Cross references. - Regulations pertaining to rates of interest generally, T. 7, C. 4.

Suretyship, T. 10, C. 7.

CHAPTER 1 GENERAL PROVISIONS

Reserved

CHAPTER 2 DEBTOR AND CREDITOR RELATIONS

General Provisions.

Acts Void as Against Creditors.

Preferences and Assignments for Benefit of Creditors.

Uniform Voidable Transactions Act.

Cross references. - Effect of new promise to pay a debt as reviving or extending original liability, § 9-3-110 et seq.

Right of debtor to direct claim to which payment to creditor shall be appropriated, § 13-4-42 .

Release generally, § 13-4-80 .

Accord and satisfaction, § 13-4-100 et seq.

RESEARCH REFERENCES

ALR. - Previous debtor and creditor relationship as condition of account stated, 6 A.L.R.2d 113.

Creditor's failure to disclose correct amount due as affecting sufficiency of debtor's tender of amount which debtor believes to be due, but which is less than amount actually due, 82 A.L.R.3d 1178.

Right of judgment creditor to demand that debtor's tender of payment be in cash or by certified check rather than by uncertified check, 82 A.L.R.3d 1199.

Necessity and sufficiency, in order to toll statute of limitations as to debt, of statement of amount of debt in acknowledgment or new promise to pay, 21 A.L.R.4th 1121.

ARTICLE 1 GENERAL PROVISIONS

RESEARCH REFERENCES

ALR. - Presumption of payment from lapse of time, 1 A.L.R. 779 .

Binding effect of promise to pay debt discharged in bankruptcy where compromise was made by bankrupt with creditors, 1 A.L.R. 1704 .

Counterclaim or set-off as affecting rule as to part payment of a liquidated and undisputed debt, 4 A.L.R. 474 ; 53 A.L.R. 768 .

Judgment against claim based on original form of indebtedness as res judicata as to claim based on new or substituted obligation, 4 A.L.R. 1173 .

Creditor's receipt of proceeds of conveyance or transfer by debtor as estopping him to claim that conveyance or transfer was fraudulent, 9 A.L.R. 358 .

Right of creditors as against directors or officers to whom property of a corporation has been transferred for a consideration other than payment of debts due them, 9 A.L.R. 1447 .

Payment of entire claim of third person as condition of subrogation, 9 A.L.R. 1596 ; 32 A.L.R. 568 , 46 A.L.R. 857 , 53 A.L.R. 304 , 91 A.L.R. 855 .

Gift of debt of third person not evidenced by commercial instrument, 14 A.L.R. 707 .

Gift of debtor's services to third person as fraud on creditors, 28 A.L.R. 1046 .

Prerogative right of county or other political subdivision to preference in assets of insolvent, 36 A.L.R. 640 ; 52 A.L.R. 755 , 90 A.L.R. 208 .

Right of retainer in respect of indebtedness of heir, legatee, or distributee, 75 A.L.R. 878 ; 110 A.L.R. 1384 , 164 A.L.R. 717 .

May account stated be predicated on rendition and acceptance of a bare statement of balance due without enumeration of original items, 84 A.L.R. 114 .

Effect of bankruptcy of contractor or subcontractor upon mechanics' liens of his subcontractors, laborers, and materialmen, 98 A.L.R. 323 .

Duty of innocent creditor to restore to third person money or other property of the latter received as result of fraud or mistake in transaction between debtor and third person, 114 A.L.R. 382 .

Rights as between creditors of fraudulent grantor, where one or more of them, in payment of or as security for his debt, receives deed or mortgage from fraudulent grantee, 114 A.L.R. 406 .

To whom must acknowledgment, new promise, or payment be made in order to toll statute of limitations after creditor's death, 117 A.L.R. 224 .

Creditor's release of, or promise to release, guarantor as affected by existence or sufficiency of consideration, 126 A.L.R. 1241 .

Right of one whose property without his consent was fraudulently or mistakenly applied to an indebtedness for which he was not responsible, to be subrogated to creditor's rights or security held by him, 129 A.L.R. 196 .

Bankruptcy of debtor as affecting necessity of compliance with conditions precedent to enforcement of bond in attachement or other judicial proceeding, 130 A.L.R. 1162 .

Discharge in bankruptcy of one spouse as bar to satisfaction of obligation of both spouses out of property owned by them by entireties, 130 A.L.R. 1244 .

Agreement postponing payment of pre-existing debt until happening of some specific contingency wholly or partially within debtor-promisor's control as requiring payment within a reasonable time, even though the contingent event has not occurred, 148 A.L.R. 1075 .

Death of one of two or more judgment debtors as necessitating revival before execution, 165 A.L.R. 921 .

Exemption of proceeds of national service life insurance from claim of creditors, 54 A.L.R.2d 1335.

Enforceability, in forum, of extraterritorial waiver of debtor's exemption valid where made, 60 A.L.R.2d 1449.

Gift of debt to debtor, 63 A.L.R.2d 259.

Creditor's participation in alleged act of bankruptcy as precluding him from filing or joining in involuntary petition, 6 A.L.R.3d 476.

Validity and effect of agreement that debt or legal obligation contemporaneously or subsequently incurred shall be canceled by death of creditor or obligee, 11 A.L.R.3d 1427.

Liability of director or dominant shareholder for enforcing debt legally owed him by corporation, 56 A.L.R.3d 212.

Garnishee's duty to give debtor notice of garnishment prior to delivery of money without judgment against the garnishee on the debt, 36 A.L.R.4th 824.

18-2-1. Creation of relationship of debtor and creditor.

Whenever one person, by contract or by law, is liable and bound to pay to another an amount of money, certain or uncertain, the relation of debtor and creditor exists between them.

(Orig. Code 1863, § 1946; Code 1868, § 1934; Code 1873, § 1944; Code 1882, § 1944; Civil Code 1895, § 2686; Civil Code 1910, § 3215; Code 1933, § 28-101.)

JUDICIAL DECISIONS

ANALYSIS

General Consideration

O.C.G.A. § 18-2-1 gives generic meaning of term "creditor." - While generic meaning of term "creditor," was defined by former Civil Code 1910, § 3215 (see now O.C.G.A. § 18-2-1 ), it was used in former Civil Code 1910, § 2220 (see now O.C.G.A. § 14-4-63 ) in its more circumscribed and ordinary meaning as denoting a holder of an obligation arising ex contractu. Howard v. Long, 142 Ga. 789 , 83 S.E. 852 (1914).

Liability for conversion included. - Relationship of debtor and creditor is defined broader than is generally supposed, and would seem to include liability for wrongful conversion of property for which trover would lie. Banks v. McCandless, 119 Ga. 793 , 47 S.E. 332 (1904).

Liability for trespass. - Words "liable and bound by law to pay another an amount of money, certain or uncertain," certainly were broad enough to embrace a person liable to pay for trespass, and that before amount of trespass, or extent of damage, was ascertained; for the words were, "an amount of money, certain or uncertain." Powell v. Westmoreland, 60 Ga. 572 (1878).

Relation between stock certificate holder and issuing association. - True relation between holder of certificate of stock in loan and building association and association is neither more nor less than that of debtor and creditor. Cook v. Equitable Bldg. & Loan Ass'n, 104 Ga. 814 , 30 S.E. 911 (1898); Cashen v. Southern Mut. Bldg. & Loan Ass'n, 114 Ga. 983 , 41 S.E. 51 (1902).

Right to set aside fraudulent transfers. - Former Civil Code 1933, §§ 28-101, 28-102, 28-201, and 28-202 (see now O.C.G.A. § 18-2-1 , 18-2-20 , 18-2-22 and 18-2-23 [see now, also, O.C.G.A. § 18-2-70 ]) provide creditors with the right to set aside fraudulent transfers, and this remedy was available to any creditor at time of transfer who thereafter reduces the creditor's claim to judgment lien. United States v. Hickox, 356 F.2d 969 (5th Cir. 1966).

Renunciation of lien privileges. - Judgment creditor may lose, surrender, or waive benefit of creditor's lien by renunciation of privileges secured by such lien. Law v. Coleman, 173 Ga. 68 , 159 S.E. 679 (1931).

Principal of dissolved corporate business still subject to unliquidated claim. - Unliquidated tort claims by a customer against a car dealership survived as a debt owed to the customer by the principal of the dealership, to whom the dealership had conveyed the dealership's assets while insolvent; furthermore, the principal's responses to and filing of summary judgment motions, and participation in the lawsuit in other ways, waived any objections to the trial court's exercise of personal jurisdiction. Hodge v. Howes, 260 Ga. App. 107 , 578 S.E.2d 904 (2003).

Guarantors considered debtors for purposes of confirmation statute. - Lender's compliance with the requirements contained in O.C.G.A. § 44-14-161 was a condition precedent to the lender's ability to pursue a guarantor for a deficiency after a foreclosure had been conducted, but the guarantors had the contractual ability to waive the condition precedent requirement. "Debtor" included guarantors as of the time the promissory note was in default. PNC Bank, Nat'l Ass'n v. Smith, 298 Ga. 818 , 785 S.E.2d 505 (2016).

Cited in Watson v. Whatley, 218 Ga. 86 , 126 S.E.2d 621 (1962); First Nat'l Bank & Trust Co. v. Kunes, 230 Ga. 888 , 199 S.E.2d 776 (1973); Redman Indus., Inc. v. Tower Properties, Inc., 517 F. Supp. 144 (N.D. Ga. 1981); Threatt v. Forsyth County, 262 Ga. App. 186 , 585 S.E.2d 159 (2003).

Bank Deposits

Debtor/creditor relationship between bank and depositor. - When money is placed in bank on general deposit, title passes immediately to the bank, and the relation of the debtor and creditor is thereby created between the bank and the depositor. Foster v. People's Bank, 42 Ga. App. 102 , 155 S.E. 62 (1930).

Ordinarily, when checks or drafts are endorsed and deposited in a bank, the presumption is that the title does not pass and the relation of debtor and creditor does not exist until the collection has been made. Foster v. People's Bank, 42 Ga. App. 102 , 155 S.E. 62 (1930).

When checks or drafts are received on deposit by the bank with the intention that the checks or drafts be treated as cash, title passes immediately to the bank and the relationship of the debtor and the creditor is established between the bank and the depositor. Foster v. People's Bank, 42 Ga. App. 102 , 155 S.E. 62 (1930).

Alimony

Spouse owed alimony is "creditor." - Willful failure to provide for maintenance and support of spouse and children creates a lawful demand which, when legally enforced, was called alimony, and spouse to whom alimony was due is a creditor within the meaning of this section. Carter v. Bush, 216 Ga. 429 , 116 S.E.2d 568 (1960).

Proceeding by spouse to set aside conveyance. - Under former Code 1933, §§ 28-101 and 28-201 (see now O.C.G.A. §§ 18-2-1 and 18-2-22 (repealed)), wife may bring equitable proceeding to cancel and set aside conveyance of property made by her husband with intent to defeat recovery by her of alimony, and such proceeding will lie against grantee of husband, who took with knowledge of such intention or with reasonable grounds to suspect such intent. A different result is not required by Ga. L. 1950, p. 365, (see now O.C.G.A. § 19-5-7 ), relating to filing of lis pendens notice, since the grantee was not an innocent purchaser. Wood v. McGahee, 211 Ga. 913 , 89 S.E.2d 634 (1955).

RESEARCH REFERENCES

ALR. - Acceptance of cashier's check from debtor as absolute or conditional payment, 36 A.L.R. 470 ; 42 A.L.R. 1353 , 45 A.L.R. 1487 .

Title to commercial paper deposited by customer of bank to his account, 99 A.L.R. 486 .

What is an action for "debt" within attachment or garnishment statute, 12 A.L.R.2d 787.

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; 6 A.L.R.4th 862.

Creditor's acceptance of obligation of third person as constituting novation, 61 A.L.R.2d 755.

Unsolicited mailing, distribution, house call, or telephone call as invasion of privacy, 56 A.L.R.3d 457.

Liability of creditor for excessive attachment or garnishment, 56 A.L.R.3d 493.

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.

Spouse's liability, after divorce, for community debt contracted by other spouse during marriage, 20 A.L.R.4th 211.

18-2-2. Compulsory election of remedy least likely to jeopardize rights of other creditors.

As among themselves, creditors shall so prosecute their own rights as not to jeopardize unnecessarily the rights of others; hence, a creditor having a lien on two funds of the debtor, equally accessible to him, will be compelled to pursue the one on which other creditors have no lien.

(Orig. Code 1863, § 1951; Code 1868, § 1939; Code 1873, § 1949; Code 1882, § 1949; Civil Code 1895, § 2691; Civil Code 1910, § 3220; Code 1933, § 28-106.)

JUDICIAL DECISIONS

ANALYSIS

General Consideration

For illustration of application of statute, see Richardson v. Conn, 100 Ga. 39 , 27 S.E. 978 (1896), overruled insofar as inconsistent with Love v. Goodson, 150 Ga. 46 , 102 S.E. 429 (1920).

Doctrine of two funds applies only when contending creditors have a common debtor. Carter v. Neal, 24 Ga. 346 , 71 Am. Dec. 136 (1858).

Rule of this statute does not apply between debtor and creditor. Union Point Ginnery & Co. v. Harriman Nat'l Bank, 142 Ga. 727 , 83 S.E. 657 (1914).

Mortgagees cannot charge other mortgagees of equal rank with solvent collaterals unless those mortgagees have collected the collateral. Vance & Kirby v. Roberts, 86 Ga. 457 , 12 S.E. 653 (1890).

Limit on mortgage creditor's rights as against transferee of tax execution. - In equity, mortgage creditor as against transferee of tax execution is not entitled to have satisfaction of mortgage debt with property the value of which exceeds indebtedness. Thompson v. Harris, 177 Ga. 53 , 169 S.E. 349 (1933).

When one creditor abandons claim against one fund. - When one creditor, in order to bring fund into court, abandons claim on other property, equity will not permit another creditor, who has claim on the money and also on the property relinquished, to take money, but will remand the creditor to the property, it being accessible to the creditor; especially so, when the creditor stood by, and took no part in a fight which resulted in a compromise verdict under which the fund was brought into court. Sims v. Albea, 72 Ga. 751 (1884).

Impact on other lien holders and debtor considered. - When a creditor held a second priority security interest in real estate while a bank held a first priority security interest in promissory notes and the real estate, marshaling under O.C.G.A. § 18-2-2 was enforced by subrogation in favor of the creditor after consideration of the impact on other lienholders and on the Chapter 11 debtor. Customized Distib., LLC v. Coastal Bank & Trust Co. (In re Lee's Famous Recipes, Inc.), Bankr. (Bankr. N.D. Ga. Jan. 24, 2013).

Marshaling of assets. - Marshaling of all properties of five debtors was not warranted, in part, because the evidence did not support the argument that the five debtor entities were alter-egos of each other and should be treated as one for marshaling or other purposes. In re Bay Circle Props., 577 Bankr. 587 (Bankr. N.D. Ga. 2017).

Cited in Newsom v. McLendon, 6 Ga. 392 (1849); Johnson v. Lewis, 8 Ga. 460 (1850); Weed v. Gainesville, Jefferson & S.R.R., 119 Ga. 576 , 46 S.E. 885 (1904); Moore v. Cofield, 10 Ga. App. 197 , 73 S.E. 45 (1911); Hardy v. Truitt, 20 Ga. App. 529 , 93 S.E. 149 (1917); Ash v. Fitzgerald Cotton Oil Co., 27 Ga. App. 35 , 107 S.E. 342 (1921); NCR Co. v. Stubbs, 29 Ga. App. 543 , 116 S.E. 44 (1923); Shemwell v. Garrett, 159 Ga. 222 , 125 S.E. 497 , 36 A.L.R. 658 (1924); Federal Land Bank v. Farmers' & Merchants' Bank, 177 Ga. 505 , 170 S.E. 504 (1933); Nicholson v. Thurmond, 178 Ga. 457 , 173 S.E. 391 (1934); Brown v. Smith, 50 Ga. App. 332 , 178 S.E. 180 (1935); Thompson v. Harris, 181 Ga. 495 , 182 S.E. 903 (1935); Irwin v. Willis, 202 Ga. 463 , 43 S.E.2d 691 (1947); Keller v. Hand, 173 Ga. App. 829 , 328 S.E.2d 431 (1985).

Limitation on Compulsory Election

Holder of mortgage, who purchased property in good faith. - Equity will not compel election by holder of mortgage, who purchased property in good faith, to protect the holder's title. Georgia Chem. Works v. Cartledge, 77 Ga. 547 , 4 Am. St. R. 96 (1886).

Mortgagees holding defeasible deed without power to sell judgment lien. - Fact that mortgagees sought to be postponed had defeasible deed to certain realty from the debtor, would not compel the mortgagees to relinquish the mortgagees' lien upon money in hands of the sheriff to be distributed, and to proceed against the land, when the mortgagees had no judgment lien against the land, and it did not appear that the deed to them contained power authorizing them to sell the land for purpose of paying the debt. Vance & Kirby v. Roberts, 86 Ga. 457 , 12 S.E. 653 (1890).

When second fund located out of state. - Creditor having two securities, one within this state, and one beyond the state, will not, at instance of a competing creditor holding junior lien on former security, be driven out of state to exhaust the creditor's security there before being allowed to proceed here. Denham v. Williams, 39 Ga. 312 (1869); Calloway v. People's Bank, 54 Ga. 572 (1875).

Limit on compulsory election. - Principles stated in former Code 1933, §§ 28-106 and 37-501 (see now O.C.G.A. §§ 18-2-2 and 23-1-24 ) did not mean that a creditor having priority against fund in court can be required to relinquish the creditor's direct claim thereon, and proceed at the creditor's 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).

Limit on scope of law in certain circumstances. - Equitable remedy of marshaling securities will not be so extended as to delay or inconvenience the creditor in collection of a debt secured by collateral notes by confining the creditor to particular collaterals at instance of one whose note is included among collaterals and who claims equitable set-off against the payee of the note. Hanesley v. National Park Bank, 147 Ga. 96 , 92 S.E. 879 (1917).

When two creditors, not two funds of one creditor, are involved. - When one creditor holds a claim against two persons, and another creditor holds a claim against one of those two, equity will not compel the former creditor to proceed against that one of joint debtors against whom the latter creditor has no claim, in order that the funds of the debtor may be applied exclusively to the payment of the debtor's claim. Equity will never do this for the sake of the creditor who has a single claim, but will do it when it is equitable as between the two debtors that it should be done. Love v. Goodson, 150 Ga. 46 , 102 S.E. 429 (1920).

Applicability to detriment of third person with equity equivalent to that of invoking creditor. - This section was subject to limitation that such marshaling must not be applied to detriment of third person with an equity equal to or greater than that of creditor seeking to invoke the rule. Beneficiaries of homestead have such equity and interest in homestead estate as to be within protection of this limitation. Mulherin v. Porter, 1 Ga. App. 153 , 58 S.E. 60 (1907).

Doctrine of compulsory election style was inapplicable when sought to be applied to the detriment of a third person with an equity equal to or greater than that of the creditor seeking to invoke the rule. Northwest Atlanta Bank v. Manning, 193 Ga. 186 , 17 S.E.2d 547 (1941).

18-2-3. Reaching of equitable assets by creditors.

Courts of equity jurisdiction shall assist creditors in reaching equitable assets in every case where to refuse interference would jeopardize the collection of their debts.

(Orig. Code 1863, § 1948; Code 1868, § 1936; Code 1873, § 1946; Code 1882, § 1946; Civil Code 1895, § 2688; Civil Code 1910, § 3217; Code 1933, § 28-103.)

Law reviews. - For article, "Retirement Benefits: Protection from Creditors' Claims," see 24 Ga. St. B.J. 118 (1988).

JUDICIAL DECISIONS

ANALYSIS

General Consideration

Injunctive relief to protect rights in endangered fund. - Judgment creditor was granted injunction and receiver in state court when only fund out of which the creditor could get the creditor's rights was in danger. Merchants' & Planters' Nat'l Bank v. Trustees of Masonic Hall, 63 Ga. 549 (1879).

Action by corporate creditor to hold one liable as trustee ex maleficio. - Petition in equity against corporation and individual states cause of action when it is alleged that the plaintiff is the creditor of a now insolvent corporation, and that the individual has converted to the individual's own use assets of the corporation in excess of the amount of the plaintiff's claim, leaving no other assets sufficient in amount with which to pay the corporate debt, and which suit seeks to hold liable individual as trustee ex maleficio. Turner v. Tyson, 211 Ga. 53 , 84 S.E.2d 86 (1954).

Creditor can reach beneficiary's interest in trust unless exempt. - Creditors can bring a bill in equity to reach interest of beneficiary under a trust unless beneficiary's interest is exempt by terms of trust or by statute. The creditor must exhaust legal remedies before proceeding in equity, but this requirement does not apply if it appears that an attempt to exhaust legal remedies would be futile. Henderson v. Collins, 245 Ga. 776 , 267 S.E.2d 202 (1980).

Irrevocable trust. - Trust income from husband's irrevocable trust was subject to the wife's claims to the same extent any income of a spouse would be subject to the claims of the other spouse for alimony and distribution of property. Speed v. Speed, 263 Ga. 166 , 430 S.E.2d 348 (1993).

Equity available in satisfaction of alimony debt. - Willful failure to provide for maintenance and support of spouse and children creates lawful demand which, when legally enforced, is called alimony, and is a debtor/creditor relation. Thus, the wife was a creditor at the time of the conveyances which are alleged to have been made to defeat her claim for alimony, although no alimony judgment had been rendered at the time and it would be inequitable and unjust not to allow her to maintain an action for judgment in rem against the husband's property when she was unable to obtain personal service due to the husband's willful avoidance of service. Carter v. Bush, 216 Ga. 429 , 116 S.E.2d 568 (1960).

Judgment creditor's right to appointment of receiver when prior judgment creditor holds deed to secure debt. - When debt secured by deed to secure debt was interest bearing and not due, and redemption under former Code 1933, §§ 39-201 and 39-202 (see now O.C.G.A. § 9-13-60 ) would cause the judgment creditor to lose substantial sum approximating an amount of unearned interest, the debtor having no other property from which to satisfy the judgment, the subsequent judgment creditor may proceed in equity for an appointment of the receiver for purpose of selling property subject to principal of debt and accrued interest. Cook v. Securities Inv. Co., 184 Ga. 544 , 192 S.E. 179 (1937).

Availability of cash surrender or loan value of life insurance. - Cash surrender and cash loan value of policy of life insurance accruing at end of specified tontine period is not subject to garnishment by creditors of insured; nor will such value be made available to judgment creditor of insured by court of equity in proceedings instituted for purpose of obtaining equitable relief analogous to process of garnishment at law. F & M Bank v. National Life Ins. Co., 161 Ga. 793 , 131 S.E. 902 , 44 A.L.R. 1184 (1926).

Cited in Turnipseed v. Schaefer, 76 Ga. 109 , 20 Am. St. R. 15 (1886); Taylor Lumber Co. v. Clark Lumber Co., 33 Ga. App. 815 , 127 S.E. 905 (1925); Howard v. Pate, 218 Ga. 741 , 130 S.E.2d 752 (1963); Banks v. Employees Loan & Thrift Corp., 112 Ga. App. 38 , 143 S.E.2d 787 (1965); Chatham County Hosp. Auth. v. Barnes, 226 Ga. 508 , 175 S.E.2d 854 (1970).

Interests in Estates

Reaching distributive share of estate to which insolvent debtor is entitled. - Court of equity will aid judgment creditor who has pursued the creditor's legal remedies to every available extent, to reach distributive share of estate to which insolvent debtor is entitled in debtor's own right, in hands of administrator held in trust for such judgment debtor. Dukes v. Cairo Banking Co., 220 Ga. 507 , 140 S.E.2d 182 (1964).

Devisee of vested remainder entitled to equitable interference in suit by creditors. - To refuse equitable interference by appointment of receiver for devisee's interest in vested remainder, in suit by creditors against executor would "jeopard the collections" of debts, within meaning of former Civil Code 1910, § 3217. Bank of Statesboro v. Waters, 165 Ga. 848 , 142 S.E. 156 (1928).

Equitable procedure for reaching assets after exhaustion of legal remedies. - Generally, if creditor exhausts the creditor's legal remedies against estate so as to entitle oneself to reach assets through court of equity, the creditor should obtain judgment and fieri facias which can be levied on goods of testator or intestate, and procure a return of nulla bona. Lemon v. Thaxton, 59 Ga. 706 (1877).

Effect of contingent interest of legatee. - When under will only bare contingency or possibility rather than present right or interest, legal or equitable, devolved upon "ultimate" legatee upon probate, judgment creditor of latter was not entitled to appointment of a receiver to sell interest of legatee and apply proceeds thereof to satisfaction of judgment. Yancy v. Grafton, 197 Ga. 117 , 27 S.E.2d 857 (1943).

Statutory provisions for spouse's one year support (see now O.C.G.A. § 53-5-2 ) may not be used to defraud judgment creditors of widow's debtor son by attempting to assign as year's support the son's share of the estate, when this amount was far above the widow's legitimate needs for one year. Dukes v. Cairo Banking Co., 220 Ga. 507 , 140 S.E.2d 182 (1964).

RESEARCH REFERENCES

C.J.S. - 37 C.J.S., Fraudulent Conveyances, § 167.

ALR. - Creditor's knowledge that stock is unpaid as affecting stockholders' liability, 7 A.L.R. 972 ; 69 A.L.R. 881 .

Valuation of notes and accounts receivable in determining question of insolvency or bankruptcy, 133 A.L.R. 1274 .

Jurisdiction, and propriety of its exercise, to require real property in another state or country to be applied in satisfaction of debt (including the setting aside of a fraudulent conveyance thereof), 144 A.L.R. 646 .

Right of creditors of life insured as to options or other benefits available to him during his lifetime, 37 A.L.R.2d 268.

ARTICLE 2 ACTS VOID AS AGAINST CREDITORS

RESEARCH REFERENCES

ALR. - Necessity of participation by the grantee or transferee in the fraud of the grantor or transferrer in order to avoid a voluntary conveyance or transfer as against creditors, 17 A.L.R. 728 .

Right of insolvent to insure life for benefit of relatives, 34 A.L.R. 838 .

Right of creditor or one representing him to recover money paid or property transferred by debtor on illegal consideration, 34 A.L.R. 1297 .

Right of creditor of heir to contest will, 46 A.L.R. 1490 ; 128 A.L.R. 963 .

Scope and effect of statutory provisions extending debtor's exemptions to claims or proceeds of claims for personal injuries or death, 116 A.L.R. 1481 .

Right of creditors or their representatives to complain of a voluntary transfer or pledge of corporate assets by a corporation which subsequently becomes insolvent, 117 A.L.R. 1263 .

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; 6 A.L.R.4th 862.

Conveyance or transfer in consideration of legal services, rendered or to be rendered, as fraudulent as against creditors, 45 A.L.R.2d 500.

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

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.

Purchase of annuity by debtor as fraud on creditors, 74 A.L.R.6th 549.

18-2-20. Rights of creditors to be favored by courts.

The rights of creditors shall be favored by the courts; and every remedy and facility shall be afforded them to detect, defeat, and annul any effort to defraud them of their just rights.

(Orig. Code 1863, § 1947; Code 1868, § 1935; Code 1873, § 1945; Code 1882, § 1945; Civil Code 1895, § 2687; Civil Code 1910, § 3216; Code 1933, § 28-102.)

JUDICIAL DECISIONS

ANALYSIS

General Consideration

Rights to set aside fraudulent transfers. - Former Code 1933, §§ 28-101, 28-102, 28-201 and 28-202 (see now O.C.G.A. §§ 18-2-1 , 18-2-20 and 18-2-70 ) provided the creditors with the right to set aside fraudulent transfers, and this remedy was available to any creditor at the time of transfer who thereafter reduced the creditor's claim to a judgment lien. United States v. Hickox, 356 F.2d 969 (5th Cir. 1966).

Intervention by former partner was authorized by former Code 1933 §§ 28-102 and 28-103 (see now O.C.G.A. §§ 18-2-20 and § 18-2-3 , respectively) to wind up affairs since the partner's allegations were sufficient. Sheppard v. Bridges, 137 Ga. 615 , 74 S.E. 245 (1912).

Interlocutory appointment of receiver under creditor's bill attacking voluntary assignment for fraud was not error. Oliver & Co. v. Victor & Co., 74 Ga. 543 (1885).

Debtors cannot shift assets at will, giving creditors mere notice. - If not a violation of the letter of former Civil Code 1910, §§ 3216 and 3217 (see now O.C.G.A. §§ 18-2-20 and § 18-2-3 , respectively) it would certainly not accord with their spirit and purpose to hold that a firm of debtors could shift their assets at will, and impose on their creditors duties by mere notice, but could prevent a creditor from accepting for the creditor's benefit the status which they had thrust upon the creditor for their own. Sheppard v. Bridges, 137 Ga. 615 , 74 S.E. 245 (1912).

One to whom alimony is due is creditor. - Willful failure to provide for the maintenance and support of spouse and children creates a lawful demand which, when legally enforced, is called alimony, and is a debtor/creditor relation. Carter v. Bush, 216 Ga. 429 , 116 S.E.2d 568 (1960).

Damages available. - Georgia law allowing the recovery of general and punitive damages for fraudulent conveyances survived the enactment of Georgia's Uniform Fraudulent Transfers Act, O.C.G.A. § 18-2-70 et seq. Interfinancial Midtown, Inc. v. Choate Constr. Co., 343 Ga. App. 793 , 806 S.E.2d 255 (2017).

Cited in Robert v. Tift, 60 Ga. 566 (1878); Daniel v. Prost, 62 Ga. 697 (1879); Orton v. Madden, 75 Ga. 83 (1885); Hood v. Perry, 75 Ga. 310 (1885); Turnipseed v. Schaefer, 76 Ga. 109 , 2 Am. St. R. 15 (1886); Banks v. McCandless, 119 Ga. 793 , 47 S.E. 332 (1904); Stewart v. Mundy, 131 Ga. 586 , 62 S.E. 986 (1908); Taylor Lumber Co. v. Clark Lumber Co., 33 Ga. App. 815 , 127 S.E. 905 (1925); Johnson v. Tifton Buick Co., 40 Ga. App. 158 , 149 S.E. 73 (1929).

Actions

It is essential that creditors' pleadings set forth facts entitling each to maintain an action. Fouche v. Brower, 74 Ga. 251 (1884).

Creditor bringing suit to prevent fraudulent conveyances acquires lien at commencement of suit. - Creditor, who brings suit to prevent the debtor from carrying into effect a threat to convey away all of the debtor's property for purpose of defeating claims of such creditor, acquires a lien from commencement of the suit to prevent such fraudulent conveyance, and after service of process. Law v. Coleman, 173 Ga. 68 , 159 S.E. 679 (1931).

RESEARCH REFERENCES

C.J.S. - 37 C.J.S., Fraudulent Conveyances, §§ 1, 150 et seq.

ALR. - Larceny or embezzlement as affected by purpose to take or retain property in payment of, or as security for, a claim, 13 A.L.R. 142 ; 116 A.L.R. 997 .

Availability of judgment under which exempt property has been seized as a set-off or counterclaim against claim based on the wrongful seizure, 20 A.L.R. 276 .

Attachment or execution creditor as purchaser within rule that first of two purchasers to obtain possession will prevail, 21 A.L.R. 1031 .

Right of creditor to interest after bankruptcy, declared insolvency, or appointment of receiver, where assets are more than sufficient to pay the principal of all claims, 39 A.L.R. 457 ; 44 A.L.R. 1170 .

Property covered by power of appointment as subject to claims of donee's creditors, 121 A.L.R. 803 .

Right of creditors in respect of property gratuitously conveyed or transferred to a third person for alleged benefit of debtor, 147 A.L.R. 1160 .

Purchase of annuity by debtor as fraud on creditors, 154 A.L.R. 727 .

Construction and effect of provision in note for "renewal until paid," and the like, 35 A.L.R.2d 1090.

Conveyance or transfer in consideration of legal services, rendered or to be rendered, as fraudulent as against creditors, 45 A.L.R.2d 500.

Exemption of proceeds of national service life insurance from claims of creditors, 54 A.L.R.2d 1335.

Right of creditor to set up statute of limitations against other creditors of his debtor, 71 A.L.R.2d 1049.

Unsolicited mailing, distribution, house call, or telephone call as invasion of privacy, 56 A.L.R.3d 457.

Purchase of annuity by debtor as fraud on creditors, 74 A.L.R.6th 549.

Creditor's right to have bankruptcy discharge of individual debtor revoked, vacated, and set aside, 138 A.L.R. Fed 253.

18-2-21. Right of creditors to attack judgments, conveyances, or other arrangements interfering with creditors' rights.

Creditors may attack as fraudulent a judgment, conveyance, or any other arrangement interfering with their rights, either at law or in equity.

(Orig. Code 1863, § 1949; Code 1868, § 1937; Code 1873, § 1947; Code 1882, § 1947; Civil Code 1895, § 2689; Civil Code 1910, § 3218; Code 1933, § 28-104.)

JUDICIAL DECISIONS

ANALYSIS

General Consideration

Insolvent's acquisition of property in name of third party. - If insolvent debtor, for purpose of hindering, delaying, and defrauding creditors, uses the debtor's assets in the purchase of property, taking title in the name of a third person who has full knowledge of the purpose of the transaction, such transaction is fraudulent as to existing creditors. Harper v. Atlanta Milling Co., 203 Ga. 608 , 48 S.E.2d 89 (1948).

One to whom alimony is due is creditor. - Willful failure to provide for the maintenance and support of spouse and children creates a lawful demand which, when legally enforced, is called alimony, and is debtor/creditor relationship. Thus, wife was creditor at time of conveyances which are alleged to have been made to defeat her claim for alimony, although no alimony judgment had been rendered at time of conveyances, and it would be inequitable and unjust not to allow her to maintain an action for judgment in rem against the husband's property when she was unable to obtain personal service due to his willful avoidance of service. Carter v. Bush, 216 Ga. 429 , 116 S.E.2d 568 (1960).

Statutory provisions for spouse's one year support (see now O.C.G.A. § 53-5-2 ) may not be used to defraud judgment creditors of widow's debtor son by attempting to assign as year's support the son's share of the estate, when this amount was far above widow's legitimate needs for one year. Dukes v. Cairo Banking Co., 220 Ga. 507 , 140 S.E.2d 182 (1964).

Reaching distributive share of estate to which insolvent debtor is entitled. - Court of equity will aid judgment creditor who has pursued the creditor's legal remedies to every available extent, to reach distributive share of estate to which insolvent debtor is entitled in the debtor's own right, in hands of the administrator held in trust for such judgment debtor. Dukes v. Cairo Banking Co., 220 Ga. 507 , 140 S.E.2d 182 (1964).

Damages available. - Georgia law allowing the recovery of general and punitive damages for fraudulent conveyances survived the enactment of Georgia's Uniform Fraudulent Transfers Act, O.C.G.A. § 18-2-70 et seq. Interfinancial Midtown, Inc. v. Choate Constr. Co., 343 Ga. App. 793 , 806 S.E.2d 255 (2017).

Cited in Seagraves v. Powell Co., 143 Ga. 572 , 85 S.E. 760 (1915); Foremost Dairy Prod., Inc. v. Sawyer, 185 Ga. 702 , 196 S.E. 436 (1938); Neal v. Stapleton, 203 Ga. 236 , 46 S.E.2d 130 (1948); Bank of LaFayette v. Giles, 208 Ga. 674 , 69 S.E.2d 78 (1952); Stone Mt. Pool Supply Co. v. Imperial Pool Co., 170 Ga. App. 283 , 316 S.E.2d 769 (1984); Howell v. Bank of Fitzgerald, 181 Ga. App. 57 , 351 S.E.2d 258 (1986).

Judgments

Collateral attack. - Unreversed judgment of competent court cannot be collaterally attacked absent fraud or collusion. Smith v. Cuyler, 78 Ga. 654 , 3 S.E. 406 (1887); Williams v. Lancaster, 113 Ga. 1020 , 39 S.E. 471 (1901).

Setting judgment aside by another creditor. - Judgment of foreclosure in favor of one creditor may not be set aside by another, except for fraud. Mahan v. Cavender, 77 Ga. 118 (1886).

Setting aside judgment foreclosing liens. - When judgment foreclosing liens was on the judgment's face valid and regular, the plaintiffs were not, so long as the judgment remained of force, entitled to an injunction for which the plaintiffs prayed. Dixon, Mitchell & Co. v. Baxter & Co., 106 Ga. 180 , 32 S.E. 24 (1898); Suwannee Turpentine Co. v. Baxter & Co., 109 Ga. 597 , 35 S.E. 142 (1900).

Judgment on petition consolidating four liens on separate parcels of land not void. - When in suit for foreclosure of four different liens for different amounts, each on land different and distinct from that affected by other liens, were consolidated in one petition and judgment prayed setting up and establishing liens for aggregate sum of all liens on all the land, and such judgment was rendered by the court, the judgment was irregular but not void. Suwannee Turpentine Co. v. Baxter & Co., 109 Ga. 597 , 35 S.E. 142 (1900).

Collateral attack against default judgment against debtor known to be insane. - When attorney for plaintiff-creditor knew that the defendant had been judged insane at the time of obtaining a default judgment, this knowledge did not constitute such fraud or collusion as would open a judgment to collateral attack by another creditor, in proceeding in nature of a money rule. Burkhalter v. Virginia-Carolina Chem. Co., 42 Ga. App. 312 , 156 S.E. 272 (1930).

Actions

Single suit seeking both judgment on debt and setting aside fraudulent conveyance. - Since Uniform Procedure Act of 1887, Ga. L. 1887, p. 64, a creditor may in one suit proceed for judgment on the debt and to set aside fraudulent conveyance made by a debtor. Harper v. Atlanta Milling Co., 203 Ga. 608 , 48 S.E.2d 89 (1948).

Creditor may in one action in superior court proceed against a debtor for judgment on creditor's demand and to set aside fraudulent conveyance joining debtor and grantee. Hyde v. Atlanta Woolen Mills Corp., 204 Ga. 450 , 50 S.E.2d 52 (1948).

Third party to fraudulent transaction is necessary party. - Defrauded creditor may, in court of equity, have fraudulent transaction set aside; and, for this purpose, third party to transaction would be proper and necessary party. Harper v. Atlanta Milling Co., 203 Ga. 608 , 48 S.E.2d 89 (1948).

Actions at law. - O.C.G.A. § 18-2-21 provided a viable cause of action at law for fraudulent conveyance because, when the legislature repealed O.C.G.A. § 18-2-22 , the common law reemerged as an appropriate remedy for fraudulent conveyance. O.C.G.A. § 18-2-21 referred plaintiffs to the Uniform Fraudulent Transfers Act (UFTA) (now Uniform Voidable Transactions Act), O.C.G.A. § 18-2-70 et seq., or, in the case of those claims that could not be brought under UFTA, to the common law cause of action. Wessinger v. Spivey (In re Galbreath), 475 Bankr. 749 (Bankr. S.D. Ga. 2003).

Judgment creditor did not have an equitable right to have a testamentary trust declared null and void when the creditor had failed to make a claim against the trust during the time between the trust's establishment and the enactment of the Georgia Trust Act, O.C.G.A. T. 53, Ch. 12, the act applied to the trust and, since it gives a creditor having a tort judgment a statutory right to proceed against distributions from the trust, the creditor was not entitled to equitable relief. Jordan v. Caswell, 264 Ga. 638 , 450 S.E.2d 818 (1994).

RESEARCH REFERENCES

Am. Jur. 2d. - 21 Am. Jur. 2d, Creditor's Bills, §§ 3, 4.

37 Am. Jur. 2d, Fraud and Deceit, § 497.

C.J.S. - 37 C.J.S., Fraudulent Conveyances, §§ 150 et seq.

ALR. - Creditor's receipt of proceeds of conveyance or transfer by debtor as estopping him to claim that conveyance or transfer was fraudulent, 9 A.L.R. 358 .

Necessity of exhausting remedies against other judgment debtor before bringing suit to set aside conveyance as fraudulent, 22 A.L.R. 200 .

Right of creditor or one representing him to recover money paid or property transferred by debtor on illegal consideration, 34 A.L.R. 1297 .

Delivery of key as satisfying condition of immediate delivery and actual or continued change of possession to uphold sale of personal property against subsequent purchaser or third persons generally, 56 A.L.R. 518 .

Absolute conveyance or transfer with secret reservation as fraudulent per se as against creditors, 68 A.L.R. 306 .

Joinder of grantees or transferees in different conveyances or transfers in suit to avoid them as in fraud of creditors, 69 A.L.R. 229 .

When statute of limitations or laches commences to run against action to set aside conveyance or transfer in fraud of creditors, 76 A.L.R. 864 ; 100 A.L.R.2d 1094.

Remedies of creditors of insolvent decedent's estate where other creditors have received excessive payments, 77 A.L.R. 981 .

Validity as against creditors of conveyance in trust for settlor for life with remainder to his appointees, 93 A.L.R. 1211 .

Right of creditor of decedent, before perfecting his claim or after loss of recourse against decedent's estate, to pursue remedy against property conveyed by the decedent in fraud of his creditors, 103 A.L.R. 555 .

Fraud of judgment debtor in concealing assets or misrepresenting his financial condition as affecting failure to issue execution or revive judgment within the statutory period or as ground of action for fraud and deceit causing loss of legal remedy on the judgment, 104 A.L.R. 214 .

Decree in suit by judgment creditor to set aside conveyance in fraud of creditors as bar to another suit for same purpose in respect of another conveyance, 108 A.L.R. 699 .

Succession, estate, or gift tax in respect of or as affected by conveyance or transfer restoring to original owner property transferred by him to defraud or delay creditors, 108 A.L.R. 1508 .

Criterion of jurisdictional amount in action in form of creditors' bill or suit to avoid conveyance in fraud of creditors, 109 A.L.R. 1185 .

Conflict of laws as regards validity of fraudulent and preferential transfers and assignments, 111 A.L.R. 787 .

Rights as between creditors of fraudulent grantor, where one or more of them, in payment of or as security for his debt, receives deed or mortgage from fraudulent grantee, 114 A.L.R. 406 .

Right to attack and conditions of attack upon conveyance, mortgage, or transfer as fraudulent as against creditors as affected by mortgage or other security for indebtedness to attacking creditor, 116 A.L.R. 1048 .

Complainant's purpose to defraud creditors as defense to suit to recover property paid for by him but conveyed to defendant, 117 A.L.R. 1464 .

Right of individual creditor or creditors of debtor in liquidation or receivership to maintain bill to set aside conveyances or transfers in fraud of creditors, 119 A.L.R. 1339 .

Statute of limitation applicable to suit by creditor to set aside transfers of debtor's property, 128 A.L.R. 1289 .

Right of grantee, or his privies, to maintain suit or proceeding for affirmative relief, where claim is made or anticipated that conveyance was made with intention on part of grantor, but without actual fraud by grantee, to defraud former's creditors, 128 A.L.R. 1504 .

Conditions of creditor's bill or suit to avoid conveyance as a fraud on creditors where creditor has recovered foreign judgment, 129 A.L.R. 506 .

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 .

Rights as between creditors of grantor or transferrer and those of grantee or transferee in respect of property conveyed or transferred in fraud of creditors, 148 A.L.R. 520 .

Pleading and proof of exempt character of property in suit to set aside its conveyance as in fraud of creditors, 154 A.L.R. 913 .

Right of wife or child by virtue of right to support to maintain action to set aside conveyance by husband or parent as fraudulent, without reducing claim to judgment, 164 A.L.R. 524 .

Right of attachment or judgment creditor, or officer standing in his shoes, to attack older lien or security interest for usury, 70 A.L.R.2d 1409.

Right of tort claimant, prior to judgment, to attack conveyance or transfer as fraudulent, 73 A.L.R.2d 749.

Conveyance as fraudulent where made in contemplation of possible liability for future tort, 38 A.L.R.3d 597.

Right of secured creditor to have set aside fraudulent transfer of other property by his debtor, 8 A.L.R.4th 1123.

Right of creditor to recover damages for conspiracy to defraud him of claim, 11 A.L.R.4th 345.

Purchase of annuity by debtor as fraud on creditors, 74 A.L.R.6th 549.

18-2-22. Conveyances by debtors deemed fraudulent.

Reserved. Repealed by Ga. L. 2002, p. 141, § 2, effective July 1, 2002.

Editor's notes. - This Code section was based on Laws 1818, Cobb's 1851 Digest, p. 168; Code 1863, § 1954; Ga. L. 1865-66, p. 29, § 1; Code 1868, § 1942; Code 1873, § 1952; Code 1882, § 1952; Civil Code 1895, § 2695; Civil Code 1910, § 3224; Code 1933, § 28-201; Ga. L. 1984, p. 22, § 18. For present comparable provisions, see T. 18, C. 2, A. 4.

18-2-23. Validity of conveyance to innocent subsequent purchaser.

Reserved. Repealed by Ga. L. 2002, p. 141, § 2, effective July 1, 2002.

Editor's notes. - This Code section was based on Civil Code 1895, § 2696; Civil Code 1910, § 3225; Code 1933, § 28-202.

18-2-24. Effect of giving debtor permission to exercise control or use of property as security for any debt.

Where any property is conveyed, assigned, or mortgaged as security for any debt and permission is given to the debtor to exercise dominion over or to use the property or the proceeds thereof or any part thereof, the giving of such permission shall not cause the conveyance, assignment, or mortgage to be deemed fraudulent or to create a presumption of fraud as to creditors.

(Ga. L. 1952, p. 154, § 1.)

RESEARCH REFERENCES

ALR. - Conveyance in consideration of future support as fraudulent against creditors, 2 A.L.R. 1438 ; 23 A.L.R. 584 .

Right of secured creditor to have set aside fraudulent transfer of other property by his debtor, 8 A.L.R.4th 1123.

18-2-25. Effect of misrepresentation or private agreement giving preference upon settlement between debtor and creditor.

If a debtor misrepresents or suppresses any material fact in the statement of his affairs either as to the amount of his property or of his indebtedness, the composition shall be void. If a debtor privately agrees to give a creditor better security or to pay a creditor more than other creditors, the contract with the others shall be void.

(Civil Code 1895, § 2692; Civil Code 1910, § 3221; Code 1933, § 28-107.)

History of section. - This Code section is derived from the decision in Woodruff & Co. v. Saul, 70 Ga. 271 (1883).

JUDICIAL DECISIONS

Cited in Saul v. Buck, Hefflebower & Neer, 72 Ga. 254 (1884); Burgess v. Simpson Grocery Co., 128 Ga. 423 , 57 S.E. 717 (1907).

RESEARCH REFERENCES

ALR. - Confirmation of composition in bankruptcy as barring later confirmation of composition or discharge within six years, 80 A.L.R. 406 .

Debtor's waiver of, or refraining from exercising, right to resort to bankruptcy, or his insolvency, as consideration for release of all or part of liability, 108 A.L.R. 656 .

ARTICLE 3 PREFERENCES AND ASSIGNMENTS FOR BENEFIT OF CREDITORS

Law reviews. - For article, "The Problem and the Law of the Insolvent Debtor," see 16 Ga. B.J. 391 (1954). For note suggesting corporations, persons, and firms may execute common-law assignments to allow assignee to carry on and such assignment would preempt creditors attempting to gain preference by judgment, see 10 Ga. B.J. 129 (1947).

JUDICIAL DECISIONS

Partial assignment of single debt. - Creditor cannot divide obligation to pay creditor a stated sum of money into fragments, and assign them to a number of different persons, thereby subjecting debtor to more than one claim, and in order to enforce such partial assignment of a single debt, acceptance by debtor must be shown. Graham v. Southern Ry., 173 Ga. 573 , 161 S.E. 125 (1931).

Partial assignment of a debt due is enforceable in equity, although debtor may not assent, if all parties at interest are before the court, so that the right of each in the fund may be determined in one suit and settled by one decree. Graham v. Southern Ry., 173 Ga. 573 , 161 S.E. 125 (1931).

RESEARCH REFERENCES

ALR. - Preference of wages over lien creditors of corporation in hands of receiver, in absence of statutory provision therefor, 5 A.L.R. 690 .

Validity and effect of provisions in assignments for creditors authorizing assignees to continue assignor's business, 23 A.L.R. 199 .

Constitutionality of statute relating to preferences in assets of insolvent bank, 31 A.L.R. 790 ; 79 A.L.R. 582 ; 83 A.L.R. 1080 .

Right to setoff loss under mutual insurance policy against premium or assessment, 31 A.L.R. 1281 .

Payment of judgment by debtor without notice of its assignment, 32 A.L.R. 1021 .

Right of creditor to interest after bankruptcy, declared insolvency, or appointment of receiver, where assets are more than sufficient to pay the principal of all claims, 44 A.L.R. 1170 .

Duty of mortgagee to account for rents and profits or for use and occupation for benefit of owner of equity of redemption or junior lienor, 46 A.L.R. 138 .

Transfer in bankruptcy, or otherwise in interest of creditors or lien holders, as violating covenant in lease against assignment, 46 A.L.R. 847 .

Priority of assignment of chose in action over subsequent garnishment as affected by lack of notice to debtor of assignment, 52 A.L.R. 109 .

Waiver of or estoppel to assert lien by filing claim with or receiving dividend from assignee for creditors, 55 A.L.R. 993 .

State's prerogative right of preference at common law, 65 A.L.R. 1331 ; 90 A.L.R. 184 ; 167 A.L.R. 640 .

Enforceability in equity of assignment of part of a debt without the debtor's consent, 80 A.L.R. 413 .

Pledge of accounts as affected by pledgor's reservation of partial dominion or control, 85 A.L.R. 222 .

Assignment by creditor of insolvent debtor or estate as carrying full amount named or merely dividends payable in respect of that amount, 93 A.L.R. 1525 .

Assignability of contemplated debt before execution of agreement by which it is to be created, 116 A.L.R. 955 .

Right of debtor who pays creditor to control application of payments made by latter to his creditor with proceeds of original payment, 130 A.L.R. 198 ; 166 A.L.R. 641 .

Application of payment as between disputed and undisputed claims, 164 A.L.R. 940 .

Debtor's transfer of assets to representative of creditors as effectuating release of unsecured claims, in absence of express agreement to that effect, 8 A.L.R.3d 903.

Bankruptcy: Right of creditor who has not filed timely petition for review of referee's order to participate in appeal secured by another creditor, 22 A.L.R.3d 914.

18-2-40. Right of debtor to prefer creditors.

A debtor may prefer one creditor over another; and to that end he may rightfully give a lien by mortgage or other legal means, sell in payment of the debt, or transfer choses in action as collateral security, where the surplus in such cases is not reserved for the debtor's own benefit.

(Orig. Code 1863, § 1955; Code 1868, § 1943; Code 1873, § 1953; Code 1882, § 1953; Civil Code 1895, § 2697; Civil Code 1910, § 3230; Code 1933, § 28-301.)

Law reviews. - For article, "Preparing the Georgia Farmer (or Other Small Entrepreneur) for Bankruptcy," see 22 Ga. St. B.J. 186 (1986). For note discussing assignments for benefit of creditors, see 12 Ga. L. Rev. 814 (1978).

JUDICIAL DECISIONS

ANALYSIS

General Consideration

Legislative intent behind this section and former § 18-2-22 . - Construing former Code 1868, §§ 1942 and 1943 (see now O.C.G.A. §§ 18-2-22 (repealed) and 18-2-40 ) together, as being in pari materia, the intention of the legislature was that an insolvent debtor may assign property in trust, for the benefit of one or more of the debtor's creditors, to the exclusion of others, if it was done bona fide, and no trust or benefit was reserved to the assignor, or any person for the assignor. Embry & Fisher v. Clapp, 38 Ga. 245 (1868).

Discussion of effect of Ga. L. 1865-66, p. 29 on former Code 1882, § 1953. - See Powell, Brother & Co. v. Kelly Brothers & Porter, 82 Ga. 1 , 9 S.E. 278 , 3 L.R.A. 139 (1889).

Even an insolvent debtor may prefer one creditor to another, and to this end the debtor may transfer choses in action as collateral security for preexisting debt, surplus in such case not being reserved for the debtor's own benefit. Suttles v. Vickery, 179 Ga. 751 , 177 S.E. 714 (1934).

Effect of pendency of suit. - Mere pendency of suit against debtor does not extinguish debtor's right to prefer one creditor over another, and in such case, controlling question is "existence or nonexistence of fraud in the transfer." Suttles v. Vickery, 179 Ga. 751 , 177 S.E. 714 (1934).

Transfer to be made in good faith and not benefit debtor. - Debtor is permitted to prefer one creditor over another and to make assignments to that end so long as the transfer is made in good faith and does not benefit the debtor. Bank of Cave Spring v. Gold Kist, Inc., 173 Ga. App. 679 , 327 S.E.2d 800 (1985).

Means of accomplishing preference of one creditor over others. - Insolvent debtor may give preference in a great variety of ways to one creditor to the exclusion of others, provided it be done with good faith. McWhorter v. Wright, Nichols & Co., 5 Ga. 555 (1848).

Insolvent debtor cannot assign all property for benefit of part of creditors. - Assignment made by insolvent debtor of all debtor's property for benefit of part of creditors is not allowed by laws of this state, but one in debt may sell part of the debtor's property to pay one of the debtor's creditors. Bones v. Printup Bros. & Co., 64 Ga. 753 (1880).

Prerequisites to valid preferential conveyance. - Debtor may in good faith prefer one creditor to others by conveying property, even while insolvent, in total or partial payment of a debt, and without additional consideration, provided that such payment or credit represents the fair market value of the property or is not unreasonably disproportionate to such value; and provided that no secret trust or covert benefit, prohibited by former Code 1933, § 28-301, was reserved to the debtor; and provided further that the intent of the debtor, known to the creditor, shall not be to hinder, delay, or defraud other creditors. Moncrief Furnace Co. v. Northwest Atlanta Bank, 193 Ga. 440 , 19 S.E.2d 155 (1942).

Intent as key in judging validity of preferential conveyance. - Husband who is indebted to his wife may convey property to her in preference to other creditors; but this rule is subject to qualification that conveyance must be made only for purpose of paying or securing his wife as creditor, and not be tainted with any intention to hinder, delay, or defraud others, such conveyance being judged by intention with which it is made and accepted, and not by its consideration or effect. Cotton States Fertilizer Co. v. Childs, 179 Ga. 23 , 174 S.E. 708 (1934).

While it is true that "a debtor may prefer one creditor to another," and may convey property for this purpose, such right is subject to qualification that conveyance must be made only for purpose of paying or securing creditor so preferred, and not be tainted with any intentions to hinder, delay, or defraud others; such conveyance being judged by intention with which it is made and accepted, and not by its consideration or effect. Dickson v. Citizens Bank & Trust Co., 184 Ga. 398 , 191 S.E. 379 (1937).

Good faith conveyance for consideration to creditor before another creditor obtains judgment. - Creditor may in good faith and for valuable consideration take from the creditor's debtor a deed to property before another creditor obtains judgment, and such a valid deed, even though improperly recorded or not recorded until after judgment, will not be subordinate thereto. Moncrief Furnace Co. v. Northwest Atlanta Bank, 193 Ga. 440 , 19 S.E.2d 155 (1942).

Preference enabling one creditor to obtain advantageous judgment. - Insolvent debtor may prefer one creditor to others by dividing debt which the debtor owes to that creditor into smaller debts so that they shall be within jurisdiction of court in which judgment may be obtained on them that shall be such as to give that creditor an advantage over others. Bank of Savannah v. Planters Bank, 22 Ga. 466 (1857); Andrews & Co. v. Kaufmans, 60 Ga. 669 (1878).

Mortgage by insolvent debtor to secure payment of preexisting debt. - Mortgage, executed by insolvent debtor to secure payment of bona fide preexisting debt, is not per se fraudulent as against creditors. Davis v. Anderson, 1 Ga. 176 (1846); Lee v. Brown, 7 Ga. 275 (1849).

Partner's sale of share of partnership assets to pay individual indebtedness. - Under this section and the law generally, each partnership member has the right, with consent of a partner, to sell the partner's share in firm assets in payment of the partner's individual indebtedness. Ellison & Son v. Lucas & McDuffie, 87 Ga. 223 , 13 S.E. 445 , 27 Am. St. R. 242 (1891).

Sale of stock of goods to extinguish debt. - Former Civil Code 1895, § 2697 (see now O.C.G.A. § 18-2-40 ) was not repealed by the former Bulk Sales Act (see now O.C.G.A. § 11-6-101 et seq.), but the sale of a stock of goods in extinguishment of a debt, in whole or in part, was permissible, if the Bulk Sales Act was complied with. Sampson v. Brandon Grocery Co., 127 Ga. 454 , 56 S.E. 488 , 9 Ann. Cas. 331 (1907).

No distinction as to kind of creditor preferred or property used. - No distinction is made as to kind of creditors who may be preferred or as to kind of property which may be used for this purpose. Ellison & Son v. Lucas & McDuffie, 87 Ga. 223 , 13 S.E. 445 , 27 Am. St. R. 242 (1891).

Debtor cannot discriminate in trust deed among creditors. - Debtor may prefer creditors by direct sale to them, in extinguishment of the creditor's claims, or the debtor may bona fide sell the debtor's property to a stranger, and apply the proceeds to debts of favored creditors; but the debtor cannot discriminate, in trust deed, between creditors. Brown v. Lee, 7 Ga. 267 (1849); Hobbs v. Davis, 50 Ga. 213 (1873); McLendon v. Reynolds Grocery Co., 160 Ga. 763 , 129 S.E. 65 (1925).

Recording agreement to prefer certain creditor in event of insolvency. - Fact that agreement by debtor to prefer certain creditor in case of insolvency is not recorded does not render the agreement fraudulent since such agreement is not required by law to be recorded, and its record would therefore not constitute notice. Fechheimer v. Baum, 43 F. 719 (S.D. Ga. 1890).

Extinguishment of right to prefer. - Right of the debtor to prefer one creditor to another in a bona fide transaction continues up to the date when a judgment or lien is obtained against the debtor. The mere pendency of a suit does not extinguish that right to prefer. Bank of Waynesboro v. Ellison, 162 Ga. 657 , 134 S.E. 751 (1926).

Mortgage not ground for equitable relief. - That insolvent firm seeks to prefer certain creditors by mortgage constitutes no ground for equitable relief. Heidingsfelder v. Slade & Etheridge, 60 Ga. 396 (1878).

Cited in Lamkin v. Clary, 103 Ga. 631 , 30 S.E. 596 (1898); Mobley v. Merchants & Planters Bank, 157 Ga. 658 , 122 S.E. 233 (1924); Durden v. Royster Guano Co., 158 Ga. 234 , 123 S.E. 603 (1924); Cowan v. Bank of Rockdale, 159 Ga. 123 , 125 S.E. 194 (1924); Walker v. Martin, 170 Ga. 447 , 153 S.E. 41 (1930); Johnson v. Sherrer, 185 Ga. 340 , 195 S.E. 149 (1938); Anderson v. Chambers, 59 Ga. App. 115 , 200 S.E. 478 (1938); First Nat'l Bank v. Kelly, 190 Ga. 603 , 10 S.E.2d 66 (1940); Williams v. Russell, 82 Ga. App. 529 , 61 S.E.2d 567 (1950); Threlkeld v. Whitehead, 95 Ga. App. 378 , 98 S.E.2d 76 (1957).

Conveyances Between Spouses

Burden of proof. - When transaction between husband and wife is attacked for fraud by creditors of either, burden is on husband and wife to show that the transaction was fair. Cotton States Fertilizer Co. v. Childs, 179 Ga. 23 , 174 S.E. 708 (1934).

Conveyance by husband to wife holding equitable title. - When wife's money is used with her consent to purchase a tract of land, the title to which was intended to be in her but unknown to her at the time, was taken in the name of the husband, the wife had equitable title and it was perfectly proper and lawful for the husband to convey such land to her. Rowe v. Cole, 183 Ga. 477 , 188 Ga. 668 (1936).

Failure of wife to make claim known does not deprive her of rights as creditor, even as against one of husband's creditors who gave credit to him in ignorance of her claim, there being no inquiry made of her by such creditor. Rowe v. Cole, 183 Ga. 477 , 188 S.E. 668 (1936).

Preferences by Corporate Officers

Officers' scheme to indemnify selves against loss. - Officers and directors of insolvent corporation may not use position to prefer themselves over creditors, and any scheme or device, the purpose of which is to indemnify themselves against loss, whether as creditors or as endorsers of notes given by the corporation or otherwise, constitutes legal fraud. Ware v. Rankin, 97 Ga. App. 837 , 104 S.E.2d 555 (1958).

Preference by officers of insolvent corporation. - Officers and directors of insolvent corporation may prefer one creditor over another, and may pay a debt which is due and payment of which is being demanded, even though the effect of payment is to reduce assets available to other creditors, and even though such action by directors or officers may result in some incidental benefit, such as extinguishment of liability they may have previously incurred as endorsers or sureties on commercial paper in hands of a preferred creditor. Ware v. Rankin, 97 Ga. App. 837 , 104 S.E.2d 555 (1958).

Intent key in determining whether preference fraudulent. - Test for determining whether or not a creditor preference by directors of insolvent corporation is fraudulent is intent or purpose which induced the making of payment or giving of security. Ware v. Rankin, 97 Ga. App. 837 , 104 S.E.2d 555 (1958).

Assignments

Accounts may be transferred as collateral security. Boykin v. Epstein, 94 Ga. 750 , 22 S.E. 218 (1894).

Right of heir to interest in estate of ancestor is a chose in action and is assignable. Greenwood v. Greenwood, 178 Ga. 605 , 173 S.E. 858 (1934).

Choses in action. - Choses in action are not subject to seizure and sale under executions based upon ordinary judgments and can only be reached by judgment creditor through garnishment or some other collateral proceedings; and, inasmuch as such garnishment or collateral proceeding is necessary to fix lien of judgment so as to make it effective, an assignment of the chose in action by the debtor before institution of such collateral proceeding passes to assignee property of the debtor in the chose in action assigned, freed from lien of general judgment previously rendered against assignor. Greenwood v. Greenwood, 178 Ga. 605 , 173 S.E. 858 (1934).

Assignable interest of voluntary bankrupt. - Voluntary bankrupt has an assignable interest in property claimed in the bankrupt's petition as exempt under the constitution and homestead laws of this state; and the bankrupt may assign property in good faith to an existing creditor before it is set apart by a trustee in bankruptcy, and therefore before exemption is confirmed by a referee in bankruptcy. Strickland Hdwe. Co. v. Fletcher, 152 Ga. 445 , 110 S.E. 229 (1921).

Voluntary bankrupt has an assignable interest in the property claimed by the bankrupt in the bankrupt petition as exempt under the constitution and homestead laws of this state and can transfer this interest in good faith to the bankrupt's creditor either in extinguishment of, or to secure, a preexisting debt, before the property is set aside by the trustee in bankruptcy, and before the proceeding is confirmed by the bankrupt court. Silver & Goldstein v. Chapman, 163 Ga. 604 , 136 S.E. 914 (1927).

Assignment prior to service of summons of garnishment. - If assignment is made before service of summons of garnishment upon the drawee, the garnishing creditor will be postponed to the assignee, and this is so whether or not the garnishee was notified of the assignment. Suttles v. Vickery, 179 Ga. 751 , 177 S.E. 714 (1934).

Assignment of life insurance policy to secure debt. - Life insurance policy was a chose in action and may be assigned by an insured as security for a debt under former Code 1933, §§ 28-301 and 85-1803 (see now O.C.G.A. §§ 18-2-40 and 44-12-22 ), and generally the effect of such assignment was to vest legal title to the policy in the assignee to the amount of debt secured. Parramore v. Williams, 215 Ga. 179 , 109 S.E.2d 745 (1959).

Since rights of beneficiary and debtor were subjected by assignment of insurance policy to full amount of debt secured by such assignment which debt exceeded the value of the policies, the beneficiary had no further interest in such policies, and no rights to assert as to the policies in receivership proceedings. Parramore v. Williams, 215 Ga. 179 , 109 S.E.2d 745 (1959).

Mortgage to creditor on all property followed by general assignment for creditors. - When mortgage is given by insolvent debtor to one of the debtor's creditors on all the debtor's property, and is followed immediately by other mortgages which in effect constitute a general assignment for creditors, the first mortgage does not constitute part of the assignment. Fechheimer v. Baum, 43 F. 719 (S.D. Ga. 1890).

Sufficient consideration to support equitable and legal assignments to secure preexisting indebtedness, see Suttles v. Vickery, 179 Ga. 751 , 177 S.E. 714 (1934).

Actions

Petition stating cause of action under this statute and authorizing injunctive relief, see Moncrief Furnace Co. v. Northwest Atlanta Bank, 193 Ga. 440 , 19 S.E.2d 155 (1942).

RESEARCH REFERENCES

C.J.S. - 21C.J.S., Creditor and Debtor, § 3 et seq. 37 C.J.S., Fraudulent Conveyances, §§ 112, 115.

ALR. - Conveyance in consideration of future support as fraudulent against creditors, 2 A.L.R. 1438 ; 23 A.L.R. 584 .

Attachment or execution creditor as purchaser within rule that first of two purchasers to obtain possession will prevail, 21 A.L.R. 1031 .

Right of surety who discharges obligation due to government to be subrogated to priority or preference of latter, 24 A.L.R. 1502 ; 83 A.L.R. 1131 .

Right of surety discharges obligation due to government, to be subrogated to rights of latter against third persons, 24 A.L.R. 1523 .

Priority as between different assignees of same chose in action as affected by notice to debtor, 31 A.L.R. 876 ; 110 A.L.R. 774 .

Preference in event of debtor's insolvency in respect of funds designated or set apart by him for payment of specified obligations, 32 A.L.R. 950 .

Right of debtor who pays creditor to control application of payments made by latter to his creditor with proceeds of original payment, 41 A.L.R. 1297 ; 130 A.L.R. 198 ; 166 A.L.R. 641 .

Character of service contemplated by statutes giving a lien or preference, in event of insolvency, to servants, employees, laborers, etc, 54 A.L.R. 567 .

Trust or preference in respect of money deposited in bank by court, or pursuant to its order, or by officer of court, 86 A.L.R. 209 .

State's prerogative right of preference at common law, 90 A.L.R. 184 ; 167 A.L.R. 640 .

Right of creditor who institutes supplementary proceedings to priority over other creditors in respect of property disclosed thereby, 92 A.L.R. 1435 ; 153 A.L.R. 211 .

Conflict of laws as regards validity of fraudulent and preferential transfers and assignments, 111 A.L.R. 787 .

Equality among claimants under indemnity or surety bond which is insufficient to pay all claimants in full, 128 A.L.R. 1096 .

Judgment debtor's personal injury claims against third person or latter's liability insurer as subject to creditor's bill, 51 A.L.R.2d 595.

Debtor's return of merchandise to selling creditor for credit as preferential transfer voidable in bankruptcy proceedings, 62 A.L.R.2d 774.

Right of creditor to set up statute of limitations against other creditors of his debtor, 71 A.L.R.2d 1049.

Validity of provision in deed or transfer to assignee for benefit of creditors for payment of attorneys' fees, 79 A.L.R.2d 513.

Creditor's knowledge of preference, or of debtor's insolvency, under § 60(b) of Bankruptcy Act, as indicated by receipt of property in payment of debt, 88 A.L.R.2d 1050.

18-2-41. Rights of nonmunicipal corporation.

Any corporation, not municipal, may make an assignment for the benefit of creditors; but no such corporation shall be allowed in such assignment to prefer any creditor or class of creditors, except creditors who have debts entitled to priority by law.

(Ga. L. 1894, p. 90, § 1; Civil Code 1895, § 2698; Civil Code 1910, § 3231; Code 1933, § 28-302.)

JUDICIAL DECISIONS

Comparison of corporate rights to those of individual. - Corporation has an equal right with an individual allowing preference, but clearly under the law a corporation "shall not be allowed to prefer any creditor or class of creditors, except such as have debts entitled to priority by the laws of this State." Milledgeville Banking Co. v. McIntyre Alliance Store, 98 Ga. 503 , 25 S.E. 567 (1896).

Assignments with or without preferences. - Insolvent corporation is capable of making a general assignment for benefit of creditors, either with or without giving preference and priority of payment to certain of the creditors. Albany & Renssellaer Iron & Steel Co. v. Southern Agric. Works, 76 Ga. 135 , 2 Am. St. R. 26 (1886).

Preference of creditor even though incidental benefit accrues to directors. - Right of debtor corporation to prefer a creditor, and right of creditor to be preferred, cannot be lost simply because, as a mere incident to the transaction by which preference is effected, the directors may themselves gain some benefit. Milledgeville Banking Co. v. McIntyre Alliance Store, 98 Ga. 503 , 25 S.E. 567 (1896); Atlas Tack Co. v. Macon Hdwe. Co., 101 Ga. 391 , 29 S.E. 27 (1897).

Sole owner of insolvent corporation preferring self as creditor. - Sole owner and president of defendant corporation may not, after corporation becomes insolvent, seize all the corporation's remaining assets and apply those assets to the debt owed by the corporation to the owner personally, thereby rendering the corporation incapable of paying its other business debts. Fountain v. Burke, 160 Ga. App. 262 , 287 S.E.2d 39 (1981).

RESEARCH REFERENCES

Am. Jur. 2d. - 6 Am. Jur. 2d, Assignments for Benefit of Creditors, § 10.

ALR. - Right of resident creditors of foreign corporation to preference over nonresident creditors, 1 A.L.R. 648 .

Right of creditor of corporation to maintain action or suit for his own benefit against another creditor to whom corporation has given a preference, 12 A.L.R. 246 .

Right of corporation to prefer creditors, 19 A.L.R. 320 ; 38 A.L.R. 90 ; 48 A.L.R. 479 ; 56 A.L.R. 207 ; 62 A.L.R. 738 .

Waiver of right of government to preference in the assets of insolvent debtor by taking security, 24 A.L.R. 1495 ; 83 A.L.R. 1119 .

Priority as between different assignees of same chose in action as affected by notice to debtor, 31 A.L.R. 876 ; 110 A.L.R. 774 .

Power of municipality to transfer or assign its right to enforce assessment or lien for local improvements, 55 A.L.R. 667 .

Payment of depositor's check after insolvency of bank as an unlawful preference, 74 A.L.R. 937 .

Debtor's return of merchandise to selling creditor for credit as preferential transfer voidable in bankruptcy proceedings, 62 A.L.R.2d 774.

Validity of provision in deed or transfer to assignee for benefit of creditors for payment of attorneys' fees, 79 A.L.R.2d 513.

18-2-42. Rights of persons and firms.

Persons and firms may make assignments and prefer creditors.

(Ga. L. 1894, p. 90, § 2; Civil Code 1895, § 2699; Civil Code 1910, § 3232; Code 1933, § 28-303.)

JUDICIAL DECISIONS

Even an insolvent debtor may prefer one creditor to another, and to this end the debtor may transfer choses in action as collateral security for preexisting debt, surplus in such case not being reserved for the debtor's own benefit. Suttles v. Vickery, 179 Ga. 751 , 177 S.E. 714 (1934).

Mere pendency of suit against debtor does not extinguish the debtor's right to prefer one creditor over another, and in such case, controlling question is "existence or nonexistence of fraud in the transfer." Suttles v. Vickery, 179 Ga. 751 , 177 S.E. 714 (1934).

Assignment to be made in good faith and not benefit debtor. - Debtor is permitted to prefer one creditor over another and to make assignments to that end, so long as the transfer is made in good faith and does not benefit the debtor. Bank of Cave Spring v. Gold Kist, Inc., 173 Ga. App. 679 , 327 S.E.2d 800 (1985).

Effect of assignment prior to service of summons of garnishment. - If assignment is made before service of summons of garnishment upon drawee, garnishing creditor will be postponed to assignee, and this is so whether or not garnishee was notified of assignment. Suttles v. Vickery, 179 Ga. 751 , 177 S.E. 714 (1934).

Sufficient consideration to support equitable and legal assignments to secure preexisting indebtedness. - Suttles v. Vickery, 179 Ga. 751 , 177 S.E. 714 (1934).

Cited in Anderson v. Chambers, 58 Ga. App. 844 , 200 S.E. 478 (1938).

RESEARCH REFERENCES

Am. Jur. 2d. - 21 Am. Jur. 2d, Creditor's Bills, §§ 35, 79.

C.J.S. - 21 C.J.S., Creditor and Debtor, § 3 et seq.

ALR. - Priority as between different assignees of same chose in action as affected by notice to debtor, 31 A.L.R. 876 ; 110 A.L.R. 774 .

Preference in event of debtor's insolvency in respect of funds designated or set apart by him for payment of specified obligations, 32 A.L.R. 950 .

Right of debtor who pays creditor to control application of payments made by latter to his creditor with proceeds of original payment, 41 A.L.R. 1297 ; 130 A.L.R. 198 ; 166 A.L.R. 641 .

Debtor's return of merchandise to selling creditor for credit as preferential transfer voidable in bankruptcy proceedings, 62 A.L.R.2d 774.

Validity of provision in deed or transfer to assignee for benefit of creditors for payment of attorneys' fees, 79 A.L.R.2d 513.

18-2-43. Execution, filing, and recording deeds of assignment.

In all cases the deed of assignment for the benefit of creditors shall be executed, filed, and recorded as provided for deeds in Code Section 44-2-1.

(Ga. L. 1894, p. 90, § 3; Civil Code 1895, § 2700; Civil Code 1910, § 3233; Code 1933, § 28-304.)

18-2-44. Property to be conveyed generally; description of property; attachment of list of creditors of assignor.

  1. All assignments referred to in Code Section 18-2-42 shall convey all of the property of every sort which is claimed or owned by the assignor at the time of the execution thereof. Such assignments shall:
    1. Identify any lands owned or any interest in lands;
    2. Identify goods, wares, and merchandise by general words of description, indicating the location, kind, and quality thereof, with a statement as accurate as possible, containing the purchase price and selling price of the lot as a whole; and
    3. Describe in general terms any shares of capital stock, livestock, or personal property which are not connected with any mercantile or manufacturing business.
  2. The assignor shall attach a list of all creditors with their post office addresses and amounts due to each.

    (Ga. L. 1894, p. 90, § 4; Civil Code 1895, § 2701; Civil Code 1910, § 3234; Code 1933, § 28-305.)

JUDICIAL DECISIONS

Description of nature of debts in schedule. - Assignors' schedule of creditors need not describe nature and character of debts; if the schedule sets forth in detail the name of, amount due to, and residence of each of the creditors of assignors, no further description of the debts is required. Stultz & Blair v. Fleming & Bussey, 83 Ga. 14 , 9 S.E. 1067 (1889).

Cited in Burkhalter v. Glennville Bank, 184 Ga. 147 , 190 S.E. 644 (1937).

RESEARCH REFERENCES

Am. Jur. 2d. - 6 Am. Jur. 2d, Assignments for Benefit of Creditors, §§ 4, 5, 47.

C.J.S. - 21 C.J.S., Creditor and Debtor, § 5 et seq.

ALR. - Conflict of laws as regards validity of fraudulent and preferential transfers and assignments, 111 A.L.R. 787 .

Valuation of notes and accounts receivable in determining question of insolvency or bankruptcy, 133 A.L.R. 1274 .

Creditor's knowledge of preference, or of debtor's insolvency, under § 60(b) of Bankruptcy Act, as indicated by receipt of property in payment of debt, 88 A.L.R.2d 1050.

18-2-45. Conveyances; statements as to aggregate amounts.

Assignments referred to in Code Section 18-2-42 shall convey all books, books of account, choses in action, notes, drafts, bills, judgments, liens, and mortgages held or owned, indicating, as near as may be, the aggregate amount thereof, with a statement as to the total amounts which are considered good, doubtful, or bad.

(Ga. L. 1894, p. 90, § 5; Civil Code 1895, § 2702; Civil Code 1910, § 3235; Code 1933, § 28-306.)

JUDICIAL DECISIONS

Cited in Burkhalter v. Glennville Bank, 184 Ga. 147 , 190 S.E. 644 (1937).

RESEARCH REFERENCES

ALR. - What language in conveyance or contract amounts to assumption of mortgage by grantee, 101 A.L.R. 281 .

Release of vendee (or intermediate assignee of vendee's interest) by subsequent dealings between assignee and vendor, 125 A.L.R. 979 .

18-2-46. Annexation of affidavit to deed of assignment; contents of affidavit.

At the time of signing the deed of assignment provided for in Code Section 18-2-43, the person or firm making an assignment or the officer acting for the corporation making an assignment shall make an affidavit which shall be annexed to such assignment, and which affidavit shall state that:

  1. The assignment conveys all property held, claimed, or owned by the assignor at the time of making the assignment;
  2. All recitals and all estimates of totals and values therein and all list creditors are true to the best of his knowledge and belief;
  3. The debts set out as due to the preferred creditors are bona fide just, due, and unpaid; and
  4. The assignment is not made for the purpose of hindering, delaying, or defrauding creditors.

    (Ga. L. 1894, p. 90, § 6; Civil Code 1895, § 2703; Civil Code 1910, § 3236; Code 1933, § 28-307.)

JUDICIAL DECISIONS

Cited in Burkhalter v. Glennville Bank, 184 Ga. 147 , 190 S.E. 644 (1937).

RESEARCH REFERENCES

ALR. - The fact that the parties to a conveyance in fraud of creditors are not in pari delicto as affecting the right of the party guilty of fraud to relief, 7 A.L.R. 150 .

Who may take affidavit as basis for warrant of arrest, 16 A.L.R. 923 .

Conveyance in consideration of future support as fraudulent against creditors, 23 A.L.R. 584 .

Imputation of agent's knowledge to bankrupt or to creditor as satisfying conditions of provisions of Bankruptcy Act excepting unscheduled debts from discharge, 134 A.L.R. 185 .

18-2-47. List of all property of assignor at time of assignment; affidavits of assignor and assignee as to accuracy of list.

Within 15 days after the recording of the assignment provided for in Code Section 18-2-43, the assignor shall, in connection with the assignee, prepare a full and complete list of all property of every kind, character, and description held, claimed, owned, or possessed by the assignor at the date of making such assignment, to which shall be attached the affidavit of the assignor that the list is true. The assignee shall also attach an affidavit that he has examined the books and other papers of the assignor, that he assisted in the preparation of the list as far as possible, and that to the best of his knowledge, information, and belief the list is correct. If he cannot make such affidavit, he shall state the reason therefor.

(Ga. L. 1894, p. 90, § 7; Civil Code 1895, § 2704; Civil Code 1910, § 3237; Code 1933, § 28-308.)

JUDICIAL DECISIONS

Editor's notes. - In light of the similarity of the statutory provisions, annotations decided under former Ga. L. 1880-81, p. 174 and Ga. L. 1884-85, p. 100 have been included in the annotations for this Code section.

Construction of Act. - Former Ga. L. 1880-81, p. 174 was remedial in nature and should be strictly construed against the assignor and assignee, and liberally in favor of the creditors. Turnipseed v. Schaefer, 76 Ga. 109 , 2 Am. St. R. 15 (1886) (decided under former Ga. L. 1880-81, p. 174).

Effect of noncompliance. - Former Ga. L. 1880-81, p. 174 was mandatory and assignment by an insolvent debtor for the benefit of creditors is void and conveyed no title when no schedule or inventory was attached to the deed of assignment. Crittenden Bros. v. Coleman & Co., 70 Ga. 293 (1883); Crittenden Bros. v. Coleman & Co., 74 Ga. 331 (1884) (decided under former Ga. L. 1880-81, p. 174).

Annexed schedules are not part of the contract. Birdseye v. Underhill, 82 Ga. 142 , 7 S.E. 863 , 14 Am. St. R. 142 , 2 L.R.A. 99 (1888) (decided under former Ga. L. 1880-81, p. 174).

Specificity of schedules. - It is essential to rights of creditors that schedule of property assigned be made out specifically, so that it may be seen if assignment covers property sold by them, and whether, by reason of fraud in debtor, they can claim title thereto. Crittenden Bros. v. Coleman & Co., 70 Ga. 293 (1883) (decided under former Ga. L. 1880-81, p. 174).

Inventory and schedule need not state values of property listed. - It is not essential to validity of deed of assignment that values should be affixed to items of property included in inventory and schedule thereto attached. Anthony v. Price & Maas, 92 Ga. 170 , 17 S.E. 1024 (1893) (decided under former Ga. L. 1880-81, p. 174).

Intention to defraud by material omissions from schedule. - See Wood & Lovingood v. Haynes, Henson & Co., 92 Ga. 180 , 18 S.E. 47 (1893) (decided under former Ga. L. 1880-81, p. 174).

Omission from schedule of property assigned of a right of redemption. - When one who made a voluntary assignment for the benefit of creditors omitted from schedule attached thereto the right of redemption which that person had in certain premises which the person conveyed for security of a debt, such omission was fatal to the assignment. McMillan v. Knapp, 76 Ga. 171 , 2 Am. St. R. 29 (1886) (decided under former Ga. L. 1880-81, p. 174).

Cited in Burkhalter v. Glennville Bank, 184 Ga. 147 , 190 S.E. 644 (1937).

RESEARCH REFERENCES

Am. Jur. 2d. - 6 Am. Jur. 2d, Assignments for Benefit of Creditors, §§ 4, 5.

ALR. - Imputation of agent's knowledge to bankrupt or to creditor as satisfying conditions of provisions of Bankruptcy Act excepting unscheduled debts from discharge, 134 A.L.R. 185 .

Bankrupt's right to object to allowance of claims, 64 A.L.R.2d 889.

18-2-48. List to remain on file ten days.

The list referred to in Code Section 18-2-47 shall remain on file for ten days in the clerk of the court's office in the county in which the assignment was filed, subject to examination by any interested person.

(Ga. L. 1894, p. 90, § 8; Civil Code 1895, § 2705; Civil Code 1910, § 3238; Code 1933, § 28-309.)

JUDICIAL DECISIONS

Cited in Burkhalter v. Glennville Bank, 184 Ga. 147 , 190 S.E. 644 (1937).

18-2-49. Correcting of mistake in list of assets or creditors.

Where an unintentional mistake or omission has been made in the description of the property, in the list of assets, in the method of preparing the list of assets, or in the list of creditors, the same may be amended upon proof thereof to the court.

(Ga. L. 1894, p. 90, § 18; Civil Code 1895, § 2715; Civil Code 1910, § 3248; Code 1933, § 28-319.)

RESEARCH REFERENCES

C.J.S. - 21 C.J.S., Creditor and Debtor, § 5 et seq.

18-2-50. Notification of creditors of filing of assignment; notification of actions attacking assignment; sufficient notice.

Within 30 days after filing the assignment, the assignee shall notify each creditor that the same has been filed. Within 30 days after the date the assignee is served with the complaint attacking the assignment, he shall give notice of the filing of the complaint to each creditor named. Depositing a letter in the post office, stamped and properly addressed, shall be sufficient notice under this Code section.

(Ga. L. 1894, p. 90, § 17; Civil Code 1895, § 2714; Civil Code 1910, § 3247; Code 1933, § 28-318.)

JUDICIAL DECISIONS

Cited in Burkhalter v. Glennville Bank, 184 Ga. 147 , 190 S.E. 644 (1937).

RESEARCH REFERENCES

Am. Jur. 2d. - 6 Am. Jur. 2d, Assignments for Benefit of Creditors, § 117.

C.J.S. - 21 C.J.S., Creditor and Debtor, § 5 et seq.

18-2-51. Foreign assignments to conform with Georgia law.

No property in this state shall pass under any assignment made by corporations, persons, or firms out of this state unless such foreign assignment shall conform to the law of assignments in this state.

(Ga. L. 1894, p. 90, § 9; Civil Code 1895, § 2706; Civil Code 1910, § 3239; Code 1933, § 28-310.)

JUDICIAL DECISIONS

Later change in law. - Assignment contrary to law at time it was made is void, although law was afterwards altered. Mason & Fant v. S. Stricker & Co., 37 Ga. 262 (1867).

Situs of debt follows creditor, and law of creditor's domicile prevails where creditor and debtor are residents of different states. Birdseye v. Underhill, 82 Ga. 142 , 7 S.E. 863 , 14 Am. St. R. 142 , 2 L.R.A. 99 (1888).

Cited in Burkhalter v. Glennville Bank, 184 Ga. 147 , 190 S.E. 644 (1937).

RESEARCH REFERENCES

C.J.S. - 21 C.J.S., Creditor and Debtor, § 42.

18-2-52. Providing and filing of bond by assignee; amount of bond.

Upon the request of any three of the creditors of the assignor, the assignee shall make and file a bond with surety, in a sum to be fixed by the judge of the superior court, conditioned for the faithful performance of his trust, which bond shall be made payable to the judge of the probate court of the county and his successors in office, for the benefit of all creditors of the assignor. In no case shall the bond be less than the estimated value of the property assigned.

(Ga. L. 1894, p. 90, § 10; Civil Code 1895, § 2707; Civil Code 1910, § 3240; Code 1933, § 28-311.)

JUDICIAL DECISIONS

Cited in Burkhalter v. Glennville Bank, 184 Ga. 147 , 190 S.E. 644 (1937).

RESEARCH REFERENCES

Am. Jur. 2d. - 6 Am. Jur. 2d, Assignments for Benefit of Creditors, §§ 4, 5.

C.J.S. - 21 C.J.S., Creditor and Debtor, § 45.

ALR. - Power, after institution of bankruptcy proceedings, of court in which receivership or assignment proceedings have previously begun, to allow or pay fees or other compensation or expenses connected therewith, 90 A.L.R. 1217 .

18-2-53. Duties of assignee generally; payment of preferred debts after filing.

The assignee shall proceed to carry out the duties imposed upon him by the assignment, but he shall not pay any preferred debt until after 60 days from the filing of the assignment in the clerk of the court's office in the county in which the assignment was filed.

(Ga. L. 1894, p. 90, § 11; Civil Code 1895, § 2708; Civil Code 1910, § 3241; Code 1933, § 28-312.)

JUDICIAL DECISIONS

Cited in Burkhalter v. Glennville Bank, 184 Ga. 147 , 190 S.E. 644 (1937).

RESEARCH REFERENCES

Am. Jur. 2d. - 6 Am. Jur. 2d, Assignments for Benefit of Creditors, § 90 et seq.

C.J.S. - 21 C.J.S., Creditor and Debtor, §§ 14, 50 et seq.

ALR. - Preference in event of debtor's insolvency in respect of funds designated or set apart by him for payment of specified obligations, 32 A.L.R. 950 .

18-2-54. Powers and rights of assignee.

The assignee shall succeed to all rights of the assignor but may attack and set aside any fraudulent conveyances or recover property conveyed by the assignor for the purpose of hindering, delaying, or defrauding creditors.

(Ga. L. 1894, p. 90, § 12; Civil Code 1895, § 2709; Civil Code 1910, § 3242; Code 1933, § 28-313.)

JUDICIAL DECISIONS

Assignee for creditors can sue on account included in deed of assignment for use of purchaser. - Trustee or assignee holding legal title to choses in action under valid deed of assignment for benefit of creditors can sue for amount of an account included in such assignment for use of one who purchased the account at public sale held by that person as such trustee or assignee. May v. McCarty, 11 Ga. App. 454 , 75 S.E. 672 (1912).

Cited in Burkhalter v. Glennville Bank, 184 Ga. 147 , 190 S.E. 644 (1937).

RESEARCH REFERENCES

Am. Jur. 2d. - 6 Am. Jur. 2d, Assignments for Benefit of Creditors, § 90 et seq.

C.J.S. - 21 C.J.S., Creditor and Debtor, § 14, 50 et seq.

ALR. - The fact that parties to a conveyance in fraud of creditors are not in pari delicto as affecting the right of the party guilty of fraud to relief, 7 A.L.R. 150 .

Conveyance in consideration of future support as fraudulent against creditors, 23 A.L.R. 584 .

Preference in event of debtor's insolvency in respect of funds designated or set apart by him for payment of specified obligations, 32 A.L.R. 950 .

Absolute conveyance or transfer with secret reservation as fraudulent per se as against creditors, 68 A.L.R. 306 .

Assignees for creditors as within protection of statute requiring filing or recording of conditional-sale contract or chattel mortgage, 71 A.L.R. 981 .

18-2-55. Nature of actions to set aside assignments generally; priorities and payment to creditors on judgments rendered after filing of complaint to set aside assignment.

No assignment shall be set aside except in a direct action filed for that purpose; and no creditor shall obtain any priority or preference of payment out of the assets assigned on any judgment rendered after the filing of a complaint to set aside the assignment if the assignment is set aside and decreed to be void.

(Ga. L. 1894, p. 90, § 13; Civil Code 1895, § 2710; Civil Code 1910, § 3243; Code 1933, § 28-314.)

JUDICIAL DECISIONS

Editor's notes. - In light of the similarity of the statutory provisions, decisions under former Ga. L. 1884-85, p. 100, are included in the annotations for this Code section.

Complainants attacking assignment as fraudulent could proceed without first reducing complainants' claims to judgment. Burns v. Beck, 83 Ga. 471 , 10 S.E. 121 (1889) (decided under former Ga. L. 1884-85, p. 100, No. 429).

Cited in Coleman & Burden Co. v. Rice, 115 Ga. 510 , 42 S.E. 5 (1902); Burkhalter v. Glennville Bank, 184 Ga. 147 , 190 S.E. 644 (1937).

RESEARCH REFERENCES

Am. Jur. 2d. - 6 Am. Jur. 2d, Assignments for Benefit of Creditors, § 116.

C.J.S. - 21 C.J.S., Creditor and Debtor, § 78 et seq. 37 C.J.S., Fraudulent Conveyances, § 150 et seq.

ALR. - Priority of assignment of chose in action over subsequent garnishment as affected by lack of notice to debtor of assignment, 52 A.L.R. 109 .

18-2-56. Parties to actions to set aside assignments.

In all actions to set aside assignments, the assignee and assignor shall be indispensable parties; and any preferred or unpreferred creditor may be made a party plaintiff or defendant at any time in term or vacation.

(Ga. L. 1894, p. 90, § 14; Civil Code 1895, § 2711; Civil Code 1910, § 3244; Code 1933, § 28-315.)

JUDICIAL DECISIONS

Cited in Burkhalter v. Glennville Bank, 184 Ga. 147 , 190 S.E. 644 (1937).

RESEARCH REFERENCES

Am. Jur. 2d. - 6 Am. Jur. 2d, Assignments for Benefit of Creditors, § 117.

C.J.S. - 37 C.J.S., Fraudulent Conveyances, § 179 et seq.

18-2-57. Proof required in rendering an assignment void.

When the assignment is attacked as fraudulent or void for any reason, it shall not be necessary to show fraud or collusion or notice thereof in the assignee in order to render the assignment void.

(Ga. L. 1894, p. 90, § 15; Civil Code 1895, § 2712; Civil Code 1910, § 3245; Code 1933, § 28-316.)

JUDICIAL DECISIONS

Cited in Burkhalter v. Glennville Bank, 184 Ga. 147 , 190 S.E. 644 (1937).

RESEARCH REFERENCES

Am. Jur. 2d. - 6 Am. Jur. 2d, Assignments for Benefit of Creditors, § 116.

C.J.S. - 21 C.J.S., Creditor and Debtor, §§ 69, 78 et seq. 37 C.J.S., Fraudulent Conveyances, § 150 et seq.

ALR. - The fact that parties to a conveyance in fraud of creditors are not in pari delicto as affecting the right of the party guilty of fraud to relief, 7 A.L.R. 150 .

Conveyance in consideration of future support as fraudulent against creditors, 23 A.L.R. 584 .

Absolute conveyance or transfer with secret reservation as fraudulent per se as against creditors, 68 A.L.R. 306 .

18-2-58. Judgment not required before action against assignor or assignee.

No creditor shall be required to reduce his debt to judgment before asking equitable relief in any action against the assignor or assignee, or both.

(Ga. L. 1894, p. 90, § 16; Civil Code 1895, § 2713; Civil Code 1910, § 3246; Code 1933, § 28-317.)

JUDICIAL DECISIONS

Cited in Burkhalter v. Glennville Bank, 184 Ga. 147 , 190 S.E. 644 (1937).

RESEARCH REFERENCES

C.J.S. - 37 C.J.S., Fraudulent Conveyances, § 170 et seq.

ALR. - Death of principal defendant as abating or dissolving garnishment or attachment, 21 A.L.R. 272 ; 131 A.L.R. 1146 .

Right of creditors in respect of property gratuitously conveyed or transferred to a third person for alleged benefit of debtor, 147 A.L.R. 1160 .

18-2-59. Appointment of new assignees upon death or removal from jurisdiction of courts of state of sole or surviving assignee.

In all cases of assignments for the benefit of creditors, where the sole or surviving assignee has died or moved beyond the jurisdiction of the courts of the state, the superior courts of this state shall have full power and authority, upon the petition of two or more of the parties interested in such assignment and on such notice as the court shall direct, in a summary manner, to appoint a new assignee or assignees in the place of the deceased or nonresident assignee; and the new assignee shall have all the authority and responsibilities of the deceased or nonresident assignee; and all laws or enactments shall be as applicable and in as full force in respect to the new as to the old assignee; and the court may in its discretion require a bond and security of such assignee.

(Ga. L. 1861, p. 32, § 1; Code 1868, § 2296; Code 1873, § 2322; Code 1882, § 2322; Civil Code 1895, § 3166; Civil Code 1910, § 3746; Code 1933, § 28-320.)

JUDICIAL DECISIONS

When trustee failed to appoint successor. - When property was devised to named trustee with power to appoint trustee's own successor, but trustee died without exercising this power, judge of superior court was authorized to appoint trustee. White v. McKeon, 92 Ga. 343 , 17 S.E. 283 (1893).

When trustee of naked trust died, judge might appoint successor, who could maintain ejectment on title. Logan v. Goodall, 42 Ga. 95 (1871).

Power to appoint when trust was executed by children reaching majority. - When trust was executed by children reaching majority, a judge did not have power, on resignation of trustees after death of grantor, to appoint a successor in trust for the children. Milledge v. Bryan, 49 Ga. 397 (1873).

RESEARCH REFERENCES

Am. Jur. 2d. - 6 Am. Jur. 2d, Assignments for Benefit of Creditors, § 86.

C.J.S. - 21 C.J.S., Creditor and Debtor, § 43 et seq.

ALR. - Death of principal defendant as abating or dissolving garnishment or attachment, 21 A.L.R. 272 ; 131 A.L.R. 1146 .

Jurisdiction to garnish debt as affected by previous assignment by principal defendant to a nonresident served constructively, 39 A.L.R. 1465 .

ARTICLE 4 UNIFORM VOIDABLE TRANSACTIONS ACT

Cross references. - Provision that plaintiff may state claim for money and claim to set aside fraudulent conveyance without first obtaining judgment establishing claim for money, § 9-11-18 .

Form of complaint on claim for debt and to set aside fraudulent conveyance, § 9-11-113 .

Rights of unsecured creditors of seller of goods which have been identified to contract for sale, § 11-2-402 .

Attack by creditors on transactions between husband and wife, § 19-3-10 .

Gifts void as against creditors and bonafide purchasers, § 44-5-88 .

Wrongful sale or removal of mortgaged property, § 44-14-6 .

Editor's notes. - Ga. L. 2015, p. 996, § 1-1/SB 65, not codified by the General Assembly, provides that: "(a) This Act shall be known and may be cited as the 'Debtor-Creditor Uniform Law Modernization Act of 2015.'

"(b) To promote consistency among the states, it is the intent of the General Assembly to modernize certain existing uniform laws promulgated by the Uniform Law Commission affecting debtor and creditor rights, responsibilities, and relationships and other federally recognized laws affecting such rights, responsibilities, and relationships."

Ga. L. 2015, p. 996, § 7-1(d)/SB 65, not codified by the General Assembly, provides that: "(d) The amendments made by Parts 4A and 4B of this Act shall:

"(1) Apply to a transfer made or obligation incurred on or after July 1, 2015;

"(2) Not apply to a transfer made or obligation incurred before July 1, 2015;

"(3) Not apply to a right of action that has accrued before July 1, 2015; and

"(4) For purposes of this subsection, a transfer is made and an obligation is incurred at the time provided in Code Section 18-7-76."

Law reviews. - For article surveying domestic relations law in 1984-85, see 37 Mercer L. Rev. 221 (1985). For article, "Preparing the Georgia Farmer (or Other Small Entrepreneur) for Bankruptcy," see 22 Ga. St. B.J. 186 (1986). For note discussing fraudulent conveyances by debtors, see 12 Ga. L. Rev. 814 (1978). For comment on Downs v. Powell, 215 Ga. 62 , 108 S.E.2d 715 (1959), see 11 Mercer L. Rev. 241 (1959).

JUDICIAL DECISIONS

ANALYSIS

General Consideration

Editor's notes. - In light of the similarity of the statutory provisions, decisions under former Civil Code 1863, §§ 1952 and 1954, former Code 1873, §§ 1944 and 1952, former Civil Code 1895, §§ 2687, 2726, 2727, and 2695, former Civil Code 1910, §§ 3220, 3223, 3224, 3225 and 3230, former Code 1933, §§ 28-101, 28-102, 28-103, 28-104, 28-201, 28-202 and 28-203, and former Code Sections §§ 18-2-20 through 18-2-25 are included in the annotations for this article.

Fraudulent Conveyance Act was based on the statute of Elizabeth (13 Eliz. Chap. 5). Chattanooga Fed. Sav. & Loan Ass'n v. Northwest Recreational Activities, Inc., 4 Bankr. 36 (Bankr. N.D. Ga. 1980) (decided under former Code 1933, § 28-201).

For discussion of history of former Code 1868, § 1944, see Westmoreland v. Powell, 59 Ga. 256 (1877) (decided under former Code 1868, § 1944); McDowell v. McMurria, 107 Ga. 812 , 33 S.E. 709 , 73 Am. St. R. 155 (1899); Boswell v. Boswell, 147 Ga. 734 , 95 S.E. 247 (1918) (decided under former Civil Code 1895, § 2695);(decided under former Civil Code 1910, § 3224).

Former Civil Code 1910, § 3224 referred to creditors at time of conveyance. Mitchell v. Langley, 148 Ga. 244 , 96 S.E. 430 (1918) (decided under former Civil Code 1910, § 3224); Gormley v. Askew, 177 Ga. 554 , 170 S.E. 674 (1933);(decided under former Civil Code 1910, § 3224).

Applicability. - Fraudulent Conveyance Act applied to conveyance of own property intended to delay or defraud, known to taker. Jones v. Foster, 150 Ga. 277 , 103 S.E. 491 (1920) (decided under former Civil Code 1910, § 3224).

Before conveyance by insolvent debtor can be attacked by debtor's creditor, it must appear that the insolvent debtor actually parted with some valuable asset which belonged to the debtor, and which, if title had been retained, might have been subjected to debts. S.T. & W.A. Dewees Co. v. Paul B. Carter & Co., 190 Ga. 68 , 8 S.E.2d 376 (1940) (decided under former Code 1933, § 28-201).

This rule applies with equal force in determining character and the purpose of the transaction between an individual and a corporation controlled by the individual. S.T. & W.A. Dewees Co. v. Paul B. Carter & Co., 190 Ga. 68 , 8 S.E.2d 376 (1940) (decided under former Code 1933, § 28-201).

As to claims against one corporation whose property has been purchased by another, the general law would apply, prohibiting any transaction in fraud of creditors, and preventing an assignment by an insolvent wherein it or stockholders reserved any benefit or trust. Hawkins v. Central of Ga. Ry., 119 Ga. 159 , 46 S.E. 82 (1903) (decided under former Civil Code 1895, § 2695); White v. Atlanta, B. & A.R.R., 5 Ga. App. 308 , 63 S.E. 234 (1908);(decided under former Civil Code 1895, § 2695).

Former § 18-2-22 did not apply to an assent to probate of a will since such assent did not operate as an assignment or conveyance of any property interest subject to execution or levy by the plaintiff because the plaintiff's judgment was not entered until several months after the assent was given. Moody v. Davis, 234 Ga. App. 146 , 505 S.E.2d 844 (1998) (decided under former § 18-2-22 ).

Word "others" as used in the phrase "creditors and others" includes plaintiffs with claims against debtors "liable as tortfeasors, or otherwise . . . for an unascertained damage to person or property, so far as fraudulent conveyances are concerned." Rolleston v. Cherry, 237 Ga. App. 733 , 521 S.E.2d 1 , cert. denied, 528 U.S. 1046, 120 S. Ct. 580 , 145 L. Ed. 2 d 482 (1999) (decided under former § 18-2-22 ); Bonner v. Smith, 247 Ga. App. 419 , 543 S.E.2d 457 (2000);(decided under former § 18-2-22 ).

Plaintiff in trover is protected. Banks v. McCandless, 119 Ga. 793 , 47 S.E. 332 (1904) (decided under former Civil Code 1895, § 2687).

Conditions for transfer invalid. - Transfer is invalid against creditors, and therefore a trustee in bankruptcy if: (1) debtor conveys property with intent to delay or defraud debtor's creditors; and (2) recipient of property knows of debtor's intention to defraud. Loeb v. Dante, 1 Bankr. 547 (Bankr. N.D. Ga. 1979) (decided under former Code 1933, 28-201).

Invalidation. - Invalidation is permitted whenever: (1) bona fide creditor of debtor exists at time of transfer; (2) debtor and transferee intended conveyance as a gift rather than a sale; and (3) debtor is insolvent at time of transfer or rendered insolvent as a result of transfer. Loeb v. Dante, 1 Bankr. 547 (Bankr. N.D. Ga. 1979) (decided under former Code 1933, § 28-201).

Meaning of "delay." - "Delay" cannot be construed to include situations in which debtor files reorganization petition in bankruptcy and obtains protection of automatic stay to suspend creditors from recovering possession of collateral; the automatic stay of an otherwise proper petition is not a delay prohibited or contemplated. Chattanooga Fed. Sav. & Loan Ass'n v. Northwest Recreational Activities, Inc., 4 Bankr. 36 (Bankr. N.D. Ga. 1980) (decided under former Code 1933, § 28-201).

Distinction between equitable and legal remedies. - Equitable remedy of setting aside the conveyance for satisfaction of the original debt is completely different from the right at law to recover damages for the fraud of the conveyance itself, and judgment creditors are not required to give up their right to satisfy the judgment debt by getting the conveyance set aside, in order to get damages for the fraud. Kesler v. Veal, 182 Ga. App. 444 , 356 S.E.2d 254 , modified on other grounds, 257 Ga. 677 , 362 S.E.2d 214 (1987) (decided under former § 18-2-22 ).

Remedy available to one reducing claim to judgment lien. - Former Code 1933, §§ 28-101, 28-102, 28-201, and 28-202 provided creditors with the right to set aside fraudulent transfers, and this remedy was available to any creditor at the time of transfer who thereafter reduces the creditor's claim to a judgment lien. United States v. Hickox, 356 F.2d 969 (5th Cir. 1966) (decided under former Code 1933, §§ 28-101, 28-102, 28-201, and 28-202 ).

Time of acquisition of lien. - Creditor, who brings suit to prevent a debtor from carrying into effect a threat to convey away all of the debtor's property for purpose of defeating claims of such creditor, acquires a lien from commencement of suit to prevent such fraudulent conveyance, and after service of process. Law v. Coleman, 173 Ga. 68 , 159 S.E. 679 (1931) (decided under former Civil Code 1910).

Status of trustee in bankruptcy. - Condition precedent to filing action was that only judgment creditors can void certain acts. Section 544(b) of the Bankruptcy Code provides trustee with status of a hypothetical judgment creditor. Therefore, this condition precedent is satisfied in suit by trustee alleging fraudulent conveyance of real property by debtor to debtor's spouse. Pettigrew v. Graham, 16 Bankr. 606 (Bankr. N.D. Ga. 1981) (decided under former Code 1933, § 28-201).

Remedy under bankruptcy law. - When a creditor has been injured by fraudulent or other willful misconduct by the debtor, the appropriate remedy under bankruptcy law as to the debtor is an exception to or a denial of a discharge. As to another creditor which may have willfully participated in the misconduct, the appropriate remedy under bankruptcy law is an adjudication of the relative priorities between the wrongdoer and the other innocent creditors. Sandersville Prod. Credit Ass'n v. Douthit, 47 Bankr. 428 (M.D. Ga. 1985) (decided under former § 18-2-22 ).

Denial of discharge in bankruptcy. - Determination that bankruptcy debtor made the subject transfers to the debtor's wife in an intentional effort to perpetrate fraud and conceal assets may constitute a sufficient legal basis for denying the debtor's discharge pursuant to 11 U.S.C. § 727(a)(2)(A). Sikes v. Norton, 185 Bankr. 945 (Bankr. N.D. Ga. 1995) (decided under former § 18-2-22 ).

Right of trustee in bankruptcy to avoid transfer. - Trustee in bankruptcy may avoid any transfer of property by bankrupt which any creditor of bankrupt might have avoided; and this right of trustee extends to all transfers made and accepted in fraud of creditors, regardless of whether transactions occurred within four months prior to bankruptcy or not. Sullivan v. Ginsberg, 180 Ga. 840 , 181 S.E. 163 (1935) (decided under former Code 1933, § 28-201).

When an insolvent debtor did not receive equivalent value in exchange for a transfer, the transfer could be avoided. Ragsdale v. South Fulton Mach. Works, Inc. (In re Whitacre Sunbelt, Inc.), 200 Bankr. 422 (Bankr. N.D. Ga. 1996) (decided under former § 18-2-22 ).

In spite of fraudulence of conveyance, subsequent creditor who sustains no harm is denied relief. - One may make a conveyance with actual intent to defraud future creditor or to defeat debt which, though contemplated, is not yet in actual existence; and, unless creditor is hurt by such conveyance, relief will be denied. Roach v. Roach, 212 Ga. 40 , 90 S.E.2d 423 (1955) (decided under former Code 1933).

Tort claim against vendor. - One having tort claim against vendor may, in proper case, attack a conveyance as fraudulent. Foremost Dairies, Inc. v. Kelley, 51 Ga. App. 722 , 181 S.E. 204 (1935) (decided under former Code 1933, § 28-203).

Alimony claims. - Words "and others" appearing in former Code 1933, § 28-201 bring a claim for alimony within the statute's provisions. McGahee v. McGahee, 204 Ga. 91 , 48 S.E.2d 675 (1948) (decided under former Code 1933, § 28-201).

One suing for alimony may obtain relief against fraudulent conveyance by spouse, as such person, if not a creditor in the ordinary sense, is within phrase "and others." Von Kamp v. Gary, 204 Ga. 875 , 52 S.E.2d 591 (1949) (decided under former Code 1933, § 28-201).

Conveyances in pursuance of common scheme. - Fact that value of property covered by several conveyances was largely in excess of debt due petitioner did not afford ground for demurrer as all of the conveyances were executed in pursuance of a common scheme and could be attacked without reference to the amount of the judgment creditor's debt as compared to the value of property conveyed. Peoples Loan Co. v. Allen, 199 Ga. 537 , 34 S.E.2d 811 (1945) (decided under former Code 1933, § 28-201).

Deed to secure debt also subject to attack. - Conveyance of property for present valuable consideration may be void as to creditors and a deed to secure debt is as much open to attack for fraud as an absolute conveyance. Burkhalter v. Glennville Bank, 184 Ga. 147 , 190 S.E. 644 (1937) (decided under former Code 1933, § 28-201); Peoples Loan Co. v. Allen, 199 Ga. 537 , 34 S.E.2d 811 (1945);(decided under former Code 1933, § 28-201).

Plaintiff claiming equitable title and contending defendant's conveyance was fraudulent. - Plaintiff suing for land on equitable title, and contending that defendant's conveyance was fraudulent and voluntary, held not to be within the statutes. Wommack v. Wommack, 150 Ga. 401 , 104 S.E. 421 (1920) (decided under former Civil Code 1910, § 3224).

Sale under power of land set aside as year's support. - Former Civil Code 1910, § 3220 was inapplicable to restrain sale under power in security deeds, when equity in lands was set apart as year's support. Redman v. Thaxton, 167 Ga. 646 , 146 S.E. 445 (1929) (decided under former Civil Code 1910, § 3220).

Effect on parties of deed void as to creditors. - Deed void as to creditors may, nevertheless, be good between the parties. Jones v. Dougherty, 10 Ga. 273 (1851) (decided under former law).

Deed made to defraud creditors, though void as to creditors was good between grantor and grantee, and former after executing such deed has no title to property thereby conveyed, and therefore cannot have title set apart and exempted as a homestead under the laws of this state. McDowell v. McMurria, 107 Ga. 812 , 33 S.E. 709 , 73 Am. St. R. 155 (1899) (decided under former Civil Code 1895, § 2695).

Conveyances, though void as to creditors and other persons designated, are good between parties to the conveyances and all persons other than creditors or persons having rightful claims against the grantor for which those people are entitled to judgment. Gunn v. Chapman, 166 Ga. 279 , 142 S.E. 873 (1928) (decided under former law).

Under the 1882 provisions, the law was designed solely to protect rights of creditors, and consequently rendered a fraudulent transfer void only as against them, and make no provision whatever in regard to its effect between the parties to the transfer. McCranie v. Cobb, 174 Ga. 370 , 162 S.E. 692 (1932) (decided under former law).

Though deed be made to defraud creditors, neither vendor nor those in privity with vendor will be allowed to set up this fact to defeat action of ejectment brought by vendee as the deed is good as between parties thereto and those in privity with them, though void as to creditors. McCranie v. Cobb, 174 Ga. 370 , 162 S.E. 692 (1932) (decided under former law).

When deed is made to defraud creditors, it is good as between parties thereto and those in privity with them, though void as to creditors. Fuller v. Fuller, 213 Ga. 103 , 97 S.E.2d 306 (1957) (decided under former law).

Grantor of fraudulent conveyance may not have it set aside. - Courts will not set aside a conveyance to hinder, delay, or defraud creditors at instance of grantor. Watkins v. Nugen, 118 Ga. 375 , 45 S.E. 260 (1903) (decided under former law); Tune v. Beeland, 131 Ga. 528 , 62 S.E. 976 (1908);(decided under former law).

Action by administrator of grantor of fraudulent conveyance. - When a debtor, to defraud creditors conveys the debtor's property to another, the debtor's administrator cannot maintain an equitable action against such grantee to recover the property for the purpose of paying the creditors of the decedent. Crosby v. De Graffenreid, 19 Ga. 290 (1856) (decided under former law); Boswell v. Boswell, 147 Ga. 734 , 95 S.E. 247 (1918);(decided under former law).

Applicability of doctrine that grantor in fraudulent deed cannot question deed's validity. - Doctrine that grantor in deed made for purpose of hindering, delaying, or defrauding the debtor's creditors, or one claiming in the debtor's right, cannot be heard to question the validity of such deed, does not apply when the deed was not in fact delivered. Allen v. Bemis, 193 Ga. 556 , 19 S.E.2d 516 (1942) (decided under former law); Fuller v. Fuller, 211 Ga. 201 , 84 S.E.2d 665 (1954);(decided under former law).

Cited in Hightower v. Mustian, 8 Ga. 506 (1850); Burnside v. Terry, 51 Ga. 186 (1874); Planters' & Miners' Bank v. Willeo Cotton Mills, 60 Ga. 168 (1878); Heflin v. Kiser & Co., 88 Ga. 306 , 14 S.E. 585 (1892); Lamkin v. Clary, 103 Ga. 631 , 30 S.E. 596 (1898); Ernest v. Merritt, 107 Ga. 61 , 32 S.E. 898 (1899); Oglesby v. Walton & Co., 118 Ga. 203 , 44 S.E. 990 (1903); Hinkle v. James Smith & Son, 133 Ga. 255 , 65 S.E. 427 (1909); Fourth Nat'l Bank v. Consolidated Steamboat Co., 12 Ga. App. 864 , 76 S.E. 1057 (1913); Pincus v. S. H. Meinhard & Bro., 139 Ga. 365 , 77 S.E. 82 (1913); Adams v. First Nat'l Bank, 147 Ga. 470 , 94 S.E. 568 (1917); Jones v. Foster, 150 Ga. 277 , 103 S.E. 491 (1920); Mobley v. Merchants & Planters Bank, 157 Ga. 658 , 122 S.E. 233 (1924); Jackson v. B.T. Kight & Sons, 159 Ga. 584 , 126 S.E. 379 (1925); Gunn v. Chapman, 166 Ga. 279 , 142 S.E. 873 (1928); Davenport & Broadhurst v. Wood, 166 Ga. 365 , 143 S.E. 398 (1928); Young v. Cochran Banking Co., 166 Ga. 877 , 144 S.E. 652 (1928); Peck v. Calhoun, 38 Ga. App. 764 , 145 S.E. 528 (1928); Seagraves v. Couch & Jackson, 163 Ga. 38 , 147 S.E. 61 (1929); Walker v. Martin, 170 Ga. 447 , 153 S.E. 41 (1930); Parker v. Pender, 174 Ga. 579 , 163 S.E. 506 (1932); Rowe v. Cole, 176 Ga. 592 , 168 S.E. 882 (1933); Bandy v. Taylor Iron Works & Supply Co., 177 Ga. 455 , 170 S.E. 368 (1933); Strobel v. Gormley, 50 Ga. App. 358 , 178 S.E. 192 (1935); Stonecypher v. Elliott, 181 Ga. 438 , 182 S.E. 587 (1935); Killebrew v. Smith, 182 Ga. 117 , 184 S.E. 714 (1936); Ayer v. First Nat'l Bank & Trust Co., 182 Ga. 765 , 187 S.E. 27 (1936); Segars v. Virginia-Carolina Chem. Corp., 56 Ga. App. 597 , 193 S.E. 786 (1937); New England Mut. Life Ins. Co. v. Childs, 185 Ga. 198 , 194 S.E. 561 (1937); Tucker v. Talmadge, 186 Ga. 798 , 198 S.E. 726 (1938); Armour Fertilizer Works v. Maxwell, 186 Ga. 801 , 199 S.E. 120 (1938); Owen v. S.P. Richards Paper Co., 188 Ga. 258 , 3 S.E.2d 660 (1939); Beavers v. Le Sueur, 188 Ga. 393 , 3 S.E.2d 667 (1939); Dwight v. Acme Lumber & Supply Co., 189 Ga. 473 , 6 S.E.2d 586 (1939); Cunningham v. Avakian, 192 Ga. 391 , 15 S.E.2d 493 (1941); Caldwell v. Northwest Atlanta Bank, 194 Ga. 370 , 21 S.E.2d 619 (1942); First Nat'l Bank v. Carmichael, 198 Ga. 309 , 31 S.E.2d 811 (1944); Stubbs v. Fulton Nat'l Bank, 146 F.2d 558 (5th Cir. 1945); United States v. Phillips, 59 F. Supp. 1006 (S.D. Ga. 1945); Hoard v. Maddox, 202 Ga. 274 , 42 S.E.2d 744 (1947); Williams v. Russell, 82 Ga. App. 529 , 61 S.E.2d 567 (1950); Mitchell v. Waller, 83 Ga. App. 7 , 62 S.E.2d 383 (1950); Bank of LaFayette v. Giles, 208 Ga. 674 , 69 S.E.2d 78 (1952); Johnston v. Clement A. Evans & Co., 111 Ga. App. 659 , 143 S.E.2d 38 (1965); Kamlapat v. Purvis-Wade Carpet Mills, 112 Ga. App. 781 , 146 S.E.2d 138 (1965); Leachman v. Cobb Dev. Co., 229 Ga. 207 , 190 S.E.2d 537 (1972); United Bldg. Supply, Inc. v. Atlanta Dry Wall Co., 231 Ga. 554 , 203 S.E.2d 159 (1974); Valley View Church of God in Christ, Inc. v. King, 236 Ga. 337 , 223 S.E.2d 701 (1976); Jones v. Milligan, 238 Ga. 440 , 233 S.E.2d 202 (1977); American Nat'l Bank & Trust Co. v. Davis, 241 Ga. 333 , 245 S.E.2d 291 (1978); Ingram v. Warren, 244 Ga. 189 , 259 S.E.2d 448 (1979); Silverman v. Morton Gruber & Assocs., 244 Ga. 396 , 260 S.E.2d 92 (1979); Nicholson v. Merken, 477 F. Supp. 97 (N.D. Ga. 1979); Duncan v. First Nat'l Bank, 597 F.2d 51 (5th Cir. 1979); Southern Educators Assocs. v. Silver, 245 Ga. 520 , 284 S.E.2d 3 (1981); Aiken v. Citizens & S. Bank, 249 Ga. 481 , 291 S.E.2d 717 (1982); Sheppard v. Tribble Heating & Air Conditioning, Inc., 163 Ga. App. 732 , 294 S.E.2d 572 (1982); Pettigrew v. Graham, 747 F.2d 1383 (11th Cir. 1984); Artrac Corp. v. Austin Kelley Adv., Inc., 197 Ga. App. 772 , 399 S.E.2d 529 (1990); Dime Savs. Bank v. Sandy Springs Assocs., 261 Ga. 485 , 405 S.E.2d 491 (1991); Ray v. Atkins, 205 Ga. App. 85 , 421 S.E.2d 317 (1992); In re Munford, Inc., 172 Bankr. 404 (Bankr. N.D. Ga. 1993); Merrell v. Beckwith, 263 Ga. 779 , 439 S.E.2d 488 (1994); Smith v. Travis Pruitt & Assocs., 265 Ga. 347 , 455 S.E.2d 586 (1995); Dearing v. A.R. III, Inc., 266 Ga. 301 , 466 S.E.2d 565 (1996); Integon Indem. Corp. v. Henry Medical Ctr., Inc., 235 Ga. App. 97 , 508 S.E.2d 476 (1998); Brown v. Cooper, 237 Ga. App. 348 , 514 S.E.2d 857 (1999); Hadlock v. Anderson, 246 Ga. App. 291 , 540 S.E.2d 282 (2000).

Construction

Liberal construction. - Though this provision is strict, courts will give liberal construction to the statute's provisions. Duncan v. Freeman, 152 Ga. 332 , 110 S.E. 5 (1921) (decided under former Code 1863, § 1954).

Construction in pari materia with § 18-2-23 . - Former Civil Code 1910, §§ 3224 and 3225 (see now O.C.G.A. §§ 18-2-23 and 18-2-59 ), the innocent subsequent purchaser statute, being in pari materia, were to be construed together. Warren v. Citizens Nat'l Bank, 145 Ga. 503 , 89 S.E. 520 (1916); FDIC v. United States, 654 F. Supp. 794 (N.D. Ga. 1986) (decided under former O.C.G.A. § 18-2-23).

Direct cause of action against transferee. - Former O.C.G.A. § 18-2-22 does not, either by the statute's terms or by implication, create a direct cause of action in tort against the transferee for the transferor's negligence in a completely separate transaction. Brown Transp. Corp. v. Street, 194 Ga. App. 717 , 391 S.E.2d 699 (1990) (decided under former O.C.G.A. § 18-2-22 ).

Basis for general and punitive damages. - If there is evidence of bad faith, actual fraud, or conspiracy on the part of the taking party or transferee in receiving assets fraudulently conveyed to the transferee by the debtor, an award of general and punitive damages against the transferee may be upheld. Lawson v. Athens Auto Supply & Elec., Inc., 200 Ga. App. 609 , 409 S.E.2d 60 , cert. denied, 200 Ga. App. 895 , 409 S.E.2d 60 (1991) (decided under former O.C.G.A. § 18-2-22 ).

Assignment for Benefit of Creditors

Creditor refusing to accept assignment as satisfaction. - Assignment by insolvent debtor for the benefit of the debtor's creditors, provided they would take property thereby conveyed in full satisfaction of their claims, is not binding on a creditor who refuses to accept the property. McBride & Co. v. Bohanan, 50 Ga. 527 (1874) (decided under former law); Miller v. Conklin & Co., 17 Ga. 430 , 63 Am. Dec. 248 (1855);(decided under former law).

Assignment for benefit of some creditors to exclusion of others. - Insolvent debtor may make assignment of the debtor's property in trust, bona fide, for benefit of one or more creditors to exclusion of others, provided no trust or benefit is reserved to assignor, or any person for the debtor. Embry & Fisher v. Clapp, 38 Ga. 245 (1868) (decided under former law).

Insolvent debtor may make assignment of property in trust, for benefit of one or more creditors, to exclusion of others, so long as no trust or benefit is reserved for the assignor, or any person for the debtor. Embry & Fisher v. Clapp, 38 Ga. 245 (1868) (decided under former law).

Validity of out-of-state assignment of property located within state. - Assignment by debtor for equal benefit of all debtor's creditors was valid and violated no law or public policy of this state. Therefore, such assignment lawfully made in South Carolina by a resident thereof will pass personal assets found in Georgia. Miller v. Kernaghan, 56 Ga. 155 (1876) (decided under former law).

Reservation of Benefit or Trust

Subject to attack by interested party in direct or collateral proceeding. - Assignment or transfer by insolvent debtor of any kind or character of property, when any trust or benefit is reserved to an assignor, is fraudulent and void. Being void, such transfer or assignment may be attacked by a party interested, in either a direct or collateral legal proceeding, when the proceeding is sought to be set up. Coleman & Burden Co. v. Rice, 115 Ga. 510 , 42 S.E. 5 (1902) (decided under former Civil Code 1895, § 2695).

Retention of life estate in conveyed property invalidates conveyance. - If it be agreed between an insolvent debtor and purchaser of property from a debtor, that the debtor shall remain in possession thereof during the debtor's life, it is such a reservation of benefit to the debtor as may avoid conveyance. Barber v. Terrell, 54 Ga. 146 (1875) (decided under the Act of 1818).

Agreement to return grantor's property if debt paid. - Fact that grantor may have executed deed to claimant with understanding that if grantor paid the indebtedness to claimant "he could get his land back" was not such a reservation of benefit in grantor as would invalidate the conveyance. Johnson v. Sherrer, 185 Ga. 340 , 195 S.E. 149 (1938) (decided under former Code 1933, § 28-201).

Deed to creditor containing reversionary clause. - Stipulation in deed by debtor to creditor stating: "It is understood that should said grantee depart this life before grantor, then above-described property is to revert back to said grantor and become his property as if this deed had not been made," did not render the deed void as being repugnant. Davie v. Tanner, 150 Ga. 770 , 105 S.E. 355 (1920) (decided under former Civil Code 1910, § 3224).

Assignment with provision requiring return of surplus is valid. - Assignment by insolvent bank to pay existing debt to creditor is not void because the amount of effects assigned is larger than would be reasonably sufficient to pay the debt and because there is a stipulation that the excess shall be returned to the bank. Carey v. Giles, 10 Ga. 9 (1851) (decided under the Act of 1818).

Deed to land given by insolvent debtor to creditor in trust to secure payment of debt, which deed provides that if debt is not paid in four months creditor may sell land at public outcry, and reimburse the creditor out of proceeds for the debtor's debt, cost, and expenses, and that the debtor is to pay balance, if any, to grantor, is not, on account of such provision for payment of balance, void. The law would give that direction to the balance without the provision. Lay v. Seago, 47 Ga. 82 (1872) (decided under the Act of 1818).

Loan with pledged collateral when collateral value exceeded debt. - When transaction was in nature of a loan and pledge of collateral to secure the loan, although amount of collateral exceeded amount of debt it was intended to secure, no such prohibited trust was thereby created. Booth v. Atlanta Clearing-House Ass'n, 132 Ga. 100 , 63 S.E. 907 (1909) (decided under the Act of 1818).

Transaction purporting to secure creditor for money advanced to named person. - When security deed involved was not in trust or for benefit of or on behalf of creditors, but was a transaction purporting to secure a creditor for money stated to have been advanced or loaned to a named person, it was not such a transaction as is declared to be void. Jones v. Edwards, 177 Ga. 723 , 171 S.E. 285 (1933) (decided under former Civil Code 1910, § 3223).

Execution of release of retained benefits and acceptance by assignee. - Even if assignment, as originally executed, was violative of provisions it would not be so after the execution of endorsement releasing benefit and its acceptance by assignee. John J. Cohen & Sons v. Summers, 54 Ga. 501 (1875) (decided under former Civil Code 1863, § 1952).

Transfer of a mortgage to an alimony trust for the benefit of assignor's wife who was seeking a divorce was a fraudulent transfer under the circumstances of the case. FDIC v. United States, 654 F. Supp. 794 (N.D. Ga. 1986) (decided under former O.C.G.A. § 18-2-23 ).

Bona Fide Purchasers

Must be without notice or grounds for reasonable suspicion. - To be protected, purchaser must be without notice or grounds for reasonable suspicion - not simply without knowledge. Nicol & Davidson v. Crittenden, 55 Ga. 497 (1875) (decided under former Civil Code 1863, § 1952).

Bona fide purchaser holding under fraudulent conveyance. - Law protects bona fide purchasers even when those purchasers hold under fraudulent conveyance, when those purchasers have purchased for a valuable consideration and without notice or reasonable grounds for suspicion. Thornton v. Carver, 80 Ga. 397 , 6 S.E. 915 (1888) (decided under former law).

Bona fide purchaser, without notice of promissory note and mortgage to secure the note, who buys before the debt becomes due, is protected against defense that mortgage was made by the debtor in anticipation of bankruptcy and to defraud the debtor's creditors. Murray & Co. v. Jones, 50 Ga. 109 (1873) (decided under former law).

Innocent purchaser at sale intended to defraud creditors not affected by fraud of seller, though property be attached in purchaser's hands before it is paid for, and before negotiable notes given for price have passed to innocent holders. Nicol & Davidson v. Crittenden, 55 Ga. 497 (1875) (decided under former Civil Code 1863, § 1952).

Bona fide sale without fraudulent intent not invalid. - Bona fide sale of property, not made to hinder, delay, or defraud creditors, is not rendered invalid because vendor may have been insolvent at time. Burkhalter v. Glennville Bank, 184 Ga. 147 , 190 S.E. 644 (1937) (decided under former Code 1933, § 28-201).

Bona fide conveyance by debtor is not void because made when insolvent, and this is so with respect to conveyances by corporations and artificial persons as well. Thornton v. Lane, 11 Ga. 459 (1852) (decided under former law); Hadden v. McQueen, 138 Ga. 406 , 75 S.E. 333 (1912);(decided under former law).

Purchaser of very inconsiderable portion of insolvent debtor's property. - Rule that sale of all of insolvent debtor's property is a badge of fraud does not apply in contest between creditors and one who has purchased a very inconsiderable portion thereof, especially when enough was left, at the time, to pay debts. Scott v. Winship, 20 Ga. 429 (1856) (decided under former law).

Fraudulent Intent - Generally

Party relying on former Code 1933, § 28-201) must establish two elements: (1) the requisite intent of the grantor; and (2) grantee's knowledge of grantor's intent; the second element may be established either by proof of actual knowledge or by proof of circumstances sufficient to put grantee on inquiry. Stokes v. McRae, 247 Ga. 658 , 278 S.E.2d 393 (1981) (decided under former Code 1933, § 28-201).

Proof of bad faith, actual fraud, or conspiracy required. - Legislature did not intend the taking party to be liable for general and punitive damages based solely upon the fraudulent conveyance without proof of bad faith, actual fraud, or conspiracy on the party's part. Kesler v. Veal, 257 Ga. 677 , 362 S.E.2d 214 (1987) (decided under former O.C.G.A. § 18-2-22 ).

Act done by debtor merely to delay creditor may amount to fraud. Von Kamp v. Gary, 204 Ga. 875 , 52 S.E.2d 591 (1949) (decided under former Code 1933, § 28-101).

Badges of fraud do not in themselves constitute fraud; but are only signs or indicia from which it may be inferred as a matter of evidence; and they are subject to explanation. Burkhalter v. Glennville Bank, 184 Ga. 147 , 190 S.E. 644 (1937) (decided under former Code 1933, § 28-201).

Fraudulent intent to be inferred from facts. - It is impossible that a sale can defraud creditors, unless the sale was made with fraudulent intent; and the nature of intent will not be presumed as a matter of law, but must be inferred by the jury from the facts in evidence. Nicol & Davidson v. Crittenden, 55 Ga. 497 (1875) (decided under former Civil Code 1863, § 1952); Almand v. Thomas, 148 Ga. 369 , 96 S.E. 962 (1918);(decided under former law).

Inference or presumption of fraud. - That a given act was followed necessarily by delay to creditors, however strong a circumstance to be weighed by the jury, is not ground for presuming as a matter of law that it was intended to have that effect. Nicol & Davidson v. Crittenden, 55 Ga. 497 (1875) (decided under former Civil Code 1863, § 1952).

Fraud may be inferred from sale pending litigation and from vendor's retention of property. Bozikis v. Anestos, 33 Ga. App. 422 , 126 S.E. 555 (1925) (decided under former Civil Code 1910, § 3224).

Insolvency of the debtor is determined by ascertaining whether the debtor retained sufficient assets to satisfy the debtor's obligations after the transfers. Rolleston v. Cherry, 237 Ga. App. 733 , 521 S.E.2d 1 , cert. denied, 528 U.S. 1046, 120 S. Ct. 580 , 145 L. Ed. 2 d 482 (1999) (decided under former O.C.G.A. § 18-2-22 ).

Insolvency of debtor need not be shown. Anderson Oil Co. v. Benton Oil Co., 246 Ga. 304 , 271 S.E.2d 207 (1980) (decided under former Code 1933, § 28-201).

Applicability of former paragraph (2). - Former Code 1933, § 28-201(2) may be applied in a proper case either to a deed based on valuable consideration or to a voluntary conveyance, regardless of whether the grantor was solvent or insolvent. Von Kamp v. Gary, 204 Ga. 875 , 52 S.E.2d 591 (1949) (decided under former Code 1933, § 28-201).

Conveyance by insolvent intended to defraud creditors. - Creditor, or third person, may pay full and fair price to insolvent debtor for property, yet if transaction was made with intention to delay or defraud creditors of the creditors' rights, it is void as to those creditors. Peck v. Land, 2 Ga. 1 (1847) (decided under the Act of 1818).

Circumstances sufficient to set aside fraudulent conveyance. - To invalidate conveyance of property as one made with intent to delay or defraud creditors, it is essential that it was made with such intention on the part of the debtor and that such intention be known to the party to whom conveyance is made. Pekor-Cook Jewelry Co. v. Schwartz, 67 Ga. App. 738 , 21 S.E.2d 440 (1942) (decided under former Code 1933, § 28-201).

When a sale, other than between husband and wife, is attacked as having been made to hinder, delay, or defraud creditors, it is necessary to show that the grantor had such intention in making the sale, and that the intention was known to the grantee or circumstances were sufficient to put the grantee on inquiry. Avary v. Avary, 202 Ga. 22 , 41 S.E.2d 314 (1947) (decided under former Code 1933, § 28-201).

In case wherein plaintiff seeks cancellation of deed as having been made in fraud of creditor, it is ordinarily not necessary for the plaintiff to show more than that there is a liability to the plaintiff for which judgment is prayed, and that conveyance was made with intent to defraud the plaintiff with reference to such liability, and that such intention was known to the parties taking or that the parties had reasonable cause to suspect that intention. Von Kamp v. Gary, 204 Ga. 875 , 52 S.E.2d 591 (1949) (decided under former Code 1933, § 28-201).

Insolvency irrelevant in determining validity. - Deed may be set aside when the deed was made with design and intent to hinder, delay, or defraud creditors, which intent may be found to have existed whether or not the grantor was or is insolvent. Keeter v. Bank of Ellijay, 190 Ga. 525 , 9 S.E.2d 761 (1940) (decided under former Code 1933, § 28-201).

Conveyance with fraudulent intent made for valuable consideration. - When a conveyance is made with intent to hinder, delay, or defraud a creditor, and this fact is known to a grantee, or a grantee has a reasonable ground to suspect that such was the intention of the grantor, the conveyance is void as against the creditor, even though it is given on a valuable consideration. Durham Iron Co. v. Durham, 62 Ga. App. 361 , 7 S.E.2d 804 (1940) (decided under former Code 1933, § 28-201).

Intention to hinder, delay, or defraud creditors may exist, though debtor is not insolvent. - Deed may be set aside when the deed was made with design and intention to hinder, delay, or defraud creditors, and such intention may be found to have existed even though the grantor was not and is not insolvent. Mercantile Nat'l Bank v. Aldridge, 233 Ga. 318 , 210 S.E.2d 791 (1974) (decided under former Code 1933, § 28-201).

Claim denied for failure to show intent. - Given the undisputed testimony of the former property owner and the owner's spouse that a house was conveyed to an irrevocable trust for estate planning purposes, there were no circumstances from which a jury could infer that they acted with an intent to defraud creditors based on this transaction; therefore, the trial court properly granted summary judgment to the owner and the owner's spouse as to a fraudulent conveyance claim. Albee v. Krasnoff, 255 Ga. App. 738 , 566 S.E.2d 455 (2002) (decided under former § 18-2-22 ).

Acquisition of property in name of third party fraudulent as to existing creditors. - If an insolvent debtor, for purpose of hindering, delaying, and defrauding creditors, uses the debtor's assets in purchase of property, taking title in name of third person, who has full knowledge of purpose of transaction, such transaction is fraudulent as to existing creditors. Harper v. Atlanta Milling Co., 203 Ga. 608 , 48 S.E.2d 89 (1948) (decided under former Code 1933, § 28-201).

Mortgage fraudulently withheld from record to protect mortgagor's credit. - Mortgage given for valuable consideration more than four months before the petition was filed was held fraudulent and void as to creditors because the mortgage was fraudulently withheld from the record until the day the petition was filed. National Bank v. Shackelford, 239 U.S. 81, 36 S. Ct. 17 , 60 L. Ed. 158 (1915) (decided under former Civil Code 1910, § 3224).

When mortgage is made and accepted with understanding between parties that the mortgage will be withheld from record for purpose of protecting financial credit of mortgagor, such agreement may amount to fraud as against subsequent creditors, depending upon intention of parties to be determined as an issue of fact. Sullivan v. Ginsberg, 180 Ga. 840 , 181 S.E. 163 (1935) (decided under former Code 1933, § 28-201).

Mortgages withheld from record, by secret agreement between bankrupt and creditor, inducing other creditors to sell goods to bankrupt is a fraudulent conveyance. Clayton v. Exchange Bank, 121 F. 630 (5th Cir.), cert. denied, 191 U.S. 567, 24 S. Ct. 840 , 48 L. Ed. 305 (1903) (decided under former Civil Code 1895, §§ 2726 and 2727).

Mortgage given for loan to pay some creditors and defraud others. - When bankrupt, with knowledge of insolvency, mortgaged bankrupt's entire stock of goods and pledged bankrupt's choses in action for large loan secured by demand note, and used proceeds to pay three creditors, leaving considerable number unprotected, and lender had reasonable grounds for suspicion that transfer was made with intent to delay bankrupt's other creditors, it was invalid. In re Walden Bros. Clothing Co., 199 F. 315 (N.D. Ga. 1912), aff'd, 204 F. 372 (5th Cir. 1913) (decided under former Civil Code 1910, § 3224).

One extending credit subsequent to and with notice of conveyance. - When undisputed evidence produced by creditor showed that creditor had knowledge of defendant's conveyance of real estate to spouse, prior to time creditor renewed defendant's loan, creditor clearly did not rely on defendant's ownership of such real estate when it subsequently extended defendant credit, and as subsequent creditor with notice, could not void conveyance as fraudulent. Peachtree Bank & Trust Co. v. Atha, 151 Ga. App. 565 , 260 S.E.2d 559 (1979) (decided under former Code 1933, § 28-201).

Transaction between parent and child. - Mere fact that transaction occurred between parent and child does not of itself establish fraud; there must be some other badge of fraud in connection therewith. Martin v. Martin, 180 Ga. 782 , 180 S.E. 851 (1935) (decided under former Code 1933, § 28-201).

Party seeking to set aside transfer of house from parent to daughter did not meet the party's burden of proving intent to delay or defraud creditors. Nelson v. United States, 821 F. Supp. 1496 (M.D. Ga. 1993) (decided under former § 18-2-33).

Reacquisition of conveyed property by corporation controlled by debtor. - When insolvent debtor executed deed to secure indebtedness, which indebtedness at all times greatly exceeded value of security given, and lien was foreclosed by grantee, and at sale the property was bought by grantee, fact that such grantee purchaser may have subsequently conveyed property to corporation of which debtor was president and treasurer would not render such subsequent sale void as against creditors of debtor, where no attack is made upon validity of foreclosure sale, and when it appears that consideration of purchase by corporation was furnished wholly by corporation, and not by debtor. S.T. & W.A. Dewees Co. v. Paul B. Carter & Co., 190 Ga. 68 , 8 S.E.2d 376 (1940) (decided under former Code 1933, § 28-201).

Conveyance to creditor and immediate reconveyance to debtor's spouse. - See Curtis v. Wortsman, 25 F. 893 (S.D. Ga. 1885) (decided under former Civil Code 1863, § 1952).

Purchase by attorney from client of judgment or execution. - Purchase by attorney at law, from client or client's agent, of a judgment or execution belonging to client in hands of attorney for collection, is presumptively invalid as against client's creditors. Stubinger v. Frey, 116 Ga. 396 , 42 S.E. 713 (1902) (decided under former Civil Code 1895, § 2695).

Agreement by purchaser of insolvent partnership's assets to employ partner. - Mere fact that in a sale by insolvent partnership of all the partnership's assets there is an agreement by purchasers to employ one partner at stipulated compensation per month to manage business, will not per se render sale void as against creditors. If there was no intention to defraud, delay, or hinder the creditors, and if sale was for full value above and beyond agreement for employment, the transaction was valid. Cribb & Co. v. Bagley & Rivers, 83 Ga. 105 , 10 S.E. 194 (1889) (decided under former Civil Code 1863, § 1952); McKenzie v. Thomas, 118 Ga. 728 , 45 S.E. 610 (1903);(decided under former Civil Code 1895, § 2695).

Conveyance of property of value larger than debt to be paid. - Conveyance of effects in amount larger than debt to be paid does not make assignment void; but it is a badge of fraud to be considered by jury. Banks v. Clapp, 12 Ga. 514 (1853) (decided under the Act of 1818).

Conveyance to oneself as trustee. - Making of deed by one as an individual to oneself in that person's representative capacity, the deed being for land in which the person has a contingent remainder, is, on insolvency, sufficient evidence on which to base a verdict that the deed was executed with the intent to hinder and delay collection of the grantor's other debts. Eberhardt v. Bennett, 163 Ga. 796 , 137 S.E. 64 (1927) (decided under former Civil Code 1910, § 3224).

Deed by trustee with power of sale created in fraudulent transfer. - If assignment or transfer was prohibited and is made to named trustee with power of sale, an execution of power conveys no title to purchaser, and a deed purporting to convey to the purchaser any part of property so transferred is likewise void. Coleman & Burden Co. v. Rice, 115 Ga. 510 , 42 S.E. 5 (1902) (decided under former Civil Code 1895, § 2695).

Conveyance made with fraudulent intent, known to grantee. - Absolute deed made with intent to delay or defraud creditors, though made also to secure debt, is void as against creditors if grantee takes the deed with notice of fraudulent intention. Palmour & Smith v. Johnson, 84 Ga. 91 , 10 S.E. 500 (1889) (decided under former Civil Code 1863, § 1952); McLendon v. Reynolds Grocery Co., 160 Ga. 763 , 129 S.E. 65 (1925);(decided under former Civil Code 1910, § 3224).

Under former Code 1933, § 28-320 (see now O.C.G.A. § 18-2-59 ), a conveyance of real estate had or made with intent to delay or defraud creditors, with such intent known to party taking, is invalid as to existing creditors. Citizens & S. Nat'l Bank v. Kontz, 185 Ga. 131 , 194 S.E. 536 (1937) (decided under former Code 1933, § 28-201).

Every conveyance of property made with intent to delay or defraud creditors of grantor is void against such creditors when the grantee has knowledge of such intention or reasonable ground to suspect that intention. Hilburn v. Hightower, 178 Ga. 534 , 173 S.E. 389 (1934); Cunningham v. Avakian, 187 Ga. 575 , 1 S.E.2d 433 (1939) (decided under former Civil Code 1910, § 3224).

Deed is void as to creditors when made for purpose of hindering, delaying, or defrauding creditors in collection of the creditors' debts, and when grantee in taking the deed has knowledge of such fraudulent intent or reasonable ground to suspect it. Taylor v. Gates, 206 Ga. 880 , 59 S.E.2d 365 (1950) (decided under former Code 1933, § 28-201).

Transaction upheld. - The kind of transaction, based upon valuable consideration, which will be upheld is "a bona fide transaction on valuable consideration, and without notice or grounds for reasonable suspicion." Conley v. Buck, 100 Ga. 187 , 28 S.E. 97 (1897) (decided under former Civil Code 1895, § 2695).

Charge requiring finding of intent to "delay, hinder, and defraud." - In trial of action by creditor to set aside and cancel a fraudulent conveyance, it was inaccurate and therefore erroneous to charge that if debtor made conveyance with intention to "delay, hinder, and defraud" the creditors, it would be void. The acts voiding the conveyance should have been stated disjunctively as stating the acts conjunctively imposed upon creditor a greater burden than the law does. Evans v. Coleman, 101 Ga. 152 , 28 S.E. 645 (1897) (decided under former Civil Code 1895, § 2695).

Verdict finding no intent to defraud, but an intent to delay creditors, is not void for inconsistency and uncertainty; debtor who attempts to postpone time of payment endeavors to deprive the debtor's creditors of a valuable right, and it matters not what the debtor's motive may be. Monroe Mercantile Co. v. Arnold & McCord, 108 Ga. 449 , 34 S.E. 176 (1899) (decided under former Civil Code 1933, § 2695).

Inadequate Consideration

Inference of fraud in transfer. - Great inadequacy of consideration in transfer of property creates strong inference that the transfer was fraudulent. United States v. McMahan, 392 F. Supp. 1159 (N.D. Ga. 1975), aff'd, 556 F.2d 362 (5th Cir. 1977), rev'd in part on other grounds, 569 F.2d 889 (5th Cir. 1978) (decided under former Code 1933, § 28-201).

Conveyance for inadequate consideration, when insolvent or causing insolvency. - If at time of conveyance, for greatly inadequate consideration, defendant was insolvent, or if such transfer rendered defendant insolvent as to defendant's creditors, such conveyance was fraudulent within meaning of former Code 1933, § 28-320 (see now O.C.G.A. § 18-2-59 ), and, as such, may be set aside. United States v. McMahan, 392 F. Supp. 1159 (N.D. Ga. 1975), aff'd, 556 F.2d 362 (5th Cir. 1977), rev'd in part on other grounds, 569 F.2d 889 (5th Cir. 1978) (decided under former Code 1933, § 28-201).

Inadequate price, accompanied by other doubtful and suspicious circumstances. - While inadequacy of price alone is not sufficient grounds to set aside a conveyance in a court of equity, that circumstance, taken in consideration and in connection with others of a doubtful and suspicious nature, may afford such a strong presumption of fraud so as to authorize a court to set it aside. United States v. McMahan, 392 F. Supp. 1159 (N.D. Ga. 1975), aff'd, 556 F.2d 362 (5th Cir. 1977), rev'd in part on other grounds, 569 F.2d 889 (5th Cir. 1978) (decided under former Code 1933, § 28-201).

Inadequacy of consideration in otherwise good faith conveyance. - When one honestly and in good faith purchases property from another, the mere fact that the consideration paid was inadequate will not authorize creditor of grantor, who afterwards obtains judgment against latter, to subject property to satisfaction of creditor's judgment. Childers v. Ackerman Constr. Co., 211 Ga. 350 , 86 S.E.2d 227 (1955) (decided under former Code 1933, § 28-201).

Consideration deemed adequate. - Severance payments to corporate officers did not lack consideration when the corporation was assured that the officers would not leave without providing the corporation recourse in the event their leaving frustrated its plans to sell its stock. Munford v. Valuation Research Corp., 98 F.3d 604 (11th Cir. 1996), cert. denied, 522 U.S. 1068, 118 S. Ct. 738 , 139 L. Ed. 2 d 675 (1998) (decided under former § 18-2-22 ).

Retention of Possession by Debtor

Possession retained by vendor after absolute sale of real property is prima facie evidence of fraud, although it may be explained and rebutted. Hilburn v. Hightower, 178 Ga. 534 , 173 S.E. 389 (1934) (decided under former Civil Code 1910, § 3224).

Possession of property, real or personal, remaining with vendor after an absolute conveyance is evidence of fraud. Peck v. Land, 2 Ga. 1 , 46 Am. Dec. 368 (1847) (decided under the Act of 1818); Fleming v. Townsend, 6 Ga. 103 , 50 Am. Dec. 318 (1849); Perkins, Hopkins & White v. Patten, 10 Ga. 241 (1851) (decided under former law); Smith v. McDonald, 25 Ga. 377 (1858); Stephens v. Southern Cotton Oil Co., 147 Ga. 410 , 94 S.E. 245 (1917) (decided under former law); Virginia-Carolina Chem. Co. v. Hollis, 23 Ga. App. 634 , 99 S.E. 154 (1919); Greene v. Matthews, 31 Ga. App. 265 , 120 S.E. 434 (1923) (decided under former law);(decided under former law);(decided under former Civil Code 1910, § 3224);(decided under former Civil Code 1910, § 3224).

Possession of personal property remaining with vendor after absolute conveyance is evidence of fraud, when such possession is not satisfactorily explained. Scruggs v. Blackshear Mfg. Co., 45 Ga. App. 855 , 166 S.E. 249 (1932) (decided under former Civil Code 1910, § 3224).

If debtor, shortly after conveying to claimant absolutely, is in possession of premises, and so continues until levy is made, debtor's possession, in absence of evidence to show when or how it commenced, may be presumed to have existed at date of conveyance; and such continuous possession, unexplained, is a badge of fraud. Collins v. Taggart, 57 Ga. 355 (1876) (decided under former Civil Code 1863, § 1952).

Possession retained by grantor in security deed. - Possession remaining with grantor after absolute conveyance is evidence of fraud; but the same is not true of possession retained by grantor in security deed. Burkhalter v. Glennville Bank, 184 Ga. 147 , 190 S.E. 644 (1937) (decided under former Code 1933, § 28-201).

Delivery delayed for several months after sale to allow clearing up mortgage. - Fact that it was a few months after execution and delivery of bill of sale before the defendant delivered possession of property sold to the claimant, property being under mortgage and it taking some time to clear property up before delivery to the claimant, did not tend to render bill of sale void on account of fraud or show any fraudulent intent upon the part of parties thereto. Foremost Dairies, Inc. v. Kelley, 51 Ga. App. 722 , 181 S.E. 204 (1935) (decided under former Code 1933, § 28-203).

Retention of possession by grantor after conveyance in trust for spouse and children. - When personal property is conveyed by spouse to trustee for benefit of the other spouse and children, subsequent possession by spouse being consistent with object of deed is not evidence of fraud. Clayton v. Brown, 17 Ga. 217 (1855) (decided under former law).

When mortgagee purchasing at foreclosure sale allows mortgagor to retain possession. - When creditor forecloses a mortgage and purchases mortgaged property at sheriff's sale and suffers property so purchased to remain in possession of mortgagor after sale, such retention of possession, by mortgagor, is a badge of fraud as against other judgment creditors. Williams v. C. & G.H. Kelsey & Halsted, 6 Ga. 365 (1849) (decided under former law).

Grantee's Notice of Fraud

Transaction carried out so as to excite suspicion of its fairness. - See Hoffer v. Gladden, 75 Ga. 532 (1885) (decided under former Civil Code 1863, § 1952).

Suspicion alone insufficient. - Contrary to trial court's conclusion, reasonable grounds for suspicion alone do not suffice to render a subsequent purchaser's title void, and when buyer acquired automobile for value, and had no notice that seller's title was obtained through fraud, the buyer received good title. Hall v. Hidy, 263 Ga. 422 , 435 S.E.2d 215 (1993) (decided under former § 18-2-23 ).

Fraudulent conveyance void as to grantor and grantee having notice. - If a defendant sells property in order to prevent defendant's creditors from making their claims out of it, the sale will be void as to defendant; and if at time of sale the purchaser has reasonable ground to suspect that such is the defendant's object, the sale will be void also as to the purchaser. Smith v. Wellborn, 75 Ga. 799 (1885) (decided under former Civil Code 1863, § 1952); Virginia-Carolina Chem. Co. v. Hollis, 23 Ga. App. 634 , 99 S.E. 154 (1919); Greene v. Matthews, 31 Ga. App. 265 , 120 S.E. 434 (1923) (decided under former Civil Code 1910, § 3224);(decided under former Civil Code 1910, § 3224).

Fraudulent intent of grantor of which grantee had no notice. - Fraudulent intent in execution of a deed, upon part of grantor, which was unknown to grantee and which grantee had no reasonable ground to suspect, will not vitiate grantee's title. Hollis v. Sales, 103 Ga. 75 , 29 S.E. 482 (1897) (decided under former law).

Child, who testified, uncontradicted, did not know why the child's parent gave the child the house, had no actual knowledge of the parent's intent to delay or defraud the parent's creditors. Nelson v. United States, 821 F. Supp. 1496 (M.D. Ga. 1993) (decided under former § 18-2-33).

Grantee having reasonable ground to suspect spouse's fraudulent intent. - It is not necessary to prove that both husband and wife joined to hinder, delay, and defraud other creditors in collection of their debts, if it can be shown that wife had reasonable ground to suspect that her husband's purpose was to hinder, delay, and defraud other creditors in collection of their debts. United States v. McMahan, 392 F. Supp. 1159 (N.D. Ga. 1975), aff'd, 556 F.2d 362 (5th Cir. 1977), rev'd in part on other grounds, 569 F.2d 889 (5th Cir. 1978) (decided under former Code 1933, § 28-201).

Conveyance for consideration, but with known fraudulent intent. - Fact that transaction is based upon valuable consideration does not save the transaction from attack on ground of fraud when party taking has knowledge of such fraud or ground for reasonable suspicion. Sullivan v. Ginsberg, 180 Ga. 840 , 181 S.E. 163 (1935) (decided under former Code 1933, § 28-201).

Conveyance of property, made with intention of hindering, delaying, or defrauding creditors, is void as against creditors; if transaction is bona fide and for valuable consideration, and party taking has no notice or ground for reasonable suspicion of intention to hinder, delay, or defraud creditors, it is valid, but if party taking has notice of intention of maker to hinder, delay, or defraud creditors, or has ground for reasonable suspicion of such intention, the conveyance is void as against creditors of maker. Gardner v. Day, 182 Ga. 113 , 184 S.E. 710 (1936) (decided under former law).

Conveyance intended to defeat recovery of alimony. - Under former Code 1933, §§ 28-101 and 28-201 (see now O.C.G.A. §§ 18-2-1 and 18-2-59 ), one may bring equitable proceeding to cancel and set aside a conveyance of property made by spouse with intent to defeat recovery of alimony, and such proceeding will lie against grantee of spouse who took with knowledge of such intention or with reasonable grounds to suspect such intent. A different result was not required by former Code 1933, § 30-112 (see now O.C.G.A. § 19-5-7 ), as relating to filing of lis pendens notice, since the grantee is not an innocent purchaser. Wood v. McGahee, 211 Ga. 913 , 89 S.E.2d 634 (1955) (decided under former Code 1933, § 28-201).

Under provisions of former Code 1933, § 28-320 (see now O.C.G.A. § 18-2-59 ), a deed executed by husband living separate and apart from his wife, conveying certain of his property to another with intent and purpose of defeating wife's right to alimony, is invalid as to wife if grantee knew or had grounds for reasonable suspicion that such was the purpose of grantor, even though deed was made to secure or in payment of valid preexisting debt due by husband to grantee. McCallie v. McCallie, 192 Ga. 699 , 16 S.E.2d 562 (1941) (decided under former Code 1933, § 28-201).

Action to set aside conveyance of grantee's notice of fraudulent intent. - See Webb-Crawford Co. v. Bozeman, 178 Ga. 328 , 173 S.E. 144 (1934) (decided under former Civil Code 1910, § 3224).

Charge requiring that grantee take "with no suspicion even" of fraudulent intent was error. Norton v. Neely Co., 148 Ga. 652 , 98 S.E. 76 (1919) (decided under former law).

Insolvency of Debtor

Test for insolvency. - Test for determining whether a debtor was insolvent, within the meaning of paragraph (3) of former Code 1933, § 28-201, was whether the value of the debtor's remaining property was sufficient to pay in full all of the debtor's debts, and the value of the debtor's remaining property must be determined as of the date the conveyance sought to be set aside was made. Goodman v. Lewis, 247 Ga. 605 , 277 S.E.2d 908 (1981) (decided under former Code 1933, § 28-201).

Evidence of insolvency. - Defendant's solvency at time of allegedly fraudulent conveyance is relevant, but evidence should be restricted to defendant's financial condition at time of conveyance. Warren v. Citizens Nat'l Bank, 145 Ga. 503 , 89 S.E. 520 (1916) (decided under former Civil Code 1910, §§ 3224 and 3225).

Plaintiff may prove insolvency of debtor. - On trial of issue whether conveyance is fraudulent against creditors, plaintiff may prove insolvency of debtor at time of sale. Tillman v. Fontaine, 98 Ga. 672 , 27 S.E. 149 (1896) (decided under former law).

Insolvency means inability to pay debts as the debts fall due. Loeb v. Dante, 1 Bankr. 547 (Bankr. N.D. Ga. 1979) (decided under former Code 1933, § 28-201).

Solvency determined by sufficiency of property to discharge all debts. - Unless one's property, whether real or personal, tangible or intangible, leviable or nonleviable, is insufficient in value to discharge all one's debts, one can in no proper sense be termed insolvent. Keeter v. Bank of Ellijay, 190 Ga. 525 , 9 S.E.2d 761 (1940) (decided under former Code 1933, § 28-201).

Debtor is insolvent, if after voluntary deed or conveyance, property left or retained by the debtor is not ample to pay the debtor's existing debts. Chambers v. Citizens & S. Nat'l Bank, 242 Ga. 498 , 249 S.E.2d 214 (1978) (decided under former Code 1933, § 28-201); Barclay v. First Nat'l Bank, 265 Ga. 744 , 462 S.E.2d 374 (1995); Cavin v. Brown, 246 Ga. App. 40 , 538 S.E.2d 802 (2000) (decided under former § 18-2-22 );(decided under former § 18-2-22 ).

Under paragraph (3) of former Code 1933, § 28-201, a debtor was insolvent when property left or retained by the debtor after voluntary conveyance is insufficient to pay the debtor's existing debts. Moister v. Waters, 8 Bankr. 163 (Bankr. N.D. Ga. 1981) (decided under former Code 1933, § 28-201).

Time of insolvency. - Solvency is to be tested by value of property at time of making of voluntary deed, rather than at time of transferor's death. Wallace v. Williams, 212 Ga. 692 , 95 S.E.2d 369 (1956) (decided under former Code 1933, § 28-201).

Deduction of exempt property or homestead. - In determining whether property left or retained by debtor making conveyance to spouse is sufficient to pay existing debts and liabilities, property in which debtor is entitled to exemption or homestead, but which had not been exempted, is not to be deducted, unless jury should find as a fact that debtor, at time of conveyance, intended to exempt that property. Mitchell v. Weekes, 179 Ga. 886 , 177 S.E. 737 (1934) (decided under former Civil Code 1910, § 3224).

Suretyship obligations on debts not matured at time of conveyance. - In testing the solvency of one who has made a voluntary conveyance of property, one's endorsements or suretyship on obligations of others, not matured at time of conveyance, should not be counted as one's debts when it does not appear that one's contingent liability was at that time likely to become absolute or in fact became so. Moister v. Waters, 8 Bankr. 163 (Bankr. N.D. Ga. 1981) (decided under former Code 1933, § 28-201).

Insolvency of debtor is conclusively shown by the fact that debtor is in the process of obtaining a discharge in bankruptcy at the time of the fraudulent conveyance. Brown v. Citizens & S. Nat'l Bank, 168 Ga. App. 385 , 308 S.E.2d 850 (1983), rev'd on other grounds, 253 Ga. 119 , 317 S.E.2d 180 (1984) (decided under former § 18-2-22 ).

Insolvency of debtor not conclusive of fraudulence of conveyance. - While insolvency of grantor is a pertinent matter for consideration in determining whether transfer or conveyance is fraudulent, it is only a circumstance, and is not conclusive. Burkhalter v. Glennville Bank, 184 Ga. 147 , 190 S.E. 644 (1937) (decided under former Code 1933, § 28-201).

Conveyances Between Relatives and Spouses

Spouses bear burden of showing fairness of transaction. - For transactions between spouses which are attacked for fraud by the creditors of either, a burden to show fairness of the transactions is placed on the spouses; in other relationships such as business and social relationships this rule does not apply and the burden is on the party seeking to set aside the deed. However, regardless of the placing of the burden, the relationship between the parties is a circumstance to be considered in actions attacking transactions for fraud. Stokes v. McRae, 247 Ga. 658 , 278 S.E.2d 393 (1981) (decided under former Code 1933, § 28-201).

Transactions between near relatives. - Transactions between near relatives, as brothers-in-law, are to be scanned with care and scrutinized closely, and slight evidence of fraud between the relatives may be sufficient to set aside the transaction. Hilburn v. Hightower, 178 Ga. 534 , 173 S.E. 389 (1934) (decided under former Civil Code 1910, § 3224).

Transactions between relatives are to be scanned with care and scrutinized closely, and slight evidence of fraud shown between the relatives may be sufficient to set aside the transaction. McLendon v. Reynolds Grocery Co., 160 Ga. 763 , 129 S.E. 65 (1925) (decided under former Civil Code 1910, § 3224); Scruggs v. Blackshear Mfg. Co., 45 Ga. App. 855 , 166 S.E. 249 (1932);(decided under former Civil Code 1910, § 3224).

Mere fact of close relationship, unless marital, unsupported by other circumstances. - While transactions between near relatives are to be scrupulously inspected, and the law permits evidence of relationship to give additional weight to other circumstances, and thus to bear heavily upon transactions between them; mere fact of relationship, unsupported by other circumstances, will not authorize finding that transaction even between persons closely related, unless husband and wife, are fraudulent. Webb-Crawford Co. v. Bozeman, 178 Ga. 328 , 173 S.E. 144 (1934) (decided under former Civil Code 1910, § 3224).

When sale is attacked as in contravention statute and as having been made to hinder, delay, or defraud creditors, burden was on plaintiff to establish plaintiff's contentions under same rules as were applicable to all other civil cases; and proof of near relationship other than that of husband and wife, without more, is not sufficient to constitute a badge of fraud. Webb-Crawford Co. v. Bozeman, 178 Ga. 328 , 173 S.E. 144 (1934) (decided under former Civil Code 1910, § 3224).

Proof of near relationship between parties to deed, other than that of husband and wife, without more, is not sufficient to show fraud. McCallie v. McCallie, 192 Ga. 699 , 16 S.E.2d 562 (1941) (decided under former Code 1933, § 28-201).

Conveyance by husband to wife. - In conveyance from husband and wife, the utmost good faith must be made to appear, and wife must show with great clearness that she was a bona fide purchaser, and that she had no reason to believe that transfer was made to delay or defraud creditors of her husband. Curtis v. Wortsman, 25 F. 893 (S.D. Ga. 1885) (decided under former Civil Code 1863, § 1952).

Voluntary conveyance to spouse not void if grantor retains ample property to pay existing debts and liabilities. Mitchell v. Weekes, 179 Ga. 886 , 177 S.E. 737 (1934) (decided under former Civil Code 1910, § 3224).

Husband's transfer of 100% interest in the marital residence to his wife less than one year before he filed a bankruptcy petition was a fraudulent transfer. Ellenberg v. Bouldin, 196 Bankr. 202 (Bankr. N.D. Ga. 1996) (decided under former § 18-2-22 ).

Conveyance by husband to wife will not be set aside as fraudulent unless the conveyance was shown to have been made with intent to defraud creditors and the wife was shown to have had knowledge or some reasonable notice or suspicion of such intent. United States v. McMahan, 392 F. Supp. 1159 (N.D. Ga. 1975), aff'd, 556 F.2d 362 (5th Cir. 1977), rev'd in part on other grounds, 569 F.2d 889 (5th Cir. 1978) (decided under former Code 1933, § 28-201).

Transfer of funds from husband to wife. - Evidence showed that taxpayer fraudulently transferred funds to his wife, when he deposited receipts from his legal practice into bank accounts and wrote checks on the accounts payable to his wife, who then deposited the checks into her own account and wrote checks on that account to pay mortgage and other "household" expenses. United States v. Tranakos, 778 F. Supp. 1220 (N.D. Ga. 1991) (decided under former § 18-2-22 ).

Conveyance to wife and children. - Settlement in favor of wife and children, or either, will be supported, if made in good faith and with no intent to defraud creditors; but one by debtor in greatly embarrassed circumstances of the bulk of the debtor's estate, leaving but a pittance, insufficient for debts, cannot be supported. Clayton v. Brown, 30 Ga. 490 (1860) (decided under former law); Reese v. Shell, 95 Ga. 749 , 22 S.E. 580 (1895) (decided under former Civil Code 1863, § 1952).

Facts subjecting conveyance by husband to wife to attack. - See Mattox v. West, 194 Ga. 310 , 21 S.E.2d 428 (1942) (decided under former Code 1933, § 28-201).

Fraudulent conveyance to wife who insures for own benefit. - See St. Paul Fire Ins. & Co. v. Brunswick Grocery Co., 113 Ga. 786 , 39 S.E. 483 (1901) (decided under former Civil Code 1895, § 2695).

Burden of proof. - While absolute conveyance from husband to wife for valuable consideration will not be set aside at instance of creditor upon ground of fraud unless wife knew of fraud or had "ground for reasonable suspicion" thereof, burden is not upon creditor, as in other cases, to prove fraudulent scheme. Cotton States Fertilizer Co. v. Childs, 179 Ga. 23 , 174 S.E. 708 (1934) (decided under former Civil Code 1910, § 3230).

Whenever transaction between husband and wife is attacked by husband's creditors for fraud, if wife claims the property purchased or received, onus is upon her to make fair showing about whole transaction, particularly where conveyance was a gift. Spiegel v. Ross, 188 F. Supp. 812 (N.D. Ga. 1960) (decided under former Code 1933, § 28-201).

In case where wife sets up title to property levied upon under deed from her husband, and his creditor attacks same upon ground that it was a fraudulent conveyance, intended to hinder, delay, and defraud such creditor, the law does not put upon creditor the burden of establishing fraud in the conveyance. On the contrary, it puts burden upon husband and wife, who must show that transaction as a whole is free from fraud. Moore v. Loganville Mercantile Co., 184 Ga. 351 , 191 S.E. 121 (1937) (decided under former law).

Spouse preferring payment to spouse who has loaned money. - Since wife, having loaned money to her husband, is a general creditor, husband may prefer payment to his wife over any other unsecured creditor, paying her in property or money without such payment being fraudulent, provided the property so conveyed be reasonably proportioned to amount of the debt. United States v. McMahan, 392 F. Supp. 1159 (N.D. Ga. 1975), aff'd, 556 F.2d 362 (5th Cir. 1977), rev'd in part on other grounds, 569 F.2d 889 (5th Cir. 1978) (decided under former Code 1933, § 28-201).

While husband has right to prefer his wife to other unsecured creditors and pay her with property or money, provided property conveyed in satisfaction of her debt is reasonably proportioned to amount of debt, a conveyance by him to her of property in a sum grossly in excess of amount due her, amounts to conveyance made with intent to delay and defraud creditors notwithstanding both husband's and wife's claims to have acted in good faith in the transaction. United States v. McMahan, 392 F. Supp. 1159 (N.D. Ga. 1975), aff'd, 556 F.2d 362 (5th Cir. 1977), rev'd in part on other grounds, 569 F.2d 889 (5th Cir. 1978) (decided under former Code 1933, § 28-201).

Jury charges relating to spousal conveyances. - See Almond v. Gairdner & Arnold, 76 Ga. 699 (1886) (decided under former Civil Code 1863, § 1952).

When there was some evidence that defendant's wife paid part of purchase price of property conveyed to her by her husband, trial court, in charging on setting aside of conveyances made with intention of defrauding creditors, should add phrase, "and such intention known to party taking." Baker v. Goddard, 205 Ga. 477 , 53 S.E.2d 754 (1949) (decided under former Code 1933, § 28-201).

For proper jury charge on validity of conveyance to creditor-spouse, see Pharr v. Pharr, 206 Ga. 354 , 57 S.E.2d 177 (1950) (decided under former Code 1933, § 28-201).

Husband conveyed automobile to wife for valuable consideration when wife advanced $2000 toward car purchase and made payments to creditor's credit union. Brown v. Citizens & S. Nat'l Bank, 253 Ga. 119 , 317 S.E.2d 180 (1984) (decided under former § 18-2-22 ).

Constructive trust finding not valid when transferor's intent fraudulent. - In divorce action, jury decision that transfer of real property from husband to wife created a constructive trust in favor of husband should have been excluded by judgment notwithstanding the verdict when transfer was made with the intent and purpose of defrauding husband's creditors, and there was no issue of fact as to the intent and purpose of the husband at the time of the transfer. Carden v. Carden, 253 Ga. 546 , 322 S.E.2d 226 (1984) (decided under former § 18-2-22 ).

Conveyance to son with knowledge of impending bankruptcy. - Evidence of an intent to defraud creditors is shown by circumstantial evidence that son, who knew that his family members were soon to declare bankruptcy, had their valuable assets transferred to the son with the intent to keep such assets within the family at the expense of the creditors. Gower v. Cohn, 643 F.2d 1146 (5th Cir. 1981) (decided under former Code 1933, § 28-201).

Transfer of property from Chapter 7 debtor to spouse. - Settlement of a bona fide family controversy and waiver of further claims for alimony or property division was a valuable consideration for post-nuptial agreements between a Chapter 7 debtor and the debtor's spouse, and the transfer of property to the spouse was not a fraudulent conveyance. Tidwell v. Galbreath, 207 Bankr. 309 (Bankr. M.D. Ga. 1997) (decided under former § 18-2-22 ).

Conveyance challenge estopped. - Chapter 7 trustee was estopped from challenging conveyance of collateral as fraudulent under state law because of secured creditor's prepetition agreement with debtor, in which it agreed not to contest debtor's conveyance of debtor's home to debtor's parent. Harris v. Huff, 160 Bankr. 256 (Bankr. M.D. Ga. 1993) (decided under former § 18-2-22 ).

Voluntary Conveyances

Voluntary deed is one totally without consideration. - Voluntary conveyance or deed is one without any valuable consideration, and a valuable consideration is founded on money, or something convertible into money, or having a value in money. Stokes v. McRae, 247 Ga. 658 , 278 S.E.2d 393 (1981) (decided under former Code 1933, § 28-201).

Former paragraph (3) was mandatory and admits of no exception. King v. Poole, 61 Ga. 373 (1878) (decided under former Civil Code 1863, § 1952).

Transfers not for valuable consideration. - Statute allows creditors to avoid certain transfers made by debtor which were not for valuable consideration. Moister v. Eidson, 10 Bankr. 432 (Bankr. N.D. Ga. 1981) (decided under former law).

Test for satisfaction of former paragraph (3). - There were two elements which must be established in order to meet the test of paragraph (3) of former Code 1933, § 28-201: the debtor must: (1) convey by a voluntary deed, not for a valuable consideration; and (2) be insolvent at the time of the conveyance. Stokes v. McRae, 247 Ga. 658 , 278 S.E.2d 393 (1981) (decided under former Code 1933, § 28-201); Ambase Int'l Corp. v. Bank S., N.A., 196 Ga. App. 336 , 395 S.E.2d 904 (1990);(decided under former § 18-2-22 ).

Intention of parties. - Whether conveyance is in fact voluntary depends upon intention of parties as ascertained from facts and circumstances at time of the conveyance's execution. Pharr v. Pharr, 206 Ga. 354 , 57 S.E.2d 177 (1950) (decided under former Code 1933, § 28-201).

Showing of fraudulent intent not prerequisite. - While under paragraph (1) of former Code 1933, § 28-201, fraudulent intent of debtor was necessary to cancellation, it need not be shown when a voluntary conveyance was rendered void under paragraph (3) of that section. Neal v. Stapleton, 203 Ga. 236 , 46 S.E.2d 130 (1948) superseded by statute, Citizens Bank of Mass. V. Grand Street Parkway, LLC et al, 21 Mass. L. Rep. 594 (2006) (decided under former Code 1933, § 28-201); Mercantile Nat'l Bank v. Aldridge, 233 Ga. 318 , 210 S.E.2d 791 (1974); Drake v. Dennis, 209 Bankr. 20 (Bankr. S.D. Ga. 1996) (decided under former Code 1933, § 28-201);(decided under former § 18-2-22 ).

Retention of sufficient property to pay debts. - Good faith voluntary conveyance is valid if debtor retains sufficient property to pay debts. Weed v. Davis, 25 Ga. 684 (1858) (decided under former law).

Nonfraudulent conveyance, before bankruptcy, of small part of estate. - Voluntary conveyance by bankrupt to children before adjudication of bankruptcy is not void when there was no intent to defraud and property conveyed formed inconsiderable part of grantor's estate. Adams v. Collier, 122 U.S. 382, 7 S. Ct. 1208 , 30 L. Ed. 1207 (1887) (decided under former law).

Voluntary deed executed when insolvent or rendering debtor insolvent. - Voluntary deed by debtor may be set aside by debtor's creditor if debtor was insolvent when deed was executed, or was thereby rendered insolvent. Downs v. Powell, 215 Ga. 62 , 108 S.E.2d 715 (1959) (decided under former Code 1933, § 28-201).

Voluntary conveyance from insolvent debtor to wife. - If husband, insolvent at time and having no property subject to demands of judgment creditors, makes gift of property to his wife, such gift would be void as against creditors, whether or not wife had knowledge or notice of husband's fraudulent intent. Garner v. State Banking Co., 150 Ga. 6 , 102 S.E. 442 (1920) (decided under former Civil Code 1910, § 3224); Oxford v. Hasty, 213 Ga. App. 539 , 445 S.E.2d 276 (1994);(decided under former § 18-2-22 ).

Voluntary conveyance by insolvent debtor not binding on creditors. - Voluntary conveyance by insolvent debtor, based on no consideration either by payment of debt or otherwise, will not bind other creditors, and this is true irrespective of any fraudulent purpose on part of debtor, or any knowledge on part of creditor as to such purpose. Moncrief Furnace Co. v. Northwest Atlanta Bank, 193 Ga. 440 , 19 S.E.2d 155 (1942) (decided under former law).

Voluntary conveyance with intent to defraud creditors. - When tort-feasor made voluntary conveyance with intent to delay or defraud party damaged, such conveyance is void as to that party whether or not volunteer grantee had notice of fraudulent intent. Westmoreland v. Powell, 59 Ga. 256 (1877) (decided under former Civil Code 1863, § 1952).

Voluntary conveyance by solvent or insolvent debtor, made with intent to delay or defraud the debtor's creditor in collection of the debt, is void as to the creditor, irrespective of notice or grounds of suspicion to party taking conveyance. Citizens & S. Nat'l Bank v. Kontz, 185 Ga. 131 , 194 S.E. 536 (1937) (decided under former Code 1933, § 28-201).

Voluntary deed was void as to creditors, though grantor was not insolvent at time of execution, if the grantor's purpose in so doing is to hinder, delay, or defraud creditors, whether donee knew of fraudulent intention or not. Peoples Loan Co. v. Allen, 199 Ga. 537 , 34 S.E.2d 811 (1945) (decided under former Code 1933, § 28-201); Hyde v. Atlanta Woolen Mills Corp., 204 Ga. 450 , 50 S.E.2d 52 (1948);(decided under former law).

Applicability of statute to conveyance by insolvent shareholder of insolvent national bank. - See Duncan v. Freeman, 152 Ga. 332 , 110 S.E. 5 (1921) (decided under former Code 1933, § 28-201).

Conveyance in consideration of promise to care for grantor for life is not voluntary, but is for valuable consideration. Avary v. Avary, 202 Ga. 22 , 41 S.E.2d 314 (1947) (decided under former Code 1933, § 28-201).

Conveyance in consideration of love, affection, and $5.00. - Deed by father to the father's children, reciting as consideration love, affection, and $5.00, is not on its face a voluntary conveyance; whether such conveyance is in fact voluntary depends upon intention of parties as ascertained from facts and circumstances at time of execution. Glenn v. Tankersley, 187 Ga. 129 , 200 S.E. 709 (1938), later appeal sub nom. Bussell v. Glenn, 197 Ga. 816 , 30 S.E.2d 617 (1944) (decided under former Code 1933, § 28-201).

Deed reciting consideration of "$5.00 and love and affection" is not, on the deed's face, a voluntary conveyance. Avary v. Avary, 202 Ga. 22 , 41 S.E.2d 314 (1947) (decided under former Code 1933, § 28-201).

Husband's deed to wife reciting consideration of love and affection for grantee and $5.00, was not upon the deed's face a voluntary conveyance, but was prima facie a deed based on valuable consideration. Pharr v. Pharr, 206 Ga. 354 , 57 S.E.2d 177 (1950) (decided under former Code 1933, § 28-201).

Deed to daughters in consideration of love and affection. - When deed by defendant in fieri facias to defendant's three daughters was without consideration other than natural love and affection, it was a voluntary conveyance, regardless of fact that this property came to him from his wife's father, and that he and his wife had long planned to convey it to his three daughters (claimants); while under appropriate facts, a resulting trust may be declared, no such facts or contention were involved as so far as the evidence showed title to property was vested unconditionally in the defendant without any obligation or agreement to convey it to his daughters. Bussell v. Glenn, 197 Ga. 816 , 30 S.E.2d 617 (1944) (decided under former Code 1933, § 28-201).

Marriage is valuable consideration, and sufficient to support deed; and if the woman is guilty of no fraud, and enters into settlement without notice of debt due from man to third person, she will be protected in property conveyed by settlement against that debt. Marshall v. Morris, 16 Ga. 368 (1854) (decided under the Act of 1818).

Voluntary conveyances to family at a time when grantor is solvent. - When one executed voluntary conveyances of realty to his wife and two daughters and at time of execution he was indebted to creditor in a sum much less than the value of realty and personalty which he still owned, unencumbered so far as the record shows, he was not insolvent, and conveyances to wife and daughters should not be set aside. Mitchell v. Weekes, 179 Ga. 886 , 177 S.E. 737 (1934) (decided under former Civil Code 1910, § 3224).

Purchase of land in trust for daughter as voluntary conveyance to latter. - See Cohen v. Parish, 105 Ga. 339 , 31 S.E. 205 (1898) (decided under former Civil Code 1895, § 2695).

Good faith conveyance for purpose of preferring one creditor over another. - Conveyance made in good faith for purpose of preferring one creditor over another is not a "voluntary deed or conveyance". Johnson v. Sherrer, 185 Ga. 340 , 195 S.E. 149 (1938) (decided under former Code 1933, § 28-201).

Promise to provide grantor with necessities of life. - Conveyance of property for sole consideration of promise by grantee to provide for and furnish to grantor, for remainder of her life, necessities of life such as lodging, food, clothing, and medical expenses, is not voluntary conveyance, but is one for valuable consideration. Ayer v. First Nat'l Bank & Trust Co., 182 Ga. 765 , 187 S.E. 27 (1936) (decided under former Code 1933, § 28-201).

Interest payments made to a party by a debtor corporation were in return for the valuable consideration of a bona fide antecedent debt of the corporation incurred as a result of the party's loan to it. Consequently, these payments were not "fraudulent conveyances" under paragraph (3) of former O.C.G.A. § 18-2-22 . Estes v. Cranshaw (In re N & D Properties, Inc.), 54 Bankr. 590 (N.D. Ga. 1985), modified on other grounds, 799 F.2d 726 (11th Cir. 1986) (decided under former § 18-2-22 ).

Actions

Judgment for debt and cancellation of fraudulent conveyance sought in same action. - Since the Uniform Procedure Act of 1887, a creditor may in one suit proceed for judgment on debt and to set aside fraudulent conveyance made by debtor. Harper v. Atlanta Milling Co., 203 Ga. 608 , 48 S.E.2d 89 (1948) (decided under former Code 1933, §§ 28-104 and 28-201).

Creditor may in one action in superior court proceed against a debtor for judgment on the creditor's demand and to set aside a fraudulent conveyance, joining the debtor and grantee. Hyde v. Atlanta Woolen Mills Corp., 204 Ga. 450 , 50 S.E.2d 52 (1948) (decided under former law).

Action for both alimony and cancellation of fraudulent conveyance. See McCallie v. McCallie, 192 Ga. 699 , 16 S.E.2d 562 (1941) (decided under former Code 1933, § 28-201).

Action against both tortfeasor and grantee of conveyance with fraudulent purpose. - Parent of minor child killed by negligent tortious acts of another was within protection of former Code 1933, § 28-320 (see now O.C.G.A. § 18-2-59 ), and may proceed in one action against tortfeasor and grantee named in conveyances executed by tortfeasor to obtain: (1) judgment for damages against tortfeasor for negligent tortious homicide of the parent's child; and (2) decree adjudging null and void as to the conveyances of real and personal property, executed by the defendant tortfeasor subsequent to commission of tort, for purpose of hindering, delaying, or defrauding the plaintiff in collection of the plaintiff's claim for damages. McVeigh v. Harrison, 185 Ga. 121 , 194 S.E. 208 (1937) (decided under former Code 1933, § 28-201); Downs v. Powell, 215 Ga. 62 , 108 S.E.2d 715 (1959);(decided under former Code 1933, § 28-201).

Action in rem by alimony obligee against fraudulently conveyed property. - Willful failure to provide for maintenance and support of spouse and children creates lawful demand which, when legally enforced, is called alimony, and is a debtor/creditor relationship. Thus, when spouse was creditor at time of conveyances which are alleged to have been made to defeat her claim for alimony, although no alimony judgment had been rendered at time of conveyances, it would be inequitable and unjust not to allow her to maintain action because she elected to obtain judgment in rem against husband's property when she was unable to obtain personal service because of his willful avoidance of service. Carter v. Bush, 216 Ga. 429 , 116 S.E.2d 568 (1960) (decided under former Code 1933, §§ 28-101 - 28-104, and 28-201).

Action by creditor against transferee. - Creditor can obtain a personal money judgment against a transferee. United States v. Tranakos, 778 F. Supp. 1220 (N.D. Ga. 1991) (decided under former § 18-2-22 ).

Equitable relief to judgment creditor proving fraudulent conveyance. - See Peoples Loan Co. v. Allen, 199 Ga. 537 , 34 S.E.2d 811 (1945) (decided under former Code 1933, § 28-201).

Showing of actual damage. - In action to cancel fraudulent conveyance, the plaintiff need not show that actual damage has accrued. Von Kamp v. Gary, 204 Ga. 875 , 52 S.E.2d 591 (1949) (decided under former Code 1933, § 28-201).

Judgment for damages may be appropriate. - When plaintiff alleges that the defendant transferred and conveyed property to parties unknown, and that the property is now beyond the defendant's control, it would not be inappropriate to allow judgment for such damages as creditors may have sustained, not exceeding value of property. Sullivan v. Ginsberg, 180 Ga. 840 , 181 S.E. 163 (1935) (decided under former Code 1933, § 28-201).

Jury charge upheld. - In suit based on paragraphs (2) and (3) of statute, giving statute in its entirety in charge to jury was not grounds for new trial. Thompson v. Shellman Banking Co., 180 Ga. 495 , 179 S.E. 75 (1935) (decided under former Civil Code 1910, § 3224).

Parties and Pleadings

Third party to fraudulent conveyance as necessary party. - Defrauded creditor may, in court of equity, have fraudulent transaction set aside; and, for this purpose, third party to the transaction would be a proper and necessary party. Harper v. Atlanta Milling Co., 203 Ga. 608 , 48 S.E.2d 89 (1948) (decided under former Code 1933, §§ 28-104 and 28-201).

Grantor and first taker of stock not indispensable parties. - In a fraudulent conveyance action against the grantee of stock brought by a divorced wife who was awarded the stock in the divorce proceeding, the grantor, husband, and first taker, a corporation, were not indispensable parties since neither was necessary for a just adjudication of the merits of the action, and neither was required for complete relief. Halta v. Bailey, 219 Ga. App. 178 , 464 S.E.2d 614 (1995) (decided under former § 18-2-22 ).

Special pleadings to show fraud. - In trial of statutory claim to land, it is not necessary to have special pleadings to show fraud. Mattox v. West, 194 Ga. 310 , 21 S.E.2d 428 (1942) (decided under former Code 1933, § 28-201).

Plea failing to allege intent or notice. - Plea to action of ejectment, to effect that a certain deed, constituting one link in plaintiff's chain of title, was made in fraud of rights of creditors under whom defendants hold, and is fraudulent and void, but which did not allege intent to defraud or notice to grantee should, on motion, be stricken. Baird v. Evans, 58 Ga. 350 (1877) (decided under former law).

Allegation that assignee of insolvent debtor had notice of debtor's insolvency. - In action to set aside as fraudulent an assignment or transfer of property alleged to have been made by insolvent debtor in trust or for benefit of one of the creditors, when a benefit was reserved to the debtor, the petition need not allege that the assignee or transferee had notice of the debtor's insolvency at the time of transfer. McKenzie v. Thomas, 118 Ga. 728 , 45 S.E. 610 (1903) (decided under former Civil Code 1895, § 2695).

Subsequent transferee of the debtor who sought to set aside the original transfer on the grounds of fraud had no argument that the transfer was invalid as to the original transferee because its claim to the property was based on its purchase from the debtor, it was the debtor's privy and stood in the debtor's shoes in challenging the validity of the debtor's contract with the original transferee. Thomas Mote Trucking, Inc. v. PCL Civil Constructors, Inc., 246 Ga. App. 306 , 540 S.E.2d 261 (2000) (decided under former § 18-2-22 ).

Identity of specific conveyance required. - In a fraudulent conveyances claim asserted under former O.C.G.A. § 18-2-22 , the requirement that fraud be pled with particularity mandates that the claimant identify a specific conveyance with sufficient definiteness to advise the adversary of the conveyance which it must explain. Gwinnett Property v. G & H Montage, 215 Ga. App. 889 , 453 S.E.2d 52 (1994) (decided under former § 18-2-22 ).

Petition stating cause of action authorizing injunctive relief. - See Moncrief Furnace Co. v. Northwest Atlanta Bank, 193 Ga. 440 , 19 S.E.2d 155 (1942) (decided under former law).

Setting aside transfer as fraudulent. - Paragraph (3) of former O.C.G.A. § 18-2-22 was not available to the party seeking to set aside the transfer as fraudulent when the amended answer and pretrial order only tracked the language of paragraph (2) of former O.C.G.A. § 18-2-22 . Nelson v. United States, 821 F. Supp. 1496 (M.D. Ga. 1993) (decided under former § 18-2-22).

Evidentiary Issues

Circumstantial evidence may be of high importance. - When a conveyance, a security deed, or a mortgage is attacked as having been made to hinder, delay, or defraud the creditors of the maker of such instrument, circumstantial evidence is of the highest importance in determining the good faith or bad faith - the real intent - of the grantor in the execution of the instrument; direct testimony as to the real intent of the grantor and grantee whose motives are under attack can only be obtained from these interested persons, and consequently necessarily any circumstance that may throw light on their conduct and motive is admissible for the jury's consideration. Gower v. Cohn, 643 F.2d 1146 (5th Cir. 1981) (decided under former Code 1933, § 28-201).

Failure to produce testimony is badge of fraud, when bona fides of transaction in issue, and witnesses who ought to be able to explain the transaction are in reach. Eberhardt v. Bennett, 163 Ga. 796 , 137 S.E. 64 (1927) (decided under former Civil Code 1910, § 3224).

Facts necessary for conclusive presumption of fraud. - Only facts necessary to render deed from husband to wife fraudulent in law are indebtedness, insolvency of debtor, and voluntariness of deed. When these facts are proved, the law conclusively presumes fraudulent intent and declares instrument void so far as creditors who held demands against the debtor at the time of conveyance are concerned. Chambers v. Citizens & S. Nat'l Bank, 242 Ga. 498 , 249 S.E.2d 214 (1978) (decided under former Code 1933, § 28-201); Barclay v. First Nat'l Bank, 265 Ga. 744 , 462 S.E.2d 374 (1995);(decided under former § 18-2-22 ).

Evidence of general character of alleged fraud perpetrator. - When conveyance between near relatives is attacked upon ground of fraud, the law requires jury to examine every circumstance with care and caution, and one who is charged with defrauding honest creditors should be allowed to introduce evidence concerning one's general character. Wimberly v. Toney, 175 Ga. 416 , 165 S.E. 257 (1932) (decided under former law).

Evidence of indebtedness. - Testamentary trust created by a wife in favor of her husband was not a fraudulent transfer against a judgment creditor since the wife had been released from liability on the judgment by virtue of a settlement agreement executed in bankruptcy court and, thus, creation of the trust was not a debtor's act that could be deemed fraudulent against the creditor under former O.C.G.A. § 18-2-22 . Jordan v. Caswell, 264 Ga. 638 , 450 S.E.2d 818 (1994) (decided under former § 18-2-22 ).

Proof of suits against defendant at time of allegedly fraudulent conveyance. - On trial of issue whether conveyance is fraudulent against creditors, the plaintiff may prove pendency of suits against the debtor at the time of execution of the deed. Barber v. Terrell, 54 Ga. 146 (1875) (decided under former Civil Code 1863, § 1952).

Unexplained agreement that grantor retain possession. - Agreement between a grantor and grantee that property shall remain in possession of vendor, if not satisfactorily explained, is a badge of fraud; and when such continued possession in vendor is shown, the burden of proof shifts to grantee. State Housecraft, Inc. v. Jones, 96 Ga. App. 182 , 99 S.E.2d 701 (1957) (decided under former Code 1933, § 28-201).

Proof required to overcome prima facie case. - If after conveyance of property grantor was allowed to retain and remain in possession, this was sufficient prima facie evidence to establish fraud under paragraphs (2) and (3) of former Code 1933, § 28-201, and it was then incumbent upon grantee claiming under conveyance to establish that grantor's possession was not by any right of ownership or that grantor was not insolvent at time of such conveyance, and that, even if solvent, any intention of grantor to delay or defraud grantor's creditors was unknown to the grantee at the time of conveyance. Glenn v. Tankersley, 187 Ga. 129 , 200 S.E. 709 (1938), later appeal sub nom. Bussell v. Glenn, 197 Ga. 816 , 30 S.E.2d 617 (1944) (decided under former Code 1933, § 28-201).

Rebuttal of presumption of fraud arising from seller's continued possession. - Proof of payment of valuable consideration rebuts presumption of fraud arising from seller's continued possession. Scott v. Winship, 20 Ga. 429 (1856) (decided under former law); Scruggs v. Blackshear Mfg. Co., 45 Ga. App. 855 , 166 S.E. 249 (1932);(decided under former Civil Code 1910, § 3224).

Admissibility of writs of fieri facias against defendant. - See Buttram v. Jackson, 32 Ga. 409 (1861) (decided under former law).

When question of defendant's solvency is involved, fieri facias against defendant with entry of nulla bona thereon is admissible in evidence. Lawson v. Wright, 21 Ga. 242 (1857) (decided under former law).

Proof required by plaintiff in fieri facias to invalidate conveyance. - See Glenn v. Tankersley, 187 Ga. 129 , 200 S.E. 709 (1938), later appeal sub nom. Bussell v. Glenn, 197 Ga. 816 , 30 S.E.2d 617 (1944) (decided under former Code 1933, § 28-201).

Without standing to allege fraud. - When plaintiffs were not creditors of the creator of a trust, plaintiffs could not argue that the plaintiffs were defrauded by the plaintiffs transfer of patents to the trust. Beeson v. Crouch, 227 Ga. App. 578 , 490 S.E.2d 118 (1997).

Jury/Court Issues

Whether deed was made with intent to delay or defraud creditors is question of fact for jury to decide from all of the circumstances of the case, and whether the debtor is so solvent or insolvent is a question of fact for the jury. Goodman v. Lewis, 247 Ga. 605 , 277 S.E.2d 908 (1981) (decided under former Code 1933, § 28-201).

Questions of fraud and bad faith are ordinarily for jury. Mercantile Nat'l Bank v. Aldridge, 233 Ga. 318 , 210 S.E.2d 791 (1974) (decided under former Code 1933, § 28-201).

Issues of good faith and grantee's notice. - Whether there has been sufficient proof of good faith of transaction or of spouse's lack of knowledge of the other spouse's business affairs or debts is a question for determination by jury. Cotton v. John W. Eshelman & Sons, 137 Ga. App. 360 , 223 S.E.2d 757 (1976) (decided under former Code 1933, § 28-201).

Issues of fraudulent intent of grantor and notice of grantee. - Whether conveyance to spouse was made with intent to delay or defraud creditors, and whether such intent was known to party taking, were all questions for jury, under the evidence and a proper charge. Primrose v. Browning, 59 Ga. 69 (1877) (decided under former Civil Code 1863, § 1952).

Whether deed was executed by grantor with intention to delay or defraud grantor's spouse in collection of alimony and such intention was known to grantee or whether transaction was bona fide and for valuable consideration and without notice or ground for reasonable suspicion is ordinarily question for determination by jury. Lewis v. Lewis, 210 Ga. 330 , 80 S.E.2d 312 (1954) (decided under former Code 1933, § 28-201).

Whether grantee chargeable with notice of grantor's fraudulent intention. - It is a jury question whether grantee is chargeable with notice or ground for reasonable suspicion of grantor's intention to delay or defraud creditors. Mercantile Nat'l Bank v. Aldridge, 233 Ga. 318 , 210 S.E.2d 791 (1974) (decided under former Code 1933, § 28-201).

When circumstances, if not satisfactorily explained, indicate fraud. - When transaction between brothers-in-law is attacked by creditor as fraudulent and there are other circumstances besides relationship which, if not satisfactorily explained, may be regarded as badges of fraud, issues are matters to be determined by jury. Hilburn v. Hightower, 178 Ga. 534 , 173 S.E. 389 (1934) (decided under former Civil Code 1910, § 3224).

Allegations of fraudulent intent and notice to grantee. - Petition of wife against husband which alleges that husband executed deed to his attorney, conveying property occupied by wife and children, for purpose of hindering, delaying, or defrauding her in collection of alimony for support of herself and children, and raises question as to whether defendant attorney knew or had reasonable ground to suspect such intention, was sufficient to raise an issue for determination by jury, and it was error for court to grant nonsuit. Lewis v. Lewis, 210 Ga. 330 , 80 S.E.2d 312 (1954) (decided under former Code 1933, § 28-201).

Issues regarding execution of release. - When the exclusion in a liability policy for injuries or death caused by assault or battery applied to a claim against the insured arising from an assault and battery caused by its employee, there was no coverage under the policy, and a release by the insured of any claims it might have against the insurer did not transfer a valuable asset to the insurer in violation of this statute. Jefferson Ins. Co. v. Dunn, 269 Ga. 213 , 496 S.E.2d 696 (1998) (decided under former § 18-2-22 ).

Whether tortfeasor was solvent at time of voluntary conveyance. - If tortfeasor was insolvent, or left insolvent, when tortfeasor made voluntary conveyance, it was void as against party damaged; and whether insolvent or not, was question for jury. Westmoreland v. Powell, 59 Ga. 256 (1877) (decided under former Code 1873, §§ 1944 and 1952) Primrose v. Browning, 59 Ga. 69 (1877) See also (decided under former Code 1873, §§ 1944 and 1952).

Evidence that deed was voluntary and intended to defeat claim for alimony. - Evidence that deed executed by the debtor to the testatrix was fraudulent and void because the deed was without consideration and based on a collusive transaction between them, for the sole purpose of defeating the claim of the debtor's spouse for support and alimony, was sufficient to carry the case upon this question to the jury. Blevins v. Pittman, 189 Ga. 789 , 7 S.E.2d 662 (1940) (decided under former law).

Nature and adequacy of consideration for mortgage. - Whether the consideration for which a mortgage is alleged to have been executed is bona fide, or merely colorable to defraud creditors or so inadequate as to constitute a badge of fraud, is a question of fact for the jury. Williams v. C. & G.H. Kelsey & Halsted, 6 Ga. 365 (1849) (decided under former law).

Inconsistent jury findings. - When a jury's finding of fraudulent conveyance constituted a finding that the defendant's capital was impaired by a stock redemption, that there was a specific intent to cause harm to the plaintiff, the defendant's vendor, and that punitive damages should be awarded against the directors and shareholders, these findings were wholly inconsistent and irreconcilable with the jury's finding against the defendant on its cross-claim, which required a finding either that no unlawful stock redemption occurred or that the stockholders lacked knowledge of its unlawfulness, and the trial court erred in denying the parties' motions for new trial. Docutronics, Inc. v. Reitman, 235 Ga. App. 268 , 509 S.E.2d 348 (1998) (decided under former § 18-2-22 ).

Effect of Invalidating Conveyance

Title to property fraudulently conveyed. - Fraudulent conveyances are declared void, and title to property so conveyed remains in judgment debtors subject to judgments subsequently obtained. Coleman v. Law, 170 Ga. 906 , 154 S.E. 445 (1930) (decided under former Civil Code 1910, § 3224).

Duty of grantee of fraudulently conveyed property to hold in trust. - When a debtor makes a fraudulent transfer of property or choses in action, which is voidable as to creditors, property in hands of a fraudulent grantee is held by a debtor in trust for creditors of a fraudulent grantor; and if it has been converted into money, the money is impressed with same trust, and the fraudulent grantee will be compelled in equity to account for the money. Edwards v. United Food Brokers, Inc., 195 Ga. 1 , 22 S.E.2d 812 (1942) (decided under former Code 1933, § 28-201).

Judgment of creditor rendered after conveyance. - If a debtor conveys the debtor's property with intent to delay or defraud the debtor's creditors, and grantee takes with knowledge of such intent, the land can be subjected to judgment of one of such creditors rendered after conveyance. Horton v. Black, 137 Ga. 577 , 73 S.E. 833 (1912) (decided under former Civil Code 1910, § 3224).

Effect of setting aside fraudulent transfer. - Edwards v. United Food Brokers, Inc., 195 Ga. 1 , 22 S.E.2d 812 (1942) (decided under former Code 1933, § 28-201).

Effect of fraudulent conveyance on rights of subsequent creditors. - Roach v. Roach, 212 Ga. 40 , 90 S.E.2d 423 (1955) (decided under former law).

RESEARCH REFERENCES

Am. Jur. 2d. - 37 Am. Jur. 2d, Fraudulent Conveyances and Transfers, § 1 et seq.

C.J.S. - 37 C.J.S., Fraudulent Conveyances, §§ 3, 4, 5. 79 C.J.S., Secured Transactions, § 20 et seq.

ALR. - Conveyance in consideration of future support as fraudulent against creditors, 2 A.L.R. 1438 ; 23 A.L.R. 584 .

Right of grantee or transferee to be reimbursed for expenditures in payment of taxes or encumbrances on property where conveyance or transfer is in fraud of creditors, 8 A.L.R. 527 .

Right of creditors as against directors or officers to whom property of a corporation has been transferred for a consideration other than payment of debts due them, 9 A.L.R. 1447 .

Right of insolvent to insure life for benefit of relatives, 31 A.L.R. 51 ; 34 A.L.R. 838 .

Preference in event of debtor's insolvency in respect of funds designated or set apart by him for payment of specified obligations, 32 A.L.R. 950 .

Right of parent as against creditor or lienor to make gift to minor child of latter's own services, 44 A.L.R. 876 .

Delivery of key as satisfying condition of immediate delivery and actual or continued change of possession to uphold sale of personal property against subsequent purchaser or third persons generally, 56 A.L.R. 518 .

What constitutes a "general assignment for the benefit of creditors" within provisions of the Bankruptcy Act which make such an assignment an act of bankruptcy, 57 A.L.R. 859 .

Validity, as against creditors of trustee or one deriving his right from trustee, of conveyance or transfer to carry out terms of unenforceable parol trust, 64 A.L.R. 576 .

Admissibility of subsequent declarations of vendor on issue of whether sale was in fraud of creditors, 64 A.L.R. 797 .

Remedy of general creditor or judgment creditor as affected by Uniform Fraudulent Conveyance Act, 65 A.L.R. 251 ; 119 A.L.R. 949 .

Absolute conveyance or transfer with secret reservation as fraudulent per se as against creditors, 68 A.L.R. 306 .

Effect of payment to subcontractors or materialmen by owner or contractor, or by sureties on contractor's bond, within four months of principal contractor's bankruptcy, as a voidable preference, 70 A.L.R. 983 .

Right of surety or one secondarily liable to bring an action before payment of obligation to set aside fraudulent conveyances by principal, 71 A.L.R. 354 .

When statute of limitations or laches commences to run against action to set aside conveyance or transfer in fraud of creditors, 76 A.L.R. 864 ; 100 A.L.R. 1094 .

Right of grantee, mortgagee, or transferee in instrument fraudulent as to creditors to protection to extent of consideration paid by him, 79 A.L.R. 132 .

Transfer of property by debtor to corporation, in consideration of its stock, as a fraud on creditors, 85 A.L.R. 133 .

Pledge of accounts as affected by pledgor's reservation of partial dominion or control, 85 A.L.R. 222 .

Right and remedy as regards application of debt due from insolvent as between debts owed by creditor to insolvent, 86 A.L.R. 993 .

Right of 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 .

Persons asserting claim on theory of agency or trust as within term "creditors" in statutes relating to proof of claims against insolvent bank, 89 A.L.R. 383 .

Right of executor or administrator to attack conveyance or transfer by decedent as a fraud upon his creditors, or to the benefit of a successful attack by one or more of the creditors, 91 A.L.R. 133 .

Uniform Fraudulent Conveyance Act as applied to conveyance between third persons, upon consideration furnished by debtor, 91 A.L.R. 741 .

Reservation to settlor of trust or other grantor of right to revoke or change the same, or to withdraw securities or other property items and substitute others, as affecting its validity as against his creditors, 92 A.L.R. 282 .

Debtor's intent to defraud or delay creditors within contemplation of attachment statute as inferable as matter of law from fact that he has removed or is about to remove property from the state without making adequate provision for his creditors, 92 A.L.R. 966 .

Validity as against creditors of conveyance in trust for settlor for life with remainder to his appointees, 93 A.L.R. 1211 .

Right of creditor of decedent, before perfecting his claim or after loss of recourse against decedent's estate, to pursue remedy against property conveyed by the decedent in fraud of his creditors, 103 A.L.R. 555 .

Fraud of judgment debtor in concealing assets or misrepresenting his financial condition as affecting failure to issue execution or revive judgment within statutory period or as ground of action for fraud and deceit causing loss of legal remedy on judgment, 104 A.L.R. 214 .

Validity and effect as against creditors of change of beneficiary or assignment of insurance policy from estate to individual, 106 A.L.R. 596 .

Succession, estate, or gift tax in respect of or as affected by conveyance or transfer restoring to original owner property transferred by him to defraud or delay creditors, 108 A.L.R. 1508 .

Fact that debt to pay or secure which conveyance was made was barred by limitation as affecting attack made upon it as a fraud upon creditors, 109 A.L.R. 1220 .

Time when limitation commences to run against action at law or in equity based on fraud inducing execution of contract or conveyance as affected by time when actual damages resulted, 110 A.L.R. 1178 .

Conflict of laws as regards validity of fraudulent and preferential transfers and assignments, 111 A.L.R. 787 .

Liability of one who assists or encourages the making of conveyance or preference in fraud of creditors, by debtor to a third person, 112 A.L.R. 1250 .

Right of creditors, or of trustee in bankruptcy, of grantor in conveyance fraudulent as against creditors, in respect of proceeds of insurance upon property, 114 A.L.R. 1374 .

Right to attack and conditions of attack upon conveyance, mortgage, or transfer as fraudulent as against creditors as affected by mortgage or other security for indebtedness to attacking creditor, 116 A.L.R. 1048 .

Death of grantee or transferee of property conveyed or transferred in fraud of creditors as affecting rights of creditors of grantor or transferor to attach same, 116 A.L.R. 1196 .

Complainant's purpose to defraud creditors as defense to suit to recover property paid for him but conveyed to defendant, 117 A.L.R. 1464 .

Right of creditors of one spouse, either before or after death of other spouse, to attack conveyance or encumbrance of estate by entireties by both spouses as in fraud of creditors, 121 A.L.R. 1028 .

Right of grantee, or his privies, to maintain suit or proceeding for affirmative relief, where claim is made or anticipated that conveyance was made with intention on part of grantor, but without actual fraud by grantee, to defraud former's creditors, 128 A.L.R. 1504 .

Conditions of creditor's bill or suit to avoid conveyance as a fraud on creditors where creditor has recovered foreign judgment, 129 A.L.R. 506 .

Remedy of general creditor or judgment creditor as affected by Uniform Fraudulent Conveyance Act, 129 A.L.R. 949 .

Jurisdiction, and propriety of its exercise, to require real property in another state or country to be applied in satisfaction of debt (including the setting aside of a fraudulent conveyance thereof), 144 A.L.R. 646 .

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 .

Rights as between creditors of grantor or transferor and those of grantee or transferee in respect of property conveyed or transferred in fraud of creditors, 148 A.L.R. 520 .

Assignability of executor's or administrator's right to attack conveyance or transfer by decedent as fraud upon his creditors, 150 A.L.R. 508 .

Purchase of homestead as fraud on creditors, 161 A.L.R. 1287 .

Right of wife or child by virtue of right to support to maintain actions to set aside conveyance by husband or parent as fraudulent, without reducing claim to judgment, 164 A.L.R. 524 .

Use of debtor's individual funds or property for acquisition, improvement of, or discharge of, liens on, property held in estate by entireties as a fraud upon creditors, 7 A.L.R.2d 1104.

Rule denying relief to one who conveyed his property to defraud his creditors as applicable where the claim which motivated the conveyance was never established, 21 A.L.R.2d 589; 6 A.L.R.4th 862.

Necessary parties defendant to action to set aside conveyance in fraud of creditors, 24 A.L.R.2d 395.

Right of creditors to attack as fraudulent a conveyance by third person to debtor's spouse, 35 A.L.R.2d 8.

Admissibility of testimony of transferee as to his knowledge, purpose, intention, or good faith on issue whether conveyance was in fraud of transferor's creditors, 52 A.L.R.2d 418.

Admissibility, in prosecution for criminal burning of property, or for maintaining fire hazard, of evidence of other fires, 87 A.L.R.2d 891.

When statute of limitations or laches commences to run against action to set aside fraudulent conveyance or transfer in fraud of creditors, 100 A.L.R.2d 1094.

Debtor's transfer of assets to representative of creditors as effectuating release of unsecured claims, in absence of express agreement to that effect, 8 A.L.R.3d 903.

Conveyance as fraudulent where made in contemplation of possible liability for future tort, 38 A.L.R.3d 597.

Right of secured creditor to have set aside fraudulent transfer of other property by his debtor, 8 A.L.R.4th 1123.

Right of creditor to recover damages for conspiracy to defraud him of claim, 11 A.L.R.4th 345.

18-2-70. Short title.

This article, which was formerly known and cited as the "Uniform Fraudulent Transfers Act," shall be known and may be cited as the "Uniform Voidable Transactions Act."

(Code 1981, § 18-2-70 , enacted by Ga. L. 2002, p. 141, § 3; Ga. L. 2015, p. 996, § 4A-1/SB 65.)

Law reviews. - For survey article on cases in the areas of corporate, securities, partnership, and banking law for the period from June 1, 2002 through May 31, 2003, see 55 Mercer L. Rev. 55 (2003). For annual survey of law on business associations, see 62 Mercer L. Rev. 41 (2010). For annual survey on real property, see 69 Mercer L. Rev. 251 (2017). For article, "Self-Settled Asset Protection Trusts in Georgia," see 23 Ga. St. B.J. 17 (Feb. 2018).

JUDICIAL DECISIONS

Claims under former O.C.G.A. § 18-2-22 not extinguished. - O.C.G.A. § 18-2-22 was repealed on July 1, 2002, when Georgia enacted the Uniform Fraudulent Transfers Act (now Uniform Voidable Transactions Act), O.C.G.A. § 18-2-70 et seq., but this repeal does not extinguish causes of action that arose under former O.C.G.A. § 18-2-22 before that date. Gerschick v. Pounds, 281 Ga. App. 531 , 636 S.E.2d 663 (2006), cert. denied, No. S07C0191, 2007 Ga. LEXIS 95 (Ga. 2007).

Conveyance at issue took place in September 2001 and needed to be construed under former O.C.G.A. § 18-2-22 (repealed) even though the statute was repealed when the legislature adopted the Uniform Fraudulent Transfer Act (now Uniform Voidable Transactions Act), O.C.G.A. § 18-2-70 et seq. Flatau v. Smith (In re Smith), Bankr. (Bankr. M.D. Ga. Oct. 30, 2007).

Defendant did not have to be indebted to plaintiff. - Read and considered as a whole, a jury charge was an accurate statement of the law and was authorized by the evidence in an action in which the jury was instructed that it was not necessary for a defendant to be indebted to a plaintiff at the time of a transfer for former O.C.G.A. § 18-2-22 to apply and there was evidence that an attorney made a conveyance with actual intent to defraud a future creditor, a client; moreover, the trial court fully and completely charged the law on fraudulent conveyances, including former O.C.G.A. § 18-2-22 (2). Gerschick v. Pounds, 281 Ga. App. 531 , 636 S.E.2d 663 (2006), cert. denied, No. S07C0191, 2007 Ga. LEXIS 95 (Ga. 2007).

Aiding and abetting. - Although Georgia courts had not yet had an opportunity to address the issue of whether there was a cause of action for aiding and abetting a fraudulent transfer when the alleged aider-abetter was not a debtor or a transferee, the instant court concluded that Georgia courts were not likely to recognize such an action; the Uniform Fraudulent Transfer Act (UFTA) (now Uniform Voidable Transactions Act), O.C.G.A. § 18-2-70 et seq., did not refer to parties other than debtors, creditors, and transferees, and further there was no language in UFTA that suggested the creation of a distinct cause of action for aiding and abetting claims against non-transferees. Hays v. Paul, Hastings, Janofsky & Walker LLP, F. Supp. 2d (N.D. Ga. Sept. 14, 2006).

No-action clause. - Claims by noteholders under the Uniform Fraudulent Transfers Act (now Uniform Voidable Transactions Act), O.C.G.A. § 18-2-70 et seq., against a corporation and the corporate directors and officers should have been dismissed by the district court because a no-action clause in trust indentures that governed the notes barred the noteholders' claims since the noteholders did not fall within any exception to the rule that no-action clauses barred fraudulent conveyance claims; the appellate court had jurisdiction to grant permission to appeal to all appellants because both prongs of 28 U.S.C. § 1292(b) had been satisfied, which was that the district court had stated the required language in the court's order and the appellants had then filed an application for interlocutory appeal within ten days of that statement. Akanthos Capital Mgmt., LLC v. CompuCredit Holdings Corp., 677 F.3d 1286 (11th Cir. 2012).

Motion for summary judgment denied. - Summary judgment motion filed by an insurer in response to a Chapter 7 trustee's complaint charging that certain premiums paid to the insurer by a debtor were fraudulent conveyances that were recoverable under 11 U.S.C. § 548 and/or under Georgia's Uniform Fraudulent Transfers Act (now Uniform Voidable Transactions Act), O.C.G.A. § 18-2-70 et seq., was denied because the case presented significant factual issues concerning the legal relationships between the debtor and the entities on behalf of which the debtor had paid the premiums and the presence of such issues foreclosed summary judgment. Coleman v. Zurich Am. Ins. Co. (In re Darrow Auto. Group, Inc.), Bankr. (Bankr. S.D. Ga. Mar. 29, 2011).

Trial court erred by denying an insurance company's motion for summary judgment on a claim that the company engaged in a conspiracy which violated the Uniform Fraudulent Transfers Act (now Uniform Voidable Transactions Act), O.C.G.A. § 18-2-70 et seq., by a conspiracy to settle a bad faith/negligence claim possessed by an estate for less than the claim's true value because the insurer was found not to have engaged in fraudulent conduct. Baker v. Huff, 323 Ga. App. 357 , 747 S.E.2d 1 (2013).

Motion for directed verdict properly denied. - Attorney and a wife's motion for a directed verdict was properly denied as a party bringing a fraudulent conveyance action under former O.C.G.A. § 18-2-22 did not have to be a creditor; the circumstances and the timing of the transfer showed the attorney's intent to defraud as a quitclaim deed from the attorney to the wife was "rush recorded" two days after the attorney received a draft order for the underlying judgment, no valuable consideration was given for the transfer, and the attorney was an expert in estate planning, including the protection of assets from the claims of creditors. Gerschick v. Pounds, 281 Ga. App. 531 , 636 S.E.2d 663 (2006), cert. denied, No. S07C0191, 2007 Ga. LEXIS 95 (Ga. 2007).

Transfer to avoid bankruptcy ramifications. - Under former O.C.G.A. § 18-2-22 (repealed), a wife's motion to dismiss a claim brought by a Chapter 7 trustee to avoid a transfer made to her by a debtor husband was denied because the trustee, through the complaint and use of a quitclaim deed, provided a factual basis sufficient to state a claim including some evidence that the transfer was made for no consideration, that the transfer was voluntary, and that the wife knew of the debtor's insolvency at the time the transfer was made. Flatau v. Smith (In re Smith), Bankr. (Bankr. M.D. Ga. Oct. 30, 2007).

Transfer was not fraudulent. - When a corporation paid a dividend to a shareholder pursuant to a shareholders agreement after designating itself an S corporation, it was not a fraudulent transfer because it was not error to find that the transfer was made in exchange for reasonably equivalent value since the shareholders agreement provided the corporation with valuable benefits by virtue of its S-corporation election. Crumpton v. McGarrity (In re Northlake Foods, Inc.), F.3d (11th Cir. Apr. 16, 2013)(Unpublished).

No fraud shown by 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).

Judgment creditor could not set aside fraudulent transfer that occurred prior to assignment of loan. - Because of the anti-assignment statute, O.C.G.A. § 44-12-24 , a judgment creditor did not have standing under the Uniform Fraudulent Transfers Act (UFTA), O.C.G.A. § 18-2-70 et seq., to contest transfers by the debtor that occurred prior to assignment of the debtor's loan to the creditor. Merrill Ranch Props., LLC v. Austell, 336 Ga. App. 722 , 784 S.E.2d 125 (2016).

No asset of debtor involved. - Judgment voiding a transfer of property as fraudulent under the Uniform Fraudulent Transfers Act (UFTA) (now Uniform Voidable Transactions Act), O.C.G.A. § 18-2-70 et seq., was reversed because, despite not being recorded, the 2002 security deed executed in favor of a former sister-in-law, pledging the property as collateral for a promissory note, gave the former sister-in-law, as one of the defendant's creditors, priority over the plaintiff's judgment, such that the property could not be characterized as the defendant's asset under the UFTA. Wallin v. Wallin, 341 Ga. App. 440 , 800 S.E.2d 617 (2017).

No property transfer involved. - Trial court correctly granted summary judgment in favor of the defendants as to the plaintiff's fraud counts pursuant to the Uniform Fraudulent Transfers Act (UFTA), O.C.G.A. § 18-2-70 et seq., because the UFTA explicitly requires a transfer of an asset, which is defined as certain forms of property and neither defending entity owned property in that classic sense, thus, the UFTA was not the appropriate vehicle for the plaintiff's recovery. Dan J. Sheehan Co. v. Fairlawn on Jones Condo. Ass'n, Inc., 334 Ga. App. 595 , 780 S.E.2d 35 (2015), cert. denied, No. S16C0473, 2016 Ga. LEXIS 217 (Ga. 2016).

Fraudulent conveyance claim not stated. - Administrator failed to state a claim under the Georgia Uniform Fraudulent Transfer Act, now Uniform Voidable Transactions Act, O.C.G.A. § 18-2-70 et seq., against group three when the administrator alleged that defendant one held title to the property when the suit was filed, and claimed that the administrator was entitled to recover the property from defendant one and to set aside the lien to defendant two; the administrator acknowledged that defendants three, four, and five denied any knowledge of the administrator's lien on the property when they purchased the property, and that therefore no one disclosed the lien to the closing attorney or defendants three, four, and five, despite certain parties' knowledge and affirmative duty to disclose the existence of the writ as constituting a lien on the property. Huggins v. Powell, 315 Ga. App. 599 , 726 S.E.2d 730 (2012).

Choice of law. - In a fraudulent conveyance action transferred from the Northern District of Texas, Georgia's former fraudulent conveyance law, former O.C.G.A. § 18-2-22 , which was in force at the time the actions in question occurred, was the applicable state law under Texas choice of law principles because Georgia had the most significant relationship to the issues raised in the lawsuit. MC Asset Recovery v. Southern Co., F. Supp. 2d (N.D. Ga. Apr. 1, 2008).

Damages. - Georgia law allowing the recovery of general and punitive damages for fraudulent conveyances survived the enactment of Georgia's Uniform Fraudulent Transfers Act, O.C.G.A. § 18-2-70 et seq. Interfinancial Midtown, Inc. v. Choate Constr. Co., 343 Ga. App. 793 , 806 S.E.2d 255 (2017).

Cited in Bishop v. Patton, 288 Ga. 600 , 706 S.E.2d 634 (2011).

RESEARCH REFERENCES

Am. Jur. 2d. - 37A Am. Jur. 2d, Fraudulent Conveyances and Transfers, § 2.

18-2-71. Definitions.

As used in this article, the term:

  1. "Affiliate" means:
    1. A person who directly or indirectly owns, controls, or holds with power to vote, 20 percent or more of the outstanding voting securities of the debtor, other than a person who holds the securities:
      1. As a fiduciary or agent without sole discretionary power to vote the securities; or
      2. Solely to secure a debt, if the person has not exercised the power to vote;
    2. A corporation 20 percent or more of whose outstanding voting securities are directly or indirectly owned, controlled, or held with power to vote by the debtor or a person who directly or indirectly owns, controls, or holds with power to vote 20 percent or more of the outstanding voting securities of the debtor, other than a person who holds the securities:
      1. As a fiduciary or agent without sole power to vote the securities; or
      2. Solely to secure a debt, if the person has not in fact exercised the power to vote;
    3. A person whose business is operated by the debtor under a lease or other agreement, or a person substantially all of whose assets are controlled by the debtor; or
    4. A person who operates the debtor's business under a lease or other agreement or controls substantially all of the debtor's assets.
  2. "Asset" means property of a debtor, but the term does not include:
    1. Property to the extent it is encumbered by a valid lien;
    2. Property to the extent it is generally exempt under nonbankruptcy law; or
    3. An interest in property held in tenancy by the entireties to the extent it is not subject to process by a creditor holding a claim against only one tenant.
  3. "Claim," except for claim for relief, means a right to payment, whether or not the right is reduced to judgment, liquidated, unliquidated, fixed, contingent, matured, unmatured, disputed, undisputed, legal, equitable, secured, or unsecured.
  4. "Creditor" means a person who has a claim, regardless of when the person acquired the claim, together with any successors or assigns.
  5. "Debt" means liability on a claim.
  6. "Debtor" means a person who is liable on a claim.
  7. "Electronic" means relating to technology having electrical, digital, magnetic, wireless, optical, electromagnetic, or similar capabilities.
  8. "Insider" includes:
    1. If the debtor is an individual:
      1. A relative of the debtor or of a general partner of the debtor;
      2. A partnership in which the debtor is a general partner;
      3. A general partner in a partnership described in division (ii) of this subparagraph; or
      4. A corporation of which the debtor is a director, officer, or person in control;
    2. If the debtor is a corporation:
      1. A director of the debtor;
      2. An officer of the debtor;
      3. A person in control of the debtor;
      4. A partnership in which the debtor is a general partner;
      5. A general partner in a partnership described in division (iv) of this subparagraph; or
      6. A relative of a general partner, director, officer, or person in control of the debtor;
    3. If the debtor is a partnership:
      1. A general partner in the debtor;
      2. A relative of a general partner in, or a general partner of, or a person in control of the debtor;
      3. Another partnership in which the debtor is a general partner;
      4. A general partner in a partnership described in division (iii) of this subparagraph; or
      5. A person in control of the debtor;
    4. An affiliate, or an insider of an affiliate as if the affiliate were the debtor; and
    5. A managing agent of the debtor.
  9. "Lien" means a charge against or an interest in property to secure payment of a debt or performance of an obligation and includes a security interest created by agreement, a judicial lien obtained by legal or equitable process or proceedings, a common-law lien, or a statutory lien.
  10. "Organization" means a person other than an individual.
  11. "Person" means an individual, public corporation, government or governmental subdivision agency or instrumentality, business or nonprofit entity, estate, or other legal entity.
  12. "Property" means anything that may be the subject of ownership.
  13. "Record" means information that is inscribed on a tangible medium or that is stored in an electronic or other medium and is retrievable in perceivable form.
  14. "Relative" means an individual related by consanguinity within the third degree as determined by the common law, a spouse, or an individual related to a spouse within the third degree as so determined and includes an individual in an adoptive relationship within the third degree.
  15. "Sign" means, with present intent to authenticate or adopt a record:
    1. To execute or adopt a tangible symbol; or
    2. To attach to or logically associate with the record an electronic symbol, sound, or process.
  16. "Transfer" means every mode, direct or indirect, absolute or conditional, voluntary or involuntary, of disposing of or parting with an asset or an interest in an asset and includes payment of money, release, lease, and creation of a lien or other encumbrance.
  17. "Valid lien" means a lien that is effective against the holder of a judicial lien subsequently obtained by legal or equitable process or proceedings. (Code 1981, § 18-2-71 , enacted by Ga. L. 2002, p. 141, § 3; Ga. L. 2003, p. 140, § 18; Ga. L. 2015, p. 996, § 4A-1/SB 65.)

Law reviews. - For article, "2014 Georgia Corporation and Business Organization Case Law Developments," see 20 Ga. St. Bar. J. 26 (April 2015).

JUDICIAL DECISIONS

Transfer. - Definition of a "transfer" is broad enough to encompass a co-owner's withdrawal of funds from a joint bank account. Bishop v. Patton, 288 Ga. 600 , 706 S.E.2d 634 , overruled on other grounds by SRB Inv. Servs., LLLP v. Branch Banking & Trust Co., 289 Ga. 1 , 709 S.E.2d 267 (2011).

Debtor was entitled to summary judgment with respect to an adversary complaint count alleging fraudulent transfer of property under the Georgia Uniform Fraudulent Transfer Act (UFTA) (now Uniform Voidable Transactions Act), O.C.G.A. § 18-2-70 et seq., because the transfer of property fully protected the plaintiffs' liens and, therefore, there was no "asset" and no claim for fraudulent conveyance existed. SEG Gateway, LLC v. Bay Circle Props., LLC (In re Bay Circle Props., LLC), Bankr. (Bankr. N.D. Ga. Aug. 1, 2017).

Property. - Defendants' transferring of corporate goodwill, or "book of business," to another entity was a transfer of property under the broad definition of property in Georgia's fraudulent transfer law. Jones v. Tauber & Balser, P.C., 503 Bankr. 162 (N.D. Ga. 2013).

Summary judgment improper. - Trial court erred by granting summary judgment to a creditor because under O.C.G.A. § 18-2-75(b) , the questioned real estate transfer involved the debtor purchasing the property for the debtor's mother because the debtor had the right to purchase the property and it was only deeded to the debtor briefly the same day, which transfer was not to satisfy an antecedent debt, thus, no fraudulent transfer occurred. Truelove v. Buckley, 318 Ga. App. 207 , 733 S.E.2d 499 (2012).

Transferees were not entitled to summary judgment on a Chapter 7 trustee's claim to avoid transfers as actually fraudulent under the Bankruptcy Code and Georgia law as the transferees failed to demonstrate by either affirmative evidence or by pointing to lack of evidence that the trustee could not carry the trustee's burden at trial regarding the debtor's intent to transfer the debtor's assets. Rather, several badges of fraud existed, including that the debtor made the transfer to an insider (a company wholly owned by a director of the debtor who owned more than 20 percent of the stock of the debtor) and that the transfer was made for the purpose of satisfying an antecedent debt owed to an insider. Howell v. Fulford (In re Southern Home & Ranch Supply, Inc.), 515 Bankr. 699 (Bankr. N.D. Ga. 2014).

Cited in Ralls Corp. v. Huerfano River Wind, LLC, 27 F. Supp. 3d 1303 (N.D. Ga. 2014); RES-GA Hightower, LLC v. Golshani, 334 Ga. App. 176 , 778 S.E.2d 805 (2015), cert. denied, No. S16C0330, 2016 Ga. LEXIS 54 (Ga. 2016); Dan J. Sheehan Co. v. Fairlawn on Jones Condo. Ass'n, Inc., 334 Ga. App. 595 , 780 S.E.2d 35 (2015), cert. denied, No. S16C0473, 2016 Ga. LEXIS 217 (Ga. 2016); Bloom v. Camp, 336 Ga. App. 891 , 785 S.E.2d 573 (2016); Wallin v. Wallin, 341 Ga. App. 440 , 800 S.E.2d 617 (2017); EMM Credit, LLC v. Remington, 343 Ga. App. 710 , 808 S.E.2d 96 (2017).

RESEARCH REFERENCES

C.J.S. - 37 C.J.S., Fraudulent Conveyances, § 5.

18-2-72. Determining insolvency.

  1. A debtor is insolvent if, at a fair valuation, the sum of the debtor's debts is greater than the sum of the debtor's assets.
  2. A debtor who is generally not paying his or her debts as they become due other than as a result of a bona fide dispute is presumed to be insolvent. The presumption imposes on the party against which the presumption is directed the burden of proving that the nonexistence of insolvency is more probable than its existence.
  3. Assets under this Code section do not include property that has been transferred, concealed, or removed with intent to hinder, delay, or defraud creditors or that has been transferred in a manner making the transfer voidable under this article.
  4. Debts under this Code section do not include an obligation to the extent it is secured by a valid lien on property of the debtor not included as an asset. (Code 1981, § 18-2-72 , enacted by Ga. L. 2002, p. 141, § 3; Ga. L. 2015, p. 996, § 4A-1/SB 65.)

JUDICIAL DECISIONS

Determining the date of insolvency for purposes of a breach of trust claim under Georgia's common law did not require the application of an insolvency standard differing significantly from the fair valuation standard under O.C.G.A. § 18-2-72 . Post-Confirmation Comm. for Small Loans, Inc. v. Martin, F. Supp. 2d (M.D. Ga. June 13, 2016).

Insolvency resulting in constructive fraud pled. - Actual fraud was adequately pled by alleging badges of fraud sufficient to infer the fraudulent nature of transfers to insiders; moreover, insolvency resulting in constructive fraud also was adequately pled. Ralls Corp. v. Huerfano River Wind, LLC, 27 F. Supp. 3d 1303 (N.D. Ga. 2014).

Judgment against debtor. - Debtor's transfer of real property to the debtor's spouse, a default judgment in a lawsuit, which the trustee claimed rendered the debtor insolvent, in which the spouse did not participate and which was filed after the transfer did not prove the debtor's insolvency at the time of the transfer for purposes of former O.C.G.A. § 18-2-22(3); the spouse's status as the debtor's spouse, standing alone, did not establish privity with the debtor, and the judgment against the debtor did not bind the spouse. Thurmond v. Turner (In re Turner), Bankr. (Bankr. N.D. Ga. Sept. 19, 2006).

RESEARCH REFERENCES

Am. Jur. 2d. - 37 Am. Jur. 2d, Fraudulent Conveyances and Transfers, § 18 et seq.

C.J.S. - 37 C.J.S., Fraudulent Conveyances, § 63 et seq.

18-2-73. Value given for transfer.

  1. Value is given for a transfer or an obligation if, in exchange for the transfer or obligation, property is transferred or an antecedent debt is secured or satisfied, but value does not include an unperformed promise made otherwise than in the ordinary course of the promisor's business to furnish support to the debtor or another person.
  2. For the purposes of paragraph (2) of subsection (a) of Code Section 18-2-74 and Code Section 18-2-75, a person gives a reasonably equivalent value if the person acquires an interest of the debtor in an asset pursuant to a regularly conducted, noncollusive foreclosure sale or execution of a power of sale for the acquisition or disposition of the interest of the debtor upon default under a mortgage, deed of trust, or security agreement.
  3. A transfer is made for present value if the exchange between the debtor and the transferee is intended by them to be contemporaneous and is in fact substantially contemporaneous. (Code 1981, § 18-2-73 , enacted by Ga. L. 2002, p. 141, § 3; Ga. L. 2015, p. 996, § 4A-1/SB 65.)

JUDICIAL DECISIONS

Antecedent debt. - Fraudulent transfer claims involving evidence of several badges of fraud survived summary judgment; the equitable doctrine of earmarking was inapplicable because apportionment of the debtor's estate was not at issue, the in pari delicto defense was inapplicable because liquidators were pursuing the fraudulent transfer claims for the benefit of innocent creditors, and factual issues existed as to whether payment on an antecedent debt was actual value. Am. Pegasus SPC v. Clear Skies Holding Co., LLC, F. Supp. 2d (N.D. Ga. Sept. 22, 2015).

RESEARCH REFERENCES

Am. Jur. 2d. - 37 Am. Jur. 2d, Fraudulent Conveyances and Transfers, § 25 et seq.

C.J.S. - 37 C.J.S., Fraudulent Conveyances, § 78 et seq.

18-2-74. Voidable transfer; determination of actual intent.

  1. A transfer made or obligation incurred by a debtor is voidable as to a creditor, whether the creditor's claim arose before or after the transfer was made or the obligation was incurred, if the debtor made the transfer or incurred the obligation:
    1. With actual intent to hinder, delay, or defraud any creditor of the debtor; or
    2. Without receiving a reasonably equivalent value in exchange for the transfer or obligation, and the debtor:
      1. Was engaged or was about to engage in a business or a transaction for which the remaining assets of the debtor were unreasonably small in relation to the business or transaction; or
      2. Intended to incur, or believed or reasonably should have believed that he or she would incur, debts beyond his or her ability to pay as they became due.
  2. In determining actual intent under paragraph (1) of subsection (a) of this Code section, consideration may be given, among other factors, to whether:
    1. The transfer or obligation was to an insider;
    2. The debtor retained possession or control of the property transferred after the transfer;
    3. The transfer or obligation was disclosed or concealed;
    4. Before the transfer was made or obligation was incurred, the debtor had been sued or threatened with suit;
    5. The transfer was of substantially all the debtor's assets;
    6. The debtor absconded;
    7. The debtor removed or concealed assets;
    8. The value of the consideration received by the debtor was reasonably equivalent to the value of the asset transferred or the amount of the obligation incurred;
    9. The debtor was insolvent or became insolvent shortly after the transfer was made or the obligation was incurred;
    10. The transfer occurred shortly before or shortly after a substantial debt was incurred; and
    11. The debtor transferred the essential assets of the business to a lienor who transferred the assets to an insider of the debtor.
  3. If a creditor is a successor or assignee, a right of action under subsection (a) of this Code section is automatically assigned to such successor or assignee.
  4. A creditor making a claim for relief under subsection (a) of this Code section has the burden of proving the elements of the claim for relief by a preponderance of the evidence. (Code 1981, § 18-2-74 , enacted by Ga. L. 2002, p. 141, § 3; Ga. L. 2015, p. 996, § 4A-1/SB 65.)

Law reviews. - For article, "Self-Settled Asset Protection Trusts in Georgia," see 23 Ga. St. B.J. 17 (Feb. 2018).

JUDICIAL DECISIONS

Transfers of assets before death. - Before decedent died, a decedent's gifts to the decedent's spouse, the decedent's subsequent purchase of land and deeding of the land in a corporate entity's name without documented consideration from the entity, and the decedent's involvement in the capitalization of the entity with purported funds from the spouse could all be found to constitute transfers made with the intent to fraudulently defeat claims of the decedent's ex-spouse under the terms of a settlement agreement the decedent had with the decedent's ex-spouse, and could constitute fraud under the statute. Miller v. Lomax, 266 Ga. App. 93 , 596 S.E.2d 232 (2004).

Evidence was sufficient to sustain the jury's verdict under the plaintiff'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).

Badges of fraud identified by federal court applicable. - O.C.G.A. § 18-2-74 permits the trustee to avoid a transfer made with the actual intent to hinder, delay or defraud any creditor of the debtor. Subsection (b) states that, in determining actual intent, the court could consider a specified list of factors among other factors, which track the badges of fraud identified by the United States Court of Appeals for the Eleventh Circuit. Scarver v. M. Abuhab Participacoes S.A. (In re Moskowitz), Bankr. (Bankr. N.D. Ga. Nov. 28, 2011).

Intentional fraud. - Plaintiff established prima facie case of intentional fraud sufficient to trigger Georgia's fraudulent transfer law because the plaintiff provided evidence showing that the transaction resulted in transfer of substantially all assets, transferring company became insolvent shortly after transfer, transfer occurred just before potential lawsuit against transferring company became known, shareholders of transferring company simply switched over to company to whom assets transferred, and some evidence existed that efforts were made to conceal the nature of the transfer. Jones v. Tauber & Balser, P.C., 503 Bankr. 162 (N.D. Ga. 2013).

Assignee of debt could bring fraudulent transfer claim. - Judgment creditor had standing to pursue the creditor's claim against a judgment debtor and the debtor's transferees, although the judgment creditor was the assignee of the debt leading to the judgment, because it did not seek a remedy for an injury to the previous holder of the note, but for an injury that was committed directly against it; O.C.G.A. § 44-12-24 did not apply. RES-GA YPL, LLC v. Rowland, 340 Ga. App. 713 , 798 S.E.2d 315 (2017).

Right of action for injuries arising from fraud cannot be assigned. - An assignee of debt is precluded from pursuing a fraudulent transfer claim even though the assignee met the definitions of a creditor with a claim under the Georgia Uniform Fraudulent Transfers Act (now the Uniform Voidable Transactions Act), O.C.G.A. § 18-2-70 et seq., because the non-assignment statute provides that a right of action for injuries arising from fraud cannot be assigned; thus, the second assignee had no standing to assert a fraudulent transfer claim against the appellee regarding two parcels of real property because a fraudulent transfer claim could not be assigned under Georgia law. RES-GA Hightower, LLC v. Golshani, 334 Ga. App. 176 , 778 S.E.2d 805 (2015), cert. denied, No. S16C0330, 2016 Ga. LEXIS 54 (Ga. 2016).

Court granted a motion for default judgment and denied Chapter 7 debtor's discharge when the well-pled allegations of the complaint established that post-petition, the debtor liquidated the debtor's 401(k) account and spent or transferred proceeds without authority from the court and with intent to hinder, delay, or defraud creditors or officers of the debtor's bankruptcy estate. The court inferred the debtor's fraudulent intent based on badges of fraud under Georgia fraudulent conveyance statute, including that the debtor did not fully disclose the value of the account; the debtor transferred a portion of the funds to the debtor's mother and daughter, who were insiders; funds were substantially all of the debtor's assets; and the debtor transferred a portion of the funds without adequate consideration. Gebhardt v. Oliver (In re Oliver), Bankr. (Bankr. N.D. Ga. May 5, 2015).

Because the 2015 amendments to the Georgia Uniform Fraudulent Transfers Act (now the Uniform Voidable Transactions Act), O.C.G.A. § 18-2-70 et seq., specifically allowed assignees and successors to debt to pursue fraudulent transfer claims, it follows that under the previous version of the Georgia Uniform Fraudulent Transfers Act, such assignments were not allowed. RES-GA Hightower, LLC v. Golshani, 334 Ga. App. 176 , 778 S.E.2d 805 (2015), cert. denied, No. S16C0330, 2016 Ga. LEXIS 54 (Ga. 2016).

Even though the four-year statute of limitations under the Georgia Uniform Fraudulent Transfer Act (UFTA) (now the Uniform Voidable Transactions Act), O.C.G.A. § 18-2-70 et seq., had not expired, a Chapter 7 trustee's avoidance action, which was brought pursuant to a Bankruptcy Code provision allowing the trustee to step into the shoes of an unsecured creditor, was barred by the two-year limitations period in the Bankruptcy Code. Nor was the statute tolled by a Bankruptcy Code provision dealing with extensions of time as the trustee's fraudulent transfer action was brought standing in the shoes of a creditor, not the debtor. Boudreaux v. Hall Oil Co. (In re Pope Logging, Inc.), Bankr. (Bankr. S.D. Ga. Sept. 17, 2015).

Chapter 7 trustee's state law fraudulent transfer claim was barred by the statute of limitations because the trustee was pursuing the claim through the trustee's authority as lien creditor and did not bring the action within the time set forth under bankruptcy law. Boudreaux v. Hall Oil Co. (In re Butler Logging, Inc.), 538 Bankr. 174 (Bankr. S.D. Ga. 2015).

Void as to creditor not void ab initio. - When a bank sought relief from the automatic stay to proceed with a sheriff's sale under a prepetition state court consent judgment that resolved a fraudulent transfer action against the debtor and others by declaring the transfer "void," the court denied the motion as unnecessary. No interest in the property revested in the debtor because, applying rules of contract construction to the consent judgment, and giving the consent judgment a construction that rendered it in compliance with Georgia fraudulent transfer statutes, the court determined that the word "void" meant void as to the bank, not void ab initio. Southeastern Bank v. Allen (In re Allen), Bankr. (Bankr. S.D. Ga. June 5, 2017)(decided prior to the 2015 amendment).

Insider. - Certain individuals and entities were insiders of the debtor, including officers and persons in control of the debtor, their spouses, the owner of 66 percent of the debtor, and indirect owners of 20 percent or more of the debtor. Watts v. MTC Dev., LLC (In re Palisades at W. Paces Imaging Ctr., LLC), 501 Bankr. 896 (Bankr. N.D. Ga. 2013).

Pleading requirements. - Special pleading requirements of Fed. R. Civ. P. 9(b) did not apply to an action for fraudulent conveyance under Georgia Uniform Fraudulent Transfers Act (now Uniform Voidable Transactions Act), O.C.G.A. § 18-2-70 et seq. Nesco, Inc. v. Fairley Cisco, F. Supp. 2d (S.D. Ga. Oct. 7, 2005).

Trustee's pleadings that alleged that the investors used the debtors as part of a Ponzi scheme and that the money transferred to the limited liability company amounted to a fraudulent transfer was sufficient to meet the pleading requirements of Fed. R. Civ. P. 8, Fed. R. Bankr. 7008, the heightened pleading requirements of Fed. R. Civ. P. 9(b), and to state a claim under 11 U.S.C. § 548 and O.C.G.A. § 18-2-75(a) . Perkins v. Crown Fin., LLC (In re Int'l Mgmt. Assocs. LLC), Bankr. (Bankr. N.D. Ga. Mar. 6, 2007).

Defendant LLC did not establish that a more definite statement was required for the trustee's allegations under 11 U.S.C. § 548 and O.C.G.A. § 18-2-74 because the trustee's complaint was not unintelligible and provided sufficient information to the LLC so it could frame a response; the complaint named only the LLC as a defendant and alleged that the transfer made pursuant to a settlement agreement was fraudulent. Perkins v. Crown Fin., LLC (In re Int'l Mgmt. Assocs. LLC), Bankr. (Bankr. N.D. Ga. Mar. 6, 2007).

Chapter 7 trustee's allegations were sufficient to survive a creditor's motion to dismiss the trustee's complaint seeking to avoid and recover transfers pursuant to 11 U.S.C. §§ 544(b)(1) and 550 when the trustee alleged sufficient facts to suggest that, pursuant to O.C.G.A. § 18-2-74(b) , the creditor received avoidable fraudulent transfers from the debtor. The trustee alleged that all of the transfers were made within four years of the petition date, that the transfers were from the debtors' bank account, and that several badges of fraud indicated the debtors' actual intent to hinder, delay, or defraud including the fact that the transfers occurred when the debtors were insolvent, the creditor was an insider of the debtors at the time of the transfers, and the creditor knew or should have known that the debtors were involved in an unlawful scheme to defraud investors. Gordon v. Graybeal (In re CM Vaughn, LLC), Bankr. (Bankr. N.D. Ga. June 21, 2010).

Court rejected transferees' argument that a Chapter 7 trustee could not plausibly assert the existence of a creditor with an allowed claim that gave the creditor standing under 11 U.S.C. § 544(b)(1) to assert a constructively fraudulent transfer claim under O.C.G.A. § 18-2-74 and Del. Code Ann. tit. 6, § 1304 because the assertion that only an unsecured creditor with a claim arising prior to the transfers could seek their avoidance was legally flawed. Under the state statutes, a transfer for less than reasonably equivalent value was constructively fraudulent as to creditors whose claims arose after the transfers when the debtor was engaged or was about to engage in a business or transaction for which the remaining assets of the debtor were unreasonably small in relation to the business or transaction. Watson v. Powell (In re Atlantis Plastics, Inc.), Bankr. (Bankr. N.D. Ga. Mar. 31, 2011)(Unpublished).

When an investor asserted a fraudulent transfer claim against a bank to which a consultant who allegedly defrauded the investor made a down payment on a house, it was error to dismiss the claim based on the bank's assertion that the bank, under O.C.G.A. § 18-2-74(a)(1), took the consultant's funds in good faith and for a reasonably equivalent value because: (1) the investor's complaint did not admit or otherwise demonstrate such an affirmative defense; and (2) the investor had no obligation to anticipate the affirmative defense. Furthermore, the claims could survive a motion to dismiss because the investor: (1) stated viable claims; (2) did not have to anticipate affirmative defenses; and (3) did not admit such defenses. Speedway Motorsports, Inc. v. Pinnacle Bank, 315 Ga. App. 320 , 727 S.E.2d 151 (2012).

Trustee could not prevail under O.C.G.A. § 18-2-74 because the trustee was not a "creditor" who was able to utilize § 18-2-74 . Here, the trustee did not plead that the trustee was moving under 11 U.S.C. § 544; rather, the trustee simply asserted a state law cause of action. Cooper v. Bullock (In re Bullock), Bankr. (Bankr. N.D. Ga. June 12, 2012).

Actual fraud was adequately pled by alleging badges of fraud sufficient to infer the fraudulent nature of transfers to insiders; moreover, insolvency resulting in constructive fraud also was adequately pled. Ralls Corp. v. Huerfano River Wind, LLC, 27 F. Supp. 3d 1303 (N.D. Ga. 2014).

Transferees were not entitled to summary judgment on a Chapter 7 trustee's claim to avoid transfers as actually fraudulent under the Bankruptcy Code and Georgia law as the transferees failed to demonstrate by either affirmative evidence or by pointing to lack of evidence that the trustee could not carry the trustee's burden at trial regarding the debtor's intent to transfer the debtor's assets. Rather, several badges of fraud existed, including that the debtor made the transfer to an insider (a company wholly owned by a director of debtor who owned more than 20 percent of the stock of the debtor) and that the transfer was made for the purpose of satisfying an antecedent debt owed to an insider. Howell v. Fulford (In re Southern Home & Ranch Supply, Inc.), 515 Bankr. 699 (Bankr. N.D. Ga. 2014).

Bankruptcy trustee failed to allege that payments to a creditor were avoidable as fraudulent since the bankruptcy debtor incurred the obligation upon execution of an agreement which occurred outside the look-back period for avoiding fraudulent transfers. Gordon v. Harrison (In re Alpha Protective Servs.), 531 Bankr. 889 (Bankr. M.D. Ga. 2015).

Judgment creditor could seek relief under the Uniform Fraudulent Transfers Act (now Uniform Voidable Transactions Act), O.C.G.A. § 18-2-70 et seq., against the judgment debtor and transferees, but it could not pursue the judgment debtor's mother and sister or their corporation because they did not receive any interest from the judgment debtor and were not themselves debtors of the judgment creditor whose transfers were subject to attack. RES-GA YPL, LLC v. Rowland, 340 Ga. App. 713 , 798 S.E.2d 315 (2017).

Colorable claim in bankruptcy. - When a Chapter 7 debtor failed to list a creditor's claim, the claim was non-dischargeable under 11 U.S.C. § 523(a)(3). Pursuant to the fraudulent transfer elements of O.C.G.A. § 18-2-74 , the creditor made the required showing of a colorable claim of non-dischargeability under 11 U.S.C. § 523(a)(6). D.A.N. Joint Venture III, L.P. v. Wier (In re Wier), Bankr. (Bankr. N.D. Ga. Sept. 30, 2012).

No asset of debtor involved. - Judgment voiding a transfer of property as fraudulent under the Uniform Fraudulent Transfers Act (UFTA) (now Uniform Voidable Transactions Act), O.C.G.A. § 18-2-70 et seq., was reversed because, despite not being recorded, the 2002 security deed executed in favor of a former sister-in-law, pledging the property as collateral for a promissory note, gave the former sister-in-law, as one of the defendant's creditors, priority over the plaintiff's judgment, such that the property could not be characterized as the defendant's asset under the UFTA. Wallin v. Wallin, 341 Ga. App. 440 , 800 S.E.2d 617 (2017).

Property was transferred. - Defendants' argument that transfer of corporate goodwill, or "book of business," could not as a matter of law constitute transfer under Georgia's fraudulent transfer law because goodwill had no value was rejected because the plaintiff produced evidence that the goodwill transferred had substantial value. Jones v. Tauber & Balser, P.C., 503 Bankr. 162 (N.D. Ga. 2013).

Fraudulent transfer shown. - Checks payable from a Chapter 7 debtor that were deposited in an insider's account were avoidable as made with actual intent to defraud a creditor because the deposited checks were not fully disclosed, the debtor received no consideration for the transfer, the debtor was insolvent at the time, and the checks, and any invoices which allegedly supported them, were created in order to defraud a creditor into making advances for expenses not validly incurred. Watts v. MTC Dev., LLC (In re Palisades at W. Paces Imaging Ctr., LLC), 501 Bankr. 896 (Bankr. N.D. Ga. 2013).

Father who admitted he caused property to be transferred to his son to shield the property from the father's creditors was not entitled to judgment against the son because he 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 father's creditors. Roach v. Roach, 327 Ga. App. 513 , 759 S.E.2d 587 (2014).

Chapter 7 debtor's discharge was denied based on transfer of funds for no consideration shortly after the debtor had been sued from a joint bank account to an account purportedly controlled by the debtor's spouse because the debtor testified that the funds were transferred to the spouse so that money would not be garnished. McAfee v. Harman (In re Harman), Bankr. (Bankr. N.D. Ga. Sept. 10, 2014).

Assignment of a bankruptcy debtor's interest in real property was avoidable as fraudulent since the debtor received no proceeds from the assignee's sale of the property, did not receive reasonably equivalent value for the assignment, and became insolvent as a result of the assignment. 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).

Beneficiary of trust preferred securities sufficiently alleged a fraudulent transfer based on allegations that the issuer of the securities caused its subsidiary bank to issue new stock in a concealed placement to transfer substantially all of the issuer's assets with an intent to deprive the beneficiary of returns on the securities. U.S. Capital Funding VI, Ltd. v. Patterson Bankshares, Inc., 137 F. Supp. 3d 1340 (S.D. Ga. 2015).

No fraudulent transfer shown. - When a debtor received valuable consideration or reasonably equivalent value as a result of a creditor bank's release of the bank's lien against the debtor's assets in exchange for the payment of another's obligation guaranteed by the debtor, no fraudulent transfer occurred under 11 U.S.C. § 548(a)(1)(B) or O.C.G.A. § 18-2-74(a) . Hays v. Farmers and Merchants Bank (In re Stewart Fin. Co.), Bankr. (Bankr. M.D. Ga. June 8, 2007).

Transfers from bankruptcy debtors were avoidable as fraudulent under O.C.G.A. § 18-2-74(a)(1) since the transfers made in the course of a Ponzi scheme were deemed to be made with fraudulent intent, and the lack of information from the debtors, the refusal of the debtors to allow transferees to conduct due diligence, and the usurious interest paid by the debtors clearly indicated that the transactions were fraudulent. Kerr v. Audio Answers, Inc. (In re Christou), Bankr. (Bankr. N.D. Ga. Sept. 28, 2009).

Chapter 7 trustee was not entitled to the recovery of property from the debtor's property under 11 U.S.C. § 544. Under the fraudulent transfer elements of O.C.G.A. § 18-2-74 , the debtor received reasonably equivalent value in exchange for the privilege of living in the property without the payment of rent, taxes, or insurance and in exchange for enjoying the benefit of property improvements. Pettigrew v. Rollins (In re Rollins), Bankr. (Bankr. N.D. Ga. Sept. 29, 2011).

Distributions to the members of a limited liability company did not constitute a fraudulent transfer in violation of O.C.G.A. § 18-2-74(a) because insolvency on the part of the company and an actual intent to hinder, defraud, or delay the creditor's collection of the creditor's debt was not shown. Sun Nurseries, Inc. v. Lake Erma, LLC, 316 Ga. App. 832 , 730 S.E.2d 556 (2012).

No fraudulent transfer when work performed. - Debtor's twice monthly $1833 payments to the defendant in exchange for regular, hotel managerial services did not constitute avoidable fraudulent transfers under O.C.G.A. §§ 18-2-74(a)(2)(B) and 18-2-75 because the defendant's work for the debtor constituted reasonably equivalent value in exchange for the payments. Anderson v. Patel (In re Diplomat Constr., Inc.), Bankr. (Bankr. N.D. Ga. Aug. 6, 2013).

Transfer before a crime was committed. - Although the transfer of a house was accompanied by some badges of fraud, the trial court abused the court's discretion in enjoining further disposition of the house, pending adjudication of the merits of wrongful death and fraudulent transfer claims, since the transferor gave the house to the transferor's three minor grandchildren in Florida three months before the transferor murdered the decedent. Bishop v. Patton, 288 Ga. 600 , 706 S.E.2d 634 , overruled on other grounds by SRB Inv. Servs., LLLP v. Branch Banking & Trust Co., 289 Ga. 1 , 709 S.E.2d 267 (2011).

Fraudulent transfer by individual accused of murder. - Court did not abuse the court's discretion in entering an interlocutory injunction barring further disposition of the proceeds from joint bank accounts pending final disposition of fraudulent transfer and wrongful death lawsuits because badges of fraud indicated an actual intent to hinder, delay, or defraud a decedent's estate and heirs of a full recovery. The transferor's adult child came up from Florida to withdraw the funds from joint bank accounts in Georgia three days after the transferor was arrested for the murder of the decedent. Bishop v. Patton, 288 Ga. 600 , 706 S.E.2d 634 , overruled on other grounds by SRB Inv. Servs., LLLP v. Branch Banking & Trust Co., 289 Ga. 1 , 709 S.E.2d 267 (2011).

Accrual of action for fraudulent conveyance. - In determining when a cause of action accrued for purposes of O.C.G.A. § 9-3-32 it was necessary to ascertain the time when the plaintiff could first have maintained plaintiff's action to a successful result. The relevant date for determining the statute of limitations on a fraudulent conveyance claim, pursuant to O.C.G.A. §§ 18-2-74 , 18-2-75 , and 18-2-76 , was the date that the debtor incurred the obligation to make the transfer. Kipperman v. Onex Corp., 411 Bankr. 805 (N.D. Ga. 2009).

Fraudulent conveyance claim time-barred. - Administrator's fraudulent conveyance claims against group one were time-barred under O.C.G.A. §§ 18-2-74(a)(1) and 18-2-79 (1), even though the claim was not time-barred under the limitations period in effect when the claim accrued, as application of § 18-2-79 , a procedural law in effect at the time the suit was filed, did not violate the constitutional prohibition against retroactive laws under Ga. Const. 1983, Art. I, Sec. I, Para. X; the administrator also failed to utilize the one-year statute of limitation effective upon discovery of the alleged fraud. Huggins v. Powell, 315 Ga. App. 599 , 726 S.E.2d 730 (2012).

Since an administrator's fraudulent conveyance claims were time-barred under O.C.G.A. §§ 18-2-74(a)(1) and 18-2-79(1) , a limited liability company's (LLC) failure to respond to the administrator's requests for admissions was of no consequence and the trial court's denial of summary judgment to the LLC was improper. Huggins v. Powell, 315 Ga. App. 599 , 726 S.E.2d 730 (2012).

Margin or settlement payments. - Federal statute, 11 U.S.C. § 546(e), was a defense to the counts of a trustee's avoidance action brought against an investment company under 11 U.S.C. § 544, which incorporated O.C.G.A. §§ 18-2-22(3) and 18-2-74(a)(2), and to the count brought pursuant to 11 U.S.C. § 548(a)(1)(A). Hayes v. Morgan Stanley DW Inc. (In re Stewart Fin. Co.), 367 Bankr. 909 (Bankr. M.D. Ga. 2007).

Charging order did not give creditor rights against LLC assets. - Judgment creditor did not have standing to set aside allegedly fraudulent transfers made by non-judgment debtor limited liability companies (LLCs), although the creditor had charging orders against the LLCs under O.C.G.A. § 14-11-504(a) ; the charging orders did not give the creditor any rights against the assets of the LLCs. Merrill Ranch Props., LLC v. Austell, 336 Ga. App. 722 , 784 S.E.2d 125 (2016).

Discovery of attorney-client communications. - Judgment creditor could inquire into attorney-client communications only as the communications were related to the planning or execution of the transition from the limited liability company (LLC) to the other entities. The creditor could not inquire into communications made after these transactions were carried out, even if those communications concern the possible legal implications of the transactions. Tindall v. H & S Homes, LLC, F. Supp. 2d (M.D. Ga. Jan. 10, 2011).

Crime fraud exception to attorney-client privilege triggered. - With respect to documents claimed to be protected by attorney-client privilege, because the plaintiff successfully established a prima facie case of intentional fraud and violation of Georgia's fraudulent transfer law, that was enough to trigger the crime-fraud exception and require the defendants to produce documents related to the transfer at issue. Jones v. Tauber & Balser, P.C., 503 Bankr. 162 (N.D. Ga. 2013).

Interlocutory injunction proper. - Trial court did not abuse the court's discretion in entering an interlocutory injunction to preserve the status quo pending adjudication of the merits of the creditor's action against the debtors alleging breach of contract and fraudulent transfers because the debtors presented no evidence of harm from the creditor's delay in amending the creditor's complaint to seek an interlocutory injunction, and the delay resulted primarily from the debtors' concealment of the debtors' actions and obstruction of the creditor's efforts to discover the details; vague assertions of harm supported by no citation to evidence in the record are insufficient to sustain a defense of laches, and there is a balance between a plaintiff's knowing that a cause of action exists and that interim injunctive relief may be needed and sitting on the plaintiff's rights to the prejudice of the defendant. SRB Inv. Servs., LLLP v. Branch Banking & Trust Co., 289 Ga. 1 , 709 S.E.2d 267 (2011).

Trial court did not abuse the court's discretion in entering an interlocutory injunction to preserve the status quo pending adjudication of the merits of the creditor's action against the debtors alleging breach of contract and fraudulent transfers in violation of the Georgia Uniform Fraudulent Transfers Act (UFTA) (now Uniform Voidable Transactions Act), O.C.G.A. § 18-2-70 et seq., because foreclosing on collateral of uncertain remaining value, going through confirmation proceedings, and suing the insolvent debtors to reclaim the deficiency and then having to recover the fraudulently transferred assets to collect on the ensuing judgment was not an adequate remedy at law since it was not nearly as practical and as efficient to the ends of justice and its prompt administration as the remedy in equity enjoining further transfers temporarily so that the creditor could collect a final judgment; when a money judgment is likely to be uncollectible because a debtor has fraudulently moved the debtor's assets in an attempt to dissipate or conceal the assets from a creditor, Georgia law, both before and under the Georgia UFTA, gives the creditor the right to seek interlocutory relief by freezing the assets where the assets are. SRB Inv. Servs., LLLP v. Branch Banking & Trust Co., 289 Ga. 1 , 709 S.E.2d 267 (2011).

Trial court did not abuse the court's discretion in entering an interlocutory injunction to preserve the status quo pending adjudication of the merits of the creditor's action against the debtors alleging breach of contract and fraudulent transfers in violation of the Georgia Uniform Fraudulent Transfers Act (UFTA) (now Uniform Voidable Transactions Act), O.C.G.A. § 18-2-70 et seq., because at least seven statutory badges of fraud listed in the UFTA, O.C.G.A. § 18-2-74(b) , were implicated, and the creditor also presented evidence as a non-statutory badge of fraud of the debtors' pattern of maintaining just enough funds in certain accounts to satisfy the debtors' financial covenants at the end of each quarter and then transferring the funds away shortly thereafter; under the UFTA, O.C.G.A. § 18-22-77(a)(3)(A), the trial court was authorized to enter an interlocutory injunction against further disposition by the debtor or a transferee, or both, of the asset transferred or of other property. SRB Inv. Servs., LLLP v. Branch Banking & Trust Co., 289 Ga. 1 , 709 S.E.2d 267 (2011).

Summary judgment improper. - On a fraudulent transfer claim brought by the buyers of the assets of a fitness center, it was error to grant summary judgment to the sellers. There was evidence that about seven days after the closing, the sellers' corporation distributed the sales proceeds to the corporation's four shareholders and that this left the corporation with essentially no assets; furthermore, the buyers presented sufficient evidence on each of the elements of fraud so as to survive summary judgment on the buyer's fraud claim. Kilroy v. Alpharetta Fitness, Inc., 295 Ga. App. 274 , 671 S.E.2d 312 (2008), cert. denied, Alpharetta Fitness, Inc., v. Kilroy, No. S09C0645, 2009 Ga. LEXIS 216 (Ga. 2009).

Based on evidence of the sale of judgment debtors' business to their long-time close friends and evidence that the friends were aware that the business owed money, a genuine issue of material fact remained as to whether the debtors transferred their assets with actual intent to hinder, delay, or defraud their creditor under O.C.G.A. § 18-2-74(a)(1). Therefore, the trial court's grant of summary judgment was reversed. Abbott Oil Co. v. Rogers, 302 Ga. App. 439 , 691 S.E.2d 561 (2010), cert. denied, No. S10C1026, 2010 Ga. LEXIS 583 (Ga. 2010).

Bankruptcy court denied a Chapter 7 trustee's motion for summary judgment on the trustee's claim that transfers that were made by a mortgage company to an investor were avoidable under 11 U.S.C. § 544 and the Georgia Uniform Fraudulent Transfer Act (now Uniform Voidable Transactions Act), O.C.G.A. § 18-2-74 et seq., because a person who owned the company used the company to operate a Ponzi scheme. The trustee had the burden of showing that there was no genuine issue of material fact, and there was a genuine dispute regarding whether the investor took the transfers in good faith, or gave reasonably equivalent value in exchange for the transfers; although a significant portion of the uncertainty in the evidence arose from the fact that the investor refused to respond to the trustee's requests for discovery, the trustee had done nothing more than highlight the investor's use of U.S. Const., amend. 5. Kerr v. Hart (In re Christou), Bankr. (Bankr. N.D. Ga. Sept. 23, 2010).

O.C.G.A. § 18-2-74 allows the avoidance of a transfer made without receiving reasonably equivalent value when the debtor was either engaged or about to engage in a business or transaction for which the remaining assets of the debtor were unreasonably small in relation to the business or transaction, or the debtor intended to incur or believed or reasonably should have believed that he or she would incur debts beyond his or her ability to pay as the debts became due. Scarver v. M. Abuhab Participacoes S.A. (In re Moskowitz), Bankr. (Bankr. N.D. Ga. Nov. 28, 2011).

Trial court erred by granting summary judgment to a creditor because, under O.C.G.A. § 18-2-75(b) , the questioned real estate transfer involved the debtor purchasing the property for the debtor's mother because the debtor had the right to purchase the property and it was only deeded to the debtor briefly the same day, which transfer was not to satisfy an antecedent debt, thus, no fraudulent transfer occurred. Truelove v. Buckley, 318 Ga. App. 207 , 733 S.E.2d 499 (2012).

Summary judgment was inappropriate as to a lender's claims under Georgia's Uniform Fraudulent Transfers Act (now Uniform Voidable Transactions Act), O.C.G.A. § 18-2-70 et seq., because the evidence was not undisputed, particularly given the evidence of the guarantor's optimistic efforts to secure additional investors and shore up the financials of the guarantor's businesses during the same approximate time frame. Nissan Motor Acceptance Corp. v. Sowega Motors, Inc., F. Supp. 2d (M.D. Ga. Sept. 11, 2012).

Trustee's avoidance action alleging fraudulent conveyance could not be resolved on summary judgment because, despite existence of several badges of fraud, the mere fact that the debtor thought the debtor was returning property that was not the debtors was sufficient to preclude avoiding transfers, and what the debtor believed or reasonably should have believed was genuine issues of material fact. Kelley v. Speciale (In re Gregg), Bankr. (Bankr. M.D. Ga. July 2, 2013).

In a transfer avoidance action under 11 U.S.C. § 544(b)(1), the complaint alleged sufficient facts to raise questions of fact regarding whether the statute of limitations barred the trustee's claim as it was plausible that the debtors concealed the transfers and the creditor did not learn of the transfers until years later. Lubin v. Markowitz (In re Markowitz), Bankr. (Bankr. N.D. Ga. Mar. 22, 2017).

Fraudulent transfer claims involving evidence of several badges of fraud survived summary judgment; the equitable doctrine of earmarking was inapplicable because apportionment of the debtor's estate was not at issue, the in pari delicto defense was inapplicable because liquidators were pursuing the fraudulent transfer claims for the benefit of innocent creditors, and factual issues existed as to whether payment on an antecedent debt was actual value. Am. Pegasus SPC v. Clear Skies Holding Co., LLC, F. Supp. 2d (N.D. Ga. Sept. 22, 2015).

Insufficient basis for actual fraud to go before jury. - Trustee's assertion of seven badges of fraud drawn from O.C.G.A. § 18-2-74(b) and fraudulent transfer case law provided insufficient factual detail to give the court a sufficient basis in the record to allow the issue of actual fraud to go before a jury. Kipperman v. Onex Corp., 411 Bankr. 805 (N.D. Ga. 2009).

Defenses. - Bankruptcy court rejected a Chapter 11 trustee's argument that investors who received payments from affiliated businesses that were accused of operating a Ponzi scheme did not give value for the payments and could not assert a defense under 11 U.S.C. § 548(c) or Georgia law against the trustee's action seeking recovery of those payments under 11 U.S.C. §§ 544(b) and 548(a)(1)(A) and (a)(1)(B), and Georgia law, as fraudulent transfers. The investors had a claim for the return of principal the investors invested, based on fraud, the investors gave value for payments the investors received up to the amount of the principal the investors invested because the payments satisfied their claim, and their right to keep the payments did not depend on whether the investments the investors made were characterized as debt or equity. In re Int'l Mgmt. Assocs., LLC, Bankr. (Bankr. N.D. Ga. Dec. 1, 2009), aff'd, 661 F.3d 623 (11th Cir. 2011)(Unpublished).

Damages available. - Georgia law allowing the recovery of general and punitive damages for fraudulent conveyances survived the enactment of Georgia's Uniform Fraudulent Transfers Act, O.C.G.A. § 18-2-70 et seq. Interfinancial Midtown, Inc. v. Choate Constr. Co., 343 Ga. App. 793 , 806 S.E.2d 255 (2017).

Statute mirrors Bankruptcy Code. - As with actual fraud under Georgia law, both O.C.G.A. §§ 18-2-74(a)(2)(B) and 18-2-75 substantially mirror the constructive fraud claims under the Bankruptcy Code. Pettie v. Bonertz (In re LendXFinancial, LLC), Bankr. (Bankr. N.D. Ga. Mar. 16, 2012).

Analysis same as under 11 U.S.C. § 548(a)(1)(a). - O.C.G.A. § 18-2-74(a)(1) substantially mirrors 11 U.S.C. § 548(a)(1)(A) of the Bankruptcy Code. The Georgia statutes are different in that a creditor may recover property up to four years after the transfer occurred under O.C.G.A. § 18-2-79 . Pettie v. Bonertz (In re LendXFinancial, LLC), Bankr. (Bankr. N.D. Ga. Mar. 16, 2012).

Cited in In re Davis, Bankr. (Bankr. N.D. Ga. July 9, 2007); EMM Credit, LLC v. Remington, 343 Ga. App. 710 , 808 S.E.2d 96 (2017).

RESEARCH REFERENCES

C.J.S. - 37 C.J.S., Fraudulent Conveyances, § 74 et seq.

18-2-75. Transfer or obligation voidable if incurred without receiving reasonably equivalent value.

  1. A transfer made or obligation incurred by a debtor is voidable as to a creditor whose claim arose before the transfer was made or the obligation was incurred if the debtor made the transfer or incurred the obligation without receiving a reasonably equivalent value in exchange for the transfer or obligation and the debtor was insolvent at that time or the debtor became insolvent as a result of the transfer or obligation.
  2. A transfer made by a debtor is voidable as to a creditor whose claim arose before the transfer was made if the transfer was made to an insider for an antecedent debt, the debtor was insolvent at that time, and the insider had reasonable cause to believe that the debtor was insolvent.
  3. If a creditor is a successor or assignee, a right of action under subsection (a) or (b) of this Code section is automatically assigned to such successor or assignee.
  4. Subject to subsection (b) of Code Section 18-2-72 , a creditor making a claim for relief under subsection (a) or (b) of this Code section has the burden of proving the elements of the claim for relief by a preponderance of the evidence. (Code 1981, § 18-2-75 , enacted by Ga. L. 2002, p. 141, § 3; Ga. L. 2015, p. 996, § 4A-1/SB 65.)

JUDICIAL DECISIONS

Transfer of property set aside. - Debtor's transfer of property to the debtor's daughter, without consideration, was properly set aside since the deed was recorded nearly 18 months after the deed was signed, recorded the day after the appellate court entered judgment on the case, the debtor continued to occupy the property without paying rent, and the debtor disposed of assets worth at least $500,000 in the seven months after the deed was recorded, leading to the debtor's insolvency. Kent v. A.O. White, Jr., Consulting Eng'r, Inc., 279 Ga. App. 563 , 631 S.E.2d 782 (2006).

After the debtor transferred funds to the debtor's sister, who had ownership, dominion and control over the funds, the sister was a transferee under 11 U.S.C. § 550, and the funds were recoverable as a fraudulent conveyance under 11 U.S.C. § 544 and O.C.G.A. § 18-2-75 . Ogier v. Braswell (In re Clark), 435 Bankr. 753 (Bankr. N.D. Ga. 2009).

When an investor asserted fraudulent transfer and related claims against accounts in the names of the former wife and widow of a consultant who allegedly defrauded the investor, the claims survived a motion to dismiss because the investor: (1) stated viable claims; (2) did not have to anticipate affirmative defenses; and (3) did not admit such defenses. Speedway Motorsports, Inc. v. Pinnacle Bank, 315 Ga. App. 320 , 727 S.E.2d 151 (2012).

Evidence that a corporation was insolvent at the time the corporation made payments in the amount of $248,367 to each of two principals, and that the corporation did not receive reasonably equivalent value for the payments, was sufficient to show that the payments were constructively fraudulent and could be recovered for the corporation's bankruptcy estate under 11 U.S.C. § 544 and O.C.G.A. § 18-2-75 ; although the principals claimed that the payments were due on a loan the principals made to the corporation and that the principals returned some payments to the corporation's accounts, there was no evidence supporting the principal's claims. Anderson v. Patel (In re Diplomat Constr., Inc.), Bankr. (Bankr. N.D. Ga. Aug. 26, 2013).

No property transfer involved. - Trial court correctly granted summary judgment in favor of the defendants as to the plaintiff's fraud counts pursuant to the Uniform Fraudulent Transfers Act (UFTA) (now Uniform Voidable Transactions Act), O.C.G.A. § 18-2-70 et seq., because the UFTA explicitly requires a transfer of an asset, which is defined as certain forms of property and neither defending entity owned property in that classic sense; thus, the UFTA was not the appropriate vehicle for the plaintiff's recovery. Dan J. Sheehan Co. v. Fairlawn on Jones Condo. Ass'n, Inc., 334 Ga. App. 595 , 780 S.E.2d 35 (2015), cert. denied, No. S16C0473, 2016 Ga. LEXIS 217 (Ga. 2016).

Reasonably equivalent value. - Debtor's twice monthly $1833 payments to the defendant in exchange for regular, hotel managerial services did not constitute avoidable fraudulent transfers under O.C.G.A. §§ 18-2-74(a)(2)(B) and 18-2-75 because the defendant's work for the debtor constituted reasonably equivalent value in exchange for the payments. Anderson v. Patel (In re Diplomat Constr., Inc.), Bankr. (Bankr. N.D. Ga. Aug. 6, 2013).

Failure to offer evidence of value. - Transferees were not entitled to summary judgment on a Chapter 7 trustee's constructive fraud claims under the Bankruptcy Code and Georgia law as the transferees failed to offer any evidence of the value of the collateral at issue and, thus, the trustee's evidence created a question of fact. Howell v. Fulford (In re Southern Home & Ranch Supply, Inc.), 515 Bankr. 699 (Bankr. N.D. Ga. 2014).

Transfers not made by debtor not subject to attack. - Judgment creditor could seek relief under the Uniform Fraudulent Transfers Act (now Uniform Voidable Transactions Act), O.C.G.A. § 18-2-70 et seq., against the judgment debtor and transferees, but it could not pursue the judgment debtor's mother and sister or their corporation because they did not receive any interest from the judgment debtor and were not themselves debtors of the judgment creditor whose transfers were subject to attack. RES-GA YPL, LLC v. Rowland, 340 Ga. App. 713 , 798 S.E.2d 315 (2017).

Accrual of action for fraudulent conveyance. - In determining when a cause of action accrued for purposes of O.C.G.A. § 9-3-32 , it was necessary to ascertain the time when the plaintiff could first have maintained the plaintiff's action to a successful result. The relevant date for determining the statute of limitations on a fraudulent conveyance claim, pursuant to O.C.G.A. §§ 18-2-74 , 18-2-75 , and 18-2-76 , was the date that the debtor incurred the obligation to make the transfer. Kipperman v. Onex Corp., 411 Bankr. 805 (N.D. Ga. 2009).

Claims not subject to arbitration. - When a trustee of a creditor trust under bankruptcy debtors' confirmed plan alleged that providers of financial services to the debtors were the transferees of fraudulent transfers from the debtors under O.C.G.A. § 18-2-75(a) , the claims were not subject to arbitration under arbitration clauses in contracts between the providers and the debtors; the claims were not derived from the rights of the debtors under the contracts since the debtors were the transferors, and the trustee asserted the claims on behalf of the creditors. Cohen v. Ernst & Young, LLP (In re Friedman's, Inc.), 372 Bankr. 530 (Bankr. S.D. Ga. 2007).

Summary judgment improper. - Trial court erred by granting summary judgment to a creditor because under O.C.G.A. § 18-2-75(b) , the questioned real estate transfer involved the debtor purchasing the property for the debtor's mother because the debtor had the right to purchase the property and the property was only deeded to the debtor briefly the same day, which transfer was not to satisfy an antecedent debt, thus, no fraudulent transfer occurred. Truelove v. Buckley, 318 Ga. App. 207 , 733 S.E.2d 499 (2012).

Summary judgment was inappropriate as to a lender's claims under Georgia's Uniform Fraudulent Transfers Act (now Uniform Voidable Transactions Act), O.C.G.A. § 18-2-70 et seq., because the evidence was not undisputed, particularly given the evidence of the guarantor's optimistic efforts to secure additional investors and shore up the financials of the guarantor's businesses during the same approximate time frame. Nissan Motor Acceptance Corp. v. Sowega Motors, Inc., F. Supp. 2d (M.D. Ga. Sept. 11, 2012).

Trustee's avoidance action alleging fraudulent conveyance could not be resolved on summary judgment because genuine issue of material fact existed with respect to the debtor's insolvency. Kelley v. Speciale (In re Gregg), Bankr. (Bankr. M.D. Ga. July 2, 2013).

Dispute over law firm's fees payable by debtor. - In a complaint seeking to recover pre-petition transfers made by a Chapter 11 debtor to a law firm, the law firm's motion for summary judgment was denied as there was a genuine dispute of material fact regarding whether the debtor failed to receive reasonably equivalent value for the transfers as required by either 11 U.S.C. § 548(a)(1)(B)(I) or O.C.G.A. § 18-2-75(a) . The law firm contended that the firm's invoices demonstrated that the firm provided substantial legal services to the debtor in exchange for the payments the firm received, while the debtor's responsible officer contended that the descriptions of work in the invoices were too vague and cursory to evaluate whether the services constituted reasonably equivalent value. Davis v. McDermott Will & Emery LLP (In re Tom's Foods, Inc.), Bankr. (Bankr. M.D. Ga. Oct. 20, 2010).

Obligation and payments thereon evaluated separately. - In a fraudulent conveyance action, the need to evaluate a debt separately from the payments thereon was evidenced by 11 U.S.C. § 548 and O.C.G.A. § 18-2-75(a) , which permitted the obligation and the payments to be avoided separately or together. Watts v. Peachtree Tech. Partners, LLC (In re Palisades at West Paces Imaging Ctr., LLC), Bankr. (Bankr. N.D. Ga. Sept. 13, 2011).

Bankruptcy trustee failed to allege that payments to a creditor were avoidable as fraudulent since the bankruptcy debtor incurred the obligation upon execution of an agreement which occurred outside the look-back period for avoiding fraudulent transfers. Gordon v. Harrison (In re Alpha Protective Servs.), 531 Bankr. 889 (Bankr. M.D. Ga. 2015).

Fraudulent transfer shown. - One million three hundred forty thousand dollars ($1,340,000) in payments made by the debtor to an insider, allegedly for a construction management fee, were avoidable because there was no evidence to support any reasonably equivalent value in excess of the $175,000 contract price since there was no evidence as to what the "extras" were, the cost of the "extras", or even a contractual basis for the extra charges. Watts v. MTC Dev., LLC (In re Palisades at W. Paces Imaging Ctr., LLC), 501 Bankr. 896 (Bankr. N.D. Ga. 2013).

Payments made by Chapter 7 debtor to an insider, allegedly for a construction management fee, were avoidable as a transfer made to an insider for an antecedent debt because the insider had reasonable cause to believe the debtor was insolvent at the time the payments were made, and, even under the insider's version of the facts, the payments were for antecedent debt. Watts v. MTC Dev., LLC (In re Palisades at W. Paces Imaging Ctr., LLC), 501 Bankr. 896 (Bankr. N.D. Ga. 2013).

Checks payable from a Chapter 7 debtor that were deposited in an insider's account were avoidable because there was no evidence that the debtor, which was insolvent at the time of the transfers, received any value as a result of the checks, nor any evidence that the insider used the funds to pay any valid expenses of the debtor. Watts v. MTC Dev., LLC (In re Palisades at W. Paces Imaging Ctr., LLC), 501 Bankr. 896 (Bankr. N.D. Ga. 2013).

Checks payable from a Chapter 7 debtor that were deposited in an insider's account were avoidable because the checks were on account of antecedent debt. Watts v. MTC Dev., LLC (In re Palisades at W. Paces Imaging Ctr., LLC), 501 Bankr. 896 (Bankr. N.D. Ga. 2013).

Although transfers by a Chapter 7 debtor to insiders could not be avoided because the debtor received reasonably equivalent value, the transfers were nonetheless avoidable because they were made on account of antecedent debt at a time when the debtor was insolvent. Watts v. MTC Dev., LLC (In re Palisades at W. Paces Imaging Ctr., LLC), 501 Bankr. 896 (Bankr. N.D. Ga. 2013).

Actual fraud was adequately pled by alleging badges of fraud sufficient to infer the fraudulent nature of transfers to insiders; moreover, insolvency resulting in constructive fraud also was adequately pled. Ralls Corp. v. Huerfano River Wind, LLC, 27 F. Supp. 3d 1303 (N.D. Ga. 2014).

18-2-76. When transfer made.

For the purposes of this article:

  1. A transfer is made:
    1. With respect to an asset that is real property other than a fixture, but including the interest of a seller or purchaser under a contract for the sale of the asset, when the transfer is so far perfected that a good faith purchaser of the asset from the debtor against whom applicable law permits the transfer to be perfected cannot acquire an interest in the asset that is superior to the interest of the transferee; and
    2. With respect to an asset that is not real property or that is a fixture, when the transfer is so far perfected that a creditor on a simple contract cannot acquire a judicial lien otherwise than under this article that is superior to the interest of the transferee;
  2. If applicable law permits the transfer to be perfected as provided in paragraph (1) of this Code section and the transfer is not so perfected before the commencement of an action for relief under this article, the transfer is deemed made immediately before the commencement of the action;
  3. If applicable law does not permit the transfer to be perfected as provided in paragraph (1) of this Code section, the transfer is made when it becomes effective between the debtor and the transferee;
  4. A transfer is not made until the debtor has acquired rights in the asset transferred; and
  5. An obligation is incurred:
    1. If oral, when it becomes effective between the parties; or
    2. If evidenced by a record, when the record signed by the obligor is delivered to or for the benefit of the obligee. (Code 1981, § 18-2-76 , enacted by Ga. L. 2002, p. 141, § 3; Ga. L. 2015, p. 996, § 4A-1/SB 65.)

JUDICIAL DECISIONS

Accrual of action for fraudulent conveyance. - In determining when a cause of action accrued for purposes of O.C.G.A. § 9-3-32 , it was necessary to ascertain the time when the plaintiff could first have maintained the plaintiff's action to a successful result. The relevant date for determining the statute of limitations on a fraudulent conveyance claim, pursuant to O.C.G.A. §§ 18-2-74 , 18-2-75 , and 18-2-76 , was the date that the debtor incurred the obligation to make the transfer. Kipperman v. Onex Corp., 411 Bankr. 805 (N.D. Ga. 2009).

18-2-77. Relief for creditor against fraudulent transfer or obligation.

  1. In an action for relief against a transfer or obligation under this article, a creditor, subject to the limitations in Code Section 18-2-78, may obtain:
    1. Avoidance of the transfer or obligation to the extent necessary to satisfy the creditor's claim;
    2. An attachment or other provisional remedy against the asset transferred or other property of the transferee in accordance with the procedure prescribed by Chapter 3 of this title; and
    3. Subject to applicable principles of equity and in accordance with applicable rules of civil procedure:
      1. An injunction against further disposition by the debtor or a transferee, or both, of the asset transferred or of other property;
      2. Appointment of a receiver to take charge of the asset transferred or of other property of the transferee; or
      3. Any other relief the circumstances may require.
  2. If a creditor has obtained a judgment on a claim against the debtor, the creditor, if the court so orders, may levy execution on the asset transferred or its proceeds. (Code 1981, § 18-2-77 , enacted by Ga. L. 2002, p. 141, § 3; Ga. L. 2015, p. 996, § 4A-1/SB 65.)

JUDICIAL DECISIONS

Pleadings adequate for fraud. - Actual fraud was adequately pled by alleging badges of fraud sufficient to infer the fraudulent nature of transfers to insiders; moreover, insolvency resulting in constructive fraud also was adequately pled. Ralls Corp. v. Huerfano River Wind, LLC, 27 F. Supp. 3d 1303 (N.D. Ga. 2014).

Claims survived motion to dismiss. - When an investor asserted fraudulent transfer and related claims against accounts in the names of the former wife and widow of a consultant who allegedly defrauded the investor, the claims survived a motion to dismiss because the investor: (1) stated viable claims; (2) did not have to anticipate affirmative defenses; and (3) did not admit such defenses. Speedway Motorsports, Inc. v. Pinnacle Bank, 315 Ga. App. 320 , 727 S.E.2d 151 (2012).

Transfer prior to death. - Although the transfer of a house was accompanied by some badges of fraud, the trial court abused the court's discretion in enjoining further disposition of the house, pending adjudication of the merits of wrongful death and fraudulent transfer claims since the transferor gave the house to the transferor's three minor grandchildren in Florida three months before the transferor murdered the decedent. Bishop v. Patton, 288 Ga. 600 , 706 S.E.2d 634 , overruled on other grounds by SRB Inv. Servs., LLLP v. Branch Banking & Trust Co., 289 Ga. 1 , 709 S.E.2d 267 (2011).

Evidence was sufficient to sustain the jury's verdict under the plaintiff'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).

Suit against non-transferees of property barred. - Judgment creditor could seek relief under the Uniform Fraudulent Transfers Act (now Uniform Voidable Transactions Act), O.C.G.A. § 18-2-70 et seq., against the judgment debtor, as well as any recipient of the transfers the debtor made, O.C.G.A. §§ 18-2-77 and 18-2-78 , but the creditor could not pursue the judgment debtor's mother and sister or their corporation because they did not receive any interest in the properties from the judgment debtor. RES-GA YPL, LLC v. Rowland, 340 Ga. App. 713 , 798 S.E.2d 315 (2017).

Interlocutory injunction proper. - Trial court did not abuse the court's discretion in entering an interlocutory injunction to preserve the status quo pending adjudication of the merits of the creditor's action against the debtors alleging breach of contract and fraudulent transfers in violation of the Georgia Uniform Fraudulent Transfers Act (UFTA), O.C.G.A. § 18-2-70 et seq., because at least seven statutory badges of fraud listed in the UFTA (now Uniform Voidable Transactions Act), O.C.G.A. § 18-2-74(b) , were implicated, and the creditor also presented evidence as a non-statutory badge of fraud of the debtors' pattern of maintaining just enough funds in certain accounts to satisfy the debtors' financial covenants at the end of each quarter and then transferring the funds away shortly thereafter; under the UFTA, O.C.G.A. § 18-22-77(a)(3)(A), the trial court was authorized to enter an interlocutory injunction against further disposition by the debtor or a transferee, or both, of the asset transferred or of other property. SRB Inv. Servs., LLLP v. Branch Banking & Trust Co., 289 Ga. 1 , 709 S.E.2d 267 (2011).

RESEARCH REFERENCES

Am. Jur. 2d. - 37 Am. Jur. 2d, Fraudulent Conveyances and Transfers, § 90 et seq.

C.J.S. - 37 C.J.S., Fraudulent Conveyances, § 150 et seq.

18-2-78. Conditions for voidability of transfer or obligation; judgment.

  1. A transfer or obligation is not voidable under paragraph (1) of subsection (a) of Code Section 18-2-74 against a person who took in good faith and for a reasonably equivalent value or against any subsequent transferee or obligee.
  2. To the extent a transfer is avoidable in an action by a creditor under paragraph (1) of subsection (a) of Code Section 18-2-77, the following rules apply:
    1. Except as otherwise provided in this Code section, the creditor may recover judgment for the value of the asset transferred, as adjusted under subsection (c) of this Code section, or the amount necessary to satisfy the creditor's claim, whichever is less. The judgment may be entered against:
      1. The first transferee of the asset or the person for whose benefit the transfer was made; or
      2. An immediate or mediate transferee of the first transferee, other than:
        1. A good faith transferee who took for value; or
        2. An immediate or mediate good faith transferee of a person described in division (i) of this subparagraph.
    2. Recovery pursuant to paragraph (1) of subsection (a) or subsection (b) of Code Section 18-2-77 of or from the asset transferred or its proceeds, by levy or otherwise, is available only against a person described in paragraph (1) of this subsection.
  3. If the judgment under subsection (b) of this Code section is based upon the value of the asset transferred, the judgment must be for an amount equal to the value of the asset at the time of the transfer, subject to adjustment as the equities may require.
  4. Notwithstanding voidability of a transfer or an obligation under this article, a good faith transferee or obligee is entitled, to the extent of the value given the debtor for the transfer or obligation, to:
    1. A lien on or a right to retain any interest in the asset transferred;
    2. Enforcement of any obligation incurred; or
    3. A reduction in the amount of the liability on the judgment.
  5. A transfer is not voidable under paragraph (2) of subsection (a) of Code Section 18-2-74 or Code Section 18-2-75 if the transfer results from:
    1. Termination of a lease upon default by the debtor when the termination is pursuant to the lease and applicable law; or
    2. Enforcement of a security interest in compliance with Article 9 of the Uniform Commercial Code, other than acceptance of collateral in full or partial satisfaction of the obligation it secures.
  6. A transfer is not voidable under subsection (b) of Code Section 18-2-75:
    1. To the extent the insider gave new value to or for the benefit of the debtor after the transfer was made unless the new value was secured by a valid lien;
    2. If made in the ordinary course of business or financial affairs of the debtor and the insider; or
    3. If made pursuant to a good faith effort to rehabilitate the debtor and the transfer secured the present value given for that purpose as well as an antecedent debt of the debtor.
  7. The following rules determine the burden of proving matters referred to in this Code section:
    1. A party that seeks to invoke subsection (a), (d), (e), or (f) of this Code section has the burden of proving the applicability of that subsection;
    2. Except as otherwise provided in paragraphs (3) and (4) of this subsection, the creditor has the burden of proving each applicable element of subsection (b) or (c) of this Code section;
    3. The transferee has the burden of proving the applicability to the transferee of subparagraph (b) (1) (B) of this Code section; and
    4. A party that seeks adjustment under subsection (c) of this Code section has the burden of proving the adjustment.
  8. The standard of proof required to establish matters referred to in this Code section is preponderance of the evidence. (Code 1981, § 18-2-78 , enacted by Ga. L. 2002, p. 141, § 3; Ga. L. 2015, p. 996, § 4A-1/SB 65.)

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

Effect of sale to person without notice of equity, § 23-1-19 .

JUDICIAL DECISIONS

Editor's notes. - In light of the similarity of the statutory provisions, decisions under former Code 1933, § 28-202 and former § 18-2-23 are included in the annotations for this Code section.

Basis of right to set aside fraudulent transfers. - Former Code 1933, §§ 28-101, 28-102, 28-201 and 28-202 provided creditors with a right to set aside fraudulent transfers, and this remedy was available to any creditor at time of transfer who thereafter reduced their claim to a judgment lien. United States v. Hickox, 356 F.2d 969 (5th Cir. 1966) (decided under former Code 1933, § 28-202).

Construction in pari materia with other statutes. - Former Civil Code 1910, §§ 3224 and 3225, being in pari materia, were to be construed together. Warren v. Citizens Nat'l Bank, 145 Ga. 503 , 89 S.E. 520 (1916) (decided under former Civil Code 1910, § 3225).

Fraudulent conveyance statute, former §§ 18-2-22 and 18-2-23 should be considered in pari materia. FDIC v. United States, 654 F. Supp. 794 (N.D. Ga. 1986) (decided under former § 18-2-23 ).

One induced to sell goods to a bankrupt by fraud cannot reclaim from trustee. In re Whatley Bros., 199 F. 326 (N.D. Ga. 1912) (decided under former Civil Code 1910, § 3225).

Impoundment of unpaid purchase money from sale. - If the fraudulent grantee sells to an innocent purchaser, any unpaid purchase money due on such sale will be impounded as an equitable asset of the debtor for the distribution to the debtor's creditors. Beasley v. Smith, 144 Ga. 377 , 87 S.E. 293 (1915) (decided under former Civil Code 1910, § 3225).

Suspicion alone insufficient. - Contrary to the trial court's conclusion, reasonable grounds for suspicion alone do not suffice to render a subsequent purchaser's title void, and when the buyer acquired the automobile for value, and had no notice that the seller's title was obtained through fraud, the buyer received good title. Hall v. Hidy, 263 Ga. 422 , 435 S.E.2d 215 (1993) (decided under former § 18-2-23 ).

Charge that grounds to suspect fraud in grantor's acquisition vitiates conveyance. - It was error to charge that purchaser from one who is fraudulent grantee takes no title as against creditors if the individual has grounds to reasonably suspect fraud in conveyance to the grantor. Hinkle v. James Smith & Son, 133 Ga. 255 , 65 S.E. 427 (1909) (decided under former Civil Code 1895, § 2695).

Protection of trustee and contingent beneficiary. - When it was clearly evident that both the trustee and the contingent beneficiary of a trust had reasonable grounds to suspect that the purpose of the second security deed against certain property and the assignment thereof to the trust, at least in part, was done with the intent of the assignor to delay or defraud creditors in violation of former § 18-2-22(2), neither the trustee nor the beneficiary was a subsequent purchaser entitled to the protections of former § 18-2-23 . FDIC v. United States, 654 F. Supp. 794 (N.D. Ga. 1986) (decided under former § 18-2-23 ).

Reasonably equivalent value. - Bankruptcy court rejected a Chapter 11 trustee's argument that investors who received payments from affiliated businesses that were accused of operating a Ponzi scheme did not give value for the payments and could not assert a defense under 11 U.S.C. § 548(c) or Georgia law against the trustee's action seeking recovery of those payments under 11 U.S.C. §§ 544(b) and 548(a)(1)(A) and (a)(1)(B), and Georgia law, as fraudulent transfers. The investors had a claim for the return of principal the investors invested, based on fraud, the investors gave value for payments the investors received up to the amount of the principal the investors invested because the payments satisfied their claim, and their right to keep the payments did not depend on whether the investments the investors made were characterized as debt or equity. In re Int'l Mgmt. Assocs., LLC, Bankr. (Bankr. N.D. Ga. Dec. 1, 2009), aff'd, 661 F.3d 623 (11th Cir. 2011)(Unpublished).

When an investor asserted a fraudulent transfer claim against a bank to which a consultant who allegedly defrauded the investor made a down payment on a house, it was error to dismiss the claim based on the bank's assertion that the bank, under O.C.G.A. § 18-2-74(a)(1), took the consultant's funds in good faith and for a reasonably equivalent value because: (1) the investor's complaint did not admit or otherwise demonstrate such an affirmative defense; and (2) the investor had no obligation to anticipate the affirmative defense. Speedway Motorsports, Inc. v. Pinnacle Bank, 315 Ga. App. 320 , 727 S.E.2d 151 (2012).

Transfers were avoidable. - There was no showing of transferees' good faith in fraudulent transfers from bankruptcy debtors since the lack of information from the debtors, the refusal of the debtors to allow transferees to conduct due diligence, and the usurious interest paid by the debtors clearly indicated that the transactions were fraudulent; thus, the transfers from bankruptcy debtors were avoidable. Kerr v. Audio Answers, Inc. (In re Christou), Bankr. (Bankr. N.D. Ga. Sept. 28, 2009).

Damages available. - Georgia law allowing the recovery of general and punitive damages for fraudulent conveyances survived the enactment of Georgia's Uniform Fraudulent Transfers Act, O.C.G.A. § 18-2-70 et seq. Interfinancial Midtown, Inc. v. Choate Constr. Co., 343 Ga. App. 793 , 806 S.E.2d 255 (2017).

Suit against non-transferees of property barred. - Judgment creditor could seek relief under the Uniform Fraudulent Transfers Act (now Uniform Voidable Transactions Act), O.C.G.A. § 18-2-70 et seq., against the judgment debtor, as well as any recipient of the transfers the debtor made, O.C.G.A. §§ 18-2-77 and 18-2-78 , but the creditor could not pursue the judgment debtor's mother and sister or their corporation because they did not receive any interest in the properties from the judgment debtor. RES-GA YPL, LLC v. Rowland, 340 Ga. App. 713 , 798 S.E.2d 315 (2017).

Summary judgment improper. - Based on evidence of the sale of judgment debtors' business to their long-time close friends and evidence that the friends were aware that the business owed money, a genuine issue of material fact remained as to whether the debtors transferred their assets with actual intent to hinder, delay, or defraud their creditor under O.C.G.A. § 18-2-74(a)(1). Therefore, the trial court's grant of summary judgment was reversed. Abbott Oil Co. v. Rogers, 302 Ga. App. 439 , 691 S.E.2d 561 (2010), cert. denied, No. S10C1026, 2010 Ga. LEXIS 583 (Ga. 2010).

Creditor failed to show good faith under O.C.G.A. § 18-2-78 in receiving fraudulent transfers from a bankruptcy debtor as returns on the creditor's investments in the debtor's Ponzi scheme, and thus the creditor was not entitled to summary judgment; the creditor was an educated and sophisticated businessman and, despite the creditor's assertion that the creditor had no reason to doubt the debtor who previously brokered mortgages for the creditor, the facts that the creditor invested substantial funds, received no promissory notes, and was paid no interest were sufficient to indicate that the creditor should have been suspicious of the nature of the transactions. In re Christou v. Cressaty Metals, Inc., Bankr. (Bankr. N.D. Ga. Sept. 23, 2010).

O.C.G.A. § 18-2-78(e) was inapplicable to the transfer. The transfer occurred as part of the Settlement Agreement after the transferee sued the debtor and, as such, the transferee did not enforce a security interest in compliance with Article 9 of the Uniform Commercial Code; moreover, there was not a segregated, discrete fund in which the transferee could have exercised the transferee's security interest. Perkins v. Crown Fin., LLC (In re Int'l Mgmt. Assocs., LLC), Bankr. (Bankr. N.D. Ga. Feb. 9, 2016)(Unpublished).

Cited in Dime Savs. Bank v. Sandy Springs Assocs., 261 Ga. 485 , 405 S.E.2d 491 (1991).

RESEARCH REFERENCES

Am. Jur. 2d. - 37 Am. Jur. 2d, Fraudulent Conveyances and Transfers, § 92.

C.J.S. - 37 C.J.S., Fraudulent Conveyances, § 144.

ALR. - Right of grantee or transferee to be reimbursed for expenditures in payment of taxes or encumbrances on property where conveyance or transfer is in fraud of creditors, 8 A.L.R. 527 .

Delivery of key as satisfying condition of immediate delivery and actual or continued change of possession to uphold sale of personal property against subsequent purchaser or third persons generally, 56 A.L.R. 518 .

Persons asserting claim on theory of agency or trust as within term "creditors" in statutes relating to proof of claims against insolvent bank, 89 A.L.R. 383 .

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 .

Rule denying relief to one who conveyed his property to defraud his creditors as applicable where the threatened claim which occasioned the conveyance was never established, 21 A.L.R.2d 589; 6 A.L.R.4th 862.

Right of creditors to attack as fraudulent a conveyance by third person to debtor's spouse, 35 A.L.R.2d 8.

Right of secured creditor to have set aside fraudulent transfer of other property by his debtor, 8 A.L.R.4th 1123.

18-2-79. Time for commencement of action.

A cause of action with respect to a fraudulent transfer or obligation under this article is extinguished unless action is brought:

  1. Under paragraph (1) of subsection (a) of Code Section 18-2-74, within four years after the transfer was made or the obligation was incurred or, if later, within one year after the transfer or obligation was or could reasonably have been discovered by the claimant;
  2. Under paragraph (2) of subsection (a) of Code Section 18-2-74 or subsection (a) of Code Section 18-2-75, within four years after the transfer was made or the obligation was incurred; or
  3. Under subsection (b) of Code Section 18-2-75 , within one year after the transfer was made or the obligation was incurred. (Code 1981, § 18-2-79 , enacted by Ga. L. 2002, p. 141, § 3; Ga. L. 2015, p. 996, § 4A-1/SB 65.)

JUDICIAL DECISIONS

Editor's notes. - In light of the similarity of the statutory provisions, decisions under former § 18-2-22 are included in the annotations for this Code section.

Limitations on actions. - U.S. Bankruptcy Court determined appropriate limitations periods for claims for alleged fraudulent conveyances of real property (seven years) and personal property (four years) by analogy to adverse possession and conversion, respectively, in the absence of an express limitations period in former O.C.G.A. § 18-2-22 . Broadfoot v. Hunerwadel (In re Dulock), 282 Bankr. 54 (Bankr. N.D. Ga. 2002) (decided under former O.C.G.A. § 18-2-22 ).

Trial court improperly granted summary judgment to judgment debtors on a judgment creditor's claim under O.C.G.A. § 14-8-28 upon finding that the limitations period under O.C.G.A. § 18-2-79 barred the claim as there was no legal basis to conclude that the limitation period in § 18-2-79 was applicable to the creditor's claim. Morris v. Nexus Real Estate Mortg. & Inv. Co., 296 Ga. App. 477 , 675 S.E.2d 511 (2009).

Chapter 7 trustee was not barred by the statute of limitations under O.C.G.A. § 18-2-79 or under 11 U.S.C. § 546 from pursuing a cause of action under 11 U.S.C. § 544 because the debtor filed the debtor's petition before the state statute of limitations expired, but was barred from pursuing avoidance under 11 U.S.C. § 548 of any transfer occurring prior to two years before the petition was filed. Watts v. Peachtree Tech. Partners, LLC (In re Palisades at West Paces Imaging Ctr., LLC), Bankr. (Bankr. N.D. Ga. Sept. 13, 2011).

As an administrator's fraudulent conveyance claims were time-barred under O.C.G.A. §§ 18-2-74(a)(1) and 18-2-79(1) , a limited liability company's (LLC) failure to respond to the administrator's requests for admissions was of no consequence and the trial court's denial of summary judgment to the LLC was improper. Huggins v. Powell, 315 Ga. App. 599 , 726 S.E.2d 730 (2012).

Administrator's fraudulent conveyance claims against group one were time-barred under O.C.G.A. §§ 18-2- 74(a)(1) and 18-2-79(1) , even though the claim was not time-barred under the limitations period in effect when the claim accrued, as application of § 18-2-79 , a procedural law in effect at the time the suit was filed, did not violate the constitutional prohibition against retroactive laws under Ga. Const. 1983, Art. I, Sec. I, Para. X; the administrator also failed to avail the administrator of the one-year statute of limitation effective upon discovery of the alleged fraud. Huggins v. Powell, 315 Ga. App. 599 , 726 S.E.2d 730 (2012).

Even though the four-year statute of limitations under the Georgia Uniform Fraudulent Transfer Act (now Uniform Voidable Transactions Act), O.C.G.A. § 18-2-70 et seq., had not expired, a Chapter 7 trustee's avoidance action, which was brought pursuant to a Bankruptcy Code provision allowing the trustee to step into the shoes of an unsecured creditor, was barred by the two-year limitations period in the Bankruptcy Code. Nor was the statute tolled by a Bankruptcy Code provision dealing with extensions of time as the trustee's fraudulent transfer action was brought standing in the shoes of a creditor, not the debtor. Boudreaux v. Hall Oil Co. (In re Pope Logging, Inc.), Bankr. (Bankr. S.D. Ga. Sept. 17, 2015).

In a transfer avoidance action under 11 U.S.C. § 544(b)(1), the complaint alleged sufficient facts to raise questions of fact regarding whether the statute of limitations barred the trustee's claim as it was plausible that the debtors concealed the transfers and the creditor did not learn of the transfers until years later. Lubin v. Markowitz (In re Markowitz), Bankr. (Bankr. N.D. Ga. Mar. 22, 2017).

Action to set aside fraudulent transfer timely filed. - Fraudulent transfer occurred on the date the deed was recorded, even though the deed was signed nearly 18 months earlier, and the creditor timely filed the creditor's complaint and action to set aside the fraudulent transfer approximately six months before the four-year statute of limitation would have run. Kent v. A.O. White, Jr., Consulting Eng'r, Inc., 279 Ga. App. 563 , 631 S.E.2d 782 (2006).

Fraudulent transfer claim was time-barred. - Former director's putative transferee met the transferee's burden for summary judgment purposes of asserting that a fraudulent transfer claim was time-barred, but the creditor failed to point to specific evidence that gave rise to a triable issue with respect to whether the limitation period did not bar the claim. Am. Nat'l Holding Corp. v. EMM Credit, LLC, 323 Ga. App. 655 , 748 S.E.2d 683 (2013).

Fraudulent transfer claims alleging actual fraud survived summary judgment because fact issues existed as to when the fraudulent nature of the transfers was discovered, but some constructive fraud claims were untimely because no discovery rule applied. Am. Pegasus SPC v. Clear Skies Holding Co., LLC, F. Supp. 2d (N.D. Ga. Sept. 22, 2015).

Claim not subject to dismissal based on unrecorded deeds. - Judgment creditor's fraudulent transfer action was not shown to be barred by limitations because, even assuming that the reference to the year 2003 in unwitnessed and unrecorded deeds from the judgment debtor proved that the deeds were executed in 2003, those deeds could not prove the passing of title, and questions concerning the judgment creditor's diligence in discovering the alleged fraud were generally questions for a trier of fact. RES-GA YPL, LLC v. Rowland, 340 Ga. App. 713 , 798 S.E.2d 315 (2017).

Cited in Bishop v. Patton, 288 Ga. 600 , 706 S.E.2d 634 (2011); Fox v. Norfolk S. Corp., 342 Ga. App. 38 , 802 S.E.2d 319 (2017).

RESEARCH REFERENCES

Am. Jur. 2d. - 37 Am. Jur. 2d, Fraudulent Conveyances and Transfers, § 152 et seq.

C.J.S. - 37 C.J.S., Fraudulent Conveyances, § 123 et seq.

18-2-80. Venue.

  1. In this Code section, the following rules determine a debtor's location:
    1. A debtor who is an individual is located at the individual's principal residence;
    2. A debtor that is an organization and has only one place of business is located at its place of business; and
    3. A debtor that is an organization and has more than one place of business is located at its chief executive office.
  2. A cause of action in the nature of a claim for relief under this article is governed by the law of the jurisdiction in which the debtor is located when the transfer is made or the obligation is incurred. (Code 1981, § 18-2-80 , enacted by Ga. L. 2015, p. 996, § 4A-1/SB 65.)

RESEARCH REFERENCES

Am. Jur. 2d. - 37 Am. Jur. 2d, Fraudulent Conveyances and Transfers, § 126 et seq.

18-2-81. Series organization and determinations.

  1. As used in this Code section, the term:
    1. "Protected series" means an arrangement, however denominated, created by a series organization that, pursuant to the law under which the series organization is organized, has the characteristics set forth in paragraph (2) of this subsection.
    2. "Series organization" means an organization that, pursuant to the law under which it is organized, has the following characteristics:
      1. The organic record of the organization provides for creation by the organization of one or more protected series, however denominated, with respect to specified property of the organization, and for records to be maintained for each protected series that identify the property of or associated with the protected series;
      2. Debt incurred or existing with respect to the activities of, or property of or associated with, a particular protected series is enforceable against the property of or associated with the protected series only, and not against the property of or associated with the organization or other protected series of the organization; or
      3. Debt incurred or existing with respect to the activities or property of the organization is enforceable against the property of the organization only, and not against the property of or associated with a protected series of the organization.
  2. A series organization and each protected series of the organization is a separate person for purposes of this article, even if for other purposes a protected series is not a person separate from the organization or other protected series of the organization. (Code 1981, § 18-2-81 , enacted by Ga. L. 2015, p. 996, § 4A-1/SB 65.)

18-2-82. Applicability of principles of law and equity.

Unless displaced by the provisions of this article, the principles of law and equity, including the law merchant and the law relating to principal and agent, estoppel, laches, fraud, misrepresentation, duress, coercion, mistake, insolvency, or other validating or invalidating cause, supplement its provisions.

(Code 1981, § 18-2-80 , enacted by Ga. L. 2002, p. 141, § 3; Code 1981, § 18-2-82 , as redesignated by Ga. L. 2015, p. 996, § 4A-1/SB 65.)

JUDICIAL DECISIONS

Damages available. - Georgia law allowing the recovery of general and punitive damages for fraudulent conveyances survived the enactment of Georgia's Uniform Fraudulent Transfers Act, O.C.G.A. § 18-2-70 et seq. Interfinancial Midtown, Inc. v. Choate Constr. Co., 343 Ga. App. 793 , 806 S.E.2d 255 (2017).

Cited in Bishop v. Patton, 288 Ga. 600 , 706 S.E.2d 634 (2011).

RESEARCH REFERENCES

Am. Jur. 2d. - 37 Am. Jur. 2d, Fraudulent Conveyances and Transfers, § 152 et seq.

C.J.S. - 37 C.J.S., Fraudulent Conveyances, § 170 et seq.

18-2-83. Uniformity with laws of other states.

This article shall be applied and construed to effectuate its general purpose to make uniform the law with respect to the subject of this article among states enacting the "Uniform Voidable Transactions Act."

(Code 1981, § 18-2-83 , enacted by Ga. L. 2015, p. 996, § 4A-1/SB 65.)

18-2-84. Construction with federal provisions.

This article modifies, limits, and supersedes the federal Electronic Signatures in Global and National Commerce Act, 15 U.S.C. Section 7001, et seq., but shall not modify, limit, or supersede Section 101(c) of that act, 15 U.S.C. Section 7001(c), or authorize electronic delivery of any of the notices described in Section 103(b) of that act, 15 U.S.C. Section 7003(b).

(Code 1981, § 18-2-84 , enacted by Ga. L. 2015, p. 996, § 4A-1/SB 65.)

18-2-85. Transfers to charitable organizations; statute of limitations.

  1. As used in this Code section, the term:
    1. "Charitable organization" means an organization which has qualified as tax-exempt under Section 501(c) (3) of the federal Internal Revenue Code of 1986 and has been so qualified for not less than two years preceding any transfer pursuant to this Code section, other than a private foundation or family trust.
    2. "Private foundation" shall have the same meaning as set forth in 26 U.S.C. Section 509(a).
  2. A transfer made to a charitable organization shall be considered voidable only if it is established that a voidable transfer has occurred as described in Code Section 18-2-74 or 18-2-75, and such charitable organization had actual or constructive knowledge of the voidable nature of the transfer.
  3. The statute of limitations for a civil action with respect to a voidable transfer to a charitable organization under this Code section shall be within two years after such transfer was made. (Code 1981, § 18-2-81 , enacted by Ga. L. 2013, p. 1045, § 1/SB 105; Code 1981, § 18-2-85 , as redesignated by Ga. L. 2015, p. 996, § 4A-1/SB 65.)

CHAPTER 3 ATTACHMENT PROCEEDINGS

General Provisions.

Levy and Replevy of Property Generally.

Third-party Claims.

Judgment, Execution, and Levy.

Cross references. - Executions and judicial sales, T. 9, C. 13.

Attachment of goods covered by negotiable document of title, § 11-7-602 .

Issuance of writ of ne exeat to restrain person from leaving jurisdiction of state, § 23-3-20 et seq.

Jeopardy assessments by state revenue commissioner in situations where taxpayer gives evidence of intention to leave state, to remove property from state, or other actions to avoid collection of state tax, § 48-2-51 .

Attachment of property by state revenue commissioner, § 48-2-55 .

Law reviews. - For article critically analyzing the various elements constitutionally required for prejudgment seizure of a debtor's property, focusing on § 9-503 of the U.C.C., see 28 Mercer L. Rev. 665 (1977). For note discussing implications for other postjudgment collection devices of developments in postjudgment garnishment law in Georgia, see 12 Ga. L. Rev. 60 (1977). For note discussing constitutional issues affecting attachment procedures, see 12 Ga. L. Rev. 814 (1978).

JUDICIAL DECISIONS

For discussion of constitutionality of attachment proceeding prior to 1980 revision. - See Kitson v. Hawke, 231 Ga. 157 , 200 S.E.2d 703 (1973).

RESEARCH REFERENCES

Wrongful Attachment, 36 POF2d 149.

ALR. - Exemption from attachment or execution of property brought by nonresident witness or litigant who comes into state in connection with the litigation, 13 A.L.R. 368 .

Attachment in alienation of affections or criminal conversation case, 67 A.L.R.2d 527.

Necessity and sufficiency, in order to toll statute of limitations as to debt, of statement of amount of debt in acknowledgement or new promise to pay, 21 A.L.R.4th 1121.

Liquor license as subject to execution or attachment, 40 A.L.R.4th 927.

ARTICLE 1 GENERAL PROVISIONS

Law reviews. - For article surveying judicial developments in Georgia's trial practice and procedure laws, see 31 Mercer L. Rev. 249 (1979). For note discussing grounds and proceedings for attachment, see 12 Ga. L. Rev. 814 (1978).

JUDICIAL DECISIONS

Cited in Outlaw v. Premium Distrib. Co., 83 Ga. App. 198 , 63 S.E.2d 260 (1951).

RESEARCH REFERENCES

ALR. - Attachment for goods or money embezzled, stolen, or converted, 4 A.L.R. 832 .

What are "tools," "implements," "instruments," "utensils," or "apparatus" within the meaning of debtor's exemption laws, 9 A.L.R. 1020 ; 36 A.L.R. 669 ; 52 A.L.R. 826 .

Seat in chamber of commerce, board of trade, or stock exchange as subject of attachment, garnishment, or execution, 14 A.L.R. 284 .

Attachment or garnishment of goods covered by negotiable warehouse receipt, 40 A.L.R. 969 .

Right of state court, in enforcing rights under federal statute, to obtain jurisdiction by means not available in federal court, 42 A.L.R. 1236 .

Action based on statute as one in which attachment will lie, 51 A.L.R. 1386 .

What amounts to an attachment or levy within provision of the Uniform Conditional Sales Act avoiding reservation of title by unfiled contract, 54 A.L.R. 269 .

Validity and construction of statute requiring statement of account due one having special or limited interest in property seized under attachment or execution against another, 63 A.L.R. 575 .

What constitutes an action for recovery of money only within statute as to the character of actions in which attachment may issue, 76 A.L.R. 1446 .

Attachment or garnishment as interference with foreign or interstate commerce, 85 A.L.R. 1395 .

Action based on rescission of contract as one arising on contract, express or implied, within the meaning of attachment statute, 95 A.L.R. 1028 .

Local property of insolvent foreign corporation for which a liquidator or receiver has been appointed in another state as subject to sequestration or seizure under execution or attachment, 98 A.L.R. 351 .

Attachment or garnishment with respect to award (or judgment thereon) under Workmen's Compensation Act, 126 A.L.R. 150 .

Pledgor's interest as subject to attachment by pledgee for another debt, and effect of the attachment upon the pledge, 126 A.L.R. 188 .

Bankruptcy of debtor as affecting necessity of compliance with conditions precedent to enforcement of bond in attachment or other judicial proceeding, 130 A.L.R. 1162 .

Residence of partnership for purposes of statutes authorizing attachment or garnishment on ground of nonresidence, 9 A.L.R.2d 471.

What is an action for "debt" within attachment or garnishment statute, 12 A.L.R.2d 787.

Recovery of damages for mental anguish, distress, suffering, or the like, in action for wrongful attachment, garnishment, sequestration, or execution, 83 A.L.R.3d 598.

18-3-1. Grounds for attachment.

Attachments may issue when the debtor:

  1. Resides out of the state;
  2. Moves or is about to move his domicile outside the limits of the county;
  3. Absconds;
  4. Conceals himself;
  5. Resists legal arrest; or
  6. Is causing his property to be removed beyond the limits of the state.

    (Laws 1799, Cobb's 1851 Digest, p. 69; Ga. L. 1855-56, p. 25, § 1; Code 1863, § 3188; Code 1868, § 3199; Code 1873, § 3264; Code 1882, § 3264; Civil Code 1895, § 4510; Civil Code 1910, § 5055; Code 1933, § 8-101.)

Law reviews. - For note discussing notice and judicial supervision in postjudgment garnishment in Georgia, see 26 Emory L.J. 597 (1977). For comment on Reeves v. Motor Contract Co., 324 F. Supp. 1011 (N.D. Ga. 1971), see 23 Mercer L. Rev. 369 (1972).

JUDICIAL DECISIONS

ANALYSIS

General Consideration

Construction of attachment law. - Attachment proceedings were unknown at common law and are to be strictly construed, especially as to nonresident debtors. Mills v. Findlay, 14 Ga. 230 (1853).

Rights of out-of-state creditors. - In absence of statute or decision, the right to proceed by attachment is not limited to citizens or residents of the state, and "it is generally immaterial that the attaching creditor is a nonresident." Harmon v. Wiggins, 48 Ga. App. 469 , 172 S.E. 847 (1934).

Debtor removing property out of state. - Creditor's rights under paragraph (6) of former Civil Code 1910, § 5055 were not affected by the fact that the debtor has other property which might be subjected to the payment of the debtor's debts. Bush v. Dean, 17 Ga. App. 364 , 86 S.E. 1075 (1915).

Absent allegations of property in Georgia, there was no basis for the issuance of a writ of attachment, although the defendants resided outside of Georgia. Ralls Corp. v. Huerfano River Wind, LLC, 27 F. Supp. 3d 1303 (N.D. Ga. 2014).

Plaintiff in attachment must prove demand before taking a judgment against attached property, although declaration in attachment sets forth demand in orderly and distinct paragraphs, consecutively numbered. Walden v. Barwick, 72 Ga. App. 508 , 34 S.E.2d 551 (1945).

Remedy when in personam jurisdiction unavailable. - When no jurisdiction is obtained over the debtor's person, the remedy is a proceeding in rem, in that it proceeds against property in custody of court and the judgment binds such property only; but when jurisdiction of debtor's person is obtained, either by personal service or appearance, proceeding is ordinarily in personam, and a personal judgment is rendered without regard to the attachment. Harmon v. Wiggins, 48 Ga. App. 469 , 172 S.E. 847 (1934).

Applicability to corporate debtors. - Corporation is an artificial person, and provisions of former Code 1933, § 8-101 were applicable to corporate debtor as well as to individual debtors. Lawrence v. Lee's Dep't Store, 48 Ga. App. 271 , 172 S.E. 471 (1934).

Effect of codefendant. - Defendant in attachment can be garnished as to a codefendant's property or money in the codefendant's hands. Kibbler v. James, 75 Ga. App. 852 , 44 S.E.2d 910 (1947).

Applicability of § 18-3-4 . - Provisions of former Code 1933, § 8-104 (see now O.C.G.A. § 18-3-4 ) were applicable to attachments under former Code 1933, § 8-101 (see now O.C.G.A. § 18-3-1 ). Threlkeld v. Whitehead, 95 Ga. App. 378 , 98 S.E.2d 76 (1957).

Invocation of equitable remedies. - Declaration in attachment may invoke equitable remedies and relief under former Civil Code 1910, § 5406 (see now O.C.G.A. § 23-3-1 ). Coral Gables Corp. v. Hamilton, 168 Ga. 182 , 147 S.E. 494 (1929).

Cited in Levy v. Millman, 7 Ga. 167 (1849); Brown & Sanford v. McCluskey, 26 Ga. 577 (1858); Stowers v. Carter, 28 Ga. 351 (1859); Oliver v. Wilson, 29 Ga. 642 (1859); Irvin v. Howard, 37 Ga. 18 (1867); Mississippi Cent. R.R. Co. v. Plant, 58 Ga. 167 (1877); Brooks v. Hutchinson, 122 Ga. 838 , 50 S.E. 926 (1905); Forrester v. Forrester, 155 Ga. 722 , 118 S.E. 373 (1923); Dulion v. S.A. Lynch Enter. Fin. Corp., 53 F.2d 568 (5th Cir. 1931); Barnett v. Findley, 44 Ga. App. 610 , 162 S.E. 288 (1932); Gaston v. Jackson Nat'l Bank, 45 Ga. App. 106 , 163 S.E. 265 (1932); Isaac Silver & Bros. Co. v. Kalmon, 175 Ga. 244 , 165 S.E. 434 (1932); Pere Marquette Ry. v. Tifton Produce Co., 48 Ga. App. 286 , 172 S.E. 727 (1934); Grimmett v. Barnwell, 184 Ga. 461 , 192 S.E. 191 (1937); Lawrence v. Lawrence, 196 Ga. 204 , 26 S.E.2d 283 (1943); Irwin v. Griffin, 202 Ga. 456 , 43 S.E.2d 687 (1947); Smith v. R.F. Brodegaard & Co., 77 Ga. App. 661 , 49 S.E.2d 500 (1948); Tennessee-Virginia Constr. Co. v. Willingham, 115 Ga. App. 90 , 153 S.E.2d 627 (1967); Multiple Realty, Inc. v. Walker, 119 Ga. App. 393 , 167 S.E.2d 380 (1969); Reeves v. Motor Contract Co., 324 F. Supp. 1011 (N.D. Ga. 1971); Coursin v. Harper, 144 Ga. App. 4 , 240 S.E.2d 565 (1977); Johnson v. American Credit Co., 581 F.2d 526 (5th Cir. 1978); Renfro Corp. v. McLarty Indus., Inc., 2 Bankr. 68 (Bankr. N.D. Ga. 1979).

Nonresident Debtors

Effect of nature of money demand. - Attachment may issue when debtor resides out of state in all cases of money demands, whether arising ex contractu or ex delicto. Benefield v. Radiator Specialty Co., 116 Ga. App. 588 , 158 S.E.2d 423 (1967).

Fact of nonresidence. - Mere fact of nonresidence subjects one to attachment for one's debts under former Code 1873, § 3264. Charles v. Foster, 56 Ga. 612 (1876).

Fact of nonresidence subjects one to attachment, provided nonresidence is distinctly averred. DeLeon v. Heller, Hirsch & Co., 77 Ga. 740 (1886); Wilson v. Park View Sanitarium, 135 Ga. 471 , 69 S.E. 741 (1910).

Applicability of paragraph (2). - Paragraph (2) of former Code 1873, § 3264 was applicable to nonresident debtor passing through county with the debtor's goods. Johnson v. Lowry, 47 Ga. 560 , 15 Am. R. 655 (1873).

Paragraph (2) of former Civil Code 1855, § 4510 was applicable to member of partnership failing to pay that partner's share of debts in dissolution; thus, other partner may institute attachment proceeding. Tucker v. Murphey, 114 Ga. 662 , 40 S.E. 836 (1902).

Nonresident lessee of domestic corporation is subject to attachment. Breed v. Mitchell, 48 Ga. 533 (1873).

Proof under paragraph (2). - Acts and intentions of defendant at time of attachment under paragraph (2) of former Code 1863, § 3188 must be shown. Louis Stix & Co. v. S. Pump & Co., 36 Ga. 526 (1867); Nicols v. Ward, 27 Ga. App. 501 , 108 S.E. 832 (1921).

When intent to remove exists, chattel mortgage may be foreclosed prior to maturity. Perryman v. Pope, 102 Ga. 502 , 31 S.E. 37 (1897).

Recitation as to joint indebtedness in affidavit. - When both joint-debtors are nonresidents, affidavit of attachment need not recite that indebtedness is joint. Dobbs v. Justices of Inferior Court, 17 Ga. 624 (1855).

Attachment against nonresident, executed by levy. - In case of attachment against nonresident debtor executed by levy, jurisdiction of a court of this state attaches by virtue of the seizure of property of such nonresident, and when the officer executing the levy seizes certain property as property of such nonresident debtor, and so makes the debtor's return to the court, it acquires such jurisdiction as will enable the court to proceed to judgment subjecting the debtor's interest in the property to the payment of the debt. Harmon v. Wiggins, 48 Ga. App. 469 , 172 S.E. 847 (1934).

Only lien foreclosed in attachment against nonresident is that created by seizure of the property. Owens v. Atlanta Trust & Banking Co., 119 Ga. 924 , 47 S.E. 215 (1904).

Plaintiff without perfect right to sue cannot proceed in attachment against nonresident but must resort to equity. Tennessee Fertilizer Co. v. Hand, 147 Ga. 588 , 95 S.E. 81 (1918).

Removal of Domicile

When debtor is about to move beyond limits of county, attachment may issue against the debtor. Lawrence v. Lee's Dep't Store, 48 Ga. App. 271 , 172 S.E. 471 (1934).

Paragraph (2) referred to removal of domicile of debtor, and not merely removal of debtor property from county of debtor domicile. This ground differs from that set forth in paragraph (6) which contemplated removal of property "beyond the limits" of the state. United States Fid. & Guar. Co. v. Lawrence, 184 Ga. 83 , 190 S.E. 346 (1937).

Whether one is about to remove must be shown by acts and conduct. - Whether one is about to remove is a matter of intent, but it must be shown by acts and conduct. Patne v. Oliver, 96 Ga. App. 644 , 101 S.E.2d 154 (1957).

Defendants commencing removal pending bill in equity. - When, pending a bill in equity to collect indebtedness, defendants removed out of state and were proceeding to remove all of the defendants' property, attachment would lie in favor of the complainant. Epping v. Aiken, 71 Ga. 600 (1883).

Debtor's Concealment

Affidavit to obtain attachment against partnership, alleging that the partnership "conceal themselves" is sufficient. Guckenheimer & Son v. Day & Higgs, 74 Ga. 1 (1884).

Removal of Property

Executor de son tort, removing assets of deceased from county, is liable to be attached, and the assets levied on. Cox v. Felder, 36 Ga. 597 (1867).

Proof of removal under paragraph (6). - Fact that one was causing something to be done under paragraph (6) was more than a matter of intent and some overt preparatory act at least should be taken to carry burden of proving this fact. Patne v. Oliver, 96 Ga. App. 644 , 101 S.E.2d 154 (1957).

Burden of proving debtor removing "his property." - Sixth ground enumerated in O.C.G.A. § 18-3-1 requires a showing that the defendant "is causing his property" to be removed, which places the burden upon the plaintiff to show the alleged debtor was removing "his property." Trax, Inc. v. Pentagon Aero-Marine Corp., 162 Ga. App. 276 , 290 S.E.2d 196 (1982).

RESEARCH REFERENCES

2B Am. Jur. Pleading and Practice Forms, Attachment and Garnishment, § 91. 2C Am. Jur. Pleading and Practice Forms, Attachment and Garnishment, §§ 340, 494.

ALR. - What constitutes nonresidence for purpose of attachment, 26 A.L.R. 180 .

Action based on statute as one in which attachment will lie, 26 A.L.R. 563 ; 51 A.L.R. 1386 .

Right of creditor to attach bankrupt's exempt property after discharge in bankruptcy, 55 A.L.R. 303 .

Nature and extent of relief of successful intervenor or interpleader in attachment, 66 A.L.R. 908 .

Property of incompetent or infant under guardianship as subject of execution, attachment, or garnishment, 92 A.L.R. 919 .

Debtor's intent to defraud or delay creditors within contemplation of attachment statute as inferable as matter of law from fact that he has removed or is about to remove property from the state without making adequate provision for his creditors, 92 A.L.R. 966 .

Foreign corporation as a nonresident for purposes of attachment law of the state in which it is doing business or is domesticated, 114 A.L.R. 1378 .

Attachment as affected by release or modification of lien to which property was subject when attachment was levied, 128 A.L.R. 1392 .

Right of creditors to reach, by garnishment or other process, commissions of debtor, as executor, administrator, or trustee, 143 A.L.R. 190 .

Money or other property taken from prisoner as subject of attachment, garnishment, or seizure under execution, 154 A.L.R. 758 .

Foreign attachment or garnishment as available in action by nonresident against nonresident or foreign corporation upon a foreign cause of action, 14 A.L.R.2d 420.

Joint bank account as subject to attachment, garnishment, or execution by creditor of one joint depositor, 86 A.L.R.5th 527.

18-3-2. Right to seek attachment on money demands generally.

In all cases of money demands, whether arising ex contractu or ex delicto, the plaintiff shall have the right to seek attachment when the defendant places himself in such situation as will authorize a plaintiff to seek attachment.

(Ga. L. 1857, p. 23, § 1; Code 1863, § 3199; Code 1868, § 3210; Code 1873, § 3278; Code 1882, § 3278; Civil Code 1895, § 4524; Civil Code 1910, § 5069; Code 1933, § 8-102.)

JUDICIAL DECISIONS

Statute embraced all money demands, whether resting in tort or contract. Walker v. Zorn, 56 Ga. 35 (1876).

Attachment may issue when debtor resides out of state in all cases of money demands, whether arising ex contractu or ex delicto. Benefield v. Radiator Specialty Co., 116 Ga. App. 588 , 158 S.E.2d 423 (1967).

Extent of judgment creditor's lien. - Lien of judgment creditor is not a lien acquired by contract, but is given by law; consequently, a lienor is not in the position of a bona fide purchaser, and a lien extends only to property levied upon which actually belongs to the defendant in attachment. Parker v. Boyd, 208 Ga. 829 , 69 S.E.2d 760 (1952).

Attachment proper as to action for specific damages arising in tort. Graves v. Strozier, 37 Ga. 32 (1867).

Attachment proper regarding promise to pay debt with solvent notes. Monroe v. Bishop, 29 Ga. 159 (1859).

Attachment proper as to breach of promise of marriage. Morton v. Pearman, 28 Ga. 323 (1859).

Cited in McReynolds v. Colclough, 146 Ga. 696 , 92 S.E. 206 (1917); Grimmett v. Barnwell, 184 Ga. 461 , 192 S.E. 191 (1937); Tennessee-Virginia Constr. Co. v. Willingham, 115 Ga. App. 90 , 153 S.E.2d 627 (1967).

RESEARCH REFERENCES

ALR. - Replevin for bank account, 44 A.L.R. 1522 .

Attachment in libel and slander cases, 61 A.L.R. 1347 .

Action based on rescission of contract as one arising on contract express or implied within the meaning of attachment statute, 77 A.L.R. 748 ; 95 A.L.R. 1028 .

Judgment in tort action as subject of assignment, attachment, or garnishment pending appeal, 121 A.L.R. 420 .

Attachment statute as applicable to equity suits, 154 A.L.R. 95 .

18-3-3. Attachment prior to debt becoming due; stay of execution when debt not due before final judgment.

When the debt is not due, the debtor shall be subject to attachment in the same manner and to the same extent as in cases where the debt is due, except that, where the debt does not become due before final judgment, execution upon the judgment shall be stayed until the debt is due.

(Laws 1816, Cobb's 1851 Digest, p. 75; Code 1863, § 3197; Code 1868, § 3208; Code 1873, § 3275; Code 1882, § 3275; Civil Code 1895, § 4521; Civil Code 1910, § 5066; Code 1933, § 8-103.)

JUDICIAL DECISIONS

Attachment under Laws 1816, Cobb's 1851 Digest, p. 75 (see now O.C.G.A. § 18-3-3 ) must be by affidavit in the form required by Ga. L. 1855-56, p. 25, § 42 (see now O.C.G.A. § 18-3-19 ). Harrill v. Humphries, 26 Ga. 514 (1858).

Cited in Monroe v. Bishop, 29 Ga. 159 (1859); Askew v. Melvin, 144 Ga. 348 , 87 S.E. 278 (1915); Hensley v. Minehan, 29 Ga. App. 251 , 114 S.E. 647 (1922); Stevenson v. Allen, 94 Ga. App. 123 , 93 S.E.2d 794 (1956).

RESEARCH REFERENCES

ALR. - What amounts to a "debt" within statute providing for attachment before debt is due, 65 A.L.R. 1439 ; 58 A.L.R.2d 1451.

What sort of claim, obligation, or liability is within contemplation of statute providing for attachment, or giving right of action for indemnity, before a debt or liability is due, 58 A.L.R.2d 1451.

18-3-4. Attachment after action commenced; effect of judgment on pending action.

In all cases where the plaintiff has commenced an action for the recovery of a debt and the defendant, during the pendency of such action, shall become subject to attachment, the plaintiff may have an attachment against the defendant; and all the proceedings in relation to the same shall be as prescribed in relation to attachments where no action is pending. A satisfaction of the judgment in the common-law action shall satisfy the judgment in attachment, and a satisfaction of the judgment in attachment shall satisfy the judgment in the common-law action.

(Ga. L. 1855-56, p. 25, § 28; Code 1863, § 3201; Code 1868, § 3212; Code 1873, § 3280; Code 1882, § 3280; Civil Code 1895, § 4526; Civil Code 1910, § 5071; Code 1933, § 8-104.)

Law reviews. - For article discussing Sniadach v. Family Fin. Corp., 395 U.S. 337, 89 S. Ct. 1820 , 23 L. Ed. 2 d 349 (1969) in relation to former Georgia law on prejudgment garnishment, see 21 Mercer L. Rev. 495 (1970). For article discussing Georgia's long arm statute, prejudgment attachment and habeas corpus, with respect to judicial developments in practice and procedure in the fifth circuit, see 30 Mercer L. Rev. 925 (1979).

JUDICIAL DECISIONS

Suit in attachment is separate and distinct from a common law action; and failure to number and document them separately is error on part of clerk. Dollar v. Fred W. Amend Co., 184 Ga. 432 , 191 S.E. 696 (1937).

Former Code 1933, § 8-104 (see now O.C.G.A. § 18-3-4 ) was applicable to attachments under former Code 1933, § 8-101 (see now O.C.G.A. § 18-3-1 ). Threlkeld v. Whitehead, 95 Ga. App. 378 , 98 S.E.2d 76 (1957).

Pending action with bail in superior court, plaintiff may take out attachment on same demand returnable to inferior court. Wood v. Carter, 29 Ga. 580 (1859).

Filing of declaration claiming damages was commencement of action for purposes of former Code 1863, § 3201 (see now O.C.G.A. § 18-3-4 ), though the defendant was not yet served. Graves v. Strozier, 37 Ga. 32 (1867).

Effect upon pending action of payment of costs of attachment. - When attachment is sued out against the defendant in a pending common-law action, payment by the defendant to the sheriff of the principal, interest, and costs upon the attachment in order to relieve the defendant's property from seizure does not discharge the defendant from any additional liability to which the defendant might have been subject in the original action. Johnson & Son v. Friedman-Shelby Shoe Co., 15 Ga. App. 561 , 83 S.E. 969 (1914).

Cited in Heath v. Bates, 70 Ga. 633 (1883); Donaldson v. Tripod Paint Co., 43 Ga. App. 3 , 158 S.E. 640 (1931); Sheehan v. Ruben, 83 Ga. App. 336 , 63 S.E.2d 605 (1951); Crawford v. Sumerau, 101 Ga. App. 32 , 112 S.E.2d 682 (1960).

18-3-5. Attachment against administrator or executor; entry of final judgment.

Process of attachment may issue against an administrator of an estate or the executor of the last will and testament of any deceased person, as in other cases, when the administrator or executor actually removes or is about to remove the property of the deceased person outside the limits of any county, provided that final judgment shall not be entered against such administrator or executor until after the expiration of two years from the granting of letters of administration or letters testamentary, as the case may be.

(Ga. L. 1857, p. 24, § 1; Code 1863, § 3199; Code 1868, § 3210; Code 1873, § 3277; Code 1882, § 3277; Civil Code 1895, § 4523; Civil Code 1910, § 5068; Code 1933, § 8-105.)

Cross references. - Administrators and executors generally, T. 53, C. 6.

JUDICIAL DECISIONS

Nature of removal for which attachment authorized. - Former Code 1868, § 3210 did not authorize attachment on ground that the executor or administrator was personally removing, but rather on ground that the executor or administrator is actually removing or about to remove property of the estate. Holloway v. Chiles, 40 Ga. 346 (1869).

Twelve-month exemption from suit allowed executors and administrators does not prevent levy of attachment against property of estate in hands of administrator or executor. Hartley v. Hartley, 173 Ga. 710 , 161 S.E. 358 (1931).

Proviso that final judgment not be entered for two years from commencement of administration. - Proviso in former Civil Code 1910, § 5068 that final judgment shall not be entered until expiration of two years from granting of letters of administration serves as a quasi-injunction to restrain administration of property upon which attachment has been levied until determination of issues which may be raised in attachment case. Hartley v. Hartley, 173 Ga. 710 , 161 S.E. 358 (1931).

Judgment in attachment will not raise priority of debt owed creditor of intestate in proceeding to marshal assets. Wooten v. Hartley, 186 Ga. 639 , 198 S.E. 750 (1838).

Cited in Ross v. Edwards, 52 Ga. 24 (1874).

RESEARCH REFERENCES

ALR. - Garnishment against executor or administrator by creditor of estate, 60 A.L.R.3d 1301.

18-3-6. Attachment against joint contractors or partners.

In cases of joint contractors and partners, where any one of them shall render himself liable to attachment according to law, an attachment may issue against him, upon the plaintiff, his agent, or his attorney at law complying with this article. The proceeding against such joint contractor or partner shall be in all respects as in other cases of attachment, except that such attachment shall be levied only upon the separate property of such joint contractor or partner.

(Ga. L. 1851-52, p. 19, § 1; Ga. L. 1855-56, p. 25, § 26; Code 1863, § 3198; Code 1868, § 3209; Code 1873, § 3276; Code 1882, § 3276; Civil Code 1895, § 4522; Civil Code 1910, § 5067; Code 1933, § 8-106.)

JUDICIAL DECISIONS

Exception to rule that joint obligors are necessary parties. - Former Civil Code 1910, § 5067 provided an exception to rule that joint obligors are all necessary parties to suit on the obligation if within the jurisdiction of the court. Clark v. Maddox, 41 Ga. App. 807 , 154 S.E. 728 (1930).

In attachment against one member of partnership, the declaration need not be against all partners. Connon v. Dunlap, 64 Ga. 680 (1880).

Interest of one partner in partnership property was not subject to levy and sale under attachment; it could only be reached at law by process of garnishment. J.A. Holifield & Co. v. White, 52 Ga. 567 (1874) (decided prior to repeal of § 14-8-74 by Ga. L. 1984, p. 1439).

Partner as sole survivor and nonresident. - Attachment available against partner's interest in partnership when the partner is the only survivor and nonresident. Leroy M. Wiley & Co. v. Sledge, 8 Ga. 532 (1850).

Interest of tenants in common of a ship can be attached. Walter v. Kierstead, 74 Ga. 18 (1884).

Cited in Starr v. Mayer & Co., 60 Ga. 546 (1878); Shaw v. Goodman, 138 Ga. 567 , 75 S.E. 661 (1912).

RESEARCH REFERENCES

ALR. - Joint bank account as subject to attachment, garnishment, or execution by creditor of one of the joint depositors, 11 A.L.R.3d 1465.

18-3-7. Attachment against nonresident corporations.

Attachments may issue against nonresident corporations transacting business within the state under the same rules and regulations as are prescribed in relation to issuing attachments and garnishments in other cases.

(Ga. L. 1855-56, p. 25, § 33; Code 1863, § 3202; Code 1868, § 3213; Code 1873, § 3281; Code 1882, § 3281; Civil Code 1895, § 4527; Civil Code 1910, § 5072; Code 1933, § 8-108.)

JUDICIAL DECISIONS

This statute was cumulative and not restrictive of other attachment statutes; and nonresident corporation having property in this state is subject to attachment whether or not the corporation transacts business here. Pacific Selling Co. v. Albright-Prior Co., 3 Ga. App. 143 , 59 S.E. 468 (1907).

Construction of attachment law. - Attachment was unknown at common law, and should be strictly construed, especially as to nonresident debtors. Mitchell v. Union Bag & Paper Corp., 75 Ga. App. 15 , 42 S.E.2d 137 (1947).

Attachment against foreign corporation, also being sued in this state. - Fact that Georgia court may have personal jurisdiction over a corporation does not mean it is not subject also to attachment, for this statute was intended to authorize attachment against a foreign corporation, even though the corporation might be sued in Georgia. Image Mills, Inc. v. Vora, 146 Ga. App. 196 , 245 S.E.2d 882 (1978).

Whether doing business in this state or not, nonresident corporation is subject to attachment. Parramore v. Alexander, 132 Ga. 642 , 64 S.E. 660 (1909).

Affidavit alleging transaction of business in state. - Affidavit is sufficient which alleges the defendant, though not incorporated in this state, transacts business here. Parramore v. Alexander, 132 Ga. 642 , 64 S.E. 660 (1909).

Cited in Wilson v. Danforth, 47 Ga. 676 (1873); Selma, R. & D.R.R. v. Tyson, 48 Ga. 351 (1873); Mississippi Cent. R.R. Co. v. Plant, 58 Ga. 167 (1877); Schmidlapp & Co. v. La Confiance Ins. Co., 71 Ga. 246 (1883); Pacific Selling Co. v. Albright-Prior Co., 3 Ga. App. 143 , 59 S.E. 468 (1907); Louisiana State Rice Milling Co. v. Mente & Co., 173 Ga. 1 , 159 S.E. 497 (1931); Mitchell v. Union Bag & Paper Corp., 75 Ga. App. 15 , 42 S.E.2d 137 (1947).

RESEARCH REFERENCES

ALR. - Constitutionality of statute prescribing conditions of right of defendant in foreign attachment to appear and defend, 17 A.L.R. 884 .

Foreign corporation as a nonresident for purposes of attachment law of the state in which it is doing business or is domesticated, 114 A.L.R. 1378 .

Sufficiency of affidavit for attachment, respecting fraud or intent to defraud, as against objection that it is a mere legal conclusion, 8 A.L.R.2d 578.

Foreign attachment or garnishment as available in action by nonresident against nonresident or foreign corporation upon a foreign cause of action, 14 A.L.R.2d 420.

18-3-8. Right of surety or endorser upon an instrument of writing to attach property of principal.

  1. In all cases where a person is surety or endorser upon an instrument of writing and the principal shall become subject to attachment according to Code Section 18-3-1, such surety or endorser may, upon complying with this chapter, have attachment against his principal. The proceedings shall be in all respects the same as in other cases of attachment, and the money raised by the attachment shall be paid to the person holding the instrument of writing.
  2. If the surety or endorser has paid the debt, then the money raised upon the attachment or so much thereof as will pay the amount the surety or endorser has paid shall be paid to the surety or endorser.
  3. In case the debt is not due at the time judgment is rendered against the principal, execution shall be stayed until the debt is due.

    (Laws 1820, Cobb's 1851 Digest, p. 75; Laws 1842, Cobb's 1851 Digest, p. 88; Ga. L. 1855-56, p. 25, § 27; Code 1863, § 3200; Code 1868, § 3211; Code 1873, § 3279; Code 1882, § 3279; Civil Code 1895, § 4525; Civil Code 1910, § 5070; Code 1933, § 8-107.)

Cross references. - Suretyship generally, T. 10, C. 7.

JUDICIAL DECISIONS

Cited in Patne v. Oliver, 96 Ga. App. 644 , 101 S.E.2d 154 (1957).

RESEARCH REFERENCES

2C Am. Jur. Pleading and Practice Forms, Attachment and Garnishment, § 452.

ALR. - What sort of claim, obligation, or liability is within contemplation of statute providing for attachment, or giving right of action for indemnity, before a debt or liability is due, 58 A.L.R.2d 1451.

Funds in hands of his attorney as subject of attachment or garnishment by client's creditor, 35 A.L.R.3d 1094.

18-3-9. Application for issuance of writ of attachment prior to judgment; contents of application; procedure.

  1. When the plaintiff contends one or more of the grounds set forth in Code Section 18-3-1 exist, prior to obtaining judgment against the defendant, the plaintiff may make application to a judge of any court of record, other than the probate court, in the county of the residence of the defendant, if known, and, if not known, in the county wherein the property sought to be attached is located, for an order authorizing issuance of a writ of attachment. The application shall be made in writing, under oath, and shall set forth the specific facts that show the existence of one or more of such grounds, the basis and nature of the claim, and the amount of indebtedness claimed therein by the plaintiff.
  2. Upon presentation of plaintiff's sworn application for a writ of attachment, it shall be the duty of the judge to inquire into the facts alleged, going beyond mere conclusions of fact alleged by the plaintiff and clearly setting forth the facts entitling the creditor to a writ of attachment as set forth in Code Section 18-3-1. Upon consideration of the inquiry, the judge shall have the discretion to grant or deny the issuance of a writ of attachment. Any order by a judge granting the issuance of a writ of attachment shall be subject to approval of a bond by the clerk of the court, pursuant to Code Section 18-3-10, prior to filing of the writ of attachment.

    (Ga. L. 1855-56, p. 25, § 2; Code 1863, § 3189; Code 1868, § 3200; Code 1873, § 3265; Code 1882, § 3265; Ga. L. 1893, p. 117, § 1; Civil Code 1895, § 4511; Civil Code 1910, § 5056; Code 1933, § 8-109; Ga. L. 1968, p. 1013, § 1; Ga. L. 1980, p. 1065, § 1.)

JUDICIAL DECISIONS

No basis for writ of attachment. - Absent allegations of property in Georgia, there was no basis for the issuance of a writ of attachment since the defendants resided outside of Georgia. Ralls Corp. v. Huerfano River Wind, LLC, 27 F. Supp. 3d 1303 (N.D. Ga. 2014).

Cited in Kahn v. Herman, 3 Ga. 266 (1847); Deupree v. Eisenach, 9 Ga. 598 (1851); Dobbs v. Justices of Inferior Court, 17 Ga. 624 (1855); Holston Mfg. Co. v. Lea, 18 Ga. 647 (1855); Henderson v. Pittman, 20 Ga. 735 , 65 Am. Dec. 649 (1856); B.W. & J.P. Force & Co. v. Hubbard, 26 Ga. 289 (1858); Harrill v. Humphries, 26 Ga. 514 (1858); Brown & Sanford v. McCluskey, 26 Ga. 577 (1858); Cohen v. Manco, 28 Ga. 27 (1859); Stowers v. Carter, 28 Ga. 351 (1859); Brewer v. Ainsworth, 32 Ga. 487 (1861); Kennon & Klink v. Evans, Gardner & Co., 36 Ga. 89 (1867); Cox v. Felder, 36 Ga. 597 (1867); Irvin v. Howard, 37 Ga. 18 (1867); Wilkowski v. Halle, 37 Ga. 678 , 95 Am. Dec. 374 (1868); Mississippi Cent. R.R. Co. v. Plant, 58 Ga. 167 (1877); Guckenheimer & Son v. Day & Higgs, 74 Ga. 1 (1884); Krutina v. Culpepper, 75 Ga. 602 (1885); DeLeon v. Heller, Hirsch & Co., 77 Ga. 740 (1886); Jones v. Wylie, 82 Ga. 745 , 9 S.E. 614 (1889); Heard v. National Bank, 114 Ga. 291 , 40 S.E. 266 (1901); Levin v. American Furn. Co., 133 Ga. 670 , 66 S.E. 888 (1909); Silverman & Son v. Sloat & Bro., 11 Ga. App. 193 , 74 S.E. 938 (1912); Hensley v. Minehan, 29 Ga. App. 251 , 114 S.E. 647 (1922); Bennett v. Wheatley, 154 Ga. 591 , 115 S.E. 83 (1922); Friedman v. First Nat'l Bank, 31 Ga. App. 742 , 122 S.E. 81 (1924); West v. Gainesville Nat'l Bank, 32 Ga. App. 703 , 124 S.E. 733 (1924); Brach & Sons v. Oglesby Grocery Co., 33 Ga. App. 481 , 127 S.E. 157 (1925); Dulion v. S.A. Lynch Enter. Fin. Corp., 53 F.2d 568 (5th Cir. 1931); Harmon v. Wiggins, 48 Ga. App. 469 , 172 S.E. 847 (1934); Stalvey v. Varn Motors & Fin. Co., 56 Ga. App. 696 , 193 S.E. 627 (1937); Stone v. Atlantic Eng'r & Contracting Co., 95 Ga. App. 312 , 97 S.E.2d 709 (1957); Benefield v. Radiator Specialty Co., 116 Ga. App. 588 , 158 S.E.2d 423 (1967); Kazakos v. Soteres, 120 Ga. App. 258 , 170 S.E.2d 50 (1969); Jenkins v. Community Loan & Inv. Corp., 120 Ga. App. 543 , 171 S.E.2d 654 (1969); Reeves v. Motor Contract Co., 324 F. Supp. 1011 (N.D. Ga. 1971); Doran v. Home Mart Bldg. Centers, Inc., 233 Ga. 705 , 213 S.E.2d 825 (1975); Johnson v. American Credit Co., 581 F.2d 526 (5th Cir. 1978).

OPINIONS OF THE ATTORNEY GENERAL

Magistrate courts' power to order prejudgment attachment. - Because magistrate courts are not "courts of record" those courts may not order prejudgment attachment or garnishment. 1984 Op. Att'y Gen. No. U84-28.

RESEARCH REFERENCES

ALR. - Affidavits stating grounds of attachment on information and belief, 86 A.L.R. 588 .

18-3-10. Bond requirements generally.

No writ of attachment shall issue unless accompanied by a bond with good security, conditioned to pay the defendant all costs and damages that he may sustain in consequence of the issuance of the writ of attachment in the event that the amount claimed to be due was not due, that no lawful ground for issuance of the attachment existed, or that the property sought to be attached was not subject to attachment. The bond shall be in a sum equal to twice the amount claimed due in the plaintiff's application. The bond shall be presented to the clerk of the court where the application provided for in Code Section 18-3-9 is sought to be filed for approval by such clerk prior to filing of the writ of attachment.

(Laws 1833, Cobb's 1851 Digest, p. 83; Ga. L. 1855-56, p. 25, § 3; Code 1863, § 3190; Code 1868, § 3201; Code 1873, § 3266; Code 1882, § 3266; Ga. L. 1892, p. 56, § 1; Civil Code 1895, § 4512; Civil Code 1910, § 5057; Code 1933, § 8-111; Ga. L. 1980, p. 1065, § 2.)

JUDICIAL DECISIONS

ANALYSIS

General Consideration

Requirements of former Code 1933, § 8-111 were mandatory and prerequisite to issuance of attachment. Powell v. Stinson's Garage, Inc., 97 Ga. App. 613 , 103 S.E.2d 580 (1958).

Principal cannot be surety to the principal's own bond. Bonds v. Powl, 140 Ga. App. 140 , 230 S.E.2d 133 (1976).

President of corporation may be surety for the corporation. Levin v. American Furn. Co., 133 Ga. 670 , 66 S.E. 888 (1909).

Notary public, who was attorney for plaintiff, cannot take bond required by former Code 1868, § 3201. Wilkowski v. Halle, 37 Ga. 678 , 95 Am. Dec. 374 (1868).

Security must also be of twice the value of the debt. Lockett v. DeNeufville, 55 Ga. 454 (1875).

Amount of interest due on debt may be disregarded. Saulter v. Butler, 10 Ga. 510 (1851).

Cited in Kahn v. Herman, 3 Ga. 266 (1847); Brown, Shipley & Co. v. Clayton, 12 Ga. 564 (1853); Shockley v. Davis, 17 Ga. 175 (1855); Smith v. Joiner, 27 Ga. 65 (1855); Alston v. Dunning, 35 Ga. 229 (1866); Cox v. Felder, 36 Ga. 597 (1867); Rogers v. Birdsall Co., 72 Ga. 133 (1883); Guckenheimer & Son v. Day & Higgs, 74 Ga. 1 (1884); Born v. Williams & Bro., 81 Ga. 796 , 7 S.E. 868 (1888); Goggins v. Jones, 115 Ga. 596 , 41 S.E. 995 (1902); Greene v. Lombard, 33 Ga. App. 518 , 126 S.E. 890 (1925); Harmon v. Wiggins, 48 Ga. App. 469 , 172 S.E. 847 (1934); Higgins v. Gosden, 53 Ga. App. 313 , 185 S.E. 574 (1936); Stalvey v. Varn Motors & Fin. Co., 56 Ga. App. 696 , 193 S.E. 627 (1937); Maryland Cas. Co. v. Tow, 71 Ga. App. 178 , 30 S.E.2d 433 (1944); Irwin v. Griffin, 202 Ga. 456 , 43 S.E.2d 687 (1947); Draper Canning Co. v. Dempsey, 91 Ga. App. 593 , 86 S.E.2d 678 (1955); Kitson v. Hawke, 136 Ga. App. 92 , 220 S.E.2d 28 (1975); Johnson v. American Credit Co., 581 F.2d 526 (5th Cir. 1978); Solomon Refrigeration, Inc. v. Osburn, 148 Ga. App. 772 , 252 S.E.2d 686 (1979).

Failure to Give Attachment Bond

Bond requirement of this statute was jurisdictional and noncompliance rendered attachment null and void. Grimmett v. Barnwell, 184 Ga. 461 , 192 S.E. 191 (1937).

Requirement that plaintiff in attachment give specified bond is jurisdictional, and its absence renders proceeding fatally defective. Tapley v. Proctor, 150 Ga. App. 337 , 258 S.E.2d 25 (1979).

Financial inability to give attachment bond renders proceeding seeking attachment fatally defective. Grimmett v. Barnwell, 184 Ga. 461 , 192 S.E. 191 (1937).

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

Liability on Attachment Bond

Liability of surety on statutory bond. - See United States Fid. & Guar. Co. v. Luttrell, 110 Ga. App. 325 , 138 S.E.2d 457 (1964).

Extent of liability. - Under statutory bond required of the plaintiff in attachment, the defendant cannot recover from the principal and surety thereon for damage other than such as proximately results from seizure of the defendant's property under such attachment. Dunn & McCarthy, Inc. v. Pinkston, 54 Ga. App. 92 , 187 S.E. 175 (1936).

Liability for wrongful attachment. - Fact that attachment is irregular or void will not screen the plaintiff in attachment or surety on attachment bond from liability for damages resulting from wrongful attachment, levy, and sale of the defendant's property thereunder. United States Fid. & Guar. Co. v. Luttrell, 110 Ga. App. 325 , 138 S.E.2d 457 (1964).

Recovery on Attachment Bond

Conditions necessary to recovery on attachment bond. - Only conditions necessary to recovery on bond are failure on the part of the plaintiff to recover in the case and sustaining by defendant of damages or costs in consequence of the suing out of attachment. No question of malicious use or abuse of legal process or other additional element necessary for a recovery in tort is involved. United States Fid. & Guar. Co. v. Luttrell, 110 Ga. App. 325 , 138 S.E.2d 457 (1964).

Seizure of defendant's property is a prerequisite to action on attachment bond. Massachusetts Bonding & Ins. Co. v. United States Conservation Co., 31 Ga. App. 716 , 122 S.E. 728 (1924).

Recovery on statutory bond permitted if any property wrongfully seized belongs to defendant in attachment, although some of the property does not. United States Fid. & Guar. Co. v. Luttrell, 110 Ga. App. 325 , 138 S.E.2d 457 (1964).

Plaintiff's failure as condition precedent. - Failure of the plaintiff to recover in attachment is condition precedent to recovery on statutory bond. M & M Transf. Co. v. Auto Rental & Leasing, Inc., 313 F. Supp. 907 (N.D. Ga. 1970).

Action on attachment bond will lie without preliminary recovery against plaintiff. Fourth Nat'l Bank v. Mayer, 96 Ga. 728 , 24 S.E. 453 (1895).

Compensatory damages, including attorney's fees, interest, and expenses are recoverable in action on attachment bond, but not exemplary damages, which can only be recovered by common-law action. Fourth Nat'l Bank v. Mayer, 96 Ga. 728 , 24 S.E. 453 (1895).

Recovery unavailable against surety for attorney's fees for prosecuting suit on attachment bond against the surety. United States Fid. & Guar. Co. v. Luttrell, 108 Ga. App. 606 , 134 S.E.2d 77 (1963).

RESEARCH REFERENCES

2C Am. Jur. Pleading and Practice Forms, Attachment and Garnishment, §§ 385, 452.

ALR. - Liability on attachment bond as affected by lack of levy or by invalid levy, 108 A.L.R. 917 .

Recovery of value of use of property wrongfully attached, 45 A.L.R.2d 1221.

Right to recover attorney's fees for wrongful attachment, 65 A.L.R.2d 1426.

What constitutes malice sufficient to justify an award of punitive damages in action for wrongful attachment or garnishment, 61 A.L.R.3d 984.

18-3-10.1. Service of process in action against nonresident plaintiff for damages.

When a person who has been a defendant in attachment desires to bring an action against the plaintiff for damages, and the plaintiff in attachment does not reside in this state, it shall be sufficient to serve the complaint and summons on the security to the bond given by the plaintiff, and the action may proceed against both principal and security.

(Ga. L. 1855-56, p. 25, § 54; Code 1863, § 3267; Code 1868, § 3278; Code 1873, § 3354; Code 1882, § 3354; Civil Code 1895, § 5013; Civil Code 1910, § 5595; Code 1933, § 3-304.)

Cross references. - Service of process generally, § 9-11-4 .

JUDICIAL DECISIONS

Constitutionality. - Proceeding under this statute afforded due process of law and did not violate U.S. Const., amend. 14. Continental Nat'l Bank v. Folsom, 78 Ga. 449 , 3 S.E. 269 (1887).

Service on security of nonresident national bank which gave bond under statute was sufficient. Continental Nat'l Bank v. Folsom, 78 Ga. 449 , 3 S.E. 269 (1887).

RESEARCH REFERENCES

C.J.S. - 72 C.J.S., Process, §§ 31, 32, 84.

18-3-11. Affidavit for attachment and execution of bond when debt due to partnership or several persons jointly.

When the debt, for the recovery of which the attachment is sought, is due to a partnership or is due to several persons jointly, any one of the partners or joint creditors, his agent, or his attorney at law may make the affidavit and give the bond as prescribed and sign the names of the other partners or joint creditors to said bond; and the partners or joint creditors shall be bound thereby in the same manner as though they had signed it themselves.

(Ga. L. 1855-56, p. 25, § 4; Code 1863, § 3191; Code 1868, § 3202; Code 1873, § 3267; Code 1882, § 3267; Civil Code 1895, § 4513; Civil Code 1910, § 5058; Code 1933, § 8-110.)

JUDICIAL DECISIONS

Partner cannot be surety on partnership bond. Copeland & Co. v. Monroe, 16 Ga. App. 586 , 85 S.E. 789 (1915).

Cited in Williams Bros. Lumber Co. v. Anderson, 210 Ga. 198 , 78 S.E.2d 612 (1953).

RESEARCH REFERENCES

ALR. - Affidavits stating grounds of attachment on information and belief, 86 A.L.R. 588 .

18-3-12. Persons who may be taken as security or surety on a bond.

No person shall be taken as security or surety on any attachment bond who is an attorney for the plaintiff or a nonresident, except such nonresident who is possessed of real estate in the county where the attachment issues which is the value of the amount of such bond.

(Ga. L. 1873, p. 29, § 1; Code 1873, § 3268; Code 1882, § 3268; Civil Code 1895, § 4514; Civil Code 1910, § 5059; Code 1933, § 8-112.)

JUDICIAL DECISIONS

Plaintiff's attorney as surety. - Former Civil Code 1895, § 4514 was directory; consequently, a proceeding was not void when plaintiff's attorney signs bond as surety. Husband Bros. v. Georgia S. & Florida Ry. Co., 3 Ga. App. 157 , 59 S.E. 326 (1907).

Cited in Burton v. Wynne, 55 Ga. 615 (1876).

18-3-13. Procedure for contesting sufficiency of bond; requirement of additional security or new bond; failure to comply.

When any attachment shall be issued and levied upon the property of the defendant, the defendant, his agent, or his attorney may file an affidavit stating that he has a good defense to the action, that the bond given in the action is not a good bond, and stating the ground of its insufficiency. When the affidavit is made and delivered to the levying officer, the officer shall return such attachment together with the affidavit forthwith to the judge issuing the attachment. The judge issuing the attachment shall without delay hear testimony as to the sufficiency of the bond and may in his discretion require additional security or a new bond to be given within such time as he may prescribe. If the plaintiff fails to provide such additional security or new bond, the judge shall dismiss the levy made under the attachment.

(Ga. L. 1873, p. 29, § 2; Code 1873, § 3271; Code 1882, § 3271; Ga. L. 1892, p. 56, § 2; Civil Code 1895, § 4517; Ga. L. 1899, p. 37, § 1; Civil Code 1910, § 5062; Code 1933, § 8-113; Ga. L. 1980, p. 1065, § 3.)

JUDICIAL DECISIONS

No question of amendment can be entertained, except amendment of bond, and of that only insofar as may be necessary to make the bond conform to law as a bond in support of attachment as originally issued and levied. Lockett v. DeNeufville, 55 Ga. 454 (1875).

Amendment of bond. - Plaintiff in attachment may amend the plaintiff's bond, "as in other cases at common law." Collins v. Southern Fin. Corp., 51 Ga. App. 400 , 180 S.E. 744 (1935).

Amendment of bond which was absolutely void was not authorized by this statute. Copeland & Co. v. Monroe, 16 Ga. App. 586 , 85 S.E. 789 (1915).

Filing of attachment bond for first time at trial term was not authorized by statute. Copeland & Co. v. Monroe, 16 Ga. App. 586 , 85 S.E. 789 (1915).

Burden of proof is on defendant to show insufficiency of bond. Reid v. Armour Packing Co., 93 Ga. 696 , 21 S.E. 131 (1894); Stephens v. Woodson, 8 Ga. App. 639 , 70 S.E. 55 (1911).

Time for raising objection. - Judgment on attachment not void for insufficiency of bond when question not raised in proceeding. Collins v. Southern Fin. Corp., 51 Ga. App. 400 , 180 S.E. 744 (1935).

Surety on bond as a minor whose contracts are voidable. - Contract made by minor not void, but is voidable only; it is therefore no ground for dismissal of attachment that surety upon attachment bond executed by plaintiff in attachment was a minor. Benjamin v. Pardue, 44 Ga. App. 587 , 162 S.E. 291 (1932).

Cited in Gregory v. Clark, 73 Ga. 542 (1884); Reid v. Armour Packing Co., 93 Ga. 696 , 21 S.E. 131 (1894); Kesler v. Groover, 58 Ga. App. 548 , 199 S.E. 332 (1938); Kitson v. Hawke, 231 Ga. 157 , 200 S.E.2d 703 (1973); Hagopian v. Consolidated Equities Corp., 397 F. Supp. 934 (N.D. Ga. 1975).

RESEARCH REFERENCES

ALR. - Constitutionality of statute prescribing conditions of right of defendant in foreign attachment to appear and defend, 17 A.L.R. 884 .

Duty to give bond and procure return of property in order to mitigate damages from its wrongful seizure under legal process, 33 A.L.R. 1479 .

Value of attached property as limit of liability on bond to release attachment, 80 A.L.R. 595 .

Liability on attachment bond as affected by lack of levy or by invalid levy, 108 A.L.R. 917 .

18-3-14. Service of writ of attachment on defendant; notification of defendant of issuance of attachment.

  1. The defendant shall be given notice of the attachment issued against his property by any one or more of the following methods:
    1. The plaintiff, at the time the attachment is filed with the clerk, shall commence procedures to effectuate the service of a copy of the writ of attachment on the defendant; and service thereafter shall be made on the defendant as soon as is reasonably practicable. Service pursuant to this paragraph shall be made pursuant to Code Section 9-11-4;
    2. The plaintiff, after issuance of the writ of attachment and not more than three business days after levy upon the property of the defendant, shall cause a written notice to be sent to the defendant at defendant's last known address by registered or certified mail or statutory overnight delivery, return receipt requested. Either the return receipt indicating receipt by the defendant or the envelope bearing the official notification from the United States Postal Service of the defendant's refusal to accept delivery or failure to claim such registered or certified mail or statutory overnight delivery shall be filed with the clerk of the court in which the attachment is pending. The defendant's refusal to accept or failure to claim such registered or certified mail or statutory overnight delivery addressed to defendant shall be deemed notice to defendant;
    3. The plaintiff, after the issuance of the writ of attachment and not more than three business days after levy upon the property of the defendant, shall cause a written notice to be delivered personally to the defendant by the plaintiff or by plaintiff's attorney at law or other agent. A certification by the person making the delivery shall be filed with the clerk;
    4. When the defendant resides out of the state or has departed the state or cannot, after due diligence, be found within the state or conceals his place of residence from the plaintiff and the fact shall appear, by affidavit, to the satisfaction of the judge or clerk of the court, the levy and attachment shall constitute sufficient notice to the defendant, provided such levy and attachment without more shall constitute sufficient notice, unless the plaintiff has actual knowledge of the defendant's address, in which case, to provide sufficient notice, the plaintiff shall also mail a written notice of attachment to the defendant at said address or, not having actual knowledge of the defendant's address but the address at which the defendant was last known to reside, to provide sufficient notice, the plaintiff shall also mail a written notice of attachment to the defendant at said address. A mailing of the written notice provided in this paragraph shall be made after the issuance of the writ of attachment and not more than three business days after levy upon the property of the defendant, and a certificate of such mailing shall be filed with the clerk by the person mailing the notice;
    5. Where it shall appear by affidavit that a defendant in the attachment action is not a resident of this state or has departed from this state or, after due diligence, cannot be found in this state or that the defendant conceals his place of residence from the plaintiff, notice may be given by causing two publications of the written notice in the paper in which advertisements are printed by the sheriff in each county in which a writ of attachment is served. Such publications must be at least six days apart and the second publication must be made not more than 21 days after levy upon the property of the defendant. A certification by the person causing the notice to be published shall be filed with the clerk, provided such publication shall constitute sufficient notice alone, unless the plaintiff has actual knowledge of the defendant's address, in which case, to provide sufficient notice, the plaintiff shall also mail a written notice of attachment to the defendant at said address. A mailing of the written notice provided in this paragraph shall be made after the issuance of the writ of attachment and not more than three business days after levy upon the property of the defendant, and a certificate of such mailing shall be filed with the clerk by the person mailing the notice; or
    6. Where the defendant's address is known, the plaintiff, after issuance of the attachment and not more than three business days after levy upon the property of the defendant, shall send a written notice of the attachment to the defendant at such known address by ordinary mail. A certification by the person mailing the notice shall be filed with the clerk.
  2. The receiving by the defendant of actual timely notice of the attachment and levy shall constitute notice.
  3. "Written notice," as referred to in paragraphs (2) through (6) of subsection (a) of this Code section, shall consist of a copy of the affidavit and bond for attachment or of a document which includes the names of the plaintiff and the defendant, the amount claimed in the affidavit for attachment, and the court wherein the proceeding is filed.
  4. The methods of notification specified in subsection (a) of this Code section are cumulative and may be used in any sequence or combination. Where it appears that a plaintiff has reasonably, diligently, and in good faith attempted to use one method, another method thereafter may be utilized and, for the time during which the attempt was being made, the time limit shall be tolled for the subsequent method.

    (Laws 1799, Cobb's 1851 Digest, p. 70; Ga. L. 1855-56, p. 25, § 5; Code 1863, § 3192; Code 1868, § 3203; Code 1873, § 3269; Code 1882, § 3269; Civil Code 1895, § 4515; Civil Code 1910, § 5060; Code 1933, § 8-114; Ga. L. 1980, p. 1065, § 4; Ga. L. 1991, p. 94, § 18; Ga. L. 2000, p. 1589, § 3.)

JUDICIAL DECISIONS

Editor's notes. - In light of the similarity of the statutory provisions, decisions under former Code 1868, § 3233, former Code 1873, § 3309, former Code 1882, § 3309, and former Code 1933, § 8-602, dealing with notice to the defendant, have been included in the annotations for this Code section.

Absent personal service, appearance, or replevy, in personam judgment is void. - When the defendants were not personally served with notice of pendency of attachment, did not appear and defend, and did not give bond and security to replevy property attached, an in personam judgment against the defendants was accordingly erroneous. Broome v. Graham, 99 Ga. App. 682 , 109 S.E.2d 824 (1959) (decided under former Code 1933, § 8-602).

Contents of notice. - Written notice to the defendant that attachment was pending against the defendant stating the court to which attachment was returnable, and the time, and stating on what property attachment had been levied, was sufficient compliance with former Code 1868, § 3233 to authorize proceedings as in ordinary suit, especially if the defendant appeared and pleaded to the merits. Pool v. Perdue, 44 Ga. 454 (1871) (decided under former Code 1868, § 3233).

Administrator of defendant who dies pending attachment. - If, pending attachment, the defendant dies, and the defendant's administrator was made party to the proceeding, and no notice was given, as provided by former Code 1873, § 3309, the administrator stood precisely as did the deceased defendant. The administrator may attack the validity of the attachment, and if the administrator's objection was good the whole proceeding fell. Ross v. Edwards, 52 Ga. 24 (1874) (decided under former Code 1873, § 3309).

When defendant receives sufficient notice and fails to defend. - When nonresident defendants in attachment were given sufficient notice to put the defendants upon inquiry in time to have defended, but failed to do so, the supreme court will not control decision of presiding judge in refusing to allow the defendants to open judgment rendered in an attachment case for purpose of pleading to merits. Steers & Co. v. Morgan & Armstrong, 66 Ga. 552 (1881) (decided under former Code 1873, § 3309).

Plaintiff may entitle self to general judgment against defendant by giving prescribed notice. Sutton v. Gunn, 86 Ga. 652 , 12 S.E. 979 (1891) (decided under former Code 1882, § 3309).

Effect on third persons of judgment by court without jurisdiction. - General judgment of court without jurisdiction of particular class of attachments will not be valid against third persons although the judgment might be good against a defendant. First Nat'l Bank v. Ragan, 92 Ga. 333 , 18 S.E. 295 (1893) (decided under former Code 1882, § 3309).

Absence of signature on notice of attachment. - Although notices of attachment were not signed by the plaintiff, plaintiff's attorney, or anyone as agent for the plaintiff, when the notices conveyed information required by statute and defendants were in no manner prejudiced by absence of a signature, the notice was sufficient to entitle the plaintiff to judgment on the declaration filed as at common law. Stalvey v. Varn Motors & Fin. Co., 56 Ga. App. 696 , 193 S.E. 627 (1937).

Cited in Cox v. Felder, 36 Ga. 597 (1867); Tharpe v. Foster, 52 Ga. 79 (1874); Bennett v. Wheatley, 154 Ga. 591 , 115 S.E. 83 (1922); Gaston v. Jackson Nat'l Bank, 45 Ga. App. 106 , 163 S.E. 265 (1932); Higgins v. Gosden, 53 Ga. App. 313 , 185 S.E. 574 (1936); Stalvey v. Varn Motors & Fin. Co., 56 Ga. App. 696 , 193 S.E. 627 (1937); Sassoon v. State, 138 Ga. App. 172 , 225 S.E.2d 732 (1976); Johnson v. American Credit Co., 581 F.2d 526 (5th Cir. 1978).

18-3-15. Right of defendant to postseizure hearing.

When a writ of attachment is issued against the property of the defendant, the defendant may at any time traverse the plaintiff's affidavit upon which the attachment was obtained, stating that the affidavit is untrue or legally insufficient. Upon filing of the traverse, the court shall issue a show cause order to the plaintiff requiring him to appear at a specified time, which shall not be more than ten days from the filing of the traverse, to prove the grounds for the issuance of the attachment. If the plaintiff shall fail to carry the burden of proof, the order authorizing the attachment shall be revoked.

(Code 1933, § 8-114.1, enacted by Ga. L. 1980, p. 1065, § 5.)

JUDICIAL DECISIONS

Editor's notes. - In light of the similarity of the statutory provisions, decisions under former Code 1868, § 3236, former Code 1873, § 3312, former Code 1882, § 3312, former Civil Code 1895, § 4560, and former Civil Code 1910, § 5107 are included in the annotations for this Code section.

Traverse need not be sworn to. Ouzts v. Seabrook, 47 Ga. 359 (1872) (decided under former Code 1868, § 3236).

Demurrer (now motion to dismiss) may be filed for lack of affidavit and attachment dismissed. DeLeon v. Heller, Hirsch & Co., 77 Ga. 740 (1886) (decided under former provisions).

Denial of truth of ground for attachment may be treated as traverse. Cooley v. Abbey, 111 Ga. 439 , 36 S.E. 786 (1900) (decided under former Code 1893, § 4560).

Third-party claimant to property levied upon. - Claimant of property levied on by execution issued on judgment founded on attachment cannot, on trial of claim, traverse grounds on which attachment issued. Foster v. Higginbotham, 49 Ga. 263 (1873) (decided under former Code 1882, § 3312).

Burden of proof. - On trial of traverse, burden of proof is on plaintiff in attachment. Oliver v. Wilson, 29 Ga. 642 (1859) (decided prior to codification of this principle).

Admissibility of evidence to sustain traverse after replevy of attached property. - When ground of attachment is duly traversed, defendant is entitled to introduce evidence to sustain the defendant's traverse, and presiding justice errs in holding that it is too late to do this after the defendant has replevied property attached. Brumby v. Rickoff, 94 Ga. 429 , 21 S.E. 232 (1894) (decided under former Code 1873, § 3312).

Plaintiff is competent witness as to traverse by administrator regarding contract entered with intestate. - When the plaintiff makes an affidavit for purpose of obtaining attachment against an administrator, and the administrator files traverse to affidavit, the plaintiff is a competent witness upon trial of issue formed, even though the contract, which is the foundation of the plaintiff's claim, was made with intestate. Effect of verdict for the defendant, upon such issue, is a dismissal of attachment. Ouzts v. Seabrook, 47 Ga. 359 (1872) (decided under former Code 1868, § 3236).

Waiver. - Objections to form of affidavit are waived by appearance of the defendant, and pleading to the merits. Pool v. Perdue, 44 Ga. 454 (1871) (decided under former Code 1868, § 3236).

Defendant in attachment does not waive traverse to the plaintiff's affidavit by afterwards pleading to the merits of the action. The two defenses are perfectly consistent, the former going to the writ and the latter to the declaration. Parker v. Brady, 56 Ga. 372 (1876) (decided under former Code 1868, § 3236).

Effect of finding issue in defendant's favor. - When issue on traverse is found in favor of the defendant, all defendant gains is that levy falls, and if judgment is obtained on merits the judgment does not date from time of levy, but the judgment would take lien on property attached as well as on other property from date of judgment only. Blakely Milling & Trading Co. v. Thompson, 34 Ga. App. 129 , 128 S.E. 688 (1924) (decided under former Civil Code 1910, § 5107).

Intervenor's right to traverse affidavit of attachment. - Construing O.C.G.A. §§ 18-3-15 and 18-3-50 in pari materia, in light of the due process requirements, the intervenor has the same right to traverse the plaintiff's affidavit of attachment as the defendant, and once the affidavit of attachment is traversed, the procedure to follow is the same as that accorded the defendant. Trax, Inc. v. Pentagon Aero-Marine Corp., 162 Ga. App. 276 , 290 S.E.2d 196 (1982).

Cited in Williams v. Williams, 170 Ga. App. 563 , 317 S.E.2d 625 (1984).

RESEARCH REFERENCES

ALR. - Filing bond to secure release or return of seized property as appearance, 57 A.L.R.2d 1109.

18-3-16. Issuance and levy of attachment on Sunday.

Attachments may issue and be levied on Sunday when the plaintiff, his agent, or his attorney at law shall state, in his sworn application for a writ of attachment, that he has reason to believe the debt will not be satisfied unless process of attachment shall issue on Sunday and shall also comply with the other provisions of this chapter.

(Laws 1834, Cobb's 1851 Digest, p. 482; Ga. L. 1855-56, p. 25, § 23; Code 1863, § 3196; Code 1868, § 3207; Code 1873, § 3274; Code 1882, § 3274; Civil Code 1895, § 4520; Civil Code 1910, § 5065; Code 1933, § 8-115.)

JUDICIAL DECISIONS

Omission in pleadings of oath required is amendable when necessary facts existed at time of attachment under this statute was issued. Sloan v. Smith, 29 Ga. App. 591 , 116 S.E. 200 (1923).

RESEARCH REFERENCES

ALR. - Power of municipal corporation to legislate as to Sunday observance, 37 A.L.R. 575 .

18-3-17. Courts to which attachments returnable; applicability of rules of civil practice and procedure; filing of declaration in attachment; notice of declaration.

  1. Attachments shall be returnable to the court of record in which filed pursuant to subsection (a) of Code Section 18-3-9 and shall be governed by the rules of procedure and practice governing ordinary civil actions, as respects appearance day, trial term, and judgment pursuant to default, and by any and all other rules relating to procedure and practice.
  2. The plaintiff shall file his declaration in attachment within 15 days after the levy of attachment and the declaration shall thereafter be governed by the rules governing ordinary civil actions as provided for in subsection (a) of this Code section. Notice of the declaration shall be given pursuant to Code Section 18-3-14.

    (Laws 1799, Cobb's 1851 Digest, pp. 70, 638; Ga. L. 1855-56, p. 25, § 6; Ga. L. 1857, p. 117, § 1; Code 1863, § 3194; Code 1868, § 3205; Code 1873, § 3272; Code 1882, § 3272; Civil Code 1895, § 4518; Civil Code 1910, § 5063; Code 1933, § 8-117; Ga. L. 1962, p. 520, § 1; Ga. L. 1980, p. 1065, § 6.)

Cross references. - Provisions governing pleadings, defenses, and procedures subsequent to filing of declaration in attachment, § 18-3-18 .

Civil Practice Act, T. 9, C. 11.

JUDICIAL DECISIONS

Cited in Wanet v. Corbet, 13 Ga. 441 (1853); Duke v. Horton, 32 Ga. 637 (1861); Chapman v. Woodruff, 34 Ga. 91 (1864); Irvin v. Howard, 37 Ga. 18 (1867); Nashville, Chattanooga & St. Louis Ry. Co. v. Cleghorn & Co., 94 Ga. 413 , 21 S.E. 227 (1894); Woodward Lumber Co. v. Vizard, 144 F. 982 (N.D. Ga. 1906); National Bank v. Pritchard, 4 Ga. App. 46 , 61 S.E. 841 (1908); Ferger Grain Co. v. Eatonton Milling & Grocery Co., 17 Ga. App. 170 , 86 S.E. 401 (1915); Tygart v. Domestic Elec. Co., 151 Ga. 624 , 107 S.E. 866 (1921); Watters & Co. v. O'Neill, 151 Ga. 680 , 108 S.E. 35 (1921); Carroll & Downs v. Groover, 27 Ga. App. 747 , 110 S.E. 30 (1921); Bailey v. Kennett, 32 Ga. App. 255 , 122 S.E. 804 (1924); Farmers Hdwe. Co. v. Bearden, 32 Ga. App. 445 , 123 S.E. 730 (1924); Gaston v. Jackson Nat'l Bank, 45 Ga. App. 106 , 163 S.E. 265 (1932); Harmon v. Wiggins, 48 Ga. App. 469 , 172 S.E. 847 (1934); Stalvey v. Varn Motors & Fin. Co., 56 Ga. App. 696 , 193 S.E. 627 (1937); Grand Trunk W.R.R. v. Barge, 75 Ga. App. 646 , 44 S.E.2d 281 (1947); Harris v. McDaniel, 92 Ga. App. 299 , 88 S.E.2d 442 (1955); Parker v. Mercer, 111 Ga. App. 108 , 140 S.E.2d 915 (1965); Peterson v. General Shoe Corp., 115 Ga. App. 12 , 153 S.E.2d 637 (1967); Benefield v. Radiator Specialty Co., 116 Ga. App. 588 , 158 S.E.2d 423 (1967); Tennessee-Virginia Constr. Co. v. Willingham, 117 Ga. App. 290 , 160 S.E.2d 444 (1968); Smith v. Hooks, 117 Ga. App. 837 , 162 S.E.2d 296 (1968); Merchants & Mfrs. Transf. Co. v. Auto Rental & Leasing, Inc., 121 Ga. App. 729 , 175 S.E.2d 156 (1970); Smith v. Robinson, 122 Ga. App. 693 , 178 S.E.2d 697 (1970); M & M Transf. Co. v. Auto Rental & Leasing, Inc., 313 F. Supp. 907 (N.D. Ga. 1970); Hagopian v. Consolidated Equities Corp., 397 F. Supp. 934 (N.D. Ga. 1975); Johnson v. American Credit Co., 581 F.2d 526 (5th Cir. 1978).

RESEARCH REFERENCES

ALR. - Attachment or garnishment as affected by trick or device by which the property of or indebtedness to nonresident was subjected to the jurisdiction, 37 A.L.R. 1255 .

18-3-18. Applicability of Chapter 10 of Title 9 subsequent to filing of declaration in attachment.

All pleadings, defenses, and procedures subsequent to the filing of the declaration in attachment shall be governed by Chapter 10 of Title 9.

(Laws 1838, Cobb's 1851 Digest, p. 86; Ga. L. 1855-56, p. 25, § 20; Code 1863, § 3221; Code 1868, § 3232; Code 1873, § 3308; Code 1882, § 3308; Civil Code 1895, § 4556; Civil Code 1910, § 5102; Code 1933, § 8-601; Ga. L. 1962, p. 520, § 2; Ga. L. 1980, p. 1065, § 12.)

Law reviews. - For article surveying judicial developments in Georgia's trial practice and procedure laws, see 31 Mercer L. Rev. 249 (1979).

RESEARCH REFERENCES

ALR. - Attack by defendant upon attachment or garnishment as an appearance subjecting him personally to jurisdiction, 129 A.L.R. 1240 .

18-3-19. Forms for attachment.

In all cases of attachment, the form of the affidavit, bond, attachment, and order authorizing the issuance thereof may be as follows: (1) Affidavit for attachment. AFFIDAVIT STATE OF GEORGIA COUNTY OF ________ Personally appeared ____________ who on oath says that he is attorney at law for ____________ and that ____________ is indebted to said plaintiff in the sum of $ ______ and that said defendant __________. ____________ Affiant Sworn to and subscribed before me this ________ day of ______, ______. __________________ Judge

(2) Bond.

BOND

STATE OF GEORGIA COUNTY OF ________ We, ________, principal, and ________, security, jointly and severally acknowledge ourselves bound unto the foregoing defendant in the sum of $ ______, subject to the following conditions: The said principal is seeking attachment against the said defendant which is now about to be sued out in the ______ Court of ______ County. Now, if the said plaintiff shall pay all damages that the defendant may sustain, and also all costs that may be incurred by him in consequence of suing out such attachment, in the event that the said plaintiff shall fail to recover in said case, then this bond shall be void. __________ (SEAL) __________ (SEAL) Witnessed and approved this ____________ day of ________, ______. __________________ Deputy Clerk, ______ Court of __________ County

(3) Attachment.

ATTACHMENT

STATE OF GEORGIA COUNTY OF ________ To the marshal of said court or his lawful deputies, to all and singular the sheriffs or their lawful deputies, and to all lawful constables of said state: You are commanded to seize so much of the property of the foregoing defendant as will make the sum of $ ________ and all costs, and to serve such summons of garnishment as may be placed in your hands, and that you make return of this attachment with your actions entered thereon to the ________ term, ____________, of the ________ Court of ______ County, to which court this attachment is hereby made returnable. This ________ day of ________, ________. ________ (SEAL) ______ Court of ________ County

(4) Order.

IN THE ______ COURT OF ________ COUNTY

STATE OF GEORGIA

__________ ) Plaintiff ) v. ) Civil action ) File no. ________ __________ ) Defendant ) )

ORDER

Upon application of the plaintiff for a writ of attachment, and having considered the affidavit with bond attached, and inquiring into the grounds and circumstances herein, it is the determination of this court that the plaintiff is (or is not) entitled to a writ of attachment, and it is ORDERED that a writ of attachment issue upon the property of the defendant (or that a writ of attachment be denied). This ______ day of ________, ________. ____________ Judge, ______ Court of ________ County

(Ga. L. 1855-56, p. 25, § 42; Code 1863, § 3205; Code 1868, § 3216; Code 1873, § 3283; Code 1882, § 3283; Civil Code 1895, § 4529; Civil Code 1910, § 5074; Code 1933, § 8-119; Ga. L. 1980, p. 1065, § 7; Ga. L. 1999, p. 81, § 18.)

JUDICIAL DECISIONS

Affidavit may be sufficient in form though it does not show that debt is due. Askew v. Melvin, 144 Ga. 348 , 87 S.E. 278 (1915).

Variance in defendant's name in required documents. - Variance between affidavit and bond on one hand and attachment on the other, in the name of party against whom proceedings are brought is fatal to the attachment. Leffler & Son v. Union Compress Co., 126 Ga. 662 , 55 S.E. 927 (1906).

Bill of particulars not annexed to papers. - Attachment not necessarily void because no bill of particulars is annexed to original attachment papers. Pharr v. Estey Piano & Organ Co., 7 Ga. App. 262 , 66 S.E. 618 (1909).

Absent levy or seizure of property under attachment there can be no recovery on bond. Hinton-Bellah, Inc. v. Thebit, 62 Ga. App. 672 , 9 S.E.2d 779 (1940).

Effect of release on recovery of attachment expenses. - Fact that plaintiff's property had been released did not preclude the plaintiff from recovering expense sustained in consequence of the attachment. Hinton-Bellah, Inc. v. Thebit, 62 Ga. App. 672 , 9 S.E.2d 779 (1940).

Damages recoverable on attachment expenses. - Hinton-Bellah, Inc. v. Thebit, 62 Ga. App. 672 , 9 S.E.2d 779 (1940).

Cited in Cohen v. Manco, 28 Ga. 27 (1859); Graves v. Rivers, 123 Ga. 224 , 51 S.E. 318 (1905); Thebit v. Hinton-Bellah, Inc., 57 Ga. App. 205 , 194 S.E. 894 (1938).

RESEARCH REFERENCES

2B Am. Jur. Pleading and Practice Forms, Attachment and Garnishment, § 91. 2C Am. Jur. Pleading and Practice Forms, Attachment and Garnishment, § 340.

18-3-20. Substantial compliance in matters of form sufficient.

A substantial compliance in all matters of form shall be held sufficient in all applications for attachment and in all attachments issued as provided by this chapter.

(Ga. L. 1855-56, p. 25, § 43; Code 1863, § 3204; Code 1868, § 3215; Code 1873, § 3282; Code 1882, § 3282; Civil Code 1895, § 4528; Civil Code 1910, § 5073; Code 1933, § 8-118.)

JUDICIAL DECISIONS

Levy failing to state that property was levied on as property of the defendant was amendable and such defect was not ground for arresting judgment. Flegal v. Loveless, 93 Ga. App. 41 , 90 S.E.2d 606 (1955).

Absence of signature on notice of attachment. - Although notices of attachment were not signed by the plaintiff, the plaintiff's attorney, or anyone as agent for the plaintiff, where the notices conveyed information required by statute and defendants were in no manner prejudiced by absence of a signature, the notice was sufficient to entitle the plaintiff to judgment on the declaration filed as at common law. Stalvey v. Varn Motors & Fin. Co., 56 Ga. App. 696 , 193 S.E. 627 (1937).

Cited in B.W. & J.P. Force & Co. v. Hubbard, 26 Ga. 289 (1858); Kennon & Klink v. Evans, Gardner & Co., 36 Ga. 89 (1867); Irvin v. Howard, 37 Ga. 18 (1867); Black v. Scanlon, 48 Ga. 12 (1873); Neal v. Gordon, 60 Ga. 112 (1878); Pharr v. Estey Piano & Organ Co., 7 Ga. App. 262 , 66 S.E. 618 (1909).

ARTICLE 2 LEVY AND REPLEVY OF PROPERTY GENERALLY

Law reviews. - For note discussing procedures for levy upon an attachment, see 12 Ga. L. Rev. 814 (1978). For comment on Fuentes v. Shevin, 407 U.S. 67, 92 S. Ct. 1983 , 32 L. Ed. 2 d 556 (1972), holding the seizure of property in replevin without notice and hearing or waiver as violative of due process, see 22 J. of Pub. L. 169 (1973).

RESEARCH REFERENCES

ALR. - Right to damages as distinguished from interest for loss of use of property taken in replevin, 6 A.L.R. 478 .

What is "stock in trade" within exemption law, 9 A.L.R. 1259 .

Seat in chamber of commerce, board of trade, or stock exchange as subject of attachment, garnishment, or execution, 14 A.L.R. 284 .

Amount of alternative money judgment in replevin as affected by sale of property under foreclosure of lien of third person, while in hands of unsuccessful party, 22 A.L.R. 215 .

Replevin for an undivided share in or undivided quantity of a larger mass, 26 A.L.R. 1015 .

Bankruptcy of debtor within four months after attachment or execution as discharging surety on bond given to release property seized thereunder, 36 A.L.R. 449 ; 107 A.L.R. 1138 .

Wrongful attachment or garnishment of debt as conversion, 40 A.L.R. 594 .

Amount of judgment recovered by defendant in replevin on account of counterclaim as within coverage of bond given by plaintiff, 87 A.L.R. 295 .

Redemption money in hands of officer as subject to attachment, garnishment, or execution, 94 A.L.R. 1049 .

Attack upon attachment after judgment, because of defects or irregularities, 129 A.L.R. 779 .

Failure or refusal to surrender possession or disclose whereabouts of property in replevin as contempt, 130 A.L.R. 632 .

Validity of attachment of chattels within store or building other than private dwelling, made without removing the goods or without making an entry, 22 A.L.R.2d 1276.

Allowance, in replevin action, of loss of profits from deprivation of use of detained property, 48 A.L.R.2d 1053.

Liability of creditor for excessive attachment or garnishment, 56 A.L.R.3d 493.

Recovery of damages for mental anguish, distress, suffering, or the like, in action for wrongful attachment, garnishment, sequestration, or execution, 83 A.L.R.3d 598.

18-3-30. Duty of officer to whom attachment directed generally and regarding property removed from county.

It shall be the duty of any one of the officers to whom an attachment is directed to levy the attachment upon real or personal property of the defendant which is necessary to satisfy the claim of the plaintiff and which may be found in the county of which he is an officer. It shall be the duty of any one of the officers to whom an attachment is directed, where the defendant has removed his property beyond the limits of the county in which the attachment is issued and returnable, to follow the property into any county of the state, levy the attachment upon such property of the defendant which is necessary to satisfy the claim of the plaintiff, and return the property to the county in which the attachment is returnable.

(Laws 1799, Cobb's 1851 Digest, p. 70; Laws 1841, Cobb's 1851 Digest, p. 87; Ga. L. 1855-56, p. 25, § 10; Code 1863, § 3206; Code 1868, § 3217; Code 1873, § 3284; Code 1882, § 3284; Civil Code 1895, § 4530; Civil Code 1910, § 5075; Code 1933, § 8-201.)

Law reviews. - For article discussing Sniadach v. Family Fin. Corp., 395 U.S. 337, 89 S. Ct. 1820 , 23 L. Ed. 2 d 349 (1969) in relation to former Georgia law on prejudgment garnishment, see 21 Mercer L. Rev. 495 (1970). For comment on Reeves v. Motor Contract Co., 324 F. Supp. 1011 (N.D. Ga. 1971), see 23 Mercer L. Rev. 369 (1972).

JUDICIAL DECISIONS

Presumption in favor of officer. - Absent evidence to the contrary, it is presumed that an officer did the officer's duty and did not exceed the officer's authority under this statute. Connolly v. Atlantic Contracting Co., 120 Ga. 213 , 47 S.E. 575 (1904).

Failure to state where levy was made. - When return of an officer on levy of attachment fails to show in what county the levy was made, but the levy is in other respects legal and regular, failure to set out where levy was made is not ground for dismissal. Connolly v. Atlantic Contracting Co., 120 Ga. 213 , 47 S.E. 575 (1904).

Levy by sheriff of attachment which should properly be levied by a constable is invalid. Pearce & Renfroe v. Renfroe Bros., 68 Ga. 194 (1881).

Cited in Massengale v. McGinty, 73 Ga. 120 (1884); McFarlin v. Board of Drainage Comm'rs, 153 Ga. 766 , 113 S.E. 447 (1922); Lane v. Bradfield, 37 Ga. App. 395 , 140 S.E. 417 (1927); Peterson v. General Shoe Corp., 115 Ga. App. 12 , 153 S.E.2d 637 (1967); Trax, Inc. v. Pentagon Aero-Marine Corp., 162 Ga. App. 276 , 290 S.E.2d 196 (1982).

OPINIONS OF THE ATTORNEY GENERAL

Escrow accounts of real estate brokers are not subject to attachment when broker is defendant inasmuch as money in such accounts is not property of the broker nor does it constitute a debt free from contingencies. 1972 Op. Att'y Gen. No. 72-1.

RESEARCH REFERENCES

ALR. - Levy upon or garnishment of contents of safety deposit box, 39 A.L.R. 1215 .

Replevin for bank account, 44 A.L.R. 1522 .

Contingent remainder as subject to levy and sale by creditor, 60 A.L.R. 803 .

Interest of vendee under conditional sales contract as subject to attachment, garnishment, or execution, 61 A.L.R. 781 .

Liability of sheriff or other officer executing process of execution or attachment for failure to seize sufficient property, 93 A.L.R. 316 .

Maintainability of replevin or similar possessory action where defendant, at time action is brought, is no longer in possession of property, 97 A.L.R. 896 .

Bank deposit as subject of garnishment for debt of depositor as affected by previous acts by bank in relation to deposit, 107 A.L.R. 697 .

Joint bank account as subject to attachment, garnishment, or execution by creditor of one of the joint depositors, 11 A.L.R.3d 1465.

Potential liability of insurer under liability policy as subject of attachment, 33 A.L.R.3d 992.

Liquor license as subject to execution or attachment, 40 A.L.R.4th 927.

18-3-31. Levy by officer of attachments in order received; entry of time and date of levy on attachment; levy upon land and attachment entry on docket by clerk.

In all cases it shall be the duty of the officer levying attachments to levy them in the order in which they come into his hands, and it shall be his duty to enter upon the same the year, month, day, and hour on which he made the levy. Where the levy is upon land, the attachment must be entered on the execution or attachment docket by the clerk of the superior court in order to be good against third persons acting in good faith and without actual notice.

(Ga. L. 1855-56, p. 25, § 19; Code 1863, § 3208; Code 1868, § 3219; Code 1873, § 3286; Code 1882, § 3286; Ga. L. 1892, p. 58, § 1; Civil Code 1895, § 4532; Civil Code 1910, § 5077; Code 1933, § 8-203.)

History of section. - The language of this Code section is derived in part from the decision in Deveney, Hood & Co. v. Burton, 110 Ga. 56 , 35 S.E. 268 (1900).

JUDICIAL DECISIONS

Omission of description of property on attachment docket. - Though entry on attachment docket respecting attachment upon land does not contain description of the property, it may not be taken advantage of by a claimant to the property who acquired the property under fraudulent circumstances. Deveney, Hood & Co. v. Burton, 110 Ga. 56 , 35 S.E. 268 (1900).

Nature of lien of judgment creditor; limitation of judgment's scope. - Lien of a judgment creditor is not a lien acquired by contract; but is given by law. The judgment creditor is not, therefore, in the position of a bona fide purchaser, and the judgment creditor's lien extends only to property levied upon which actually belongs to the defendant in attachment. Parker v. Boyd, 208 Ga. 829 , 69 S.E.2d 760 (1952).

18-3-32. Levy on property in a different county.

When the plaintiff in attachment wishes to levy his attachment upon property in a different county from that in which the same is returnable, it shall be the duty of the judge issuing the attachment, upon the request of the plaintiff, his agent, or his attorney at law, to make out a copy or copies of the original attachment, bond, and affidavit and certify the same officially to be true copies. Upon delivery of the copies of the attachment, bond, and affidavit, as directed, to any officer of the county in which the property of the defendant is located, it shall be the duty of the officer forthwith to levy the attachment upon the property of the defendant located in that county and to return the attachment, with his actings and doings entered thereon, to the court to which the original attachment is returnable.

(Laws 1799, Cobb's 1851 Digest, p. 73; Ga. L. 1855-56, p. 25, § 10; Code 1863, § 3193; Code 1868, § 3204; Code 1873, § 3270; Code 1882, § 3270; Civil Code 1895, § 4516; Civil Code 1910, § 5061; Code 1933, § 8-210; Ga. L. 1980, p. 1065, § 8.)

JUDICIAL DECISIONS

Cited in Gaston v. Jackson Nat'l Bank, 45 Ga. App. 106 , 163 S.E. 265 (1932); Stalvey v. Varn Motors & Fin. Co., 56 Ga. App. 696 , 193 S.E. 627 (1937).

RESEARCH REFERENCES

ALR. - Attachment proceedings as affected by officer's failure to comply with statutory requirements as to return or inventory, 93 A.L.R. 748 .

Maintainability of replevin or similar possessory action where defendant, at time action is brought, is no longer in possession of property, 97 A.L.R.2d 896.

18-3-33. Replevy of property by defendant generally upon payment of bond; amount of bond; return of property by officer taking bond; right of plaintiff to entry of judgment upon bond.

  1. When an attachment has been levied upon the property of a defendant, it shall be the duty of the officer levying the attachment to deliver the property levied upon to the defendant upon his giving bond, with good security, payable to the plaintiff in attachment, obligating himself to pay the plaintiff the amount of the judgment and costs that he may recover in the case.
  2. Where the value of the property levied upon, as appraised by the levying officer, is equal to or exceeds the claim of the plaintiff, the bond shall be fixed in an amount equal to the amount claimed to be due. Where the value of the property levied upon, as appraised by the levying officer, is less than the claim of the plaintiff, the bond shall be fixed in an amount equal to twice the value of the property levied upon.
  3. The officer taking the bond shall return the bond with the attachment to the court to which the attachment is returnable, and the plaintiff shall be entitled to entry of judgment against the defendant and his sureties upon the bond for the amount of the judgment and costs entered against the defendant in the case.

    (Laws 1799, Cobb's 1851 Digest, p. 71; Laws 1816, Cobb's 1851 Digest, p. 74; Ga. L. 1855-56, p. 25, § 11; Code 1863, § 3232; Code 1868, § 3243; Ga. L. 1872, p. 8, § 1; Code 1873, § 3319; Code 1882, § 3319; Civil Code 1895, § 4567; Civil Code 1910, § 5113; Code 1933, § 8-701.)

JUDICIAL DECISIONS

ANALYSIS

General Consideration

Editor's notes. - In light of the similarity of the statutory provisions, annotations decided under former Code 1933, § 8-901 are included in the annotations for this Code section.

Purpose of section. - Principal of this statute was the same as in garnishment proceedings. Light v. Hunt, 17 Ga. App. 491 , 87 S.E. 763 (1916).

Bond required only after levy. - Bond provided for in this statute was required only after levy of attachment, and not after judgment on attachment against the property. Lafferty Lumber Co. v. Thomas, 37 Ga. App. 226 , 139 S.E. 587 (1927).

Section not applicable when parties agree otherwise. - Since no replevy bond was given by the defendant, an agreement between parties that the constable should sell the property on a given date and deliver proceeds of the sale to the sheriff, to be held by the sheriff until final disposition of the case, controls rights of parties, and the provision, allowing the defendant in attachment to replevy the property, did not apply. Hill v. Hixon, 151 Ga. 333 , 106 S.E. 551 (1921).

Bond with condition to produce property on day of sale was not within statute. Moody v. Morgan, 25 Ga. 381 (1858).

When defendant gives bond, a general judgment was authorized. Mitchell v. Perry, 145 Ga. 233 , 88 S.E. 930 (1916).

One bond given when three attachments are levied will cover judgment in each case. Irvin v. Howard, 37 Ga. 18 (1867).

Failure to state name of firm. - After giving replevy bond, firm cannot request dismissal for failure to state name of firm. DeLeon v. Heller, Hirsch & Co., 77 Ga. 740 (1886).

Liability of officer for noncompliance with duties. - Ford & Booth v. Perkerson, 59 Ga. 359 (1877).

Cited in Rogers v. Moore, Jenkins & Co., 40 Ga. 386 (1869); Walker v. Walker, 42 Ga. 141 (1871); Wilson v. Danforth, 47 Ga. 676 (1873); Nagle v. Lumpkin, 48 Ga. 521 (1873); Moore, Jenkins & Co. v. Allen, 55 Ga. 67 (1875); Chittenden v. Darden, 5 F. Cas. 642 (N.D. Ga. 1875); Reeves v. Chattahoochee Brick Co., 85 Ga. 477 , 11 S.E. 837 (1890); Henry v. Lennox-Haldeman Co., 116 Ga. 9 , 42 S.E. 383 (1902); Rutland v. Hill, 19 Ga. App. 528 , 91 S.E. 922 (1917); Blakely Milling & Trading Co. v. Thompson, 34 Ga. App. 129 , 128 S.E. 688 (1925); Courson v. Manufacturers' Fin. Acceptance Corp., 41 Ga. App. 551 , 153 S.E. 624 (1930); Henley v. Colonial Stages S., Inc., 56 Ga. App. 722 , 193 S.E. 905 (1937); Johnson v. American Credit Co., 581 F.2d 526 (5th Cir. 1978).

Effect of Replevy Bond

Effect of replevy bond. - When property attached has been replevied, attachment is dissolved, bond is substituted for property, and the case stands as if the case had been founded on ordinary principles. Thompson v. Wright, 22 Ga. 607 (1857); Camp v. Cahn, 53 Ga. 558 (1875); Walter v. Kierstead, 74 Ga. 18 (1884); Woodbridge v. Drought, 118 Ga. 671 , 45 S.E. 266 (1903); Watters v. Southern Fixture & Cabinet Co., 13 Ga. App. 468 , 79 S.E. 360 (1913).

Action is in personam. - Replevy bond converts suit from action in rem to action in personam authorizing a common-law judgment. Middlebrooks v. Carson, 23 Ga. App. 665 , 99 S.E. 151 (1919).

Replevy bond, in converting action in rem to one in personam, is equivalent to appearance. Ubico Milling Co. v. Poythress, 29 Ga. App. 134 , 113 S.E. 815 (1922).

When defendant in attachment personally appears, replevies property attached, and defends action on its merits, the case proceeds in all respects as an ordinary action in personam and, accordingly, when there was no evidence to support single ground of attachment alleged, and traverse to attachment was well taken, this was not ground for a new trial or for setting aside judgment entered against defendant on the merits. Patne v. Oliver, 96 Ga. App. 644 , 101 S.E.2d 154 (1957) (decided under former Code 1933, § 8-901).

Replevy bond binds defendant not only to appear, but to pay judgment, if rendered against the defendant. Cole v. Reilly, 28 Ga. 431 (1859).

Liability of Surety

When grounds of attachment fail, replevy bond, insofar as it is sought to bind sureties thereon, fails also; in such event there is no liability of sureties on the bond, but their remedy is by affidavit of illegality or, perhaps, by some collateral motion. Patne v. Oliver, 96 Ga. App. 644 , 101 S.E.2d 154 (1957).

When grounds of attachment fail, replevy bond fails in the bond's binding effect upon sureties. Oliver v. Beasley, 109 Ga. App. 558 , 136 S.E.2d 530 (1964).

Validity of replevy bond is dependent upon validity of attachment; and if attachment has been dismissed, no liability attaches against surety on the replevy bond, notwithstanding the plaintiff in attachment may, after obtaining jurisdiction in personam over the defendant, have proceeded with the suit and obtained a common-law judgment thereon against the defendant. Burnette v. Johnson, 38 Ga. App. 396 , 144 S.E. 36 (1928).

Dismissal as to principal on ground of bankruptcy or death. - Since liability of sureties depends upon that of principal, if principal is discharged on ground of bankruptcy or death, case should be dismissed as a whole. Langston v. Watts, 142 Ga. 439 , 83 S.E. 92 (1914).

If, upon levy of attachment for purchase-money, defendant replevies property by giving bond and security as provided in former Civil Code 1910, § 5113, and if within four months after levy of such attachment, the defendant is adjudicated a bankrupt, the lien of attachment is void, and the principal debtor and surety on replevy bond are both discharged. Longshore v. Collier, 37 Ga. App. 450 , 140 S.E. 636 (1927).

Rights of plaintiff against sureties on replevy bond are generally the same as against the defendant. McDonald v. W.W. Kimball Co., 144 Ga. 105 , 86 S.E. 234 (1915).

When no objection was made to sufficiency of bond sureties not liable for more than amount named in bond. Jones v. Fayette Fertilizer Co., 141 Ga. 32 , 80 S.E. 306 (1913).

Bond taken for double the amount levied on sets limit. - When bond is taken for double the amount of property levied on, and judgment in attachment case is for an amount greater than the bond, judgment should be entered on the bond to the extent of the bond, no more and no less. Wilson & Co. v. Sims, 144 Ga. 685 , 87 S.E. 890 (1916).

Surety on replevy bond not necessary party to defendant's appeal of judgment. - Surety on replevy bond executed by defendant in attachment, where the obligation, which is joint and several, is to pay whatever judgment plaintiff in attachment may obtain against the defendant in attachment, including court costs, is not a necessary and essential party to an appeal by the defendant in attachment from the judgment rendered. Bunn v. Gamble, 54 Ga. App. 417 , 188 S.E. 257 (1936).

Sureties on replevy bond posted by the defendant upon attachment of the defendant's property are not necessary or essential parties to appeal following judgment against the defendant and the defendant's sureties. Patne v. Oliver, 96 Ga. App. 644 , 101 S.E.2d 154 (1957).

Liability of sureties on appeal. - Sureties are liable as security upon appeals, notwithstanding loss or destruction of property. Irvin v. Howard, 37 Ga. 18 (1867).

Sureties cannot urge after judgment against the sureties that attachment would not lie against property attached. Craig v. Herring & Turner ex rel. McCandless, 80 Ga. 709 , 6 S.E. 283 (1888).

When sheriff, unknown to plaintiff, fraudulently induced sureties to sign, legality of the bond was not affected; redress of sureties is against sheriff. Craig v. Herring & Turner ex rel. McCandless, 80 Ga. 709 , 6 S.E. 283 (1888).

Sureties making claim contrary to replevy bond. - When replevy bond executed by sureties recited that the property levied on was levied on as property of the defendant, the sureties are estopped to deny a valid levy on ground that levy failed to state that property was levied on as property of the defendant. Flegal v. Loveless, 93 Ga. App. 41 , 90 S.E.2d 606 (1955).

RESEARCH REFERENCES

ALR. - Voluntary dismissal of repleving action by plaintiff as affecting defendant's right to judgment for the return or value of the property, 2 A.L.R. 200 .

Recovery for depreciation of property between the date it was replevied and final judgment, 24 A.L.R. 1189 .

Replevin for an undivided share in or undivided quantity of a larger mass, 26 A.L.R. 1015 .

Duty to give bond and procure return of property in order to mitigate damages from its wrongful seizure under legal process, 33 A.L.R. 1479 .

Liability on bond in replevin as affected by superior title or lien of third person, or seizure thereunder, 36 A.L.R. 1102 .

Premium for redelivery bond as item of damages for wrongful attachment, 42 A.L.R. 1057 .

Sufficiency of offer or tender to satisfy requirement of judgment or condition of bond in replevin for delivery or redelivery of chattels, 57 A.L.R. 806 .

Answering to merits or giving bond for release of attachment as waiver of objections to attachment, 72 A.L.R. 120 .

Liability of surety on replevin bond as affected by amendment of pleadings in replevin, 90 A.L.R. 541 .

Right of one joint owner of personal property to maintain against third person replevin, detinue, trover, or other action to recover possession or damages, 110 A.L.R. 353 .

Recovery of damages in replevin for usable value of property detained, by successful party having only security interest as conditional vendor, chattel mortgagee, or the like, 33 A.L.R.2d 774.

Filing bond to secure release or return of seized property as appearance, 57 A.L.R.2d 1109.

Posting of redelivery bond by defendant in attachment as waiver of damages for wrongful attachment, 57 A.L.R.2d 1376.

Replevin or claim-and-delivery: Modern view as to validity of statute or contractual provision authorizing summary repossession of consumer goods sold under retail installment sales contract, 45 A.L.R.3d 1233.

18-3-34. Replevy of property of foreign corporation upon payment of bond; return of bond by levying officer; right of plaintiff to entry of judgment on bond.

When an attachment is levied on the property of a foreign corporation, any agent of the corporation may recover the property levied upon by giving a bond, with good security, conditioned to pay the amount of judgment and costs that the plaintiff in attachment may recover in the case. The officer taking the bond shall return the bond with the attachment to the court to which the attachment is made returnable; and the plaintiff shall be entitled to entry of judgment against the corporation and its sureties upon the bond for the amount of the judgment and costs entered against the corporation in the case.

(Ga. L. 1855-56, p. 25, § 33; Code 1863, § 3233; Code 1868, § 3244; Code 1873, § 3320; Code 1882, § 3320; Civil Code 1895, § 4568; Civil Code 1910, § 5114; Code 1933, § 8-702.)

JUDICIAL DECISIONS

Cited in Turner's Chapel A.M.E. Church v. Lord Lumber Co., 121 Ga. 376 , 49 S.E. 272 (1904); Parramore v. Alexander, 132 Ga. 642 , 64 S.E. 660 (1909).

RESEARCH REFERENCES

ALR. - Recovery for depreciation of property between the date it was replevied and final judgment, 24 A.L.R. 1189 .

Duty to give bond and procure return of property in order to mitigate damages from its wrongful seizure under legal process, 33 A.L.R. 1479 .

Premium for redelivery bond as item of damages for wrongful attachment, 42 A.L.R. 1057 .

Sufficiency of offer or tender to satisfy requirement of judgment or condition of bond in repleving for delivery or redelivery of chattels, 57 A.L.R. 806 .

ARTICLE 3 THIRD-PARTY CLAIMS

Law reviews. - For note discussing procedures by which one not an original party to an attachment may interpose a claim to the attached property, see 12 Ga. L. Rev. 814 (1978).

RESEARCH REFERENCES

ALR. - Right upon ground of duress to recover back money paid upon an excessive or unfounded claim to avoid an attachment, 18 A.L.R. 1233 .

Liability on bond in replevin as affected by superior title or lien of third person, or seizure thereunder, 36 A.L.R. 1102 .

Obligation of surety on attachment bond as affected by attachment defendant's adjudication in bankruptcy, 68 A.L.R. 1331 .

General denial by answer in action for conversion or replevin as permitting proof of special title, lien, or right of possession, 104 A.L.R. 1154 .

Failure or refusal to surrender possession or disclose whereabouts of property in replevin as contempt, 130 A.L.R. 632 .

Allowance, in replevin action, of loss of profits from deprivation of use of detained property, 48 A.L.R.2d 1053.

18-3-50. Procedure generally.

  1. When property is levied on by virtue of an attachment and the same is claimed by any person not a party to the attachment, it shall be the duty of the person claiming the same, his agent, or his attorney at law to make an oath before some person authorized by law to administer an oath that the property levied on is the property of the claimant and is not subject to the attachment according to the best of his knowledge and belief.
  2. The claimant shall give bond, with good security, payable to the plaintiff in attachment in a sum not larger than double the amount of the attachment levied and, where the property attached is of less value than the attachment, in the judgment of the levying officer, then in double the value of the property conditioned to pay the plaintiff all damages which the jury, on the trial of the right of property, may assess against him in case it should be made to appear that the claim was made for the purpose of delay; and, in case the claim is interposed by the agent or attorney at law of the claimant, the agent or attorney at law shall have power to sign the name of the claimant to the bond, and the claimant shall be bound in the same manner as though he had signed it himself. It shall be the duty of the levying officer taking the affidavit and bond to return the same to the court to which the attachment is returnable, unless the property levied on should be real estate, in which case it shall be his duty to return the same to the superior court of the county where the land lies, provided that, if the claimant is unable to give such bond and security, he may interpose his claim as provided in Code Section 9-15-2.

    (Laws 1814, Cobb's 1851 Digest, p. 72; Ga. L. 1855-56, p. 25, § 34; Code 1863, § 3235; Code 1868, § 3246; Code 1873, § 3322; Code 1882, § 3322; Ga. L. 1887, p. 40, § 1; Civil Code 1895, § 4569; Civil Code 1910, § 5115; Code 1933, § 8-801.)

Cross references. - Intervention generally, § 9-11-24 .

JUDICIAL DECISIONS

Intervention in action. - Claimant who alleges being the true owner is permitted to intervene in an attachment action. Trax, Inc. v. Pentagon Aero-Marine Corp., 162 Ga. App. 276 , 290 S.E.2d 196 (1982).

Construing O.C.G.A. §§ 18-3-15 and 18-3-31 in pari materia, in light of the due process requirements, the intervenor has the same right to traverse the plaintiff's affidavit of attachment as the defendant, and once the affidavit of attachment is traversed, the procedure to follow is the same as that accorded the defendant. Trax, Inc. v. Pentagon Aero-Marine Corp., 162 Ga. App. 276 , 290 S.E.2d 196 (1982).

Only issue in third-party claim requires determination of who has title. - When property is levied on by virtue of attachment and is claimed by one not party to the attachment, the only issue on trial requires determination of who has title to the property. Bank of Manchester v. Universal Credit Co., 45 Ga. App. 233 , 164 S.E. 95 (1932).

Prevailing party refusing to take property back and seeking value instead. - When tortious levy is made upon property of one not party to the process, and one files statutory claim to the property one cannot, upon recovering judgment finding the property not subject, refuse to take the property back from the officer, and instead seek to hold person causing the levy liable for the property's full market value. Maxwell v. Speth, 9 Ga. App. 745 , 72 S.E. 292 (1911).

To whom bond payable. - When a claim for property attached is not interposed until after judgment on attachment, claim bond should be made payable to the sheriff as in other claim cases. Benton v. Benson, 32 Ga. 354 (1861).

Cited in James Selman & Co. v. Shackelford, 17 Ga. 615 (1855); Manufacturers' Fin. Acceptance Corp. v. Bradley, 50 Ga. App. 138 , 177 S.E. 272 (1934); Rahal v. Titus, 107 Ga. App. 844 , 131 S.E.2d 659 (1963).

18-3-51. Delivery of property to claimant upon payment of bond; return of affidavit and bond by levying officer.

The claimant, his agent, or his attorney at law may give bond, with good security, payable to the levying officer, in a sum equal to double the value of the property claimed, the value to be judged by the levying officer, conditioned to deliver the property at the time and place of sale, provided the same should be found subject to the attachment; and, upon the delivery of the bond to the levying officer, it shall be his duty to deliver such property to the claimant, his agent, or his attorney at law; and it shall be the duty of the levying officer to return the bond, together with the affidavit and claim bond, to the court to which the attachment is returnable; and, when the claim is interposed by the agent or attorney at law of the claimant, the agent or attorney at law shall have power to sign the name of the claimant to the bond, who shall be bound thereby in the same manner as though he had signed it himself.

(Laws 1836, Cobb's 1851 Digest, p. 84; Ga. L. 1855-56, p. 25, § 36; Code 1863, § 3237; Code 1868, § 3248; Code 1873, § 3324; Code 1882, § 3324; Civil Code 1895, § 4571; Civil Code 1910, § 5117; Code 1933, § 8-803.)

JUDICIAL DECISIONS

Refusal to deliver property was a forfeiture of the bond. Stinson v. Hall, 54 Ga. 676 (1875).

Breach of bond. - There is a breach of bond when the property has been consumed or otherwise disposed of so as to render it impossible for obligors in bond to deliver the property to levying officer on demand. Manufacturers' Fin. Acceptance Corp. v. Bradley, 50 Ga. App. 138 , 177 S.E. 272 (1934).

Claimant's inability to deliver property, resulting from claimant's sale of the property, dispenses with advertisement and is a breach of claimant's bond. Lassiter v. Byrd & Coker, 55 Ga. 606 (1876).

When claimant breached claimant's bond by converting property and dismissing claimant's claim, claimant thereby waives the right, on trial of suit for breach of bond, to assert that property was not subject to attachment. Earnest v. Barrett, 55 Ga. App. 482 , 190 S.E. 635 (1937).

Cited in Thompson v. O'Connor, 115 Ga. 120 , 41 S.E. 242 (1902).

RESEARCH REFERENCES

ALR. - Recovery for depreciation of property between the date it was replevied and final judgment, 24 A.L.R. 1189 .

Sufficiency of offer or tender to satisfy requirement of judgment or condition of bond in replevin for delivery or redelivery of chattels, 57 A.L.R. 806 .

Right of one joint owner of personal property to maintain against third person replevin, detinue, trover, or other action to recover possession or damages, 110 A.L.R. 353 .

Replevin or claim-and-delivery: Modern view as to validity of statute or contractual provision authorizing summary repossession of consumer goods sold under retail installment sales contract, 45 A.L.R.3d 1233.

18-3-52. Trial of claim.

The third-party claim shall be tried in the same manner and subject to the same rules and regulations as are prescribed by law for the trial of other claims in the court to which it is returned.

(Ga. L. 1855-56, p. 25, § 35; Code 1863, § 3236; Code 1868, § 3247; Code 1873, § 3323; Code 1882, § 3323; Civil Code 1895, § 4570; Civil Code 1910, § 5116; Code 1933, § 8-802.)

JUDICIAL DECISIONS

Issue in third-party claim. - When levy was made under attachment before judgment, and a claim interposed thereto, the issue was whether property levied on was that of the defendant in attachment or that of the claimant. Cecil & Thrasher v. Gazan, 71 Ga. 631 (1883).

Admissibility of attachment proceedings. - Attachment proceedings are admissible in a claim proceeding, though judgment therein is defective. Cecil & Thrasher v. Gazan, 71 Ga. 631 (1883).

Trial of intervenor's traverse claim in the same manner as defendant's traverse. - See Trax, Inc. v. Pentagon Aero-Marine Corp., 162 Ga. App. 276 , 290 S.E.2d 196 (1982).

Cited in Curtis v. Wortsman, 26 F. 36 (S.D. Ga. 1885); Foremost Dairies, Inc. v. Kelley, 51 Ga. App. 722 , 181 S.E. 204 (1935); Rahal v. Titus, 107 Ga. App. 844 , 131 S.E.2d 659 (1963).

18-3-53. Proceedings upon failure of claimant to deliver property pursuant to conditions of bond.

Upon the failure of the claimant to deliver the property according to the conditions of the bond, the levying officer may immediately sue the claimant and security upon the bond and recover the full value of the property claimed and also all damages, costs, and charges that the plaintiff may have sustained in consequence of the failure of the claimant to deliver the property.

(Laws 1836, Cobb's 1851 Digest, p. 84; Ga. L. 1855-56, p. 25, § 37; Code 1863, § 3238; Code 1868, § 3249; Code 1873, § 3325; Code 1882, § 3325; Civil Code 1895, § 4572; Civil Code 1910, § 5118; Code 1933, § 8-804.)

JUDICIAL DECISIONS

Inability to produce property is equivalent to failure to produce property. Manufacturers' Fin. Acceptance Corp. v. Bradley, 50 Ga. App. 138 , 177 S.E. 272 (1934).

Occurrence of breach. - There is a breach of bond when property has been consumed or otherwise disposed of so as to render it impossible for obligors in bond to deliver the property to levying officer on demand. Manufacturers' Fin. Acceptance Corp. v. Bradley, 50 Ga. App. 138 , 177 S.E. 272 (1934).

Defendant raising defenses decided against defendant in prior claim case. - One who files claim to levy of attachment and replevies property by giving a forthcoming bond cannot, after judgment has been rendered in the claim case finding the property subject, set up, in defense to an action upon the forthcoming bond, any contention decided against that person by the judgment in the claim case. Thompson v. O'Connor, 115 Ga. 120 , 41 S.E. 242 (1902).

Cited in Wade v. Wortsman, 29 F. 754 (S.D. Ga. 1887).

RESEARCH REFERENCES

ALR. - Recovery for depreciation of property between the date it was replevied and final judgment, 24 A.L.R. 1189 .

Right of one joint owner of personal property to maintain against third person replevin, detinue, trover, or other action to recover possession or damages, 110 A.L.R. 353 .

Recovery of attorney's fees as damages by successful litigant in replevin or detinue action, 60 A.L.R.2d 945.

18-3-54. Liability of claimant and surety on bond for hire or use of property where plaintiff's debt unsatisfied.

  1. In cases where the claimant shall deliver the property and upon selling the same a sufficient amount shall not be raised to pay the debt and costs of the plaintiff, the plaintiff may institute an action against the claimant and his securities upon his bond and recover the full value of the hire or use of the property while the same has been in the possession of the claimant and also full damages for any deterioration of the value of the property, by use or otherwise, while the same has been in the possession of the claimant, provided such recovery shall not exceed the amount of the debt that may remain due from the defendant in attachment to the plaintiff.
  2. The remedy provided in this Code section is and shall be extended to all other claims in the cases herein provided for.

    (Ga. L. 1855-56, p. 25, § 38; Code 1863, § 3239; Code 1868, § 3250; Ga. L. 1873, p. 42, § 1; Code 1873, § 3326; Code 1882, § 3326; Civil Code 1895, § 4573; Civil Code 1910, § 5119; Code 1933, § 8-805.)

JUDICIAL DECISIONS

Cited in Frost v. Gibson, 59 Ga. 600 (1877); Walker v. Chambers & Co., 85 Ga. 136 , 11 S.E. 582 (1890).

RESEARCH REFERENCES

ALR. - Recovery for depreciation of property between the date it was replevied and final judgment, 24 A.L.R. 1189 .

Liability of garnishee to garnishing creditor for depreciation in value of property pending contest, 32 A.L.R. 572 .

Sufficiency of offer or tender to satisfy requirement of judgment or condition of bond in replevin for delivery or redelivery of chattels, 57 A.L.R. 806 .

Liability of surety on replevin bond as affected by amendment of pleadings in replevin, 90 A.L.R. 541 .

Replevin bond or redelivery bond in replevin as covering damages for detention between judgment against principal and delivery or redelivery of property, 90 A.L.R. 972 .

Right of one joint owner of personal property to maintain against third person replevin, detinue, trover, or other action to recover possession or damages, 110 A.L.R. 353 .

18-3-55. Interposition of claim before or after judgment.

In cases of attachment, the claim may be interposed either before or after judgment.

(Orig. Code 1863, § 3240; Code 1868, § 3251; Code 1873, § 3327; Code 1882, § 3327; Civil Code 1895, § 4574; Civil Code 1910, § 5120; Code 1933, § 8-806.)

JUDICIAL DECISIONS

Issue in claim interposed before judgment is whether property levied on is claimant's or defendant's. W.B. Parham & Co. v. Potts-Thompson Liquor Co., 127 Ga. 303 , 56 S.E. 460 (1907).

Claim interposed pending attachment dismissed for irregularity. - If a claim, interposed pending attachment, be dismissed for irregularity, such dismissal is no bar to another claim, after judgment on the attachment. Benton v. Benson, 32 Ga. 354 (1861).

Third person, not party to attachment, may claim property at any time before the property's sale. Simmons v. Bennett, 20 Ga. 48 (1856).

Cited in Rogers v. Bates, 19 Ga. 545 (1856); Cecil & Thrasher v. Gazan, 71 Ga. 631 (1883).

ARTICLE 4 JUDGMENT, EXECUTION, AND LEVY

18-3-70. Property bound by judgment in attachment.

When the defendant has given bond and security, or when he has appeared and made defense by himself or attorney at law without raising a valid defense of lack of jurisdiction over the person, the judgment rendered against him in such case shall bind all his property and shall have the same force and effect as when there has been personal service, and execution shall issue accordingly, but it shall be first levied upon the property attached. In all other cases, the judgment on the attachment shall only bind the property attached and the judgment shall be entered only against such property.

(Code 1933, § 8-901, enacted by Ga. L. 1982, p. 1578, § 1; Code 1981, § 18-3-70 , enacted by Ga. L. 1982, p. 1578, § 2.)

JUDICIAL DECISIONS

Cited in Keishian v. Buckley, 752 F.2d 1513 (11th Cir. 1984).

18-3-71. Setting aside judgment.

A judgment in attachment may be set aside in a court of law upon an issue suggesting fraud or want of consideration, tendered by a judgment creditor of the defendant in attachment.

(Code 1933, § 8-902, enacted by Ga. L. 1982, p. 1578, § 1; Code 1981, § 18-3-71 , enacted by Ga. L. 1982, p. 1578, § 2.)

18-3-72. Execution and levy on judgment.

After the judgment has been obtained in any case of attachment, execution shall issue as in cases at common law, which execution shall be levied in the same manner as executions issuing at common law; and the proceedings in all respects shall be the same, except that when the judgment only binds the property levied on by the attachment, as aforesaid, the execution shall be issued against such property only and that property only shall be levied on and sold.

(Code 1933, § 8-903, enacted by Ga. L. 1982, p. 1578, § 1; Code 1981, § 18-3-72 , enacted by Ga. L. 1982, p. 1578, § 2.)

18-3-73. Application of proceeds of sale.

All money raised by the sale of defendant's property or otherwise, by virtue of this chapter, shall be paid over to the creditors of the defendant, according to the priority of the lien of their judgments, except that as between attaching creditors the attachment first levied shall be first satisfied to the entire exclusion of any attachment of younger levy.

(Code 1933, § 8-904, enacted by Ga. L. 1982, p. 1578, § 1; Code 1981, § 18-3-73 , enacted by Ga. L. 1982, p. 1578, § 2.)

18-3-74. When lien arises; priorities.

The lien of an attachment is created by the levy and not the judgment in the attachment; and in case of a conflict between attachments, the first levied shall be first satisfied; but in a contest between attachments and ordinary judgments or suits, it is the judgment and not the levy which fixes the lien. However, the lien of an attachment shall have priority over the lien of an ordinary judgment that has been obtained upon a suit filed after the levy of the attachment.

(Code 1933, § 8-905, enacted by Ga. L. 1982, p. 1578, § 1; Code 1981, § 18-3-74 , enacted by Ga. L. 1982, p. 1578, § 2.)

18-3-75. Entry on attachment docket; effect of failure to make such entry.

As against the interests of third parties acting in good faith and without notice who may have acquired a transfer or lien binding any real estate, no attachment levied upon real estate shall be a lien on the same from the levy thereof unless said attachment is entered upon the attachment docket of the county in which the real estate is situated within five days from said levy. When the attachment is entered upon the docket after the five days, the lien shall date from such entry; and it shall be the duty of the sheriff to have said entry made within the five days. Nothing in this Code section shall be construed to affect the validity or force of any attachment as between the parties thereto.

(Code 1933, § 8-906, enacted by Ga. L. 1982, p. 1578, § 1; Code 1981, § 18-3-75 , enacted by Ga. L. 1982, p. 1578, § 2.)

CHAPTER 4 GARNISHMENT PROCEEDINGS

General Provisions.

Continuing Garnishment Proceedings.

Continuing Garnishment for Child Support or Spousal Support.

Garnishment Forms.

Effective date. - This chapter became effective May 12, 2016.

Cross references. - Executions and judicial sales, T. 9, C. 13.

Use of garnishment to collect taxes, § 48-2-55 .

Garnishments, Uniform Rules for the Superior Courts of Georgia, Rule 15.1.

Editor's notes. - Former Chapter 4, relating to garnishment proceedings, and consisting of Code Sections 18-4-1 through 18-4-135, was repealed by Ga. L. 2016, p. 8, § 1/SB 255, effective May 12, 2016. The former Chapter was based on Ga. L. 1976, p. 1608, §§ 1, 2; Ga. L. 1977, p. 159, §§ 1-3; Ga. L. 1977, p. 634, § 1; Ga. L. 1977, p. 783, § 1; Ga. L. 1980, p. 1769, §§ 1-8; Ga. L. 1981, p. 383, § 1; Ga. L. 1981, p. 804, § 1; Ga. L. 1982, p. 3, § 18; Ga. L. 1983, p. 454, § 1; Ga. L. 1983, p. 683, § 1; Ga. L. 1984, p. 370, §§ 1, 2; Ga. L. 1984, p. 1319, § 2; Ga. L. 1985, p. 149, § 18; Ga. L. 1985, p. 785, §§ 1, 2; Ga. L. 1985, p. 1632, §§ 1-5; Ga. L. 1990, p. 360, § 1; Ga. L. 1996, p. 317, § 1; Ga. L. 1997, p. 941, §§ 1-5; Ga. L. 1997, p. 1613, § 5; Ga. L. 1999, p. 81, § 18; Ga. L. 2000, p. 1589, § 3; Ga. L. 2006, p. 119, § 1/HB 149; Ga. L. 2009, p. 453, § 2-2/HB 228; Ga. L. 2012, p. 2, §§ 1-17/HB 683; Ga. L. 2014, p. 482, §§ 7-9/SB 386.

Law reviews. - For article as to federal restrictions on garnishment, see 21 Mercer L. Rev. 495 (1970). For article, "Garnishment Restrictions Under Federal Law," see 6 Ga. St. B.J. 399 (1970). For article critically analyzing the various elements constitutionally required for prejudgment seizure of a debtor's property, focusing on § 9-503 of the U.C.C., see 28 Mercer L. Rev. 665 (1977). For article on the 2016 enactment of this chapter, see 33 Ga. St. U. L. Rev. 41 (2016). For note discussing the constitutionality of former Georgia garnishment laws, see 28 Mercer L. Rev. 341 (1976). For note discussing intervention by defendants and third persons into garnishment proceedings, see 12 Ga. L. Rev. 814 (1978). For note discussing notice and judicial supervision in postjudgment garnishment in Georgia, see 26 Emory L.J. 597 (1977). For comment discussing due process problems with Georgia's prejudgment procedures prior to the adoption of the 1976 Acts on garnishment, in light of Hall v. Stone, 229 Ga. 96 , 189 S.E.2d 403 (1972), see 9 Ga. St. B.J. 336 (1973).

JUDICIAL DECISIONS

Editor's notes. - In light of the similarity of the statutory provisions, decisions under former Ga. L. 1855-6, pp. 36, 37, former Civil Code 1895, §§ 4705, 4709, and former Civil Code 1910, §§ 5265, 5268, and 5269, and Ga. L. 1976, p. 1608, § 1 et seq (former O.C.G.A. T. 18, C. 4) are included in the annotations for this chapter.

Due process compliance. - Garnishment in attachment must comply with defendant's due process rights under a valid garnishment statute. Coursin v. Harper, 144 Ga. App. 4 , 240 S.E.2d 565 (1977) (decided under former law).

Proceedings on garnishment in attachment which do not comply with statutory provisions violate defendant's due process rights under United States and Georgia Constitutions. Coursin v. Harper, 144 Ga. App. 4 , 240 S.E.2d 565 (1977) (decided under former law).

Constitutional requirements for garnishment proceedings. - See North Ga. Finishing, Inc. v. Di-Chem, Inc., 419 U.S. 601, 95 S. Ct. 719 , 42 L. Ed. 2 d 751 (1975) (decided under former law).

Garnishment must be strictly pursued. - Garnishment proceeding is a distinct suit against a separate party, and for an entirely new cause of action, and such proceeding, being purely statutory and in derogation of common law, must be strictly pursued. Anderson v. Ledbetter-Johnson Contractors, 62 Ga. App. 732 , 9 S.E.2d 860 (1940) (decided under former law).

No constitutional right to jury trial. - Former Georgia garnishment law was a special statutory proceeding enacted subsequent to the first Georgia Constitution and was in derogation of the common law. Thus, a garnishment action was not a civil action of such a nature in which a trial by jury was guaranteed. Mull v. Mull, 167 Ga. App. 687 , 307 S.E.2d 675 (1983) (decided under former O.C.G.A. T. 18, C. 4).

Garnishment constitutes a distinct suit against separate party for an entirely new cause of action. Ahrens & Ott Mfg. Co. v. Patton Sash, Door & Bldg. Co., 94 Ga. 247 , 21 S.E. 523 (1894) (decided under former Ga. L. 1855-56, p. 36); Woods v. Massachusetts Mills, 17 Ga. App. 422 , 87 S.E. 688 (1916); Lamb v. Whitman, 17 Ga. App. 687 , 87 S.E. 1095 (1916); Jones v. Maril, 19 Ga. App. 216 , 91 S.E. 445 (1917) (decided under former Civil Code 1910, § 5265).

Issuance of successive summons of garnishment is permissible. Born v. Williams & Bro., 81 Ga. 796 , 7 S.E. 868 (1888); Pratt v. Young, 90 Ga. 39 , 15 S.E. 630 (1892), (decided under former Ga. L. 1855-56, p. 37).

Original summons is served, rather than a copy thereof, and it is unnecessary that a copy be put on file. 397 U.S. 1008, 90 S. Ct. 1236 , 25 L. Ed. 2 d 421 (1970) (decided under former Civil Code 1910, § 5269).

Only evidence record showing to whom summons directed and to what court returnable is officer's entry. Tifton Compress Co. v. Robinson, 31 Ga. App. 350 , 120 S.E. 701 (1923) (decided under former Civil Code 1910, § 5269).

Waiver. - Appearance and pleading waives all objections to process and return of officer. Flournoy & Epping v. Rutledge, 73 Ga. 735 (1884) (decided under former Ga. L. 1855-56, p. 37).

Defective service waived by appearance of garnishee. Dooly v. Miles, 101 Ga. 797 , 29 S.E. 118 (1897) (decided under former Civil Code 1895, § 4709).

Summons returnable to justice court, when main suit pending in the superior court, is void. Durden v. Belt, 61 Ga. 545 (1878) (decided under former Ga. L. 1855-56, p. 37).

Reliance on officer's promise to notify garnishee when to answer. - Promise by officer that the officer would notify garnishee when to answer, coupled with sheer ignorance on part of latter, was not an excuse. Jones v. Bibb Brick Co., 120 Ga. 321 , 48 S.E. 25 (1904) (decided under former Civil Code 1895, § 4709).

Attorney at law of corporation cannot verify answer. Plant & Son v. Mutual Life Ins. Co., 92 Ga. 636 , 19 S.E. 719 (1893) (decided under Ga. L. 1855-56, p. 37).

Failure to make timely answer. - Garnishee cannot attack judgment for causes anterior to rendition when garnishee failed to make timely answer. Henderson v. Mutual Fertilizer Co., 150 Ga. 465 , 104 S.E. 229 (1920) (decided under former Civil Code 1910, § 5269).

Damages when plaintiff fails in original suit. - When the plaintiff fails to recover in original suit, the defendant may recover as damages the premium on, and expenses paid in procuring dissolution bond, and reasonable attorneys fees. Collins v. Myers, 30 Ga. App. 151 , 117 S.E. 265 (1923) (decided under former Civil Code 1910, § 5268).

Defendant's unliquidated claim for damages against garnishee. - Claim, debt, or demand owing by garnishee to the defendant, to be subject to process of garnishment cannot be an unliquidated claim for damages against the garnishee. Curtis v. Bailey, 51 Ga. App. 119 , 179 S.E. 633 (1935) (decided under former Civil Code 1910, § 5265).

Debt due jointly to defendant and nonparty, by weight of authority, cannot be garnished. Bryant v. McCrary, 40 Ga. App. 685 , 151 S.E. 236 (1929) (decided under former Civil Code 1910, § 5265).

Effect on lien of garnishment of subsequent bankruptcy proceeding. - See Henley v. Colonial Stages S., Inc., 56 Ga. App. 722 , 193 S.E. 905 (1937) (decided under former Civil Code 1910, § 5265).

Garnishment proceedings are purely statutory and cannot be extended to property not subject to process. Weston v. Beverly & McCollum, 10 Ga. App. 261 , 73 S.E. 404 (1912) (decided under former Civil Code 1910, § 5265).

Tort for conversion must be reduced to final judgment before garnishment will lie. Southern Ry. v. Hodgson Bros. Co., 148 Ga. 851 , 98 S.E. 541 (1919) (decided under former Civil Code 1910, § 5265).

Garnishment lies in suit on dormant judgment. Bridges v. North, 22 Ga. 52 (1857) (decided under Ga. L. 1855-6, p. 36); Atlanta & W.P.R.R. v. Farmers' Exch., 6 Ga. App. 405 , 65 S.E. 165 (1909) (decided under former Civil Code 1895, § 4705).

RESEARCH REFERENCES

C.J.S. - 38 C.J.S., Garnishment, §§ 1 et seq., 60 et seq., 209 et seq.

ALR. - Right of one to summon or charge himself as garnishee, 31 A.L.R. 711 , 61 A.L.R. 1458 .

Liability of garnishee to garnishing creditor for depreciation in value of property pending contest, 32 A.L.R. 572 .

Attachment or garnishment of goods covered by negotiable warehouse receipt, 40 A.L.R. 969 .

Judgment as subject to garnishment in another court of the state in which it was rendered, 43 A.L.R. 190 .

Garnishee's duty as to protection of rights of principal defendant or third person, 45 A.L.R. 646 .

Garnishment of carrier in respect of goods shipped, 46 A.L.R. 933 .

Garnishment of fire insurer, 53 A.L.R. 724 .

Foreign attachment or garnishment upon which jurisdiction is dependent resting upon property coming into hands of garnishee, or obligations having their inception, after service of the writ, 53 A.L.R. 1022 .

Garnishment of salaries, wages, or commissions not expressly exempted by statute, 56 A.L.R. 601 .

Accounts in one's hands for collection as subject of garnishment, 60 A.L.R. 884 .

Expiration of period of life of judgment as affecting pending garnishment proceeding by judgment creditor against one indebted to judgment debtor, 75 A.L.R. 1359 .

Interest of mortgagor or pledgor in property in possession of mortgagee or pledgee as subject of garnishment, 83 A.L.R. 1383 .

Attachment or garnishment as interference with foreign or interstate commerce, 85 A.L.R. 1395 .

Effect as between garnishor and principal defendant in garnishment of judgment against garnishee, 103 A.L.R. 839 .

Home Owners' Loan Corporation or other similar agency as subject to garnishment, 108 A.L.R. 705 .

Affidavit of substantial defense to the merits in an attachment or garnishment proceeding as a general appearance, 116 A.L.R. 1215 .

Garnishment as remedy in case of violation of bulk sales law, 155 A.L.R. 1061 .

Removability to federal court of garnishment proceedings, 22 A.L.R.2d 904.

Garnishee's pleading, answering interrogatories, or the like, as affecting his right to assert court's lack of jurisdiction, 41 A.L.R.2d 1093.

Right of garnishee, other than bank holding deposit, to set off claims not due or certain when garnishment is served, 57 A.L.R.2d 700.

Recovery of damages for mental anguish, distress, suffering, or the like, in action for wrongful attachment, garnishment, sequestration, or execution, 83 A.L.R.3d 598.

ARTICLE 1 GENERAL PROVISIONS

Law reviews. - For note, "Postjudgment Garnishment in Georgia: Acting Largely in the Dark," see 12 Ga. L. Rev. 60 (1977). For note discussing postjudgment garnishment as a creditor's remedy, see 12 Ga. L. Rev. 814 (1978).

JUDICIAL DECISIONS

Editor's notes. - In light of the similarity of the statutory provisions, decisions under former Ga. L. 1976, p. 1608, § 1 et seq (former O.C.G.A. T. 18, C. 4) are included in the annotations for this article.

Constitutionality. - Postjudgment garnishment procedure meets requirements of judicial supervision and notice, and is not unconstitutional for those reasons. Easterwood v. LeBlanc, 240 Ga. 61 , 239 S.E.2d 383 (1977); Farmer v. Farmer, 147 Ga. App. 387 , 249 S.E.2d 106 (1978) (decided under former Ga. L. 1976, p. 1608, § 1 et seq).

(decided under former Ga. L. 1976, p. 1608, § 1 et seq).

Georgia's garnishment statutes prior to July 1, 1975, were unconstitutional in prejudgment and postjudgment garnishment cases. Madsen v. Memorial Sales of Ga., Inc., 140 Ga. App. 178 , 230 S.E.2d 115 (1976) (decided under former Ga. L. 1976, p. 1608, § 1 et seq).

RESEARCH REFERENCES

ALR. - Attachment or garnishment of goods covered by negotiable warehouse receipt, 40 A.L.R. 969 .

Garnishment of carrier in respect of goods shipped, 46 A.L.R. 933 .

Attachment or garnishment as interference with foreign or interstate commerce, 85 A.L.R. 1395 .

Local property of insolvent foreign corporation for which a liquidator or receiver has been appointed in another state as subject to sequestration or seizure under execution or attachment, 98 A.L.R. 351 .

Effect as between garnishor and principal defendant in garnishment of judgment against garnishee, 103 A.L.R. 839 .

Bank deposit as subject of garnishment for debt of depositor as affected by previous acts by bank in relation to deposit, 107 ALR 697.

Effect of judgment in garnishment proceedings as between garnishee and principal defendant, 166 A.L.R. 272 .

Recovery of damages for mental anguish, distress, suffering, or the like, in action for wrongful attachment, garnishment, sequestration, or execution, 83 A.L.R.3d 598.

18-4-1. Definitions.

As used in this chapter, the term:

  1. "Disposable earnings" means that part of the earnings of an individual remaining after the deduction for federal income tax, state income tax, withholdings for the Federal Insurance Contributions Act (FICA), and other mandatory deductions required by law.
  2. "Earnings" means compensation paid or payable for personal services, whether denominated as wages, salary, commission, fee, bonus, tips, overtime, or severance pay, including recurring periodic payments from pensions or retirement plans, including, but not limited to, the United States Department of Veterans Affairs, Railroad Retirement Board, Keoghs, and individual retirement accounts.
  3. "Entity" means a public corporation or a corporation, limited liability company, partnership, limited partnership, professional corporation, firm, or other business organization other than a natural person.
  4. "Financial institution" means every federal or state chartered commercial or savings bank, including savings and loan associations and cooperative banks, federal or state chartered credit unions, benefit associations, insurance companies, safe-deposit companies, trust companies, any money market mutual fund, or other organization held out to the public as a place of deposit of funds or medium of savings or collective investment.
  5. "Garnishee answer" or "garnishee's answer" means the response filed by a garnishee responding to a summons of garnishment detailing the money or other property of the defendant that is in the possession of the garnishee or declaring that the garnishee holds no such money or other property of the defendant.
  6. "Public corporation" means any department, agency, branch of government, or political subdivision, as such term is defined in Code Section 50-15-1 , or any public board, bureau, commission, or authority created by the General Assembly. (Code 1981, § 18-4-1 , enacted by Ga. L. 2016, p. 8, § 1/SB 255.)

U.S. Code. - The federal Insurance Contributions Act, referred to in this Code section, is codified at 26 U.S.C. § 3101 et seq.

JUDICIAL DECISIONS

Financial institution did not include insurance company garnished as employer. - Insurance company was not a "financial institution" under the financial institution garnishment scheme, O.C.G.A. §§ 18-4-1(4) and 18-4-4(c)(2), when the insurance company was garnished based on earnings that the company owed the debtor as the debtor's former employer; rather, the statutes envisioned places of deposit for a debtor's funds or investments. Blach v. Diaz-Verson, 303 Ga. 63 , 810 S.E.2d 129 (2018).

18-4-2. Uniform procedures for garnishment; entitlement to procedures; application of the Civil Practice Act; amendment.

  1. The procedure in garnishment cases shall be uniform in all courts throughout this state that have jurisdiction to preside over garnishment proceedings.
  2. In all cases when a money judgment was obtained in a court of this state or a federal court or is being enforced in this state as provided in Article 5 of Chapter 12 of Title 9, the "Uniform Foreign-Country Money Judgments Recognition Act," or Article 6 of Chapter 12 of Title 9, the "Uniform Enforcement of Foreign Judgments Law," the plaintiff shall be entitled to the process of garnishment.
  3. Except as otherwise provided in this chapter, Chapter 11 of Title 9 shall apply in garnishment proceedings.
  4. Any affidavit, garnishee answer, or pleading required or permitted by this chapter shall be amendable at any time before judgment is entered or before money or other property subject to garnishment is distributed by the court. (Code 1981, § 18-4-2 , enacted by Ga. L. 2016, p. 8, § 1/SB 255.)

JUDICIAL DECISIONS

Editor's notes. - In light of the similarity of the statutory provisions, decisions under former Ga. L. 1884-55, p. 54, former Civil Code 1895, § 4708, former Civil Code 1910, §§ 5265 and 5268, former Ga. L. 1976, p. 1608, § 1, former O.C.G.A. § 18-4-3 , and former O.C.G.A. T. 18, Ch. 4, Art. 4 are included in the annotations for this Code section.

Constitutionality. - Postjudgment garnishment procedure meets requirements of judicial supervision and notice, and is not unconstitutional for those reasons. Easterwood v. LeBlanc, 240 Ga. 61 , 239 S.E.2d 383 (1977) (decided under former Ga. L. 1976, p. 1608, § 1); Farmer v. Farmer, 147 Ga. App. 387 , 249 S.E.2d 106 (1978) (decided under former Ga. L. 1976, p. 1608, § 1).

Post-judgment garnishment proceedings are not unconstitutional for lack of due process. Morgan v. Morgan, 156 Ga. App. 726 , 275 S.E.2d 673 (1980) (decided under former Ga. L. 1976, p. 1608, § 1).

Amendment after evidence but prior to judgment. - It was not error to allow a party to amend the party's garnishment affidavit only a few days before judgment, and after all the evidence had been presented. Coleman v. Burnett, 169 Ga. App. 297 , 312 S.E.2d 627 (1983) (decided under former O.C.G.A. § 18-4-3 ).

Absence of a judge's or clerk's signature on an affidavit for garnishment did not constitute a nonamendable defect justifying the grant of a motion to set aside a judgment. Horizon Credit Corp. v. Lanier Bank & Trust Co., 220 Ga. App. 362 , 469 S.E.2d 452 (1996) (decided under former O.C.G.A. § 18-4-3 ).

Parties to proceedings. - Post-judgment garnishments primarily involve a plaintiff (bank) and garnishee (employer) with a very limited right of participation by the defendant (debtor). Flournoy v. Pate (In re Antley), 18 Bankr. 207 (Bankr. M.D. Ga. 1982) (decided under former O.C.G.A. T. 18, Ch. 4, Art. 4).

Defendant debtor was not a "party" to a garnishment proceeding, although provision was made in former O.C.G.A. § 18-4-64 for defendant debtor to receive notice. The defendant debtor at the defendant debtor's option may become a party by compliance with former O.C.G.A. § 18-4-93 for the limited purposes set out in former O.C.G.A. § 18-4-65. Flournoy v. Pate (In re Antley), 18 Bankr. 207 (Bankr. M.D. Ga. 1982) (decided under former O.C.G.A. T. 18, Ch. 4, Art. 4).

Dismissal of proceeding upon notification of bankruptcy. - Judgment creditor's attorney had an affirmative duty to dismiss the garnishment proceeding upon notification of bankruptcy. Dennis v. Pentagon Fed. Credit Union, 17 Bankr. 558 (Bankr. M.D. Ga. 1982) (decided under former O.C.G.A. T. 18, Ch. 4, Art. 4).

Proceedings must be based on a domestic, not a foreign judgment. Union Inv. Co. v. Southern Ry., 32 Ga. App. 478 , 124 S.E. 77 , cert. denied, 32 Ga. App. 808 (1924) (decided under former Civil Code 1910, § 5265).

Separate affidavit and bond is required for each judgment as to which garnishment is sought. Rich & Co. v. Kiser & Co., 61 Ga. 370 (1878) (decided under former Ga. L. 1884-55, p. 54).

Impact of consolidation. - Consolidation by assignee of two executions issued on judgments obtained in separate suits in affidavit and bond renders proceedings illegal and void. Morgan v. Latham, 111 Ga. 835 , 36 S.E. 99 (1900) (decided under former Civil Code 1895, § 4708); Wright v. Stewart, 22 Ga. App. 655 , 97 S.E. 193 (1918) (decided under former Civil Code 1910, § 5268).

RESEARCH REFERENCES

C.J.S. - 38 C.J.S., Garnishment, § 140 et seq.

ALR. - Discharge of attachment or garnishment, or bond for its dissolution, by subsequent amendment of pleadings or writ, 74 A.L.R. 912 .

18-4-3. Affidavit and requirements; summons of garnishment.

  1. The plaintiff, the plaintiff's attorney, or the plaintiff's agent shall make, on personal knowledge or belief, an affidavit setting forth that the plaintiff has a judgment against a named defendant, the amount remaining due on the judgment, the name of the court which rendered the judgment, and the case number thereof.
  2. Upon the filing of the affidavit described in subsection (a) of this Code section with the clerk of any court having jurisdiction to preside over garnishment proceedings, such clerk shall cause a summons of garnishment to issue, provided that the plaintiff's affidavit is made before any officer authorized to administer oaths, a notary public, such clerk, or the deputy clerk of the court in which the garnishment is filed.
  3. An affidavit of garnishment may be electronically submitted to the clerk or deputy clerk of the court if the court has promulgated rules authorizing such submission.
  4. The form for an affidavit of garnishment is set forth in Code Section 18-4-71 . (Code 1981, § 18-4-3 , enacted by Ga. L. 2016, p. 8, § 1/SB 255; Ga. L. 2018, p. 820, § 1/SB 194.)

The 2018 amendment, effective May 8, 2018, substituted the present provisions of subsection (b) for the former provisions, which read: "Upon the filing of the affidavit described in subsection (a) of this Code section with the clerk of any court having jurisdiction to preside over garnishment proceedings, such clerk shall cause a summons of garnishment to issue, provided that the plaintiff's affidavit is:

"(1) Made before any officer authorized to administer oaths, a notary public, such clerk, or the deputy clerk of the court in which the garnishment is filed; and

"(2) Submitted to and approved by any judge of the court in which the garnishment is filed or submitted to and approved by any clerk or deputy clerk of such court if the court has promulgated rules authorizing the clerk or deputy clerk of such court to review and approve affidavits of garnishment."

Law reviews. - For article discussing due process problems with Georgia's post-judgment garnishment procedures, in light of City Fin. Co. v.Winston, 238 Ga. 10 , 231 S.E.2d 45 (1976), see 13 Ga. St. B.J. 144 (1977).

JUDICIAL DECISIONS

ANALYSIS

General Consideration

Editor's notes. - In light of the similarity of the statutory provisions, decisions under former Civil Code 1895, § 4708, former Code 1933, § 46-102 as it read after passage of Ga. L. 1976, p. 1608, § 1 and former O.C.G.A. § 18-4-61 are included in the annotations for this Code section.

Present obligation necessary. - Garnishment on apprehension that some amount might become due in the future is not authorized. Kirchman v. Kirchman, 212 Ga. 488 , 93 S.E.2d 685 (1956) (decided under former law).

Jurisdiction over garnishment of U.S. Marine Corps member's pay. - Georgia trial court had jurisdiction to consider a wife's garnishment of her husband's U.S. Marine Corps pay to collect past due child support, despite the fact that the Marine Corps Finance Center (the garnishee) was located in Missouri and the husband was stationed in North Carolina. Souza v. Souza, 196 Ga. App. 59 , 395 S.E.2d 298 , cert. denied, 196 Ga. App. 909 , 397 S.E.2d 166 (1990) (decided under former O.C.G.A. § 18-4-61).

Claim for interest waived. - Because the plaintiffs failed to timely put an insurer on notice that the plaintiffs were seeking to garnish the interest accruing on an underlying consent judgment with the insured, the plaintiffs claim for that interest was waived under former O.C.G.A. § 18-4-61.(decided under former O.C.G.A. § 18-4-61).

Garnishee holding funds of judgment debtor. - One need not know prior to making affidavit that the garnishee holds funds or property of the judgment debtor. Fidelity Nat'l Bank v. KM Gen. Agency, Inc., 244 Ga. 753 , 262 S.E.2d 67 (1979) (decided under former Code 1933, § 46-102).

Name of garnishee need not be stated in affidavit for garnishment. Gainesville Feed & Poultry Co. v. Waters, 87 Ga. App. 354 , 73 S.E.2d 771 (1952) (decided under former law).

Affidavits subscribed to before unauthorized persons. - When garnishment or attachment affidavits are subscribed to before unauthorized persons, proceedings are void ab initio rendering judgments based thereon likewise void. Jenkins v. Community Loan & Inv. Corp., 120 Ga. App. 543 , 171 S.E.2d 654 (1969) (decided under former law).

Absence of a judge's or clerk's signature on an affidavit for garnishment did not constitute a nonamendable defect justifying the grant of a motion to set aside a judgment. Horizon Credit Corp. v. Lanier Bank & Trust Co., 220 Ga. App. 362 , 469 S.E.2d 452 (1996) (decided under former O.C.G.A. § 18-4-61).

Fieri facias need not issue along with or follow judgment prior to issuance of summons of garnishment. Black v. Black, 245 Ga. 281 , 264 S.E.2d 216 (1980) (decided under former Code 1933, § 46-102).

Amount stated in affidavit may be less than ad damnum clause in original suit. The latter may be reduced by amendment. Seaboard Air-Line Ry. v. Hutchinson, 4 Ga. App. 526 , 62 S.E. 97 (1908) (decided under former Civil Code 1895, § 4708).

Constitutionality

Garnishment procedure meets due process requirements. - Constitutional due process requirements are adequately met by judicial supervision and notice to the defendant mandated by the statutory procedure for garnishments. Black v. Black, 245 Ga. 281 , 264 S.E.2d 216 (1980) (decided under former O.C.G.A. § 18-4-61).

Compliance of garnishment procedure with due process requirements. - See Antico v. Antico, 241 Ga. 294 , 244 S.E.2d 820 (1978) (decided under former Code 1933, § 46-102).

RESEARCH REFERENCES

Am. Jur. 2d. - 6 Am. Jur. 2d, Attachment and Garnishment, § 330 et seq.

C.J.S. - 38 C.J.S., Garnishment, § 158 et seq.

ALR. - Waiver or admission by garnishee as affecting principal defendant, 64 A.L.R. 430 .

Liability of garnishee to garnisher where former pays debt or releases property pending defective garnishment proceedings, 89 A.L.R. 975 .

Resident or foreign corporation doing business within state as subject to garnishment because of indebtedness to nonresident who in turn is indebted to nonresident principal defendant, 116 A.L.R. 387 .

18-4-4. Process of garnishment; period of garnishment.

  1. All obligations owed by the garnishee to the defendant at the time of service of the summons of garnishment upon the garnishee and all obligations accruing from the garnishee to the defendant throughout the garnishment period shall be subject to the process of garnishment. No payment made by the garnishee to the defendant or on his or her behalf, or by any arrangement between the defendant and the garnishee, after the date of service of the summons of garnishment upon the garnishee shall defeat the lien of such garnishment.
  2. All money or other property of the defendant in the possession or control of the garnishee at the time of service of the summons of garnishment upon the garnishee or coming into the possession or control of the garnishee throughout the garnishment period shall be subject to the process of garnishment, provided that, in the case of collateral securities in the hands of a creditor, such securities shall not be subject to garnishment so long as there is an amount owed on the debt for which the securities were given as collateral.
  3. The garnishment period shall begin on the day of service of the summons of garnishment and, for:
    1. A continuing garnishment, shall include the next 179 days;
    2. Garnishments, other than a continuing garnishment or continuing garnishment for support, served on a financial institution, shall include the next five days;
    3. A continuing garnishment for support, shall remain for so long as the defendant is employed by the garnishee and shall not terminate until the original arrearage is retired; and
    4. All other garnishments, shall include the next 29 days. (Code 1981, § 18-4-4 , enacted by Ga. L. 2016, p. 8, § 1/SB 255.)

Law reviews. - For comment on Reeves v. Motor Contract Co., 324 F. Supp. 1011 (N.D. Ga. 1971), see 23 Mercer L. Rev. 369 (1972).

JUDICIAL DECISIONS

ANALYSIS

General Consideration

Editor's notes. - In light of the similarity of the statutory provisions, decisions under former Ga. L. 1855-56, p. 36; former Ga. L. 1872, p. 43; former Ga. L. 1880-81, p. 109; former Civil Code 1895, §§ 4712 and 4732; former Civil Code 1910, §§ 5265, 5272, 5273, 5296, and 5298; former Code 1933, §§ 46-201, 46-203, and 46-208 as they read prior to revision of Chapter 46-2 by Ga. L. 1976, p. 1608, § 1; former Code 1933, §§ 46-101 and 46-301 as they read after passage of Ga. L. 1976, p. 1608, § 1; and former O.C.G.A. §§ 18-4-20 and 18-4-60 are included in the annotations for this Code section.

Constitutionality. - Bank account holder whose accounts contained funds that were exempt from garnishment had standing to challenge the constitutionality of the garnishment statute as there was a substantial likelihood the account holder would suffer future garnishment proceedings and the return of the account holder's previously garnished funds did not moot the action because the "capable of repetition, yet evading review" exception applied. Strickland v. Alexander, 772 F.3d 876 (11th Cir. 2014) (decided under former O.C.G.A. § 18-4-60).

Garnishment is a purely statutory proceeding, and will not be extended so as to reach money or property of the defendant not made subject thereto by statute. Hartsfield Co. v. Zakas Bakery, 50 Ga. App. 284 , 177 S.E. 825 (1934) (decided under former Civil Code 1910, § 5272).

Garnishment proceedings are purely statutory, in derogation of common law, and must be strictly pursued. Arnold v. Citizens' & S. Nat'l Bank, 47 Ga. App. 254 , 170 S.E. 316 (1933) (decided under former law).

Garnishment proceedings are purely statutory and cannot be extended to cases not enumerated in statute. Kirchman v. Kirchman, 212 Ga. 488 , 93 S.E.2d 685 (1956) (decided under former law).

As garnishment proceedings are purely statutory the proceedings cannot be extended to cases not enumerated in the statutes, and courts have no power to enlarge the remedy or hold under it property not made subject to process. Undercofler v. Brosnan, 113 Ga. App. 475 , 148 S.E.2d 470 (1966) (decided under former law).

Process of garnishment issued upon any ground not authorized by statute is without authority of law, and judgment based upon it is binding upon no one. Undercofler v. Brosnan, 113 Ga. App. 475 , 148 S.E.2d 470 (1966) (decided under former law).

Purpose of garnishment lien. - Purpose of garnishment proceeding is to assure that property in hands of third party is held subject to order of the court until conflicting claims are adjudicated. It frequently has been held that a judgment creates no lien on choses in action belonging to the defendant. Carmichael Tile Co. v. Yaarab Temple Bldg. Co., 177 Ga. 318 , 170 S.E. 294 (1933) (decided under former Civil Code 1910, § 5273).

Garnishment lien is intended to reach something actually due the defendant and which the defendant could force the garnishee to pay. A.C. White Transf. & Storage Co. v. Grady Mem. Hosp., 151 Ga. App. 751 , 261 S.E.2d 476 (1979) (decided under former Ga. L. 1976, p. 1608, § 1).

Presence of a debt is necessary to validity of garnishment process. In re Eidson, 6 Bankr. 613 (Bankr. N.D. Ga. 1980) (decided under former Ga. L. 1976, p. 1608, § 1).

Underlying debt is essential for validity of garnishment. In re Eidson, 6 Bankr. 613 (Bankr. N.D. Ga. 1980) (decided under former Ga. L. 1976, p. 1608, § 1).

When no debt is owed by garnishee to the defendant, there is no basis for garnishment. Goodyear Tire & Rubber Co. v. New Amsterdam Cas. Co., 101 Ga. App. 577 , 114 S.E.2d 546 (1960) (decided under former Code 1933, § 46-201, as it read prior to revision by Ga. L. 1976, p. 1608, § 1).

Garnishments issued under void judgments are also void. In re Eidson, 6 Bankr. 613 (Bankr. N.D. Ga. 1980) (decided under former Ga. L. 1976, p. 1608, § 1).

Garnishment operates both on person of garnishee and on debt itself. - Garnishment proceeding notifies the debtor not to pay the debt, operates to arrest the debt's payment, fixes a lien upon it, and ultimately subjects it to the plaintiff's claim. Thus, it operates both on the person of the garnishee and on the debt itself. In re Eidson, 6 Bankr. 613 (Bankr. N.D. Ga. 1980) (decided under former Ga. L. 1976, p. 1608, § 1).

Garnishment action properly allowed. - Trial court did not err by allowing a garnishment action to proceed because the garnishor was not pursuing a reverse-piercing claim, or any other equitable action, against the garnishee, rather, the action arose from a garnishment action expressly authorized by law. Carrier411 Servs. v. Insight Tech., Inc., 322 Ga. App. 167 , 744 S.E.2d 356 (2013) (decided under former O.C.G.A. § 18-4-20 ).

Garnishment law not intended to violate existing contracts or restrain right to contract. - Garnishee is bound by existing liens on property in the garnishee's hands, and while garnishment law is to prevent evasions and subterfuges, it does not intend to violate existing contracts or restrain right to contract, but is only intended to reach something actually due the defendant and which the defendant could recover personally. J. Austin Dillon Co. v. Edwards Shoe Stores, Inc., 53 Ga. App. 437 , 186 S.E. 470 (1936) (decided under former Code 1933, § 46-208).

Salespersons earnings not subject to garnishment. - One who sells bread, cakes, and pastries for a baking company, receiving as remuneration therefore 10 percent of the cash purchase-price of all such products sold by that person, the company furnishing daily an automobile truck to haul and deliver the bread and pies, with the necessary gasoline to operate the truck, and also the necessary products for such salesperson to sell, it being the arrangement and agreement that at the end of each day the salesperson shall account to the company for the products sold that day, delivering to the company 90 percent of the cash sales, and all unsold bread, and retaining for the salesperson 10 percent thereof, does not earn any salary, wages, or other compensation for selling such bakery products as can be reached by or subjected to the process of garnishment served upon the baking company in proceedings against the salesperson. Hartsfield Co. v. Zakas Bakery, 50 Ga. App. 284 , 177 S.E. 825 (1934) (decided under former Civil Code 1910, § 5273).

Judgment creditor is bound by existing counter-claims, setoffs, pledges, encumbrances, or liens, though they may be unrecorded. Owens v. Atlanta Trust & Banking Co., 122 Ga. 521 , 50 S.E. 379 (1905) (decided under former Civil Code 1895, § 4712).

Garnishment lien attaches upon service of summons. - Service of garnishment operates as an inchoate lien until judgment is rendered against garnishee. Such inchoate lien becomes a complete lien upon, and in virtue of, rendition of judgment against garnishee, after which time the legal rights of the creditor are fixed, dating from service of garnishment. Carmichael Tile Co. v. Yaarab Temple Bldg. Co., 177 Ga. 318 , 170 S.E. 294 (1933) (decided under former Civil Code 1910, § 5273).

Garnishing creditor has, as to any property, money, or effects of garnishee's debtor that may be caught in hands of garnishee, an inchoate lien, which arises on service of summons of garnishment. Shabaz v. Henn, 48 Ga. App. 441 , 173 S.E. 249 (1934) (decided under former Civil Code 1910, § 5273).

Service of summons operates as a lien upon all garnishee's indebtedness to the defendant, and on all accruing indebtedness, which lien shall not be defeated by any payments to defendant or other arrangements between a defendant and a garnishee. J. Austin Dillon Co. v. Edwards Shoe Stores, Inc., 53 Ga. App. 437 , 186 S.E. 470 (1936) (decided under former Code 1933, § 46-201, as it read prior to revision by Ga. L. 1976, p. 1608, § 1).

As to nature of lien created upon service of summons of garnishment, see Ownby v. Wager, 64 Ga. App. 433 , 13 S.E.2d 686 (1941) (decided under former Code 1933, § 46-203, as it read prior to revision by Ga. L. 1976, p. 1608, § 1).

Lien attaches to the garnished funds when the summons of garnishment is served. Ameron Protective Coatings Div. v. Georgia Steel, Inc., 25 Bankr. 781 (Bankr. M.D. Ga. 1982) (decided under former O.C.G.A. § 18-4-20 ).

Garnishee to whom defendant is indebted has lien superior to plaintiff in garnishment. - If debtor is indebted to garnishee, the latter has a lien on funds coming into the garnishee's hands, or future indebtedness to the debtor, superior to that of the plaintiff in garnishment; the garnishee is entitled to pay oneself before the garnishee is required to collect for the benefit of others, and this applies to any past indebtedness due the garnishee by the defendant. W.C. Caye & Co. v. Milledgeville Banking Co., 91 Ga. App. 664 , 86 S.E.2d 717 (1955) (decided under former Code 1933, § 46-203 prior to revision by Ga. L. 1976, p. 1608, § 1).

When garnishing creditor obtains valid judgment, lien shall date from service of garnishment. - Service of a summons of garnishment in all cases operates as a lien on the garnishee's indebtedness at the date of service, and upon all future indebtedness accruing up to date of answer, which lien is inchoate or incomplete; such inchoate lien becomes completed when the creditor obtains a valid judgment against the debtor and such lien shall date from service of garnishment. Anderson v. Ashford & Co., 174 Ga. 660 , 163 S.E. 741 (1932) (decided under former Civil Code 1910, § 5273).

Garnishment by judgment creditor against defendant's insurer. - After the parents of a shooting victim obtained a judgment against the owner of the property on which their son was shot, and the owner filed bankruptcy, the Court of Appeals erred in reversing the trial court and holding that a judgment debtor had no garnishment action against the owner's insurer. Ross v. St. Paul Reinsurance Co., Ltd., 279 Ga. 92 , 610 S.E.2d 57 (2005) (decided under former O.C.G.A. § 18-4-20 ).

Service of summons more than four months before bankruptcy proceeding is effective. - Service of summons of garnishment more than four months before proceeding in bankruptcy is filed creates a lien upon any property, money, or effects of debtor which may be caught in the hands of the garnishee. Light v. Hunt, 17 Ga. App. 491 , 87 S.E. 763 (1916) (decided under former Civil Code 1910, § 5272).

Garnishment may be classified as a proceeding quasi in rem. - Statutory proceeding in garnishment strictly speaking is not a proceeding in rem. It partakes both of the nature of a proceeding in personam and a proceeding in rem and may be classified as a proceeding quasi in rem. In re Eidson, 6 Bankr. 613 (Bankr. N.D. Ga. 1980) (decided under former Ga. L. 1976, p. 1608, § 1 et seq.)

State law controls both procedures and extent to which wages may be garnished under 42 U.S.C. § 659(a). Williamson v. Williamson, 247 Ga. 260 , 275 S.E.2d 42 , cert. denied, 454 U.S. 1097, 102 S. Ct. 669 , 70 L. Ed. 2 d 638 (1981) (decided under former O.C.G.A. § 18-4-20 ).

Effect of exclusive jurisdiction of bankruptcy court over debt. - When debt upon which garnishment action is based came into exclusive jurisdiction of United States Bankruptcy Court prior to entry of judgment by state court, jurisdiction of state court over cause of action is preempted. In re Eidson, 6 Bankr. 613 (Bankr. N.D. Ga. 1980) (decided under former Ga. L. 1976, p. 1608, § 1 et seq.)

Position of garnishing plaintiff with respect to garnishee is no better than that of the defendant with respect to the garnishee. If the defendant personally could not obtain judgment against the garnishee, garnishing the plaintiff cannot do so. Gant, Inc. v. Citizens & S. Nat'l Bank, 151 Ga. App. 212 , 259 S.E.2d 485 (1979) (decided under former Ga. L. 1976, p. 1608, § 1 et seq.); Scarboro v. Ralston Purina Co., 160 Ga. App. 576 , 287 S.E.2d 623 (1981) (decided under former Ga. L. 1976, p. 1608, § 1 et seq.)

Ascertainment of whether garnishee is indebted to or holds assets of defendant. - In garnishment action, question as to whether such garnishee is or is not indebted to the defendant, or whether such garnishee has assets of such defendant in its hands, should be ascertained by comparing their respective claims or accounts, and after service of summons, garnishee may not increase indebtedness to itself for purpose of this comparison. A.C. White Transf. & Storage Co. v. Grady Mem. Hosp., 151 Ga. App. 751 , 261 S.E.2d 476 (1979) (decided under former Ga. L. 1976, p. 1608, § 1 et seq.)

Proceeds of war risk insurance paid to beneficiary under federal statute not subject to garnishment. Hunt v. Slagle, 45 Ga. App. 470 , 165 S.E. 287 (1932) (decided under former Ga. L. 1976, p. 1608, § 1 et seq.)

Certificates of title held by bank as security interest. - Judgment creditor cannot reach debtor's rights in vehicles, certificates of title to which are held by bank as security interests for debtor's loans, by attempting to garnish certificates of title in bank's hand. Cobb Bank & Trust Co. v. Springfield, 145 Ga. App. 753 , 245 S.E.2d 42 (1978) (decided under former Ga. L. 1976, p. 1608, § 1 et seq.)

Effect of execution for amount of garnished property. - When judgment is rendered against the garnishee for property in the garnishee's control at the time of service of the summons of garnishment, and the execution is issued for an amount equal to the value of that same property, no distinction will be drawn between the judgment and the execution; indeed, the garnishee must turn over an amount equal to the value of the garnishable property. Toporek v. Water Processing Co., 169 Ga. App. 141 , 312 S.E.2d 132 (1983) (decided under former O.C.G.A. § 18-4-20 ).

Finding required as to amount withheld. - Trial court erred when the court did not determine whether more had been withheld from the party's earnings than was subject to garnishment under subsection (d) of former O.C.G.A. § 18-4-20 as the issue was distinctly raised in the evidence and in the party's contentions that these garnishments were keeping the party in slavery and destroying the party's ability to pay current obligations. Cale v. Cale, 161 Ga. App. 398 , 288 S.E.2d 677 (1982) (decided under former O.C.G.A. § 18-4-20 ).

Limitation on creation of debts to defeat garnishment. - Statutory limitation of O.C.G.A. § 18-4-20 (b) as to payments to the defendant is based upon the theory that a garnishee may not create a debt on the part of a defendant after the service of the summons of garnishment and then use that debt in order to defeat the lien created by the service of that summons. Ameron Protective Coatings Div. v. Georgia Steel, Inc., 25 Bankr. 781 (Bankr. M.D. Ga. 1982) (decided under former O.C.G.A. § 18-4-20 ).

Garnishee may not defeat a lien of garnishment by making payments to the defendant. Ameron Protective Coatings Div. v. Georgia Steel, Inc., 25 Bankr. 781 (Bankr. M.D. Ga. 1982) (decided under former O.C.G.A. § 18-4-20 ).

Independent liability of the garnishees arises when the garnishees are no longer in possession due to some arrangement, between the defendant and the garnishees after the date of the service of the summons of continuing garnishment upon the garnishees, designed to defeat the lien of such garnishment. Stone v. George F. Richardson, Inc., 169 Ga. App. 232 , 312 S.E.2d 339 (1983), overruled on other grounds, Schofield v. Holsey, 281 Ga. 809 , 642 S.E.2d 56 (2007) (decided under former O.C.G.A. § 18-4-20 ).

Collusion between judgment debtor and debtor's professional corporations. - Arrangement between judgment debtor and debtor's professional corporations whereby judgment debtor technically ceased to draw salaries from the corporations supported finding of fraud and collusion, and did not defeat lien of garnishment against such corporations. Stone v. George F. Richardson, Inc., 163 Ga. App. 86 , 293 S.E.2d 746 (1982) (decided under former O.C.G.A. § 18-4-20 ).

Title does not vest in plaintiff in garnishment proceeding. - Title to property that is the subject of a garnishment does not vest in the plaintiffs in the garnishment proceeding, but rather remains property belonging to the defendant. Conner v. Mount Carmel Country Estates, 21 Bankr. 616 (Bankr. N.D. Ga. 1982) (decided under former O.C.G.A. § 18-4-20 ).

Stay did not allow return of property. - Georgia's garnishment statutes, including former O.C.G.A. § 18-4-20 (b), (c), provided that a garnishment plaintiff was protected by the effect of the service of a summons of garnishment through the time of the garnishee's answer; thus, a stay of the garnishee's answer did not allow the garnishee to return to the defendant any of the defendant's property. Chase Manhattan Bank v. LaFray, 258 Ga. App. 183 , 573 S.E.2d 435 (2002) (decided under former O.C.G.A. § 18-4-20 ).

Transfer of garnishment funds to creditor constitutes transfer of property of debtor within the ambit of 11 U.S.C. §§ 101(40) and 547 of the Bankruptcy Code. Conner v. Mount Carmel Country Estates, 21 Bankr. 616 (Bankr. N.D. Ga. 1982) (decided under former O.C.G.A. § 18-4-20 ).

Garnishment as preference for bankruptcy purposes. - Georgia law does not vest title in plaintiff but, instead, allows garnishment of property "belonging to defendant." This is true despite fact that nonanswering garnishee is subject to direct liability to plaintiff. Accordingly, to extent that a transfer occurred during 90 day preference period preceding filing of debtor's petition, a preferential transfer has been made. Evans v. CIT Fin. Servs., Inc., 16 Bankr. 731 (Bankr. N.D. Ga. 1982) (decided under former O.C.G.A. § 18-4-20 ).

Garnishee cannot waive judgment- debtor's claim to exemption. - While the garnishee can waive its defenses to the proceeding, a garnishee cannot waive the judgment-debtor's claim to an exemption from the garnishment process of the amounts in the hands of the garnishee. Cale v. Eastern Air Lines, 159 Ga. App. 630 , 284 S.E.2d 647 (1981) (decided under former O.C.G.A. § 18-4-20 ).

Garnishee failing to disclose exemption may incur liability. - Garnishee who fails to disclose exemption when the fact is within the garnishee's knowledge, and when the defendant is not present to claim it personally, may render oneself liable to the defendant after payment into court; for the garnishee ought to disclose the garnishment; and the garnishee cannot deprive the defendant of that right against the garnishee by failing to do so. Cale v. Eastern Air Lines, 159 Ga. App. 630 , 284 S.E.2d 647 (1981) (decided under former O.C.G.A. § 18-4-20 ).

Garnishee paying over money which constitutes part of personalty exemption of the debtor does so at garnishee's own risk. Garnishee will be liable to the debtor (garnishee's creditor) for the full amount of the money garnishee has paid. A person who has been brought into court as a garnishee may answer that the property of the debtor, in the garnishee's hands, or the garnishee's indebtedness to such debtor, is exempt by law from seizure on attachment or execution, and the garnishee is bound to bring the fact to the notice of the court; otherwise the judgment against such garnishee, and the satisfaction thereof, will not bar an action against the garnishee by the attaching debtor. Cale v. Eastern Air Lines, 159 Ga. App. 630 , 284 S.E.2d 647 (1981) (decided under former O.C.G.A. § 18-4-20 ).

Garnishee may waive garnishee's personal jurisdiction defense under former O.C.G.A. § 18-4-20 and submit itself to the jurisdiction of a court which would not otherwise have jurisdiction over the garnishee. Cale v. Eastern Air Lines, 159 Ga. App. 630 , 284 S.E.2d 647 (1981) (decided under former O.C.G.A. § 18-4-20 ).

Garnishment of ERISA welfare plan. - Federal Employee Retirement Income Security Act, 29 U.S.C. § 1001 et seq., does not forbid garnishment of an ERISA welfare benefit plan, even when the purpose is to collect judgments against plan participants. Mackey v. Lanier Collection Agency & Serv., Inc., 486 U.S. 825, 108 S. Ct. 2182 , 100 L. Ed. 2 d 836 (1988) (decided under former O.C.G.A. § 18-4-20 ).

Bank properly paid cashier's check to court. - Trial court did not err in granting summary judgment to a bank because the bank acted properly in refusing to honor the cashier's check since the funds were the property of the payee and were within the control of the bank at the time the bank received the garnishment order; thus, O.C.G.A. § 18-4-4 required that the bank pay those funds into the court in the garnishment action and not to the payee. Burrowes v. Bank of Am., N.A., 340 Ga. App. 248 , 797 S.E.2d 493 (2017).

Financial institution did not include insurance company garnished as employer. - Insurance company was not a "financial institution" under the financial institution garnishment scheme, O.C.G.A. §§ 18-4-1(4) and 18-4-4(c)(2), when the insurance company was garnished based on earnings that the company owed the debtor as the debtor's former employer; rather, the statutes envisioned places of deposit for a debtor's funds or investments. Blach v. Diaz-Verson, 303 Ga. 63 , 810 S.E.2d 129 (2018).

Constitutionality

Due process requirements. - Garnishment of wages to satisfy alimony orders or judgments meets demands of due process. Black v. Black, 245 Ga. 281 , 264 S.E.2d 216 (1980) (decided under former O.C.G.A. § 18-4-20 ).

Allowing garnishment of wages earned wholly outside this state is not an unconstitutional extension of the laws of this state to a debt created outside the geographical limits of this state thus depriving the garnishee of due process. United Merchants & Mfrs., Inc. v. Citizens & S. Nat'l Bank, 166 Ga. App. 468 , 304 S.E.2d 552 (1983) (decided under former O.C.G.A. § 18-4-20 ).

What Is Subject to Garnishment

Garnishee's dominion and control over property. - It was the legislature's intent to allow a garnishor to obtain a garnishment lien only on the property over which the garnishee exercised dominion or control. Parham v. Lanier Collection Agency & Serv., Inc., 178 Ga. App. 84 , 341 S.E.2d 889 (1986) (decided under former O.C.G.A. § 18-4-20 ).

Test of whether funds in hands of third person are subject to garnishment is whether or not the principal debtor could personally recover such funds by suit directly against the garnishee. Anderson v. Burnham, 12 Bankr. 286 (Bankr. N.D. Ga. 1981) (decided under former O.C.G.A. § 18-4-20 ).

Check is an asset which is garnishable. Water Processing Co. v. Southern Golf Bldrs., Inc., 248 Ga. 597 , 285 S.E.2d 21 (1981) (decided under former O.C.G.A. § 18-4-20 ).

Garnishment may reach out-of- state wages. - Wages of persons who reside out of this state and which have been earned wholly within or without this state are subject to garnishment in this state particularly when the case is not one brought by writ of attachment. Phillips v. Phillips, 159 Ga. App. 676 , 285 S.E.2d 52 (1981) (decided under former O.C.G.A. § 18-4-20 ).

Garnishment may reach property or money belonging to client in hands of an attorney. Water Processing Co. v. Southern Golf Bldrs., Inc., 248 Ga. 597 , 285 S.E.2d 21 (1981) (decided under former O.C.G.A. § 18-4-20 ).

Garnishment cannot reach assets in possession of garnishee which defendant personally could not recover from garnishee. J. Austin Dillon Co. v. Edwards Shoe Stores, Inc., 53 Ga. App. 437 , 186 S.E. 470 (1936) (decided under former Code 1933, § 46-201, as it read prior to revision by Ga. L. 1976, p. 1608, § 1); Southern Amusement Co. v. Neal, 15 Ga. App. 130 , 82 S.E. 765 (1914) (decided under former Civil Code 1910, § 5272); Gainesville Feed & Poultry Co. v. Waters, 87 Ga. App. 354 , 73 S.E.2d 771 (1952) (decided under former Code 1933, § 46-203 prior to revision by Ga. L. 1976, p. 1608, § 1); Anderson v. Burnham, 12 Bankr. 286 (Bankr. N.D. Ga. 1981) (decided under former O.C.G.A. § 18-4-20 ).

Creditor cannot reach by garnishment assets which the debtor personally could not recover from the garnishee; for what one cannot recover personally cannot, by garnishment, be recovered against the debtor. Hiatt v. Edwards, 52 Ga. App. 152 , 182 S.E. 634 (1935) (decided under former O.C.G.A. § 18-4-20 ).

If the defendant personally cannot obtain judgment against the garnishee, the garnishing plaintiff cannot do so. Hiatt v. Edwards, 52 Ga. App. 152 , 182 S.E. 634 (1935) (decided under former Code 1933, § 46-201 prior to revision by Ga. L. 1976, p. 1608, § 1).

Husband's obligation to make a lump-sum cash payment to his ex-wife could not be characterized as alimony for garnishment purposes, when the terms of the divorce decree described an exchange of assets between the parties, and it was clear that alimony was not involved. Boyd v. Boyd, 191 Ga. App. 718 , 382 S.E.2d 730 (1989) (decided under former O.C.G.A. § 18-4-20 ).

Income of tenant cropper. - When landlord furnishes to landlord's cropper everything to make the crop, except labor (which is furnished by the cropper, the cropper's family, and others employed by the cropper), net amount due cropper after full settlement with landlord is in nature of wages paid to day laborers. McElmurray v. Turner, 86 Ga. 215 , 12 S.E. 359 (1890) (decided under former Ga. L. 1872, p. 43); Thompson v. Passmore, 9 Ga. App. 771 , 72 S.E. 185 (1911) (decided under former Civil Code 1910, § 5298).

Contract debtor or one holding property of defendant in tort action. - Plaintiff in a pending tort action for damages for personal injuries alleged to have been caused by negligence of the defendant may take out garnishment proceeding against contract debtor of the defendant in tort action, or against one who has property, money, or effects in the debtor's possession belonging to the defendant in tort action. Curtis v. Bailey, 51 Ga. App. 119 , 179 S.E. 633 (1935) (decided under former Code 1933, § 46-201, as it read prior to revision by Ga. L. 1976, p. 1608, § 1).

Garnishment is not permitted as to tort liability prior to final judgment. Gamble v. Cent. R.R. & Banking Co., 80 Ga. 595 , 7 S.E. 315 , 12 Am. St. R. 276 (1888) (decided under former Ga. L. 1880-81, p. 109); Southern Ry. v. Hodgson Bros. Co., 148 Ga. 851 , 98 S.E. 541 (1919) (decided under former Civil Code 1910, § 5272).

Garnishment can be based on claim for mesne profits in ejectment action. Walker v. Zorn, 56 Ga. 35 (1876) (decided under former Ga. L. 1855-56, p. 36).

Money held by bank on note collected for payee may be garnished. Freeman v. Exchange Bank, 87 Ga. 45 , 13 S.E. 160 (1891) (decided under former Ga. L. 1880-81, p. 109).

Money held by third person for creditors before acceptance of arrangement by latter may be garnished. Cox v. Reeves, 78 Ga. 543 , 3 S.E. 620 (1887) (decided under Ga. L. 1880-81, p. 109); Bluethenthal & Bickart v. Silverman, 113 Ga. 102 , 38 S.E. 344 (1901) (decided under former Civil Code 1895, § 4712).

Garnishment permitted as to debt on note paid by garnishee. Connally v. Rice, 77 Ga. 312 (1886) (decided under former Ga. L. 1880-81, p. 109).

Proceeds of compromised tort claim may be subject to garnishment. Lee & Anderson v. Louisville & Nashville R.R., 2 Ga. App. 337 , 58 S.E. 520 (1907) (decided under former Civil Code 1895, § 4712).

Garnishment does not lie against debtor's land. Groves v. Bibb Sewer Pipe Co., 24 Ga. App. 558 , 101 S.E. 587 (1919) (decided under former Civil Code 1910, § 5265); Groves v. Bibb Sewer Pipe Co., 149 Ga. 542 , 101 S.E. 190 (1919) (decided under former Civil Code 1910, § 5272).

Word "property" in former Civil Code 1910, § 5272 did not include land. Groves v. Bibb Sewer Pipe Co., 24 Ga. App. 558 , 101 S.E. 587 (1919) (decided under former Civil Code 1910, § 5265); Groves v. Bibb Sewer Pipe Co., 149 Ga. 542 , 101 S.E. 190 (1919) (decided under former Civil Code 1910, § 5272).

Proceeds from land sold by executor are subject to garnishment. - If executors, empowered by will to sell lands of decedent, sell the land for purpose of division, proceeds are personalty, unimpressed with character of real estate, and therefore are subject to garnishment. Brown Guano Co. v. Bridges, 34 Ga. App. 652 , 130 S.E. 695 (1925) (decided under former Civil Code 1910, § 5272).

Bank accounts. - Bank was not entitled to assume that an account was a legitimate corporate account when the bank did not follow the bank's own internal procedure with respect to opening the account and, thus, the bank was not excused from complying with a summons of garnishment naming a signatory on the account, nor did the fact that the bank was unable to locate the account relieve the bank from the bank's responsibilities under the garnishment statutes. Mobile Paint Mfg. Co. v. Johnston, 219 Ga. App. 299 , 464 S.E.2d 903 (1995) (decided under former O.C.G.A. § 18-4-20 ).

Deposited checks not subject to garnishment. Bostwick-Goddell Co. v. Wolff, 19 Ga. App. 61 , 90 S.E. 975 (1901) (decided under former Civil Code 1895, § 4712).

Notes set apart as homestead not subject to garnishment. Watkins v. Cason, 46 Ga. 444 (1913) (decided under former Civil Code 1910, § 5272).

Contingent claim for attorneys fees not subject to garnishment. Modlin v. Smith, 13 Ga. App. 259 , 79 S.E. 82 (1907) (decided under former Civil Code 1895, § 4712).

Money paid into court under order to await distribution not subject to garnishment. Chance v. Simpkins, 22 Ga. App. 148 , 95 S.E. 739 (1918) (decided under former Civil Code 1910, § 5272).

Garnishment based on judgment against corporation cannot subject money belonging to individual. Todd v. Stewart, 17 Ga. App. 113 , 86 S.E. 284 (1915) (decided under former Civil Code 1910, § 5272).

Escrow accounts of real estate broker. - Moneys belonging to others held in escrow by real estate brokers are not subject to garnishment for broker's personal debts. Citizens & S. Nat'l Bank v. AVCO Fin. Servs., Inc., 129 Ga. App. 605 , 200 S.E.2d 309 (1973).

Garnishment did not reach surplus of proceeds of security in hands of secured creditor, arising from sale made after garnishment had been answered. Cutter & Co. v. Central Bank & Trust Corp., 24 Ga. App. 564 , 101 S.E. 704 (1919) (decided under former Civil Code 1910, § 5296).

Setoff by Garnishee

Garnishment lien subject to offset of garnishee; latter subject to good faith. - Garnishment lien becomes perfected upon rendition of valid judgment in favor of garnishing creditor against the defendant, subject, however, to any claim or right of offset in garnishee at the time of service of summons of garnishment or subsequently thereto, up to the time for answer, provided the right in the garnishee was not a result of bad faith on the garnishee's part. Gant, Inc. v. Citizens & S. Nat'l Bank, 151 Ga. App. 212 , 259 S.E.2d 485 (1979) (decided under Ga. L. 1976, p. 1608, § 1).

Garnishee's setoff may not be result of bad faith on the garnishee's part. - Setoff of a valid claim is a remedy specifically given by law to the garnishees, and a garnishment lien is subject to any claim or right of setoff in the garnishee at time of service of summons of garnishment, or subsequently thereto, up to time for answer, provided such right in garnishee was not a result of bad faith on the garnishee's part. Florida First Nat'l Bank v. First Nat'l Bank, 154 Ga. App. 211 , 267 S.E.2d 849 (1980) (decided under Ga. L. 1976, p. 1608, § 1).

Availability of setoff. - Right to setoff is an available remedy specifically given by law, whether the defendant debtor is an employee of the garnishee or bears some other relation to the garnishee. Turner v. State, 178 Ga. App. 888 , 345 S.E.2d 99 (1986) (decided under Ga. L. 1976, p. 1608, § 1).

Bank's right to setoff general deposit account of customer. - Generally, a bank has right of setoff against amount of general deposit account belonging to customer of a matured debt due by customer to the bank. Washington Loan & Banking Co. v. First Fulton Bank & Trust, 155 Ga. App. 141 , 270 S.E.2d 242 (1980) (decided under Ga. L. 1976, p. 1608, § 1).

Superiority of lien of garnishee to whom defendant is indebted. - If the debtor is indebted to the garnishee, the latter has a lien on funds coming into the garnishee's hands, or future indebtedness to the debtor, superior to that of another creditor in garnishment; garnishee is entitled to pay oneself before the garnishee is required to collect for the benefit of others. Florida First Nat'l Bank v. First Nat'l Bank, 154 Ga. App. 211 , 267 S.E.2d 849 (1980) (decided under Ga. L. 1976, p. 1608, § 1).

Requirement of filing answer. - If the defendant owes debt of a greater amount to the garnishee than the garnishee owes to the defendant, the garnishee would not be required to pay any sums into the court, but this would not relieve the garnishee of responsibility of filing an answer. Washington Loan & Banking Co. v. First Fulton Bank & Trust, 155 Ga. App. 141 , 270 S.E.2d 242 (1980) (decided under Ga. L. 1976, p. 1608, § 1).

Garnishee may setoff claim for money illegally taken between time of service and answer. - Garnishee may setoff against defendant a claim for money illegally taken from the garnishee between time of service of garnishment and time for filing garnishment answer. Jacobs Pharmacy Co. v. Southern Bell Tel. Co., 56 Ga. App. 661 , 193 S.E. 487 (1937) (decided under former Code 1933, § 46-203 prior to revision by Ga. L. 1976, p. 1608, § 1).

Employer-garnishee cannot setoff employee's indebtedness to employer entirely against nonexempt wages. - Garnishee, in answering a summons of garnishment in a suit against an employee who works for daily, weekly, or monthly wages, where the employee is indebted to the garnishee, is not entitled to offset debt of employee against only that portion of wages due which is not exempt but which is subject to process of garnishment; but garnishee, if garnishee offsets debt of defendant against what garnishee owes defendant, must offset it without reference to whether any portion of garnishee's indebtedness to defendant is exempt from or subject to garnishment. Davison-Paxon Co. v. Mutual Empire Clothing Co., 52 Ga. App. 686 , 184 S.E. 409 (1936) (decided under former Code 1933, § 46-208 as it read prior to revision by Ga. L. 1976, p. 1608, § 1).

Test as to whether funds in hands of another are subject to garnishment is whether or not the defendant in garnishment could recover such funds by suit directly against the garnishee. Morgan v. Morgan, 156 Ga. App. 726 , 275 S.E.2d 673 (1980) (decided under former law).

Judgment for alimony is a money judgment in sense that it may be enforced in the same manner as other judgments as is a judgment for child support. Thacker Constr. Co. v. Williams, 154 Ga. App. 670 , 269 S.E.2d 519 (1980) (decided under former Code 1933, § 46-101).

Decree of alimony is a money judgment and as such may be the subject matter of post-judgment garnishment proceeding. Morgan v. Morgan, 156 Ga. App. 726 , 275 S.E.2d 673 (1980) (decided under former Code 1933, § 46-101).

Burden of proof. - Burden is on the plaintiff generally to establish that the plaintiff is entitled to the garnished fund. Thacker Constr. Co. v. Williams, 154 Ga. App. 670 , 269 S.E.2d 519 (1980) (decided under former Code 1933, § 46-101).

Attorney subject to garnishment, when the attorney has money or other effects belonging to the defendant in the attorney's hands. Water Processing Co. v. Toporek, 158 Ga. App. 502 , 280 S.E.2d 901 , rev'd on other grounds, 248 Ga. 597 , 285 S.E.2d 21 (1981) (decided under former O.C.G.A. § 18-4-60).

Chose in action. - Proper way to reach chose in action is by garnishment. Water Processing Co. v. Toporek, 158 Ga. App. 502 , 280 S.E.2d 901 , rev'd on other grounds, 248 Ga. 597 , 285 S.E.2d 21 (1981) (decided under former O.C.G.A. § 18-4-60).

OPINIONS OF THE ATTORNEY GENERAL

Editor's notes. - In light of the similarity of the statutory provisions, opinions decided under former Code 1933, § 46-301 as it read after passage of Ga. L. 1976, p. 1608, § 1 are included in the opinions for this Code section.

Right of setoff exists in garnishee-employer respecting indebtedness of defendant-employee to garnishee employer as against claim of plaintiff in garnishment; thus, the garnishee is entitled to pay oneself from earnings accruing to the employee before paying the plaintiff in garnishment. 1976 Op. Att'y Gen. No. U76-26 (decided under former Code 1933, § 46-301).

RESEARCH REFERENCES

Am. Jur. 2d. - 6 Am. Jur. 2d, Attachment and Garnishment, §§ 69 et seq., 107.

C.J.S. - 38 C.J.S., Garnishment, § 173.

ALR. - Money due only on further performance of contract by debtor as subject to garnishment, 2 A.L.R. 506 .

Rights of holder of check as affected by garnishment of drawer's bank account, 5 A.L.R. 587 .

Garnishment of bank in suit against the payee or other holder of a check upon the bank, 5 A.L.R. 589 .

Levy upon or garnishment of contents of safety deposit box, 19 A.L.R. 863 ; 39 A.L.R. 1215 .

Judgment as subject to garnishment in another court of the state in which it was rendered, 43 A.L.R. 190 .

Money or other property taken from prisoner as subject of attachment, garnishment, or seizure under execution, 48 A.L.R. 583 .

Priority of assignment of chose in action over subsequent garnishment as affected by lack of notice to debtor of assignment, 52 A.L.R. 109 .

Foreign attachment or garnishment upon which jurisdiction is dependent resting upon property coming into hands of garnishee, or obligations having their inception, after service of the writ, 53 A.L.R. 1022 .

Garnishment of salaries, wages, or commissions not expressly exempted by statute, 56 A.L.R. 601 .

Debt owing to two or more as subject of garnishment in action against less than all, 57 A.L.R. 844 .

Who is "employee" within debt exemption statute, 58 A.L.R. 777 .

Right of creditor upon dissolution of his own attachment to garnish custodian of attached property, 59 A.L.R. 526 .

Garnishment against executor or administrator by creditor of heir, legatee, distributee, or creditor of estate, 59 A.L.R. 768 .

County as subject to garnishment process, 60 A.L.R. 823 .

Interest of vendee under conditional sales contract as subject to attachment, garnishment, or execution, 61 A.L.R. 781 .

Issuance of successive writs of garnishment or other process to reach property or earnings exempt in whole or in part, 65 A.L.R. 1283 .

Refusal to render judgment or garnishment in proceedings in rem, because of danger to garnishee of double liability in event of refusal of court of another jurisdiction to recognize or give effect to judgment, if rendered, 69 A.L.R. 609 .

Indebtedness to partnership as subject of attachment or garnishment by creditor of individual partner, 71 A.L.R. 77 .

Construction, application, and effect of statute exempting from garnishment debt evidenced by negotiable instrument, 71 A.L.R. 581 .

Interest of mortgagor or pledgor in property in possession of mortgagee or pledgee as subject of garnishment, 83 A.L.R. 1383 .

Liability for conversion of property as the subject of garnishment by creditor of the owner, 91 A.L.R. 1337 .

Property of incompetent or infant under guardianship as subject of execution, attachment, or garnishment, 92 A.L.R. 919 .

Unliquidated claims of damage in tort as subject of garnishment, 93 A.L.R. 1088 .

Withdrawal value of stock in building and loan association as basis of attachment or execution by member or as subject of garnishment by member's creditor, 94 A.L.R. 1017 .

Redemption money in hands of officer as subject to attachment, garnishment, or execution, 94 A.L.R. 1049 .

Indebtedness as subject to garnishment or trustee process after debtor has given his check therefor, 94 A.L.R. 1391 .

Right to garnish amount payable under a contract contemplating a cash transaction, 95 A.L.R. 1497 .

Garnishment by landlord's creditor of tenant's obligation in respect of rent, 100 A.L.R. 307 .

Garnishment of bank deposit as affected by bank's right, or waiver of right, to set off depositor's indebtedness to it against deposit or apply deposit to such indebtedness, 106 A.L.R. 62 ; 110 A.L.R. 1268 .

Garnishment as suit within rule that state may not be sued without its consent, 114 A.L.R. 261 .

Resident or foreign corporation doing business within state as subject to garnishment because of indebtedness to nonresident who in turn is indebted to nonresident principal defendant, 116 A.L.R. 387 .

Debtor's exemption (other than homestead) as applicable in favor of nonresidents or of residents absent or about to remove from the state, 119 A.L.R. 554 .

Judgment in tort action as subject of assignment, attachment, or garnishment pending appeal, 121 A.L.R. 420 .

Issuance and return of execution as necessary condition of garnishment after judgment, 128 A.L.R. 1153 .

What amounts to a contingency within statute or rule permitting garnishment or similar process before an obligation is due or payable, if payment or delivery is not dependent upon a contingency, 134 A.L.R. 853 .

Right of creditors to reach by garnishment or other process, commissions of debtor, as executor, administrator, or trustee, 143 A.L.R. 190 .

Form of judgment against garnishee respecting obligation payable in installments, 7 A.L.R.2d 680.

Judgment debtor's personal injury claims against third person or latter's liability insurer as subject to creditor's bill, 51 A.L.R.2d 595.

Value of room and board furnished to servant as included in total salary or earnings for purpose of statute exempting wages, 51 A.L.R.2d 947.

Sharecropper's share in crop wholly or partly unharvested as subject to garnishment, 82 A.L.R.2d 858.

Garnishment of salary, wages, or commissions where defendant debtor is indebted to garnishee-employer, 93 A.L.R.2d 995.

Funds deposited in court as subject of garnishment, 1 A.L.R.3d 936.

Attachment and garnishment of funds in branch bank or main office of bank having branches, 12 A.L.R.3d 1088.

Funds in hands of his attorney as subject of attachment or garnishment by client's creditor, 35 A.L.R.3d 1094.

Liability of creditor for excessive attachment or garnishment, 56 A.L.R.3d 493.

Garnishment against executor or administrator by creditor of estate, 60 A.L.R.3d 1301.

Special bank deposits as subject of attachment or garnishment to satisfy depositor's general obligations, 8 A.L.R.4th 998.

Garnishment of funds payable under building and construction contract, 16 A.L.R.5th 548.

Joint bank account as subject to attachment, garnishment, or execution by creditor of one joint depositor, 86 A.L.R.5th 527.

18-4-5. Maximum part of disposable earnings subject to garnishment; adverse employment action prohibited.

    1. Subject to the limitations set forth in Code Sections 18-4-6 and 18-4-53, the maximum part of disposable earnings for any work week which is subject to garnishment shall not exceed the lesser of:
      1. Twenty-five percent of the defendant's disposable earnings for that week; or
      2. The amount by which the defendant's disposable earnings for that week exceed $217.50.
    2. In case of earnings for a period other than a week, the proportionate fraction or multiple of 30 hours per week at $7.25 per hour shall be used.
  1. The limitation on garnishment set forth in subsection (a) of this Code section shall apply although the garnishee may receive a summons of garnishment in more than one garnishment case naming the same defendant unless the garnishee has received a summons of continuing garnishment for support as provided in Article 3 of this chapter.
  2. No employer shall discharge an employee by reason of the fact that such employee's earnings have been subjected to garnishment for any one obligation, even though more than one summons of garnishment may be served upon such employer with respect to the obligation. (Code 1981, § 18-4-5 , enacted by Ga. L. 2016, p. 8, § 1/SB 255; Ga. L. 2018, p. 820, § 2/SB 194.)

The 2018 amendment, effective May 8, 2018, substituted "$217.50" for "$217.00" in subparagraph (a)(1)(B); and substituted the present provisions of paragraph (a)(2) for the former provisions, which read: "In case of earnings for a period other than a week, a multiple of $7.25 per hour shall be used."

RESEARCH REFERENCES

C.J.S. - 38 C.J.S., Garnishment, § 209 et seq.

ALR. - Who is "employee" within debt exemption statute, 58 A.L.R. 777 .

Wrongful discharge: employer's liability under state law for discharge of employee based on garnishment order against wages, 41 A.L.R.5th 31.

Protection of debtor from acts of discrimination by private entity under § 525(b) of Bankruptcy Code of 1978 (11 USCS § 525(b)), 105 A.L.R. Fed. 555.

Preemption of state-law wrongful discharge claim, not arising from whistleblowing, by § 301(a) of Labor-Management Act of 1947 (29 U.S.C.A. § 185(a)), 184 A.L.R. Fed. 241.

18-4-6. Exemption from garnishment.

    1. Certain earnings or property of the defendant may be exempt from the process of garnishment.
    2. Funds or benefits from an individual retirement account or from a pension or retirement program shall be exempt from the process of garnishment until paid or otherwise distributed to a member of such program or beneficiary thereof. Such funds or benefits, when paid or otherwise distributed to such member or beneficiary, shall be exempt from the process of garnishment only to the extent of the limitations provided in Code Section 18-4-5 for other disposable earnings, unless a greater exemption is otherwise provided by law.
    3. Funds in an unfunded plan maintained by an employer primarily for the purpose of providing deferred compensation for a select group of management or highly compensated employees shall not be exempt from the process of garnishment.
    4. Exempt property shall not be considered disposable earnings for purposes of Code Section 18-4-5 or subsection (b) of Code Section 18-4-53.
  1. Not later than May 22, 2016, the Attorney General shall create and maintain on the Department of Law's website a list of exemptions that a defendant may be allowed by law to claim in relation to a garnishment of his or her earnings or property. The Attorney General shall revise such list when exemptions are repealed, revised, or created by law. The Attorney General shall transmit a copy of such list to each clerk of court in this state who issues summonses of garnishment and transmit a revised list when a change is made to such list.
  2. Each clerk of court in this state who issues summonses of garnishment shall post and update such list of exemptions as promulgated by the Attorney General and shall provide such list to individuals upon request.
  3. A defendant may claim an exemption as provided in Code Section 18-4-15.
  4. The fact that an exemption is not identified by the Attorney General shall not preclude a defendant from claiming an exemption. (Code 1981, § 18-4-6 , enacted by Ga. L. 2016, p. 8, § 1/SB 255.)

Code Commission notes. - Pursuant to Code Section 28-9-5, in 2016, "May 22, 2016" was substituted for "ten days after the effective date of this Code section" in the first sentence of subsection (b).

Law reviews. - For article, "Retirement Benefits: Protection from Creditors' Claims," see 24 Ga. St. B.J. 118 (1988). For note reviewing Georgia's new garnishment procedures, see 17 Ga. St. B.J. 140 (1981). For note on 1990 amendment of this Code section, see 7 Ga. St. U. L. Rev. 265 (1990).

JUDICIAL DECISIONS

Pension funds exempt, not individual pension payments. - Law exempted from garnishment all pension funds for policemen and municipal employees, irrespective of their source or intended beneficiaries, but it is the funds, rather than the individual pension payments, that are exempt from garnishment. Cooper v. City of Atlanta Policemen's Pension Fund, 147 Ga. App. 633 , 249 S.E.2d 684 (1978).

When funds or benefits exempt. - O.C.G.A. § 18-4-22 means that funds or benefits from a pension or retirement program are exempt from the process of garnishment until such funds or benefits are in the hands of the member or beneficiary of the program. Davis v. Davis, 161 Ga. App. 722 , 288 S.E.2d 748 (1982).

Chapter 7 bankruptcy. - Debtor's Individual Retirement Account (IRA) would be excluded from the bankruptcy estate under 11 U.S.C. § 541(c)(2) on the basis of the restriction on transfer by garnishment contained in subsection (a) of O.C.G.A. § 18-4-22 , notwithstanding that the transfer restriction was contained only in the Georgia statute and was not contained within the IRA document itself and notwithstanding that the debtor had access to the IRA funds for personal use upon payment of a 10% penalty tax. Meehan v. Wallace, 102 F.3d 1209 (11th Cir. 1997).

Federal preemption. - Twenty-five percent of the defendant ERISA beneficiary's benefit payment was subject to garnishment by the defendant judgment creditor under a continuing garnishment pursuant to O.C.G.A. § 18-4-22(a) because the ERISA Plan was a Top Hat Plan, which was not subject to the ERISA anti-alienation provision, 29 U.S.C. § 1056. AFLAC Inc. v. Diaz-Verson, F. Supp. 2d (M.D. Ga. May 25, 2012).

Benefits not actually received not subject to garnishment. - Retirement benefits paid into registry of trial court by garnishee were not subject to garnishment because the defendant had never received actual possession of the benefits. Birchfield v. Birchfield, 165 Ga. App. 101 , 299 S.E.2d 409 (1983).

Individual retirement accounts. - Federal law preempts O.C.G.A. § 18-4-22 and mandates a finding that individual retirement accounts possessed by the garnishees are exempt from garnishment by commercial creditors in a nonbankruptcy situation. Citizens Bank v. Shingler, 173 Ga. App. 511 , 326 S.E.2d 861 (1985) (decided prior to 1990 amendment specifically exempting individual retirement account funds or benefits).

Chapter 7 debtor's Roth individual retirement account (IRA) was not excluded from the property of the estate because O.C.G.A. § 18-4-22(a) applied only to an IRA within the meaning of 26 U.S.C. § 408 and Georgia law provided no similar protection for a Roth IRA established under 26 U.S.C. § 408A. Goodman v. Bramlette (In re Bramlette), 333 Bankr. 911 (Bankr. N.D. Ga. 2005).

Annuity. - O.C.G.A. § 44-13-100 specifically addresses what types of annuities and similar contracts are exempt in bankruptcy cases. Therefore, the debtor's attempt to exempt the annuity under O.C.G.A. §§ 18-4-22 and 47-2-332 would have failed even if the annuity met the requirements of those statutes (which appeared not to be the case in any event). In re Sheffield, 507 Bankr. 400 (Bankr. S.D. Ga. 2014).

Cited in Goddard v. Boozer, 160 Ga. App. 303 , 287 S.E.2d 308 (1981).

RESEARCH REFERENCES

ALR. - Who is "employee" within debt exemption statute, 58 A.L.R. 777 .

Debtor's exemption (other than homestead) as applicable in favor of nonresidents or of residents absent or about to remove from the state, 119 A.L.R. 554 .

Employee retirement pension benefits as exempt from garnishment, attachment, levy, execution, or similar proceedings, 93 A.L.R.3d 711.

Enforcement of claim for alimony or support, or for attorneys' fees and costs incurred in connection therewith, against exemptions, 52 A.L.R. 5 th 221.

Individual retirement accounts as exempt property in bankruptcy, 133 A.L.R. Fed. 1.

18-4-7. Required information on summons of garnishment or attachment thereto; form usage; failure to use correct form.

  1. The amount shown on the summons of garnishment shall not exceed the amount the defendant owes the plaintiff pursuant to a judgment.
    1. A summons of garnishment, or an attachment thereto, shall state on its face with particularity all of the following information, to the extent reasonably available to the plaintiff:
      1. The name of the defendant and, to the extent such would reasonably enable the garnishee to properly respond to the summons of garnishment, all known configurations, nicknames, aliases, former or maiden names, trade names, or variations thereof;
      2. The service address and the current address of the defendant and, to the extent such would reasonably enable the garnishee to properly respond to the summons of garnishment and such is reasonably available to the plaintiff, the past addresses of the defendant; and
      3. The social security number or federal tax identification number of the defendant; provided, however, that if such summons is filed with a court, the court filing shall be redacted in accordance with Code Section 9-11-7.1 or 15-10-54, as applicable. The defendant's full social security number or federal tax identification number shall be made known to the garnishee and defendant in accordance with Code Section 9-11-7.1 or 15-10-54, as applicable, to the extent such information is reasonably available to the plaintiff.
    2. The form for a summons of garnishment on a financial institution shall not be used for a continuing garnishment or continuing garnishment for support. A summons of garnishment on a financial institution, or an attachment thereto, shall also state with particularity the defendant's account, identification, or tracking numbers known to the plaintiff used by the garnishee in the identification or administration of the defendant's funds or property; provided, however, that if such summons is filed with a court, the court filing shall be redacted in accordance with Code Section 9-11-7.1 or 15-10-54, as applicable. The defendant's account, identification, or tracking numbers shall be made known to the garnishee and defendant in accordance with Code Section 9-11-7.1 or 15-10-54, as applicable, to the extent such information is known to the plaintiff.
    3. A misspelling of any information required by this subsection, other than the surname of a natural person defendant, shall not invalidate a summons of garnishment, so long as such information is not misleading in a search of the garnishee's records.
  2. The form for a summons of garnishment is set forth in Code Section 18-4-74, and the optional attachment thereto is set forth in Code Section 18-4-75. The form for a summons of garnishment on a financial institution is set forth in Code Section 18-4-76, and the attachment thereto is set forth in Code Section 18-4-77. The form for a summons of garnishment on a financial institution shall not be used for a continuing garnishment or continuing garnishment for support.
  3. When a plaintiff uses the incorrect form for a summons of garnishment of any type, the garnishment shall not be valid and the garnishee shall be relieved of all liability. (Code 1981, § 18-4-7 , enacted by Ga. L. 2016, p. 8, § 1/SB 255; Ga. L. 2018, p. 820, § 3/SB 194.)

The 2018 amendment, effective May 8, 2018, substituted "The form for a" for "A" at the beginning of the first sentence of paragraph (b)(2).

JUDICIAL DECISIONS

Cited in Blach v. Diaz-Verson, 303 Ga. 63 , 810 S.E.2d 129 (2018).

RESEARCH REFERENCES

C.J.S. - 38 C.J.S., Garnishment, §§ 173 et seq., 185 et seq.

ALR. - Who may serve writ, summons, or notice of garnishment, 75 A.L.R.2d 1433.

18-4-8. Required documents and service thereof.

  1. The plaintiff shall serve the garnishee, as provided in Code Section 9-11-4, or, when the garnishment is filed in a magistrate court, the plaintiff may serve the garnishee by using the constable of the magistrate court in the manner set forth in Code Section 9-11-4, with a copy of the affidavit of garnishment, summons of garnishment, Notice to Defendant of Right Against Garnishment of Money, Including Wages, and Other Property, and Defendant's Claim Form. The plaintiff shall fill in the style of the case, except for the civil action file number, and the garnishment court information on such notice and claim form. Such notice and claim form are set forth in Code Section 18-4-82.
    1. Not more than three business days after service of the summons of garnishment on the garnishee, the plaintiff shall cause a copy of the affidavit of garnishment, a copy of the summons of garnishment, a copy of the Notice to Defendant of Right Against Garnishment of Money, Including Wages, and Other Property, and a copy of the Defendant's Claim Form as described in subsection (a) of this Code section, using one of the following methods:
        1. To be sent to the defendant at the defendant's last known address by:
          1. Regular mail; and
          2. Registered or certified mail or statutory overnight delivery, return receipt requested.
        2. The return receipt indicating receipt by the defendant, the envelope bearing the official notification from the United States Postal Service of the defendant's refusal to accept delivery of such registered or certified mail, the envelope bearing the official notification from a commercial firm of the defendant's refusal to accept such statutory overnight delivery, or an official written notice from the United States Postal Service of the defendant's refusal to accept delivery of such registered or certified mail shall be filed with the clerk of the court in which the garnishment is pending.
        3. The defendant's refusal to accept or failure to claim such registered or certified mail or statutory overnight delivery addressed to such defendant shall be deemed notice to such defendant;
        1. To be delivered personally to the defendant by:
          1. An individual who is not a party and is not younger than 18 years of age;
          2. An individual who has been appointed by the court to serve process or is a permanent process server;
          3. The sheriff of the county where the action is brought or where the defendant is found or by such sheriff's deputy;
          4. The marshal or sheriff of the court or by such official's deputy;
          5. The constable of the magistrate court, when the garnishment is filed in a magistrate court, or by the constable's deputy; or
          6. A certified process server as provided in Code Section 9-11-4.1 .
        2. A certification by the person making the delivery shall be filed with the clerk of the court in which the garnishment is pending; or
        1. To be sent to the defendant by regular mail at the address at which the defendant:
          1. Accepted service in the action resulting in the judgment;
          2. Identified as his or her residence in any pleading in the action resulting in the judgment; or
          3. Was served as shown on the return of service in the action resulting in the judgment when it shall appear by affidavit that the defendant resides out of this state; has departed this state; cannot, after due diligence, be found within this state; or has concealed his or her place of residence from the plaintiff.
        2. A certificate of such mailing shall be filed with the clerk of the court in which the garnishment is pending by the person mailing such notice.
    2. The methods of notification specified in this subsection shall be cumulative and may be used in any sequence or combination. When it appears that a plaintiff has reasonably, diligently, and in good faith attempted to use one method, another method thereafter may be utilized; for the time during which the attempt was being made, the time limit shall be tolled for the subsequent method.
    3. No money or other property paid or delivered to the court by the garnishee shall be distributed nor shall any judgment be rendered against the garnishee until:
      1. Ten days have elapsed from the date of compliance with at least one method of notification provided by this subsection; and
      2. If a garnishee answer was filed:
        1. Twenty days have elapsed from the filing of the garnishee's answer without a claim having been filed by any defendant or third party and without a traverse having been filed by the plaintiff; or
        2. All traverses filed prior to the twenty-first day from the filing of the garnishee's answer have been adjudicated and all claims have been adjudicated. (Code 1981, § 18-4-8 , enacted by Ga. L. 2016, p. 8, § 1/SB 255; Ga. L. 2018, p. 820, § 4/SB 194.)

The 2018 amendment, effective May 8, 2018, substituted the present provisions of subparagraph (b)(1)(C) for the former provisions, which read: "To be sent to the defendant by regular mail at the address at which the defendant was served as shown on the return of service in the action resulting in the judgment when it shall appear by affidavit to the satisfaction of the clerk of the court that the defendant resides out of this state, has departed this state, cannot, after due diligence, be found within this state, or has concealed his or her place of residence from the plaintiff. A certificate of such mailing shall be filed with the clerk of the court in which the garnishment is pending by the person mailing such notice."

JUDICIAL DECISIONS

Editor's notes. - In light of the similarity of the statutory provisions, decisions under former Ga. L. 1884-85, p. 95; former Civil Code 1895, § 4710; former Civil Code 1910, § 5270; former Code 1933, § 46-105; former Code 1933, § 46-106, as it read prior to revision by Ga. L. 1976, p. 1608, § 1; former Code 1933, § 46-304 as it read after passage of Ga. L. 1976, p. 1608, § 1; and former O.C.G.A. §§ 18-4-23 and 18-4-64 are included in the annotations for this Code section.

Construction. - Because garnishment was a special statutory proceeding in derogation of common law, former O.C.G.A. § 18-4-23 had to be strictly construed. ARC Sec., Inc. v. Massey Bus. College, 221 Ga. App. 489 , 471 S.E.2d 569 (1996) (decided under former O.C.G.A. § 18-4-23 ).

Relationship with other laws. - After a consumer appealed a district court's dismissal of the consumer's improper venue Fair Debt Collection Practices Act (FDCPA), 15 U.S.C. § 1692 et seq., complaint, the FDCPA venue provision applied only to legal actions against any consumer, and Georgia garnishment proceedings were not legal actions against any consumer. Ray v. McCullough Payne & Haan, LLC, 838 F.3d 1107 (11th Cir. 2016).

Former Civil Code 1895, § 4710 was not restricted to service on domestic corporations. Cathcart v. Cincinnati, Hamilton & Dayton Ry. Co., 108 Ga. 253 , 33 S.E. 875 (1899) (decided under former Civil Code 1895, § 4710).

Corporation not transacting business in this state is not subject to garnishment, though the corporation's agent resides herein. Schmidlapp & Co. v. La Confiance Ins. Co., 71 Ga. 246 (1883) (decided under former Civil Code 1895, § 4710).

Service upon agent in cases of foreign debt or garnishee. - Garnishment can lawfully be served upon a foreign corporation by making personal service upon an authorized agent of the company in this state even though the principal debtor and the garnishee may both be nonresidents, or that the debt garnished was contracted and is payable elsewhere (i.e., in another state). United Merchants & Mfrs., Inc. v. Citizens & S. Nat'l Bank, 166 Ga. App. 468 , 304 S.E.2d 552 (1983) (decided under former O.C.G.A. § 18-4-23 ).

Process served on corporation pending its application for charter will not confer jurisdiction. Bartram, Hendrix & Co. v. Collins Mfg. Co., 69 Ga. 751 (1882) (decided under former law).

Construction of "agent." - Word "agent" in former Civil Code 1910, § 5270 should not be construed in a narrow, technical sense, but should be given a broad, common-sense construction. Central of Ga. Ry. v. Ellis, 17 Ga. App. 536 , 87 S.E. 815 (1916) (decided under former Civil Code 1910, § 5270).

Service on agent in charge. - When agent was served, return is amendable to show that agent was in charge. Southern Express Co. v. National Bank, 4 Ga. App. 399 , 61 S.E. 857 (1908) (decided under former Civil Code 1895, § 4710).

Service upon agent who is defendant in main suit. - Service of garnishment upon corporation doing business in this state may be perfected by service upon its agent in charge of its business in this state, even though agent is defendant in main suit. Jewel Tea Co. v. Patillo, 50 Ga. App. 620 , 178 S.E. 925 (1935) (decided under former Code 1933, § 46-106).

Delegation of employee as agent. - If principal officer in charge of business of corporation is authorized to designate another employee because the corporation prefers that the corporation's principal officer not receive service, then that employee can be designated as agent in charge of office of corporation for purpose of receiving such service. Cleveland Lumber Co. v. Delta Equities, Inc., 232 Ga. 883 , 209 S.E.2d 212 (1974) (decided under former Code 1933, § 46-106).

Entry of service must show service on corporation or the corporation's alter ego. North Ga. Banking Co. v. Fancher, 23 Ga. App. 683 , 99 S.E. 229 (1919) (decided under former Civil Code 1910, § 5270).

President of chartered bank is the bank's alter ego. Third Nat'l Bank v. McCullough Bros., 108 Ga. 249 , 33 S.E. 848 (1899) (decided under former Civil Code 1895, § 4710); Twilley & Hodges v. Middle Ga. Bank, 28 Ga. App. 416 , 111 S.E. 694 (1922) (decided under former Civil Code 1910, § 5270).

When person other than president is served, return must show it was agent in charge. Twilley & Hodges v. Middle Ga. Bank, 28 Ga. App. 416 , 111 S.E. 694 (1922) (decided under former Civil Code 1910, § 5270).

Service on others. - Entry showing service on cashier must show that cashier was in charge. North Ga. Banking Co. v. Fancher, 23 Ga. App. 683 , 99 S.E. 229 (1919) (decided under former Civil Code 1910, § 5270).

Return merely designating person served as "supt." is insufficient. Hargis v. East Tenn., V. & Ga. Ry., 90 Ga. 42 , 15 S.E. 631 (1892) (decided under former law); Southern Ry. v. Hagan, 103 Ga. 564 , 29 S.E. 760 (1897) (decided under former Civil Code 1895, § 4710).

Service on chief clerk when agent is absent, and that clerk is in charge suffices. Central of Ga. Ry. v. Ellis, 17 Ga. App. 536 , 87 S.E. 815 (1916) (decided under former Civil Code 1910, § 5270).

Personal service upon ticket agent in charge of ticket office of railroad company, and selling tickets and handling passenger business for the railroad and other like companies is sufficient. Seaboard Air-Line Ry. v. Browder, 144 Ga. 322 , 87 S.E. 6 (1915) (decided under former Civil Code 1910, § 5270).

Burden of proof. - When corporation denies that agent served was in charge of office, prima facie presumption in favor of return arises, and burden of proof is on company. Twilley & Hodges v. Middle Ga. Bank, 28 Ga. App. 416 , 111 S.E. 694 (1922) (decided under former Civil Code 1910, § 5270).

Evidence sufficient to challenge service. - Testimony from the president and controller of a corporation that they were the only persons authorized to receive service and that the person served was not a corporate officer, performed only clerical functions, and was paid on an hourly basis, along with similar testimony from the receptionist who was served, was sufficient evidence that service was improper. ARC Sec., Inc. v. Massey Bus. College, 221 Ga. App. 489 , 471 S.E.2d 569 (1996) (decided under former O.C.G.A. § 18-4-23 ).

Garnishment procedure meets constitutional due process requirements. - Constitutional due process requirements are adequately met by judicial supervision and notice to the defendant mandated by the statutory procedure for garnishments. Black v. Black, 245 Ga. 281 , 264 S.E.2d 216 (1980) (decided under former Code 1933, § 46-105).

Garnishment proceeding as complying with procedural due process requirements. - See Antico v. Antico, 241 Ga. 294 , 244 S.E.2d 820 (1978) (decided under former Code 1933, § 46-105).

Written notice containing specified information was sufficient, although unsigned. Mahan v. Ford Motor Co., 146 Ga. App. 291 , 246 S.E.2d 374 (1978) (decided under former Code 1933, § 46-105).

No garnishment allowed upon out-of-state wages of nonresident. - Georgia state court was without power to enforce a Georgia child support judgment through the garnishment of the defendant's wages in another state when defendant was not within Georgia. Nelson v. Nelson, 173 Ga. App. 546 , 327 S.E.2d 529 (1985) (decided under former O.C.G.A. § 18-4-64).

Court refused to dismiss consumer's claim that a debt collection agency's letter to the consumer did not comply with the requirement of former O.C.G.A. § 18-4-64(c) that written notice include a statement that a garnishment against the property and credits had been or would be served on the garnishee; the collection agency, an agency employee, and a law firm failed to address that claim in their Fed. R. Civ. P. 12(b)(6) motion to dismiss. Taylor v. Heath W. Williams, L.L.C., 510 F. Supp. 2d 1206 (N.D. Ga. Feb. 23, 2007) (decided under former O.C.G.A. § 18-4-64).

Dismissal of a garnishment action was proper because the judgment creditor failed to comply with the notice requirement of former O.C.G.A. § 18-4-64(a)(2); the judgment debtor was not served with notice until more than six months after the bank was served. Because there was no compliance with the notice requirements, the burden did not shift to the judgment debtor to raise improper service/notice as a defense. TBF Fin., LLC v. Houston, 298 Ga. App. 657 , 680 S.E.2d 662 (2009) (decided under former O.C.G.A. § 18-4-64).

Substantial compliance with three- day notice period was insufficient. - Court of Appeals erred when the court held that a judgment creditor's notification of a judgment debtor of a garnishment eight business days after service of the garnishee substantially complied with former O.C.G.A. § 18-4-64(a)(7)'s requirement that notice be given within three business days. O.C.G.A. § 1-3-1 did not apply because the statute was unambiguous. Cook v. NC Two, L.P., 289 Ga. 462 , 712 S.E.2d 831 (2011) (decided under former O.C.G.A. § 18-4-64).

RESEARCH REFERENCES

Am. Jur. 2d. - 6 Am. Jur. 2d, Attachment and Garnishment, §§ 344, 353.

C.J.S. - 38 C.J.S., Garnishment, § 201 et seq.

ALR. - Content of notice to nonresident principal essential to garnishment or attachment, 92 A.L.R. 570 .

Effect of judgment in garnishment proceedings as between garnishee and principal defendant, 166 A.L.R. 272 .

18-4-9. Periodic summonses; original filing date limiting extension.

  1. Summonses of garnishment may issue from time to time until the judgment is paid or the garnishment proceeding is otherwise terminated.
  2. No new summons of garnishment on the same affidavit of garnishment shall be issued after two years from the date of the original filing of such affidavit. After two years, the garnishment proceeding based on such affidavit shall automatically stand dismissed unless there are funds remaining in the registry of the court or a new summons of garnishment has been issued in the preceding 30 days. (Code 1981, § 18-4-9 , enacted by Ga. L. 2016, p. 8, § 1/SB 255; Ga. L. 2018, p. 820, § 5/SB 194.)

The 2018 amendment, effective May 8, 2018, substituted "After two years, the" for "The" at the beginning of the second sentence of subsection (b).

JUDICIAL DECISIONS

Editor's notes. - In light of the similarity of the statutory provisions, certain decisions under former Civil Code 1910, § 5269 are included in the annotations for this Code section.

Additional affidavit to obtain another summons in appropriate cases. - While summons of garnishment may issue from time to time before trial, without giving an additional affidavit, the plaintiff in a garnishment proceeding is not precluded from making, if the plaintiff so desires, an additional affidavit to obtain another summons of garnishment, when the answer of the garnishee to the first summons shows that the garnishee was indebted to the defendant in an amount less that of the plaintiff's claim. Johnson v. Atlanta Furn. Co., 47 Ga. App. 124 , 169 S.E. 767 (1933) ??? (decided under former Civil Code 1910, § 5269).

RESEARCH REFERENCES

Am. Jur. 2d. - 6 Am. Jur. 2d, Attachment and Garnishment, § 342.

18-4-10. Responses by garnishee; judgment by default.

  1. The summons of garnishment shall state that if the garnishee fails to file a garnishee's answer to such summons in a timely manner, a judgment by default shall be entered against the garnishee for the amount remaining due on a judgment as shown in the plaintiff's affidavit of garnishment.
  2. The summons of garnishment shall be directed to the garnishee, commanding the garnishee to respond and state what money or other property is subject to garnishment. Except as provided in subsection (c) of this Code section and Articles 2 and 3 of this chapter, the garnishee's answer shall be filed with the court issuing the summons not sooner than 30 days and not later than 45 days after service of the summons, and the money or other property subject to garnishment shall be paid to or delivered to the court concurrently with such garnishee's answer.
  3. When the garnishee is a financial institution and the garnishment is not a continuing garnishment or continuing garnishment for support, such garnishee's answer shall be filed with the court issuing the summons of garnishment not sooner than five days and not later than 15 days after the date of service of the summons, and the money or other property subject to garnishment shall be paid to or delivered to the court concurrently with such garnishee's answer. If the defendant does not have an active account with and is not the owner of any money or other property in the possession of such financial institution, then the garnishee may immediately file the garnishee's answer; provided, however, that such garnishee's answer shall be filed not later than 15 days after the date of service of the summons. (Code 1981, § 18-4-10 , enacted by Ga. L. 2016, p. 8, § 1/SB 255.)

Law reviews. - For article discussing due process problems with Georgia's post-judgment garnishment procedures, in light of City Fin. Co. v.Winston, 238 Ga. 10 , 231 S.E.2d 45 (1979), see 13 Ga. St. B.J. 144 (1977). For article discussing an advisory opinion issued by the Standing Committee on the Unlicensed Practice of Law on the issue of execution and filing of an answer in the garnishment action by a nonattorney employee of the garnishee, see 16 (No. 1) Ga. St. B.J. 102 (2010).

JUDICIAL DECISIONS

Editor's notes. - In light of the similarity of the statutory provisions, certain decisions under former Civil Code 1910, § 5269, former Code 1933, §§ 46-105 and 46-301, as they read prior to revision of Title 46 by Ga. L. 1976, p. 1608, § 1, and former O.C.G.A. § 18-4-62 are included in the annotations for this Code section.

Relationship with federal law. - After a consumer appealed a district court's dismissal of the consumer's improper venue Fair Debt Collection Practices Act (FDCPA), 15 U.S.C. § 1692 et seq., complaint, the FDCPA venue provision applied only to legal actions against any consumer, and Georgia garnishment proceedings were not legal actions against any consumer. Ray v. McCullough Payne & Haan, LLC, 838 F.3d 1107 (11th Cir. 2016).

Purpose of summons of garnishment. - Summons of garnishment is the process that brings the garnishee into court, and in this respect is like process in an ordinary suit, its purpose being to give notice to the garnishee of the plaintiff's claim upon the defendant's property in the garnishee's possession or upon the garnishee's indebtedness to the defendant. Gowen v. Bell, 113 Ga. App. 324 , 148 S.E.2d 52 (1966) (decided under former Code 1933, § 46-105, as it read prior to revision by Ga. L. 1976, p. 1608, § 1).

Substantial compliance with requirements. - Substantial compliance with the requisites of the Code, with respect to issuing and serving of process, will be sufficient, and, when notice is given, no technical or formal objection shall invalidate any process. Gainesville Feed & Poultry Co. v. Waters, 87 Ga. App. 354 , 73 S.E.2d 771 (1952) (decided under former Code 1933, § 46-105, as it read prior to revision by Ga. L. 1976, p. 1608, § 1).

Premature answer in garnishment is amendable. - Answer in garnishment prematurely filed exists, after time for proper filing arrives, in an imperfect form, and is therefore amendable as are pleadings generally. Mark Ten Homes Corp. v. First Nat'l Bank, 115 Ga. App. 597 , 155 S.E.2d 455 (1967) (decided under former Code 1933, § 46-301, as it read prior to revision by Ga. L. 1976, p. 1608, § 1).

Personal service necessary. - Former Civil Code 1910, § 5269 required that when summons of garnishment is issued, officer shall serve the summons upon person of garnishee, which means that the summons shall be served upon the garnishee personally. Robinson v. T.A. Bryson & Sons, 45 Ga. App. 440 , 165 S.E. 158 (1932) (decided under former Civil Code 1910, § 5269).

Personal service defined. - Personal service means actual delivery of process to the defendant in person, and does not include leaving a copy at the defendant's usual place of abode, or the defendant's home, or at the defendant's office, or by delivery to someone else. Robinson v. T.A. Bryson & Sons, 45 Ga. App. 440 , 165 S.E. 158 (1932) (decided under former Civil Code 1910, § 5269).

Availability of personal service provisions of § 9-11-4(d) . - Provisions of O.C.G.A. § 9-11-4(d) concerning personal service of process are available in a garnishment case. Alpha Transp. Serv., Inc. v. Cartwright, 248 Ga. 701 , 285 S.E.2d 713 (1982) (decided under former O.C.G.A. § 18-4-62).

Former O.C.G.A. § 18-4-62 did not expressly state that personal service provisions of O.C.G.A. § 9-11-4(d) are unavailable, and further, § 9-11-4(j) provides that "service shall be sufficient when made in accordance with the statutes relating particularly to the proceeding or in accordance with this Code section. " Alpha Transp. Serv., Inc. v. Cartwright, 248 Ga. 701 , 285 S.E.2d 713 (1982) (decided under former O.C.G.A. § 18-4-62).

Service on nonresident garnishee's agent and answer by garnishee. - When attachment process is sued out against nonresident and summons of garnishment was served on agent of garnishee, and when garnishee filed answer admitting funds, garnishee cannot legally defend against subsequent action on attachment bond on ground that the garnishee was not personally served as required. Carrington v. Wilharbla Realty Co., 67 Ga. App. 898 , 20 S.E.2d 860 (1942) (decided under former Code 1933, § 46-105, as it read prior to revision by Ga. L. 1976, p. 1608, § 1).

Return of service conclusive as to identity of person to whom summons was directed. - When it is not contended that it was irregular or incomplete in any way, return of service is conclusive as to identity of person to whom summons of garnishment was directed. Gainesville Feed & Poultry Co. v. Waters, 87 Ga. App. 354 , 73 S.E.2d 771 (1952) (decided under former Code 1933, § 46-105, as it read prior to revision by Ga. L. 1976, p. 1608, § 1).

Amendability of return of service. - Return of service not amendable to show that person named in it was garnishee served. Gibbs v. Rhodes Furn. Co., 58 Ga. App. 352 , 198 S.E. 315 (1938) (decided under former Code 1933, § 46-105, as it read prior to revision by Ga. L. 1976, p. 1608, § 1).

Motion to quash filed after time for answering has expired. - When time provided by law for answering summons of garnishment has expired when garnishee files the garnishee's motion to quash, the trial court errs if the court grants the motion. Gowen v. Bell, 113 Ga. App. 324 , 148 S.E.2d 52 (1966) (decided under former Code 1933, § 46-105, as it read prior to revision by Ga. L. 1976, p. 1608, § 1).

Garnishment by judgment creditor against defendant's insurer. - After the parents of a shooting victim obtained judgment against the owner of the property on which their son was shot, and the owner filed bankruptcy, the Court of Appeals erred in reversing the trial court and holding that the judgment debtor had no garnishment action against the owner's insurer; the insurer could contest, under former O.C.G.A. § 18-4-62, the assertion that it held property belonging to the owner, namely the benefits to be paid on the owner's behalf under an insurance contract. Ross v. St. Paul Reinsurance Co., Ltd., 279 Ga. 92 , 610 S.E.2d 57 (2005) (decided under former O.C.G.A. § 18-4-62).

When claim for default arises. - Claim arises against the garnishee at the time the garnishee falls into default by failing to file answers in a continuing garnishment proceeding, and is separate and distinct from any claim which may have existed prior to that time. Fazio v. Growth Dev. Corp., 168 Bankr. 1009 (Bankr. N.D. Ga. 1994) (decided under former O.C.G.A. § 18-4-90).

Garnishee failed to amend the defective answer as permitted by law and, pursuant to former O.C.G.A. § 18-4-90, the garnishee was automatically in default. Because the garnishee failed to establish the presence of a nonamendable defect on the face of the record or pleadings, the court abused the court's discretion by granting the motion to set aside the default judgment. Oxmoor Portfolio, LLC v. Flooring & Tile Superstore of Conyers, Inc., 320 Ga. App. 640 , 740 S.E.2d 363 (2013) (decided under former O.C.G.A. § 18-4-90).

Cited in Blach v. Diaz-Verson, 303 Ga. 63 , 810 S.E.2d 129 (2018).

RESEARCH REFERENCES

Am. Jur. 2d. - 6 Am. Jur. 2d, Attachment and Garnishment, § 339 et seq.

C.J.S. - 38 C.J.S., Garnishment, §§ 174, 185, 186, 188 et seq., 262 et seq.

ALR. - Money due only on further performance of contract by debtor as subject to garnishment, 2 A.L.R. 506 .

Waiver or admission by garnishee as affecting principal defendant, 64 A.L.R. 430 .

Who may serve writ, summons, or notice of garnishment, 75 A.L.R.2d 1433.

Sufficiency, as to content, of notice of garnishment required to be served upon garnishee, 20 A.L.R.5th 229.

18-4-11. Garnishee answer; property located in area with restricted access.

  1. Within the time prescribed by Code Section 18-4-10, the garnishee shall file a garnishee answer. Along with the garnishee's answer, the garnishee shall pay or deliver to the court the money or other property admitted in the garnishee's answer to be subject to garnishment.
  2. If in responding to the summons of garnishment the garnishee shall state that the property of the defendant includes property in a safe-deposit box or similar property, the garnishee shall respond to the court issuing the summons of garnishment as to the existence of such safe-deposit box and shall restrict access to any contents of such safe-deposit box until the earlier of:
    1. Further order of such court regarding the disposition of the contents of such safe-deposit box; or
    2. The elapsing of 120 days from the date of filing of the garnishee answer unless such time has been extended by the court.
  3. If the garnishee has been served with a summons in more than one garnishment case involving the same defendant, the garnishee shall state in each garnishee answer that the money or other property is being paid or delivered to a specifically named court subject to the demands of other cases and shall give the numbers of all such cases in each garnishee answer.
  4. If the garnishee is unable to respond with the specific information required by this Code section, the garnishee's inability shall be stated in the garnishee's answer, together with all the facts plainly, fully, and distinctly set forth, so as to enable the court to give judgment thereon.
  5. The form for a garnishee answer is set forth in Code Section 18-4-84 , and the form for a financial institution garnishee answer is set forth in Code Section 18-4-85 . (Code 1981, § 18-4-11 , enacted by Ga. L. 2016, p. 8, § 1/SB 255.)

JUDICIAL DECISIONS

Editor's notes. - In light of the similarity of the statutory provisions, decisions under former Ga. L. 1884-5, p. 96; former Civil Code 1895, § 4727; former Civil Code 1910, § 5293; former Code 1933, § 46-301, as it read prior to revision by Ga. L. 1976, p. 1608, § 1; former Code 1933, § 46-501 as it read after passage of Ga. L. 1976, p. 1608, § 1; and former O.C.G.A. §§ 18-4-82 and 18-4-84 are included in the annotations for this Code section.

Garnishee may admit indebtedness but claim exemption. - Garnishee can admit an indebtedness but contend and show by denial that the indebtedness admitted is exempt from the process of garnishment, and because of its denial, the garnishee can fail to pay the amount into court without subjecting itself to the penalty of being subject to judgment for the entire indebtedness. United Merchants & Mfrs., Inc. v. Citizens & S. Nat'l Bank, 166 Ga. App. 468 , 304 S.E.2d 552 (1983) (decided under former O.C.G.A. § 18-4-84 ).

Garnishment action against judgment debtor's insurer was proper. - After the parents of a shooting victim obtained judgment against the owner of the property on which their son was shot, and the owner filed bankruptcy, the Court of Appeals erred in reversing the trial court and holding that the judgment debtor had no garnishment action against the owner's insurer; the insurer could contest, under former O.C.G.A. § 18-4-62, the assertion that it held property belonging to the owner, namely the benefits to be paid on the owner's behalf under an insurance contract. Ross v. St. Paul Reinsurance Co., Ltd., 279 Ga. 92 , 610 S.E.2d 57 (2005) (decided under former O.C.G.A. § 18-4-82 ).

Statement in answer that garnishee is not indebted is not a conclusion, but a factual averment. Ole Campbellton Constr. Co. v. Desert Inn & Country Club, 154 Ga. App. 107 , 267 S.E.2d 646 (1980) (decided under former Code 1933, § 46-501).

Verification of answer in behalf of corporation. - Answer in behalf of corporation to summons of garnishment may be verified by any agent who can and will depose positively to facts stated therein. Ole Campbellton Constr. Co. v. Desert Inn & Country Club, 154 Ga. App. 107 , 267 S.E.2d 646 (1980).

Answer in garnishment is designed to show indebtedness of garnishee for two periods of time prior to the date of service of the summons, and also the period between service and answer. Mark Ten Homes Corp. v. First Nat'l Bank, 115 Ga. App. 597 , 155 S.E.2d 455 (1967) (decided under former Code 1933, § 46-301).

Garnishee must answer concerning indebtedness and effects belonging to defendant. Citizens Nat'l Bank v. Dasher, 16 Ga. App. 33 , 84 S.E. 482 (1915) (decided under former Civil Code 1910, § 5293).

Liability for improper answer on garnishment. - Garnishee's reliance on signature cards and the debtor's assurances that the bank accounts were trust accounts was insufficient to relieve the garnishee of liability for failing to list these accounts on the garnishment answer. Wachovia Bank v. Unisys Fin. Corp., 221 Ga. App. 471 , 471 S.E.2d 554 (1996) (decided under former O.C.G.A. § 18-4-82 ).

Garnishee cannot refuse to answer and garnishee's answer must be directed to matter contained in summons. Citizens & S. Nat'l Bank v. AVCO Fin. Servs., Inc., 129 Ga. App. 605 , 200 S.E.2d 309 (1973) (decided under former Code 1933, § 46-301).

Bank's duty to comply with garnishment laws. - Bank was not entitled to assume that an account was a legitimate corporate account when the bank did not follow the bank's own internal procedure with respect to opening the account and, thus, the bank was not excused from complying with a summons of garnishment naming a signatory on the account, nor did the fact that the bank was unable to locate the account relieve the bank from the bank's responsibilities under the garnishment statutes. Mobile Paint Mfg. Co. v. Johnston, 219 Ga. App. 299 , 464 S.E.2d 903 (1995) (decided under former O.C.G.A. § 18-4-82 ).

Garnishee's determination as to status of assets is subject to contrary determination by court. Citizens & S. Nat'l Bank v. AVCO Fin. Servs., Inc., 129 Ga. App. 605 , 200 S.E.2d 309 (1973) (decided under former Code 1933, § 46-301).

Answer in nature of an interpleader was permitted. Small v. Mendel, Gosling & Co., 96 Ga. 532 , 23 S.E. 834 (1895) (decided under former Civil Code 1895, § 4727); Booth v. Brooke & Co., 6 Ga. App. 299 , 64 S.E. 1103 (1909) (decided under former Civil Code 1895, § 4727).

Garnishee who is in doubt as to liability may have court resolve such doubt by presenting every element involved in the matter so that the court can make the determination and the garnishee avoid liability. Citizens & S. Nat'l Bank v. AVCO Fin. Servs., Inc., 129 Ga. App. 605 , 200 S.E.2d 309 (1973) (decided under former Code 1933, § 46-301).

Inability of garnishee to answer as required. - See Estridge v. Janko, 96 Ga. App. 246 , 99 S.E.2d 682 (1957) (decided under former Code 1933, § 46-301).

Portion of section concerning garnishee's inability to answer as required, inapplicable when garnishee not indebted. - Statutory provision that when garnishee is unable to answer in what sum garnishee is indebted to defendant or what property garnishee has belonging to the defendant as required by the summon's garnishee shall so allege in the garnishee's answer setting forth all facts does not apply when the garnishee has not become indebted to the defendant. Hardware Mut. Cas. Co. v. Scott, 116 Ga. App. 637 , 158 S.E.2d 275 (1967) (decided under former Code 1933, § 46-301).

Status of indebtedness between defendant and garnishee becomes fixed when latter files answer. - When answer of garnishee is filed, status of indebtedness between the defendant and the garnishee upon which right and quantum of plaintiff's recovery depends, becomes fixed, and the plaintiff's right of recovery is not thereafter affected, increased nor diminished by debts or demands accruing to the credit of the defendant or the garnishee against the other. Estridge v. Janko, 96 Ga. App. 246 , 99 S.E.2d 682 (1957) (decided under former Code 1933, § 46-301).

Unless garnishee alleges inability to answer, status of indebtedness is fixed when answer is filed. - When a garnishee fails to allege, as required by former Code 1933, § 46-301, the garnishee's inability to answer whether or in what manner the garnishee is indebted to the defendant or that a nonresident debtor owes a debt not yet due, the status of indebtedness between the nonresident and the defendant is fixed as of the time when the garnishee files an answer to the summons of garnishment. Estridge v. Janko, 96 Ga. App. 246 , 99 S.E.2d 682 (1957) (decided under former Code 1933, § 46-301).

Garnishee's answer to summons, stating there is nothing in garnishee's possession subject thereto, is sufficient. Citizens & S. Nat'l Bank v. AVCO Fin. Servs., Inc., 129 Ga. App. 605 , 200 S.E.2d 309 (1973) (decided under former Code 1933, § 46-301).

Garnishee is entitled to set-off any indebtedness owed by the defendant in garnishment. Mutual Reserve Life Ins. Co. v. Fowler, 2 Ga. App. 537 , 59 S.E. 469 (1907) (decided under former Civil Code 1895, § 4727).

One owing wages exempt from garnishment, need not pay money into court upon being garnished, but may resist by one's answer. Emmons, McKee & Co. v. Southern Bell Tel. & Tel. Co., 80 Ga. 760 , 7 S.E. 232 (1888) (decided under former Ga. L. 1884-85, p. 96).

Effect of bankruptcy of defendant. - See Armour Packing Co. v. Wynn, 119 Ga. 683 , 46 S.E. 865 (1904) (decided under former Civil Code 1895, § 4727).

OPINIONS OF THE ATTORNEY GENERAL

Editor's notes. - In light of the similarity of the statutory provisions, opinions decided under former O.C.G.A. § 18-4-84 are included in the annotations for this Code section.

Summons of garnishment establishes lien which attaches from date of service. - Summons of garnishment directing the garnishee to deliver any property into court that is subject to garnishment establishes a lien on the subject property that attaches from the date of service of the summons of garnishment. 1981 Op. Att'y Gen. No. U81-25 (decided under former O.C.G.A. § 18-4-84 ).

Garnishment action remains ancillary to or dependent upon principal action between creditor and debtor, even though it establishes lien on subject property. 1981 Op. Att'y Gen. No. U81-25 (decided under former O.C.G.A. § 18-4-84 ).

Rank of judgment on which garnishment depends determines priority. - Because of ancillary nature of garnishment, the relevant factor in determining priorities of several garnishments is rank of judgment on which garnishment is dependent and not rank of garnishment lien. 1981 Op. Att'y Gen. No. U81-25 (decided under former O.C.G.A. § 18-4-84 ).

Priority lien that initial garnishing creditor obtains by virtue of initial creditor having first served garnishee does not defeat priority of subsequent garnishing creditor with senior judgment. 1981 Op. Att'y Gen. No. U81-25 (decided under former O.C.G.A. § 18-4-84 ).

RESEARCH REFERENCES

Am. Jur. 2d. - 6 Am. Jur. 2d, Attachment and Garnishment, § 354 et seq.

C.J.S. - 38 C.J.S., Garnishment, § 262 et seq.

ALR. - Waiver or admission by garnishee as affecting principal defendant, 64 A.L.R. 430 .

Answer on information and belief by trustee or garnishee in garnishment or trustee process, 125 A.L.R. 253 .

18-4-12. Entity as garnishee.

  1. When a garnishment proceeding is filed in a court under any provision of this chapter involving an entity as garnishee, the execution and filing of a garnishee answer may be done by an entity's authorized officer or employee and shall not constitute the practice of law. If a claim or traverse is filed to such entity's garnishee answer in a court of record, an attorney shall be required to represent such entity in further garnishment proceedings.
  2. An entity's payment into court of any money or other property of the defendant, or money or other property which is admitted to be subject to garnishment, may be done by an entity's authorized officer or employee and shall not constitute the practice of law. (Code 1981, § 18-4-12 , enacted by Ga. L. 2016, p. 8, § 1/SB 255.)

Law reviews. - For article discussing an advisory opinion issued by the Standing Committee on the Unlicensed Practice of Law on the issue of execution and filing of an answer in the garnishment action by a nonattorney employee of the garnishee, see 16 (No. 1) Ga. St. B.J. 102 (2010).

RESEARCH REFERENCES

Am. Jur. 2d. - 6 Am. Jur. 2d, Attachment and Garnishment, § 1 et seq.

18-4-13. Service of garnishee's answer.

  1. All garnishee answers shall, concurrently with filing, be served by the garnishee upon the plaintiff or the plaintiff's attorney and the defendant or the defendant's attorney.
    1. Service of the garnishee's answer upon the plaintiff shall be shown by the:
      1. Written acknowledgment of the plaintiff or the plaintiff's attorney; or
      2. Certificate of the garnishee or the garnishee's attorney, attached to the garnishee's answer, that a copy of the garnishee's answer was mailed to the plaintiff or the plaintiff's attorney.
    2. No service upon the plaintiff shall be required unless the name and address of the plaintiff or the plaintiff's attorney shall legibly appear on the face of the summons of garnishment.
    3. If the garnishee fails to serve the plaintiff, the plaintiff shall be allowed 20 days from the time the plaintiff receives actual notice of the garnishee's answer to traverse the garnishee's answer.
    1. Service of the garnishee's answer upon the defendant shall be shown by the:
      1. Written acknowledgment of the defendant or the defendant's attorney; or
      2. Certificate of the garnishee or the garnishee's attorney, attached to the garnishee's answer, that a copy of the garnishee's answer was mailed to the:
        1. Defendant's attorney; or
        2. Defendant at the last address known to the garnishee.
    2. No service upon the defendant shall be required by a financial institution garnishee if the defendant does not have an active account with and is not the owner of any money or other property in the possession of such financial institution.
  2. The garnishee shall provide the defendant, by regular mail at the defendant's last address known to the garnishee, with the Notice to Defendant of Right Against Garnishment of Money, Including Wages, and Other Property and the Defendant's Claim Form that it received from the plaintiff as set forth in subsection (a) of Code Section 18-4-8 . (Code 1981, § 18-4-13 , enacted by Ga. L. 2016, p. 8, § 1/SB 255.)

JUDICIAL DECISIONS

Editor's notes. - In light of the similarity of the statutory provisions, decisions decided under former O.C.G.A. § 18-4-83 are included in the annotations for this Code section.

Discharge of garnishee upon plaintiff's failure to traverse answer. - By enacting a specific time limitation within which the plaintiff must traverse the garnishee's answer, the legislature expressed a clear intent to provide for automatic discharge of the garnishee from all obligations under the summons if the plaintiff did not notify the court and garnishee otherwise within the brief prescribed time period. Nockonwood Indus., Inc. v. Tuloka Affiliates, Inc., 164 Ga. App. 424 , 296 S.E.2d 405 (1982) (decided under former O.C.G.A. § 18-4-83 ).

Answer need not be served on defendant. - Garnishee's answer must be served upon the plaintiff, but there is no requirement that the answer be served upon the defendant, since the plaintiff and the garnishee are the only parties to the garnishment action. Flournoy v. Pate (In re Antley), 18 Bankr. 207 (Bankr. M.D. Ga. 1982) (decided under former O.C.G.A. § 18-4-83 ).

Failure of plaintiff to include sufficient addresses on summons of garnishment. - In garnishment proceeding, the plaintiff was required to traverse garnishee's answer within 15 days after filing of answer even though it had not been served with a copy of the answer where it had failed to include its or its attorney's address on the summons of garnishment. Nockonwood Indus., Inc. v. Tuloka Affiliates, Inc., 164 Ga. App. 424 , 296 S.E.2d 405 (1982) (decided under former O.C.G.A. § 18-4-83 ).

Effect of no service of answers. - When the name and address of the plaintiff's attorney appeared on the summons of garnishment, but no certificates of service were attached to the answers, and neither the plaintiff nor the plaintiff's attorney acknowledged receipt, the requirement that the plaintiff traverse the answers within 15 days of service was never triggered. Lowery v. Dallis, 237 Ga. App. 309 , 513 S.E.2d 740 (1999) (decided under former O.C.G.A. § 18-4-83 ).

Cited in Blach v. Diaz-Verson, 303 Ga. 63 , 810 S.E.2d 129 (2018).

18-4-14. Recovery of reasonable expenses; recovery of actual expenses; refunds.

  1. The garnishee shall be entitled to the garnishee's actual reasonable expenses, including attorney's fees, in preparing and filing a garnishee's answer. The amount of expenses incurred shall be taxed in the bill of costs and shall be paid by the party upon whom the cost is cast, as costs are cast in other cases. The garnishee may deduct $50.00 or 10 percent of the amount paid into court, whichever is greater, not to exceed $100.00, as reasonable attorney's fees or expenses.
  2. If the garnishee can show that the garnishee's actual attorney's fees or expenses exceed the amount provided for in subsection (a) of this Code section, the garnishee shall petition the court for a hearing at the time of filing the garnishee's answer without deducting from the amount paid into court. Upon hearing from the parties, the court may enter an order for payment of actual attorney's fees or expenses proven by the garnishee to have been incurred reasonably in preparing and filing the garnishee's answer.
  3. In the event the garnishee makes the deduction permitted in subsection (a) of this Code section but the costs are later cast upon the garnishee, the garnishee shall forthwith refund to the defendant the funds deducted; if the costs are later cast against the plaintiff, the court shall enter judgment in favor of the defendant and against the plaintiff for the amount of the deductions made by the garnishee.
  4. Nothing in this Code section shall limit the reimbursement of costs incurred by a financial institution as provided in Code Section 7-1-237 . (Code 1981, § 18-4-14 , enacted by Ga. L. 2016, p. 8, § 1/SB 255.)

Law reviews. - For article discussing an advisory opinion issued by the Standing Committee on the Unlicensed Practice of Law on the issue of execution and filing of an answer in the garnishment action by a nonattorney employee of the garnishee, see 16 (No. 1) Ga. St. B.J. 102 (2010).

JUDICIAL DECISIONS

Editor's notes. - In light of the similarity of the statutory provisions, decisions decided under former O.C.G.A. § 18-4-97 are included in the annotations for this Code section.

Garnishee's recovery limited where garnishee fails to employ statutory procedure. - Garnishee's recovery of attorney's fees or expenses was limited to $50 after the garnishee failed to employ procedure specified in O.C.G.A. § 18-4-97; garnishee's award in excess of $50 was, therefore, erroneous. Travelers Ins. Co. v. Trans State, Inc., 172 Ga. App. 763 , 324 S.E.2d 585 (1984) (decided under former O.C.G.A. § 18-4-97).

RESEARCH REFERENCES

C.J.S. - 38 C.J.S., Garnishment, § 344 et seq.

18-4-15. Parties to garnishment; basis for exemption; form; challenge to garnishment.

  1. A garnishment proceeding is an action between the plaintiff and garnishee; provided, however, that at any time before a judgment is entered or before money or other property subject to garnishment is distributed, the defendant may become a party to the garnishment by filing a claim with the clerk of court and may use the form set forth in Code Section 18-4-82. A defendant's claim shall assert the basis upon which he or she claims that his or her money or other property is exempt from garnishment. Money or other property may be exempt from garnishment for a variety of reasons, including, but not limited to, the limitations on garnishment as provided in Code Sections 18-4-5 and 18-4-53, exemptions as provided in Code Section 18-4-6, the plaintiff not having a judgment against the defendant, the amount claimed due by the plaintiff being erroneous, such money or other property being subject to a claim held by a third party that is superior to the judgment described in the affidavit of garnishment, or other legal or statutory defenses. Even when earnings are held at a financial institution, such money may be exempt from garnishment due to the limitations on garnishment as provided in Code Sections 18-4-5 and 18-4-53, exemptions as provided in Code Section 18-4-6, or other reasons.
  2. The defendant shall serve a copy of his or her claim upon the plaintiff and garnishee. The clerk of court shall transmit a copy of the defendant's claim to the plaintiff and garnishee. If the defendant's claim alleges that money or other property in the possession of the court may be subject to a claim held by a third party that is superior to the judgment described in the affidavit of garnishment, the defendant shall serve a copy of his or her claim upon the third party named in such claim.
  3. The defendant shall become a party to all proceedings by filing a claim pursuant to this Code section.
  4. Upon the filing of the defendant's claim, a judge of the court in which the garnishment is pending shall order a hearing to be held not more than ten days from the date the claim is filed. The form for the order for such hearing is set forth in Code Section 18-4-83. Such hearing shall be available to the defendant as a matter of right after filing his or her claim, and no further summons of garnishment shall issue nor shall any money or other property paid or delivered to the court as subject to garnishment be disbursed until the hearing shall be held.
  5. The validity of the judgment upon which a garnishment is based shall only be challenged in accordance with Chapter 11 of Title 9, and no such challenge shall be entertained in the garnishment case. However, when the court finds that the defendant has attacked the validity of the judgment upon which the garnishment is based in an appropriate forum, the judge may order the garnishment be stayed until the validity of the judgment has been determined in such forum.
  6. The filing of a claim by the defendant shall not relieve the garnishee of the duties of filing a garnishee answer, of withholding money or other property subject to garnishment, or of paying or delivering to the court any money or other property subject to garnishment.
  7. A party's failure to include the civil action file number on a defendant's claim shall not affect the validity of such claim. (Code 1981, § 18-4-15 , enacted by Ga. L. 2016, p. 8, § 1/SB 255.)

Cross references. - Susceptibility of court-appointed receivers to garnishment, § 9-8-12 .

Law reviews. - For note discussing property and persons subject to garnishment, see 12 Ga. L. Rev. 814 (1978).

JUDICIAL DECISIONS

Editor's notes. - In light of the similarity of the statutory provisions, certain decisions under former Code 1933, § 46-401, as it read prior to revision by Ga. L. 1976, p. 1608, § 1; former Code 1933, § 46-401 as it read after passage of Ga. L. 1976, p. 1608, § 1; and former O.C.G.A. §§ 18-4-65 and 18-4-83 are included in the annotations for this Code section.

Relationship with federal law. - After a consumer appealed a district court's dismissal of the consumer's improper venue Fair Debt Collection Practices Act (FDCPA), 15 U.S.C. § 1692 et seq., complaint, the FDCPA venue provision applied only to legal actions against any consumer, and Georgia garnishment proceedings were not legal actions against any consumer. Ray v. McCullough Payne & Haan, LLC, 838 F.3d 1107 (11th Cir. 2016).

Procedure for debtor asserting interest in garnishment funds. - Only former O.C.G.A. §§ 18-4-65 and 18-4-93 provide how debtor may assert any "interest" the debtor may have in garnishment funds. Flournoy v. Pate (In re Antley), 18 Bankr. 207 (Bankr. M.D. Ga. 1982) (decided under former O.C.G.A. § 18-4-65).

Defendant is not a "party" to the garnishment proceeding, although provision is made for the defendant to receive notice. Flournoy v. Pate (In re Antley), 18 Bankr. 207 (Bankr. M.D. Ga. 1982) (decided under former O.C.G.A. § 18-4-65).

Challenge to validity of judgment not permitted. - In a postjudgment garnishment proceeding, the judgment debtor's traverse asserting the judgment was void or voidable was clearly an impermissible challenge to the validity of the judgment. The trial court was not authorized to consider the debtor's verified complaint for damages which addressed issues in bar of judgment in support of the debtor's traverse, and the trial court improperly dismissed the proceeding by granting summary judgment on the debtor's verified complaint without holding an evidentiary hearing on the debtor's traverse. Southern Land & Cattle Co. v. Brock, 213 Ga. App. 3 , 443 S.E.2d 647 (1994) (decided under former O.C.G.A. § 18-4-65).

Res judicata. - Trial court properly granted a bank summary judgment in a suit for conversion against the bank brought by a debtor because the debtor's claim was barred by res judicata since the debtor failed to raise any challenge in the garnishment proceeding wherein the bank was a garnishee. Copeland v. Wells Fargo Bank, N.A., 317 Ga. App. 669 , 732 S.E.2d 536 (2012), cert. denied, No. S13C0189, 2013 Ga. LEXIS 124 (Ga. 2013) (decided under former O.C.G.A. § 18-4-65).

Plaintiff may not challenge judgment establishing debt. - Plaintiff in garnishment action is precluded from challenging the validity of the judgment upon which the garnishment was based. Loftin v. Loftin, 166 Ga. App. 778 , 305 S.E.2d 641 (1983) (decided under former O.C.G.A. § 18-4-65).

Deletion of the conjunction "and" between the partnership's name and the partner's name as they appear in the complaint and judgment does not mean that a judgment against the partner does not exist. Newton, Inc. v. Alex, 162 Ga. App. 664 , 292 S.E.2d 121 (1982) (decided under former O.C.G.A. § 18-4-65).

Dormancy of judgment. - In garnishment proceeding to collect arrears on child support judgment, issue of dormancy of judgment was not present when payments made by the appellant during the ten years following the divorce were more than adequate to cover the amount of any arrearages dating from over seven years in the past and the appellee had the right to consider those payments as having been applied to the oldest amounts due. Turner v. Wood, 162 Ga. App. 674 , 292 S.E.2d 558 (1982) (decided under former O.C.G.A. § 18-4-65).

Stay of garnishment pending attack on judgment. - So long as an attack on the underlying judgment is pending in a trial court or in an appellate court, the court in which the garnishment is pending has within the court's discretion the power to order the garnishment released and stayed until the validity of such judgment has been determined. Smith v. Smith, 161 Ga. App. 20 , 289 S.E.2d 5 (1982) (decided under former O.C.G.A. § 18-4-65).

Issuance of stay, without release, relieved garnishee from filing answer. - Although a court had the authority both to release and stay a garnishment pursuant to former O.C.G.A. § 18-4-65, there was nothing to prevent a court from only issuing a stay without a release, and such a stay relieved the garnishee from answering even without issuance of a release; thus, the trial court erred in entering a default judgment against a bank as the garnishee in a garnishment proceeding while a stay was in effect based on the bank's failure to file an answer to the garnishment complaint. Chase Manhattan Bank v. LaFray, 258 Ga. App. 183 , 573 S.E.2d 435 (2002) (decided under former O.C.G.A. § 18-4-65).

Failure to determine validity of underlying judgment not error. - When the trial court's written order denying the defendant's traverse is not premised upon findings as to the validity of the underlying judgment, this error presents no ground for reversal. Loftin v. Loftin, 166 Ga. App. 778 , 305 S.E.2d 641 (1983) (decided under former O.C.G.A. § 18-4-65).

Former O.C.G.A. § 18-4-93 was inapplicable to different garnishment proceedings based on same debt, but prohibits only further issuance of any summons of garnishment in same proceeding in which traverse was filed, pending hearing on traverse. Cale v. Cale, 160 Ga. App. 434 , 287 S.E.2d 362 (1981) (decided under former O.C.G.A. § 18-4-83 ).

Defendant was not a "party" to the garnishment proceeding, although provision is made at former O.C.G.A. § 18-4-64 for the defendant to receive notice. Flournoy v. Pate (In re Antley), 18 Bankr. 207 (Bankr. M.D. Ga. 1982) (decided under former O.C.G.A. § 18-4-83 ).

Defendant may become party to garnishment. - Present garnishment statutes do not contain a specific provision whereby a defendant may traverse the answer of the garnishee. However, while there is no express provision authorizing a defendant to traverse the garnishee's answer, it is provided that a defendant may become a party to the garnishment. Terrell v. Fuller, 160 Ga. App. 56 , 286 S.E.2d 50 (1981) (decided under former O.C.G.A. § 18-4-83 ).

Defendant is not party to garnishment. - When garnishment action is filed, the plaintiff and garnishee are the only parties. Defendant is not a party to garnishment. Stone v. Peoples Bank, 127 Ga. App. 588 , 194 S.E.2d 276 (1972) (decided under former Code 1933, § 46-401, as it read prior to revision by Ga. L. 1976, p. 1608, § 1).

For defendant to become a party it is a condition precedent that garnishment be dissolved. Stone v. Peoples Bank, 127 Ga. App. 588 , 194 S.E.2d 276 (1972) (decided under former Code 1933, § 46-401, as it read prior to revision by Ga. L. 1976, p. 1608, § 1).

Interest of a defendant or a third party in garnished funds. - As former O.C.G.A. § 18-4-93 and a court of appeals holding make clear, the interest of a defendant or that of a third party in garnished funds cannot be extinguished prior to a distribution or a judgment directing a distribution of garnished funds. Bowen v. Thompson (In re Thompson), Bankr. (Bankr. N.D. Ga. Apr. 29, 2013) (decided under former O.C.G.A. § 18-4-83 ).

Defendant wishing to contest garnishment should follow procedure outlined in statute. Powell v. Powell, 95 Ga. App. 122 , 97 S.E.2d 193 (1957) (decided under former Code 1933, § 46-401, as it read prior to revision by Ga. L. 1976, p. 1608, § 1).

Res judicata. - Trial court properly granted a bank summary judgment in a suit for conversion against the bank brought by a debtor because the debtor's claim was barred by res judicata since the debtor failed to raise any challenge in the garnishment proceeding wherein the bank was a garnishee. Copeland v. Wells Fargo Bank, N.A., 317 Ga. App. 669 , 732 S.E.2d 536 (2012), cert. denied, No. S13C0189, 2013 Ga. LEXIS 124 (Ga. 2013) (decided under former O.C.G.A. § 18-4-83 ).

Challenge to validity of judgment not permitted. - In a postjudgment garnishment proceeding, the judgment debtor's traverse asserting that the judgment was void or voidable was clearly an impermissible challenge to the validity of the judgment. The trial court was not authorized to consider the debtor's verified complaint for damages which addressed issues in bar of judgment in support of the debtor's traverse, and the trial court improperly dismissed the proceeding by granting summary judgment on the debtor's verified complaint without holding an evidentiary hearing on the debtor's traverse. Southern Land & Cattle Co. v. Brock, 213 Ga. App. 3 , 443 S.E.2d 647 (1994) (decided under former O.C.G.A. § 18-4-83 ).

Brokerage service account owner's assignee's claims against the service that it had unlawfully allowed disbursement of the funds in the account, pursuant to a garnishment judgment, after the owner had sought to close the account, were barred by res judicata under O.C.G.A. § 9-12-40 after it was noted that the owner had filed a traverse in the garnishment proceeding and, accordingly, the owner could have raised the same issues at that time, pursuant to former O.C.G.A. § 18-4-93. The owner, as the debtor in the garnishment proceeding, was required to assert any claim that the owner's right to the funds was superior to that of the judgment creditor, pursuant to former O.C.G.A. § 18-4-95. Lamb v. First Union Brokerage Servs., 263 Ga. App. 733 , 589 S.E.2d 300 (2003) (decided under former O.C.G.A. § 18-4-83 ).

Judgment debtor not party to proceedings unless debtor files a traverse to plaintiff's affidavit. - When president of judgment debtor did not file a traverse to the plaintiff's affidavit to become a party to garnishment proceeding pursuant to former O.C.G.A. § 18-4-93, the president failed to satisfy the statutory mandate and did not become a party to the garnishment proceeding. Travelers Ins. Co. v. Trans State, Inc., 172 Ga. App. 763 , 324 S.E.2d 585 (1984) (decided under former O.C.G.A. § 18-4-83 ).

Individual's wages wrongfully garnished. - Claim by an individual whose wages are wrongfully garnished, but who is not the defendant in a garnishment proceeding, can not be asserted in the garnishment proceeding. Baptist Convention v. Henry, 187 Ga. App. 551 , 370 S.E.2d 813 (1988) (decided under former O.C.G.A. § 18-4-83 ).

Traverse properly granted. - Trial court did not err in granting a sole proprietorship's traverse, in which it sought to become a party in a golf supplier's garnishment action and asserted a verified claim to the funds at issue, because there was some evidence to support the findings that the sole proprietorship was a separate and distinct entity from the corporation and that the garnishee assented to the modification of a contract to replace the corporation with the sole proprietorship as contractor; the sole proprietorship had its own tax identification number and liability insurance, and a representative of the garnishee testified that the garnishee was aware that someone had changed the contractor's name and that the garnishee had no business dealings with the corporation. A. M. Buckler & Assocs. v. Sanders, 305 Ga. App. 704 , 700 S.E.2d 701 (2010) (decided under former O.C.G.A. § 18-4-83 ).

Relationship to bankruptcy law. - Chapter 7 debtor was entitled to claim that funds the debtor's employer withheld from the debtor's wages and remitted to a Georgia court were exempt from creditors' claims under O.C.G.A. § 44-13-100(a)(6) because the debtor still had the right at the time the debtor declared bankruptcy to file a traverse under former O.C.G.A. § 18-4-93 to an affidavit a creditor filed when the creditor garnished the debtor's wages. Because the debtor retained an interest in the funds, the funds became property of the debtor's bankruptcy estate under 11 U.S.C. § 541(a)(1) and could be exempted from the creditors' claims, and a lien the creditor held on the funds could be avoided under 11 U.S.C. § 522(f). In re Williams, 460 Bankr. 915 (Bankr. N.D. Ga. 2011) (decided under former O.C.G.A. § 18-4-83 ).

RESEARCH REFERENCES

Am. Jur. 2d. - 6 Am. Jur. 2d, Attachment and Garnishment, §§ 362, 363.

ALR. - Payment under void order in garnishment proceedings as protection to garnishee, 49 A.L.R. 1411 .

Proceedings in one state upon a debt or other claim as affected by pendency in another state of proceedings to garnish or attach such debt or claim, 91 A.L.R 959.

Issues in garnishment as triable to court or to jury, 19 A.L.R.3d 1393.

18-4-16. Plaintiff filing traverse.

Within 20 days after the plaintiff has been served with the garnishee's answer, the plaintiff may file a traverse stating that the garnishee's answer is untrue or legally insufficient. Such statement places in issue all questions of law and fact concerning the garnishee's answer. The form for a plaintiff's traverse is set forth in Code Section 18-4-87.

(Code 1981, § 18-4-16 , enacted by Ga. L. 2016, p. 8, § 1/SB 255.)

JUDICIAL DECISIONS

Editor's notes. - In light of the similarity of the statutory provisions, decisions under former Civil Code 1910, § 5287; former Code 1933, § 46-303, as it read prior to revision by Ga. L. 1976, p. 1608, § 1; former Code 1933, § 46-505 as it read after passage of Ga. L. 1976, p. 1608, § 1; and former O.C.G.A. §§ 18-4-83 , 18-4-85 , 18-4-86 , 18-4-95, and 18-4-114 are included in the annotations for this Code section.

Traverse is not proper vehicle for challenging the validity of a default judgment. Ray v. Standard Fire Ins. Co., 168 Ga. App. 116 , 308 S.E.2d 221 (1983) (decided under former O.C.G.A. § 18-4-66).

Motion to vacate garnishment analogous to traverse. - Motion to vacate a garnishment is analogous to a traverse of the garnishment, and, in turn, the same legal principle regarding the finality of judgment may be applied in both situations. Georgia Farm Bldgs., Inc. v. Willard, 169 Ga. App. 394 , 313 S.E.2d 112 (1984).

Discharge of garnishee upon plaintiff's failure to traverse answer. - By enacting a specific time limitation within which the plaintiff must traverse the garnishee's answer, the legislature expressed a clear intent to provide for automatic discharge of the garnishee from all obligations under the summons if the plaintiff did not notify the court and garnishee otherwise within the brief prescribed time period. Nockonwood Indus., Inc. v. Tuloka Affiliates, Inc., 164 Ga. App. 424 , 296 S.E.2d 405 (1982) (decided under former O.C.G.A. § 18-4-83 ).

Answer need not be served on defendant. - Garnishee's answer must be served upon the plaintiff, but there is no requirement that the answer be served upon the defendant, since the plaintiff and the garnishee are the only parties to the garnishment action. Flournoy v. Pate (In re Antley), 18 Bankr. 207 (Bankr. M.D. Ga. 1982) (decided under former O.C.G.A. § 18-4-83 ).

Failure of plaintiff to include sufficient addresses on summons of garnishment. - In garnishment proceeding, the plaintiff was required to traverse garnishee's answer within 15 days after filing of answer even though it had not been served with a copy of the answer where it had failed to include its or its attorney's address on the summons of garnishment. Nockonwood Indus., Inc. v. Tuloka Affiliates, Inc., 164 Ga. App. 424 , 296 S.E.2d 405 (1982) (decided under former O.C.G.A. § 18-4-83 ).

Effect of no service of answers. - When the name and address of the plaintiff's attorney appeared on the summons of garnishment, but no certificates of service were attached to the answers, and neither the plaintiff nor the plaintiff's attorney acknowledged receipt, the requirement that the plaintiff traverse the answers within 15 days of service was never triggered. Lowery v. Dallis, 237 Ga. App. 309 , 513 S.E.2d 740 (1999) (decided under former O.C.G.A. § 18-4-83 ).

Purpose of traverse to garnishee's answer is to give the garnishee right to be heard and for protection of the garnishee's rights and interests in the premises. Ole Campbellton Constr. Co. v. Desert Inn & Country Club, 154 Ga. App. 107 , 267 S.E.2d 646 (1980) (decided under former Code 1933, § 46-504).

Discharge of garnishee upon plaintiff's failure to traverse answer. - By enacting a specific time limitation within which the plaintiff must traverse the garnishee's answer, the legislature expressed a clear intent to provide for automatic discharge of the garnishee from all obligations under the summons if the plaintiff did not notify the court and the garnishee otherwise within the brief prescribed time period. Nockonwood Indus., Inc. v. Tuloka Affiliates, Inc., 164 Ga. App. 424 , 296 S.E.2d 405 (1982) (decided under former O.C.G.A. § 18-4-85 ).

Party asserting superior claim must traverse garnishee's answer. - Defendant who has elected to become a party to the garnishment proceedings and who has a claim superior to that of the plaintiff to money or property in the hands of the garnishee is authorized to, and indeed must, assert such a claim and then traverse the answer of the garnishee. Terrell v. Fuller, 160 Ga. App. 56 , 286 S.E.2d 50 (1981) (decided under former O.C.G.A. § 18-4-85 ).

Failure of plaintiff to include sufficient addresses on summons of garnishment. - In garnishment proceeding, the plaintiff was required to traverse garnishee's answer within 15 days after filing of answer even though it had not been served with a copy of the answer where it had failed to include its or its attorney's address on the summons of garnishment. Nockonwood Indus., Inc. v. Tuloka Affiliates, Inc., 164 Ga. App. 424 , 296 S.E.2d 405 (1982) (decided under former O.C.G.A. § 18-4-85 ).

Effect of failure to serve answers. - When the name and address of the plaintiff's attorney appeared on the summons of garnishment but no certificates of service were attached to the answers and neither the plaintiff nor the attorney acknowledged receipt, the requirement that the plaintiff traverse the answers within 15 days of service was never triggered. Lowery v. Dallis, 237 Ga. App. 309 , 513 S.E.2d 740 (1999) (decided under former O.C.G.A. § 18-4-85 ).

Garnishee's answer is accepted as true unless traversed by claimant or defendant. - When answer is not traversed, all statements of fact appearing in answer are taken as true. Darlington v. Belt, 12 Ga. App. 522 , 77 S.E. 653 (1913); Joiner v. Dougherty-Ward-Little Co., 14 Ga. App. 360 , 80 S.E. 854 (1913); Harris v. Exchange Bank, 17 Ga. App. 700 , 88 S.E. 40 (1916) (decided under former Civil Code 1910, § 5283).

When garnishee answers summons of garnishment, statements in garnishee's answer are accepted as true, and garnishee is discharged from all further liability unless either the claimant or the defendant files a traverse contesting the answer. West v. West, 402 F. Supp. 1189 (N.D. Ga. 1975) (decided under former Code 1933, § 46-303).

Unqualified, though general denial of truth of answer, suffices. - Traverse may be amplified at option of the plaintiff, but nothing more is necessary to bring in question the liability of the garnishee to the garnishing creditor than an unqualified, though general, denial of the truth of the garnishee's answer. Rainey v. Eatonton Coop. Creamery, 69 Ga. App. 547 , 26 S.E.2d 297 (1943) (decided under former Code 1933, § 46-303).

Plaintiff need not traverse answer admitting that garnishee is indebted for specified sum to the defendant. Harris v. Exchange Bank, 17 Ga. App. 700 , 88 S.E. 40 (1916) (decided under former Civil Code 1910, § 5283).

Issue involved is whether garnishee is indebted as averred in traverse; it is not pertinent to such inquiry whether a prior judgment had been rendered against the defendant. Whaley v. Kear, 139 Ga. 16 , 76 S.E. 390 (1912) (decided under former Civil Code 1910, § 5283).

Issue whether alleged indebtedness is mere cover for fraud may be tried. Smith v. Dysard Constr. Co., 15 Ga. App. 192 , 82 S.E. 761 (1914) (decided under former Civil Code 1910, § 5283).

Absent dissolution bond, defendant not party to trial of issue raised by plaintiff's traverse of garnishee's answer. Leake v. Tyner, 112 Ga. 919 , 38 S.E. 343 (1901) (decided under former Civil Code 1895, § 4721).

At trial of traverse, plaintiff can recover from garnishee only what the defendant could have recovered from the garnishee. Citizens & S. Nat'l Bank v. AVCO Fin. Servs., Inc., 129 Ga. App. 605 , 200 S.E.2d 309 (1973) (decided under former Code 1933, § 46-303).

When traverse is filed, burden of proof is upon traversing party. Citizens & S. Nat'l Bank v. AVCO Fin. Servs., Inc., 129 Ga. App. 605 , 200 S.E.2d 309 (1973) (decided under former Code 1933, § 46-303).

Burden of proof is on party traversing answer of garnishee. Rockmart Bank v. Nix, 14 Ga. App. 238 , 80 S.E. 673 (1914) (decided under former Civil Code 1910, § 5283).

When the defendant gives no bond to dissolve garnishment and there is no claim filed and the only traverse to answer of the garnishee was by the plaintiff in execution, the general rule is that the burden of proof is on the plaintiff in execution, the party traversing garnishee's answer. Rainey v. Eatonton Coop. Creamery, 69 Ga. App. 547 , 26 S.E.2d 297 (1943) (decided under former Code 1933, § 46-303).

Judgment holder properly denied disbursement of funds. - In a garnishment proceeding, a trial court properly declined to disburse certain bank funds to the judgment holder since a claimant timely filed a claim to the funds, established sole ownership to the funds, and complied with the necessary procedural requirements to become a party to the action. Further, since a dispute existed about whether the funds were properly subject to garnishment and the trial court had not yet distributed the funds to the judgment holder, the trial court did not err by resolving the dispute rather than allowing an expedited distribution. Akridge v. Silva, 298 Ga. App. 862 , 681 S.E.2d 667 (2009) (decided under former O.C.G.A. § 18-4-85 ).

Unqualified, though general, denial of truth of answer suffices. - Nothing more is necessary to bring in question the liability of the garnishee to the garnishing creditor than an unqualified, though general, denial of the truth of the garnishee's answer. Ole Campbellton Constr. Co. v. Desert Inn & Country Club, 154 Ga. App. 107 , 267 S.E.2d 646 (1980) (decided under former Code 1933, § 46-505).

Motion to dismiss opposing party's answer, on the facts, constituted a traverse. - Motion to dismiss opposing party's answer constituted a statement that such answer was legally insufficient in that costs had not been paid so as to open default. As such, the motion must be considered a traverse which had been filed. Marbut Co. v. Capital City Bank, 148 Ga. App. 664 , 252 S.E.2d 85 (1979) (decided under former Code 1933, § 46-505).

Party asserting superior claim must traverse garnishee's answer. - Defendant who has elected to become a party to the garnishment proceedings and who has a claim superior to that of the plaintiff to money or property in the hands of the garnishee is authorized to, and indeed must, assert such a claim and then traverse the answer of the garnishee. Terrell v. Fuller, 160 Ga. App. 56 , 286 S.E.2d 50 (1981) (decided under former O.C.G.A. § 18-4-86 ).

There is no specific statutory requirement of verification of traverse. - Although garnishment and answer thereto must be verified, there is no specific statutory requirement of verification as to traverse. Ben O'Callaghan Co. v. Rose, Silverman & Hunt, 131 Ga. App. 29 , 205 S.E.2d 45 (1974) (decided under former Code 1933, § 46-303 as it read prior to revision by Ga. L. 1976, p. 1608, § 1).

Verification of traverse by plaintiff corporation's attorney is sufficient. Ben O'Callaghan Co. v. Rose, Silverman & Hunt, 131 Ga. App. 29 , 205 S.E.2d 45 (1974) (decided under former Code 1933, § 46-303 as it read prior to revision by Ga. L. 1976, p. 1608, § 1).

Unqualified, though general denial of truth of answer, suffices. - Traverse may be amplified at option of the plaintiff, but nothing more is necessary to bring in question the liability of the garnishee to the garnishing creditor than an unqualified, though general, denial of the truth of the garnishee's answer. Rainey v. Eatonton Coop. Creamery, 69 Ga. App. 547 , 26 S.E.2d 297 (1943) (decided under former Code 1933, § 46-303 as it read prior to revision by Ga. L. 1976, p. 1608, § 1).

It is inadequate notice to exhibit traverse to garnishee at time it is filed. Vaughan v. Bank of Cobbtown, 14 Ga. App. 9 , 79 S.E. 1130 (1913) (decided under former Civil Code 1910, § 5287).

Strictly construction. - Former O.C.G.A. § 18-4-95 was in derogation of common law and thus must be strictly construed. Terrell v. Fuller, 160 Ga. App. 56 , 286 S.E.2d 50 (1981) (decided under former O.C.G.A. § 18-4-95).

Appellant must file claim in writing under oath. - When an appellant does not file a claim in writing under oath to funds paid by the garnishee, the appellant fails to comply with necessary procedural requirements to enable the appellant to assert a claim to the allegedly exempt wages and thus a traverse of the garnishee's answer is a mere nullity. Terrell v. Fuller, 160 Ga. App. 56 , 286 S.E.2d 50 (1981) (decided under former O.C.G.A. § 18-4-95).

Garnishment claims are required to be filed under oath. National Loan Investors v. Satran, 231 Ga. App. 21 , 497 S.E.2d 627 (1998) (decided under former O.C.G.A. § 18-4-95).

Failure to file a verified complaint in a garnishment action is more than a mere technicality in the context of res judicata. Lamb v. T-Shirt City, Inc., 272 Ga. App. 298 , 612 S.E.2d 108 (2005) (decided under former O.C.G.A. § 18-4-95).

Summary judgment was proper on the ground of res judicata because: (1) the gist of the assignee's complaint was that the individual's claim to the garnished funds was superior to that of the corporation; (2) this was the very issue that the individual raised in the motion to intervene in the garnishment proceeding; (3) the garnishment court denied the motion to intervene, finding that the individual failed to file the claim under oath as required by former O.C.G.A. § 18-4-95; (4) by failing to file a verified claim, the individual failed to present the necessary evidence to prove that the individual held a superior claim; and (5) thus, it was the individual's failure of proof that deprived the garnishment court of jurisdiction to consider the claim, and the denial of the motion to intervene had the effect of a negative adjudication on the merits barring any subsequent claims to the garnished funds. Lamb v. T-Shirt City, Inc., 272 Ga. App. 298 , 612 S.E.2d 108 (2005) (decided under former O.C.G.A. § 18-4-95).

Claim timely. - Because a sole proprietorship filed a claim before the trial court entered judgment in the garnishment action or ordered the distribution of the money at issue, the claim was timely under former O.C.G.A. § 18-4-95, and the trial court did not err in considering the claim. A. M. Buckler & Assocs. v. Sanders, 305 Ga. App. 704 , 700 S.E.2d 701 (2010) (decided under former O.C.G.A. § 18-4-95).

Answers not timely traversed stand as true and may not be subsequently challenged. Worsham Bros. Co. v. FDIC, 167 Ga. App. 163 , 305 S.E.2d 816 (1983) (decided under former O.C.G.A. § 18-4-114).

Discharge does not preclude use of evidence in subsequent garnishment. - Although former O.C.G.A. § 18-4-114 automatically discharges the garnishee from liability with regard to those periods covered by untraversed answers, it did not immunize the garnishee from evidence obtained during those periods that was probative toward liability in a subsequent period. Worsham Bros. Co. v. FDIC, 167 Ga. App. 163 , 305 S.E.2d 816 (1983) (decided under former O.C.G.A. § 18-4-114).

RESEARCH REFERENCES

Am. Jur. 2d. - 6 Am. Jur. 2d, Attachment and Garnishment, §§ 360, 361.

C.J.S. - 38 C.J.S., Garnishment, § 301 et seq.

18-4-17. Third party claimants.

At any time before judgment is entered on the garnishee's answer or money or other property subject to garnishment is distributed, any person may file a third-party claim in writing under oath stating that he or she has a claim superior to that of the plaintiff to the money or other property in the hands of the garnishee subject to the process of garnishment, and the third-party claimant shall be a party to all further proceedings upon the garnishment. A third-party claimant shall serve his or her claim upon the plaintiff, defendant, and garnishee. The form for a third-party claim is set forth in Code Section 18-4-88.

(Code 1981, § 18-4-17 , enacted by Ga. L. 2016, p. 8, § 1/SB 255.)

JUDICIAL DECISIONS

Editor's notes. - In light of the similarity of the statutory provisions, decisions decided under former O.C.G.A. § 18-4-95 are included in the annotations for this Code section.

Traverse properly granted. - Trial court did not err in granting a sole proprietorship's traverse, in which it sought to become a party in a golf supplier's garnishment action and asserted a verified claim to the funds at issue, because there was some evidence to support the findings that the sole proprietorship was a separate and distinct entity from the corporation and that the garnishee assented to the modification of a contract to replace the corporation with the sole proprietorship as contractor; the sole proprietorship had its own tax identification number and liability insurance, and a representative of the garnishee testified that the garnishee was aware that someone had changed the contractor's name and that the garnishee had no business dealings with the corporation. A. M. Buckler & Assocs. v. Sanders, 305 Ga. App. 704 , 700 S.E.2d 701 (2010) (decided under former O.C.G.A. § 18-4-95).

Party asserting superior claim must traverse garnishee's answer. - Defendant who has elected to become a party to the garnishment proceedings and who has a claim superior to that of the plaintiff to money or property in the hands of the garnishee is authorized to, and indeed must, assert such a claim and then traverse the answer of the garnishee. Terrell v. Fuller, 160 Ga. App. 56 , 286 S.E.2d 50 (1981) (decided under former O.C.G.A. § 18-4-95).

Brokerage service account owner's assignee's claims against the service that it had unlawfully allowed disbursement of the funds in the account, pursuant to a garnishment judgment, after the owner had sought to close the account, were barred by res judicata under O.C.G.A. § 9-12-40 after it was noted that the owner had filed a traverse in the garnishment proceeding and, accordingly, the owner could have raised the same issues at that time, pursuant to former O.C.G.A. § 18-4-93. The owner, as the debtor in the garnishment proceeding, was required to assert any claim that the owner's right to the funds was superior to that of the judgment creditor pursuant to former O.C.G.A. § 18-4-95. Lamb v. First Union Brokerage Servs., 263 Ga. App. 733 , 589 S.E.2d 300 (2003) (decided under former O.C.G.A. § 18-4-95).

Judgment holder properly denied disbursement of disputed funds. - In a garnishment proceeding, a trial court properly declined to disburse certain bank funds to the judgment holder since a claimant timely filed a claim to the funds, established sole ownership to the funds, and complied with the necessary procedural requirements to become a party to the action. Further, since a dispute existed about whether the funds were properly subject to garnishment and the trial court had not yet distributed the funds to the judgment holder, the trial court did not err by resolving the dispute rather than allowing an expedited distribution. Akridge v. Silva, 298 Ga. App. 862 , 681 S.E.2d 667 (2009) (decided under former O.C.G.A. § 18-4-95).

RESEARCH REFERENCES

C.J.S. - 38 C.J.S., Garnishment, § 379 et seq.

18-4-18. Priority of conflicting claims to money or property.

When money or other property in court is subject to a third-party claim or to more than one garnishment case, the party with the oldest entered judgment shall have priority to such money or other property and any interested party to any one of the garnishment cases may make a motion to the court where such money or other property has been deposited for the distribution of such money or other property. Each party of interest in each case and the clerk of court shall be served with a copy of the motion. Upon hearing the motion, the court shall enter an order directing that the clerk be paid the court cost of each garnishment proceeding first, and all remaining money or other property shall be distributed in accordance with the laws governing the relative priority of claims, judgments, and liens.

(Code 1981, § 18-4-18 , enacted by Ga. L. 2016, p. 8, § 1/SB 255.)

JUDICIAL DECISIONS

Editor's notes. - In light of the similarity of the statutory provisions, decisions under former Civil Code 1895, § 4724; former Code 1933, § 46-513 as it read after passage of Ga. L. 1976, p. 1608, § 1; and former O.C.G.A. § 18-4-96 are included in the annotations for this Code section.

Effect of garnishment proceedings on creditor's liens. - Merely suing out garnishment proceedings will not alter priority of creditor's liens against bank deposits. Patterson v. Beck, 133 Ga. 701 , 66 S.E. 911 (1910) (decided under former Civil Code 1895, § 4724).

By initiating garnishment proceeding, junior judgment creditor acquires no priority over senior judgment creditor. Citizens & S. Nat'l Bank v. Wray, 144 Ga. App. 769 , 242 S.E.2d 365 (1978) (decided under former Code 1933, § 46-513).

Judgment holder properly denied disbursement of disputed funds. - In a garnishment proceeding, a trial court properly declined to disburse certain bank funds to the judgment holder since a claimant timely filed a claim to the funds, established sole ownership to the funds, and complied with the necessary procedural requirements to become a party to the action. Further, since a dispute existed about whether the funds were properly subject to garnishment and the trial court had not yet distributed the funds to the judgment holder, the trial court did not err by resolving the dispute rather than allowing an expedited distribution. Akridge v. Silva, 298 Ga. App. 862 , 681 S.E.2d 667 (2009) (decided under former O.C.G.A. § 18-4-96).

Exception to no lien rule exists in alimony cases when there is an execution against the property or an attachment of the proceeds of the sale of the defendant's property for past due installments. Cale v. Hale, 157 Ga. App. 412 , 277 S.E.2d 770 (1981) (decided under former O.C.G.A. § 18-4-96).

An ex-wife's fi. fa. and summons of garnishment relate back to original divorce judgment entered against her ex-husband and she takes priority as the holder of oldest judgment; but she can take priority only in that portion of the garnishment fund which represents ex-husband's arrearage on the date of the second creditor's judgment because she does not have a lien at the latter date for future installments that were not yet payable. Cale v. Hale, 157 Ga. App. 412 , 277 S.E.2d 770 (1981) (decided under former O.C.G.A. § 18-4-96).

OPINIONS OF THE ATTORNEY GENERAL

Editor's notes. - In light of the similarity of the statutory provisions, opinions rendered under former O.C.G.A. § 18-4-96 are included in the annotations for this Code section.

Summons of garnishment establishes lien which attaches from date of service. - Summons of garnishment directing garnishee to deliver any property into court that is subject to garnishment establishes lien on subject property that attaches from date of service of summons of garnishment. 1981 Op. Att'y Gen. No. U81-25 (decided under former O.C.G.A. § 18-4-96).

Garnishment action remains ancillary to or dependent upon principal action between creditor and debtor, even though it establishes lien on subject property. 1981 Op. Att'y Gen. No. U81-25 (decided under former O.C.G.A. § 18-4-96).

Rank of judgment on which garnishment depends determines priority. - Because of ancillary nature of garnishment, the relevant factor in determining priorities of several garnishments is rank of judgment on which garnishment is dependent and not rank of garnishment lien. 1981 Op. Att'y Gen. No. U81-25 (decided under former O.C.G.A. § 18-4-96).

Priority lien that initial garnishing creditor obtains by virtue of initial creditor's having first served garnishee does not defeat priority of subsequent garnishing creditor with senior judgment. 1981 Op. Att'y Gen. No. U81-25 (decided under former O.C.G.A. § 18-4-96).

When two or more judgment creditors claim priority to money or property that is paid into court pursuant to summons of garnishment, the garnishing creditor whose judgment is founded on senior judgment has priority over garnishing creditor whose judgment is founded on junior judgment. 1981 Op. Att'y Gen. No. U81-25 (decided under former O.C.G.A. § 18-4-96).

RESEARCH REFERENCES

ALR. - Funds deposited in court as subject of garnishment, 1 A.L.R.3d 936.

18-4-19. Order of trial; introduction of evidence; expenses.

  1. After the garnishee's answer is filed, the defendant's claim shall be tried first, the plaintiff's traverse shall be tried second, and third-party claims shall be tried last; provided, however, that the court shall retain the money or other property subject to garnishment until the completion of the trial of all claims and traverses which are filed under this chapter. The court may consolidate or bifurcate such actions for trial in the court's discretion.
  2. If a claim or traverse has been filed, all parties of record may introduce evidence to establish their respective interests in the money or other property in court, and the court shall direct that such money or other property be distributed in accordance with the laws governing the relative priority of claims, judgments, and liens.
  3. When the defendant, garnishee, or third-party claimant prevails upon the trial of his or her claim:
    1. That the plaintiff does not have a judgment against the defendant or that the plaintiff's affidavit of garnishment is untrue or is legally insufficient, the garnishment case shall be dismissed by the court, and any money or other property belonging to the defendant in the possession of the court shall be restored to the defendant unless another claim or traverse thereto has been filed;
    2. That the amount shown to be due on the plaintiff's affidavit of garnishment is incorrect, the court may allow the summons of garnishment to be amended to the amount proven to be owed, and if such amount is less than the amount shown to be due by the plaintiff, any money or other property belonging to the defendant in the possession of the court in excess of the amount due shall be restored to the defendant unless another claim or traverse thereto has been filed;
    3. That the money or other property belonging to the defendant in the possession of the court is exempt from garnishment, such exempt money or other property shall be restored directly to the defendant. The court shall order such restoration within 48 hours; and
    4. Based on any legal or statutory defense or that money or other property in the possession of the court may be subject to a claim held by a third party that is superior to the judgment described in the affidavit of garnishment, the court shall determine the disposition of the money or other property belonging to the defendant in the possession of the court.
  4. On the trial of the plaintiff's traverse, if the court finds the garnishee has failed to respond properly to the summons of garnishment, the court shall disallow any expenses demanded by the garnishee and shall enter a judgment for any money or other property the court finds subject to garnishment which the garnishee has failed to pay or deliver to the court; provided, however, that the total amount of such judgment shall not exceed the amount shown to be due by the plaintiff, together with the costs of the garnishment proceeding.
  5. A defendant shall not be allowed to present evidence, make an argument, or prevail on a claim that money or other property in a garnishment may be subject to a claim by a third party. When a claim of exemption or defense to a garnishment proceeding belongs to a defendant, a third-party claimant shall not be allowed to present evidence, make an argument, or prevail on any such claim. (Code 1981, § 18-4-19 , enacted by Ga. L. 2016, p. 8, § 1/SB 255; Ga. L. 2018, p. 820, § 6/SB 194.)

The 2018 amendment, effective May 8, 2018, inserted ", garnishee, or third-party claimant" in the introductory paragraph of subsection (c); deleted "paid or delivered to the court with the garnishee's answer, plus any money or other property" following "money or other property" in the middle of subsection (d); and added subsection (e).

JUDICIAL DECISIONS