of mere volunteers; but, if a contract is actually executed, all the rights growing out of it against or in favor of any one will be enforced.

(Orig. Code 1863, § 3049; Code 1868, § 3061; Code 1873, § 3116; Code 1882, § 3116; Civil Code 1895, § 3972; Civil Code 1910, § 4569; Code 1933, § 37-217.)

JUDICIAL DECISIONS

Equity will not decree the reformation of an instrument at the instance of one who is a mere volunteer, and who was not a party to the instrument. Sylvan Property Mgt., Inc. v. Garner, 144 Ga. App. 747, 242 S.E.2d 292 (1978).

Voluntary rent provision and debt payment.

- Defendant's claim that she satisfied her debt on a promissory note owed to her spouse by providing her mother-in-law with a rent-free apartment and by paying certain debts that spouse owed to certain creditors was to no avail as it was done under a mere volunteer arrangement with no outstanding obligations to do so. United States v. Speir, 808 F. Supp. 829 (S.D. Ga. 1992).

Cited in Smith v. Carter, 44 Ga. App. 438, 161 S.E. 649 (1931); Dobbs v. Perlman, 59 Ga. App. 770, 2 S.E.2d 109 (1939); Lifsey v. Mims, 193 Ga. 780, 20 S.E.2d 32 (1942); Glens Falls Indem. Co. v. Liberty Mut. Ins. Co., 202 Ga. App. 752, 44 S.E.2d 543 (1947); Sylvan Property Mgt., Inc. v. Garner, 144 Ga. App. 747, 242 S.E.2d 292 (1978).

23-2-34. Relief against original parties or privies; exception.

Equity will grant relief as between the original parties or their privies in law, in fact, or in estate, except bona fide purchasers for value without notice.

(Orig. Code 1863, § 3052; Code 1868, § 3064; Code 1873, § 3119; Code 1882, § 3119; Civil Code 1895, § 3976; Civil Code 1910, § 4573; Code 1933, § 37-213.)

JUDICIAL DECISIONS

General Consideration

This section is not limited by its terms to one remedy but applies to any equitable relief. Volunteer State Life Ins. Co. v. Powell-White Co., 187 Ga. 705, 1 S.E.2d 662 (1939).

Privity denotes successive relationship to the same right in the same property. Hilton v. Hilton, 202 Ga. 53, 41 S.E.2d 880 (1947).

The mere fact that plaintiff grantee and defendant grantee had entered into an agreement with the common grantor whereby each was to purchase separately from the common grantor one half of a described city lot, could not possibly constitute each grantee "an original party" to the deed of conveyance to the other within statute permitting reformation. Hilton v. Hilton, 202 Ga. 53, 41 S.E.2d 880 (1947).

It is an elementary principle of law that a privy, either in law, fact, or estate, has no greater right than the one with whom he is in privity, accordingly, since the plaintiff's father would have been estopped in law to attack and thus question the validity of the divorce which he procured from the plaintiff's mother, it logically follows that the plaintiff himself is also estopped to do so. Phillips v. Phillips, 211 Ga. 305, 85 S.E.2d 427 (1955).

Lack of standing in equity.

- Decedent's estate administrator lacked standing to challenge the three assignments of the security deed in a non-judicial foreclosure sale because the administrator was not a party to the assignment contracts, and the administrator did not have standing in equity to seek relief because the administrator was not seeking reformation of the deed and did not allege mutual mistake. Shannon v. Albertelli Firm, P.C., F.3d (11th Cir. May 7, 2015)(Unpublished).

Reformation of agreement was not permitted against bona fide purchaser of promissory note.

- In a suit on a promissory note by a lender's assignee, although some evidence supported the borrowers' claim that terms in a Forbearance Agreement (FA) binding the guarantors were the product of mutual mistake and release of the guarantors was intended, the trial court erred in reforming the FA because the borrowers had not overcome the presumption that the assignee was a bona fide purchaser for value without notice of the mistake. Hamilton State Bank v. Kelly Capital Invs., LLC, 335 Ga. App. 252, 779 S.E.2d 757 (2015).

Cited in Harrison v. Hester, 160 Ga. 865, 129 S.E. 528 (1925); Sapp v. Ritch, 169 Ga. 33, 149 S.E. 636 (1929); McCollum v. Loveless, 187 Ga. 262, 200 S.E. 115 (1938); Thomas v. Lambert, 187 Ga. 616, 1 S.E.2d 443 (1939); Ayers v. Carden, 212 Ga. 510, 93 S.E.2d 694 (1956); Empire Land Co. v. Stokes, 212 Ga. 707, 95 S.E.2d 283 (1956); Lanier v. American Cas. Co., 226 F. Supp. 630 (N.D. Ga. 1964); DOT v. Brooks, 254 Ga. 303, 328 S.E.2d 705 (1985); Anderson v. Streck, 190 Ga. App. 224, 378 S.E.2d 526 (1989); Yeazel v. Burger King Corp., 241 Ga. App. 90, 526 S.E.2d 112 (1999).

Application of Section

1. Privies

Section extends equitable relief to privies to contract, etc.

- The general rule, which allows only the parties to a judgment to attack and thus question its validity, has been relaxed in this state by this section, however, the privity either in law, in fact, or in estate, which will permit one to attack and thus question the validity of a judgment to which he is not a party has no personal basis as a mere matter of sentiment, but rests upon some actual mutual or successive relationship as to the same right of property. Phillips v. Phillips, 211 Ga. 305, 85 S.E.2d 427 (1955).

But section extends no rights to one not privy under original contract.

- Primarily the right to reform a contract belongs to the original parties thereto. The recognized extension, under this section, in favor of those in privity with the original contractors does not mean that the terms of a contract can be altered and reformed by one who does not claim as a successor under the contract sought to be reformed, but under another contract, setting up different and inconsistent rights. In such a case, the subsequent grantee's quarrel is with the person from whom he derived his title, rather than with the one holding adversely under a prior and different contract, to which he was admittedly neither party nor privy. Rawson v. Brosnan, 187 Ga. 624, 1 S.E.2d 423 (1939); Hilton v. Hilton, 202 Ga. 53, 41 S.E.2d 880 (1947).

In a quiet title action, the trial court properly granted summary judgment to the adjoining landowners as the suing neighbor was not entitled to reformation of corrective deeds entered into between the suing neighbor's predecessor in title and the adjoining landowners since the suing neighbor was not a party to the corrective deeds. Moore v. McBryar, 290 Ga. App. 725, 659 S.E.2d 789 (2008).

Requirement of privity of contract, etc., applies to remedy of reformation and to remedy of cancellation.

- The rule requiring mutuality or privity of contract or estate, applies not only to the equitable remedy of reformation but to that of cancellation or other equitable relief against the effect of an instrument. Volunteer State Life Ins. Co. v. Powell-White Co., 187 Ga. 705, 1 S.E.2d 662 (1939).

Where the plaintiff in ejectment was the prior grantee of the tract sued for, not being a privy in law, fact, or estate with the defendant, who held under a subsequent deed from the common grantor, the defendant could not defend by reforming the plaintiff's deed so as to strike therefrom, as having been included by mutual mistake, the tract subsequently conveyed to the defendant. Volunteer State Life Ins. Co. v. Powell-White Co., 187 Ga. 705, 1 S.E.2d 662 (1939).

Where personal property is sold, and a bill of sale with warranty of title is executed by the vendor, and the property is again sold with warranty of title, the last vendee and his vendor may join in an equitable petition against the original vendor, having for its purpose the reformation of the original bill of sale by including certain items of property omitted therefrom by mutual mistake. Chapman v. Cassels Co., 180 Ga. 349, 179 S.E. 91 (1935).

Where the absolute title to property is apparently in a vendor or mortgagor, the vendee or mortgagee is protected, unless the one seeking to set up a lien or trust against the property can show that the vendee or mortgagee had notice of trust funds having gone into the property. Tattnall Bank v. Harvey, 186 Ga. 752, 198 S.E. 724 (1938).

The mere fact that purchaser might have had some knowledge of a mingling by his vendor of trust funds with his own is not sufficient to charge the vendee with notice that trust funds had been diverted in the purchase of a particular piece of land. Tattnall Bank v. Harvey, 186 Ga. 752, 198 S.E. 724 (1938).

Where the original vendor of the land died intestate, and there was no administrator or personal representative of the decedent at the time the suit was brought, a suit could be maintained against the sole heir at law of the intestate, as he was apparently the only party who was interested in resisting the suit. Steadham v. Cobb, 183 Ga. 30, 196 S.E. 730 (1938).

A petition in equity by a husband seeking to cancel two concurrent verdicts and a decree obtained in the same court in a former divorce suit by the wife against her former husband, and to have declared the continued existence of the former marriage, thereby establishing incapacity of the wife to marry at the time of her marriage to the plaintiff, was subject to a general demurrer (now motion to dismiss). Martocello v. Martocello, 197 Ga. 629, 30 S.E.2d 108 (1944).

Taking as true for purposes of a Chapter 7 trustee's motion for judgment on the pleadings a bank's contention that the parties involved in the sale, financing, and purchase of the property at issue intended that the property be conveyed to the debtor wife alone and intended that the security deed encumber the entire property rather than only an undivided one-half interest, the bank was not entitled to reformation of a special warranty deed (SWD) under Georgia law because as a security deed grantee, it was not an original party to the SWD or in privity with any party to the SWD. Bank of Am., N.A. v. Adams (In re Adams), 583 Bankr. 541 (Bankr. N.D. Ga. 2018).

Privy applied to Internal Revenue Service.

- Internal Revenue Service, by reason of the fact that it was asserting a tax lien against property that inadvertently had been omitted from a conveyance deed, was a privy in law that was bound under Georgia law by a reformed conveyance because O.C.G.A. § 23-2-34 provided that equity will grant relief as between the original parties or their privies in law, in fact, or in estate, except bona fide purchasers for value without notice. Nat'l Assistance Bureau, Inc. v. Macon Mem'l Intermediate Care Home, Inc., F. Supp. 2d (M.D. Ga. June 8, 2009).

Children who were remaindermen, and would receive whatever assets of a marital trust that their mother did not appoint or distribute by will, were privies in estate with their mother. Richardson v. Bridges, 260 Ga. 62, 389 S.E.2d 215 (1990).

Bona Fide Purchasers

Section protects interests of bona fide purchasers.

- It is a rule in equity that a bona fide purchaser without notice, to be entitled to protection, must be so, not only at the time of the contract or conveyance, but until the purchase money is actually paid. Ross v. Rambo, 195 Ga. 100, 23 S.E.2d 687 (1942).

A partial payment of the purchase money before notice of the equitable title of the true owners, although not sufficient to invest the vendee with the character of a bona fide purchaser as regards the entire estate purchased, will entitle him to invoke the aid of the equitable principle that he who asks equity must do equity and to be reimbursed for the amount actually paid before. Ross v. Rambo, 195 Ga. 100, 23 S.E.2d 687 (1942).

Where a husband contracts to buy land for value and directs conveyance thereof to his wife, no inference will arise that the wife is a purchaser for value, without notice of equities in favor of the vendor as against the vendee; and if the deed to the wife does not express the true agreement between the husband and the vendor, on account of mistake of the draftsman and mutual mistake of the vendor and the original vendee, the deed may be reformed so as to speak the true agreement. Cain v. Varnadore, 171 Ga. 497, 156 S.E. 216 (1930).

When a husband fraudulently seeks and obtains a divorce from his wife in a court of his selection, he and his privies in law, in fact, or in estate, are thereafter conclusively estopped to assail the validity of the decree to the prejudice of innocent parties. Phillips v. Phillips, 211 Ga. 305, 85 S.E.2d 427 (1955).

Creditor could not prevail on the creditor's claim for equitable reformation of a security deed executed by a debtor that did not own the property because nothing in the chain of title provided constructive notice to a potential purchaser of the property of the creditor's equitable interest in the property. Stearns Bank, N.A. v. Rent-A-Tent, Inc. (In re Rent A Tent, Inc.), 468 Bankr. 442 (Bankr. N.D. Ga. 2012).

While it is the rule that a bona fide purchaser of property in which trust funds have been invested is protected, the beneficiary of a trust estate may at his option, within a reasonable time, "affirm or reject an unauthorized investment by the trustee," and equity will aid the beneficiary in recovering the funds or property, or enforcing a lien for the wrongfully used funds, provided that the assets can be traced and remain in the hands of a person "affected with notice of the misapplication." Tattnall Bank v. Harvey, 186 Ga. 752, 198 S.E. 724 (1938).

Constructive and inquiry notice.

- Purchasers of land are charged with constructive notice of recorded instruments and also recognizes the concept of inquiry notice. For a discussion of the balance between these concepts, see Stearns Bank, N.A. v. Rent-A-Tent, Inc. (In re Rent A Tent, Inc.), 468 Bankr. 442 (Bankr. N.D. Ga. 2012).

RESEARCH REFERENCES

Am. Jur. 2d.

- 27 Am. Jur. 2d, Equity, § 261.

C.J.S.

- 31 C.J.S., Equity, § 133 et seq.

ALR.

- Right of one who, with knowledge of outstanding equity, derived his interest in real property from or through a bona fide purchaser, to same protection as latter, 63 A.L.R. 1362.

Bona fides of purchaser of bill or note on an executory consideration, 100 A.L.R. 1357.

Right of lessee to equitable relief against forfeiture for breach of conditions as affected by lessor's giving a lease to or entering into other contractual obligations with a third person, 166 A.L.R. 807.

What constitutes notice to subsequent purchaser of real property of option to purchase contained in unrecorded lease, 17 A.L.R.2d 331.

Motor vehicle certificate of title or similar document as, in hands of one other than legal owner, indicia of ownership justifying reliance by subsequent purchaser or mortgagee without actual notice of other interests, 18 A.L.R.2d 813.

Rights as between purchaser of timber and subsequent vendee of land, 18 A.L.R.2d 1150.

Relative rights in real property as between purchasers from or through decedent's heirs or devisees and unknown surviving spouse, 39 A.L.R.2d 1082.

Extension of time or forbearance to sue as consideration constituting mortgagee bona fide purchaser, 39 A.L.R.2d 1088.

Knowledge or notice of inadequacy of consideration for conveyance in chain of title as affecting bona fide status of purchaser, 42 A.L.R.2d 1088.

Relative rights as between purchaser of chattel from one who had previously bought it with stolen money, and victim of the theft, 62 A.L.R.2d 537.

ARTICLE 3 FRAUD

Cross references.

- Pleading requirements in actions involving fraud, § 9-11-9.

Deceptive or unfair trade or business practices generally, § 10-1-370 et seq.

Further provisions regarding fraud in contracts, §§ 13-4-60,13-5-5.

Fraudulent entries in elections, § 21-2-562 et seq.

Equitable estoppel, § 24-14-29.

RESEARCH REFERENCES

Fraudulent Misrepresentation as to Use to Which Real Property Could Be Put, 38 POF2d 91.

Fraudulent Representations Inducing the Purchase of a Small Business, 30 POF3d 1.

23-2-50. Concurrent jurisdiction over fraud.

In all cases of fraud, except fraud in the execution of a will, equity has concurrent jurisdiction with the law.

(Orig. Code 1863, § 3103; Code 1868, § 3115; Code 1873, § 3172; Code 1882, § 3172; Civil Code 1895, § 4024; Civil Code 1910, § 4621; Code 1933, § 37-701.)

Cross references.

- For further provisions regarding actions for fraud, deceit, etc., see Ch. 6, T. 51.

JUDICIAL DECISIONS

General Consideration

History generally.

- This section was derived from Trippe & Slade v. Ward, 2 Ga. 304 (1847) and DeLaperriere v. Williams, 167 Ga. 648, 146 S.E. 482 (1929).

In all cases of fraud equity has concurrent jurisdiction with the law, but the court first taking cognizance of the case will retain it. Jordan v. General Ins. Co. of Am., 92 Ga. App. 77, 88 S.E.2d 198 (1955).

Reluctance of equity to assume jurisdiction.

- Though equity has concurrent jurisdiction with law in all cases of fraud except those in wills, unless some substantial equitable relief is sought, equity is reluctant to assume jurisdiction. Walsh v. Campbell, 130 Ga. App. 194, 202 S.E.2d 657 (1973).

Any misrepresentation intended to deceive and which does deceive is a fraud, for which a party is entitled to a remedy at law. Oliver v. O'Kelley, 48 Ga. App. 762, 173 S.E. 232 (1934).

Misrepresentation is one of the grounds on which equitable relief may be invoked in regard to judgments. Johnson v. Bogdis, 205 Ga. 535, 54 S.E.2d 620 (1949), later appeal, 207 Ga. 650, 63 S.E.2d 658 (1951).

One of the most frequently recurring forms of fraud on the part of one litigant against the other, entitling the latter to relief in equity against the judgment finally entered, is the making of some agreement or representation for the purpose of preventing an appearance or defense in the original action and reliance upon which has had the effect intended. Johnson v. Bogdis, 205 Ga. 535, 54 S.E.2d 620 (1949), later appeal, 207 Ga. 650, 63 S.E.2d 658 (1951).

Cited in Equitable Bldg. & Loan Ass'n v. Brady, 171 Ga. 576, 156 S.E. 222 (1930); Equitable Bldg. & Loan Ass'n v. Brady, 175 Ga. 43, 164 S.E. 674 (1932); Oliver v. O'Kelley, 48 Ga. App. 762, 173 S.E. 232 (1934); Grimmett v. Barnwell, 184 Ga. 461, 192 S.E. 191 (1937); Furr v. Jordan, 196 Ga. 862, 27 S.E.2d 861 (1943); Beavers v. Williams, 199 Ga. 114, 33 S.E.2d 343 (1945); Fulmer v. Wilkins, 201 Ga. 322, 39 S.E.2d 405 (1946); Heath v. Jones, 168 F.2d 460 (5th Cir. 1948); Clark v. White, 185 F.2d 528 (5th Cir. 1950); Rountree v. Davis, 90 Ga. App. 223, 82 S.E.2d 716 (1954); Oliver v. Farmer's State Bank, 224 Ga. 56, 159 S.E.2d 405 (1968); Sikes v. Sikes, 231 Ga. 105, 200 S.E.2d 259 (1973); Holder v. Brock, 129 Ga. App. 732, 200 S.E.2d 912 (1973); Central Soya Co. v. Bundrick, 234 Ga. 133, 214 S.E.2d 556 (1975).

Equitable Jurisdiction Dependent on Adequacy of Legal Remedy

Equitable jurisdiction in cases of fraud extended only where remedy at law is deficient.

- While it is true that in all cases of fraud equity has concurrent jurisdiction with the law, equity takes jurisdiction only where the operation of the general rules of law would be deficient in protecting the rights of the complaining party. Gandy v. Robinson Co., 216 Ga. 190, 115 S.E.2d 341 (1960).

This general principle does not authorize a suit in equity merely to recover damages for fraud, since the aggrieved party in such a case has an adequate and complete remedy at law. Aetna Ins. Co. v. Lunsford, 179 Ga. 716, 177 S.E. 727 (1934).

Where it appeared that insurance company had an adequate remedy at law in a suit filed by the insured against the company claiming disability payments under the policy, a petition in equity brought by the company to cancel the contract of insurance on the ground of fraud in its procurement was properly dismissed on demurrer (now motion to dismiss). Penn Mut. Life Ins. Co. v. Childs, 189 Ga. 835, 7 S.E.2d 907 (1940).

Petition seeking to rescind a conditional bill of sale because of alleged fraudulent representations of the vendor as to the kind, quality, and condition of the personalty sold, to recover the portion of the purchase money paid by the vendee, and for injunction, cancellation, and accounting, in which are set up no peculiar circumstances showing a necessity of interposition by a court of equity, such as insolvency or nonresidence of the vendor, is not maintainable in equity, as the plaintiff has an adequate and complete remedy at law, nor would the fact that it was alleged that the vendor was threatening to transfer the conditional sale contract to a third person afford any ground for equitable relief, under the facts. Williford v. Haverty Furn. Co., 183 Ga. 707, 189 S.E. 521 (1937).

Pleading and Practice

Judgments of probate courts may be set aside by equity, in a direct proceeding for that purpose, on the ground that they were procured by fraud. Johnson v. Bogdis, 205 Ga. 535, 54 S.E.2d 620 (1949), later appeal, 207 Ga. 650, 63 S.E.2d 658 (1951).

It has been many times held that judgments of courts of ordinary (now probate courts) may be set aside by equity, in a direct proceeding for that purpose, on the ground that they were procured by fraud. Maddox v. Wheeler, 230 Ga. 580, 198 S.E.2d 284 (1973).

RESEARCH REFERENCES

Am. Jur. 2d.

- 27 Am. Jur. 2d, Equity, § 20. 37 Am. Jur. 2d, Fraud and Deceit, §§ 323-326.

C.J.S.

- 30 C.J.S., Equity, § 48 et seq. 37 C.J.S., Fraud, § 74.

ALR.

- Right of insurer to have issue of fraud, raised in action on the policy, tried in equity, 97 A.L.R. 572.

Reasonable expectation of payment as affecting offense under "worthless check" statutes, 9 A.L.R.3d 719.

23-2-51. Fraud as actual or constructive.

  1. Fraud may be actual or constructive.
  2. Actual fraud consists of any kind of artifice by which another is deceived. Constructive fraud consists of any act of omission or commission, contrary to legal or equitable duty, trust, or confidence justly reposed, which is contrary to good conscience and operates to the injury of another.
  3. Actual fraud implies moral guilt; constructive fraud may be consistent with innocence.

(Orig. Code 1863, § 3104; Code 1868, § 3116; Code 1873, § 3173; Code 1882, § 3173; Civil Code 1895, § 4025; Civil Code 1910, § 4622; Code 1933, § 37-702.)

Law reviews.

- For case note, "Lynch v. Waters: Tolling Georgia's Statute of Limitations for Medical Malpractice," see 38 Mercer L. Rev. 1493 (1987).

JUDICIAL DECISIONS

General Consideration

A statement of fact is the foundation of fraud under this section. Daniel v. Dalton News Co., 48 Ga. App. 772, 173 S.E. 727 (1934).

Fraud is not always perpetrated by willful misrepresentations. Sapp v. ABC Credit & Inv. Co., 243 Ga. 151, 253 S.E.2d 82 (1979).

Actionable fraud cannot be based upon a promise as to future events; nor does actionable fraud arise from a mere failure to perform a promise. C.P.D. Chem. Co. v. National Car Rental Sys., 148 Ga. App. 756, 252 S.E.2d 665 (1979).

The general rule is that fraud cannot be predicated upon statements which are promissory in their nature as to future acts. FDIC v. Lattimore Land Corp., 656 F.2d 139 (5th Cir. 1981).

A promise, even a false promise, to perform an act in the future is not a false pretense or false representation, and does not constitute the basis for an action for fraud. FDIC v. Lattimore Land Corp., 656 F.2d 139 (5th Cir. 1981).

Cited in Mangham v. Cobb, 160 Ga. 182, 127 S.E. 408 (1925); Battle v. Williford, 160 Ga. 287, 127 S.E. 762 (1925); Lathrop v. Miller, 164 Ga. 167, 138 S.E. 50 (1927); Bryant v. Bush, 165 Ga. 252, 140 S.E. 366 (1927); Collins v. Collins, 165 Ga. 198, 140 S.E. 501 (1927); King Hdwe. Co. v. Ennis, 39 Ga. App. 355, 147 S.E. 119 (1929); Boyles v. Morgan, 168 Ga. 804, 149 S.E. 149 (1929); Thomas v. Couch, 171 Ga. 602, 156 S.E. 206 (1930); Equitable Bldg. & Loan Ass'n v. Brady, 175 Ga. 43, 164 S.E. 674 (1932); Morton v. Wallace, 177 Ga. 856, 171 S.E. 720 (1933); Dover v. Burns, 186 Ga. 19, 196 S.E. 785 (1938); Young v. Hirsch, 187 Ga. 1, 199 S.E. 179 (1938); Beavers v. Williams, 199 Ga. 114, 33 S.E.2d 343 (1945); McCommons v. Reid, 201 Ga. 500, 40 S.E.2d 73 (1946); Hogg v. Hogg, 206 Ga. 691, 58 S.E.2d 403 (1950); City of Dalton v. United States Fid. & Guar. Co., 216 Ga. 602, 118 S.E.2d 475 (1961); Bagley v. Firestone Tire & Rubber Co., 104 Ga. App. 736, 123 S.E.2d 179 (1961); Fuller v. Dillon, 220 Ga. 36, 136 S.E.2d 733 (1964); Tripp v. Conner, 220 Ga. 2, 136 S.E.2d 744 (1964); Bloodworth v. Bloodworth, 225 Ga. 379, 169 S.E.2d 150 (1969); Walsh v. Campbell, 130 Ga. App. 194, 202 S.E.2d 657 (1973); Hendrix v. Scarborough, 131 Ga. App. 342, 206 S.E.2d 42 (1974); Thibadeau Co. v. McMillan, 132 Ga. App. 842, 209 S.E.2d 236 (1974); Lewis v. Citizens & S. Nat'l Bank, 139 Ga. App. 855, 229 S.E.2d 765 (1976); Shipman v. Horizon Corp., 245 Ga. 808, 267 S.E.2d 244 (1980); Kessler v. Liberty Mut. Ins. Co., 157 Ga. App. 287, 277 S.E.2d 257 (1981); Duncan v. Poythress, 515 F. Supp. 327 (N.D. Ga. 1981); Goodlett v. Ray Label Corp., 171 Ga. App. 377, 319 S.E.2d 533 (1984); Palmer v. Neal, 602 F. Supp. 882 (N.D. Ga. 1984); Stanford v. Otto Niederer & Sons, 178 Ga. App. 56, 341 S.E.2d 892 (1986); Tarbutton v. All That Tract or Parcel of Land Known as Carter Place, 641 F. Supp. 521 (M.D. Ga. 1986); Duracell, Inc. v. SW Consultants, Inc., 126 F.R.D. 571 (N.D. Ga. 1989); Holmes v. Drucker, 201 Ga. App. 687, 411 S.E.2d 728 (1991); O'Berry v. Cooper, 202 Ga. App. 97, 413 S.E.2d 736 (1991); McLendon v. Georgia Kaolin Co., 782 F. Supp. 1548 (M.D. Ga. 1992); Sears Mtg. Corp. v. Leeds Bldg. Prods., Inc., 219 Ga. App. 349, 464 S.E.2d 907 (1995); Garbutt v. Southern Clays, Inc., 894 F. Supp. 456 (M.D. Ga. 1995); Kodadek v. Lieberman, 247 Ga. App. 606, 545 S.E.2d 25 (2001); Wessinger v. Spivey (In re Galbreath), 475 Bankr. 749 (Bankr. S.D. Ga. 2003).

Fraud Generally

1. In General

Fraud is either actual or constructive, and either constitutes legal fraud. Jordan v. Belvin, 57 Ga. 719, 196 S.E. 132 (1938); Gaultney v. Windham, 99 Ga. App. 800, 109 S.E.2d 914 (1959).

Fraud may be actual or constructive; actual fraud consists in any kind of artifice by which another is deceived, and constructive fraud consists in any act of omission or commission, contrary to legal or equitable duty, trust, or confidence justly reposed, which is contrary to good conscience and operates to the injury of another. Brittain Bros. Co. v. Davis, 174 Ga. 1, 161 S.E. 841 (1931).

Either actual or constructive fraud may consist in the misrepresentation of a material fact. Gaultney v. Windham, 99 Ga. App. 800, 109 S.E.2d 914 (1959).

Fraud is exceedingly subtle in its nature and can be accomplished by infinite means; it may be perpetrated by signs and tricks, and even silence may in some instances amount to fraud. Sapp v. ABC Credit & Inv. Co., 243 Ga. 151, 253 S.E.2d 82 (1979).

Fraud cannot consist of mere broken promises, unfulfilled predictions, or erroneous conjectures as to future events. C.P.D. Chem. Co. v. National Car Rental Sys., 148 Ga. App. 756, 252 S.E.2d 665 (1979).

Constructive fraud, as well as actual fraud, voids the contract at the election of the injured party, and may authorize a rescission of a written release from liability. Southeastern Greyhound Lines v. Fisher, 72 Ga. App. 717, 34 S.E.2d 906 (1945).

While only actual fraud will authorize an ex parte rescission of a sale of personalty so as to enable the aggrieved party to sue at law, as in trover, for property that he may have delivered to the other under the contract, a sale either of realty or of personalty may be rescinded by a court for mere constructive fraud, where the other essentials of the case are established. Puckett v. Reese, 203 Ga. 716, 48 S.E.2d 297 (1948).

2. Misrepresentation Generally

Any misrepresentation intended to deceive and which does deceive is a fraud, for which a party is entitled to a remedy at law. Oliver v. O'Kelley, 48 Ga. App. 762, 173 S.E. 232 (1934); Thompson v. Wilkins, 143 Ga. App. 739, 240 S.E.2d 183 (1977).

In a suit by the seller for the purchase money of land, the defendant purchaser is entitled to plead that he was not put in possession of the premises and that the seller was guilty of false and fraudulent representations as to the existence of liens on the premises, and, upon proof of such facts, a verdict in his favor is authorized. Oliver v. O'Kelley, 48 Ga. App. 762, 173 S.E. 232 (1934).

Where the owner of land represented to the purchaser that there was no encumbrance against the premises sold, thereby inducing him to purchase it, and it was found later to be encumbered, this constituted a fraudulent representation for which relief will be given the purchaser. Oliver v. O'Kelley, 48 Ga. App. 762, 173 S.E. 232 (1934).

A misrepresentation by a director to a person purchasing stock concerning the financial condition of the corporation is actionable. Daniel v. Dalton News Co., 48 Ga. App. 772, 173 S.E. 727 (1934).

To state that a certain individual had signed contract as surety and that her signature was genuine was a misrepresentation of material existing fact, a fraudulent thing in law which would avoid the contract. W.T. Rawleigh Co. v. Kelly, 78 Ga. App. 10, 50 S.E.2d 113 (1948).

Innocent misstatement may amount to negligence but is not fraud. Day v. Randolph, 159 Ga. App. 474, 283 S.E.2d 687 (1981).

In the absence of a confidential relationship a party may not rely and act on the misrepresentations of an opposite party as to the contents of a written instrument where the party signing can read and where no artifice or fraud is practiced which prevents the party signing from reading the instrument. Robi v. Goldstein, 100 Ga. App. 606, 112 S.E.2d 165 (1959).

In the absence of special circumstances one must exercise ordinary diligence in making an independent verification of contractual terms and representations, failure to do which will bar an action based on fraud. Hubert v. Beale Roofing, Inc., 158 Ga. App. 145, 279 S.E.2d 336 (1981).

One cannot claim to be defrauded about a matter equally open to the observation of all parties where no special relation of trust or confidence exists. Hubert v. Beale Roofing, Inc., 158 Ga. App. 145, 279 S.E.2d 336 (1981).

Misrepresentations are not actionable unless the hearer was justified in relying on them in the exercise of common prudence and diligence. Daugert v. Holland Furnace Co., 107 Ga. App. 566, 130 S.E.2d 763 (1963).

Statements as to future acts merely promissory in their nature are not actionable. Boatman v. Citizens & S. Nat'l Bank, 155 Ga. App. 848, 273 S.E.2d 190 (1980).

A misrepresentation of a present state of mind is actionable as fraud. McFarland v. Kim, 156 Ga. App. 781, 275 S.E.2d 364 (1980).

If the plaintiffs represented to the defendant that they would sign a guarantee of defendant's obligations under the lease, knowing that they had no intention of ever doing this in the future, this would not be a broken promise as to a future act but would be a misrepresentation of a present state of mind and actionable as fraud. The failure of the plaintiffs to sign such a guarantee when presented to them by the landlord is some evidence that they had no intention at any time to complete that act. McFarland v. Kim, 156 Ga. App. 781, 275 S.E.2d 364 (1980).

Misrepresentations as to a question of law cannot constitute remediable fraud, because everyone is presumed to know the law and therefore cannot in legal contemplation be deceived by erroneous statements of law, and such representations are ordinarily regarded as mere expressions of opinion. Sorrells v. Atlanta Transit Sys., 218 Ga. 623, 129 S.E.2d 846 (1963).

Duty of party to protect self against fraud.

- While a party must exercise reasonable diligence to protect himself against the fraud of another, he is not bound to exhaust all means at his command to ascertain the truth before relying upon the representations. Ordinarily the question whether the complaining party could have ascertained the falsity of the representations by proper diligence is for determination by the jury. Gaines v. Watts, 224 Ga. 321, 161 S.E.2d 830 (1968).

When the means of knowledge are at hand and equally available to both parties to a contract of sale, if the purchaser does not avail himself of these means, he will not be heard to say, in impeachment of the contract, that he was deceived by the representations of the seller. Lorick v. Na-Churs Plant Food Co., 150 Ga. App. 209, 257 S.E.2d 332 (1979).

3. Actual Fraud

Actual fraud predicated on intent.

- Whether a fraud is actual depends on whether the false representation was made with the purpose and intent to deceive. Gaultney v. Windham, 99 Ga. App. 800, 109 S.E.2d 914 (1959).

In any suit sounding in tort for damages on account of actual fraud, the gist of the action is the purpose and design to deceive. Gaultney v. Windham, 99 Ga. App. 800, 109 S.E.2d 914 (1959).

Actual fraud involves moral guilt, since there must be an intentional purpose to deceive. Turner v. Ware, 2 Ga. App. 57, 58 S.E. 310 (1907); Gaultney v. Windham, 99 Ga. App. 800, 109 S.E.2d 914 (1959).

A material misrepresentation constituting actual fraud may give rise to an independent action in tort for deceit, to recover for damage thus occasioned. In such a suit it is necessary to show, not only that a material misrepresentation was made for the purpose of inducing the plaintiff to act, that he had a right to act, and that he did act thereon to his injury, but it must be shown that such representation was willfully and knowingly false, or what the law regards as the equivalent of knowledge, a reckless or fraudulent representation about that which the party pretends to know, but about which he knows that he does not know, and by which false pretense his purpose and intent is to deceive. Gaultney v. Windham, 99 Ga. App. 800, 109 S.E.2d 914 (1959).

Essential elements.

- In an independent affirmative action for fraud and deceit, which must be predicated upon actual fraud, the plaintiff must allege and prove the following essential ingredients: (1) the defendant made the representations; (2) at the time he knew they were false (or what the law regards as the equivalent of knowledge, a fraudulent or reckless representation of facts as true, which the party may not know to be false, if intended to deceive); (3) the defendant made the representations with the intention and purpose of deceiving the plaintiff; (4) the plaintiff relied upon such representations; (5) the plaintiff sustained the alleged loss and damage as the proximate result of their having been made; and (6) (an element frequently omitted in the cases enumerating the essentials), want of knowledge by the party alleged to have been deceived that the representation was false. It is essential that the plaintiff was deceived and there can be no deceit if the plaintiff knows that the representations upon which he is alleged to have acted were false. Gaultney v. Windham, 99 Ga. App. 800, 109 S.E.2d 914 (1959); Romedy v. Willett Lincoln-Mercury, Inc., 136 Ga. App. 67, 220 S.E.2d 74 (1975); C.P.D. Chem. Co. v. National Car Rental Sys., 148 Ga. App. 756, 252 S.E.2d 665 (1979).

To allege fraud, the claimant must contend the defendant knowingly made a false representation with the intent and purpose of deceiving the plaintiff. Additionally, there must be a reliance on such representations and a loss sustained thereby. The misrepresentations must also relate to a preexisting or present fact and not statements or representations involving future conduct. Cone Mills Corp. v. A.G. Estes, Inc., 377 F. Supp. 222 (N.D. Ga. 1974).

A promise to take title to the property, farm it, pay off the debt existing thereon, and then to reconvey it to the plaintiff, made as an inducement or consideration for the execution of a deed by plaintiff, does not constitute fraud, so as to authorize cancellation of the deed, or a decree of specific performance of the agreement to convey, unless the promise was made with the present intention not to comply with it. A mere failure to comply with the promise would be insufficient to establish such fraudulent intent. Dixon v. Dixon, 211 Ga. 557, 87 S.E.2d 369 (1955).

The five elements of fraud and deceit in Georgia are: (1) false representation made by the defendant; (2) scienter; (3) an intention to induce the plaintiff to act or refrain from acting in reliance by the plaintiff; (4) justifiable reliance by the plaintiff; and (5) damage to the plaintiff. Marriott Corp. v. American Academy of Psychotherapists, Inc., 157 Ga. App. 497, 277 S.E.2d 785 (1981).

The five elements necessary to be shown in an action for fraud are that the misrepresentation or falsehood was knowingly made, that it related to a material fact, that its purpose was to deceive another and induce him to act, that he did act upon it and that he was injured as a result. Day v. Randolph, 159 Ga. App. 474, 283 S.E.2d 687 (1981).

Actual fraud is not essential to support an action in equity to rescind a contract for fraud, or to a plea of fraud to a suit on a contract; innocently made material misrepresentations which the opposite party has a right to act on, and does act on to his injury, and which amount only to constructive fraud, being sufficient in these last two instances. By a parity of reasoning, actual fraud is not essential to the setting aside of an accord and satisfaction. Jordan v. Belvin, 57 Ga. 719, 196 S.E. 132 (1938).

An independent action in tort for deceit must be grounded on actual fraud. Plough Broadcasting Co. v. Dobbs, 163 Ga. App. 264, 293 S.E.2d 526 (1982).

A theft offense constitutes actual moral fraud, and the trial court did not err in failing to charge the differences between the two types of fraud where defendant admitted theft. Alford v. Oliver, 169 Ga. App. 865, 315 S.E.2d 299 (1984).

Invoice practices constituted evidence from which a jury might have concluded that a contractor engaged in covert dealings with employee, and the employee's alleged destruction of business records might have been considered evidence of fraud under O.C.G.A. § 23-2-51. GIW Indus. v. JerPeg Contr., Inc., 530 F. Supp. 2d 1323 (S.D. Ga. 2008).

4. Constructive Fraud

Constructive fraud does not involve moral guilt, since it is the act itself, as taken in connection with the relationship of the parties, and not the guilty purpose or intent, which constitutes constructive fraud. Gaultney v. Windham, 99 Ga. App. 800, 109 S.E.2d 914 (1959).

Innocent misrepresentations, when made by one charged with a special duty to the opposite party to know and to impart the truth, under the statutes and decisions of this state cannot amount to anything more than constructive fraud, and, as such, are not creative of any independent right of action for damages in tort in favor of the injured party; but they may support an action in equity to rescind a contract so induced or be pleaded in defense to a suit on a contract thus procured, or may, it might seem, under the doctrine of estoppel, be employed in support of an action founded on the contract itself. Gaultney v. Windham, 99 Ga. App. 800, 109 S.E.2d 914 (1959).

If a person having legal title to land, which fact he does not know but has convenient means of knowing, and after a lapse of 27 years, during which time he was under no legal disability, he still has not learned the fact of his interest in the land, and in those circumstances he induces one to buy the land from a third person by representations that the land is the property of such third person, his misrepresentations to the purchaser innocently made, coupled with his delay in ascertaining the truth, will amount to constructive fraud, and they may be pleaded as an estoppel by the purchaser on the faith of the title of his vendor. Lanier v. Bryant, 180 Ga. 409, 179 S.E. 346 (1935).

Where insured furnished false evidence which was relied upon by the insurance company in reinstating insurance policies he was guilty of fraud in law which would avoid the policy, whether he was in good or bad faith and whether he intended to deceive or not. New York Life Ins. Co. v. Odom, 93 F.2d 641 (5th Cir. 1937), cert. denied, 304 U.S. 566, 58 S. Ct. 948, 82 L. Ed. 1532 (1938).

Where insured, in applying for reinstatement of life policies, furnishes false evidence which is relied on by the insurance company, he is guilty of fraud in law which avoids the policy whether he acts in good or bad faith and whether he intends to deceive or not. Life & Cas. Ins. Co. v. Davis, 62 Ga. App. 832, 10 S.E.2d 129 (1940).

Constructive fraud may arise out of any act of omission or commission, contrary to legal or equitable duty, trust or confidence justly reposed, which is contrary to good conscience and operates to the injury of another; constructive fraud may moreover be consistent with innocence and not smacking with moral guilt. Graham v. Hogan, 185 Ga. App. 842, 366 S.E.2d 219 (1988).

"Contrary to good conscience" requirement.

- Where there is no evidence of suppression, misrepresentation or concealment or bad faith so as to impute moral guilt, the mere omission of a matter from a document coupled with the failure to reveal the omission can hardly be even constructive fraud unless it is "contrary to good conscience." Rhodes v. Perimeter Properties, Inc., 187 Ga. App. 55, 369 S.E.2d 332 (1988).

Knowledge not required.

- Constructive fraud is legal fraud, but does not require knowledge or scienter. Macon-Bibb County Hosp. Auth. v. Georgia Kaolin Co., 646 F. Supp. 90 (M.D. Ga. 1986), aff'd, 817 F.2d 98 (11th Cir. 1987).

Evidence of constructive fraud.

- Where claimant was seeking workers' compensation benefits from the employer based on her alleged total disability and inability to work but at the same time she took this position before the Workers' Compensation Board, she was gainfully employed by a different employer, this is evidence sufficient to support the superior court's finding of constructive fraud. Dennington v. Rockdale Package Stores, Inc., 161 Ga. App. 450, 288 S.E.2d 709 (1982).

Nondisclosure.

- Nondisclosure may provide the basis for constructive fraud where a party is under an obligation to communicate. First Union Nat'l Bank v. Davies-Elliot, Inc., 207 Ga. App. 791, 429 S.E.2d 161 (1993).

Even though a bank had a duty to notify its customer of a change in its signature verification procedures, where there was no evidence that the bank refrained from informing its customers in order to induce them to take or refrain from taking any certain action, there was no showing of constructive fraud. Eason Publications, Inc. v. Nationsbank, 217 Ga. App. 726, 458 S.E.2d 899 (1995).

False identities.

- Trial court properly granted summary judgment to the auto dealer, mortgage broker, and the lender on the accused person's contention that they committed constructive fraud by approving and acting upon the credit application filled out by another person who used the accused person's name to obtain the financing necessary to purchase a truck. Constructive fraud is an equitable doctrine that would not support the accused person's request for damages under these circumstances, especially since the evidence did not show they knew or should have known of the impropriety surrounding the transaction. Blakey v. Victory Equip. Sales, Inc., 259 Ga. App. 34, 576 S.E.2d 38 (2002).

Confidential relationships.

- Executor's claim that a brother and a wife committed constructive fraud by withdrawing money from a decedent's bank account while the decedent was living with them prior to the decedent's death was dismissed on summary judgment; even if a confidential relationship existed between the decedent and the brother and the wife, the executor could not seek money damages on a claim brought under O.C.G.A. § 23-2-51(b). Rowland v. Rowland, F. Supp. 2d (N.D. Ga. Nov. 16, 2005).

Constructive fraud not found.

- Superior court did not err in failing to vacate an order allowing an employee to change an authorized treating physician, as the employer failed to show that due to the employee's misleading service and the Board's loss of its pleadings, it was the victim of constructive fraud which amounted to the deprivation of due process; while the employer should have been served with the evidence presented to the administrative law judge, and the Board should have properly handled the employee's filings, the employer could not show that it suffered any harm or injury. MARTA v. Reid, 282 Ga. App. 877, 640 S.E.2d 300 (2006).

No fraud shown on part of developer.

- In an action brought by the purchasers of a lot seeking to cancel the developer's security deed based upon alleged fraud, the trial court properly granted summary judgment to the developer as, even if the developer knew of the sale of the lot to the purchasers, such sale did not estop the developer from the developer's claim against the lot pursuant to the developer's security deed; however, the trial court did err by denying the equitable subrogation claim asserted by the purchasers' lender since exercising subrogation did not prejudice the developer in any manner. Byers v. McGuire Props., 285 Ga. 530, 679 S.E.2d 1 (2009), overruled on other grounds by SRM Group, Inc. v. Travelers Prop. Cas. Co. of Am., 2020 Ga. LEXIS 235 (Ga. 2020).

5. Inceptive Fraud

When the failure to perform the promised act is coupled with the present intention not to perform, fraud in the legal sense is present; this is known as inceptive fraud, and is sufficient to support an action for cancellation of a written instrument. Cone Mills Corp. v. A.G. Estes, Inc., 377 F. Supp. 222 (N.D. Ga. 1974).

Pleading and Practice

It is error to charge the jury concerning fraud when no harm was done the defendant nor was the defendant deceived or injured in any way as the result of the plaintiff attempting to write in an endorsement on a note which had actually been transferred to it but had not been properly endorsed. Associates Disct. Corp. v. Brantley, 102 Ga. App. 751, 117 S.E.2d 916 (1960).

Diligence is question for jury.

- It is the province of the jury to pass upon all the circumstances of the alleged fraud, and to determine whether or not the party defrauded exercised diligence in discovering the falsity of the misrepresentations. Daniel v. Dalton News Co., 48 Ga. App. 772, 173 S.E. 727 (1934); Daugert v. Holland Furnace Co., 107 Ga. App. 566, 130 S.E.2d 763 (1963).

The purchase by an administrator at his own sale is not in itself fraud. Gormley v. Askew, 177 Ga. 554, 170 S.E. 674 (1933).

Fraud and undue influence can rarely be established by direct proof, accordingly, both may be proved by indirect evidence and by proof of facts from which they may be inferred. Daniel v. Etheredge, 198 Ga. 191, 31 S.E.2d 181 (1944).

Fraud and undue influence are not equivalent terms, but undue influence may be a species of fraud or it may exist without any positive fraud. Daniel v. Etheredge, 198 Ga. 191, 31 S.E.2d 181 (1944).

In order to give rise to an action for damages, the defendant's fraud must be actual, i.e., the misrepresentation must be made either knowingly or with reckless disregard for the consequences. Irvin v. Lowe's of Gainesville, Inc., 165 Ga. App. 828, 302 S.E.2d 734 (1983).

"Innocent" or "constructive" fraud exists only as an equitable doctrine and will not support an action in tort for damages. Irvin v. Lowe's of Gainesville, Inc., 165 Ga. App. 828, 302 S.E.2d 734 (1983).

Fraud may be proved by showing a present intent to dishonor the promise to undertake a future act or present knowledge of the impossibility of an opinion. FDIC v. Lattimore Land Corp., 656 F.2d 139 (5th Cir. 1981).

Instructions.

- It was error for court to charge jury on actual and constructive fraud in language of this section and § 23-2-57, but to neglect to charge on essential elements of actual fraud. Plough Broadcasting Co. v. Dobbs, 163 Ga. App. 264, 293 S.E.2d 526 (1982).

RESEARCH REFERENCES

Am. Jur. 2d.

- 27 Am. Jur. 2d, Equity, § 20. 37 Am. Jur. 2d, Fraud and Deceit, § 4.

C.J.S.

- 30 C.J.S., Equity, § 48 et seq. 37 C.J.S., Fraud, § 2.

ALR.

- Remedy of contractor, who has partially performed before discovering fraud, as to character or amount of work, 2 A.L.R. 1396.

Presence of noxious weeds as ground for rescission of contract for purchase of land, 2 A.L.R. 1511.

Misrepresentation as regards validity of conveyance or transfer of property as fraud, 9 A.L.R. 1051.

False representations in business transaction as within statute relating to 'confidence game,', 9 A.L.R. 1527, 56 A.L.R. 727.

Fraud or perjury in misrepresenting status or relationship essential to the judgment as ground of relief from, or injunction against, judgment, 49 A.L.R. 1219.

May offense of obtaining money or property by false pretenses or confidence game be predicated on obtaining loan or renewal thereof, 52 A.L.R. 1167.

Misrepresentation or mistake as to whether corporate stock is assessable as one of law or of fact, 65 A.L.R. 1256.

Examination of real property by purchaser before entering into contract as precluding rescission on ground of falsity of representations, 70 A.L.R. 942.

Misrepresentation as to market price or market value as fraud, 71 A.L.R. 622.

Fraud: necessity for knowledge of falsity of representation as to value, inducing subscription to or purchase of corporate stock, or other securities, 73 A.L.R. 1120.

Civil liability of bank officer or director permitting deposit after insolvency of bank, 87 A.L.R. 1402.

Promises and statements as to future events as fraud, 91 A.L.R. 1295, 125 A.L.R. 879.

Application of principal that false representations made to one person with intention that another may act thereon are actionable in favor of latter, 91 A.L.R. 1363.

Illegal or fraudulent intent of prosecuting witness or person defrauded as defense in prosecution based on false representations, 95 A.L.R. 1249; 128 A.L.R. 1520.

Financial statement by borrower as basis of loan or extension of credit, 104 A.L.R. 921.

Action for fraud or deceit predicated upon oral contract within the statute of frauds or the transaction of which the oral contract was a part, 104 A.L.R. 1420.

Concealment of fact that one of parties to land contract was acting for third person, or misrepresentation as to identity of party for whom he was acting as reason for denying specific performance, or for rescission of contract, 121 A.L.R. 1162.

Fraud predicated upon misrepresentation by grantee or transferee regarding grantor's or transferrer's title, 136 A.L.R. 1299.

What amounts to fraud on contractor, sustaining rescission or action for damages under building or construction contract, 166 A.L.R. 938.

Doctrine of constructive trust or unjust enrichment as applicable between owner and one who fraudulently procures tax certificates, 175 A.L.R. 700.

Real estate broker's right to commission where purchaser refuses to go through with executory contract because of reckless misrepresentation made to him by broker respecting property, 9 A.L.R.2d 504.

Misrepresentation as to loan commitment on real estate as ground of action, counterclaim, or rescission by vendee, 14 A.L.R.2d 1347.

Misrepresentation by one other than insurance agent as to coverage, exclusion, or legal effect of insurance policy, as actionable, 29 A.L.R.2d 213.

Misrepresentation by lessor, in negotiations for lease, as to offers of rental received from third persons, as actionable fraud, 30 A.L.R.2d 923.

Liability of vendor of structure for failure to disclose that it was built on filled ground, 80 A.L.R.2d 1453.

Reasonable expectation of payment as affecting offense under "worthless check" statutes, 9 A.L.R.3d 719.

Employer's misrepresentations as to employee's or agent's future earnings as actionable fraud, 16 A.L.R.3d 1311.

Application of "bad check" statute with respect to postdated checks, 52 A.L.R.3d 464.

Consumer class actions based on fraud or misrepresentation, 53 A.L.R.3d 534.

Promissory estoppel as basis for avoidance of statute of frauds, 56 A.L.R.3d 1037.

Automobile or motorcycle as necessary for infant, 56 A.L.R.3d 1335.

Automobile insurance: concealment or nondisclosure of physical defects or conditions as avoiding coverage, 72 A.L.R.3d 804.

Spouse's acceptance or retention of benefits of other spouse's fraudulent act as ratification of transaction, 82 A.L.R.3d 625.

Fraud predicated on vendor's misrepresentation or concealment of danger or possibility of flooding or other unfavorable water conditions, 90 A.L.R.3d 568.

Action based upon reconveyance, upon promise of reconciliation, of property realized from divorce award or settlement, 99 A.L.R.3d 1248.

Modern status of rules to avoidance of release of personal injury claim on ground of mistake as to nature and extent of injuries, 13 A.L.R.4th 686.

Modern status of rule that crime of false pretenses cannot be predicated upon present intention not to comply with promise or statement as to future act, 19 A.L.R.4th 959.

23-2-52. Misrepresentation as legal fraud.

Misrepresentation of a material fact, made willfully to deceive or recklessly without knowledge and acted on by the opposite party or made innocently and mistakenly and acted on by the opposite party, constitutes legal fraud.

(Orig. Code 1863, § 3105; Code 1868, § 3117; Code 1873, § 3174; Code 1882, § 3174; Civil Code 1895, § 4026; Civil Code 1910, § 4623; Code 1933, § 37-703.)

Law reviews.

- For article, "Consumer Protection Against Sellers Misrepresentations," see 20 Mercer L. Rev. 414 (1969).

JUDICIAL DECISIONS

General Consideration

Fraud is either actual or constructive, and either constitutes legal fraud. Jordan v. Belvin, 57 Ga. 719, 196 S.E. 132 (1938); Southeastern Greyhound Lines v. Fisher, 72 Ga. App. 717, 34 S.E.2d 906 (1945).

Concealment by defendant of the financial status of the corporation when it was in fact a losing business facing lawsuits coupled with delivery of nonvoting stock instead of the promised voting stock constituted legal fraud when it was proven to the satisfaction of the jury. Adkins v. Lee, 127 Ga. App. 261, 193 S.E.2d 252 (1972).

Misrepresentation of a material fact, if made by mistake, and innocently, and acted on by the opposite party to his injury, constitutes constructive fraud under this section. Southeastern Greyhound Lines v. Fisher, 72 Ga. App. 717, 34 S.E.2d 906 (1945).

In the case of fire and life insurance applications a misrepresentation is material if the misrepresentation changes the character, nature or extent of the risk. State Farm Mut. Ins. Co. v. Anderson, 107 Ga. App. 348, 130 S.E.2d 144, cert. dismissed, 219 Ga. 211, 132 S.E.2d 556 (1963).

Where it is shown that a material statement in an application is false which was known to the insured at the time he made it and it was made with a view toward obtaining the insurance, with the company having no knowledge of its falsity, where the company acted upon it to its injury, the law will conclusively presume an intent to deceive, and a case of actual fraud will be made out. State Farm Mut. Auto. Ins. Co. v. Anderson, 107 Ga. App. 348, 130 S.E.2d 144, cert. dismissed, 219 Ga. 211, 132 S.E.2d 556 (1963).

Any misrepresentation intended to deceive and which does deceive is a fraud, for which a party is entitled to a remedy at law. Adkins v. Lee, 127 Ga. App. 261, 193 S.E.2d 252 (1972).

In order for a fraud to be actionable, the representation relied on must be more than a promise which is void or unenforceable. Barrett v. Independent Order of Foresters, 625 F.2d 73 (5th Cir. 1980).

Statements as to the nature of insurance coverage are opinions of law and cannot be the basis of a cause of action for fraud. Macon-Bibb County Hosp. Auth. v. Georgia Kaolin Co., 646 F. Supp. 90 (M.D. Ga. 1986), aff'd, 817 F.2d 98 (11th Cir. 1987).

Knowledge of seller that product unavailable.

- Salesman fraudulently induced customers to execute a sales contract by representing that "blue sculpted" carpet was available when he knew it was not or recklessly asserted the fact with intent to deceive. Country Pride Homes, Inc. v. DuBois, 201 Ga. App. 740, 412 S.E.2d 282 (1991).

Civil fraud and theft by deception have different elements and showing that there are jury issues as to fraud does not necessarily show that there are jury issues as to theft by deception; a failure to show the level of intent needed for proving theft by deception would preclude a jury issue on that crime as a predicate act for RICO purposes, defeating a RICO claim. Avery v. Chrysler Motors Corp., 214 Ga. App. 602, 448 S.E.2d 737 (1994).

Cited in Hixon v. Hinkle, 156 Ga. 341, 118 S.E. 874 (1923); Mangham v. Cobb, 160 Ga. 182, 127 S.E. 408 (1925); Nix v. Citizens Bank, 35 Ga. App. 55, 132 S.E. 249 (1926); Penn Mut. Life Ins. Co. v. Taggart, 38 Ga. App. 509, 144 S.E. 400 (1928); Hamlin v. Johns, 166 Ga. 880, 144 S.E. 659 (1928); Lancaster v. Neal, 41 Ga. App. 721, 154 S.E. 386 (1930); Equitable Bldg. & Loan Ass'n v. Brady, 175 Ga. 43, 164 S.E. 674 (1932); Wall v. Wall, 176 Ga. 757, 168 S.E. 893 (1933); Roper v. White, 178 Ga. 293, 173 S.E. 115 (1934); Dover v. Burns, 186 Ga. 19, 196 S.E. 785 (1938); Crowell v. Brim, 191 Ga. 288, 12 S.E.2d 585 (1940); Norwood v. Norwood, 207 Ga. 148, 60 S.E.2d 449 (1950); Patterson v. Correll, 92 Ga. App. 214, 88 S.E.2d 327 (1955); Sorrells v. Atlanta Transit Sys., 218 Ga. 623, 129 S.E.2d 846 (1963); Walsh v. Campbell, 130 Ga. App. 194, 202 S.E.2d 657 (1973); Thibadeau Co. v. McMillan, 132 Ga. App. 842, 209 S.E.2d 236 (1974); City of Jesup v. Spivey, 133 Ga. App. 403, 210 S.E.2d 859 (1974); Clements v. Warner Robins Supply Co., 235 Ga. 612, 221 S.E.2d 35 (1975); North Peachtree I-285 Properties, Ltd. v. Hicks, 136 Ga. App. 426, 221 S.E.2d 607 (1975); McClure v. Thomas Cook, Inc., 158 Ga. App. 467, 280 S.E.2d 876 (1981); Everson v. Franklin Disct. Co., 248 Ga. 811, 285 S.E.2d 530 (1982); Bill Spreen Toyota, Inc. v. Jenquin, 163 Ga. App. 855, 294 S.E.2d 533 (1982); Rhodes v. Perimeter Properties, Inc., 187 Ga. App. 55, 369 S.E.2d 332 (1988); O'Brien v. Union Oil Co., 699 F. Supp. 1562 (N.D. Ga. 1988); Johnson Realty, Inc. v. Hand, 189 Ga. App. 706, 377 S.E.2d 176 (1988); Vickers v. Roadway Express, Inc., 210 Ga. App. 78, 435 S.E.2d 253 (1993); In re Dukes, 213 Bankr. 202 (Bankr. S.D. Ga. 1997); Sellers Bros., Inc. v. Imperial Flowers, Inc., 232 Ga. App. 687, 503 S.E.2d 573 (1998); GE Life & Annuity Assur. Co. v. Donaldson, 189 F. Supp. 2d 1348 (M.D. Ga. 2002); GE Life & Annuity Assur. Co. v. Barbour, 189 F. Supp. 2d 1360 (M.D. Ga. 2002); McBride v. Life Ins. Co., 190 F. Supp. 2d 1366 (M.D. Ga. 2002); GE Life & Annuity Assur. Co. v. Barbour, 191 F. Supp. 2d 1375 (M.D. Ga. 2002); GE Life & Annuity Assur. Co. v. Combs, 191 F. Supp. 2d 1364 (M.D. Ga. 2002); J'Carpc, LLC v. Wilkins, 545 F. Supp. 2d 1330 (N.D. Ga. 2008).

Remedies

1. In General

Election of remedies.

- When a vendee is induced to enter into a contract for the purchase of land by the fraud of the vendor, when the former discovers the fraud he has an election of remedies. One of such remedies is to rescind the contract, and another is to affirm the contract and sue for damages for the fraud. Price v. Mitchell, 154 Ga. App. 523, 268 S.E.2d 743 (1980).

2. Rescission

Rescission of transaction based on misrepresentation authorized.

- Material misrepresentation, made for the purpose of inducing another to execute a promissory note, will authorize the maker, after executing the note, to rescind the transaction on discovery, of the fraud, if he relied upon the representation and was induced thereby to execute the note. Thompson v. Wilkins, 143 Ga. App. 739, 240 S.E.2d 183 (1977).

A promise to do a certain thing for the benefit of the promisee, made to induce his entrance into a contract, the promisee earnestly believing that he would receive the benefits consequent upon the fulfillment of the promise, when at the time of making the promise there was no intention on the part of the promisor to fulfill it, but, on the contrary, the promise was made with intent not to fulfill it and was uttered as a mere scheme or device to defraud, is such a fraud as will void any contract induced thereby. A promise thus fraudulently made will authorize rescission of a written instrument purporting to be a contract. Price v. Mitchell, 154 Ga. App. 523, 268 S.E.2d 743 (1980).

Constructive fraud, as well as actual fraud, voids the contract at the election of the injured party, and may authorize a rescission of a written release from liability. Southeastern Greyhound Lines v. Fisher, 72 Ga. App. 717, 34 S.E.2d 906 (1945).

A material representation falsely made by a vendor to a vendee to induce a sale, and made with knowledge of its falsity and acted upon to the vendee's injury, amounts to actual fraud, and will void a contract, and authorize rescission by the vendee if he acts promptly after discovery of the fraud and restores or offers to restore whatever of value he has received by virtue of the contract. Price v. Mitchell, 154 Ga. App. 523, 268 S.E.2d 743 (1980).

3. Damages

Damages generally.

- Misrepresentation of a material fact, made by one of the parties to a contract, though made by mistake, and innocently, if acted on by the opposite party, constitutes legal fraud, and the party injured in consequence thereof may set up the damages thus arising in defense to an action upon the contract. Morton v. W.T. Tharpe & Co., 41 Ga. App. 788, 154 S.E. 716 (1930).

Where a vendor agrees to sell a designated tract of land to another and points out to the latter its boundaries and where such boundaries include lands to which the vendor has no title, in consequence of which the purchaser loses the same, the purchaser can setoff at law the value of the portion of the land so lost, against the purchase money whether the representations were designedly made by the vendor to deceive the purchaser, or were innocently made. Bonner v. Cotton, 223 Ga. 843, 159 S.E.2d 61 (1968).

Where there is a material misrepresentation, a policy (of insurance) may be voided. State Farm Mut. Ins. Co. v. Anderson, 107 Ga. App. 348, 130 S.E.2d 144, cert. dismissed, 219 Ga. 211, 132 S.E.2d 556 (1963).

Where insured furnished false evidence which was relied upon by the insurance company in reinstating insurance policies he was guilty of fraud in law which would void the policy, whether he was in good or bad faith and whether he intended to deceive or not. New York Life Ins. Co. v. Odom, 93 F.2d 641 (5th Cir. 1937), cert. denied, 304 U.S. 566, 58 S. Ct. 948, 82 L. Ed. 1532 (1938).

Ordinary Diligence

Ordinary diligence required of party claiming injury.

- One cannot claim to be defrauded by the false representation of another where, by the exercise of ordinary diligence, such person could have discovered the falsity of the representations before acting thereon. Barrett v. Independent Order of Foresters, 625 F.2d 73 (5th Cir. 1980).

An equitable action to cancel a deed on the ground of fraud, which clearly shows that the complainant failed to use even slight diligence to discover the fraud, fails to allege a cause of action. Courts of equity will not grant relief to one whose long delay renders the ascertainment of the truth difficult, though no legal limitation bars the action. Whitfield v. Whitfield, 204 Ga. 64, 48 S.E.2d 852 (1948).

Blind reliance exists where it cannot be said that the purchase originated in fraud so much as in the carelessness of the purchaser to exercise ordinary care for his own interest. Adkins v. Lee, 127 Ga. App. 261, 193 S.E.2d 252 (1972).

While the doctrine of caveat emptor would charge the purchaser with looking out for the title which the seller had to the tract offered for sale as his, it would not charge him with looking out for the boundaries of that tract when the seller undertook to locate and point them out, thus professing to know them sufficiently to enable them to furnish this information to purchasers instead of leaving the latter to their own resources in acquiring the information. Bonner v. Cotton, 223 Ga. 843, 159 S.E.2d 61 (1968).

Failure to open trunk of car represented as new.

- It cannot be said as a matter of law that failure of plaintiff to open trunk of car represented as new in order to inspect for damage, either at time of purchase or within three and a half months thereafter amounted to failure of due diligence. Horne v. Claude Ray Ford Sales, Inc., 162 Ga. App. 329, 290 S.E.2d 497 (1982).

Pleading and Practice

In order to give rise to an action for damages, the defendant's fraud must be actual, i.e., the misrepresentation must be made either knowingly or with reckless disregard for the consequences. Irvin v. Lowe's of Gainesville, Inc., 165 Ga. App. 828, 302 S.E.2d 734 (1983).

"Innocent" or "constructive" fraud exists only as an equitable doctrine and will not support an action in tort for damages. Irvin v. Lowe's of Gainesville, Inc., 165 Ga. App. 828, 302 S.E.2d 734 (1983).

Questions of fraud, bad faith and materiality of misrepresentation are ordinarily for a jury. Adkins v. Lee, 127 Ga. App. 261, 193 S.E.2d 252 (1972).

A contention that fraud is a personal defense or plea, and could be made only by the party deceived, is without merit. Houston v. Horton, 202 Ga. 307, 43 S.E.2d 90 (1947).

RESEARCH REFERENCES

Am. Jur. 2d.

- 27 Am. Jur. 2d, Equity, § 20. 37 Am. Jur. 2d, Fraud and Deceit, § 247 et seq.

Conveyance with Intent to Defraud Creditors, 5 POF2d 697.

False Representation as to Quality or Character of Product, 35 POF2d 255.

C.J.S.

- 30 C.J.S., Equity, § 48. 37 C.J.S., Fraud, §§ 3, 19 et seq.

ALR.

- Misrepresentation as regards validity of conveyance or transfer of property as fraud, 9 A.L.R. 1051.

False representations in business transaction as within statute relating to 'confidence game,', 9 A.L.R. 1527, 56 A.L.R. 727.

Seller's concealment of ownership of other property inducing exclusion of same from contract as actionable fraud, 26 A.L.R. 990.

Promises and statements as to future events as fraud, 51 A.L.R. 46, 68 A.L.R. 635, 91 A.L.R. 1296, 125 A.L.R. 879.

Misrepresentation as to market price or market value as fraud, 71 A.L.R. 622.

Employer's misrepresentations as to employee's or agent's future earnings as actionable fraud, 16 A.L.R.3d 1311.

Duty of vendor of real estate to give purchaser information as to termite infestation, 22 A.L.R.3d 972.

Purchaser's misrepresentations as to intended use of real property as ground for vendor's equitable relief from contract and deed, 35 A.L.R.3d 1369.

Consumer class actions based on fraud or misrepresentation, 53 A.L.R.3d 534.

Modern status of rules regarding materiality and effect of false statement by insurance applicant as to previous insurance cancellations or rejections, 66 A.L.R.3d 749.

Fraud predicated on vendor's misrepresentation or concealment of danger of possibility of flooding or other unfavorable water conditions, 90 A.L.R.3d 568.

Misrepresentation in proxy solicitation - state cases, 20 A.L.R.4th 1287.

Vendor's action against vendee's prospective lender for misrepresentation respecting or failure to complete loan commitment, 30 A.L.R.4th 474.

Misrepresentation regarding sterility or use of birth control, 31 A.L.R.4th 389.

Liability of termite or other pest control or inspection contractor for work or representations, 32 A.L.R.4th 682.

Remedies for fraud or misrepresentation as to heating or cooling costs of realty purchased, 32 A.L.R.4th 828.

Real-estate broker's or agent's misrepresentation to, or failure to inform, vendor regarding value of vendor's real property, 33 A.L.R.4th 944.

Sexual partner's tort liability to other partner for fraudulent misrepresentation regarding sterility or use of birth control resulting in pregnancy, 2 A.L.R.5th 301.

Parent's child support liability as affected by other parent's fraudulent misrepresentation regarding sterility or use of birth control, or refusal to abort pregnancy, 2 A.L.R.5th 337.

23-2-53. Suppression of fact as fraud.

Suppression of a material fact which a party is under an obligation to communicate constitutes fraud. The obligation to communicate may arise from the confidential relations of the parties or from the particular circumstances of the case.

(Orig. Code 1863, § 3106; Code 1868, § 3118; Code 1873, § 3175; Code 1882, § 3175; Civil Code 1895, § 4027; Civil Code 1910, § 4624; Code 1933, § 37-704.)

Law reviews.

- For article, "Common Fact Patterns of Stock Broker Fraud and Misconduct," see 7 Ga. St. B.J. 14 (2002). For note as to recovery by home buyer for fraud in passive concealment by vendor, see 29 Mercer L. Rev. 323 (1977).

JUDICIAL DECISIONS

Under this section, suppression of a fact material to be known, and which the party is under an obligation to communicate, constitutes fraud and the obligation to communicate may arise from the particular circumstances of the case. Brittain Bros. Co. v. Davis, 174 Ga. 1, 161 S.E. 841 (1931).

Suppression of the truth is not a fraud unless used as a means of deceiving another; no man is compelled to break silence and speak, unless there is an obligation resting upon him to speak. Georgia Real Estate Comm'n v. Brown, 152 Ga. App. 323, 262 S.E.2d 596 (1979).

Suppression of the truth constitutes fraud where there is an intentional concealment of a fact for the purpose of obtaining an advantage or a benefit. Georgia Real Estate Comm'n v. Brown, 152 Ga. App. 323, 262 S.E.2d 596 (1979).

Where insured furnished false evidence which was relied upon by the insurance company in reinstating insurance policies he was guilty of fraud in law which would avoid the policy, whether he was in good or bad faith and whether he intended to deceive or not. New York Life Ins. Co. v. Odom, 93 F.2d 641 (5th Cir. 1937), cert. denied, 304 U.S. 566, 58 S. Ct. 948, 82 L. Ed. 1532 (1938); Life & Cas. Ins. Co. v. Davis, 62 Ga. App. 832, 10 S.E.2d 129 (1940).

Where plaintiff, a woman so limited in education that she could not read and understand the meaning and effect of the instrument which she signed, surrendered, upon request of the manager of defendant insurance company, policy in which she was named beneficiary, premium receipt book and record of payments on the policy sued on, and was presented for signature and signed, a receipt or release from liability in consideration of the payment to her of $3.30, whereas the policy provided for payment of $51.75 upon death of the insured, it was a fraud upon plaintiff, under the circumstances, not to disclose to her the contents of the paper which defendant, through its manager requested her to sign. Industrial Life & Health Ins. Co. v. Johnson, 62 Ga. App. 630, 9 S.E.2d 121 (1940).

In an action by a purchaser to rescind a contract for the purchase of real estate on the ground of the fraudulent concealment of a material fact, where the allegations of fact were insufficient to show actual fraud, in that there was no duty to communicate the material fact in question, which the purchaser could have discovered by exercising ordinary care, and there was no misrepresentations, no cause of action was stated. Kirven v. Blackett, 208 Ga. 178, 65 S.E.2d 791 (1951).

This section expressly goes beyond the strict fiduciary relations of the parties. Cochran v. Murrah, 235 Ga. 304, 219 S.E.2d 421 (1975).

Where persons sustain towards another a relation of trust and confidence, their silence when they ought to speak, or their failure to disclose what they ought to disclose, is so much a fraud in law as an actual affirmative false representation; mere silence on their part as to a cause, the facts giving rise to which it is their duty to disclose, amounts to a fraudulent concealment. Georgia Real Estate Comm'n v. Brown, 152 Ga. App. 323, 262 S.E.2d 596 (1979).

Constructive fraud "contrary to good conscience" requirement.

- Where there is no evidence of suppression, misrepresentation or concealment or bad faith so as to impute moral guilt, the mere omission of a matter from a document coupled with the failure to reveal the omission can hardly be even constructive fraud unless it is "contrary to good conscience." Rhodes v. Perimeter Properties, Inc., 187 Ga. App. 55, 369 S.E.2d 332 (1988).

No obligation to disclose information equally available to both parties in arms-length business or contractual relationship.

- While concealment of material facts may amount to fraud when the concealment is of intrinsic qualities the other party could not discover by the exercise of ordinary care, in an arms-length business or contractual relationship there is no obligation to disclose information which is equally available to both parties. Under such circumstances, actionable fraud cannot be shown unless the plaintiff exercised due care to discover the fraud. Southern Intermodal Logistics, Inc. v. Smith & Kelly Co., 190 Ga. App. 584, 379 S.E.2d 612 (1989).

There existed no confidential relationship between business and contractor who contracted on virtually equal terms and at arms-length, and where business elected to employ a separate contractor thereby electing not to rely solely on the first contractor. American Honda Motor Co. v. Williams & Assocs., 208 Ga. App. 636, 431 S.E.2d 437 (1993).

Attorney for opposing party had no duty to advise of legal rights.

- In taxpayers' claim against a purchaser's assignee for rescission of a redemption agreement, the facts did not support rescission. The assignee's attorney did not defraud them or conceal any facts, but advised them to hire an attorney, and any failure to advise them of their legal rights was an opinion as to a matter of law and not a material fact. Boyd v. JohnGalt Holdings, LLC, 294 Ga. 640, 755 S.E.2d 675 (2014).

A buyer-seller relationship does not require that the buyer disclose information regarding the value of the seller's property. Butts v. Southern Clays, Inc., 215 Ga. App. 110, 450 S.E.2d 244 (1994).

Responsibilities of real estate brokers.

- Listing broker was not obligated to communicate to the couple that the home they purchased was slightly smaller in size than the subdivision's model home the couple wanted duplicated on their lot as the purchase contract plainly stated that the couple had no right to rely on the listing broker as the couple's broker, that the couple had no confidential relationship with the listing broker, and that the couple was solely responsible for protecting the couple's own interests, as the couple was required to exercise due diligence before it could rely on the listing broker's representations and the couple did not do so. Middleton v. Troy Young Realty, Inc., 257 Ga. App. 771, 572 S.E.2d 334 (2002).

Potential buyer did not have a viable common law cause of action for fraud and deceit against a real estate broker and a real estate agent because, as set forth in O.C.G.A. § 10-6A-4(a), no confidential or fiduciary relationship was created between the buyer and the broker and the agent as a matter of law. Harrouk v. Fierman, 291 Ga. App. 818, 662 S.E.2d 892 (2008).

Failure to disclose decision bypassing real estate agent to avoid paying a commission was fraud.

- Trial court erred in granting a directed verdict on a real estate agent's fraud claim against an owner for failing to disclose the owner's decision to directly engage a contractor presented to it by the agent, bypassing its commission agreement with the agent. The economic loss rule did not bar the claim. ASC Constr. Equip. USA, Inc. v. City Commer. Real Estate, Inc., 303 Ga. App. 309, 693 S.E.2d 559 (2010).

Failure of insured not to supply health information.

- The failure of the insured to supply information as to health problems when no inquiry is made by the insurer or its agents and neither the certificate or master policy of insurance inform the insured that certain illnesses are not covered will not raise a defense of fraud or material misrepresentation in a suit on a credit life insurance policy. Block v. Voyager Life Ins. Co., 251 Ga. 162, 303 S.E.2d 742 (1983).

No recovery for failure to disclose when no harm shown.

- In a dispute between a concert booking agent and concert venue owners, the agent's fraud claim arising out of the owners' alleged promises to renew the agreement failed because the agent failed to show that the promises caused the agent harm. There was no evidence suggesting that the owners failed to disclose the owners' decision to terminate the agreement. Lucas Entm't Grp., LLC v. Robert W. Woodruff Arts Ctr., Inc., F.3d (11th Cir. Dec. 1, 2017)(Unpublished).

Expert testimony was required.

- Trial court did not err by granting a doctor summary judgment in a medical fraud suit because the suing patient failed to present expert testimony as to whether the pre-surgery x-rays should have put a doctor on notice of a deformity as such a determination was not within a layperson's common understanding and experience and, instead, required expert testimony. Johnson v. Johnson, 323 Ga. App. 836, 747 S.E.2d 518 (2013).

Land purchaser's duty to disclose mineral deposit.

- The mere fact that purchaser of land alone had knowledge of a large kaolin deposit does not impose a duty on the purchaser to reveal this information to sellers. One's duty to disclose would arise from the confidential relations of the parties or from the particular circumstances of the case. McLendon v. Georgia Kaolin Co., 782 F. Supp. 1548 (M.D. Ga. 1992); Butts v. Southern Clays, Inc., 215 Ga. App. 110, 450 S.E.2d 244 (1994).

Withholding information about excavation site.

- Withheld information appeared to have been material to a contractor's ability to prepare a responsible bid for a contract to excavate a site, where the withheld reports contained information about the presence of excessive moisture at the site and stated that the standard proctor test should be used rather than the more difficult modified proctor test required by the specifications, and that both the excavations and the fill should be dried before compaction. Such activity would have undoubtedly increased the cost of performance of the contract. Pinkerton & Laws Co. v. Roadway Express, Inc., 650 F. Supp. 1138 (N.D. Ga. 1986).

Evidence was sufficient to create an issue for jury determination as to whether real estate agent fraudulently failed to inform seller that documents executed at closing did not grant him a security interest in purchaser's property, as seller had requested. Welch v. Holley, 191 Ga. App. 532, 382 S.E.2d 128 (1989).

Trial court erred in granting summary judgment to the co-executors in a constructive fraud or conspiracy claim filed by the beneficiaries of an estate because it was necessary for a jury to decide whether the co-executors committed constructive fraud or engaged in a conspiracy. Bloodworth v. Bloodworth, 260 Ga. App. 466, 579 S.E.2d 858 (2003).

Nondisclosure.

- Nondisclosure may provide the basis for constructive fraud where a party is under an obligation to communicate. First Union Nat'l Bank v. Davies-Elliot, Inc., 207 Ga. App. 791, 429 S.E.2d 161 (1993).

Even though a bank had a duty to notify its customer of a change in its signature verification procedures, where there was no evidence that the bank refrained from informing its customers in order to induce them to take or refrain from taking any certain action, there was no showing of constructive fraud. Eason Publications, Inc. v. Nationsbank, 217 Ga. App. 726, 458 S.E.2d 899 (1995).

Where a debtor failed to disclose to a creditor that business assets were no longer available to secure a loan upon its renewal, the debt was not dischargeable in bankruptcy because the renewal was obtained by false pretenses. Suntrust Bank v. Brandon (In re Brandon), 297 Bankr. 308 (Bankr. S.D. Ga. 2002).

Fraud may exist as much in intentional concealment of material facts as in false statements in regard to facts; one is as fraudulent as the other if it is used as a means of deceiving the opposite party. It was error to grant summary judgment where the facts indicated a deliberate concealment of assets with the possible intent to deprive a creditor of those assets. Miller v. Lomax, 266 Ga. App. 93, 596 S.E.2d 232 (2004).

Jury was properly instructed on fraud under O.C.G.A. § 23-2-53 because the obligation to communicate to a beneficiary by a trustee was not dictated by the existence of a fiduciary relationship and viable claims for constructive fraud had long been recognized in the absence of a fiduciary relationship under the particular circumstances of the case clause. McSweeney v. Kahn, F.3d (11th Cir. Sept. 10, 2009).

Since the plaintiffs alleged that at the time the plaintiffs purchased the plaintiffs' vehicles, the manufacturer and the distributor failed to disclose to the plaintiffs or to the public the fact that there were underlying safety defects with the gasoline tanks in the models that the plaintiffs purchased, the plaintiffs plausibly alleged that the defendants omitted a material fact that the defendants had a duty to disclose under O.C.G.A. § 23-2-53 as the defects in the gasoline tanks were intrinsic qualities that could not have been discovered through the exercise of ordinary prudence and caution. McCabe v. Daimler AG, F. Supp. 2d (N.D. Ga. June 7, 2013).

Trust's account statement failed to disclose straw man transaction with trustee.

- Trust's account statement reflecting a sale of the principal asset of the trust was not a "report" because there was insufficient disclosure of the nature of the transaction to trigger the running of the shortened two-year limitation period under O.C.G.A. § 53-12-307(a). Smith v. SunTrust Bank, 325 Ga. App. 531, 754 S.E.2d 117 (2014).

Required elements of fraud not proven.

- In an action by buyers of a distributorship of heavy equipment against the manufacturer of the distributorship's main product line, based on concealment of a pending joint venture, the buyers failed to prove the required elements of fraud. Williams v. Dresser Indus., Inc., 120 F.3d 1163 (11th Cir. 1997).

Prima facie case established.

- District court found that land vendors presented a prima facie case of intentional fraudulent concealment concerning valuable mineral deposits against land purchasers. McLendon v. Georgia Kaolin Co., 837 F. Supp. 1231 (M.D. Ga. 1993).

A confidential and fiduciary relationship between brothers was not presumed when one of the brothers was aware that the other embezzled substantial amounts of money from their family business and that particular misconduct was the very subject under investigation. Wender & Roberts, Inc. v. Wender, 238 Ga. App. 355, 518 S.E.2d 154 (1999).

Negotiation of stock purchase agreement.

- Although the defendants were directors of a corporation, they did not have a fiduciary duty to the plaintiff at the time of the negotiation of a stock purchase agreement; instead, the agreement was an arm's length transaction between persons experienced in the mining business and, therefore, there was no violation of the statute. Bogle v. Bragg, 248 Ga. App. 632, 548 S.E.2d 396 (2001).

In a putative class action, the particular circumstances of the case did not warrant the imposition of a duty under O.C.G.A. § 23-2-53 to disclose an alleged defect concerning a gasoline leak in the fuel tanks of the Georgia plaintiffs' vehicles since there was no evidence of any relationship between the defendants and the plaintiffs. McCabe v. Daimler AG, F. Supp. 2d (N.D. Ga. Aug. 20, 2015).

Cited in Mangham v. Cobb, 160 Ga. 182, 127 S.E. 408 (1925); Information Buying Co. v. Miller, 173 Ga. 786, 161 S.E. 617 (1931); Floyd v. Boss, 174 Ga. 544, 163 S.E. 606 (1932); Morton v. Wallace, 177 Ga. 856, 171 S.E. 720 (1933); Blount v. Dean, 187 Ga. 494, 1 S.E.2d 653 (1939); Patterson-Pope Motor Co. v. Ford Motor Co., 66 Ga. App. 41, 16 S.E.2d 877 (1941); Jones v. Hogans, 197 Ga. 404, 29 S.E.2d 568 (1944); Thompson v. Thompson, 203 Ga. 128, 45 S.E.2d 632 (1947); Whitfield v. Whitfield, 204 Ga. 64, 48 S.E.2d 852 (1948); Westbrook v. Beusse, 79 Ga. App. 654, 54 S.E.2d 693 (1949); Fuller v. Dillon, 220 Ga. 36, 136 S.E.2d 733 (1964); Hendrix v. Scarborough, 131 Ga. App. 342, 206 S.E.2d 42 (1974); Wilhite v. Mays, 239 Ga. 31, 235 S.E.2d 532 (1977); Gellis v. B.L.I. Constr. Co., 148 Ga. App. 527, 251 S.E.2d 800 (1978); Duncan v. Poythress, 515 F. Supp. 327 (N.D. Ga. 1981); Everson v. Franklin Disct. Co., 248 Ga. 811, 285 S.E.2d 530 (1982); Davis v. Northside Realty Assocs., 165 Ga. App. 96, 299 S.E.2d 186 (1983); Smith v. Ross, 255 Ga. 193, 336 S.E.2d 39 (1985); Clay v. Department of Transp., 198 Ga. App. 155, 400 S.E.2d 684 (1990); Justus v. Justus, 198 Ga. App. 533, 402 S.E.2d 126 (1991); Tower Fin. Serv., Inc. v. Jarrett, 199 Ga. App. 248, 404 S.E.2d 622 (1991); First Union Nat'l Bank v. Gurley, 208 Ga. App. 647, 431 S.E.2d 379 (1993); Mabry v. Pelton, 208 Ga. App. 891, 432 S.E.2d 588 (1993); Saffar v. Chrysler First Bus. Credit Corp., 215 Ga. App. 239, 450 S.E.2d 267 (1994); Garbutt v. Southern Clays, Inc., 894 F. Supp. 456 (M.D. Ga. 1995); Boardman Petro., Inc. v. Federated Mut. Ins. Co., 926 F. Supp. 1566 (S.D. Ga. 1995); American Petro. Prods., Inc. v. Mom & Pop Stores, Inc., 231 Ga. App. 1, 497 S.E.2d 616 (1998); Hendry v. Wells, 286 Ga. App. 774, 650 S.E.2d 338 (2007); Wright v. Apt. Inv. & Mgmt. Co., 315 Ga. App. 587, 726 S.E.2d 779 (2012).

RESEARCH REFERENCES

Am. Jur. 2d.

- 27 Am. Jur. 2d, Equity, § 20. 37 Am. Jur. 2d, Fraud and Deceit, § 12.

C.J.S.

- 30 C.J.S., Equity, § 48. 37 C.J.S., Fraud, § 15.

ALR.

- Obligee's concealment of facts or evasive answers as fraud against surety, 8 A.L.R. 1485.

Seller's concealment of ownership of other property inducing exclusion of same from contract as actionable fraud, 26 A.L.R. 990.

Duty of vendor of real property to disclose to purchaser condition of building thereon which affects health or safety of persons using same, 141 A.L.R. 967.

What amounts to fraud on contractor, sustaining rescission or action for damages under building or construction contract, 166 A.L.R. 938.

Automobile insurance: concealment or nondisclosure of physical defects or conditions as avoiding coverage, 72 A.L.R.2d 804.

Liability of vendor of structure for failure to disclose that it was built on filled ground, 80 A.L.R.2d 1453.

Public contracts: duty of public authority to disclose contract or information, allegedly in its possession, affecting cost or feasibility of project, 86 A.L.R.3d 182.

Fraud predicated on vendor's misrepresentation or concealment of danger or possibility of flooding or other unfavorable water conditions, 90 A.L.R.3d 568.

23-2-54. Surprise as a form of fraud.

Anything which happens without the agency or fault of the party affected by it, tending to disturb and confuse his judgment or to mislead him, of which the opposite party takes an undue advantage, is in equity a surprise and is a form of fraud for which relief is granted.

(Orig. Code 1863, § 3111; Code 1868, § 3123; Code 1873, § 3180; Code 1882, § 3180; Civil Code 1895, § 4034; Civil Code 1910, § 4631; Code 1933, § 37-711.)

JUDICIAL DECISIONS

Attorney for opposing party had no duty to advise of legal rights.

- In taxpayers' claim against a purchaser's assignee for rescission of a redemption agreement, the facts did not support rescission. The assignee's attorney did not defraud them or conceal any facts, but advised them to hire an attorney, and any failure to advise them of their legal rights was an opinion as to a matter of law and not a material fact. Boyd v. JohnGalt Holdings, LLC, 294 Ga. 640, 755 S.E.2d 675 (2014).

Cited in Bentley v. Barlow, 178 Ga. 618, 173 S.E. 707 (1934); Jackson v. Jackson, 202 Ga. 634, 44 S.E.2d 250 (1947); Puckett v. Reese, 203 Ga. 716, 48 S.E.2d 297 (1948).

RESEARCH REFERENCES

Am. Jur. 2d.

- 27 Am. Jur. 2d, Equity, § 20. 37 Am. Jur. 2d, Fraud and Deceit, § 23.

C.J.S.

- 30 C.J.S., Equity, §§ 45, 48.

23-2-55. Use of similar trademarks, names, or devices.

Any attempt to encroach upon the business of a trader or other person by the use of similar trademarks, names, or devices, with the intention of deceiving and misleading the public, is a fraud for which equity will grant relief.

(Orig. Code 1863, § 3112; Code 1868, § 3124; Code 1873, § 3181; Code 1882, § 3181; Civil Code 1895, § 4035; Civil Code 1910, § 4632; Code 1933, § 37-712.)

Cross references.

- Registration and use of trademarks and service marks generally, § 10-1-440.

JUDICIAL DECISIONS

General Consideration

Construction of section.

- This section is remedial in nature, is designed for the suppression of fraud, and should be liberally construed. Kay Jewelry Co. v. Kapiloff, 204 Ga. 209, 49 S.E.2d 19 (1948).

Application of section.

- In place of an affirmative showing of specific intent, Georgia courts will apply this section when it is shown that: (1) the defendant was put on notice or had knowledge of the plaintiff's trade name and (2) the similarity in names is likely to confuse or mislead the public. Thompson v. Alpine Motor Lodge, Inc., 296 F.2d 497 (5th Cir. 1961).

Damages already sustained recoverable.

- Plaintiff seeking damages for trade name use infringement may seek recovery for damage already sustained where the illegal use has not ceased. Miller & Meier & Assocs. v. Diedrich, 174 Ga. App. 249, 329 S.E.2d 918, aff'd in part, rev'd in part on other grounds, 254 Ga. 734, 334 S.E.2d 308 (1985).

Cited in Gordy v. Dunwody, 209 Ga. 627, 74 S.E.2d 886 (1953); East Ga. Motor Club v. AAA Fin. Co., 212 Ga. 408, 93 S.E.2d 337 (1956); Royal v. Royal Poultry Co., 213 Ga. 813, 102 S.E.2d 44 (1958); Pearl Optical, Inc. v. Pearle Optical of Ga., Inc., 218 Ga. 701, 130 S.E.2d 223 (1963); Multiple Listing Serv. v. Metropolitan Multi-List, 225 Ga. 129, 166 S.E.2d 356 (1969); White's Wig Imports v. Wigmaster's Import Co., 226 Ga. 779, 177 S.E.2d 678 (1970); Tri-State Culvert Mfg., Inc. v. Tri-State Drainage Prods., Inc., 236 Ga. 157, 223 S.E.2d 202 (1976); Rolls-Royce Motors, Ltd. v. A & A Fiberglass, Inc., 428 F. Supp. 689 (N.D. Ga. 1977); Robert B. Vance & Assocs. v. Baronet Corp., 487 F. Supp. 790 (N.D. Ga. 1979); Original Appalachian Artworks, Inc. v. Toy Loft, Inc., 489 F. Supp. 174 (N.D. Ga. 1980); Southern Bell Tel. & Tel. Co. v. Associated Tel. Directory Publishers, 756 F.2d 801 (11th Cir. 1985); Morton B. Katz & Assocs. v. Arnold, 175 Ga. App. 278, 333 S.E.2d 115 (1985).

Prior Use

1. Trade Name

Effect of prior use of trade name.

- A person, by long and exclusive use, may acquire a trade name; and when thus acquired, such trade name is as much descriptive of the manufacturer or producer as is his own name, and the infringement of such trade name of an individual will be enjoined by a court of equity when a proper case is made. Womble v. Parker, 208 Ga. 378, 67 S.E.2d 133 (1951).

While generic names, geographical names, and names composed of words which are merely descriptive are incapable of exclusive appropriation, words or names which have a primary meaning of their own, such as words descriptive of the goods, service, or place where they are made, or the name of the maker, may nevertheless, by long use in connection with the business of the particular trade, come to be understood by the public as designating the goods, service, or business of a particular trader. Multiple Listing Serv., Inc. v. Metropolitan Multi-List, Inc., 223 Ga. 837, 159 S.E.2d 52 (1968), later appeal, Kidd v. Finch, 188 Ga. 492, 4 S.E.2d 187 (1939).

Knowledge of prior use of trade name raises presumption of fraud.

- When a person knows of a trade name used by another person, and, notwithstanding this knowledge, uses a similar name in his own business operations, the courts will presume that he has encroached upon the name of the other intentionally and fraudulently. Womble v. Parker, 208 Ga. 378, 67 S.E.2d 133 (1951); Thompson v. Alpine Motor Lodge, Inc., 296 F.2d 497 (5th Cir. 1961).

Because plaintiff corporation produced no evidence from which a reasonable jury could have concluded that it had exclusively and continuously used "CCI" as a trade name such that it was entitled to trade name protection, the corporation's claim for trade name infringement under O.C.G.A. § 23-2-55 was summarily dismissed. Corrpro Cos. v. Meier, F. Supp. 2d (M.D. Ga. Oct. 5, 2007).

2. Color

Effect of prior use of particular color.

- While the color of merchandise or its wrapper or container may be one of the important indicia of a fraudulent purpose, if accompanied by other confusing factors such as size, shape, name, printing, or design in the make-up of the article, yet color alone, except possibly where some peculiar and distinctive combination of colors is employed, is not sufficient to establish fraudulent intent, since no one is permitted from the mere prior use of such an all-belonging thing as a color to obtain a monopoly in its use for any particular purpose. Seybold Baking Co. v. Derst Baking Co., 196 Ga. 391, 26 S.E.2d 536 (1943).

Testimony of defendant's manager, that he was forced to discontinue less expensive white waxed paper and use more costly "tango" colored cellophane wrapper for his whole wheat bread in order to meet the competition of the plaintiff, could not be taken to establish a fraudulent purpose as a matter of fact, when the act itself did not so indicate, where he also testified that cellophane was a more desirable and more attractive wrapper, and that the color was a more suitable and appropriate transparent wrapper for the brown bread, and where the product was without any other similarities as to the plainly printed labels both inside and outside the wrapper, the ones outside being strikingly different in color. Seybold Baking Co. v. Derst Baking Co., 196 Ga. 391, 26 S.E.2d 536 (1943).

Unfair Competition

1. In General

The general purpose of the law controlling trade names and unfair competition is the prevention of fraudulent interference with rights of the lawful holder of a trade name and protection of the public from imposition. Thompson v. Alpine Motor Lodge, Inc., 296 F.2d 497 (5th Cir. 1961).

The basic principle of the law of unfair competition is that no one has a right to dress up his goods or business or otherwise represent the same in such a manner as to deceive an intending purchaser and induce him to believe he is buying the goods of another, and that no one has the right to avail himself of another's favorable reputation in order to sell his own goods. Thompson v. Alpine Motor Lodge, Inc., 296 F.2d 497 (5th Cir. 1961).

The good will and reputation of a business is as much an asset as its physical properties, and it may as well be the subject of a fraudulent encroachment by an infringer. Kay Jewelry Co. v. Kapiloff, 204 Ga. 209, 49 S.E.2d 19 (1948).

An encroachment on the business of another may be made without direct market competition. Gordy v. Dunwody, 209 Ga. 627, 74 S.E.2d 886 (1953), later appeal, 210 Ga. 810, 83 S.E.2d 7 (1954).

The words "encroach upon the business of a trader" cannot be said to limit the equitable relief available under this section to those in direct and actual market competition with an alleged infringer or to those cases where it is shown that there has been an actual diversion of trade from one business to another. Kay Jewelry Co. v. Kapiloff, 204 Ga. 209, 49 S.E.2d 19 (1948).

2. Confusing Similarity

Similarity must confuse the public.

- Although the rights in a trade name are exclusive within certain geographical limits, this section does not create rights good against anyone, anywhere. The outer limits are set by the requirement that the plaintiff must show a similarity that is confusing to the public. Thompson v. Alpine Motor Lodge, Inc., 296 F.2d 497 (5th Cir. 1961).

While geographical names and words which are merely descriptive are not generally the subject of exclusive appropriation as trade-marks or trade-names, such names and words when used so long and exclusively by a trader, manufacturer, or producer that they are generally understood to designate his business or merchandise, may acquire a secondary signification or meaning indicative not only of the place of manufacture, but of the name of the manufacturer or producer, or of the character of the product, so that the name or title thus employed, including the geographical name and descriptive words, may be the subject of protection against unfair competition in trade, and authorize equity to enjoin a newcomer competitor from the appropriation and use of a trade-name or trade-mark bearing such resemblances to those of the pioneer as to be likely to produce uncertainty and confusion, and to pass off the goods or business of one as those of the other. Womble v. Parker, 208 Ga. 378, 67 S.E.2d 133 (1951).

Unless it appears that there is or will probably be a deception of ordinary buyers and the general public into thinking that the goods or business of one is the business or goods of another and thus bring about the sale of one man's goods as the goods of the other, the case is damnum absque injuria for which no action lies. Atlanta Paper Co. v. Jacksonville Paper Co., 184 Ga. 205, 190 S.E. 777 (1937).

An infringement upon the real name or trade-name of an individual or corporation is such a colorable imitation of the name that the general public, in the exercise of ordinary care, might think that it is the name of the individual or corporation first appropriating the same. Multiple Listing Serv., Inc. v. Metropolitan Multi-List, Inc., 223 Ga. 837, 159 S.E.2d 52 (1968), later appeal, 225 Ga. 129, 166 S.E.2d 356 (1969).

Actual confusion.

- Promoter presented sufficient evidence of the strength of the promoter's marks and of actual confusion amongst the relevant consumer class to avoid summary judgment, and the appellate court reversed the district court's grant of summary judgment for the group and remanded for trial on the claims of infringement under the Lanham Act, 15 U.S.C. § 1114, false designation of origin under 15 U.S.C. § 1125, deceptive trade practices under O.C.G.A. § 10-1-372 and unfair competition under O.C.G.A. § 23-2-55 et seq., because: (1) the car dealership promoter had shown actual confusion and the district court erred by overvaluing lack of confusion exhibited by the general public; (2) "Slash-It! Sales Event" attained federal incontestable status, so the district court erred in holding that the mark was merely descriptive and not entitled to strong protection; (3) the promoter created a disputed issue of material fact that the slasher slogans left the same impression, weighing in favor of likelihood of confusion; and (4) the similarities between the two sales allowed for the inference that a reasonable consumer could possibly attribute the products here to the same source. Caliber Auto. Liquidators, Inc. v. Premier Chrysler, Jeep, Dodge, LLC, 605 F.3d 931 (11th Cir. 2010).

Confusion found.

- Summary judgment was inappropriate as to trademark infringement liability and unfair competition claims because while the "Xylem" mark was at least suggestive, the marks were substantially similar, and the trademark holder documented over 100 instances of actual confusion resulting from misdirected checks, phone calls, faxes, and emails, the court could not find that no reasonable juror would find there was no confusion created by the accused infringer's use of the Xylem name and mark. ITT Corp. v. Xylem Group, LLC, F. Supp. 2d (N.D. Ga. Aug. 5, 2013).

3. Proof

A. In General

Grant of equitable relief notwithstanding absence of evidence of actual unfair competition authorized.

- It is not essential, as a prerequisite to the granting of equitable relief in an action for infringement of a trade name, that actual and direct market competition between the litigants be shown, and that the test as to whether equitable relief is available, should not be limited to those cases where it is shown that there has been an actual diversion of trade from one business to another. Kay Jewelry Co. v. Kapiloff, 204 Ga. 209, 49 S.E.2d 19 (1948).

The early common-law rule, and the rule still maintained in some jurisdictions, has been to the effect that there must be shown actual or direct competition between the litigants as an essential prerequisite to relief in an action for infringement of a trade name or unfair trade competition. Under this view, the exclusive test is whether there is a diversion of trade from one business to another, and injury to the good will and reputation of the original user of the trade name, or other injuries as contemplated by the theories of relief afford no basis for equitable relief. Under the modern view, the emphasis is no longer on direct and actual market competition, or diversion of trade from one business to another, but rather on the injury suffered by the complaining party and the public from the confusion resulting from the infringer's acts. Kay Jewelry Co. v. Kapiloff, 204 Ga. 209, 49 S.E.2d 19 (1948).

Diversion of trade and the attendant direct loss of sales is not the only injury that may result from infringement of a trade name, but other injuries would necessarily follow, such as an injury to the complaining party's reputation and good will. Kay Jewelry Co. v. Kapiloff, 204 Ga. 209, 49 S.E.2d 19 (1948).

Plaintiff's established infringement of trade name warranting injunction.

- Plaintiffs made requisite showing that trade name reacquired upon foreclosure of their security interest had acquired such a secondary meaning and that defaulting buyers knowingly had adopted a confusingly similar name, which had in fact confused plaintiffs' former customers, thus entitling plaintiffs to injunction. Reis v. Ralls, 250 Ga. 721, 301 S.E.2d 40 (1983).

B. "Passing Off" Rule

The "passing off" rule is sufficient to afford a test as to whether there is unfair competition. The test under this rule is whether the goods or business of one are in fact "passed off" as the goods or business of another, and it has been said, in cases between litigants in actual and direct market competition, that nothing less than such conduct will constitute unfair competition. Kay Jewelry Co. v. Kapiloff, 204 Ga. 209, 49 S.E.2d 19 (1948).

Any conduct, the nature and probable tendency and effect of which is to deceive the public so as to pass off the goods or business of one person as and for the goods or business of another, constitutes actionable unfair competition. The essence thereof consists in the sale of the goods of one manufacturer or vendor for those of another. Atlanta Paper Co. v. Jacksonville Paper Co., 184 Ga. 205, 190 S.E. 777 (1937).

C. Intent to Deceive

Intent to deceive public as basis of unfair competition.

- Any conduct, the nature and probable tendency and effect of which is to deceive the public so as to pass off the goods or business of one person as and for the goods or business of another, constitutes actionable unfair competition. Thompson v. Alpine Motor Lodge, Inc., 296 F.2d 497 (5th Cir. 1961).

In Georgia, to have a word or words claimed as a trade mark protected by injunction from use by another, it should appear that the defendant's use of them was with intent to deceive or mislead the public. Atlanta Paper Co. v. Jacksonville Paper Co., 184 Ga. 205, 190 S.E. 777 (1937).

Relief under this section depends upon showing of intent to deceive. However, this intent may be presumed if encroachment is done with knowledge of the prior right. Giant Mart Corp. v. Giant Disct. Foods, Inc., 247 Ga. 775, 279 S.E.2d 683 (1981).

Words, acts and conduct prove intent, and are the usual and ordinary means adopted by courts of justice to establish it. Thompson v. Alpine Motor Lodge, Inc., 296 F.2d 497 (5th Cir. 1961).

Although intent must be found to warrant an injunction, when it comes to finding intent courts look to the effect of a defendant's "words, acts and conduct" and ask the objective questions of whether the plaintiff held an exclusive right to the trade mark or name and whether the defendant encroached upon it. Thompson v. Alpine Motor Lodge, Inc., 296 F.2d 497 (5th Cir. 1961).

Injunctive relief cannot be grounded on this section if the court makes no finding of intent to deceive. Giant Mart Corp. v. Giant Disct. Foods, Inc., 247 Ga. 775, 279 S.E.2d 683 (1981).

Intent may be presumed if encroachment is done with knowledge of the prior right. Giant Mart Corp. v. Giant Disct. Foods, Inc., 247 Ga. 775, 279 S.E.2d 683 (1981).

Knowing and willing participant in alteration of cellular telephones.

- Because plaintiff cellular telephone trademark holder's complaint properly alleged that defendant competitor was a knowing and willing participant in an enterprise that bought the holder's phones in bulk then altered the phones to circumvent prepaid airtime then resold those phones under the holder's marks, the complaint properly stated claims for unfair competition and deceptive trade practices. Tracfone Wireless, Inc. v. Zip Wireless Prods., 716 F. Supp. 2d 1275 (N.D. Ga. 2010).

RESEARCH REFERENCES

Am. Jur. 2d.

- 27 Am. Jur. 2d, Equity, § 20. 37 Am. Jur. 2d, Fraud and Deceit, § 257.

23A Am. Jur. Pleading and Practice Forms, Trademarks and Tradenames, § 78.

C.J.S.

- 30 C.J.S., Equity, § 48.

ALR.

- Protection of business or trading corporation against use of same or similar name by another corporation, 115 A.L.R. 1241.

Doctrine of secondary meaning in the law of trademarks and of unfair competition, 150 A.L.R. 1067.

Use of "family name" by corporation as unfair competition, 72 A.L.R.3d 8.

23-2-56. Consummation of fraud.

Fraud may be consummated by signs or tricks, or through agents employed to deceive, or by any other unfair way used to cheat another.

(Orig. Code 1863, § 3107; Code 1868, § 3119; Code 1873, § 3176; Code 1882, § 3176; Civil Code 1895, § 4028; Civil Code 1910, § 4625; Code 1933, § 37-705.)

JUDICIAL DECISIONS

Complaint sufficiently set forth fraud allegations.

- Trial court erred by dismissing the plaintiff's complaint for failure to state a claim because the plaintiff pled viable claims for fraud, negligent misrepresentation, and civil racketeering based on the defendant filing a medical lien seeking full chargemaster rate or sticker price of the defendant's medical procedures, which did not represent a reasonable charge for the treatment received with the intent to collect more than a reasonable charge for the services rendered to the plaintiff. Clouthier v. Medical Center of Central Georgia, Inc., 351 Ga. App. 883, 833 S.E.2d 584 (2019).

Post-nuptial agreement procured by fraud.

- After the husband engaged counsel to draw up a formal post-nuptial agreement, and the husband moved to enforce the agreement when the wife filed for divorce, the post-nuptial agreement was unenforceable as the wife testified that the wife signed the agreement because the husband represented to the wife that, if the wife signed the agreement, the husband would understand that the wife loved the husband, and the husband would tear up the agreement; the husband procured the wife's signature on the agreement under the pretense that the agreement would never be enforced and, in fact, that the agreement would be destroyed, and the evidence was sufficient to establish the existence of fraud in procuring the agreement. Murray v. Murray, 299 Ga. 703, 791 S.E.2d 816 (2016).

Cited in Floyd v. Boss, 174 Ga. 544, 163 S.E. 606 (1932); Jenkins v. Cobb, 47 Ga. App. 456, 170 S.E. 698 (1933); Morton v. Wallace, 177 Ga. 856, 171 S.E. 720 (1933); Hogg v. Hogg, 206 Ga. 691, 58 S.E.2d 403 (1950); Treadwell v. Treadwell, 216 Ga. 156, 115 S.E.2d 535 (1960); Gaines v. Watts, 224 Ga. 321, 161 S.E.2d 830 (1968); Patterson v. Castellaw, 119 Ga. App. 712, 168 S.E.2d 838 (1969); Watts v. Gaines, 226 Ga. 503, 175 S.E.2d 871 (1970); Ringer v. Lockhart, 240 Ga. 82, 239 S.E.2d 349 (1977); Georgia Farm Bureau Mut. Ins. Co. v. First Fed. Sav. & Loan Ass'n, 152 Ga. App. 16, 262 S.E.2d 147 (1979); McGaha v. Kwon, 161 Ga. App. 216, 288 S.E.2d 289 (1982).

RESEARCH REFERENCES

Am. Jur. 2d.

- 27 Am. Jur. 2d, Equity, § 20. 37 Am. Jur. 2d, Fraud and Deceit, § 12 et seq.

C.J.S.

- 30 C.J.S., Equity, § 48. 37 C.J.S., Fraud, § 1 et seq.

ALR.

- False representations in business transaction as within statute relating to 'confidence game,', 9 A.L.R. 1527, 56 A.L.R. 727.

Use of mails for sale of articles having superstitious associations, 34 A.L.R. 1292.

Genuine making of instrument for purpose of defrauding as constituting forgery, 41 A.L.R. 229, 46 A.L.R. 1529, 51 A.L.R. 568.

23-2-57. Proving existence of fraud.

Fraud may not be presumed but, being in itself subtle, slight circumstances may be sufficient to carry conviction of its existence.

(Orig. Code 1863, § 2715; Code 1868, § 2709; Code 1873, § 2751; Code 1882, § 2751; Civil Code 1895, § 4029; Civil Code 1910, § 4626; Code 1933, § 37-706.)

JUDICIAL DECISIONS

General Consideration

This section is particularly applicable in family transactions. Mattox v. West, 194 Ga. 310, 21 S.E.2d 428 (1942).

This section is peculiarly applicable in transactions between husband and wife. Strobel v. Gormley, 50 Ga. App. 358, 178 S.E. 192 (1935).

Section not applicable to suits to set aside judgments.

- Rule that fraud may be shown by slight circumstances, contained in this section, is not applicable to suits to set aside judgments. Leventhal v. Citizens & S. Nat'l Bank, 249 Ga. 390, 291 S.E.2d 222 (1982).

Fraud may not be presumed, and while it may be proved by circumstances, it must nevertheless be proved. Adams v. Higginbotham, 194 Ga. 292, 21 S.E.2d 616 (1942); Kazakos v. Soteres, 120 Ga. App. 258, 170 S.E.2d 50 (1969); Henry v. Allstate Ins. Co., 129 Ga. App. 223, 199 S.E.2d 338 (1973).

Though a transaction between near relatives is to be scanned closely, yet some proof of its fraudulent nature must appear, and until that proof appears this rule has no application. Kamlapat v. Purvis-Wade Carpet Mills, 112 Ga. App. 781, 146 S.E.2d 138 (1965).

Circumstances creating a mere suspicion are not sufficient to prove fraud. Watson v. Brown, 186 Ga. 728, 198 S.E. 732 (1938); Kamlapat v. Purvis-Wade Carpet Mills, 112 Ga. App. 781, 146 S.E.2d 138 (1965).

Fraud is "in itself subtle," and circumstances apparently trivial or almost inconclusive, if separately considered, may by their number and joint operation be sufficient to constitute conclusive proof. Grainger v. Jackson, 122 Ga. App. 123, 176 S.E.2d 279 (1970); McNeil v. Cowart, 186 Ga. App. 411, 367 S.E.2d 291 (1988); Lloyd v. Kramer, 233 Ga. App. 372, 503 S.E.2d 632 (1998).

Transfers of assets before death.

- Evidence was sufficient to sustain the jury's verdict under the plaintif's theory of fraudulent transfer and civil conspiracy as some evidence authorized the jury to find that a deed conveying the property owner's sole interest to the real property to the owner and one defendant as joint tenants with right of survivorship without any money exchanged prior to death was to evade the plaintiff before a promissory note was paid. Bloom v. Camp, 336 Ga. App. 891, 785 S.E.2d 573 (2016).

Fraud in post-nuptial agreements.

- After the husband engaged counsel to draw up a formal post-nuptial agreement, and the husband moved to enforce the agreement when the wife filed for divorce, the post-nuptial agreement was unenforceable as the wife testified that the wife signed the agreement because the husband represented to the wife that, if the wife signed the agreement, the husband would understand that the wife loved the husband, and the husband would tear up the agreement; the husband procured the wife's signature on the agreement under the pretense that the agreement would never be enforced and, in fact, that the agreement would be destroyed, and the evidence was sufficient to establish the existence of fraud in procuring the agreement. Murray v. Murray, 299 Ga. 703, 791 S.E.2d 816 (2016).

Cited in Haas & Howell v. Godby, 33 Ga. App. 218, 125 S.E. 897 (1924); Carter v. Moody, 160 Ga. 849, 129 S.E. 163 (1925); Boyles v. Morgan, 168 Ga. 804, 149 S.E. 149 (1929); Citizens & S. Nat'l Bank v. Kontz, 185 Ga. 131, 194 S.E. 536 (1937); Dwight v. Acme Lumber & Supply Co., 189 Ga. 473, 6 S.E.2d 586 (1939); Durham Iron Co. v. Durham, 62 Ga. App. 361, 7 S.E.2d 804 (1940); Horton v. Johnson, 192 Ga. 338, 15 S.E.2d 605 (1941); Quinton v. Peck, 195 Ga. 299, 24 S.E.2d 36 (1943); Jones v. Hogans, 197 Ga. 404, 29 S.E.2d 568 (1944); Scott v. Gillis, 202 Ga. 220, 43 S.E.2d 95 (1947); Boney v. Smallwood, 202 Ga. 411, 43 S.E.2d 271 (1947); Hinchcliffe v. Pinson, 87 Ga. App. 526, 74 S.E.2d 497 (1953); Rountree v. Davis, 90 Ga. App. 223, 82 S.E.2d 716 (1954); Tillman v. Byrd, 211 Ga. 918, 89 S.E.2d 479 (1955); Griffin v. Kelley, 227 F.2d 258 (5th Cir. 1955); Sutton v. McMillan, 213 Ga. 90, 97 S.E.2d 139 (1957); Leverett v. Awnings, Inc., 97 Ga. App. 811, 104 S.E.2d 686 (1958); Walker v. General Ins. Co., 214 Ga. 758, 107 S.E.2d 836 (1959); Powell v. Grimes, 223 Ga. 56, 153 S.E.2d 434 (1967); Patterson v. Castellaw, 119 Ga. App. 712, 168 S.E.2d 838 (1969); Parker v. Spurlin, 227 Ga. 183, 179 S.E.2d 251 (1971); Darden v. Darden, 227 Ga. 647, 182 S.E.2d 480 (1971); W.H. Mulherin Constr. Co. v. Betterton, 135 Ga. App. 223, 217 S.E.2d 454 (1975); Clark v. Aenchbacher, 143 Ga. App. 282, 238 S.E.2d 442 (1977); Tolar Constr. Co. v. GAF Corp., 154 Ga. App. 127, 267 S.E.2d 635 (1980); Bob Maddox Dodge, Inc. v. McKie, 155 Ga. App. 263, 270 S.E.2d 690 (1980); Rose Mill Homes, Inc. v. Michel, 155 Ga. App. 808, 273 S.E.2d 211 (1980); Sanders v. Looney, 247 Ga. 379, 276 S.E.2d 569 (1981); Marriott Corp. v. American Academy of Psychotherapists, Inc., 157 Ga. App. 497, 277 S.E.2d 785 (1981); Everson v. Franklin Disct. Co., 248 Ga. 811, 285 S.E.2d 530 (1982); McGaha v. Kwon, 161 Ga. App. 216, 288 S.E.2d 289 (1982); Plough Broadcasting Co. v. Dobbs, 163 Ga. App. 264, 293 S.E.2d 526 (1982); Marshall v. York, 165 Ga. App. 795, 302 S.E.2d 711 (1983); Lenny's, Inc. v. Allied Sign Erectors, Inc., 170 Ga. App. 706, 318 S.E.2d 140 (1984); Macon ChryslerPlymouth v. Sentell, 179 Ga. App. 754, 347 S.E.2d 639 (1986); Jackson v. Paces Ferry Dodge, Inc., 183 Ga. App. 502, 359 S.E.2d 412 (1987); Graham v. Hogan, 185 Ga. App. 842, 366 S.E.2d 219 (1988); Harden v. Vertex Assocs., 226 Ga. App. 322, 487 S.E.2d 12 (1997); Chandler v. MVM Constr., Inc., 232 Ga. App. 385, 501 S.E.2d 533 (1998); ReMax North Atlanta v. Clark, 244 Ga. App. 890, 537 S.E.2d 138 (2000).

Proving Existence of Fraud

Proof of fraud generally.

- Since proof of fraud is seldom if ever possible by direct evidence, recourse to circumstantial evidence is a necessity, and there is no kind of action wherein it can be held with greater reason that the fact in issue may be inferred from other facts proved. Durrence v. Durrence, 224 Ga. 620, 163 S.E.2d 740 (1968).

Rarely, if ever, can a fraudulent intent be shown by direct proof, and where transactions between relatives are under review, slight circumstances are often sufficient to induce belief on the part of the jury that there was fraud between the parties. Bucher v. Murray, 212 Ga. 259, 91 S.E.2d 610 (1956).

An attack on a will as having been obtained by undue influence may be supported by a wide range of testimony, since such influence can seldom be shown except by circumstantial evidence. Thus, a confidential relation between the parties, the reasonableness or unreasonableness of the disposition of the testator's estate, old age, or disease affecting the strength of the mind, tending to support any other direct testimony or any other proven fact or circumstance going to show the exercise of undue influence on the mind and will of the testator, are relevant. While the quantity of influence varies with the circumstances of each case, according to the relations existing between the parties and the strength or weakness of mind of the testator, the amount of influence necessary to dominate a mind impaired by age or disease may be decidedly less than that required to control a strong mind. Bowman v. Bowman, 205 Ga. 796, 55 S.E.2d 298 (1949).

According to the relations existing between the parties and the strength or weakness of mind of a testator, the amount of influence necessary to dominate a mind impaired by age or disease may be decidedly less than that required to control a strong mind. Fowler v. Fowler, 197 Ga. 53, 28 S.E.2d 458 (1943).

Where the grantor of an "improvident or profuse" deed was not wholly incapable of entering into such a contract, but was possessed of little or no will power and was greatly under the influence of the nephew to whom the deed was executed, an inference of fraud could have been drawn by the jury, and, the evidence for the defendant grantee not being such as to rebut the inference as a matter of law, the court was authorized to charge the jury upon the subject of fraud. Stanley v. Stanley, 179 Ga. 135, 175 S.E. 496 (1934).

While the broad statement that the conduct of the defendant constituted fraud would be insufficient without an allegation of circumstances from which the court might determine whether the pleader reached the right conclusion in saying that a fraud was committed, still it is not essential to state more facts than may be necessary to carry conviction of the existence of fraud. Wall v. Wall, 176 Ga. 757, 168 S.E. 893 (1933).

"Great inadequacy of consideration, joined with great disparity of mental ability in contracting a bargain, may justify equity in setting aside a sale or other contract." Under that principle, a deed may be set aside in equity, on proof to the two elements stated, "without proof of anything else" as to fraud. A fortiori, the same rule would apply with at least equal force in case of such mental disparity and a total absence of consideration. Stow v. Hargrove, 203 Ga. 735, 48 S.E.2d 454 (1948).

The evidence showing that a 75-year old woman, uneducated, with neither the ability to read nor write, was dealing with an experienced businessman under circumstances indicating a fraud establishes that there was an imbalance or "disparity of mental ability in contracting a bargain." Top Quality Homes, Inc. v. Jackson, 231 Ga. 844, 204 S.E.2d 600 (1974).

Circumstances apparently trivial or almost inconclusive, if separately considered, may by their number and joint operation, especially when corroborated by moral coincidences, be sufficient to constitute conclusive proof. Kelly v. Cubbedge, 143 Ga. App. 830, 240 S.E.2d 162 (1977).

Proof of fraud is seldom, if ever, susceptible of direct proof; thus, recourse to circumstantial evidence usually is required. Brown v. Mann, 237 Ga. App. 247, 514 S.E.2d 922 (1999).

In every case slight circumstances must be considered, and may be sufficient to establish the existence of fraud, in transactions between husband and wife fraud might be so completely concealed that creditors could not expose it, and in order that the public might not suffer from such concealment, the law imposes upon the husband and wife the duty of affirmatively establishing their good faith when creditors attack such transactions for fraud. Arrington v. Awbrey, 190 Ga. 193, 8 S.E.2d 648 (1940).

Where transactions between relatives are under review, slight circumstances are often sufficient to induce belief on the part of a jury that there was fraud or collusion between the parties, and authorize them to find against the claimant and in favor of the plaintiff in fi. fa. A claimant must, generally speaking, come into court with hands unstained by any suggestion of collusion with the defendant in fi. fa. to defeat or defraud the creditors of the latter; and a claimant who fails to make a clear showing of both legal and moral right to the property in dispute must generally suffer the loss thereof at the hands of a jury, if there be any circumstances in proof, even though slight, which may be sufficient to authorize the inference of fraud or collusion. Scruggs v. Blackshear Mfg. Co., 49 Ga. App. 205, 174 S.E. 732 (1934).

Since fraud is inherently subtle, slight circumstances of fraud may be sufficient to establish a proper case. Brown v. Mann, 237 Ga. App. 247, 514 S.E.2d 922 (1999).

Evidence of fraud to be of "clear, unequivocal, and decisive" quality.

- In a diversity based suit in equity to set aside or deny res judicata effect to a prior state court judgment on the grounds of fraud and mutual mistake, the plaintiffs had to prove their claims by something more than a mere preponderance of the evidence. The evidence had to preponderate in the plaintiffs' favor, but it also had to be of "clear, unequivocal, and decisive" quality. Ahrens v. Katz, 595 F. Supp. 1108 (N.D. Ga. 1984).

Sufficient evidence to create jury issue as to fraud.

- See Gibbs v. Jim Wilson Chevrolet Co., 161 Ga. App. 171, 288 S.E.2d 264 (1982); Horne v. Claude Ray Ford Sales, Inc., 162 Ga. App. 329, 290 S.E.2d 497 (1982); Minuteman Press Int'l, Inc. v. Hedrick, 167 Ga. App. 453, 306 S.E.2d 718 (1983).

Where the evidence established that at time automobile was purchased by seller of automobile the certificate of ownership listed 14,229 miles as the car's mileage, that when it was sold by seller to buyer, the odometer read 14,179 miles, and when the buyers test-drove the car the odometer read approximately 7,000 miles, there is considerable conflict regarding the actual mileage of the car, and it is the province of the jury to determine whether seller altered or knew of the alteration of the odometer. Joseph Charles Parrish, Inc. v. Hill, 173 Ga. App. 97, 325 S.E.2d 595 (1984).

Jury could have found that at least some of the numerous repairs a buyer made to a house after discharging a contractor were to correct defects the contractor passively concealed that the buyer could not have reasonably discerned. Since O.C.G.A. § 23-2-57 provides that slight circumstances may be sufficient to prove fraud, the contractor was not entitled to a directed verdict in the contractor's favor on the buyer's fraud claim. Lumpkin v. Deventer N. Am., Inc., 295 Ga. App. 312, 672 S.E.2d 405 (2008).

Trial court erred in granting summary judgment to a surety because jury questions existed as to whether two subcontractors were the same company, whether an owner acted as an agent on behalf of one of those subcontractors when the owner procured the bonds, and whether the bonds were intentionally written fraudulently based on admissions made by counsel for the surety during the hearing. Choate Constr. Co. v. Auto-Owners Ins. Co., 318 Ga. App. 682, 736 S.E.2d 443 (2012).

Evidence insufficient to go to the jury.

- In taxpayers' claim against a purchaser's assignee for rescission of a redemption agreement, the facts did not support rescission. The assignee's attorney did not defraud them or conceal any facts, but advised them to hire an attorney, and any failure to advise them of their legal rights was an opinion as to a matter of law and not a material fact. Boyd v. JohnGalt Holdings, LLC, 294 Ga. 640, 755 S.E.2d 675 (2014).

Pleading and Practice

Slight evidence of fraud and undue influence may authorize the jury to cancel the deed. Harper v. Harper, 229 Ga. 583, 193 S.E.2d 616 (1972).

Where the facts and circumstances shown by the evidence submitted by both parties on a motion for summary judgment are sufficient to authorize inferences as to fraudulent intent, the issue should be resolved by a jury on a trial, as there is a genuine issue of material fact. Nixon v. Brown, 225 Ga. 811, 171 S.E.2d 512 (1969).

Evidence necessary to defeat abusive litigation claim.

- In a suit for fraud, misrepresentation, and civil conspiracy allegedly arising out of a real estate transaction, and a counterclaim for abusive litigation, where the record revealed hotly contested versions of what the parties considered to have transpired in the complex real estate transaction, given that the law requires only slight circumstances to establish fraud and conspiracy, the trial judge was authorized to find as a matter of law that the plaintiffs had pierced an essential element of the defendant's abusive litigation claim and were thus entitled to the grant of summary judgment thereon. Seckinger v. Holtzendorf, 200 Ga. App. 604, 409 S.E.2d 76, cert. denied, 200 Ga. App. 897, 409 S.E.2d 76 (1991).

Whether a note or other writing was procured by fraud is a question of fact for the determination of a jury. Thompson v. Wilkins, 143 Ga. App. 739, 240 S.E.2d 183 (1977).

RESEARCH REFERENCES

Am. Jur. 2d.

- 27 Am. Jur. 2d, Equity, § 20. 37 Am. Jur. 2d, Fraud and Deceit, § 468 et seq.

Fraudulent Alteration of Odometer, 1 POF2d 677.

C.J.S.

- 30 C.J.S., Equity, § 48. 37 C.J.S., Fraud, § 94 et seq.

23-2-58. Confidential relations defined.

Any relationship shall be deemed confidential, whether arising from nature, created by law, or resulting from contracts, where one party is so situated as to exercise a controlling influence over the will, conduct, and interest of another or where, from a similar relationship of mutual confidence, the law requires the utmost good faith, such as the relationship between partners, principal and agent, etc.

(Orig. Code 1863, § 3108; Code 1868, § 3120; Code 1873, § 3177; Code 1882, § 3177; Civil Code 1895, § 4030; Civil Code 1910, § 4627; Code 1933, § 37-707.)

Cross references.

- Agency generally, Ch. 6, T. 10.

Confidential relationships for purposes of exclusion of evidence, § 24-5-501 et seq.

Law reviews.

- For annual survey article discussing wills, trusts and administration of estates, see 52 Mercer L. Rev. 481 (2000). For article, "Georgia's Law of Undue Influence in Gift-Making," see 5 Ga. St. B.J. 12 (2000). For article, "Common Fact Patterns of Stock Broker Fraud and Misconduct," see 7 Ga. St. B.J. 14 (2002). For survey article on wills, trusts, guardianships, and fiduciary administration for the period from June 1, 2002 to May 31, 2003, see 55 Mercer L. Rev. 459 (2003). For annual survey of law of wills, trusts, guardianships, and fiduciary administration, see 56 Mercer L. Rev. 457 (2004). For survey article on wills, trusts, guardianships, and fiduciary administration, see 59 Mercer L. Rev. 447 (2007). For article, "Holmes v. Grubman: The Supreme Court of Georgia Balances Financial Advisor Common Law Liability and Investor Protection," see 16 (No. 5) Ga. St. B.J. 20 (2011). For article, "What Duty of Care Does a Homeowner Association Owe Its Members?," see 22 Ga. St. Bar J. 19 (Dec. 2016). For note, "The Great Escape: How One Plaintiff's Sidestep of a Mandatory Arbitration Clause Was Applied to a Class in Bickerstaff v. SunTrust Bank," see 68 Mercer L. Rev. 539 (2017).

JUDICIAL DECISIONS

General Consideration

This section is not applicable to confidential relations for the purposes of exclusion of evidence. Guy v. State, 138 Ga. App. 11, 225 S.E.2d 492 (1976).

Because there was no evidence of a confidential relationship between a manufacturer and a broker beyond the contractual obligation for the broker to post bonds on behalf of the manufacturer, and the broker did not act on the manufacturer's behalf in any business transactions and was obligated only to secure the posting of the needed bonds, it was nothing more than an arms-length transaction, and the trial court's charge to the jury on agency and fiduciary relationships was error. Aon Risk Servs. v. Commercial & Military Sys. Co., 270 Ga. App. 510, 607 S.E.2d 157 (2004).

Confidential relationship distinguished from trade secret.

- An item may be considered confidential in the context of a business relationship without rising to the level of a trade secret. A confidential relationship is distinguished by the expectations of the parties involved, while a secret is identified through rigorous examination of the information sought to be protected. Roboserve, Ltd. v. Tom's Foods, Inc., 931 F.2d 789 (11th Cir. 1991).

There is never a presumption of confidential relationship. The burden is upon the party asserting same to establish its existence. United States ex rel. Meva Corp. v. Northeast Constr. Co., 298 F. Supp. 1135 (S.D. Ga. 1969).

There is never a presumption of a confidential relationship. The burden is upon the party asserting the same to establish its existence. Anderson Chem. Co. v. Portals Water Treatment, Inc., 768 F. Supp. 1568 (M.D. Ga. 1991), aff'd in part, rev'd in part, 971 F.2d 756 (11th Cir. 1992).

A confidential relationship does not exist prior to the contract or legal relationship creating it, unless it exists for other reasons. Cole v. Cates, 113 Ga. App. 540, 149 S.E.2d 165 (1966).

Whether or not the confidential relationship of partners applies to transactions outside of the scope of the partnership, it does not apply where it appears that the partnership was not in existence at the time of the transaction under consideration. Hancock v. Gunter, 195 Ga. 646, 24 S.E.2d 772 (1943).

Fiduciary relationship must exist.

- In order for this Code section to be applicable, a definite fiduciary relationship must exist between plaintiff and the other party. Anderson Chem. Co. v. Portals Water Treatment, Inc., 768 F. Supp. 1568 (M.D. Ga. 1991), aff'd in part, rev'd in part, 971 F.2d 756 (11th Cir. 1992).

Summary judgment was properly granted to the defendants on the plaintiff's breach of fiduciary duties in a partnership venture claim because the plaintiff never argued during the summary judgment phase that a confidential relationship existed between the parties as partners. Laymac v. Kushner, 349 Ga. App. 727, 824 S.E.2d 768 (2019), cert. denied, 2019 Ga. LEXIS 871 (Ga. 2019).

Aiding and abetting breach of fiduciary duty.

- Georgia law does not recognize the tort of aiding and abetting a breach of fiduciary duty, and a Georgia court faced with the issue would not be likely to create such a cause of action since the imposition of aider and abettor liability for such breaches essentially extends fiduciary obligations beyond the scope of the confidential or special relationship upon which these duties are based. Munford, Inc. v. Munford, 188 Bankr. 860 (N.D. Ga. 1994), aff'd, 97 F.3d 449 (11th Cir. 1996), 97 F.3d 456 (11th Cir. 1996), aff'd on other grounds, 98 F.3d 604 (11th Cir. 1996).

Party to confidential relationship may rely upon representations of other party.

- The reason for the rule that a party to a confidential or fiduciary relationship may rely upon representations made is that by the very terms or circumstances of the arrangement of dealings between the parties there rests upon the party acting for another the duty of protecting and furthering the interests of the person for whom he is acting, not those of himself or of any one else. The person so placing trust in him by virtue of this confidential relationship is justified by the situation of this interest in believing that the other party will act fairly and make true representations. Dover v. Burns, 186 Ga. 19, 196 S.E. 785 (1938).

And the required degree of care to detect fraud is much less where there is a confidential relationship between two parties than in cases where parties deal at arm's length. United States ex rel. Meva Corp. v. Northeast Constr. Co., 298 F. Supp. 1135 (S.D. Ga. 1969).

Failure to protect confidential information.

- Dismissal of the plaintiff's cause of action against a state agency for disclosure of private information for failure to state a cause of action was affirmed because in alleging that the plaintiff gave the agency personal information as a prerequisite to receiving services, with the expectation that it would protect the plaintiff's information, the plaintiff failed to assert in the complaint facts showing that the agency owed the plaintiff a confidential duty to protect that information. McConnell v. Department of Labor, 337 Ga. App. 457, 787 S.E.2d 794 (2016).

Therefore, ordinary diligence not required where confidential relationship exists. The numerous decisions to the effect that a party who can read must read, and that fraud which will relieve a party who can read must be such as prevents him from reading, apply to situations where the parties are dealing with each other at arms length, and have no application to a situation where the confidential and fiduciary relation of principal and agent is involved. Harrison v. Harrison, 214 Ga. 393, 105 S.E.2d 214 (1958); Allen v. Sanders, 176 Ga. App. 647, 337 S.E.2d 428 (1985).

Bankruptcy.

- This Code section does not create the kind of trust necessary to create a fiduciary relationship under the federal bankruptcy law. Blashke v. Standard, 123 Bankr. 444 (Bankr. N.D. Ga. 1991).

Cited in Boyles v. Morgan, 168 Ga. 804, 149 S.E. 149 (1929); White v. Dotson, 41 Ga. App. 436, 153 S.E. 233 (1930); Herrington v. Herrington, 42 Ga. App. 126, 155 S.E. 51 (1930); Allen v. Southern Ins. Sec. Corp., 54 Ga. App. 316, 187 S.E. 714 (1936); Blount v. Dean, 187 Ga. 494, 1 S.E.2d 653 (1939); Armour v. Lunsford, 192 Ga. 598, 15 S.E.2d 886 (1941); Manning v. Wills, 193 Ga. 82, 17 S.E.2d 261 (1941); Dorsey v. Green, 204 Ga. 453, 49 S.E.2d 901 (1948); Larkins v. Boyd, 205 Ga. 69, 52 S.E.2d 307 (1949); Hogg v. Hogg, 206 Ga. 691, 58 S.E.2d 403 (1950); Childs v. Shepard, 213 Ga. 381, 99 S.E.2d 129 (1957); Dixie Belle Mills, Inc. v. Specialty Mach. Co., 217 Ga. 104, 120 S.E.2d 771 (1961); Johnson v. Hutchinson, 217 Ga. 489, 123 S.E.2d 551 (1962); Rushing v. Bashlor, 219 Ga. 119, 131 S.E.2d 775 (1963); Brogdon v. Purvis, 220 Ga. 28, 136 S.E.2d 719 (1964); Fuller v. Dillon, 220 Ga. 36, 136 S.E.2d 733 (1964); Weddle v. Webb, 224 Ga. 674, 164 S.E.2d 129 (1968); Bloodworth v. Bloodworth, 224 Ga. 717, 164 S.E.2d 823 (1968); Parker v. Spurlin, 227 Ga. 183, 179 S.E.2d 251 (1971); Tingle v. Harvill, 228 Ga. 332, 185 S.E.2d 539 (1971); Davis v. Carpenter, 157 Ga. App. 875, 278 S.E.2d 758 (1981); McDaniel v. Dykes, 159 Ga. App. 514, 284 S.E.2d 30 (1981); Giordano v. Federal Land Bank, 163 Ga. App. 390, 294 S.E.2d 634 (1982); Pope v. Kem Mfg. Corp., 249 Ga. 868, 295 S.E.2d 290 (1982); Westminster Properties, Inc. v. Atlanta Assocs., 250 Ga. 841, 301 S.E.2d 636 (1983); Schwartz v. Rennie, 185 Ga. App. 638, 365 S.E.2d 159 (1988); Kienel v. Lanier, 190 Ga. App. 201, 378 S.E.2d 359 (1989); Gale v. Hayes Microcomputer Prods., Inc., 192 Ga. App. 30, 383 S.E.2d 590 (1989); Arford v. Blalock, 199 Ga. App. 434, 405 S.E.2d 698 (1991); Wilensky v. Blalock, 262 Ga. 95, 414 S.E.2d 1 (1992); Saffar v. Chrysler First Bus. Credit Corp., 215 Ga. App. 239, 450 S.E.2d 267 (1994); Ledbetter v. Ledbetter, 222 Ga. App. 858, 476 S.E.2d 626 (1996); Longino v. Bank of Ellijay, 228 Ga. App. 37, 491 S.E.2d 81 (1997); Parello v. Maio, 268 Ga. 852, 494 S.E.2d 331 (1998); Conner v. Hart, 252 Ga. App. 92, 555 S.E.2d 783 (2001); Duncan v. Moore, 275 Ga. 656, 571 S.E.2d 771 (2002); Douglas v. Bigley, 278 Ga. App. 117, 628 S.E.2d 199 (2006); Hendry v. Wells, 286 Ga. App. 774, 650 S.E.2d 338 (2007); Saye v. Unumprovident Corp., F. Supp. 2d (N.D. Ga. Aug. 9, 2007).

Confidential Relations Generally

1. In General

This section does not attempt to comprehensively enumerate the cases wherein the relation of mutual confidence is present. The showing of a relationship in fact which justifies the reposing of confidence by one party in another is all the law requires. Cochran v. Murrah, 235 Ga. 304, 219 S.E.2d 421 (1975); Vitner v. Funk, 182 Ga. App. 39, 354 S.E.2d 666 (1987).

The relationships listed as examples in this section are not exclusive, as shown by the use of the abbreviation "etc." and the phrase "where one party is so situated . . ." Cochran v. Murrah, 235 Ga. 304, 219 S.E.2d 421 (1975).

This section goes beyond the strict fiduciary relations of the parties to the particular circumstances of the case. Cochran v. Murrah, 235 Ga. 304, 219 S.E.2d 421 (1975).

Although some confidential relationships are created by law and contract (e.g., partners), others may be created by the facts of the particular case. Cochran v. Murrah, 235 Ga. 304, 219 S.E.2d 421 (1975).

In addition to partners and principals and agents, it has been held that confidential relationships may exist between husband and wife, brother and sister, and even banks and creditors of a depositor. Cochran v. Murrah, 235 Ga. 304, 219 S.E.2d 421 (1975).

The mere fact that one reposes trust and confidence in another does not create a confidential relationship. See Thomas v. Eason, 208 Ga. 822, 69 S.E.2d 729 (1952); Lewis v. Alderman, 117 Ga. App. 855, 162 S.E.2d 440 (1968); United States ex rel. Meva Corp. v. Northeast Constr. Co., 298 F. Supp. 1135 (S.D. Ga. 1969); Anderson Chem. Co. v. Portals Water Treatment, Inc., 768 F. Supp. 1568 (M.D. Ga. 1991), aff'd in part, rev'd in part, 971 F.2d 756 (11th Cir. 1992); Bowen v. Hunter, Maclean, Exley & Dunn, 241 Ga. App. 204, 525 S.E.2d 744 (1999); Burgess v. Coca-Cola Co., 245 Ga. App. 206, 536 S.E.2d 764 (2000).

The fact that an unlearned and uneducated person reposes trust and confidence in another does not create a confidential relationship. Clinton v. State Farm Mut. Auto. Ins. Co., 110 Ga. App. 417, 138 S.E.2d 687 (1964).

The mere fact that the defendant had confidence in the party with whom he contracted does not constitute a confidential relationship or a "similar relationship of mutual confidence" within the meaning of this section so as to require the application of § 23-2-59. Cole v. Cates, 113 Ga. App. 540, 149 S.E.2d 165 (1966).

Allegation that defendant was a frequent visitor in the plaintiff's home and that he had been a close personal, confidential and business adviser to the plaintiff did not establish the existence of a confidential relationship between them within the meaning of this section. Charles v. Simmons, 215 Ga. 794, 113 S.E.2d 604, cert. denied, 364 U.S. 871, 81 S. Ct. 113, 5 L. Ed. 2d 93 (1960).

The fact that it is alleged that a plaintiff reposed trust and confidence in the defendant does not create a confidential relationship. In the majority of business dealings opposite parties have trust and confidence in each other's integrity, but there is no confidential relationship by this alone. This state of facts does not bring the plaintiff within the protection of this section. Dover v. Burns, 186 Ga. 19, 196 S.E. 785 (1938).

Although the plaintiffs offered evidence demonstrating that defendant was their personal friend and had conducted business with them on matters not relating to investments, this evidence is not sufficient to establish a confidential relationship between the parties so as to justify the plaintiffs reposing trust in defendant. Garland v. Advance Med. Funding L.P., 86 F. Supp. 2d 1195 (N.D. Ga. 2000).

Statements made by a corporate officer and owner to investors of a mortgage company that the officer would be obligated on each and every loan and would personally manage their money and be involved with the management of the company did not create a confidential relationship; additionally, the investors had their own financial advisor. Albee v. Krasnoff, 255 Ga. App. 738, 566 S.E.2d 455 (2002).

Factual question as to whether confidential relationship existed.

- Trial court did not err in denying the motion for summary judgment filed by a corporation's general counsel/vice-president because questions of fact existed regarding the existence of a confidential relationship between the general counsel/vice-president and the investors, which were for a jury to decide. Cushing v. Cohen, 323 Ga. App. 497, 746 S.E.2d 898 (2013).

Existence or reliance on relationship issue for jury.

- Whether a confidential relationship existed between plaintiff and his employer's agents, and whether plaintiff justifiably relied on representations regarding group insurance coverage, were questions for the jury. Capriulo v. Bankers Life Co., 178 Ga. App. 635, 344 S.E.2d 430 (1986).

A confidential relationship is distinguished by the expectations of the parties involved, while a trade secret is identified through rigorous examination of the information sought to be protected. The jury is empowered to decide whether a confidential relationship exists under the facts of a particular case. Roboserve, Ltd. v. Tom's Foods, Inc., 940 F.2d 1441 (11th Cir. 1991).

2. Specific Relationships

Attorney-client relationship.

- There was insufficient evidence to establish that the attorney for the purchaser of land was also the attorney for the sellers during the time of the transactions at issue. McLendon v. Georgia Kaolin Co., 782 F. Supp. 1548 (M.D. Ga. 1992).

Trial court erred in granting summary judgment with respect to a client's breach of fiduciary duty claim, which was not a mere duplication of the legal malpractice claim that was based on the establishment of a fiduciary, attorney-client relationship that was breached, as: (1) material fact issues remained as to whether an attorney-client relationship existed between the client and the attorney; (2) the question of legal malpractice remained an issue; and (3) the client had the right to plead alternative theories, and the jury should be permitted to decide the breach of fiduciary duty claim should they find no attorney-client relationship existed. Both v. Frantz, 278 Ga. App. 556, 629 S.E.2d 427 (2006).

Creditors' 11 U.S.C. § 523(a)(4) claim against a Chapter 13 debtor, their attorney, was dismissed for failure to state a claim, as the creditors failed to allege a contract or other agreement establishing a technical trust, but instead cited O.C.G.A. § 23-2-58, which the court held did not establish fiduciary capacity, as the statute did not designate trust property or impose trust duties. Further, none of the Georgia Rules of Professional Conduct cited by the creditors, Ga. St. Bar R. 4-102(d):1.1, 1.3, 1.6, and 1.7(a), mentioned trust property and thus, those rules were ineffective to establish fiduciary capacity for purposes of 11 U.S.C. § 523(a)(4). Crisler v. Farr (In re Farr), Bankr. (Bankr. M.D. Ga. May 18, 2011).

Attorney breached fiduciary duties to a bankruptcy debtor since the debtor's reliance on the attorney as a family attorney and the attorney's controlling influence over the debtor established an attorney-client relationship with regard to a real property transaction, and the attorney induced the debtor to execute documents which were not in the debtor's best interests and instead benefitted the attorney and other parties. Boudreaux v. Holloway (In re Holloway), Bankr. (Bankr. S.D. Ga. Mar. 31, 2015), aff'd, 2017 U.S. App. LEXIS 3359 (11th Cir. Ga. 2017).

Accountant and client.

- When a company sued its accountants for breach of fiduciary duty regarding a sale of the company's assets, summary judgment was properly granted in favor of the accountants because the evidence was insufficient to create a factual dispute as to whether the accountants exercised a controlling influence over the will, conduct, and interest of the company, as required under O.C.G.A. § 23-2-58 for a fiduciary relationship to arise. R.W. Holdco, Inc. v. Johnson, 267 Ga. App. 859, 601 S.E.2d 177 (2004).

Bank and its customers.

- There is no confidential relationship between a bank and its customers merely because the customer had advised with, relied upon, and trusted the bankers in the past. Pardue v. Bankers First Fed. Sav. & Loan Ass'n, 175 Ga. App. 814, 334 S.E.2d 926 (1985); Russell v. Barnett Banks, Inc., 241 Ga. App. 672, 527 S.E.2d 25 (1999).

The trial court correctly determined that there was no evidence of special circumstances imposing upon the bank the duties of a fiduciary in favor of borrowing petroleum companies such that summary judgment as to any claim for breach of fiduciary duty was correct. Russell Corp. v. BancBoston Fin. Co., 209 Ga. App. 660, 434 S.E.2d 716 (1993).

Trial court did not err in granting judgment on the pleadings to a bank as to a customer's claim for breach of a duty of confidentiality because the customer failed to assert in the complaint facts showing that the bank owed the customer a confidential duty or invaded the customer's privacy, and the customer did not plead any special circumstances showing that the customer had a particular relationship of trust or mutual confidence with the bank; the bank-customer relationship is not confidential. Jenkins v. Wachovia Bank, N.A., 314 Ga. App. 257, 724 S.E.2d 1 (2012).

Businessmen.

- A confidential relationship may exist between businessmen, depending on the facts. Cochran v. Murrah, 235 Ga. 304, 219 S.E.2d 421 (1975).

In the majority of business dealings, opposite parties have trust and confidence in each other's integrity, but there is no confidential relationship by this alone. Lewis v. Alderman, 117 Ga. App. 855, 162 S.E.2d 440 (1968).

The entire business structure of the parties, their interactions and dealings over the course of several years, and their common goal all furnished a basis for a jury to find a relationship in fact which justified the reposal of confidence on the part of one party and good faith on the part of the others. Vitner v. Funk, 182 Ga. App. 39, 354 S.E.2d 666 (1987).

Facts would not support finding a confidential relationship between real estate developers and a supermarket regarding their shared goal of finding a site and constructing a shopping center in which the supermarket would lease space, where the parties fought over the terms of the lease agreement for approximately six months. Doll v. Grand Union Co., 925 F.2d 1363 (11th Cir. 1991).

Relationship between the parties, close and lengthy as it might have been, was merely a business relationship between two independent concerns; therefore, no fiduciary duties were created. Automated Solutions Enters. v. Clearview Software, Inc., 255 Ga. App. 884, 567 S.E.2d 335 (2002).

Parties' merger agreement and post-merger relationship did not establish a confidential or fiduciary relationship between the parties since the plaintiff did not exercise sole and exclusive control over the termination of a lease held by the defendant; also, the mere fact that the plaintiff's signature was required on instructions to the escrow agent for the release of escrow funds did not establish a confidential relationship. Interland, Inc. v. Bunting, F. Supp. 2d (N.D. Ga. Mar. 31, 2005).

Evidence that an appellant breached an agreement with the appellee; was unjustly enriched by keeping the profits of the parties' business during the months the appellee was entitled to operate it; and committed civil conspiracy when, in concert with the parties' lessor, prevented the appellee from operating the business, supported an award of lost profit damages to the appellee. Asgharneya v. Hadavi, 298 Ga. App. 693, 680 S.E.2d 866 (2009), overruled on other grounds, Jordan v. Moses, 291 Ga. 39, 727 S.E.2d 460 (2012).

Genuine issues of fact existed as to whether fiduciary duty owed between business people.

- Trial court erred by granting summary judgment to the defendants on the part owner's claim for breach of contract because there were genuine questions of fact regarding whether the defendants owed the part owner a fiduciary duty, whether the defendants breached the duty, and whether any breach proximately caused the part owner damage. Bedsole v. Action Outdoor Adver. JV, LLC, 325 Ga. App. 194, 750 S.E.2d 445 (2013).

Business relationship.

- Trial court erred by denying summary judgment to a subcontractor on the contractor's breach of fiduciary claim because the evidence did not raise an issue of fact regarding the existence of a special agency or any other confidential relationship between the parties as the business relationship was an arms-length one and even adversarial. UWork.com, Inc. v. Paragon Techs., Inc., 321 Ga. App. 584, 740 S.E.2d 887 (2013).

Members of a partnership or an LLC undoubtedly shared a special relationship under Georgia law, but the fiduciary relationship addressed in the Bankruptcy Code exception to discharge had to be demonstrated by evidence of an express trust. Keys v. Allen (In re Allen), Bankr. (Bankr. N.D. Ga. Oct. 25, 2013).

Managing and non-managing members of LLC.

- In a suit arising out of the winding up of an LLC, neither res judicata nor collateral estoppel barred the non-managing member's breach of contract and fiduciary duty counterclaims involving the sale of the LLC property based on a prior suit between the same parties because the current claims related to conduct occurring after the first trial. Eichenblatt v. Piedmont/Maple, LLC, 341 Ga. App. 761, 801 S.E.2d 616 (2017).

Manager of joint venture.

- Trial court did not err in denying a manager's motion for summary judgment as to the joint venturers' counterclaim for breach of fiduciary duty because questions of fact existed regarding whether the manager exercised good faith by depleting the business funds and suspending distributions. Maree v. ROMAR Joint Venture, 329 Ga. App. 282, 763 S.E.2d 899 (2014), overruled on other grounds by SRM Group, Inc. v. Travelers Prop. Cas. Co. of Am., 2020 Ga. LEXIS 235 (Ga. 2020).

Clergyman and parishioner.

- It can be found that a clergyman occupies a confidential relationship toward a member of his church. Bryan v. Norton, 245 Ga. 347, 265 S.E.2d 282 (1980).

Whether a wife consented to the sexual relationship would be irrelevant when the bishop was, by virtue of the bishop's confidential relationship, in a position to manipulate the wife into giving that consent by not only being a bishop but also the wife's employer. Brewer v. Paulk, 296 Ga. App. 26, 673 S.E.2d 545 (2009).

Employer and employee.

- Employee and employer is not the type of relationship such as that of principal and agent from which the law will necessarily imply confidentiality. Cochran v. Murrah, 235 Ga. 304, 219 S.E.2d 421 (1975).

Even though generally the relationship between an employer and employee is that of arms length bargaining, this is not to say, however, that under a particular fact situation a confidential relationship can never exist between an employer and his employee (e.g., an employer signing checks prepared by his secretary-bookkeeper). Cochran v. Murrah, 235 Ga. 304, 219 S.E.2d 421 (1975).

Where assurances between a real estate broker and his former real estate director, an at-will employee, would not have been made but for the prior employer-employee relationship, and because they were not made while the relationship existed, the assurances did not cause the employer and employee relationship to evolve into a fiduciary relationship. Atlanta Mkt. Ctr. Mgt. Co. v. McLane, 269 Ga. 604, 503 S.E.2d 278 (1998).

Where there was no evidence showing that employees could create obligations on behalf of their employer or bring third parties into contractual relations with it, they were not agents owing a fiduciary duty to the employer. Physician Specialists in Anesthesia, P.C. v. Wildmon, 238 Ga. App. 730, 521 S.E.2d 358 (1999).

Evidence that a former executive officer of a product development company, while still employed, pursued opportunities in the same market for the officer's own benefit, to the company's detriment, and appropriated a presentation and its information, showed a triable issue as to a confidential relationship under O.C.G.A. § 23-2-58. Glades Pharms., LLC v. Murphy, F. Supp. 2d (N.D. Ga. Dec. 16, 2005).

There is little question that a former employee's relationship with the employer was one which required confidence under O.C.G.A. § 23-2-58. The undisputed evidence showed that the employee was intimately involved in the negotiations leading up to and the continuous administration of the contracts with a contractor; not only was the employee responsible for bringing the contractor to the employer, the employee was charged with supervision and inspection of the contractor's contract work. GIW Indus. v. JerPeg Contr., Inc., 530 F. Supp. 2d 1323 (S.D. Ga. 2008).

On a breach of fiduciary duty claim against a former employee concerning the employee's alleged solicitation of the employee's co-workers, the trial court did not err in granting summary judgment in favor of the employee because, even assuming that the employee had the authority to bind the employer with respect to customer contracts, there was no evidence that the employee had the authority to bind the company on employment matters or relations. Thus, although the employee may have owed the company a fiduciary duty with respect to the customer contracts the employee entered into on its behalf, there was no evidence that the employee occupied a similar confidential relationship with respect to employee relations. Gordon Document Prods. v. Serv. Techs., 308 Ga. App. 445, 708 S.E.2d 48 (2011).

Trial court properly denied a personal assistant's motion for a directed verdict on a couple's claim for breach of fiduciary duty based upon the assistant's withdrawal of $49,000 remaining in a joint account held with the wife because there was evidence that the assistant was not entitled to any portion of that account since the assistant was a fiduciary only. Lee v. Choi, 323 Ga. App. 370, 744 S.E.2d 871 (2013).

Because the employer failed to point out specific evidence giving rise to a triable issue as to the former employee's status as an agent owing a fiduciary duty to the principal, the employer failed to show error in the trial court's grant of summary judgment to the employee on the employer's claim for breach of fiduciary duty. Avion Sys. v. Bellomo, 338 Ga. App. 141, 789 S.E.2d 374 (2016).

Evidence was insufficient to convict the defendant of criminal attempt to commit theft by taking by a fiduciary as the relationship between the defendant and the employer was merely that of employer-employee because, although the defendant was responsible for creating invoices, the defendant did not have authority to act for the employer beyond weighing the metals and assigning to the weight a dollar amount that had been previously fixed by the employer; and the defendant could not negotiate with the customers or independently determine how much the metals were worth; thus, although the conviction for criminal attempt to commit theft by taking stood, the felony sentence, based on the defendant being a fiduciary, was reversed. Scott v. State, 344 Ga. App. 412, 810 S.E.2d 613 (2018).

Employee benefit plan claims administrator and utilization review provider.

- No fiduciary duty existed between a participant in an employee benefit health plan and the claims administrator for the plan or an independent plan medical utilization review provider; therefore, the participant could not assert a claim for breach of fiduciary duty against the claims administrator or the review provider. Monroe v. Bd. of Regents of the Univ. Sys., 268 Ga. App. 659, 602 S.E.2d 219 (2004).

Executor and legatee.

- The relation between an executor and the devisees under a will is to a certain extent a relation of confidence and trust. Dorsey v. Green, 202 Ga. 655, 44 S.E.2d 377 (1947), later appeal, 204 Ga. 436, 49 S.E.2d 901 (1948).

The policy of the law forbids that administrators, executors, or trustees, having duties to perform in reference to property for their cestuis que trust, should deal with the beneficiaries with respect thereto, except upon the footing of the utmost candor and upon considerations demonstrative of the absence of any undue advantage. Dorsey v. Green, 202 Ga. 655, 44 S.E.2d 377 (1947), later appeal, 204 Ga. 436, 49 S.E.2d 901 (1948).

An executor cannot purchase property from himself, directly or indirectly, and if he does so the sale will be set aside at the instance of a legatee who is not in laches, however fair and honest it may have been. He may, however, purchase the property from a legatee who is sui juris and laboring under no disability, where all the circumstances of the transaction are fair and open, and no advantage is taken by him of the legatee by concealment, misrepresentation, or omission to state any important fact, or by the exercise or undue influence, and the legatee understands the nature and effect of his act. Dorsey v. Green, 202 Ga. 655, 44 S.E.2d 377 (1947), later appeal, 204 Ga. 436, 49 S.E.2d 901 (1948).

A court of equity looks upon the purchase of estate property by the executor from a legatee with jealous eye, and will not uphold it, unless it appears that the sale is fair, and that there is no fraud, no concealment, and no advantage taken by the executor of information acquired by him in his character as such. Dorsey v. Green, 202 Ga. 655, 44 S.E.2d 377 (1947), later appeal, 204 Ga. 436, 49 S.E.2d 901 (1948).

Business did not have a confidential relationship with a corporation where the parties had similar but separate business objectives that did not merge into a common business objective; the business's insistence on status as a platform company was inconsistent with a confidential relationship because a bid prepared by the business with another company was not evidence of such a relationship, even though the corporation's president was an officer in the other company, as there was no showing that the corporate entities should be disregarded. Infrasource, Inc. v. Hahn Yalena Corp., 272 Ga. App. 703, 613 S.E.2d 144 (2005).

Trial court properly denied the motions for a directed verdict and for a judgment notwithstanding the verdict filed by the executors of a will and trust because there was sufficient evidence to support the jury's finding that the documents were invalid as a product of undue influence based on the executors taking complete control of the elderly testator and isolating the testator from the testator's sons, as well as substituting the executors' desires and having the testator sign a new will and trust, which benefitted the executors and excluded the testator's wife and sons. Davison v. Hines, 291 Ga. 434, 729 S.E.2d 330 (2012).

Friendship.

- That the defendant was or had been a friend of the plaintiff would not alone create a relation of trust or confidence between them. Norris v. Hart, 74 Ga. App. 444, 40 S.E.2d 96 (1946).

Evidence was sufficient to support a jury's finding that there was a confidential relationship pursuant to O.C.G.A. § 23-2-58 between an attorney, who was dying of leukemia, and the attorney's former client and friend, from whom the attorney sought to borrow money on the attorney's life insurance policy. Stamps v. JFB Props., LLC, 287 Ga. 124, 694 S.E.2d 649 (2010).

Lender's claims against borrowers for discharge of documents the lender signed without reading, which discharged a $1.2 million note and released the lender's security interest in the borrowers' property, were subject to summary judgment. The lender's close, personal friendship with the borrowers did not create a confidential relationship under O.C.G.A. § 23-2-58 and did not excuse the lender's failure to read the documents. Arko v. Cirou, 305 Ga. App. 790, 700 S.E.2d 604 (2010).

Boyfriend and girlfriend.

- The trial court did not err in denying a boyfriend a directed verdict on a fraud in the inducement claim asserted by the boyfriend's girlfriend, given evidence of the personal nature of their relationship which caused the girlfriend to place trust and confidence in the boyfriend's repeated promises of marriage and believe that the boyfriend was acting in the girlfriend's best interest by taking the monies loaned to use for a business, which would ultimately allow the boyfriend to repay the girlfriend and support them after they were married. Tankersley v. Barker, 286 Ga. App. 788, 651 S.E.2d 435 (2007), cert. denied, No. S07C1821, 2007 Ga. LEXIS 742 (Ga. 2007).

Husband and wife.

- It is plain that under Georgia law a confidential relationship exists between husband and wife. ITT Com. Fin. Corp. v. Dilkes (In re Analytical Sys.), 113 Bankr. 91 (N.D. Ga. 1990), rev'd on other grounds, 933 F.2d 939 (11th Cir. 1991).

Wife's personal injury action against her husband arising from the husband's infection of the wife with genital herpes was not barred by statute of limitations; the parties enjoyed a confidential relationship pursuant to O.C.G.A. § 23-2-58, and thus, the wife was entitled to repose confidence and trust in the husband, and because the husband failed to admit the truth to the wife, he was guilty of a false representation and that falsehood deterred the wife from instituting suit and tolled the statute of limitation. Beller v. Tilbrook, 275 Ga. 762, 571 S.E.2d 735 (2002).

Wife could not claim that she had a confidential relationship with her husband when she signed a prenuptial agreement, thereby relieving the wife of any obligation to verify the agreement's representations, because when the wife signed the agreement they were not married, so the confidential relationship applicable to husbands and wives did not exist and, under Georgia law, there was no such relationship applicable to putative spouses. Mallen v. Mallen, 280 Ga. 43, 622 S.E.2d 812 (2005).

Husband, his father, and the father's friend were not entitled to summary judgment in an action by the Securities Exchange Commission against them for insider trading under 17 C.F.R. § 240.10b-5 because a reasonable factfinder could conclude that the husband violated a fiduciary duty to his wife under O.C.G.A. § 23-2-58 by disclosing information about the wife's employer, leading to his father and the friend purchasing stock options in the wife's employer on the basis of material, non-public information. United States SEC v. Goodson, F. Supp. 2d (N.D. Ga. Mar. 6, 2001).

After the husband engaged counsel to draw up a formal post-nuptial agreement, and the husband moved to enforce the agreement when the wife filed for divorce, the post-nuptial agreement was unenforceable as the wife testified that the wife signed the agreement because the husband represented to the wife that, if the wife signed the agreement, the husband would understand that the wife loved the husband, and the husband would tear up the agreement; the husband procured the wife's signature on the agreement under the pretense that the agreement would never be enforced and, in fact, that the agreement would be destroyed, and the evidence was sufficient to establish the existence of fraud in procuring the agreement. Murray v. Murray, 299 Ga. 703, 791 S.E.2d 816 (2016).

Paramours.

- As to a breach of fiduciary duty claim in a defamation suit, one of the defendants, by virtue merely of the status as a paramour of the plaintiff, owed no fiduciary duty to the plaintiff and, thus, the breach of fiduciary claim failed. Bickerstaff v. SunTrust Bank, 299 Ga. 459, 788 S.E.2d 787 (2016), cert. denied, 137 S. Ct. 571, 196 L. Ed. 2d 447 (U.S. 2016).

Insurance agent and non-insured.

- Summary judgment was properly awarded the insurer with respect to a fraud claim where the record was devoid of any evidence from which to conclude that a confidential relationship existed between insurance agent and plaintiff who was neither a party to the insurance contract, a named insured, nor an owner of the vehicle. Clark v. Superior Ins. Co., 209 Ga. App. 290, 433 S.E.2d 394 (1993).

Insurance agent and insured.

- When an insured sued an insurance agent for fraud and breach of fiduciary duty because the agent allegedly misrepresented the coverage afforded by a policy the insured purchased through the agent, the insured did not show the presence of a confidential relationship with the agent which would have negated the insured's duty to read the policy the insured purchased because: (1) the insured knew what kind of insurance coverage the insured wanted when approaching the agent, so the insured did not rely on the agent's expertise to obtain the correct insurance; and (2) the insured's past dealings with and trust in the agent did not create a confidential relationship. Canales v. Wilson Southland Ins. Agency, 261 Ga. App. 529, 583 S.E.2d 203 (2003).

Wife and agent.

- Defendant, as decedent's wife and agent under the power of attorney, enjoyed a relationship with decedent which was both confidential and fiduciary in nature. Wheeless v. Gelzer, 780 F. Supp. 1373 (N.D. Ga. 1991).

Lender and borrower.

- There is no confidential relationship between lender and borrower for they are creditor and debtor with clearly opposite interests. Pardue v. Bankers First Fed. Sav. & Loan Ass'n, 175 Ga. App. 814, 334 S.E.2d 926 (1985).

Mortgagee and mortgagor.

- There is no confidential relationship between mortgagee and mortgagor for they are creditor and debtor with clearly opposite interests. Pardue v. Bankers First Fed. Sav. & Loan Ass'n, 175 Ga. App. 814, 334 S.E.2d 926 (1985).

Mortgage companies were not liable for a breach of fiduciary duty to real estate investors whose credit scores allegedly were injured after the companies' failure to timely pay a tax bill triggered the filing of a county tax lien and after they erroneously reported having foreclosed a mortgage granted to the investors because the investors failed to show the existence of a confidential relationship between the parties within the meaning of O.C.G.A. § 23-2-58. Burch v. Chase Manhattan Mortg. Corp., F. Supp. 2d (N.D. Ga. Sept. 15, 2008).

Homeowner sufficiently alleged a claim for breach of contract against the homeowner's mortgage lender based on a promise in the security agreement that the lender would foreclose "fairly" while acting as the owner's agent; the homeowner was not required to perform the homeowner's obligation of payment because the lender's obligations as to reinstatement and foreclosure were triggered by the failure to pay. Stewart v. SunTrust Mortg., Inc., 331 Ga. App. 635, 770 S.E.2d 892 (2015).

Hospital and patient.

- In an action between a group of uninsured patients and a non-profit hospital in which the patients alleged, among other things, a breach of fiduciary duty, absent authority recognizing a fiduciary relationship between a hospital and a patient with respect to the prices the hospital charged, said claim was properly dismissed. Cox v. Athens Reg'l Med. Ctr., Inc., 279 Ga. App. 586, 631 S.E.2d 792 (2006).

Hospital and doctors.

- In a suit by doctors against a hospital where they had served as anesthesiologists alleging that the hospital's failure to rehire the doctors was motivated by malice, summary judgment to the hospital was proper based on peer review immunity under O.C.G.A. § 31-7-132(a); the doctors' claim for breach of fiduciary duty failed because the relationship between the doctors and the hospital was governed by a contract and no fiduciary relationship was shown. Cancel v. Medical Center of Central Ga., Inc., 345 Ga. App. 215, 812 S.E.2d 592 (2018), cert. denied, 2018 Ga. LEXIS 769 (Ga. 2018).

Partners.

- Partners, stand in a confidential relationship to each other. Crosby v. Rogers, 197 Ga. 616, 30 S.E.2d 248 (1944).

Petitioner was justified in failing to read deed which he signed or to examine the records, and in relying upon the defendant, because of the confidential relationship existing between them as partners, and where suit was brought promptly upon learning of the defendant's breach of faith the petitioner was not estopped by laches although 14 years had passed since the deed attacked was executed. Crosby v. Rogers, 197 Ga. 616, 30 S.E.2d 248 (1944).

Under the evidence as to the existence of a partnership between the petitioner and the defendant and their agreement to jointly purchase the land involved, and evidence that the petitioner paid one-half of the purchase money and trusted the defendant to close the deal and obtain a conveyance naming them both as grantees, the defendant could not obtain an interest in the land antagonistic to that of the petitioner; and where the defendant procured a deed, in his own name only, equity would annul the conveyance and decree title in the petitioner to his share. Crosby v. Rogers, 197 Ga. 616, 30 S.E.2d 248 (1944).

Summary judgment was not appropriate for a guaranty partner's allegations that an investment bank partner, which was also a creditor of the partnership, breached its fiduciary duty towards the guaranty partner by using coercive and deceptive tactics in its efforts to restructure the partnership because a jury question existed as to whether the investment bank partner breached its fiduciary duty owed to the guaranty partner. AAF-McQuay, Inc. v. Willis, 308 Ga. App. 203, 707 S.E.2d 508 (2011).

Court of appeals erred in granting an attorney's motion for summary judgment in the court's action to dissolve a partnership because the court cited disapproved language that the tort of wrongful dissolution of a partnership required the attempt to appropriate the "new prosperity" of the partnership; the gravamen of a wrongful dissolution claim is a partner's attempt to appropriate, through the dissolution, the assets or business of the partnership, which may include prospective business, without adequate compensation to the remaining partners. Jordan v. Moses, 291 Ga. 39, 727 S.E.2d 460 (2012).

Franchisor and franchisee.

- A franchise contract did not create a confidential relationship between the franchisor and franchisee. Allen v. Hub Cap Heaven, Inc., 225 Ga. App. 533, 484 S.E.2d 259 (1997).

Principal and agent.

- The relationship of principal and agent is fiduciary in character, and imposes upon the parties the duties of exercising toward each other the utmost good faith. Reisman v. Massey, 84 Ga. App. 796, 67 S.E.2d 585 (1951).

The law implies as a part of the contract by which every agency arises that the agent agrees to have and exercise for and toward his principal loyalty and absolute good faith, and any breach of this implied contract on his part forfeits his right to commissions. Reisman v. Massey, 84 Ga. App. 796, 67 S.E.2d 585 (1951).

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. Harrison v. Harrison, 214 Ga. 393, 105 S.E.2d 214 (1958).

Where the relation of principal and agent was established when the owner, listed her property for sale with the realty company, such being a confidential or fiduciary relation, it imposed on the agent the duty of exercising the utmost good faith and loyalty toward the principal. It became the duty of the agent to act primarily and solely for the benefit of the principal in all matters connected with the agency. Dolvin Realty Co. v. Holley, 203 Ga. 618, 48 S.E.2d 109 (1948).

The law implies, as a part of the contract by which every agency arises, that the agent agrees to have and exercise towards his principal diligence, loyalty and absolute good faith. Anderson v. Redwal Music Co., 122 Ga. App. 247, 176 S.E.2d 645 (1970).

Whatever may be the reciprocal duties imposed by law on a real estate broker and his principal, the relationship is one of mutual confidence, and the law requires that the broker, in the discharge of his duties, act towards his principal in the utmost good faith. Lyle v. Etheridge, 40 Ga. App. 808, 151 S.E. 531 (1930).

Although a real estate broker, when obtaining for the owner of real estate a tenant for the property, is under no duty, arising out of the relationship to his principal, to guarantee the financial standing of the lessee and the lessee's ability to perform the proposed lease contract, yet where the broker makes a knowingly false representation to his principal, the owner of the property, as to the financial standing of the lessee and the lessee's ability to perform the proposed lease contract, and thereby induces the principal to accept the tenant procured by the broker and to pay to the broker a commission for his services in procuring the tenant, he thereby perpetrates a fraud upon his principal, for which the principal, in a suit against the broker, may recover for the damages sustained. Lyle v. Etheridge, 40 Ga. App. 808, 151 S.E. 531 (1930).

It is for the common security of mankind "that gifts procured by agents, and purchases made by them, from their principal, should be scrutinized with a close and vigilant suspicion." Harrison v. Harrison, 214 Ga. 393, 105 S.E.2d 214 (1958).

The mere fact that one of the two parties to a contract of sale between them is known to the other to be a real estate broker, when the broker is not acting as the agent for the buyer but is himself the seller of the property, will fail to show a fiduciary relationship. Lewis v. Alderman, 117 Ga. App. 855, 162 S.E.2d 440 (1968).

Answer, alleging that the plaintiff broker misrepresented the financial ability of the buyer, that is, that the buyer was ready, willing and able to buy on the terms stipulated by the seller, thereby inducing the defendant to accept the buyer's offer and to enter into a contract which the buyer was unable to perform, set out a breach of the broker's duty of exercising the utmost good faith toward his principal, the seller, which was a defense to the broker's action for commissions. Reisman v. Massey, 84 Ga. App. 796, 67 S.E.2d 585 (1951).

Because of fiduciary relationship, the petitioner was justified in relying upon the representations of her agent and in failing to read and know the contents of the various deeds signed by her. Harrison v. Harrison, 214 Ga. 393, 105 S.E.2d 214 (1958).

Where the fiduciary relationship of principal and agent existed between the petitioner and the defendant, the latter could not make advantage or profit for himself out of the relationship to the injury of his principal. Harrison v. Harrison, 214 Ga. 393, 105 S.E.2d 214 (1958).

If the agent practices upon the principal any deception (whether intentional or not) whereby the principal is misled and damaged and the agent would reap any benefit, the transaction is fraudulent, and the courts will not allow the agent to take or retain the benefit. Reisman v. Massey, 84 Ga. App. 796, 67 S.E.2d 585 (1951).

Should the jury find that an agency relationship existed between an insurance agent and an insurance applicant, the jury would be required further to treat that relationship as a fiduciary relationship. Stewart v. Boykin, 165 Ga. App. 868, 303 S.E.2d 50 (1983).

An agent can do nothing more disloyal to his principal than contacting his principal's employer and taking over the latter's position with the company. Koch v. Cochran, 251 Ga. 559, 307 S.E.2d 918 (1983).

One of the areas where the law finds a confidential or fiduciary relationship is in the case of principal and agent. Tigner v. Shearson-Lehman Hutton, Inc., 201 Ga. App. 713, 411 S.E.2d 800 (1991).

Fiduciary relationship was created between a brokerage firm and a mentally disabled client, where the firm exercised a "controlling influence" over the client and had accepted his account with the understanding that he needed complete guidance in the management and handling of his money. Tigner v. Shearson-Lehman Hutton, Inc., 201 Ga. App. 713, 411 S.E.2d 800 (1991).

Where cotenant was a relative to the other heirs and acted as agent for the purchaser of land during the sale, the agent's confidential relationship with the other heirs was imputed to the purchaser; and a jury could find that the purchaser, through the agent's confidential relationship with the other heirs, was so situated as to exercise a controlling influence over the will, conduct, and interest of the other heirs. McLendon v. Georgia Kaolin Co., 782 F. Supp. 1548 (M.D. Ga. 1992).

Inquiry of manufacturer's customers whether, in the event representative (agent) left the appellant's employment in the future, they would consider continuing to place their orders through him did not result in profit at manufacturer's expense during his actual employment. Nilan's Alley, Inc. v. Ginsburg, 208 Ga. App. 145, 430 S.E.2d 368 (1993).

In a breach of fiduciary duty and fraud action wherein an investment company obtained a jury verdict in the company's favor against a site manager, the manager's spouse, and others, the trial evidence supported the conclusion that a fiduciary relationship arose between the site manager and the investment company as the investment company entrusted significant financial responsibility and authority to the site manager, who engaged in a financial kickback scheme diverting thousands of dollars from the investment company. Wright v. Apt. Inv. & Mgmt. Co., 315 Ga. App. 587, 726 S.E.2d 779 (2012).

An agent cannot place himself in a position in which his duty and interest conflict with that of his principal, or be permitted to make a secret profit out of his agency. Franco v. Stein Steel & Supply Co., 227 Ga. 92, 179 S.E.2d 88 (1970).

Insurance agent and insured.

- A confidential relationship did not exist between an insured and his agent which would have enabled the insured to place trust and reliance on oral representations by the agent, inconsistent with the terms of the form. The mere fact that one reposes trust and confidence in another does not create a confidential relationship. Trulove v. Woodmen of World Life Ins. Soc'y, 204 Ga. App. 362, 419 S.E.2d 324 (1992).

Purchaser of automobile and financer.

- Purchaser of automobile has no confidential relationship with the financer of the purchase. Doxie v. Ford Motor Credit Co., 603 F. Supp. 624 (S.D. Ga. 1984).

Relatives.

- A confidential relationship does not exist because of brother and sister-in-law relationship, or because of past dealings and trust and confidence reposed in brother-in-law by sister-in-law and her husband, defendant's brother. Dixon v. Dixon, 211 Ga. 557, 87 S.E.2d 369 (1955).

The fact that the plaintiff and the defendant are brothers does not of itself create a confidential or fiduciary relation between them. If such relation exists between brothers, it must be shown by proof, and the burden is upon the party asserting the existence of such relationship to affirmatively show the same. Hancock v. Hancock, 223 Ga. 481, 156 S.E.2d 354 (1967).

While the fact that the plaintiff and the decedent were brother and sister would not of itself create a confidential or fiduciary relationship between them solely because they were so related, plaintiff's allegations were sufficient to charge the existence of a confidential relationship between them requiring the utmost good faith and fair dealings on his part. Sutton v. McMillan, 213 Ga. 90, 97 S.E.2d 139 (1957).

The facts that the bank officer was the brother of plaintiff's daughter-in-law, solicited plaintiff and induced him to place his business with the bank, promised to keep his affairs confidential, and to treat plaintiff right, are insufficient to create a confidential relationship. First Am. Bank v. Bishop, 244 Ga. 317, 260 S.E.2d 49 (1979).

Parent and child.

- In a wrongful death case, the surviving spouse acts as the children's representative and owes them the duty to act prudently in asserting, prosecuting and settling the claim and to act in the utmost good faith. Home Ins. Co. v. Wynn, 229 Ga. App. 220, 493 S.E.2d 622 (1997).

Jury question was presented as to whether two trustees of their children's trusts acted against the interests of the beneficiaries (their children) in bad faith by amending a partnership agreement to concentrate all voting power in themselves to the exclusion of the beneficiaries, who otherwise would have become partners when they turned 45. Likewise, the trustees as partners owed duties to the trusts as partners in the partnership. Rollins v. Rollins, 338 Ga. App. 308, 790 S.E.2d 157 (2016).

Vendor and vendee.

- The vendor and vendee of property are not, by virtue of such fact, placed in a confidential relationship to each other, but on the contrary are presumed to be dealing at arm's length. Lewis v. Alderman, 117 Ga. App. 855, 162 S.E.2d 440 (1968).

Under the facts no confidential relationship was shown between wholesale vendor of liquor and purchaser who claimed that vendor had misrepresented the tax status of the liquors purchased. Bernstein v. Peters, 69 Ga. App. 525, 26 S.E.2d 192 (1943).

In a suit by vendor against purchaser for reformation of a deed to land to show reservation of timber, where neither fraud nor the existence of a confidential relationship was alleged or proved, it was reversible error to charge that, if the jury found that the vendor relied on the representations of the purchaser as being true due to a confidential or fiduciary relationship between the parties, and if the vendor was ignorant of the fact that reservation should have been inserted in the deed, purchaser would be guilty of fraud, and that equity will reform instrument when there was ignorance or mistake on one side and fraud or inequitable conduct on the other. Cochran v. Kendall, 210 Ga. 336, 80 S.E.2d 273 (1954).

Buyer and seller.

- Directed verdict for the seller on the buyers' breach of confidential relationship claim was reversed because there was a fact issue as to whether the seller exercised a controlling influence over the buyers in their application for mobile home permit such that the buyers were kept from discovering zoning for the property or that the seller had an increased duty to disclose the zoning. Howard v. Barron, 272 Ga. App. 360, 612 S.E.2d 569 (2005).

Tenants in common.

- Purchaser of land had no duty to disclose its knowledge of a kaolin deposit to seller by virtue of its relationship as a tenant in common, since the confidential relationship between cotenants does not extend to encompass the circumstance of one tenant purchasing another cotenant's interest. McLendon v. Georgia Kaolin Co., 782 F. Supp. 1548 (M.D. Ga. 1992).

Purchaser of property and real estate investing company.

- Since plaintiff's decision to buy property was based on plaintiff's confidence that it could be used in the way defendant suggested and that defendant would rent the property on plaintiff's behalf as defendant agreed to do, a jury issue existed regarding whether the parties were in a confidential relationship at the time of the alleged fraud. Yarbrough v. Kirkland, 249 Ga. App. 523, 548 S.E.2d 670 (2001).

Resident.

- Trial court did not err in granting a homeowners' association summary judgment on a resident's claim of breach of fiduciary duty because the resident's mere reliance upon status as a resident of the development, without more, failed to establish a fiduciary or confidential relationship. Campbell v. Landings Ass'n, 311 Ga. App. 476, 716 S.E.2d 543 (2011).

Mining leases.

- Royalty leases for the mining of kaolin were not shown to have been intended to place the parties in a confidential relationship, and the presumption remained that the agreements were entered at arm's length between persons on equal footing. Manning v. Engelhard Corp., 929 F. Supp. 1508 (M.D. Ga. 1996), aff'd, 111 F.3d 897 (11th Cir. 1997).

Investors and bank.

- Breach of fiduciary duty action filed by two investors against a bank was dismissed by summary judgment because, according to the terms of an investment agreement, there was no such relationship between the parties; further, there was no evidence that the bank exercised a controlling influence over the investors' will, conduct, or interests nor did the investors establish that they relied upon the bank to make decisions on their behalf. Newitt v. First Union Nat'l Bank, 270 Ga. App. 538, 607 S.E.2d 188 (2004).

Creditors failed to prove the existence of a technical trust, either by contract or by O.C.G.A. §§ 14-11-301(1),14-11-305(1), or23-2-58, and, as a consequence, could not prove a fiduciary defalcation by the debtors. Thus, any debt arising from the debtors' management of a limited liability company was dischargeable under 11 U.S.C. § 523(a)(4). Tarpon Point, LLC v. Wheelus (In re Wheelus), Bankr. (Bankr. M.D. Ga. Feb. 11, 2008).

Evidence of breach by trustee shown to survive summary judgment.

- In a trustee's suit against a company and the company's manager for interfering with trust assets, the trial court erred by granting summary judgment to the company and the company's manager on the trustee's breach of fiduciary claim because the evidence showed that they unilaterally transferred the trust's property interest and, although the transfer was deemed invalid, the trust's interest was invaded, creating a jury question as to injury and resulting damage, either actual or nominal. Schinazi v. Eden, 338 Ga. App. 793, 792 S.E.2d 94 (2016).

Stockbroker and stockholder.

- In response to a certified question asking whether, under Georgia law, a brokerage firm owed a fiduciary duty to the holder of a non-discretionary account, the supreme court answered that the fiduciary duties owed by a broker to a customer with a non-discretionary account were not restricted to the actual execution of transactions; the broker will generally have a heightened duty, even to the holder of a non-discretionary account, when recommending an investment which the holder has previously rejected or as to which the broker has a conflict of interest. Holmes v. Grubman, 286 Ga. 636, 691 S.E.2d 196 (2010).

Presumption of Undue Influence

Evidence of confidential relationship raises presumption of undue influences.

- Where evidence is presented of a confidential relationship, the grantor being of weaker mentality and the grantee occupying the dominant position, an issue of fact is raised as to undue influence. Fletcher v. Fletcher, 242 Ga. 158, 249 S.E.2d 530 (1978).

While a mere allegation of weakness of mind not amounting to imbecility is not sufficient to set forth a cause of action for cancellation of a deed, there being no allegation of fraud or undue influence, nevertheless, where the mental weakness is pronounced, such as would prevent the grantor from understanding the nature of his act at the time the deed was executed and especially where as alleged such mental impairment is united with alleged undue and controlling influence on the part of one occupying a confidential relationship with the illiterate grantor, it will authorize a cancellation on the ground of fraud. Mullins v. Barrett, 204 Ga. 11, 48 S.E.2d 842 (1948).

Where the evidence and the pleadings show that the deceased was an infirm and aged woman, suffering from a brain tumor, whose mental and physical condition declined during the last years of her life, weakened by the damage to her brain by the illness from which she died, and that the defendants stood in a confidential and fiduciary capacity to her, whereby they administered her medicines to her and cared for her in her illness, took care of her personal business, hired nurses for her, cared for her in their home, and she changed her bank account to make it a joint one with her nephew, one of the defendants, there arose a presumption of undue influence, and the court should have charged on undue influence and the shifting of the burden of proof, and erred in failing to charge thereon. McGahee v. Walden, 216 Ga. 352, 116 S.E.2d 559 (1960).

Trial court erred in giving a jury instruction that stated that the jury could infer that undue influence existed if it found a confidential relationship was present; the testator made a gift of realty, and the testator was in a weakened mental state and feeble-minded, so the jury was entitled under those circumstances to presume, not merely infer, that undue influence had been shown. White v. Regions Bank, 275 Ga. 38, 561 S.E.2d 806 (2002).

Evidence presented by a testator's child, which proved the testators's disease, medication, and its effects, the testator's dependence on the care givers, their isolation of the testator from the child; their active encouragement and arrangements for the drafting and execution of a new will, the testator's short-term relationship with them, the testator's sporadic contact with and lack of trust towards one of the challenged beneficiaries, and the testator's long-standing expressions of testamentary intent to leave all of the testator's property to the child, which the testator repeated the day after execution of the disposition, supplied sufficient evidence to support the child's claim of undue influence to support the jury verdict in the child's favor and not a directed verdict entered by the trial court in the face of this evidence; although this evidence did not demand a finding that the will was the product of undue influence, it was sufficient to authorize the submission of that question to the jury. Bailey v. Edmundson, 280 Ga. 528, 630 S.E.2d 396 (2006).

A trial court correctly denied an executor's motion for directed verdict in an action wherein the child of the testator filed a caveat and objection to the probate of the testator's last will and testament on the grounds that the will was the product of undue influence as sufficient evidence existed to support the conclusion that undue influence was used to have the testator bequeath the only asset, namely a home, to the caregiver who was hired by the executor. The record established that the executor blocked calls from the testator's child, refused to let the child see the testator, and a confidential relationship was established between the caregiver and the testator as the caregiver took an active role in the planning, preparation, and execution of the will. Bean v. Wilson, 283 Ga. 511, 661 S.E.2d 518 (2008).

RESEARCH REFERENCES

Am. Jur. 2d.

- 27 Am. Jur. 2d, Equity, § 20. 37 Am. Jur. 2d, Fraud and Deceit, §§ 15, 16.

Interference with Attorney-Client Relationship, 19 POF2d 335.

Existence of Attorney-Client Relationship, 48 POF2d 525.

C.J.S.

- 30 C.J.S., Equity, § 48. 37 C.J.S., Fraud, §§ 2, 16, 35.

ALR.

- Duty of joint adventures inter se in respect of acquisition or renewal of property rights or interests related to the enterprise, 62 A.L.R. 13.

Trustee's, executor's, administrator's or guardian's purchase from or sale to corporation of which he is an officer or stockholder, as voidable or as ground for surcharging his account, 105 A.L.R. 449.

Duty of vendor of real property to disclose to purchaser condition of building thereon which affects health or safety of persons using same, 141 A.L.R. 967.

23-2-59. Acquisition of antagonistic rights by one in confidential relationship.

Where, by the act or consent of parties or the act of a third person or of the law, one person is placed in such relation to another that he becomes interested for him or with him in any subject or property, he is prohibited from acquiring rights in that subject or property which are antagonistic to the person with whose interest he has become associated.

(Civil Code 1895, § 4031; Civil Code 1910, § 4628; Code 1933, § 37-708.)

History of section.

- This section is derived from the decision in Larey v. Baker, 86 Ga. 468, 12 S.E. 684 (1890).

Law reviews.

- For annual survey of law of wills, trusts, guardianships, and fiduciary administration, see 56 Mercer L. Rev. 457 (2004).

JUDICIAL DECISIONS

A confidential relationship exists where one party occupies a position of trust and confidence with respect to another. Such a relationship can exist between an executor representing an estate of a decedent, and a legatee or devisee of the estate represented in administration. Ringer v. Lockhart, 240 Ga. 82, 239 S.E.2d 349 (1977).

Where the fiduciary relationship of principal and agent existed between the petitioner and the defendant, the latter could not make advantage or profit for himself out of the relationship to the injury of his principal. Harrison v. Harrison, 214 Ga. 393, 105 S.E.2d 214 (1958).

Where a widow and named executrix under the will of a decedent, who is left a life estate in all of the property of the decedent, advises the sole nonresident remainderman named in the will that the father's estate would be handled fairly and that he would not have to worry about his father's estate, immediately, without actual notice to him applies for and obtains an uncontested year's support awarding to her all of the property of the decedent's estate, a question is presented, as to whether or not the year's support judgment was obtained by fraud. Ringer v. Lockhart, 240 Ga. 82, 239 S.E.2d 349 (1977).

Under the evidence as to the existence of a partnership between the petitioner and the defendant and their agreement to jointly purchase the land involved, and evidence that the petitioner paid one-half of the purchase money and trusted the defendant to close the deal and obtain a conveyance naming them both as grantees, the defendant could not obtain an interest in the land antagonistic to that of the petitioner; and where the defendant procured a deed, in his own name only, equity would annul the conveyance and decree title in the petitioner to his share. Crosby v. Rogers, 197 Ga. 616, 30 S.E.2d 248 (1944).

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. Harrison v. Harrison, 214 Ga. 393, 105 S.E.2d 214 (1958).

Competing with principal after agency terminates.

- The principles of agency will not sustain grant of an injunction prohibiting competition after agency relationship is terminated. Pope v. Kem Mfg. Corp., 249 Ga. 868, 295 S.E.2d 290 (1982).

In absence of evidence of a restrictive covenant in employment contract, trial court erred in enjoining employee from soliciting business for himself from eight customers to whom he had sold similar products for his employer. Pope v. Kem Mfg. Corp., 249 Ga. 868, 295 S.E.2d 290 (1982).

No breach of duty where all partners enter into agreement at same time.

- This Code section, when construed in conjunction with § 14-8-21, applies only to partnership rights acquired by one partner without the consent of the other partners. Thus, where all limited partners and the general partner acquired their rights at the same time by entering into an agreement, there was no breach of fiduciary duty. Consolidated Equities Corp. v. Bird, 195 Ga. App. 45, 392 S.E.2d 276 (1990).

Writing requirement for postemployment covenant.

- In order to be valid a post-employment covenant against competition by an employee who is not an officer or director must be in writing. Pope v. Kem Mfg. Corp., 249 Ga. 868, 295 S.E.2d 290 (1982).

Cited in Napier v. Adams, 166 Ga. 403, 143 S.E. 566 (1928); White v. Dotson, 41 Ga. App. 436, 153 S.E. 233 (1930); Thompson v. State, 47 Ga. App. 229, 170 S.E. 328 (1933); Blount v. Dean, 187 Ga. 494, 1 S.E.2d 653 (1939); Crosby v. Rogers, 197 Ga. 616, 30 S.E.2d 248 (1944); Smith v. Merck, 206 Ga. 361, 57 S.E.2d 326 (1950); Howard v. Lee, 208 Ga. 735, 69 S.E.2d 263 (1952); Johnson v. Hutchinson, 217 Ga. 489, 123 S.E.2d 551 (1962); Brogdon v. Purvis, 220 Ga. 28, 136 S.E.2d 719 (1964); Cole v. Cates, 113 Ga. App. 540, 149 S.E.2d 165 (1966); Westminster Properties, Inc. v. Atlanta Assocs., 250 Ga. 841, 301 S.E.2d 636 (1983); Hanson v. First State Bank & Trust Co., 259 Ga. 710, 385 S.E.2d 266 (1989).

RESEARCH REFERENCES

Am. Jur. 2d.

- 27 Am. Jur. 2d, Equity, § 20. 37 Am. Jur. 2d, Fraud and Deceit, §§ 15, 16.

C.J.S.

- 30 C.J.S., Equity, § 48. 37 C.J.S., Fraud, § 2.

ALR.

- Right of insolvent to insure life for benefit of relatives, 34 A.L.R. 838.

Rights and remedies of original licensee or his estate, against one in fiduciary or confidential relation who acquires in his own name an occupational or business license, 144 A.L.R. 1013.

23-2-60. Annulment of conveyances for fraud.

Fraud will authorize equity to annul conveyances, however solemnly executed.

(Orig. Code 1863, § 3109; Code 1868, § 3121; Code 1873, § 3178; Code 1882, § 3178; Civil Code 1895, § 4032; Civil Code 1910, § 4629; Code 1933, § 37-709; Ga. L. 1986, p. 294, § 4.)

The 1986 amendment, effective July 1, 1986, deleted ", and to relieve against awards, judgments, and decrees obtained by imposition" at the end of the sentence.

JUDICIAL DECISIONS

General Consideration

A court of equity will not lend its aid to a party to a contract founded upon an illegal or immoral consideration; if the contract is executed, it will be left to stand, and if it be executory, neither party can enforce it. Fender v. Crosby, 209 Ga. 896, 76 S.E.2d 769 (1953).

A person executing an instrument is not defrauded because he failed to read or understand it. Manget Realty Co. v. Carolina Realty Co., 169 Ga. 495, 150 S.E. 828 (1929).

Where one party fraudulently induces his adversary to withdraw his defense, the judgment will be set aside. Walker v. Hall, 176 Ga. 12, 166 S.E. 757 (1932).

When a litigant keeps the opposite party from court, equity will relieve against the judgment obtained in his absence. Walker v. Hall, 176 Ga. 12, 166 S.E. 757 (1932).

The mere failure of a party to disclose to the court or to his adversary matters which would defeat his own claim or defense is not such fraud as will justify or require a vacation of the judgment. Buice v. T. & B. Bldrs., Inc., 219 Ga. 259, 132 S.E.2d 784 (1963).

A mere failure to comply with a promise on the part of a grantee is insufficient to establish fraudulent intent. However, where a petition alleges an oral promise by the grantee to perform an act in the future as the inducement or consideration for the execution of the deed by the grantor and where the promise is made with the present intention on the part of the grantee not to comply with it, the petition sets forth a cause of action for cancellation. Smith v. Merck, 206 Ga. 361, 57 S.E.2d 326 (1950); Sutton v. McMillan, 213 Ga. 90, 97 S.E.2d 139 (1957); Hinson v. Hinson, 221 Ga. 291, 144 S.E.2d 381 (1965); Cowart v. Gay, 223 Ga. 635, 157 S.E.2d 466 (1967); Dye v. Dye, 231 Ga. 533, 202 S.E.2d 418 (1973); Cone Mills Corp. v. A.G. Estes, Inc., 377 F. Supp. 222 (N.D. Ga. 1974).

The mere failure to comply with a promise to perform an act in the future is not fraud in a legal sense. Hinson v. Hinson, 221 Ga. 291, 144 S.E.2d 381 (1965); Lanning v. Sockwell, 137 Ga. App. 479, 224 S.E.2d 119 (1976).

While the mere failure to comply with a promise is insufficient to establish an inceptive fraudulent intent, fraud will authorize equity to cancel and annul a deed no matter how solemnly executed. Sutton v. McMillan, 213 Ga. 90, 97 S.E.2d 139 (1957).

Cited in Bank of Penfield v. Colclough, 154 Ga. 222, 114 S.E. 33 (1922); J.R. Watkins Co. v. Herring, 51 Ga. App. 396, 180 S.E. 525 (1935); McGhee v. Minor, 188 Ga. 635, 4 S.E.2d 565 (1939); Saliba v. Saliba, 202 Ga. 279, 42 S.E.2d 748 (1947); McGahee v. McGahee, 204 Ga. 91, 48 S.E.2d 675 (1948); Johnson v. Hutchinson, 217 Ga. 489, 123 S.E.2d 551 (1962); Rushing v. Bashlor, 219 Ga. 119, 131 S.E.2d 775 (1963); Brogdon v. Purvis, 220 Ga. 28, 136 S.E.2d 719 (1964); Gaines v. Watts, 224 Ga. 321, 161 S.E.2d 830 (1968); Watts v. Gaines, 226 Ga. 503, 175 S.E.2d 871 (1970); DOT v. Livaditis, 129 Ga. App. 358, 199 S.E.2d 573 (1973); Hall v. Hall, 230 Ga. 873, 199 S.E.2d 798 (1973); Roberts v. Cameron-Brown Co., 556 F.2d 356 (5th Cir. 1977); Morgan v. Hawkins, 155 Ga. App. 836, 273 S.E.2d 221 (1980); Wessinger v. Spivey (In re Galbreath), 475 Bankr. 749 (Bankr. S.D. Ga. 2003).

Equitable Relief Generally

To determine whether equity will set aside an award for fraud, §§ 23-2-54 and23-2-60 must be construed together. Tinsley v. Maddox, 176 Ga. 471, 168 S.E. 297 (1933).

Fraud will authorize a court of equity to set aside a written instrument. Lanning v. Sockwell, 137 Ga. App. 479, 224 S.E.2d 119 (1976).

When the failure to perform the promised act is coupled with the present intention not to perform, fraud, in the legal sense, is present. This is known as inceptive fraud, and is sufficient to support an action for cancellation of a written instrument. Hinson v. Hinson, 221 Ga. 291, 144 S.E.2d 381 (1965); Lanning v. Sockwell, 137 Ga. App. 479, 224 S.E.2d 119 (1976).

Where it is alleged that the sole consideration for the execution of the deed from the grantor to the grantee is the promise of the grantees to support, maintain, provide, and care for a third party, and that this promise is made by the grantees fraudulently and for the purpose of securing the signature of the grantor, to the conveyance, and that the grantees never intend to comply with their agreement, the allegations are sufficient to state a cause of action on the ground of inceptive fraud. Bucher v. Christopher, 211 Ga. 317, 85 S.E.2d 760 (1955).

Any representation, act, or artifice intended to deceive, and which does deceive another, is such a fraud as may authorize cancellation of a written contract, but a party to a contract who can read must read or show a legal excuse for not doing so, and ordinarily, if fraud is the excuse, it must be such fraud as prevents the party from reading; nor in such case will a mere fraudulent statement by the opposite party or his agent as to the contents of the writing furnish a legal excuse. And where the contract is a deed to land, the rule will generally apply to the grantee as well as the grantor. Livingston v. Barnett, 193 Ga. 640, 19 S.E.2d 385 (1942).

A cancellation obtained by fraud or mistake without payment may itself be canceled by equity. Grimmett v. Barnwell, 184 Ga. 461, 192 S.E. 191 (1937); Lanning v. Sockwell, 137 Ga. App. 479, 224 S.E.2d 119 (1976).

If the execution of the contract was merely one of the incidents or stages by which the deed plaintiff sought to cancel was procured, evidence tending to show that the contract itself was procured by fraud was admissible for the purpose of canceling the deed. Morton v. Wallace, 177 Ga. 856, 171 S.E. 720 (1933).

While the terms of an absolute deed cannot be varied by limiting the grantee to a use of the land in a manner not restricted by the express terms of the deed, it may nevertheless be alleged and proved that it was induced by fraud, without denying or varying any of the stipulations or conditions contained in the deed. Bucher v. Christopher, 211 Ga. 317, 85 S.E.2d 760 (1955).

Where land is owned by two persons, and one obtains a deed from the other to his interest by means of an intentionally false and fraudulent promise to sell the land at its true value and pay off an encumbrance and account for the balance, or failing to find a purchaser, he will procure a new loan to discharge the present encumbrance, and after obtaining the title he retains and claims the property as absolutely his own, this transaction by which the ownership is obtained is such a fraud as will entitle the grantor to have the deed canceled. Smith v. Merck, 206 Ga. 361, 57 S.E.2d 326 (1950).

Equity will grant relief where the transfer of a valuable property has been fraudulently extorted, for a grossly inadequate consideration, from a person while in such a state of intoxication as to render him incapable of transacting business. Ealy v. Tolbert, 209 Ga. 575, 74 S.E.2d 867, later appeal, 210 Ga. 96, 78 S.E.2d 26 (1953).

Where a party at the time of entering into a contract or executing an instrument is intoxicated to such a degree as to deprive him of his reason and to disqualify his mind to apprehend the nature of his act and its probable consequences, a court of equity may grant relief by rescission and cancellation. McKaig v. Hardy, 196 Ga. 582, 27 S.E.2d 11 (1943); Ealy v. Tolbert, 209 Ga. 575, 74 S.E.2d 867, later appeal, 210 Ga. 96, 78 S.E.2d 26 (1953).

As against one who by fraud during the lifetime of deceased husband induced the latter to execute to him a deed to realty, equity will afford the widow, as personal representative, a remedy to cancel and set aside the deed and incidentally to preserve and apply rents issuing from such realty. Ealy v. Tolbert, 209 Ga. 575, 74 S.E.2d 867, later appeal, 210 Ga. 96, 78 S.E.2d 26 (1953).

Equity has jurisdiction to reform written instruments where there has been a mistake on the part of one of the parties, accompanied by fraud or inequitable conduct on the part of the other party, just as in cases where there is a mutual mistake. Thompson v. Thompson, 203 Ga. 128, 45 S.E.2d 632 (1947); Wellborn v. Johnson, 204 Ga. 389, 50 S.E.2d 16 (1948).

Petition contained sufficient allegations to show mistake on the part of the petitioner and fraud on the part of her own attorney, known to the attorney for the husband, and alleged a cause of action for reformation of contract between the parties and for modification of the judgment in the divorce suit accordingly. Thompson v. Thompson, 203 Ga. 128, 45 S.E.2d 632 (1947).

The general rule that an infant is bound by a judgment rendered in a suit in which he is represented by a next friend, to the same extent as though he were an adult, is subject to an exception in case of fraud, collusion, or like conduct on the part of the next friend, in which case the judgment may be set aside at the instance of the minor, even though it may be a consent judgment. Nelson v. Estill, 190 Ga. 235, 9 S.E.2d 73 (1940).

A decree adversely affecting the interests of minors, even though it be entered by consent of their father as next friend, may, if induced by fraud, duress, or the like, be set aside at their instance in a proper proceeding, and for that purpose they may sue by their mother as next friend. Nelson v. Estill, 190 Ga. 235, 9 S.E.2d 73 (1940).

As between the original parties thereto, fraud in its procurement voids a contract, and this upon the theory that, the consent of the parties being necessary to the binding force of a contract, if one, apparently consenting by the execution of a written contract, can show that he did not in fact consent to its terms as therein expressed, but that his apparent consent was induced by false and fraudulent practices, by means of which he was overreached by the other party, and, without negligence upon his own part, really deceived as to the terms of the contract, he would be entitled to be relieved from its apparent obligations. McKaig v. Hardy, 196 Ga. 582, 27 S.E.2d 11 (1943).

Statute of Limitations

An action to cancel a fraudulent deed must be brought within seven years from the discovery of the fraud. Harrison v. Holsenbeck, 208 Ga. 410, 67 S.E.2d 311 (1951).

While a deed to land procured by fraud will not ripen into prescriptive title regardless of the period of time possession is held thereunder, yet an action to cancel such deed upon the ground that it was fraudulently procured must be brought within seven years from the time the fraud is discovered, and is barred thereafter. Harrison v. Holsenbeck, 208 Ga. 410, 67 S.E.2d 311 (1951).

Pleading and Practice

While fraud may not be presumed, being in itself subtle, slight circumstances may be sufficient to carry conviction of its existence. Ringer v. Lockhart, 240 Ga. 82, 239 S.E.2d 349 (1977).

Slight evidence of fraud and undue influence may authorize the jury to cancel the deed. Harper v. Harper, 229 Ga. 583, 193 S.E.2d 616 (1972).

It is incumbent upon a party who attempts to rescind a contract for fraud to repudiate it promptly upon discovery of the fraud. Webb v. City of Atlanta, 188 Ga. 485, 4 S.E.2d 154 (1939).

Possession retained by the vendor, after an absolute sale of real or personal property, is prima facie evidence of fraud, which may be explained, and after the possession is proven, the burden of explaining it rests upon those who claim under the sale. Schoen v. Home Fed. Sav. & Loan Ass'n, 154 Ga. App. 68, 267 S.E.2d 466 (1980).

With proper pleadings and parties a judgment may be set aside in a court of law for fraud. Benton v. State Hwy. Dep't, 220 Ga. 674, 141 S.E.2d 396 (1965).

RESEARCH REFERENCES

Am. Jur. 2d.

- 27 Am. Jur. 2d, Equity, § 20.

C.J.S.

- 30 C.J.S., Equity, § 48.

ALR.

- Relief as regards outstanding money obligation in action for damages for fraud in inducing contract, 3 A.L.R. 74.

Right to recover back in an action at law money paid upon an existing judgment, procured by or grounded on fraud or mistake, 9 A.L.R. 400.

Necessity of participation by the grantee or transferee in the fraud of the grantor or transferor in order to avoid a voluntary conveyance or transfer as against creditors, 17 A.L.R. 728.

Necessity of exhausting remedies against other judgment debtor before bringing suit to set aside conveyance as fraudulent, 22 A.L.R. 200.

Does right of grantor to maintain a suit in equity to set aside his conveyance for cause survive to his heir, 33 A.L.R. 51.

Fraudulent misrepresentation or concealment by a contracting party concerning title to property or other subjects which are matters of public record, 33 A.L.R. 853, 56 A.L.R. 1217.

Right of one not in possession to maintain suit to remove cloud on title in case of fraud, 36 A.L.R. 698.

Fraud or perjury in misrepresenting status or relationship essential to the judgment as ground of relief from, or injunction against, judgment, 49 A.L.R. 1219.

Protection, as against third persons, of grantor tricked into delivering deed without getting cash payment contemplated, 57 A.L.R. 759.

Wife in respect of her right to maintenance or alimony as within protection of statute or rule avoiding conveyances or transfers in fraud of creditors or persons to whom maker is under legal liability, 79 A.L.R. 421.

Right to creditor to benefit of redemption from, acquisition or extinction of, outstanding right, title, or interest, by grantee or transferee in fraud of creditors, 87 A.L.R. 830.

Criterion of extrinsic fraud as distinguished from intrinsic fraud, as regards relief from judgment on ground of fraud, 88 A.L.R. 1201.

Principle which denies relief to party who has conveyed or transferred property in fraud of his creditors, as affected by execution, as part of, or as contemplated at time of, the fraudulent transaction, of reconveyance or retransfer of the property to him, 89 A.L.R. 1166.

Trustee's, executor's, administrator's, or guardian's purchase from or sale to corporation of which he is an officer or stockholder, as voidable or as ground for surcharging his account, 105 A.L.R. 449.

Avoidance on ground of fraud, mistake, duress, or mental incompetency of otherwise validly effected change of beneficiaries of insurance policies, 105 A.L.R. 950.

Form and particularity of allegations to raise issue of undue influence, 107 A.L.R. 832.

Return or tender of consideration for release or compromise as condition of action for rescission or cancellation, action upon original claim, or action for damages sustained by the fraud inducing the release or compromise, 134 A.L.R. 6.

Right to set aside, for benefit of heirs and distributees, a conveyance or transfer by decedent in fraud of his creditors, 148 A.L.R. 230.

Remedy available against invalid judgment in favor of United States, state, or other governmental unit immune to suit, 163 A.L.R. 244.

Fraud predicated upon vendor's misrepresentation of physical condition of real property, 174 A.L.R. 1010.

Concealment, misrepresentation, or mistake as regards identity of person for whom property is purchased as ground for cancellation of deed, 6 A.L.R.2d 812.

Capacity of cotenant to maintain suit to set aside conveyance of interest of another cotenant because of fraud, undue influence, or incompetency, 7 A.L.R.2d 1317.

Commitment of grantor to institution for insane as ground for setting aside conveyance in consideration of support, 18 A.L.R.2d 906.

Venue of action to set aside as fraudulent conveyance of real property, 37 A.L.R.2d 568.

Right of action for fraud, duress, or the like, causing instant plaintiff to release or compromise a cause of action against third person, 58 A.L.R.2d 500.

Accountability and liability for rents and profits of grantee of fraudulently conveyed real property, 60 A.L.R.2d 593.

Disqualification of arbitrator by court or stay of arbitration proceedings prior to award, on ground of interest, bias, prejudice, collusion, or fraud of arbitrators, 65 A.L.R.2d 755.

Conveyance as fraudulent where made in contemplation of possible liability for future tort, 38 A.L.R.3d 597.

Corporation's measure of recovery against promoter who has made secret profit in sale of property to corporation, 84 A.L.R.3d 162.

Wills: challenge in collateral proceeding to decree admitting will to probate, on ground of fraud inducing complainant not to resist probate, 84 A.L.R.3d 1119.

Action based upon reconveyance, upon promise of reconciliation, of property realized from divorce award or settlement, 99 A.L.R.3d 1248.

Rule denying recovery of property to one who conveyed to defraud creditors as applicable where the claim which motivated the conveyance was never established, 6 A.L.R.4th 862.

ARTICLE 4 ACCOUNTING OF CONTRIBUTION; APPORTIONMENT; SETOFF

23-2-70. Scope of equity jurisdiction over matters of account.

Equity jurisdiction over matters of account shall extend to:

  1. Mutual accounts growing out of privity of contract;
  2. Cases where accounts are complicated and intricate;
  3. Cases where a discovery or writ of ne exeat is prayed and granted;
  4. Cases where the account is of a trust fund;
  5. Accounts between partners or tenants in common; and
  6. Cases where a multiplicity of actions would render a trial difficult, expensive, and unsatisfactory at law.

(Orig. Code 1863, § 3063; Code 1868, § 3075; Code 1873, § 3130; Code 1882, § 3130; Civil Code 1895, § 3989; Civil Code 1910, § 4586; Code 1933, § 37-301.)

Law reviews.

- For article, "Some Problems in Providing for Nonjudicial Settlement of the Trustee's Accounts," see 3 Ga. St. B.J. 417 (1967).

JUDICIAL DECISIONS

General Consideration

An accounting may be had at law.

- The mere necessity of accounting to ascertain the amount due on a contract is insufficient to give equity jurisdiction to order an accounting. Insurance Ctr., Inc. v. Hamilton, 218 Ga. 597, 129 S.E.2d 801 (1963).

Therefore, an equitable accounting is not a proceeding to which every litigant has a right. It is granted only in carefully prescribed and determined circumstances, such as when an accounting at law is inadequate, and when the relationships and dealings between the parties are as set forth in this section. Herring v. Standard Guar. Ins. Co., 238 Ga. 261, 232 S.E.2d 544 (1977).

An equitable accounting is evidentiary in nature but the determination that an equitable accounting will be ordered is an interlocutory or preliminary matter separate and distinct from the equitable accounting itself. Herring v. Standard Guar. Ins. Co., 238 Ga. 261, 232 S.E.2d 544 (1977).

Right to attorney fees.

- Because there were no excess proceeds from the foreclosure sale to which a condominium association would have been entitled, and regardless of whether it was the owner of the condominium at the time of the foreclosure it was not entitled to an equitable accounting, the association was also properly denied attorney fees under O.C.G.A. § 13-6-11 resulting from the bank's failure to provide an equitable accounting. Riverview Condo. Ass'n v. Ocwen Fed. Bank, FSB, 285 Ga. App. 7, 645 S.E.2d 5 (2007), cert. denied, No. S07C1254, 2007 Ga. LEXIS 705 (Ga. 2007).

This section contemplates only petitions in equity involving the traditional filing of the action and the issuance and service of process. Bodrey v. Bodrey, 225 Ga. 822, 171 S.E.2d 614 (1969), rev'd on other grounds sub nom. Wiley v. Wiley, 233 Ga. 824, 213 S.E.2d 682 (1975).

Hence, equity does not have jurisdiction merely because the application for partition prays for an accounting as to common grantors where there was no filing of an action and summons and process. Bodrey v. Bodrey, 225 Ga. 822, 171 S.E.2d 614 (1969), rev'd on other grounds sub nom. Wiley v. Wiley, 233 Ga. 824, 213 S.E.2d 682 (1975).

Where a fiduciary relation exists, an accounting in equity is proper. Atlanta Trust Co. v. National Bondholders Corp., 188 Ga. 761, 4 S.E.2d 644 (1939).

So, where petitioners, remainder legatees under their mother's will, sued defendant in three different capacities, namely, as trustee for the life estate under the will, as executrix, and as an individual, seeking an injunction against the sale of realty of the estate, partition, judgment, an accounting, and other and further relief, petitioners were entitled to an accounting. Matson v. Crowe, 193 Ga. 578, 19 S.E.2d 288 (1942).

In a proceeding to obtain an accounting, the complainant is not obliged to show how much is due, provided he avers facts sufficient to indicate that something will be found to be due him by the defendant. Atlanta Trust Co. v. National Bondholders Corp., 188 Ga. 761, 4 S.E.2d 644 (1939).

An injunction may be granted to continue during an accounting. Henderson v. Turner, 36 Ga. 263 (1867).

Action for accounting pending in court of law not automatically subject to injunction by filing equitable action.

- Where it appears from a petition praying for an accounting that there was pending in another court an action by the corporate defendant against the plaintiff, such court being empowered to render an accounting between the parties, and no special reason being set out why a court of equity should assume jurisdiction for such purpose, equity will not enjoin the proceedings and processes of a court of law in the absence of some intervening equity or other proper defense of which the party, without fault on his part, cannot avail himself at law. Peeples v. Peeples, 193 Ga. 358, 18 S.E.2d 629 (1942).

There must be some special reason why a court proceeding in equity should take charge of an action where an accounting is requested, the petition must show, and this means more than the mere assertion of a conclusion, some reason why the remedy at law is inadequate. Peeples v. Peeples, 193 Ga. 358, 18 S.E.2d 629 (1942).

When transfer of accounting case from Supreme Court to Court of Appeals mandatory.

- A suit for an accounting case, on appeal, must be transferred to the Court of Appeals from the Supreme Court, where the alleged facts show no unusual complication in the transactions or other ground for equitable relief additional to the relief which might be afforded by an accounting and judgment at law. Universal Garage Co. v. Fowler, 184 Ga. 604, 192 S.E. 299 (1937).

Borrower was not entitled to an equitable accounting because the borrower failed to allege facts sufficient to show that the borrower lacked an adequate remedy at law to ascertain the amount due on the borrower's loan. Phillips v. Ocwen Loan Servicing, LLC, F. Supp. 2d (N.D. Ga. Sept. 10, 2013).

Cited in McLaren v. Steapp, 1 Ga. 376 (1846); Napier v. Napier, 6 Ga. 404 (1849); Shivers v. Palmer, 14 Ga. 342 (1853); McRarey v. Huff, 32 Ga. 681 (1861); Dill v. McGehee, 34 Ga. 438 (1886); McDonald v. Davies, 43 Ga. 356 (1871); Wilson & Co. v. Riddle, 48 Ga. 609 (1873); Sloan v. Cooper, 54 Ga. 486 (1875); Epping v. Aiken, 71 Ga. 682 (1883); Neel v. Morris, 73 Ga. 406 (1884); Gould v. Barrow, 117 Ga. 458, 43 S.E. 702 (1903); Allen v. Grant, 122 Ga. 552, 50 S.E. 494 (1905); Houston v. Polk, 124 Ga. 103, 52 S.E. 83 (1905); McArthur v. Jordan, 139 Ga. 304, 77 S.E. 150 (1913); Greer v. Jackson, 146 Ga. 376, 91 S.E. 417 (1917); McKey v. Wright, 147 Ga. 662, 95 S.E. 217 (1918); Central of Ga. Ry. v. Wright, 148 Ga. 86, 95 S.E. 963 (1918); Burress v. Montgomery, 148 Ga. 548, 97 S.E. 538 (1918); Mathewson v. Reed, 149 Ga. 217, 99 S.E. 854 (1919); Payne v. West Point Whsle. Grocery Co., 151 Ga. 46, 105 S.E. 608 (1921); Pickens v. Jackson, 152 Ga. 100, 108 S.E. 536 (1921); Goolsby v. Board of Drainage Comm'rs, 156 Ga. 213, 119 S.E. 644 (1923); Arthur Tufts Co. v. DeJarnette Supply Co., 158 Ga. 85, 123 S.E. 16 (1924); Thigpen v. Aldred, 175 Ga. 120, 165 S.E. 27 (1932); City of Macon v. Ries, 179 Ga. 320, 176 S.E. 21 (1934); New Winder Lumber Co. v. Guest, 182 Ga. 859, 187 S.E. 63 (1936); Kennedy v. Howard, 183 Ga. 410, 188 S.E. 673 (1936); Grimmett v. Barnwell, 184 Ga. 461, 192 S.E. 191 (1937); Henderson v. Curtis, 185 Ga. 390, 195 S.E. 152 (1938); Reynolds v. Hyers, 190 Ga. 200, 9 S.E.2d 78 (1940); Park v. Park, 37 F. Supp. 185 (N.D. Ga. 1941); O'Rear v. Lamb, 194 Ga. 455, 22 S.E.2d 74 (1942); Clement A. Evans & Co. v. Waggoner, 197 Ga. 857, 30 S.E.2d 915 (1944); Martin v. Home Owners Loan Corp., 198 Ga. 288, 31 S.E.2d 407 (1944); Clark v. Bandy, 198 Ga. 564, 32 S.E.2d 245 (1944); Fulmer v. Wilkins, 201 Ga. 322, 39 S.E.2d 405 (1946); Walker Elec. Co. v. Walton, 203 Ga. 246, 46 S.E.2d 184 (1948); Regents of Univ. Sys. v. Carroll, 203 Ga. 292, 46 S.E.2d 496 (1948); Ballenger v. Houston, 207 Ga. 438, 62 S.E.2d 189 (1950); West View Corp. v. Thunderbolt Yacht Basin, Inc., 208 Ga. 93, 65 S.E.2d 167 (1951); Cashin v. Markwalter, 208 Ga. 444, 67 S.E.2d 226 (1951); Gaulding v. Courts, 210 Ga. 527, 81 S.E.2d 460 (1954); Adams v. McGehee, 211 Ga. 498, 86 S.E.2d 525 (1955); Johnson v. Wilson, 212 Ga. 264, 91 S.E.2d 758 (1956); Kirchman v. Kirchman, 212 Ga. 488, 93 S.E.2d 685 (1956); Douglas-Guardian Whse. Corp. v. Todd, 212 Ga. 791, 96 S.E.2d 275 (1957); Springs v. Bulloch, 213 Ga. 164, 97 S.E.2d 582 (1957); Harrison v. Harrison, 214 Ga. 393, 105 S.E.2d 214 (1958); Mendenhall v. Kingloff, 215 Ga. 726, 113 S.E.2d 449 (1960); Gandy v. Robinson Co., 216 Ga. 190, 115 S.E.2d 341 (1960); Edwards v. United Stone & Allied Prods. Workers of Am., 220 Ga. 183, 137 S.E.2d 632 (1964); Rogers v. Griggs, 134 Ga. App. 528, 215 S.E.2d 291 (1975); Meredith v. Smith & Shiver, 157 Ga. App. 522, 277 S.E.2d 805 (1981); Faircloth v. A.L. Williams & Assocs., 219 Ga. App. 560, 465 S.E.2d 722 (1995); HAAC Chile, S.A. v. Bland Farms, LLC, F. Supp. 2d (S.D. Ga. Aug. 26, 2008).

Mutual Accounts

Mutual accounts may be setoff at law by § 13-7-4 although equity has jurisdiction under this section. Hardin v. Stanton, 14 Ga. App. 299, 80 S.E. 698 (1914).

An agent must account to his principal where he has sold unknown quantities of goods to third persons. Mitchem v. Georgia Cotton Oil Co., 139 Ga. 519, 77 S.E. 627 (1913).

Complicated and Intricate Accounts

Facts rendering equitable accounting proper.

- The life tenant having sustained a fiduciary relationship to the plaintiff, a remainderman, and the subject matter of the accounting being shown to be complicated because of the life tenant confusing and commingling her own funds with the money which upon her death became part of the remainder estate, the accounting, properly granted, is an equitable accounting. Perkins v. First Nat'l Bank, 221 Ga. 82, 143 S.E.2d 474 (1965).

Equitable accounting was unavailable absent allegations that the accounts were particularly complicated or that the amount owed could not be determined through the discovery process. Ralls Corp. v. Huerfano River Wind, LLC, 27 F. Supp. 3d 1303 (N.D. Ga. 2014).

Trust Fund Account

Remedy when trustee's funds commingled with trust funds.

- Where a trustee has so mingled the trust funds with his own estate that they cannot be distinguished, a cestui que trust may bring a bill in equity to reach the trustee's interest. Evans v. Pennington, 50 Ga. App. 146, 177 S.E. 357 (1934).

Partners or Tenants in Common

A court of equity has jurisdiction in all cases of an accounting and settlement between partners. Smith v. Hancock, 163 Ga. 222, 136 S.E. 52 (1926).

An accounting without dissolution will be granted where one partner refuses to allow another to participate in the business. Hogan v. Walsh, 122 Ga. 283, 50 S.E. 84 (1905); Zerounis v. Berry, 199 Ga. 410, 34 S.E.2d 275 (1945).

A prayer that one partner be compelled to pay another one-half of the net profit of the business includes a prayer for accounting. Bennett v. Woolfolk, 15 Ga. 213 (1854).

Depreciation of assets subsequent to the dissolution must be borne by the partnership. Houston v. Polk, 124 Ga. 103, 52 S.E. 83 (1905).

Partners may have a receiver appointed to settle the partnership affairs. Bennett v. Smith, 108 Ga. 466, 34 S.E. 156 (1899).

The waiver of discovery by a partner is immaterial. Huger v. Cunningham, 126 Ga. 684, 56 S.E. 64 (1906).

When equitable action not maintainable.

- Where the plaintiff contends all partnership relations between the plaintiff and the defendant have come to an end, that a balance has been struck, and that an indebtedness is allegedly due by the defendant to the plaintiff, which cannot be affected by any transactions between the partnership and its creditors or debtors, this is not an equitable action by a member of a firm against his copartner, but an action of law, one man against another who had formerly been his partner, upon an indebtedness a part of which grew out of the formerly existing partnership between them. Manry v. Hendricks, 192 Ga. 319, 15 S.E.2d 434 (1941).

Hence, action for accounting not tenable in equity.

- Where the partnership has been fully dissolved by written contract and the rights of each party definitely established, in case of a breach of such contract equity will not order an accounting, as the remedy is at law. Manry v. Hendricks, 192 Ga. 319, 15 S.E.2d 434 (1941).

Where an accounting is involved a city court is without jurisdiction. Dixon v. Hyde, 25 Ga. App. 84, 102 S.E. 910 (1920).

Cotenant may be compelled in equity to account to another for a just share of the profits. Huff v. McDonald, 22 Ga. 131, 68 Am. Dec. 487 (1857).

Equity has concurrent jurisdiction with courts of law, over matters of account between tenants in common, and when asserted, a court will hold and exercise equitable jurisdiction for the purpose of settling all the equities between the tenants, growing out of the tenancy in common. Bailey v. Bell, 209 Ga. 566, 74 S.E.2d 881 (1953).

A case in equity is presented by a petition which not only embraces a statutory application for partition, but also prays for an accounting from cotenants for rents and profits. Werner v. Werner, 196 Ga. 1, 25 S.E.2d 676 (1943).

Exercise by the superior court of its equity jurisdiction to fully and adequately resolve all issues between tenants in common would not be an interference with the orderly administration of estate. Evans v. Little, 246 Ga. 219, 271 S.E.2d 138 (1980).

When action for partitioning and accounting proper.

- Where a number of cotenants are in possession of all of the common property, and are collecting the rents and profits thereof, an equitable action for partitioning and accounting by those not in possession of the property is a proper remedy. Bailey v. Bell, 209 Ga. 566, 74 S.E.2d 881 (1953).

Accounting between cotenants for a just share of the profits is applicable where a partition of the land is granted. Turnbull v. Foster, 116 Ga. 765, 43 S.E. 42 (1902).

A court may entertain a partition proceeding without trying first, or in connection therewith, a suit for accounting concerning the same property held in cotenancy. Lankford v. Milhollin, 200 Ga. 512, 37 S.E.2d 197 (1946).

And it is within the power of the court to order a sale of the common property prior to the trial of the main accounting suit. Whether such partition proceeding is heard before the trial of the suit for accounting is a matter resting within the sound discretion of the court. Lankford v. Milhollin, 200 Ga. 512, 37 S.E.2d 197 (1946).

While equity jurisdiction ceases where the Legislature gives a specific remedy at law, and while a specific legal remedy for partition is provided by Subpart 2, Part 2, Art. 7, Ch. 6, T. 44, and under § 44-6-140 equity will not ordinarily take cognizance of a partition proceeding unless the remedy at law is insufficient, or peculiar circumstances render the proceeding in equity more suitable and just, accounting between tenants in common will alone and of itself give a court of equity jurisdiction of a partition proceeding, whether or not there are other peculiar circumstances which render the proceeding in equity more suitable and just. Mills v. Williams, 208 Ga. 425, 67 S.E.2d 212 (1951).

Counterclaim for partition by sale proper.

- Where a tenant-in-common sues his cotenant for an accounting and for rents and profits, and a cross action (now counterclaim) is filed by the latter for partition by sale of the common property, such cross action (now counterclaim) is germane to the original action, and the court may direct partition by sale where it appears that the common property cannot be fairly and equitably divided by metes and bounds and it is proper for the decree to direct that the funds be held in court pending the trial of the action for accounting. Lankford v. Milhollin, 200 Ga. 512, 37 S.E.2d 197 (1946).

Distribution of sales proceeds upheld.

- In a dispute over real property and specific performance of a Redemption Agreement, the trial court did not abuse the court's discretion in making an equitable award because O.C.G.A. §§ 44-6-140 and44-6-141 granted the court the authority to adjust the accounts and claims of the parties as required by the circumstances and, more specifically, authorized the trial court to consider all of the circumstances, including any circumstances that occurred after the making of the contract. Bagwell v. Trammel, 297 Ga. 873, 778 S.E.2d 173 (2015).

Accessory to misapplication of trust funds accountable to injured person.

- One who aids and assists a trustee in misapplying trust funds, with knowledge of his misconduct, is directly accountable to the person injured by such misapplication, even though the person thus assisting the trustee does not himself reap the fruits of the misappropriation. Atlanta Trust Co. v. National Bondholders Corp., 188 Ga. 761, 4 S.E.2d 644 (1939).

And the person injured by the misconduct may join in one suit the person occupying the fiduciary relationship and one who aids and assists him in misapplying trust assets. Atlanta Trust Co. v. National Bondholders Corp., 188 Ga. 761, 4 S.E.2d 644 (1939).

Some evidence admissible in accounting action.

- In an action for accounting and other relief between joint owners of property, tax receipts tending to show that one of the owners had paid the tax on the joint property for certain years were admissible. Head v. Lee, 203 Ga. 191, 45 S.E.2d 666 (1947).

Effect of consent decree on equitable action between cotenants.

- Where one tenant in common brings an equitable action against his cotenants for partition of land and for an accounting of rents, issues, and profits, and a consent decree is taken, fixing the rights and liabilities of the parties as between themselves, and decreeing their respective interests in the land, in the further progress of the case, where the decree is not attacked, the parties will not be permitted to go behind the decree so as to reopen the subject. All prior agreements and controversies between the parties, whether such were expressly pleaded or not, are merged in the decree. Johnson v. James, 246 Ga. 680, 272 S.E.2d 692 (1980).

Multiplicity of Actions

Equitable jurisdiction not grounded on avoidance of multiplicity of actions alone.

- While avoidance of a multiplicity of actions, in a proper case, may be considered as an independent ground of equitable jurisdiction, and not a mere auxiliary to other equities present, it does not alone create an equitable cause of action, regardless of other circumstances. Dobbs v. FDIC, 187 Ga. 569, 1 S.E.2d 672 (1939).

Consolidation of actions seeking equitable accounting warranted.

- Where the issue in dispossessory warrant and distress warrant proceedings is the same, to wit: does the lessee in those cases owe any rent to the lessor therein? and where a third case involves the same lease contract, the same parties, and the same claims for rent, and the lessee's petition asserts a defense to the lessor's claims on the ground that, upon an equitable accounting, it will be found that the lessee does not owe the lessor any sum as rent, but that on the contrary the lessor is liable to the lessee, and the lease contract has not terminated, the three cases should be consolidated. West View Corp. v. Thunderbolt Yacht Basin, Inc., 208 Ga. 93, 65 S.E.2d 167 (1951).

Because an employee had a breach of contract claim for failure to pay the employee severance that came with the availability of extensive discovery, the employee had an adequate remedy at law, and the trial court did not err in granting the employer's motion for summary judgment on the employee's equitable accounting claim. Vernon v. Assurance Forensic Accounting, LLC, 333 Ga. App. 377, 774 S.E.2d 197 (2015), cert. denied, No. S15C1837, 2015 Ga. LEXIS 864 (Ga. 2015).

RESEARCH REFERENCES

Am. Jur. 2d.

- 1 Am. Jur. 2d, Accounts and Accounting, § 52 et seq.

ALR.

- Rights of cotenants inter se as to timber, 2 A.L.R. 993, 41 A.L.R. 582.

Avoidance of multiplicity of suits as ground of jurisdiction in equity of a suit by one out of possession to quiet title against persons in possession of different portions of the land in severalty, 30 A.L.R. 109.

Accounting in equity in case of tort, 53 A.L.R. 815.

Right of owner of property to maintain bill for accounting against lien holder or pledgee, 79 A.L.R. 201.

Propriety of suit in equity by or against several insurers under fire policies covering same risk, 98 A.L.R. 181.

Previous demand for, and refusal of, an accounting, as condition of actions of account or for an accounting, 143 A.L.R. 1211.

Availability of equitable remedy of accounting between principal and agent, 3 A.L.R.2d 1310.

Delay as defense to action for accounting between joint adventurers, 13 A.L.R.2d 765.

Equity jurisdiction to determine valuation, where arbitration or appraisal has failed, under long-term lease providing for appraisal of premises and fixing rental value at stated intervals, 26 A.L.R.2d 744.

Right of partner or joint adventurer to accounting where firm business or transactions are illegal, 32 A.L.R.2d 1345.

Right to accounting between attorneys associated in practice, in absence of formal partnership, 81 A.L.R.2d 1420.

23-2-71. Entitlement to contribution; when equity has jurisdiction.

In cases of joint, joint and several, or several liabilities of two or more persons, where all are equally bound to bear the common burden and one has paid more than his share, he shall be entitled to contribution from the others; and whenever the circumstances are such that an action at law will not give a complete remedy, equity may entertain jurisdiction.

(Orig. Code 1863, § 3065; Code 1868, § 3077; Code 1873, § 3132; Code 1882, § 3132; Civil Code 1895, § 3991; Civil Code 1910, § 4588; Code 1933, § 37-303.)

Cross references.

- Right to contribution among joint trespassers, § 51-12-32.

Law reviews.

- For note, "Contribution Among Joint Tortfeasors," see 12 Ga. L. Rev. 553 (1978).

JUDICIAL DECISIONS

When contribution can be granted as relief.

- Contribution cannot properly be granted as affirmative relief unless the party claiming such relief has been compelled to discharge a liability for which he and the other party were equally bound. Klausman v. Klausman, 186 Ga. App. 669, 368 S.E.2d 185, cert. denied, 186 Ga. App. 918, 368 S.E.2d 185 (1988).

Enforcement of execution to compel contribution from joint defendants.

- Joint defendants who have paid an execution against themselves and others, and procured a written transfer of it from the plaintiff in fi. fa., may enforce the execution against other defendants for contribution. Miller v. Perkerson, 128 Ga. 465, 57 S.E. 787 (1907).

An agreement between the parties may absolve one of them from any duty to contribute. Chattahoochee Brick Co. v. Braswell, 92 Ga. 631, 18 S.E. 1015 (1893).

Relationship of joint tort-feasors required for right to contribution.

- In an action by tenants' insurers against suppliers of building materials for losses due to fire damage to the building, the suppliers did not have a right to contribution from the landlord since the tenants and the landlord had agreed in leases not to sue each other before for losses covered by insurance; thus, no cause of action by the insurers against the landlord ever arose and the landlord could not be a joint tort-feasor with the suppliers. Glazer v. Crescent Wallcoverings, Inc., 215 Ga. App. 492, 451 S.E.2d 509 (1994).

While the doctrine of contribution originated in courts of equity, it was subsequently adopted by courts of law and is now universally applied therein. In order to make the doctrine consistent with the forms, theories, and practices of courts of law, the fiction of an implied contract by one obligor to contribute to another coobligor who had been compelled to pay the whole obligation was adopted. Watkins v. Woodbery, 148 Ga. 249, 96 S.E. 338 (1918); Powell v. Powell, 171 Ga. 840, 156 S.E. 677 (1931), later appeal, 179 Ga. 817, 117 S.E. 566 (1934); Black v. Davidson, 65 Ga. App. 780, 16