General Consideration

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

No unclean hands for violating unenforceable covenant. - Former employer's contention that the trial court erred by refusing to consider evidence of the former employee's unclean hands was rejected because the court acted well within the court's broad discretion when the court determined that the employee could not have unclean hands for violating an unenforceable covenant. Fortress Investment Group, LLC v. Holsinger, 354 Ga. App. 405 , 841 S.E.2d 55 (2020).

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

Not applicable to child custody cases. - Maxim of unclean hands was inapplicable to child custody case, and, in any event, the father acted in good faith picking up the child after receiving a telephone call from the home of the grandmother. Lynch v. Horton, 302 Ga. App. 597 , 692 S.E.2d 34 (2010), cert. denied, 563 U.S. 988, 131 S. Ct. 2447 , 179 L. Ed. 2 d 1210 (2011).

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

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

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

Jurisdiction

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

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

Pleading and Practice

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

General Consideration

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

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

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

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

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

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

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

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

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

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

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

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

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

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

Fraud Generally

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

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

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

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

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

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

Equitable Estoppel

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

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

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

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

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

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

General Consideration

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

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

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

Equal Fault

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

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

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

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

Illustrative Cases

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

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

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

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

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

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

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

General Consideration

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

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

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

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

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

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

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

Scope of Notice

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

Trustee not on inquiry notice. - Chapter 7 trustee was a bona fide purchaser for value as of the petition date under Georgia law as no security deed was of record in the debtors' chain of title and there was nothing in the record to put the trustee on inquiry notice of the existence of a bank's unrecorded security deed and, thus, the trustee could avoid the bank's security deed under 11 U.S.C. § 544(a)(3) and recover the property for the benefit of the estate under 11 U.S.C. § 550. The court rejected the bank's argument that the bank should be equitably subrogated to the rights of a prior lender whose loan was satisfied by the bank's loan because even if the bank was correct, a subrogee could have no greater rights than the party to whose rights it was subrogated, and the lender cancelled the lender's security deed prior to the petition date so that any subrogated rights of the bank were terminated at the same time. Ogiers v. Wells Fargo Bank, N.A. (In re Phillips), 465 Bankr. 336 (Bankr. N.D. Ga. 2012).

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

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

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

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

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

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

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

Negligence

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

General Consideration

O.C.G.A. § 23-1-18 did not apply to an action in which purchasers of a farm sued their vendor's former partner to recover horses that the former partner was awarded in a lawsuit against the vendor and which the former partner obtained as the result of a levy on the judgment. Russell v. Lawrence, 234 Ga. App. 612 , 507 S.E.2d 161 (1998).

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

Doctrine of Lis Pendens

1. In General

Purpose of doctrine of lis pendens. - Lis pendens, whether it be from the common law as provided in former Code 1933, § 37-117 (see O.C.G.A. § 23-1-18 ) or by statute (Ga. L. 1939, p. 345, § 1 (see O.C.G.A. T. 44, C. 14, Art. 9)), has for its purpose the protection of innocent purchasers of real property involved in pending litigation. Patent Scaffolding Co. v. Byers, 220 Ga. 426 , 139 S.E.2d 332 (1964).

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

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

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

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

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

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

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

2. Application of Doctrine

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

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

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

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

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

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

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

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

General Consideration

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

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

Sale to One Without Notice

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

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

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

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

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

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

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

Prior possession of land is not notice to a purchaser. - Possession of real property which will charge a purchaser with notice is possession at the time the purchaser obtains title. McDonald v. Taylor, 200 Ga. 445 , 37 S.E.2d 336 (1946).

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

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

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

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

Agreement to supply water did not obligate purchaser without notice. - Even if an agreement between property owners providing that the property with a well would supply water to the adjacent property was a covenant running with the land, a later purchaser of the well property did not have actual or constructive notice of that agreement and was not bound by that agreement because the agreement was recorded outside the chain of title. McLeod v. Clements, 297 Ga. 371 , 774 S.E.2d 102 (2015).

Sale by One Without Notice

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

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

General Consideration

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

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

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

Construction Generally

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

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

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

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

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

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

Forfeitures

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

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

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

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

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

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

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

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

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

General Consideration

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

Principles stated in former Code 1933, §§ 28-106 and 37-501 (see O.C.G.A. §§ 18-2-2 and 23-1-24 ) did not mean that a creditor having a priority against a fund in court can be required to relinquish his direct claim thereon, and proceed at his own additional expense with delay in an independent suit upon an indemnifying bond from the debtor, which does not by its terms protect the creditor seeking to compel such election. Savannah Bank & Trust Co. v. Meldrim, 195 Ga. 765 , 25 S.E.2d 567 (1943).

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

Cited in Federal Land Bank v. Farmers' & Merchants' Bank, 177 Ga. 505 , 170 S.E. 504 (1933); State Banking Co. v. Hinton, 178 Ga. 68 , 172 S.E. 42 (1933); Head v. Scruggs, 178 Ga. 324 , 173 S.E. 113 (1934); Brown v. Smith, 50 Ga. App. 332 , 178 S.E. 180 (1935); Rieves v. Smith, 184 Ga. 657 , 192 S.E. 372 (1937); Irwin v. Willis, 202 Ga. 463 , 43 S.E.2d 691 (1947).

Compulsion to Elect

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

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

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

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

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

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

General Consideration

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

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

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

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

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

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

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

Equitable Demands Must Be Asserted Within Reasonable Time

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

Laches Based on Inequity

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

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

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

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

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

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

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

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

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

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

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

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

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

A general allegation of fraud amounts to nothing. - It is necessary that the complainant show, by specifications, wherein the fraud consists in order to prevent the application of laches against the complainant. Issuable facts must be charged. Welch v. Welch, 215 Ga. 198 , 109 S.E.2d 757 (1959).

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

Pleading and Practice

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

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

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

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

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

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

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

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

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

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

General Consideration

Cited in Thompson v. Thompson, 190 Ga. 264 , 9 S.E.2d 80 (1940); Armour v. Lunsford, 192 Ga. 598 , 15 S.E.2d 886 (1941); Livingston v. Barnett, 193 Ga. 640 , 19 S.E.2d 385 (1942); Jones v. Hogans, 197 Ga. 404 , 29 S.E.2d 568 (1944); Scott v. Gillis, 202 Ga. 220 , 43 S.E.2d 95 (1947); Johnson v. Boyd, 202 Ga. 531 , 43 S.E.2d 524 (1947); Pacific Nat'l Fire Ins. Co. v. Beavers, 87 Ga. App. 294 , 73 S.E.2d 765 (1952); Tillman v. Byrd, 211 Ga. 918 , 89 S.E.2d 479 (1955); Sheppard v. Broome, 214 Ga. 659 , 107 S.E.2d 219 (1959); Brogdon v. Purvis, 220 Ga. 28 , 136 S.E.2d 719 (1964); Hobbs v. Clark, 221 Ga. 558 , 146 S.E.2d 271 (1965); Norman v. Van Gerpen, 221 Ga. 698 , 146 S.E.2d 769 (1966); Fender v. Fender, 226 Ga. 129 , 173 S.E.2d 211 (1970); Titshaw v. Carnes, 226 Ga. 430 , 175 S.E.2d 541 (1970); Fender v. Fender, 228 Ga. 202 , 184 S.E.2d 590 (1971); Mullinax v. Shaw, 143 Ga. App. 657 , 239 S.E.2d 547 (1977); Guillebeau v. Yeargin, 254 Ga. 490 , 330 S.E.2d 585 (1985); Kimbrell v. Connor, 218 Ga. App. 812 , 463 S.E.2d 376 (1995).

Applicability of Section

Applicability of section. - Before it is applicable, this section requires great inadequacy of consideration joined with great disparity of mental ability. It follows, therefore, that both must exist. Bailey v. Williams, 215 Ga. 395 , 110 S.E.2d 673 (1959).

Under the principle enunciated in this section, a deed may be set aside in equity, on proof of the two elements stated (in this section), without proof of anything else as to fraud. Sutton v. McMillan, 213 Ga. 90 , 97 S.E.2d 139 (1957); Titshaw v. Carnes, 224 Ga. 57 , 159 S.E.2d 420 (1968); Jackson v. Rich, 227 Ga. 149 , 179 S.E.2d 256 (1971); Harrell v. Wilson, 233 Ga. 899 , 213 S.E.2d 871 (1975).

Principle of this section is applicable whether the consideration be the payment of a sum of money or the rendition of services. Fuller v. Stone, 207 Ga. 355 , 61 S.E.2d 467 (1950).

Failure to show disparity of mental ability in foreclosure sale contract. - Superior court did not err in granting a purchaser summary judgment in the purchaser's action seeking specific performance pursuant to O.C.G.A. § 23-2-131 requiring a mortgage company to deliver a deed conveying certain property because the company failed to demonstrate any merit in the company's contention that the superior court improperly refused to invoke the court's equitable power to relieve the company from performing under the foreclosure sale contract on the ground that the opening bid the company set forth was a mistake; although the company complained that the high bid was inadequate, the company failed to establish how that complaint allowed for the company to avoid the foreclosure sale contract, and the company did not cite any evidence authorizing a finding of any such disparity between the company and the purchaser. Decision One Mortg. Co., LLC v. Victor Warren Props., Inc., 304 Ga. App. 423 , 696 S.E.2d 145 (2010).

Inadequate Consideration and Mental Disparity Generally

1. In General

Want of consideration for a conveyance, coupled with mental weakness or old age and undue influence, will authorize equitable relief. Harden v. Weaver, 184 Ga. 652 , 192 S.E. 384 (1937).

"Great inadequacy of consideration, joined with great disparity of mental ability in contracting a bargain, may justify equity in setting aside a sale or other contract." Under that principle, a deed may be set aside in equity, on proof of the two elements stated, "without proof of anything else" as to fraud. A fortiori, the same rule would apply with at least equal force in case of such mental disparity and a total absence of consideration. Stow v. Hargrove, 203 Ga. 735 , 48 S.E.2d 454 (1948).

Conflict as to issue of disparate mental ability. - When, in a wrongful death action, a railroad argued there was no evidence presented to show a disparate mental ability between anyone representing the railroad on the one hand and the plaintiffs on the other at the time of their signing of a contract of release, but plaintiffs showed that the plaintiffs were in a highly emotional state following the death of their son and that treatment for their stress included valium, and a psychologist, who tested the plaintiffs found their I.Q. levels to be in the "mentally defective" range, while the railroad agent involved, on the other hand, was college educated and had some 20 years' experience in claims investigation and settlement, under the "any evidence" standard, the railroad was not entitled to a directed verdict. Southern Ry. v. Lawson, 256 Ga. 798 , 353 S.E.2d 491 (1987).

Mental disparity. - Generally, this section is applied in those instances where great mental disparity is relied upon by one of the parties to the contract. Moore v. Wells, 212 Ga. 446 , 93 S.E.2d 731 (1956).

2. Fraud

Fraud in the procurement renders contract void. - As between the original parties thereto, fraud in its procurement voids a contract, and this upon the theory that, the consent of the parties being necessary to the binding force of a contract, if one, apparently consenting by the execution of a written contract, can show that one did not in fact consent to its terms as therein expressed, but that one's apparent consent was induced by false and fraudulent practices, by means of which one was overreached by the other party, and, without negligence upon one's own part, really deceived as to the terms of the contract, one would be entitled to be relieved from its apparent obligations. McKaig v. Hardy, 196 Ga. 582 , 27 S.E.2d 11 (1943).

Jury instruction on fraud authorized. - When the grantor of an "improvident or profuse" deed was not wholly incapable of entering into such a contract, but was possessed of little or no will power and was greatly under the influence of the nephew to whom the deed was executed, an inference of fraud could have been drawn by the jury, and, the evidence for the defendant grantee not being such as to rebut the inference as a matter of law, the court was authorized to charge the jury upon the subject of fraud. Stanley v. Stanley, 175 Ga. 139 , 175 S.E. 496 (1934).

Fraud in realty transactions. - As against one who by fraud during the lifetime of deceased husband induced the latter to execute to that one a deed to realty, equity will afford the widow, as personal representative, a remedy to cancel and set aside the deed and incidentally to preserve and apply rents issuing from such realty. Ealy v. Tolbert, 209 Ga. 575 , 74 S.E.2d 867 , later appeal, 210 Ga. 96 , 78 S.E.2d 26 (1953).

3. Insanity

When the maker is insane and the other party sane, there would be great mental disparity. The law, however, presumes one to be sane. Norwood v. Norwood, 207 Ga. 148 , 60 S.E.2d 449 (1950).

4. Weakness of Mind

Weakness of mind not amounting to imbecility insufficient mental incapacity to justify setting deed aside. - The law recognizes that there is "some disparity of mental ability between all persons who deal with each other," and "weakness of mind not amounting to imbecility is not sufficient mental incapacity to justify setting a deed aside." Bailey v. Williams, 215 Ga. 395 , 110 S.E.2d 673 (1959); Thomas v. Garrett, 265 Ga. 395 , 456 S.E.2d 573 (1995).

5. Grief

Statement that person was "almost crazy with grief". - In action for cancellation or rescission of deed, the mere statement that the plaintiff was "almost crazy with grief over the recent death of her son" shows neither a mental incapacity to execute the instrument nor a "great disparity of mental ability" between the parties, such as would authorize the interference of equity on account of a "great inadequacy" of consideration, even if a "great inadequacy" had been sufficiently alleged. Hutchinson v. King, 192 Ga. 402 , 15 S.E.2d 523 (1941).

Will executed within days of spouse's death. - Trial court did not err in charging the jury under O.C.G.A. § 23-2-2 in a suit by an 83-year old plaintiff to recover property from defendants, her brother-in-law and his wife, because the evidence showed that defendants took plaintiff to her bank and to a lawyer 10 days after her husband died, where she deeded her entire estate to them. Mullis v. Mullis, 245 Ga. App. 845 , 539 S.E.2d 189 (2000).

6. Intoxication

When a party at the time of entering into a contract or executing an instrument is intoxicated to such a degree as to deprive the party of the party's reason and to disqualify the party's mind to apprehend the nature of the party's act and its probable consequences, a court of equity may grant relief by rescission and cancellation. Equity will grant relief when the transfer of a valuable property has been fraudulently extorted, for a grossly inadequate consideration, from a person while in such a state of intoxication as to render the party incapable of transacting business. McKaig v. Hardy, 196 Ga. 582 , 27 S.E.2d 11 (1943); Ealy v. Tolbert, 209 Ga. 575 , 74 S.E.2d 867 , later appeal, 210 Ga. 96 , 78 S.E.2d 26 (1953).

Equity will grant relief when the transfer of a valuable property has been fraudulently extorted, for a grossly inadequate consideration, from a person while in such a state of intoxication as to render the person incapable of transacting business. Ealy v. Tolbert, 209 Ga. 575 , 74 S.E.2d 867 , later appeal, 210 Ga. 96 , 78 S.E.2d 26 (1953).

Valuation of Consideration

Questions of value are peculiarly for the determination of the jury when there is any data in evidence upon which the jury may legitimately exercise their "own knowledge or ideas." Brinson v. Hester, 185 Ga. 761 , 196 S.E. 412 (1938).

Pleading and Practice

Evidence of confidential relationships raises presumption of undue influence. - When evidence is presented of a confidential relationship, the grantor being of weaker mentality and the grantee occupying the dominant position, an issue of fact is raised as to undue influence. Fletcher v. Fletcher, 242 Ga. 158 , 249 S.E.2d 530 (1978).

Charge to jury. - When the sole question was whether the transaction was an outright sale or a loan of money, and not a question of one party overreaching the other party the court did not err in not charging this section with respect to great inadequacy of consideration and great disparity of mental ability between the contracting parties. Batts v. Bedingfield, 204 Ga. 160 , 48 S.E.2d 848 (1948).

In an action to set aside a deed, an instruction that the jury might set aside a deed if the jury found the mental ability of one party merely less than the mental ability of the person with whom he or she was being compared was erroneous and, further, the giving of the charge was error because there was no evidence to warrant it. Godwin v. Godwin, 265 Ga. 891 , 463 S.E.2d 685 (1995).

General Consideration

A mistake, either of law or fact, is cognizable in equity and affords a remedy therein by reformation of the instrument so as to make it express the true intention of the parties, on a proper cause being made; but such a jurisdiction will always be cautiously exercised, and to justify it the evidence must be clear, unequivocal, and decisive. Yablon v. Metropolitan Life Ins. Co., 200 Ga. 693 , 38 S.E.2d 534 (1946); Prince v. Friedman, 202 Ga. 136 , 42 S.E.2d 434 (1947).

Reformation as applied to a contract is remedy cognizable in equity for the purpose of correcting an instrument so as to make it express the true intention of the parties, when from some cause, such as fraud, accident, or mistake it does not express such intention. The remedy is not available for the purpose of making a new and different contract for the parties, but is confined to establishment of the actual agreement. Deck v. Shields, 195 Ga. 697 , 25 S.E.2d 514 (1943).

Equity exercised with caution. - The power in equity to relieve mistakes should be exercised with caution, and the evidence shall be clear, unequivocal and decisive as to the mistake. Thomaston v. Fort Wayne Pools, Inc., 181 Ga. App. 541 , 352 S.E.2d 794 (1987).

Mistake defined. - Mistake, within the meaning of equity, is an erroneous mental condition, conception, or conviction, induced by ignorance, misapprehension, or misunderstanding of the truth, but without negligence and resulting in some act or omission done or suffered erroneously by one or both of the parties to a transaction, but without its erroneous character being intended or known at the time. Callan Court Co. v. Citizens & S. Nat'l Bank, 184 Ga. 87 , 190 S.E. 831 (1937); Whipple v. County of Houston, 214 Ga. 532 , 105 S.E.2d 898 (1958).

Mistake is internal and essentially ignorance. - Mistake is internal; it is a mental condition, a conception, a conviction of the understanding; erroneous indeed, but nonetheless a conviction which influences the will and leads to some outward physical manifestation. Its operation is ordinarily, though not always, affirmative the doing of some act which would not have been done in the absence of the particular conception or conviction which influenced the free action of the will. Its essential requisite is ignorance. Callan Court Co. v. Citizens & S. Nat'l Bank, 184 Ga. 87 , 190 S.E. 831 (1937).

The essential element of a mistake is a mental condition or conception or conviction of the understanding. This mental condition may be either a passive state or an active conviction. When merely passive, it may consist of an unconsciousness, an ignorance, or a forgetfulness; when active, it must be a belief. In the first of these two conditions, the unconsciousness, ignorance, or forgetfulness may be either of a fact which is present and now existing, or of a fact which is past and has existed; they must always concern a fact material to the transaction. In the second condition, the belief may be either that a certain matter or thing exists at the present time which really does not exist; or that certain matter or thing existed at some time which did not really exist. All possible forms of mistake of fact are embraced within this description; and all particular errors which fall under any of these conditions are mistakes of fact which furnish an occasion for equitable relief. Callan Court Co. v. Citizens & S. Nat'l Bank, 184 Ga. 87 , 190 S.E. 831 (1937).

Mistake of fact is a mistake not caused by the neglect of a legal duty on the part of the person making the mistake, and consisting in, an unconscious ignorance or forgetfulness of a fact, past or present, material to the contract; or belief in the present existence of a thing material to the contract which does not exist, or in the past existence of such a thing which has not existed. Callan Court Co. v. Citizens & S. Nat'l Bank, 184 Ga. 87 , 190 S.E. 831 (1937).

Mistake is distinguished from fraud, fraudulent representations, or fraudulent concealments, by the absence of knowledge and intention, which in legal fraud are actually present, and in constructive fraud are theoretically present, as necessary elements. It is also distinguished from that inattention or absence of thought which are inherent in negligence. The erroneous conception or conviction of the understanding which constitutes the equitable notion of mistake has nothing in common with negligence; equity will not relieve a person from the person's own erroneous acts or omissions resulting from the person's own negligence. Callan Court Co. v. Citizens & S. Nat'l Bank, 184 Ga. 87 , 190 S.E. 831 (1937).

If equity can reform a contract for sale of land, it can also reform the deed to the land. West Lumber Co. v. Moore, 179 Ga. 302 , 175 S.E. 642 (1935).

Question of fact as to whether reformation warranted. - Trial court erred in granting summary judgment to the borrowers on the bank's claim for equitable reformation of the security deeds because evidence included the fact that a portion of the 2003 loan paid off a joint debt previously secured by the property and the borrowers subsequently represented to the bankruptcy court that the debt secured by the property was jointly owed, which created a question of fact as to whether the debt was secured by the real property at issue. Bank of Am., N.A. v. Cuneo, 332 Ga. App. 73 , 770 S.E.2d 48 (2015).

Reformation of lease agreement denied. - In an action seeking reformation of a lease agreement to include an option to purchase, the trial court properly granted the defendant's motion for directed verdict at the close of the plaintiff's evidence, when there was no evidence of mutual mistake, there was likewise no evidence of fraud or inequitable conduct in the record, it was undisputed that the plaintiff did not read the lease agreement until months after the plaintiff signed the lease, and the record did not demonstrate that a confidential relationship existed between the parties, but rather showed that they were friends engaged in an arms' length transaction. A.J. Concrete Pumping, Inc. v. Richard O'Brien Equip. Sales, Inc., 256 Ga. 795 , 353 S.E.2d 496 (1987).

No mutual mistake because contract addressed disputed subject. - Parties to a business buyout agreement failed to show mutual mistake regarding the validity of a proposed lease assignment because the parties specifically contemplated that the original office building lease or assignment might have to be changed, that the assignment might never occur even with the best efforts of the parties, and that any risk in that regard would be assumed by the buying parties. Extremity Healthcare, Inc. v. Access to Care America, LLC, 339 Ga. App. 246 , 793 S.E.2d 529 (2016).

Cited in Sapp v. Ritch, 169 Ga. 33 , 149 S.E. 636 (1929); West Lumber Co. v. Moore, 179 Ga. 302 , 175 S.E. 642 (1935); Bender v. Randall Bros., 189 Ga. 197 , 5 S.E.2d 889 (1939); Gibbs v. H.T. Henning Co., 189 Ga. 675 , 7 S.E.2d 238 (1940); Sawyer Coal & Ice Co. v. Kinnett-Odom Co., 192 Ga. 166 , 14 S.E.2d 879 (1941); Deck v. Shields, 195 Ga. 697 , 25 S.E.2d 514 (1943); Lane v. Howard, 201 Ga. 616 , 40 S.E.2d 537 (1946); McCullough v. Kirby, 204 Ga. 738 , 51 S.E.2d 812 (1949); Hood v. Connell, 204 Ga. 782 , 51 S.E.2d 853 (1949); Minor v. Fincher, 206 Ga. 721 , 58 S.E.2d 389 (1950); Scurry v. Cook, 206 Ga. 876 , 59 S.E.2d 371 (1950); Altman v. Strouse, 210 Ga. 282 , 79 S.E.2d 801 (1954); Miller v. Shaw, 212 Ga. 302 , 92 S.E.2d 98 (1956); Whipple v. County of Houston, 214 Ga. 532 , 105 S.E.2d 898 (1958); White County v. Wooten, 219 Ga. 236 , 132 S.E.2d 653 (1963); Tripp v. Conner, 220 Ga. 2 , 136 S.E.2d 744 (1964); Farmers Whse. of Pelham, Inc. v. Collins, 220 Ga. 141 , 137 S.E.2d 619 (1964); Finch v. McAloney, 222 Ga. 174 , 149 S.E.2d 100 (1966); Bonner v. Cotton, 223 Ga. 843 , 159 S.E.2d 61 (1968); Hartford Accident & Indem. Co. v. Walka Mt. Camp No. 565, Woodmen of the World, Inc., 224 Ga. 194 , 160 S.E.2d 833 (1968); William H. Benton Co. v. Irvindale Dairies, Inc., 224 Ga. 780 , 164 S.E.2d 819 (1968); B.L. Ivey Constr. Co. v. Pilot Fire & Cas. Co., 295 F. Supp. 840 (N.D. Ga. 1968); Lewis v. Williford, 235 Ga. 558 , 221 S.E.2d 14 (1975); Martin v. Heard, 239 Ga. 816 , 238 S.E.2d 899 (1977); Roberts v. Gunter, 251 Ga. 276 , 304 S.E.2d 369 (1983); Atkinson v. Atkinson, 254 Ga. 70 , 326 S.E.2d 206 (1985); Fulghum v. Kelly, 255 Ga. 652 , 340 S.E.2d 589 (1986); Mag Mut. Ins. Co. v. Gatewood, 186 Ga. App. 169 , 367 S.E.2d 63 (1988); Rose v. Cain, 247 Ga. App. 481 , 544 S.E.2d 453 (2001).

Mutual Mistake

Equity will not reform a contract on the ground of mistake, unless it be a mutual one or unless there be a mistake on one side and fraud on the other. Rawson v. Brosnan, 187 Ga. 624 , 1 S.E.2d 423 (1939); Yablon v. Metropolitan Life Ins. Co., 200 Ga. 693 , 38 S.E.2d 534 (1946).

Equity will not decree the reformation of an instrument because of mistake of one of the parties alone unmixed with any fraud or knowledge on the part of the other equivalent to mutual mistake. For a mistake to be relievable in equity by reformation, it must be mutual, or else mistake on the part of one to the contract and fraud on the part of the other. Yablon v. Metropolitan Life Ins. Co., 200 Ga. 693 , 38 S.E.2d 534 (1946); Prince v. Friedman, 202 Ga. 136 , 42 S.E.2d 434 (1947).

A court of equity will reform a contract of sale when, from mutual mistake or mistake common to both parties, an instrument does not express the true agreement of the parties. Equity will also reform an instrument when there is mistake on one side, and fraud or inequitable conduct on the other. Prince v. Friedman, 202 Ga. 136 , 42 S.E.2d 434 (1947).

To enable a court to reform an agreement evidenced by writing on the ground of mistake, it must affirmatively appear that the mistake was common to both parties, and that the writing, as executed, expresses the contract as understood by both parties. Prince v. Friedman, 202 Ga. 136 , 42 S.E.2d 434 (1947).

If a writing has been executed with a view of obtaining a particular object, and by mistake it has been so drawn as not to have the contemplated operations at law, chancery (now equity) will reform the instrument, so that it will fulfill the intention of the parties. Agreements, whether executed or executory, within or without the statute of frauds, whether for the conveyance of real or personal property, will be reformed by courts of equity, on the ground of mistake. Head v. Stephens, 215 Ga. 184 , 109 S.E.2d 772 (1959), later appeal, 218 Ga. 191 , 126 S.E.2d 623 (1962).

"An honest mistake of the law as to the effect of an instrument on the part of both contracting parties, when such mistake operates as a gross injustice to one, and gives an unconscientious advantage to the other, may be relieved in equity." Fidelity & Deposit Co. v. State Hwy. Dep't, 174 Ga. 443 , 163 S.E. 174 (1932).

Simple mistake not ground for relief. - The rule is well settled that a simple mistake by a party as to the legal effect of an agreement which one executes, or as to the legal result of an act which he performs, is no ground for either defensive or affirmative relief. Callan Court Co. v. Citizens & S. Nat'l Bank, 184 Ga. 87 , 190 S.E. 831 (1937).

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

When, due to a mistake of fact unmixed with negligence, the condemnation proceeding for a public road was conducted throughout upon the theory that the road would be paved at approximately grade level, thus improving rather than damaging the remaining abutting property, and there was nothing to indicate that a fill of from 25 to 40 feet would be made in front of the remaining property which would damage it in the amount of approximately $20,000.00, a petition in equity, alleging these facts and alleging that the mistake prevented the owners from proving this consequential damage, alleged a cause of action to set aside the award and the judgment of condemnation and to recover the full damages. Whipple v. County of Houston, 214 Ga. 532 , 105 S.E.2d 898 (1958).

Because the plaintiff had opportunity to examine a second written tolling agreement before the plaintiff executed it, and because there was no suggestion that the alleged mistake in the agreement was anything other than a unilateral mistake on the part of the plaintiff, the plaintiff's own negligence resulted in there being no basis for reforming the parties' second written tolling agreement. Frame v. Hunter, Maclean, Exley & Dunn, P.C., 236 Ga. App. 226 , 511 S.E.2d 585 (1999).

Mistake of draftsman acting by direction of only one party as unilateral mistake. - In some jurisdictions it is held that the mistake of a draftsman or scrivener, acting by direction of only one of the parties, is a unilateral mistake, and is one which will not warrant reformation. Such appears to be the rule in this state. Yablon v. Metropolitan Life Ins. Co., 200 Ga. 693 , 38 S.E.2d 534 (1946).

Plea of the defendant to action on note given by the defendant to the former partner on dissolution of the partnership, alleging mutual mistake in calculating the earnings of the business, failed to allege a mistake as contemplated by law, and the court did not err in dismissing the plea and in directing the verdict for the plaintiff. Hargrove v. Bledsoe, 78 Ga. App. 107 , 50 S.E.2d 223 (1948).

Wrong property foreclosed upon. - Because a mutual mistake of law was not a valid reason to nullify the parties' choice of Delaware law in order to uphold a right of first refusal, the parties' settlement agreement was not subject to reformation due to an alleged mutual mistake. Thus, under Delaware law, the right was properly declared invalid under the rule against perpetuities. CS-Lakeview at Gwinnett, Inc. v. Simon Prop. Group, Inc., 283 Ga. 426 , 659 S.E.2d 359 (2008).

Trial court properly reformed security deed and declared that suing lender had first priority over certain tract of land since there was no doubt that parties intended for the tract to have been subject to the security deed alone; trial court also properly directed verdict in favor of suing lender as to its claim for rescission and cancellation of the deed it obtained when it mistakenly foreclosed on the wrong tract, as such relief was the proper remedy. DeGolyer v. Green Tree Servicing, LLC, 291 Ga. App. 444 , 662 S.E.2d 141 (2008).

Issue of fact in loan documents as to parties' mutual mistake. - In a lender's suit for reformation of a security deed to reflect that a different parcel owned by the borrower was the collateral, rather than the parcel described in the deed, the trial court erred in granting summary judgment for the borrower because inconsistencies in the loan documents raised an issue of fact as to whether there was a mistake. JPMorgan Chase Bank v. Cronan, 355 Ga. App. 556 , 845 S.E.2d 298 (2020).

No specific mutual mistake alleged. - Plaintiff's claim for reformation of a settlement agreement failed since the claim did not allege fraud by the defendants and did not identify any specific mutual mistake. Rohrig Invs., LP v. Knuckle P'ship, LLLP (In re Rohrig Invs., LP), 584 Bankr. 382 (Bankr. N.D. Ga. 2018).

Reformation of a bond was warranted based on mutual mistake. - Reformation of a bond was warranted based on mutual mistake since it was clear that a bank of which a bankruptcy debtor was the parent company was intended to be a named insured under the bond which named only the debtor as an insured; the bank was a named insured on a prior bond which the current bond was intended to replace, the bank was a named insured on the bond application, and the bank paid the bond premium. Lubin v. Cincinnati Ins. Co., F. Supp. 2d (N.D. Ga. Dec. 17, 2010), aff'd, 677 F.3d 1039 (11th Cir. 2012).

Summary judgment improper if questions of fact remained regarding whether quitclaim deed was contrary to parties' agreement. - Trial court erred in granting a son's motion for summary judgment as to a parent's counterclaim seeking to eject the son from a home and to have a quitclaim deed rescinded or reformed because material questions of fact remained regarding whether the terms of the quitclaim deed were, by mutual mistake, contrary to the agreement of the parties; the parent's deposition testimony could reasonably be construed to signify that the parent expressed the parent's willingness to convey the property only if the parent retained a life estate and that the son accepted the conveyance subject to that condition. Hall v. Hall, 303 Ga. App. 434 , 693 S.E.2d 624 (2010).

Ignorance of Fact

Ignorance of fact will not justify the recission of a contract. Prince v. Friedman, 202 Ga. 136 , 42 S.E.2d 434 (1947).

Reasonable Diligence

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

Equity will grant no relief to one who by the exercise of ordinary diligence, could have prevented the injury complained of. Prince v. Friedman, 202 Ga. 136 , 42 S.E.2d 434 (1947); Barham v. United States, 715 F. Supp. 1091 (M.D. Ga. 1989).

Failure of insured to read policy insufficient as proof of lack of ordinary diligence. - A mere failure of an insured to read the insured's policy of insurance does not amount to such laches as will debar the insured from having such policy reformed for mistake therein. A policy of insurance is issued by the insurer and signed by the insurer or the insurer's agent. It is not contemplated that the insured shall sign it. In the insurer's promise to deliver an accurate policy, according to the insurer's oral agreement with the insured, the insured has a just expectation that there will be no designed variance. Georgia Farm Bureau Mut. Ins. Co. v. Wall, 242 Ga. 176 , 249 S.E.2d 588 (1978).

Pleading and Practice

Grounds of mistake must be fully alleged. - When a defendant, in a court of law, seeks to avoid the defendant's contract on the ground of mistake, the defendant must, by the defendant's pleadings, allege the grounds of the mistake, as fully as the defendant is required to do in a court of equity to entitle the defendant to relief. Hargrove v. Bledsoe, 78 Ga. App. 107 , 50 S.E.2d 223 (1948).

Rules of pleading in this state require that allegations of mistake should be set forth with considerable definiteness and certainty, and that such general allegations as that certain matters were left out of or included in the contract as written "by mutual mistake of the parties" are not sufficient. Wheeler v. Poole, 204 Ga. 477 , 50 S.E.2d 326 (1948).

Evidence of mistake must be clear, unequivocal and decisive. - To authorize a verdict reforming a deed upon the ground of mutual mistake, the evidence, like the petition, should at least by inference show the particular mistake and illustrate how the mistake occurred; and the evidence must be clear, unequivocal, and decisive as to the mistake. Helton v. Shellnut, 186 Ga. 185 , 197 S.E. 287 (1938).

Jury charge on evidential standard. - Where the court did charge in language identical to that of this section, it is not subject to the criticism that it erred in its charge to the jury that they must decide the question of mistake by a preponderance of the testimony, whereas the law provides that the evidence must be clear, unequivocal, and decisive as to the mistake. Fidelity & Deposit Co. v. State Hwy. Dep't, 174 Ga. 443 , 163 S.E. 174 (1932).

Preponderance of evidence is not correct standard. - It was error for the court to instruct the jury that the party seeking reformation of the description in a deed could establish the party's right thereto by a preponderance of the evidence only. Carroll v. Craig, 214 Ga. 257 , 104 S.E.2d 215 (1958).

Evidence has to be clear, unequivocal and decisive. - In a diversity based suit in equity to set aside or deny res judicata effect to a prior state court judgment on the grounds of fraud and mutual mistake, the plaintiffs had to prove their claims by something more than a mere preponderance of the evidence. The evidence had to preponderate in the plaintiffs' favor, but it also had to be of "clear, unequivocal, and decisive" quality. Ahrens v. Katz, 595 F. Supp. 1108 (N.D. Ga. 1984).

Insufficient evidence of legal mistake. - In an action seeking cancellation of a warranty deed to a trustee, the beneficiary's testimony that the beneficiary could not remember the execution of the deed did not demand a finding that the deed should be cancelled on the ground of legal mistake. Ivey v. Ivey, 266 Ga. 143 , 465 S.E.2d 434 (1996).

Evidence failed to show mistake of present or past fact. - Court would not construe an agreement and a deed together as creating a fee simple subject to a condition subsequent because a month-long gap between the execution of the agreement and the deed was too great of a gap in time to deem the documents as being executed contemporaneously. Nor would the court reform the documents to do so as the creditor failed to demonstrate a mistake of present or past fact relievable in equity, either by rescission or reformation. Kelley v. McCormack (In re Mitchell), 548 Bankr. 862 (Bankr. M.D. Ga. 2016).

Parol evidence. - Before decreeing reformation, a court requires that the parol evidence of a mistake and of an alleged modification of a contract must be most clear and convincing. Georgia Farm Bureau Mut. Ins. Co. v. Wall, 242 Ga. 176 , 249 S.E.2d 588 (1978).

In a suit for reformation of contract based upon alleged mutual mistake, the parol evidence rule does not bar introduction of testimony as to the oral agreement reached by the parties which the writing was intended to reflect. Georgia Farm Bureau Mut. Ins. Co. v. Wall, 242 Ga. 176 , 249 S.E.2d 588 (1978).

Parol evidence can be offered to prove mistake. Vann v. Williams, 165 Ga. App. 457 , 299 S.E.2d 908 (1983).

Creation of true writing to prevent unconscionable advantage. - When petition alleges that parties to a deed orally agreed that the consideration was to be $850.00 cash for the plaintiff's equity and that the defendants were to assume and pay certain loans on the property, and that, due to a mutual mistake of law as to the effect of a recital of a nominal consideration in a deed, the deed fails to state the true consideration agreed upon by the parties, the fact that the agreement is not in writing will not bar a recovery, since what is sought to be enforced is not an oral agreement barred by the statute of frauds, but to reduce to writing the true agreement between the parties to prevent an unconscionable advantage to one of the parties to a contract. Head v. Stephens, 215 Ga. 184 , 109 S.E.2d 772 (1959), later appeal, 218 Ga. 191 , 126 S.E.2d 623 (1962).

A docketing error made in the clerk's office amounts to an accident or mistake relievable in equity so far as the defendant is concerned, provided the failure to answer is attributable thereto, without fault or negligence on its part. Dollar v. Fred W. Amend Co., 184 Ga. 432 , 191 S.E. 696 (1937).

A mere mistake in judgment or opinion as to the value of property does not authorize interference by the courts. Hargrove v. Bledsoe, 78 Ga. App. 107 , 50 S.E.2d 223 (1948).

General Consideration

This section was not intended to lodge any arbitrary discretion in judge or jury to deny reformation on the ground that the party seeking relief could by reasonable diligence have had knowledge of the mistake. Bender v. Randall Bros., 189 Ga. 197 , 5 S.E.2d 889 (1939).

Elements essential to equitable relief. - Two essential elements must affirmatively appear before a court of equity will be authorized to relieve a purchaser from the purchaser's bid because of mistake of fact; the exercise of ordinary diligence in discovering the truth, and the fact that the relief will not prejudicially affect the rights of anyone. Kurfees v. Davis, 178 Ga. 429 , 173 S.E. 157 (1934).

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

No basis for reformation. - Any possible violation of a fiduciary bond which remained between a city and a law firm as a result of a prior attorney-client relationship provided no basis for reforming an amended lease because there was no indication that the law firm was a party to its attorney's alleged duplicity and there was no proof in the record of any occurrence which prevented the city from reading the amended lease prior to executing the document. City of College Park v. Sheraton Savannah Corp., 235 Ga. App. 561 , 509 S.E.2d 371 (1998).

An insurer was entitled to reformation of a policy when coverage of a vehicle was extended at the insured's request, after the vehicle was involved in an accident; even though the insurer could have inquired before extending the coverage, the insured was not prejudiced by the insurer's action and would obtain a windfall absent reformation of the contract. Cotton States Mut. Ins. Co. v. Woodruff, 215 Ga. App. 511 , 451 S.E.2d 106 (1994).

Specific performance warranted in foreclosure sale. - Superior court did not err in granting a purchaser summary judgment in the purchaser's action seeking specific performance pursuant to O.C.G.A. § 23-2-131 and requiring a mortgage company to deliver a deed conveying certain property because the company failed to demonstrate any merit in the company's contention that the superior court improperly refused to invoke the court's equitable power to relieve the company from performing under the foreclosure sale contract on the ground that the opening bid the company set forth was a mistake. Because the dollar amount of the high bid at the foreclosure sale alone made it immediately apparent that there had been a mistake, a reasonable inference arose that had reasonable diligence been employed before the foreclosure sale, the alleged unilateral mistake would not have occurred. Decision One Mortg. Co., LLC v. Victor Warren Props., Inc., 304 Ga. App. 423 , 696 S.E.2d 145 (2010).

Equitable interference not authorized in quiet title action. - Trial court did not err in granting a bank and purchasers summary judgment in a son's action to quiet title to a parcel of land because the son did not act with reasonable diligence to verify that a house was located on the land that the son received under a deed, and the purchasers would be prejudiced if the son were granted relief. Haffner v. Davis, 290 Ga. 753 , 725 S.E.2d 286 (2012).

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

Cited in Harrison v. Hester, 160 Ga. 865 , 129 S.E. 528 (1925); Paris v. Treadaway, 173 Ga. 639 , 160 S.E. 797 (1931); McCommons v. Greene County, 53 Ga. App. 171 , 184 S.E. 897 (1936); Dobbs v. Perlman, 59 Ga. App. 770 , 2 S.E.2d 109 (1939); J. Kuniansky, Inc. v. Ware, 192 Ga. 488 , 15 S.E.2d 783 (1941); Hill v. Agnew, 202 Ga. 759 , 44 S.E.2d 653 (1947); Loyd v. Loyd, 203 Ga. 775 , 48 S.E.2d 365 (1948); Whitfield v. Whitfield, 204 Ga. 64 , 48 S.E.2d 852 (1948); Tillman v. Byrd, 211 Ga. 918 , 89 S.E.2d 479 (1955); Peerless Cas. Co. v. Housing Auth., 228 F.2d 376 (5th Cir. 1955); Charles v. Simmons, 215 Ga. 794 , 113 S.E.2d 604 (1960); Dixie Belle Mills, Inc. v. Specialty Mach. Co., 217 Ga. 104 , 120 S.E.2d 771 (1961); Cline v. Schuster, 221 Ga. 653 , 146 S.E.2d 732 (1966); Vinson v. Citizens & S. Nat'l Bank, 223 Ga. 54 , 153 S.E.2d 436 (1967); D.H. Overmyer Co. v. Joe Summers Roofing Co., 120 Ga. App. 188 , 169 S.E.2d 821 (1969); Sikes v. Sikes, 231 Ga. 105 , 200 S.E.2d 259 (1973); Martin v. Heard, 239 Ga. 816 , 238 S.E.2d 899 (1977); Garden of Eden, Inc. v. Eastern Sav. Bank, 244 Ga. 63 , 257 S.E.2d 897 (1979); FDIC v. Lattimore Land Corp., 656 F.2d 139 (5th Cir. 1981); Gulf Life Ins. Co. v. Folsom, 256 Ga. 400 , 349 S.E.2d 368 (1986); Beasley v. Wachovia Bank, 277 Ga. App. 698 , 627 S.E.2d 417 (2006); Levenson v. Word, 294 Ga. App. 104 , 668 S.E.2d 763 (2008).

Reasonable Diligence

1. In General

Courts of equity grant relief only in favor of the diligent. City of Jefferson v. Trustees of Martin Inst., 199 Ga. 71 , 33 S.E.2d 354 (1945).

The standard is one of reasonable diligence, and the defrauded party is not bound to exhaust all means at the party's command to ascertain the truth before relying upon the representations. Funding Sys. Leasing Corp. v. Pugh, 530 F.2d 91 (5th Cir. 1976).

Equity requires diligence in the protection of one's own rights. Phillips v. Hayes, 212 Ga. 148 , 91 S.E.2d 19 (1956).

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

While equity will, on reasonable application, and under proper circumstances, relieve a party from the injurious consequences of an act done under a mistake of fact, it will not do so if such party could, by reasonable diligence, have ascertained the truth as to the matter concerning which the mistake was made. Adler v. Adler Co., 205 Ga. 818 , 55 S.E.2d 139 (1949).

The duty rests upon a party who seeks to rescind a contract on the ground of fraud, to make such effort to discover the fraud as would in law amount to ordinary diligence. Tingle v. Seignious, 212 Ga. 71 , 90 S.E.2d 408 (1955).

If one has made a bad bargain by one's failure to acquaint oneself with facts which were easily ascertainable, a court of equity will not aid one in rescinding one's contract to purchase by decreeing a cancellation of the contract. Tingle v. Seignious, 212 Ga. 71 , 90 S.E.2d 408 (1955).

While former Code 1933, § 37-207 (see O.C.G.A. § 23-2-31 ) provides that equity may rescind and cancel a written contract upon the ground of mistake of fact material to the contract of one party only, ignorance of fact is no cause for rescinding a contract; and when by reasonable diligence the plaintiff could have ascertained the extent of the plaintiff's injuries, and there was no necessity for the plaintiff's rushing into a settlement, former Code 1933, § 3-1004 (see O.C.G.A. § 9-3-33 ) gave the plaintiff two years in which to bring an action to recover for such injuries, a court of equity will not relieve the plaintiff from the injurious, unwise, or disadvantageous consequences of the plaintiff's own act in executing a release. James v. Tarpley, 209 Ga. 421 , 73 S.E.2d 188 (1952).

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

A court of equity will not relieve a vendor of land from the vendor's own negligence in not ascertaining facts which the vendor could have ascertained by diligence, the vendee using no artifice or fraudulent scheme in order to prevent the vendor from ascertaining facts which might have prevented the vendor from executing the deed sought to be canceled on account of the alleged fraud on the part of the vendee. Browning v. Richardson, 181 Ga. 413 , 182 S.E. 516 (1935).

Reasonable efforts in bidding contracts. - A contractor who has bid for the excavation of highway sites on a basis of "unclassified material" may not, under the guise of mistake of fact, seek additional compensation in an action at law because the material excavated contained a higher percentage of rock than it expected, even though its only information at the time of the bid was results of test borings made available to it by the highway department (now Department of Transportation), when it was specifically stipulated that the data were not guaranteed and did not bind the department; when the department furnished all information which it had available, made no attempt to conceal actual conditions, and stipulated the provisional character of its tests, when the contractor had equal opportunity with the department to conduct its own investigation, and when the parties with knowledge of these facts elected to contract on a basis of material moved rather than to contract on a basis of the percentage of dirt and rock after removal. State Hwy. Dep't v. MacDougald Constr. Co., 102 Ga. App. 254 , 115 S.E.2d 863 (1960).

Materialmen are charged with knowledge of the premises upon which they filed their claim of lien, with knowledge of the premises to which they delivered the materials, and where they knew that these premises differed, in plenty of time to properly record a claim of lien as required by law, they cannot seek the aid of a court of equity to relieve them from their own negligence. King v. Rutledge, 208 Ga. 172 , 65 S.E.2d 801 (1951).

Plaintiff's petition to cancel and declare void the plaintiff's acknowledgement of service and to set aside the judgment probating a will on the alleged ground of fraud failed to state a cause of action for the relief sought, since the plaintiff by an exercise of the slightest degree of diligence could have ascertained and asserted in the probate proceeding the falsity of the act upon which the plaintiff relied to set aside the probate judgment. Ingram v. Rooks, 221 Ga. 701 , 146 S.E.2d 743 (1966).

Due diligence to ascertain truth. - When the terms of an instrument express the intent of the parties at the time the contract is made, as the parties are then informed, in the absence of any allegation of fraud, misrepresentation, or misplaced confidence, equity will not interfere to relieve on account of ignorance of a fact by one of the parties, if by the exercise of due diligence one might have ascertained the truth. Hargrove v. Bledsoe, 78 Ga. App. 107 , 50 S.E.2d 223 (1948).

While the doctrine of caveat emptor would charge the purchaser with looking out for the title which the seller had to the tract offered for sale as the seller's, it would not charge the purchaser with looking out for the boundaries of that tract when the seller undertook to locate and point them out, thus professing to know them sufficiently to enable them to furnish this information to purchasers instead of leaving the latter to their own resources in acquiring the information. Bonner v. Cotton, 223 Ga. 843 , 159 S.E.2d 61 (1968).

Reformation of a deed. - Trial court properly ordered reformation of a deed of assent to include an entire eight acre tract of land as opposed to only a partial strip because reformation was not barred by the seven-year statute of limitations since the seller was not prejudiced as the deed should have been corrected previously, thus, equitable relief under O.C.G.A. § 23-2-32(b) was appropriate. Ehlers v. Upper West Side, LLC, 292 Ga. 151 , 733 S.E.2d 723 (2012).

2. Duty to Read Written Instruments

One executing a contract or deed has the duty to read it and that negligence in not reading it before it is sent to one who acted in good faith can bar reformation by the negligent party. B.L. Ivey Constr. Co. v. Pilot Fire & Cas. Co., 295 F. Supp. 840 (N.D. Ga. 1968).

Because there was no fraud that prevented siblings from reading a deed presented to them by their brother, which he allegedly represented as an easement, and no fiduciary relationship upon which they could have justifiably relied, the siblings should have discovered the alleged fraud when they signed the deed, and the seven-year statute of limitations expired seven years later. McCall v. Williams, 326 Ga. App. 99 , 756 S.E.2d 217 (2014).

One about to sign a written instrument cannot rely blindly upon the representations of other parties as to its contents, and if, without an emergency or fraud inducing him not to read it, he signs without reading, he cannot hold the other party responsible for his statements, though they be false. Livingston v. Barnett, 193 Ga. 640 , 19 S.E.2d 385 (1942).

Any representation, act, or artifice intended to deceive, and which does deceive another, is such a fraud as may authorize cancellation of a written contract, but a party to a contract who can read must read or show a legal excuse for not doing so, and ordinarily, if fraud is the excuse, it must be such fraud as prevents the party from reading; nor in such case will a mere fraudulent statement by the opposite party or his agent as to the contents of the writing furnish a legal excuse. And where the contract is a deed to land, the rule will generally apply to the grantee as well as the grantor. Livingston v. Barnett, 193 Ga. 640 , 19 S.E.2d 385 (1942).

Where two contracting parties deal with each other at arms' length and on equal terms, and where there is no such confidential relation between them as to justify special confidence reposed by one in the other, a written instrument entered into between them cannot be set aside upon the ground that the party seeking to be relieved was induced to enter in and sign the instrument in consequence of fraudulent representations as to its contents upon the part of the adverse party, when it appears that the party signing could read, that there was nothing to prevent him from reading the instrument, but that he did not do so, that there was no sufficient excuse for his failing to do so, but he signed after he had full opportunity to inform himself as to the terms of the instrument by reading it, but negligently omitted to read the same, when he could thus have informed himself of its contents. Livingston v. Barnett, 193 Ga. 640 , 19 S.E.2d 385 (1942).

Where one, while negotiating for the purchase of realty, has an opportunity to examine it before agreeing to buy, but fails to do so and voluntarily relies on statements made by the seller concerning its character and value, a written contract to sell and purchase the property subsequently executed by the contracting parties will not, on petition therefor by the purchaser, be rescinded and set aside because of the falsity of such statements, unless some fraud or artifice was practiced by the seller to prevent such examination by the purchaser; and this is true although the purchaser in agreeing to buy relied upon the seller's representations as to the character and value of the property as being true, and in consequence of such reliance acted to his injury. Tingle v. Seignious, 212 Ga. 71 , 90 S.E.2d 408 (1955).

Where plaintiff signed a deed which was read to her by an attorney which she did not read herself, and there was no evidence that there were emergency circumstances of disabilities preventing her from reading the deed, the mere fact that the plaintiff signed the deed in a room where the shades were not put up and the blinds were not open, where it does not appear that she could not have raised the shades nor opened the blinds and let in sufficient light by which she could read the deed, is insufficient as an excuse for her not reading the deed and becoming acquainted with its contents before she signed it. McCommons v. Greene County, 53 Ga. App. 171 , 184 S.E. 897 (1936).

Equity will grant no relief in favor of one who buys land when he fails to exercise any diligence for his protection and asserts that he blindly relied on the representations of the seller as to matters of which he could have informed himself, and the same is true in the purchase of a stock of merchandise and fixtures. Holmes v. Walker, 207 Ga. 582 , 63 S.E.2d 359 (1951).

While the inability of a plaintiff vendor, in an alleged fraudulent land sale case, to read the English language would be a circumstance which should be considered in determining whether or not he has been defrauded, the fact of such inability is not of itself sufficient to authorize the rescission of a contract. Robertson v. Panlos, 208 Ga. 116 , 65 S.E.2d 400 (1951).

As a general rule, fraud voids all contracts; however, this rule is not applied in its entirety and without reservation to written contracts, for the reason that misrepresentations and false statements will not be heard in contradiction of the terms of a valid written instrument, unless it should appear that the party signing the contract has been induced to sign by a fraud, trickery, artifice, or emergency happening at the time of such signing. Livingston v. Barnett, 193 Ga. 640 , 19 S.E.2d 385 (1942).

General Consideration

The relief accorded by this section is relief which can be granted only by equity; in a simple action at law on a promissory note it is unavailable. Franklin v. Sea Island Bank, 111 Ga. App. 182 , 141 S.E.2d 121 (1965).

Cited in Wachovia Bank & Trust Co. v. Jones, 166 Ga. 747 , 144 S.E. 256 (1928); Paris v. Treadaway, 173 Ga. 639 , 160 S.E. 797 (1931); Cheatham v. Palmer, 178 Ga. 223 , 172 S.E. 462 (1934); Sawyer Coal & Ice Co. v. Kinnett-Odom Co., 192 Ga. 166 , 14 S.E.2d 879 (1941); Orient Ins. Co. v. Dunlap, 193 Ga. 241 , 17 S.E.2d 703 (1941); Wheeler v. Poole, 204 Ga. 477 , 50 S.E.2d 326 (1948); William H. Benton Co. v. Irvindale Dairies, Inc., 224 Ga. 780 , 164 S.E.2d 819 (1968); Hurst v. McDaniel, 159 Ga. App. 702 , 285 S.E.2d 40 (1981); Fulghum v. Kelly, 255 Ga. 652 , 340 S.E.2d 589 (1986); Brannen v. Gulf Life Ins. Co., 201 Ga. App. 241 , 410 S.E.2d 763 (1991); Curry v. Curry, 267 Ga. 66 , 473 S.E.2d 760 (1996).

Reformation of Contract

Reformation requires mutual mistake. - Equity in a proper case may reform a written contract because of fraud on one side and mistake on the other; a contract may also be reformed for a mistake of both parties, but the evidence must show that the mistake was mutual. Helton v. Shellnut, 186 Ga. 185 , 197 S.E. 287 (1938).

Equity will not reform a written contract on account of a mistake unless the mistake was one of both parties. Some particular mutual mistake and how it occurred must be alleged and plainly shown. Rawson v. Brosnan, 187 Ga. 624 , 1 S.E.2d 423 (1939).

A mistake in reference to the description of land conveyed on the part of one grantee, acting on behalf of other grantees who were absent, is a mistake on the part of all of them; and where the same mistake was made by the grantor, there would be a mistake of all the parties, within the rule as to mutuality. Lifsey v. Mims, 193 Ga. 780 , 20 S.E.2d 32 (1942).

Reformation as applied to a contract is a remedy cognizable in equity for the purpose of correcting an instrument so as to make it express the true intention of the parties, where from some cause, such as fraud, accident, or mistake it does not express such intention. The remedy is not available for the purpose of making a new and different contract for the parties, but is confined to establishment of the actual agreement. Deck v. Shields, 195 Ga. 697 , 25 S.E.2d 514 (1943).

A petition for reformation of a written contract will lie where by mistake of the draftsman and by oversight of the parties, the writing does not embody or fully express the real contract of the parties. McLoon v. McLoon, 220 Ga. 18 , 136 S.E.2d 740 (1964).

Although equity will not reform a written contract because of mistake as to the contents of the writing on the part of the complaining party, who is able to read but fails to do so, where no sufficient excuse appears as to why such party did not read the contract, such principle has not been extended to cases in which it is sought to reform written instruments on the ground of mutual mistake of fact. In all cases where the form of the conveyance or instrument is, by mutual mistake, contrary to the intention of the parties in their contract, equity will interfere to make it conform thereto. Eaton Yale & Towne, Inc. v. Strickland, 228 Ga. 430 , 185 S.E.2d 923 (1971).

The mere failure to discover a conflict between the terms of an oral contract as to what a policy of insurance is to contain and what it actually contains until after a loss occurs is a circumstance to be considered by the jury in determining the truth of the issue, but such failure to discover the discrepancy will not bar the reformation of the contract as a matter of law. Georgia Farm Bureau Mut. Ins. Co. v. Wall, 242 Ga. 176 , 249 S.E.2d 588 (1978).

Insurance contracts are not immune to suits for reformation, even where the insurance company was acting through an agent whose actions may have been unauthorized. Georgia Farm Bureau Mut. Ins. Co. v. Wall, 242 Ga. 176 , 249 S.E.2d 588 (1978).

The failure of a party to read a contract which is not signed by that party, such as a policy of insurance, does not bar reformation as a matter of law. Georgia Farm Bureau Mut. Ins. Co. v. Wall, 242 Ga. 176 , 249 S.E.2d 588 (1978).

Proof of Mistake

When mistake is relied on, the petition must allege the particular mistake and show how it occurred. Helton v. Shellnut, 186 Ga. 185 , 197 S.E. 287 (1938).

Evidence of mistake must be clear, unequivocal and decisive. - To authorize a verdict reforming a deed upon the ground of mutual mistake, the evidence, like the petition, should at least by inference show the particular mistake and illustrate how it occurred; and the evidence must be clear, unequivocal, and decisive as to the mistake. Helton v. Shellnut, 186 Ga. 185 , 197 S.E. 287 (1938).

General Consideration

The relief accorded by this section is relief which can be granted only by equity; in a simple action at law on a promissory note it is unavailable. Franklin v. Sea Island Bank, 111 Ga. App. 182 , 141 S.E.2d 121 (1965).

Cited in Brown v. Carmichael, 149 Ga. 548 , 101 S.E. 124 (1919); Hooper v. Rucker, 153 Ga. 306 , 111 S.E. 901 (1922); Edwards v. Rozar, 155 Ga. 170 , 116 S.E. 313 (1923); Williams v. Williams, 155 Ga. 622 , 118 S.E. 195 (1923); Paris v. Treadaway, 173 Ga. 639 , 160 S.E. 797 (1931); Sawyer Coal & Ice Co. v. Kinnett-Odom Co., 192 Ga. 166 , 14 S.E.2d 879 (1941); Orient Ins. Co. v. Dunlap, 193 Ga. 241 , 17 S.E.2d 703 (1941); Brooks v. Northwestern Mut. Life Ins. Co., 193 Ga. 522 , 18 S.E.2d 860 (1942); Nalley v. New York Life Ins. Co., 48 F. Supp. 470 (N.D. Ga. 1943); Scott v. Gillis, 202 Ga. 220 , 43 S.E.2d 95 (1947); Findley v. City of Vidalia, 204 Ga. 279 , 49 S.E.2d 658 (1948); Wheeler v. Poole, 204 Ga. 477 , 50 S.E.2d 326 (1948); Hood v. Connell, 204 Ga. 782 , 51 S.E.2d 853 (1949); Jackson v. Brown, 209 Ga. 78 , 70 S.E.2d 756 (1952); Farmers Whse. of Pelham, Inc. v. Collins, 220 Ga. 141 , 137 S.E.2d 619 (1964); Cline v. Schuster, 221 Ga. 653 , 146 S.E.2d 732 (1966); Westbrook v. Nationwide Ins. Co., 113 Ga. App. 299 , 147 S.E.2d 819 (1966); Hartford Accident & Indem. Co. v. Walka Mt. Camp No. 565, Woodmen of World, Inc., 224 Ga. 194 , 160 S.E.2d 833 (1968); William H. Benton Co. v. Irvindale Dairies, Inc., 224 Ga. 780 , 164 S.E.2d 819 (1968); Seaboard Constr. Co. v. Clifton, 121 Ga. App. 247 , 173 S.E.2d 436 (1970); Citizens Bank v. Barber, 123 Ga. App. 507 , 181 S.E.2d 545 (1971).

Reformation

When mistake is relied on, the petition must allege the particular mistake and show how it occurred. Helton v. Shellnut, 186 Ga. 185 , 197 S.E. 287 (1938).

The fact that a complainant does not in express terms allege that an instrument was erroneously executed through mutual mistake does not render it insufficient in law, if it alleges facts from which such a conclusion is reasonably deducible. Steadham v. Cobb, 183 Ga. 30 , 196 S.E. 730 (1938).

A mistake that will justify reformation must be a mutual mistake. McCullough v. Kirby, 204 Ga. 738 , 51 S.E.2d 812 (1949).

Mutual mistake can lead to reformation. - Where the intent of the parties and their mutual mistake in having failed to notice the discrepancy between that intent and the written document was established by the evidence, the fact that the discrepancy resulted from the landlord's error as scrivener did not preclude reformation of the lease. Zaimis v. Sharis, 275 Ga. 532 , 570 S.E.2d 313 (2002).

In a lender's suit for reformation of a security deed to reflect that a different parcel owned by the borrower was the collateral, rather than the parcel described in the deed, the trial court erred in granting summary judgment for the borrower because inconsistencies in the loan documents raised an issue of fact as to whether there was a mistake. JPMorgan Chase Bank v. Cronan, 355 Ga. App. 556 , 845 S.E.2d 298 (2020).

Equity will not reform a written contract on account of a mistake unless the mistake was one of both parties; some particular mutual mistake and how it occurred must be alleged and plainly shown. Rawson v. Brosnan, 187 Ga. 624 , 1 S.E.2d 423 (1939).

Rescission

1. Insolvency

Insolvency as basis for rescission of contract. - While an absolute deed of conveyance will not be canceled, at the instance of the grantor, merely because of a breach by the grantee of a promise made by him, in consideration of which the deed was executed, and the remedy of the grantor in such a case is a suit for damages for such breach, yet where the grantee was insolvent, and 49 shares of stock were transferred to her in consideration of her learning the plaintiff's business and assisting in its operation, which service she failed and refused to render to the plaintiff, equity would decree a cancellation of the stock certificate and restore the same to the grantor. McGhee v. Minor, 188 Ga. 635 , 4 S.E.2d 565 (1939).

The grantor may maintain an equitable action to rescind the contract if the grantee is insolvent, or where fraud is employed by the grantee in the procurement of the deed, or there are other special facts which would make rescission by the grantor an appropriate relief. Although insolvency is frequently relied upon, breach of a contract for care and maintenance of the grantor upon the property conveyed present such special facts as authorize rescission. Head v. Walker, 243 Ga. 108 , 252 S.E.2d 440 (1979).

2. Ignorance of Fact

Ignorance of fact insufficient as basis for rescission of contract. - While this section provides that equity may rescind and cancel a written contract upon the ground of mistake of fact material to the contract of one party only, ignorance of fact is no cause for rescinding a contract; and where by reasonable diligence the plaintiff could have ascertained the extent of his injuries, and there was no necessity for his rushing into a settlement, § 9-3-33 giving him two years in which to bring an action to recover for such injuries, a court of equity will not relieve him from the injurious, unwise, or disadvantageous consequences of his own act in executing a release. James v. Tarpley, 209 Ga. 421 , 73 S.E.2d 188 (1952).

When the intention of both the insurer and the insured as to the amount of the premium is expressed in the application, as corrected by the insurer as therein authorized, to be $302.90 per quarter, a mistake of the draftsman of the insurer in writing into the policy at another place the amount of the premium as being $750.48 per year, instead of what the insurer claims to have been intended, $750.48 per quarter, is obviously the unilateral mistake of the insurer alone, and there is neither mutuality nor fraud that would authorize reformation to conform with what the insurer claims to have been intended. Davis v. United Am. Life Ins. Co., 215 Ga. 521 , 111 S.E.2d 488 (1959).

A contractor who has bid for the excavation of highway sites on a basis of "unclassified material" may not, under the guise of mistake of fact, seek additional compensation in an action at law because the material excavated contained a higher percentage of rock than it expected, even though its only information at the time of the bid was results of test borings made available to it by the highway department (now Department of Transportation), where it was specifically stipulated that the data were not guaranteed and did not bind the department; where the department furnished all information which it had available, made no attempt to conceal actual conditions, and stipulated the provisional character of its tests, where the contractor had equal opportunity with the department to conduct its own investigation, and where the parties with knowledge of these facts elected to contract on a basis of material moved rather than to contract on a basis of the percentage of dirt and rock after removal. State Hwy. Dep't v. MacDougald Constr. Co., 102 Ga. App. 254 , 115 S.E.2d 863 (1960).

Wrong property foreclosed upon. - Trial court properly reformed security deed and declared that suing lender had first priority over certain tract of land since there was no doubt that parties intended for the tract to have been subject to the security deed alone; trial court also properly directed verdict in favor of suing lender as to its claim for rescission and cancellation of the deed it obtained when it mistakenly foreclosed on the wrong tract, as such relief was the proper remedy. DeGolyer v. Green Tree Servicing, LLC, 291 Ga. App. 444 , 662 S.E.2d 141 (2008).

Mistake. - In a breach of contract action regarding a loan contract between the lender and its debtor, the debtor's failure to cite to facts in the record establishing that the $4,500 note was paid in full led to the conclusion that it was not, and the fact that the debtor might have made payments in excess of $25,000 regarding all the outstanding loans with the lender did not in and of itself prove that the $4,500 loan had been paid off. Jenkins v. Sallie Mae, Inc., 286 Ga. App. 502 , 649 S.E.2d 802 (2007).

3. Proof

Equitable relief for unilateral mistake requires evidence of fraud. - Equity will grant appropriate relief for a mistake of fact by one party, accompanied by fraud on the part of the other, just as in cases where there is mutual mistake. J. Kuniansky, Inc. v. Ware, 192 Ga. 488 , 15 S.E.2d 783 (1941).

4. Clerical Error

Error resulting in seven percent discrepancy in amount of bid. - Contractor was entitled to rescind its construction bid for a church building, after a clerical error resulted in a seven percent discrepancy in the amount of the bid, notwithstanding bidding instructions which prohibited the contractor from withdrawing the bid on the ground of "negligence." First Baptist Church v. Barber Contracting Co., 189 Ga. App. 804 , 377 S.E.2d 717 (1989).

General Consideration

This section is not limited by its terms to one remedy but applies to any equitable relief. Volunteer State Life Ins. Co. v. Powell-White Co., 187 Ga. 705 , 1 S.E.2d 662 (1939).

Privity denotes successive relationship to the same right in the same property. Hilton v. Hilton, 202 Ga. 53 , 41 S.E.2d 880 (1947).

The mere fact that plaintiff grantee and defendant grantee had entered into an agreement with the common grantor whereby each was to purchase separately from the common grantor one half of a described city lot, could not possibly constitute each grantee "an original party" to the deed of conveyance to the other within statute permitting reformation. Hilton v. Hilton, 202 Ga. 53 , 41 S.E.2d 880 (1947).

It is an elementary principle of law that a privy, either in law, fact, or estate, has no greater right than the one with whom he is in privity, accordingly, since the plaintiff's father would have been estopped in law to attack and thus question the validity of the divorce which he procured from the plaintiff's mother, it logically follows that the plaintiff himself is also estopped to do so. Phillips v. Phillips, 211 Ga. 305 , 85 S.E.2d 427 (1955).

Lack of standing in equity. - Decedent's estate administrator lacked standing to challenge the three assignments of the security deed in a non-judicial foreclosure sale because the administrator was not a party to the assignment contracts, and the administrator did not have standing in equity to seek relief because the administrator was not seeking reformation of the deed and did not allege mutual mistake. Shannon v. Albertelli Firm, P.C., F.3d (11th Cir. May 7, 2015)(Unpublished).

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

Cited in Harrison v. Hester, 160 Ga. 865 , 129 S.E. 528 (1925); Sapp v. Ritch, 169 Ga. 33 , 149 S.E. 636 (1929); McCollum v. Loveless, 187 Ga. 262 , 200 S.E. 115 (1938); Thomas v. Lambert, 187 Ga. 616 , 1 S.E.2d 443 (1939); Ayers v. Carden, 212 Ga. 510 , 93 S.E.2d 694 (1956); Empire Land Co. v. Stokes, 212 Ga. 707 , 95 S.E.2d 283 (1956); Lanier v. American Cas. Co., 226 F. Supp. 630 (N.D. Ga. 1964); DOT v. Brooks, 254 Ga. 303 , 328 S.E.2d 705 (1985); Anderson v. Streck, 190 Ga. App. 224 , 378 S.E.2d 526 (1989); Yeazel v. Burger King Corp., 241 Ga. App. 90 , 526 S.E.2d 112 (1999).

Application of Section

1. Privies

Section extends equitable relief to privies to contract. - The general rule, which allows only the parties to a judgment to attack and thus question its validity, has been relaxed in this state by this section, however, the privity either in law, in fact, or in estate, which will permit one to attack and thus question the validity of a judgment to which he is not a party has no personal basis as a mere matter of sentiment, but rests upon some actual mutual or successive relationship as to the same right of property. Phillips v. Phillips, 211 Ga. 305 , 85 S.E.2d 427 (1955).

Section extends no rights to one not privy under original contract. - Primarily the right to reform a contract belongs to the original parties thereto. The recognized extension in favor of those in privity with the original contractors does not mean that the terms of a contract can be altered and reformed by one who does not claim as a successor under the contract sought to be reformed, but under another contract, setting up different and inconsistent rights. In such a case, the subsequent grantee's quarrel is with the person from whom he derived his title, rather than with the one holding adversely under a prior and different contract, to which he was admittedly neither party nor privy. Rawson v. Brosnan, 187 Ga. 624 , 1 S.E.2d 423 (1939); Hilton v. Hilton, 202 Ga. 53 , 41 S.E.2d 880 (1947).

In a quiet title action, the trial court properly granted summary judgment to the adjoining landowners as the suing neighbor was not entitled to reformation of corrective deeds entered into between the suing neighbor's predecessor in title and the adjoining landowners since the suing neighbor was not a party to the corrective deeds. Moore v. McBryar, 290 Ga. App. 725 , 659 S.E.2d 789 (2008).

Requirement of privity of contract, etc., applies to remedy of reformation and to remedy of cancellation. - Where personal property is sold, and a bill of sale with warranty of title is executed by the vendor, and the property is again sold with warranty of title, the last vendee and his vendor may join in an equitable petition against the original vendor, having for its purpose the reformation of the original bill of sale by including certain items of property omitted therefrom by mutual mistake. Chapman v. Cassels Co., 180 Ga. 349 , 179 S.E. 91 (1935).

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

The mere fact that purchaser might have had some knowledge of a mingling by his vendor of trust funds with his own is not sufficient to charge the vendee with notice that trust funds had been diverted in the purchase of a particular piece of land. Tattnall Bank v. Harvey, 186 Ga. 752 , 198 S.E. 724 (1938).

After the original vendor of the land died intestate, and there was no administrator or personal representative of the decedent at the time the suit was brought, a suit could be maintained against the sole heir at law of the intestate, as the heir was apparently the only party who was interested in resisting the suit. Steadham v. Cobb, 183 Ga. 30 , 196 S.E. 730 (1938).

The rule requiring mutuality or privity of contract or estate, applies not only to the equitable remedy of reformation but to that of cancellation or other equitable relief against the effect of an instrument. Volunteer State Life Ins. Co. v. Powell-White Co., 187 Ga. 705 , 1 S.E.2d 662 (1939).

Where the plaintiff in ejectment was the prior grantee of the tract sued for, not being a privy in law, fact, or estate with the defendant, who held under a subsequent deed from the common grantor, the defendant could not defend by reforming the plaintiff's deed so as to strike therefrom, as having been included by mutual mistake, the tract subsequently conveyed to the defendant. Volunteer State Life Ins. Co. v. Powell-White Co., 187 Ga. 705 , 1 S.E.2d 662 (1939).

A petition in equity by a husband seeking to cancel two concurrent verdicts and a decree obtained in the same court in a former divorce suit by the wife against her former husband, and to have declared the continued existence of the former marriage, thereby establishing incapacity of the wife to marry at the time of her marriage to the plaintiff, was subject to a general demurrer (now motion to dismiss). Martocello v. Martocello, 197 Ga. 629 , 30 S.E.2d 108 (1944).

Taking as true for purposes of a Chapter 7 trustee's motion for judgment on the pleadings a bank's contention that the parties involved in the sale, financing, and purchase of the property at issue intended that the property be conveyed to the debtor wife alone and intended that the security deed encumber the entire property rather than only an undivided one-half interest, the bank was not entitled to reformation of a special warranty deed (SWD) under Georgia law because as a security deed grantee, it was not an original party to the SWD or in privity with any party to the SWD. Bank of Am., N.A. v. Adams (In re Adams), 583 Bankr. 541 (Bankr. N.D. Ga. 2018).

Privy applied to Internal Revenue Service. - Internal Revenue Service, by reason of the fact that it was asserting a tax lien against property that inadvertently had been omitted from a conveyance deed, was a privy in law that was bound under Georgia law by a reformed conveyance because O.C.G.A. § 23-2-34 provided that equity will grant relief as between the original parties or their privies in law, in fact, or in estate, except bona fide purchasers for value without notice. Nat'l Assistance Bureau, Inc. v. Macon Mem'l Intermediate Care Home, Inc., F. Supp. 2d (M.D. Ga. June 8, 2009).

Children who were remaindermen, and would receive whatever assets of a marital trust that their mother did not appoint or distribute by will, were privies in estate with their mother. Richardson v. Bridges, 260 Ga. 62 , 389 S.E.2d 215 (1990).

Bona Fide Purchasers

Section protects interests of bona fide purchasers. - Where a husband contracts to buy land for value and directs conveyance thereof to his wife, no inference will arise that the wife is a purchaser for value, without notice of equities in favor of the vendor as against the vendee; and if the deed to the wife does not express the true agreement between the husband and the vendor, on account of mistake of the draftsman and mutual mistake of the vendor and the original vendee, the deed may be reformed so as to speak the true agreement. Cain v. Varnadore, 171 Ga. 497 , 156 S.E. 216 (1930).

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

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

When a husband fraudulently seeks and obtains a divorce from his wife in a court of his selection, he and his privies in law, in fact, or in estate, are thereafter conclusively estopped to assail the validity of the decree to the prejudice of innocent parties. Phillips v. Phillips, 211 Ga. 305 , 85 S.E.2d 427 (1955).

Creditor could not prevail on the creditor's claim for equitable reformation of a security deed executed by a debtor that did not own the property because nothing in the chain of title provided constructive notice to a potential purchaser of the property of the creditor's equitable interest in the property. Stearns Bank, N.A. v. Rent-A-Tent, Inc. (In re Rent A Tent, Inc.), 468 Bankr. 442 (Bankr. N.D. Ga. 2012).

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

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

General Consideration

History generally. - This section was derived from Trippe & Slade v. Ward, 2 Ga. 304 (1847) and DeLaperriere v. Williams, 167 Ga. 648 , 146 S.E. 482 (1929).

In all cases of fraud equity has concurrent jurisdiction with the law, but the court first taking cognizance of the case will retain it. Jordan v. General Ins. Co. of Am., 92 Ga. App. 77 , 88 S.E.2d 198 (1955).

Reluctance of equity to assume jurisdiction. - Though equity has concurrent jurisdiction with law in all cases of fraud except those in wills, unless some substantial equitable relief is sought, equity is reluctant to assume jurisdiction. Walsh v. Campbell, 130 Ga. App. 194 , 202 S.E.2d 657 (1973).

Any misrepresentation intended to deceive and which does deceive is a fraud, for which a party is entitled to a remedy at law. Oliver v. O'Kelley, 48 Ga. App. 762 , 173 S.E. 232 (1934).

Misrepresentation is one of the grounds on which equitable relief may be invoked in regard to judgments. Johnson v. Bogdis, 205 Ga. 535 , 54 S.E.2d 620 (1949), later appeal, 207 Ga. 650 , 63 S.E.2d 658 (1951).

One of the most frequently recurring forms of fraud on the part of one litigant against the other, entitling the latter to relief in equity against the judgment finally entered, is the making of some agreement or representation for the purpose of preventing an appearance or defense in the original action and reliance upon which has had the effect intended. Johnson v. Bogdis, 205 Ga. 535 , 54 S.E.2d 620 (1949), later appeal, 207 Ga. 650 , 63 S.E.2d 658 (1951).

Cited in Equitable Bldg. & Loan Ass'n v. Brady, 171 Ga. 576 , 156 S.E. 222 (1930); Equitable Bldg. & Loan Ass'n v. Brady, 175 Ga. 43 , 164 S.E. 674 (1932); Oliver v. O'Kelley, 48 Ga. App. 762 , 173 S.E. 232 (1934); Grimmett v. Barnwell, 184 Ga. 461 , 192 S.E. 191 (1937); Furr v. Jordan, 196 Ga. 862 , 27 S.E.2d 861 (1943); Beavers v. Williams, 199 Ga. 114 , 33 S.E.2d 343 (1945); Fulmer v. Wilkins, 201 Ga. 322 , 39 S.E.2d 405 (1946); Heath v. Jones, 168 F.2d 460 (5th Cir. 1948); Clark v. White, 185 F.2d 528 (5th Cir. 1950); Rountree v. Davis, 90 Ga. App. 223 , 82 S.E.2d 716 (1954); Oliver v. Farmer's State Bank, 224 Ga. 56 , 159 S.E.2d 405 (1968); Sikes v. Sikes, 231 Ga. 105 , 200 S.E.2d 259 (1973); Holder v. Brock, 129 Ga. App. 732 , 200 S.E.2d 912 (1973); Central Soya Co. v. Bundrick, 234 Ga. 133 , 214 S.E.2d 556 (1975).

Equitable Jurisdiction Dependent on Adequacy of Legal Remedy

Equitable jurisdiction in cases of fraud extended only where remedy at law is deficient. - This general principle does not authorize a suit in equity merely to recover damages for fraud, since the aggrieved party in such a case has an adequate and complete remedy at law. Aetna Ins. Co. v. Lunsford, 179 Ga. 716 , 177 S.E. 727 (1934).

Petition seeking to rescind a conditional bill of sale because of alleged fraudulent representations of the vendor as to the kind, quality, and condition of the personalty sold, to recover the portion of the purchase money paid by the vendee, and for injunction, cancellation, and accounting, in which are set up no peculiar circumstances showing a necessity of interposition by a court of equity, such as insolvency or nonresidence of the vendor, is not maintainable in equity, as the plaintiff has an adequate and complete remedy at law, nor would the fact that it was alleged that the vendor was threatening to transfer the conditional sale contract to a third person afford any ground for equitable relief, under the facts. Williford v. Haverty Furn. Co., 183 Ga. 707 , 189 S.E. 521 (1937).

When it appeared that insurance company had an adequate remedy at law in a suit filed by the insured against the company claiming disability payments under the policy, a petition in equity brought by the company to cancel the contract of insurance on the ground of fraud in its procurement was properly dismissed on demurrer (now motion to dismiss). Penn Mut. Life Ins. Co. v. Childs, 189 Ga. 835 , 7 S.E.2d 907 (1940).

While it is true that in all cases of fraud equity has concurrent jurisdiction with the law, equity takes jurisdiction only where the operation of the general rules of law would be deficient in protecting the rights of the complaining party. Gandy v. Robinson Co., 216 Ga. 190 , 115 S.E.2d 341 (1960).

Pleading and Practice

Judgments of probate courts may be set aside by equity, in a direct proceeding for that purpose, on the ground that they were procured by fraud. Johnson v. Bogdis, 205 Ga. 535 , 54 S.E.2d 620 (1949), later appeal, 207 Ga. 650 , 63 S.E.2d 658 (1951).

It has been many times held that judgments of courts of ordinary (now probate courts) may be set aside by equity, in a direct proceeding for that purpose, on the ground that they were procured by fraud. Maddox v. Wheeler, 230 Ga. 580 , 198 S.E.2d 284 (1973).

General Consideration

A statement of fact is the foundation of fraud. Daniel v. Dalton News Co., 48 Ga. App. 772 , 173 S.E. 727 (1934).

Fraud is not always perpetrated by willful misrepresentations. Sapp v. ABC Credit & Inv. Co., 243 Ga. 151 , 253 S.E.2d 82 (1979).

Actionable fraud cannot be based upon a promise as to future events; nor does actionable fraud arise from a mere failure to perform a promise. C.P.D. Chem. Co. v. National Car Rental Sys., 148 Ga. App. 756 , 252 S.E.2d 665 (1979).

The general rule is that fraud cannot be predicated upon statements which are promissory in their nature as to future acts. FDIC v. Lattimore Land Corp., 656 F.2d 139 (5th Cir. 1981).

A promise, even a false promise, to perform an act in the future is not a false pretense or false representation, and does not constitute the basis for an action for fraud. FDIC v. Lattimore Land Corp., 656 F.2d 139 (5th Cir. 1981).

Cited in Mangham v. Cobb, 160 Ga. 182 , 127 S.E. 408 (1925); Battle v. Williford, 160 Ga. 287 , 127 S.E. 762 (1925); Lathrop v. Miller, 164 Ga. 167 , 138 S.E. 50 (1927); Bryant v. Bush, 165 Ga. 252 , 140 S.E. 366 (1927); Collins v. Collins, 165 Ga. 198 , 140 S.E. 501 (1927); King Hdwe. Co. v. Ennis, 39 Ga. App. 355 , 147 S.E. 119 (1929); Boyles v. Morgan, 168 Ga. 804 , 149 S.E. 149 (1929); Thomas v. Couch, 171 Ga. 602 , 156 S.E. 206 (1930); Equitable Bldg. & Loan Ass'n v. Brady, 175 Ga. 43 , 164 S.E. 674 (1932); Morton v. Wallace, 177 Ga. 856 , 171 S.E. 720 (1933); Dover v. Burns, 186 Ga. 19 , 196 S.E. 785 (1938); Young v. Hirsch, 187 Ga. 1 , 199 S.E. 179 (1938); Beavers v. Williams, 199 Ga. 114 , 33 S.E.2d 343 (1945); McCommons v. Reid, 201 Ga. 500 , 40 S.E.2d 73 (1946); Hogg v. Hogg, 206 Ga. 691 , 58 S.E.2d 403 (1950); City of Dalton v. United States Fid. & Guar. Co., 216 Ga. 602 , 118 S.E.2d 475 (1961); Bagley v. Firestone Tire & Rubber Co., 104 Ga. App. 736 , 123 S.E.2d 179 (1961); Fuller v. Dillon, 220 Ga. 36 , 136 S.E.2d 733 (1964); Tripp v. Conner, 220 Ga. 2 , 136 S.E.2d 744 (1964); Bloodworth v. Bloodworth, 225 Ga. 379 , 169 S.E.2d 150 (1969); Walsh v. Campbell, 130 Ga. App. 194 , 202 S.E.2d 657 (1973); Hendrix v. Scarborough, 131 Ga. App. 342 , 206 S.E.2d 42 (1974); Thibadeau Co. v. McMillan, 132 Ga. App. 842 , 209 S.E.2d 236 (1974); Lewis v. Citizens & S. Nat'l Bank, 139 Ga. App. 855 , 229 S.E.2d 765 (1976); Shipman v. Horizon Corp., 245 Ga. 808 , 267 S.E.2d 244 (1980); Kessler v. Liberty Mut. Ins. Co., 157 Ga. App. 287 , 277 S.E.2d 257 (1981); Duncan v. Poythress, 515 F. Supp. 327 (N.D. Ga. 1981); Goodlett v. Ray Label Corp., 171 Ga. App. 377 , 319 S.E.2d 533 (1984); Palmer v. Neal, 602 F. Supp. 882 (N.D. Ga. 1984); Stanford v. Otto Niederer & Sons, 178 Ga. App. 56 , 341 S.E.2d 892 (1986); Tarbutton v. All That Tract or Parcel of Land Known as Carter Place, 641 F. Supp. 521 (M.D. Ga. 1986); Duracell, Inc. v. SW Consultants, Inc., 126 F.R.D. 571 (N.D. Ga. 1989); Holmes v. Drucker, 201 Ga. App. 687 , 411 S.E.2d 728 (1991); O'Berry v. Cooper, 202 Ga. App. 97 , 413 S.E.2d 736 (1991); McLendon v. Georgia Kaolin Co., 782 F. Supp. 1548 (M.D. Ga. 1992); Sears Mtg. Corp. v. Leeds Bldg. Prods., Inc., 219 Ga. App. 349 , 464 S.E.2d 907 (1995); Garbutt v. Southern Clays, Inc., 894 F. Supp. 456 (M.D. Ga. 1995); Kodadek v. Lieberman, 247 Ga. App. 606 , 545 S.E.2d 25 (2001); Wessinger v. Spivey (In re Galbreath), 475 Bankr. 749 (Bankr. S.D. Ga. 2003).

Fraud Generally

1. In General

Fraud is either actual or constructive, and either constitutes legal fraud. Jordan v. Belvin, 57 Ga. 719 , 196 S.E. 132 (1938); Gaultney v. Windham, 99 Ga. App. 800 , 109 S.E.2d 914 (1959).

Fraud may be actual or constructive; actual fraud consists in any kind of artifice by which another is deceived, and constructive fraud consists in any act of omission or commission, contrary to legal or equitable duty, trust, or confidence justly reposed, which is contrary to good conscience and operates to the injury of another. Brittain Bros. Co. v. Davis, 174 Ga. 1 , 161 S.E. 841 (1931).

Either actual or constructive fraud may consist in the misrepresentation of a material fact. Gaultney v. Windham, 99 Ga. App. 800 , 109 S.E.2d 914 (1959).

Fraud is exceedingly subtle in its nature and can be accomplished by infinite means; it may be perpetrated by signs and tricks, and even silence may in some instances amount to fraud. Sapp v. ABC Credit & Inv. Co., 243 Ga. 151 , 253 S.E.2d 82 (1979).

Fraud cannot consist of mere broken promises, unfulfilled predictions, or erroneous conjectures as to future events. C.P.D. Chem. Co. v. National Car Rental Sys., 148 Ga. App. 756 , 252 S.E.2d 665 (1979).

Constructive fraud, as well as actual fraud, voids the contract at the election of the injured party, and may authorize a rescission of a written release from liability. Southeastern Greyhound Lines v. Fisher, 72 Ga. App. 717 , 34 S.E.2d 906 (1945).

While only actual fraud will authorize an ex parte rescission of a sale of personalty so as to enable the aggrieved party to sue at law, as in trover, for property that he may have delivered to the other under the contract, a sale either of realty or of personalty may be rescinded by a court for mere constructive fraud, where the other essentials of the case are established. Puckett v. Reese, 203 Ga. 716 , 48 S.E.2d 297 (1948).

2. Misrepresentation Generally

Any misrepresentation intended to deceive and which does deceive is a fraud, for which a party is entitled to a remedy at law. Oliver v. O'Kelley, 48 Ga. App. 762 , 173 S.E. 232 (1934); Thompson v. Wilkins, 143 Ga. App. 739 , 240 S.E.2d 183 (1977).

In a suit by the seller for the purchase money of land, the defendant purchaser is entitled to plead that he was not put in possession of the premises and that the seller was guilty of false and fraudulent representations as to the existence of liens on the premises, and, upon proof of such facts, a verdict in his favor is authorized. Oliver v. O'Kelley, 48 Ga. App. 762 , 173 S.E. 232 (1934).

When the owner of land represented to the purchaser that there was no encumbrance against the premises sold, thereby inducing him to purchase it, and it was found later to be encumbered, this constituted a fraudulent representation for which relief will be given the purchaser. Oliver v. O'Kelley, 48 Ga. App. 762 , 173 S.E. 232 (1934).

A misrepresentation by a director to a person purchasing stock concerning the financial condition of the corporation is actionable. Daniel v. Dalton News Co., 48 Ga. App. 772 , 173 S.E. 727 (1934).

To state that a certain individual had signed contract as surety and that her signature was genuine was a misrepresentation of material existing fact, a fraudulent thing in law which would avoid the contract. W.T. Rawleigh Co. v. Kelly, 78 Ga. App. 10 , 50 S.E.2d 113 (1948).

Innocent misstatement may amount to negligence but is not fraud. Day v. Randolph, 159 Ga. App. 474 , 283 S.E.2d 687 (1981).

In the absence of a confidential relationship a party may not rely and act on the misrepresentations of an opposite party as to the contents of a written instrument where the party signing can read and where no artifice or fraud is practiced which prevents the party signing from reading the instrument. Robi v. Goldstein, 100 Ga. App. 606 , 112 S.E.2d 165 (1959).

In the absence of special circumstances one must exercise ordinary diligence in making an independent verification of contractual terms and representations, failure to do which will bar an action based on fraud. Hubert v. Beale Roofing, Inc., 158 Ga. App. 145 , 279 S.E.2d 336 (1981).

One cannot claim to be defrauded about a matter equally open to the observation of all parties where no special relation of trust or confidence exists. Hubert v. Beale Roofing, Inc., 158 Ga. App. 145 , 279 S.E.2d 336 (1981).

Misrepresentations are not actionable unless the hearer was justified in relying on them in the exercise of common prudence and diligence. Daugert v. Holland Furnace Co., 107 Ga. App. 566 , 130 S.E.2d 763 (1963).

Statements as to future acts merely promissory in their nature are not actionable. Boatman v. Citizens & S. Nat'l Bank, 155 Ga. App. 848 , 273 S.E.2d 190 (1980).

A misrepresentation of a present state of mind is actionable as fraud. McFarland v. Kim, 156 Ga. App. 781 , 275 S.E.2d 364 (1980).

If the plaintiffs represented to the defendant that they would sign a guarantee of defendant's obligations under the lease, knowing that they had no intention of ever doing this in the future, this would not be a broken promise as to a future act but would be a misrepresentation of a present state of mind and actionable as fraud. The failure of the plaintiffs to sign such a guarantee when presented to them by the landlord is some evidence that they had no intention at any time to complete that act. McFarland v. Kim, 156 Ga. App. 781 , 275 S.E.2d 364 (1980).

Misrepresentations as to a question of law cannot constitute remediable fraud, because everyone is presumed to know the law and therefore cannot in legal contemplation be deceived by erroneous statements of law, and such representations are ordinarily regarded as mere expressions of opinion. Sorrells v. Atlanta Transit Sys., 218 Ga. 623 , 129 S.E.2d 846 (1963).

Duty of party to protect self against fraud. - While a party must exercise reasonable diligence to protect himself against the fraud of another, he is not bound to exhaust all means at his command to ascertain the truth before relying upon the representations. Ordinarily the question whether the complaining party could have ascertained the falsity of the representations by proper diligence is for determination by the jury. Gaines v. Watts, 224 Ga. 321 , 161 S.E.2d 830 (1968).

When the means of knowledge are at hand and equally available to both parties to a contract of sale, if the purchaser does not avail himself of these means, he will not be heard to say, in impeachment of the contract, that he was deceived by the representations of the seller. Lorick v. Na-Churs Plant Food Co., 150 Ga. App. 209 , 257 S.E.2d 332 (1979).

3. Actual Fraud

Actual fraud predicated on intent. - Whether a fraud is actual depends on whether the false representation was made with the purpose and intent to deceive. Gaultney v. Windham, 99 Ga. App. 800 , 109 S.E.2d 914 (1959).

In any suit sounding in tort for damages on account of actual fraud, the gist of the action is the purpose and design to deceive. Gaultney v. Windham, 99 Ga. App. 800 , 109 S.E.2d 914 (1959).

Actual fraud involves moral guilt, since there must be an intentional purpose to deceive. Turner v. Ware, 2 Ga. App. 57 , 58 S.E. 310 (1907); Gaultney v. Windham, 99 Ga. App. 800 , 109 S.E.2d 914 (1959).

A material misrepresentation constituting actual fraud may give rise to an independent action in tort for deceit, to recover for damage thus occasioned. In such a suit it is necessary to show, not only that a material misrepresentation was made for the purpose of inducing the plaintiff to act, that he had a right to act, and that he did act thereon to his injury, but it must be shown that such representation was willfully and knowingly false, or what the law regards as the equivalent of knowledge, a reckless or fraudulent representation about that which the party pretends to know, but about which he knows that he does not know, and by which false pretense his purpose and intent is to deceive. Gaultney v. Windham, 99 Ga. App. 800 , 109 S.E.2d 914 (1959).

Essential elements. - A promise to take title to the property, farm it, pay off the debt existing thereon, and then to reconvey it to the plaintiff, made as an inducement or consideration for the execution of a deed by plaintiff, does not constitute fraud, so as to authorize cancellation of the deed, or a decree of specific performance of the agreement to convey, unless the promise was made with the present intention not to comply with it. A mere failure to comply with the promise would be insufficient to establish such fraudulent intent. Dixon v. Dixon, 211 Ga. 557 , 87 S.E.2d 369 (1955).

To allege fraud, the claimant must contend the defendant knowingly made a false representation with the intent and purpose of deceiving the plaintiff. Additionally, there must be a reliance on such representations and a loss sustained thereby. The misrepresentations must also relate to a preexisting or present fact and not statements or representations involving future conduct. Cone Mills Corp. v. A.G. Estes, Inc., 377 F. Supp. 222 (N.D. Ga. 1974).

In an independent affirmative action for fraud and deceit, which must be predicated upon actual fraud, the plaintiff must allege and prove the following essential ingredients: (1) the defendant made the representations; (2) at the time he knew they were false (or what the law regards as the equivalent of knowledge, a fraudulent or reckless representation of facts as true, which the party may not know to be false, if intended to deceive); (3) the defendant made the representations with the intention and purpose of deceiving the plaintiff; (4) the plaintiff relied upon such representations; (5) the plaintiff sustained the alleged loss and damage as the proximate result of their having been made; and (6) (an element frequently omitted in the cases enumerating the essentials), want of knowledge by the party alleged to have been deceived that the representation was false. It is essential that the plaintiff was deceived and there can be no deceit if the plaintiff knows that the representations upon which he is alleged to have acted were false. Gaultney v. Windham, 99 Ga. App. 800 , 109 S.E.2d 914 (1959); Romedy v. Willett Lincoln-Mercury, Inc., 136 Ga. App. 67 , 220 S.E.2d 74 (1975); C.P.D. Chem. Co. v. National Car Rental Sys., 148 Ga. App. 756 , 252 S.E.2d 665 (1979).

The five elements of fraud and deceit in Georgia are: (1) false representation made by the defendant; (2) scienter; (3) an intention to induce the plaintiff to act or refrain from acting in reliance by the plaintiff; (4) justifiable reliance by the plaintiff; and (5) damage to the plaintiff. Marriott Corp. v. American Academy of Psychotherapists, Inc., 157 Ga. App. 497 , 277 S.E.2d 785 (1981).

The five elements necessary to be shown in an action for fraud are that the misrepresentation or falsehood was knowingly made, that it related to a material fact, that its purpose was to deceive another and induce him to act, that he did act upon it and that he was injured as a result. Day v. Randolph, 159 Ga. App. 474 , 283 S.E.2d 687 (1981).

Actual fraud is not essential to support an action in equity to rescind a contract for fraud, or to a plea of fraud to a suit on a contract; innocently made material misrepresentations which the opposite party has a right to act on, and does act on to his injury, and which amount only to constructive fraud, being sufficient in these last two instances. By a parity of reasoning, actual fraud is not essential to the setting aside of an accord and satisfaction. Jordan v. Belvin, 57 Ga. 719 , 196 S.E. 132 (1938).

An independent action in tort for deceit must be grounded on actual fraud. Plough Broadcasting Co. v. Dobbs, 163 Ga. App. 264 , 293 S.E.2d 526 (1982).

A theft offense constitutes actual moral fraud, and the trial court did not err in failing to charge the differences between the two types of fraud where defendant admitted theft. Alford v. Oliver, 169 Ga. App. 865 , 315 S.E.2d 299 (1984).

Invoice practices constituted evidence from which a jury might have concluded that a contractor engaged in covert dealings with employee, and the employee's alleged destruction of business records might have been considered evidence of fraud under O.C.G.A. § 23-2-51 . GIW Indus. v. JerPeg Contr., Inc., 530 F. Supp. 2d 1323 (S.D. Ga. 2008).

4. Constructive Fraud

If a person having legal title to land, which fact he does not know but has convenient means of knowing, and after a lapse of 27 years, during which time he was under no legal disability, he still has not learned the fact of his interest in the land, and in those circumstances he induces one to buy the land from a third person by representations that the land is the property of such third person, his misrepresentations to the purchaser innocently made, coupled with his delay in ascertaining the truth, will amount to constructive fraud, and they may be pleaded as an estoppel by the purchaser on the faith of the title of his vendor. Lanier v. Bryant, 180 Ga. 409 , 179 S.E. 346 (1935).

Constructive fraud does not involve moral guilt, since it is the act itself, as taken in connection with the relationship of the parties, and not the guilty purpose or intent, which constitutes constructive fraud. Gaultney v. Windham, 99 Ga. App. 800 , 109 S.E.2d 914 (1959).

When insured furnished false evidence which was relied upon by the insurance company in reinstating insurance policies the insured was guilty of fraud in law which would avoid the policy, whether the insured was in good or bad faith and whether the insured intended to deceive or not. New York Life Ins. Co. v. Odom, 93 F.2d 641 (5th Cir. 1937), cert. denied, 304 U.S. 566, 58 S. Ct. 948 , 82 L. Ed. 1532 (1938).

When insured, in applying for reinstatement of life policies, furnishes false evidence which is relied on by the insurance company, one is guilty of fraud in law which avoids the policy whether one acts in good or bad faith and whether one intends to deceive or not. Life & Cas. Ins. Co. v. Davis, 62 Ga. App. 832 , 10 S.E.2d 129 (1940).

Innocent misrepresentations, when made by one charged with a special duty to the opposite party to know and to impart the truth, under the statutes and decisions of this state cannot amount to anything more than constructive fraud, and, as such, are not creative of any independent right of action for damages in tort in favor of the injured party; but they may support an action in equity to rescind a contract so induced or be pleaded in defense to a suit on a contract thus procured, or may, it might seem, under the doctrine of estoppel, be employed in support of an action founded on the contract itself. Gaultney v. Windham, 99 Ga. App. 800 , 109 S.E.2d 914 (1959).

Constructive fraud may arise out of any act of omission or commission, contrary to legal or equitable duty, trust or confidence justly reposed, which is contrary to good conscience and operates to the injury of another; constructive fraud may moreover be consistent with innocence and not smacking with moral guilt. Graham v. Hogan, 185 Ga. App. 842 , 366 S.E.2d 219 (1988).

"Contrary to good conscience" requirement. - Where there is no evidence of suppression, misrepresentation or concealment or bad faith so as to impute moral guilt, the mere omission of a matter from a document coupled with the failure to reveal the omission can hardly be even constructive fraud unless it is "contrary to good conscience." Rhodes v. Perimeter Properties, Inc., 187 Ga. App. 55 , 369 S.E.2d 332 (1988).

Knowledge not required. - Constructive fraud is legal fraud, but does not require knowledge or scienter. Macon-Bibb County Hosp. Auth. v. Georgia Kaolin Co., 646 F. Supp. 90 (M.D. Ga. 1986), aff'd, 817 F.2d 98 (11th Cir. 1987).

Evidence of constructive fraud. - When claimant was seeking workers' compensation benefits from the employer based on her alleged total disability and inability to work but at the same time she took this position before the Workers' Compensation Board, she was gainfully employed by a different employer, this is evidence sufficient to support the superior court's finding of constructive fraud. Dennington v. Rockdale Package Stores, Inc., 161 Ga. App. 450 , 288 S.E.2d 709 (1982).

Nondisclosure. - Nondisclosure may provide the basis for constructive fraud where a party is under an obligation to communicate. First Union Nat'l Bank v. Davies-Elliot, Inc., 207 Ga. App. 791 , 429 S.E.2d 161 (1993).

Even though a bank had a duty to notify its customer of a change in its signature verification procedures, where there was no evidence that the bank refrained from informing its customers in order to induce them to take or refrain from taking any certain action, there was no showing of constructive fraud. Eason Publications, Inc. v. Nationsbank, 217 Ga. App. 726 , 458 S.E.2d 899 (1995).

False identities. - Trial court properly granted summary judgment to the auto dealer, mortgage broker, and the lender on the accused person's contention that they committed constructive fraud by approving and acting upon the credit application filled out by another person who used the accused person's name to obtain the financing necessary to purchase a truck. Constructive fraud is an equitable doctrine that would not support the accused person's request for damages under these circumstances, especially since the evidence did not show they knew or should have known of the impropriety surrounding the transaction. Blakey v. Victory Equip. Sales, Inc., 259 Ga. App. 34 , 576 S.E.2d 38 (2002).

Confidential relationships. - Executor's claim that a brother and a wife committed constructive fraud by withdrawing money from a decedent's bank account while the decedent was living with them prior to the decedent's death was dismissed on summary judgment; even if a confidential relationship existed between the decedent and the brother and the wife, the executor could not seek money damages on a claim brought under O.C.G.A. § 23-2-51(b) . Rowland v. Rowland, F. Supp. 2d (N.D. Ga. Nov. 16, 2005).

Constructive fraud not found. - Superior court did not err in failing to vacate an order allowing an employee to change an authorized treating physician, as the employer failed to show that due to the employee's misleading service and the Board's loss of its pleadings, it was the victim of constructive fraud which amounted to the deprivation of due process; while the employer should have been served with the evidence presented to the administrative law judge, and the Board should have properly handled the employee's filings, the employer could not show that it suffered any harm or injury. MARTA v. Reid, 282 Ga. App. 877 , 640 S.E.2d 300 (2006).

No fraud shown on part of developer. - In an action brought by the purchasers of a lot seeking to cancel the developer's security deed based upon alleged fraud, the trial court properly granted summary judgment to the developer as, even if the developer knew of the sale of the lot to the purchasers, such sale did not estop the developer from the developer's claim against the lot pursuant to the developer's security deed; however, the trial court did err by denying the equitable subrogation claim asserted by the purchasers' lender since exercising subrogation did not prejudice the developer in any manner. Byers v. McGuire Props., 285 Ga. 530 , 679 S.E.2d 1 (2009), overruled on other grounds by SRM Group, Inc. v. Travelers Prop. Cas. Co. of Am., 308 Ga. 404 , 841 S.E.2d 729 (2020).

5. Inceptive Fraud

When the failure to perform the promised act is coupled with the present intention not to perform, fraud in the legal sense is present; this is known as inceptive fraud, and is sufficient to support an action for cancellation of a written instrument. Cone Mills Corp. v. A.G. Estes, Inc., 377 F. Supp. 222 (N.D. Ga. 1974).

Pleading and Practice

It is error to charge the jury concerning fraud when no harm was done the defendant nor was the defendant deceived or injured in any way as the result of the plaintiff attempting to write in an endorsement on a note which had actually been transferred to it but had not been properly endorsed. Associates Disct. Corp. v. Brantley, 102 Ga. App. 751 , 117 S.E.2d 916 (1960).

Diligence is question for jury. - It is the province of the jury to pass upon all the circumstances of the alleged fraud, and to determine whether or not the party defrauded exercised diligence in discovering the falsity of the misrepresentations. Daniel v. Dalton News Co., 48 Ga. App. 772 , 173 S.E. 727 (1934); Daugert v. Holland Furnace Co., 107 Ga. App. 566 , 130 S.E.2d 763 (1963).

The purchase by an administrator at one's own sale is not in itself fraud. Gormley v. Askew, 177 Ga. 554 , 170 S.E. 674 (1933).

Fraud and undue influence can rarely be established by direct proof, accordingly, both may be proved by indirect evidence and by proof of facts from which they may be inferred. Daniel v. Etheredge, 198 Ga. 191 , 31 S.E.2d 181 (1944).

Fraud and undue influence are not equivalent terms, but undue influence may be a species of fraud or it may exist without any positive fraud. Daniel v. Etheredge, 198 Ga. 191 , 31 S.E.2d 181 (1944).

In order to give rise to an action for damages, the defendant's fraud must be actual, i.e., the misrepresentation must be made either knowingly or with reckless disregard for the consequences. Irvin v. Lowe's of Gainesville, Inc., 165 Ga. App. 828 , 302 S.E.2d 734 (1983).

"Innocent" or "constructive" fraud exists only as an equitable doctrine and will not support an action in tort for damages. Irvin v. Lowe's of Gainesville, Inc., 165 Ga. App. 828 , 302 S.E.2d 734 (1983).

Fraud may be proved by showing a present intent to dishonor the promise to undertake a future act or present knowledge of the impossibility of an opinion. FDIC v. Lattimore Land Corp., 656 F.2d 139 (5th Cir. 1981).

Instructions. - It was error for court to charge jury on actual and constructive fraud in language of O.C.G.A. §§ 23-2-51 and 23-2-57 , but to neglect to charge on essential elements of actual fraud. Plough Broadcasting Co. v. Dobbs, 163 Ga. App. 264 , 293 S.E.2d 526 (1982).

General Consideration

Fraud is either actual or constructive, and either constitutes legal fraud. Jordan v. Belvin, 57 Ga. 719 , 196 S.E. 132 (1938); Southeastern Greyhound Lines v. Fisher, 72 Ga. App. 717 , 34 S.E.2d 906 (1945).

Legal fraud in concealment of corporate status. - Concealment by defendant of the financial status of the corporation when it was in fact a losing business facing lawsuits coupled with delivery of nonvoting stock instead of the promised voting stock constituted legal fraud when it was proven to the satisfaction of the jury. Adkins v. Lee, 127 Ga. App. 261 , 193 S.E.2d 252 (1972).

Constructive fraud. - Misrepresentation of a material fact, if made by mistake, and innocently, and acted on by the opposite party to one's injury, constitutes constructive fraud. Southeastern Greyhound Lines v. Fisher, 72 Ga. App. 717 , 34 S.E.2d 906 (1945).

Material misrepresentations in insurance applications. - In the case of fire and life insurance applications a misrepresentation is material if the misrepresentation changes the character, nature or extent of the risk. State Farm Mut. Ins. Co. v. Anderson, 107 Ga. App. 348 , 130 S.E.2d 144 , cert. dismissed, 219 Ga. 211 , 132 S.E.2d 556 (1963).

When it is shown that a material statement in an application is false which was known to the insured at the time the insured made it and it was made with a view toward obtaining the insurance, with the company having no knowledge of its falsity, when the company acted upon it to its injury, the law will conclusively presume an intent to deceive, and a case of actual fraud will be made out. State Farm Mut. Auto. Ins. Co. v. Anderson, 107 Ga. App. 348 , 130 S.E.2d 144 , cert. dismissed, 219 Ga. 211 , 132 S.E.2d 556 (1963).

Any misrepresentation intended to deceive and which does deceive is a fraud, for which a party is entitled to a remedy at law. Adkins v. Lee, 127 Ga. App. 261 , 193 S.E.2d 252 (1972).

In order for a fraud to be actionable, the representation relied on must be more than a promise which is void or unenforceable. Barrett v. Independent Order of Foresters, 625 F.2d 73 (5th Cir. 1980).

Statements as to the nature of insurance coverage are opinions of law and cannot be the basis of a cause of action for fraud. Macon-Bibb County Hosp. Auth. v. Georgia Kaolin Co., 646 F. Supp. 90 (M.D. Ga. 1986), aff'd, 817 F.2d 98 (11th Cir. 1987).

Knowledge of seller that product unavailable. - Salesman fraudulently induced customers to execute a sales contract by representing that "blue sculpted" carpet was available when he knew it was not or recklessly asserted the fact with intent to deceive. Country Pride Homes, Inc. v. DuBois, 201 Ga. App. 740 , 412 S.E.2d 282 (1991).

Civil fraud and theft by deception have different elements and showing that there are jury issues as to fraud does not necessarily show that there are jury issues as to theft by deception; a failure to show the level of intent needed for proving theft by deception would preclude a jury issue on that crime as a predicate act for RICO purposes, defeating a RICO claim. Avery v. Chrysler Motors Corp., 214 Ga. App. 602 , 448 S.E.2d 737 (1994).

Cited in Hixon v. Hinkle, 156 Ga. 341 , 118 S.E. 874 (1923); Mangham v. Cobb, 160 Ga. 182 , 127 S.E. 408 (1925); Nix v. Citizens Bank, 35 Ga. App. 55 , 132 S.E. 249 (1926); Penn Mut. Life Ins. Co. v. Taggart, 38 Ga. App. 509 , 144 S.E. 400 (1928); Hamlin v. Johns, 166 Ga. 880 , 144 S.E. 659 (1928); Lancaster v. Neal, 41 Ga. App. 721 , 154 S.E. 386 (1930); Equitable Bldg. & Loan Ass'n v. Brady, 175 Ga. 43 , 164 S.E. 674 (1932); Wall v. Wall, 176 Ga. 757 , 168 S.E. 893 (1933); Roper v. White, 178 Ga. 293 , 173 S.E. 115 (1934); Dover v. Burns, 186 Ga. 19 , 196 S.E. 785 (1938); Crowell v. Brim, 191 Ga. 288 , 12 S.E.2d 585 (1940); Norwood v. Norwood, 207 Ga. 148 , 60 S.E.2d 449 (1950); Patterson v. Correll, 92 Ga. App. 214 , 88 S.E.2d 327 (1955); Sorrells v. Atlanta Transit Sys., 218 Ga. 623 , 129 S.E.2d 846 (1963); Walsh v. Campbell, 130 Ga. App. 194 , 202 S.E.2d 657 (1973); Thibadeau Co. v. McMillan, 132 Ga. App. 842 , 209 S.E.2d 236 (1974); City of Jesup v. Spivey, 133 Ga. App. 403 , 210 S.E.2d 859 (1974); Clements v. Warner Robins Supply Co., 235 Ga. 612 , 221 S.E.2d 35 (1975); North Peachtree I-285 Properties, Ltd. v. Hicks, 136 Ga. App. 426 , 221 S.E.2d 607 (1975); McClure v. Thomas Cook, Inc., 158 Ga. App. 467 , 280 S.E.2d 876 (1981); Everson v. Franklin Disct. Co., 248 Ga. 811 , 285 S.E.2d 530 (1982); Bill Spreen Toyota, Inc. v. Jenquin, 163 Ga. App. 855 , 294 S.E.2d 533 (1982); Rhodes v. Perimeter Properties, Inc., 187 Ga. App. 55 , 369 S.E.2d 332 (1988); O'Brien v. Union Oil Co., 699 F. Supp. 1562 (N.D. Ga. 1988); Johnson Realty, Inc. v. Hand, 189 Ga. App. 706 , 377 S.E.2d 176 (1988); Vickers v. Roadway Express, Inc., 210 Ga. App. 78 , 435 S.E.2d 253 (1993); In re Dukes, 213 Bankr. 202 (Bankr. S.D. Ga. 1997); Sellers Bros., Inc. v. Imperial Flowers, Inc., 232 Ga. App. 687 , 503 S.E.2d 573 (1998); GE Life & Annuity Assur. Co. v. Donaldson, 189 F. Supp. 2d 1348 (M.D. Ga. 2002); GE Life & Annuity Assur. Co. v. Barbour, 189 F. Supp. 2d 1360 (M.D. Ga. 2002); McBride v. Life Ins. Co., 190 F. Supp. 2d 1366 (M.D. Ga. 2002); GE Life & Annuity Assur. Co. v. Barbour, 191 F. Supp. 2d 1375 (M.D. Ga. 2002); GE Life & Annuity Assur. Co. v. Combs, 191 F. Supp. 2d 1364 (M.D. Ga. 2002); J'Carpc, LLC v. Wilkins, 545 F. Supp. 2d 1330 (N.D. Ga. 2008).

Remedies

1. In General

Election of remedies. - When a vendee is induced to enter into a contract for the purchase of land by the fraud of the vendor, when the former discovers the fraud he has an election of remedies. One of such remedies is to rescind the contract, and another is to affirm the contract and sue for damages for the fraud. Price v. Mitchell, 154 Ga. App. 523 , 268 S.E.2d 743 (1980).

2. Rescission

Rescission of transaction based on misrepresentation authorized. - Material misrepresentation, made for the purpose of inducing another to execute a promissory note, will authorize the maker, after executing the note, to rescind the transaction on discovery of the fraud, if the maker relied upon the representation and was induced thereby to execute the note. Thompson v. Wilkins, 143 Ga. App. 739 , 240 S.E.2d 183 (1977).

A promise to do a certain thing for the benefit of the promisee, made to induce his entrance into a contract, the promisee earnestly believing that he would receive the benefits consequent upon the fulfillment of the promise, when at the time of making the promise there was no intention on the part of the promisor to fulfill it, but, on the contrary, the promise was made with intent not to fulfill it and was uttered as a mere scheme or device to defraud, is such a fraud as will void any contract induced thereby. A promise thus fraudulently made will authorize rescission of a written instrument purporting to be a contract. Price v. Mitchell, 154 Ga. App. 523 , 268 S.E.2d 743 (1980).

Constructive fraud, as well as actual fraud, voids the contract at the election of the injured party, and may authorize a rescission of a written release from liability. Southeastern Greyhound Lines v. Fisher, 72 Ga. App. 717 , 34 S.E.2d 906 (1945).

A material representation falsely made by a vendor to a vendee to induce a sale, and made with knowledge of its falsity and acted upon to the vendee's injury, amounts to actual fraud, and will void a contract, and authorize rescission by the vendee if he acts promptly after discovery of the fraud and restores or offers to restore whatever of value he has received by virtue of the contract. Price v. Mitchell, 154 Ga. App. 523 , 268 S.E.2d 743 (1980).

3. Damages

Damages generally. - Misrepresentation of a material fact, made by one of the parties to a contract, though made by mistake, and innocently, if acted on by the opposite party, constitutes legal fraud, and the party injured in consequence thereof may set up the damages thus arising in defense to an action upon the contract. Morton v. W.T. Tharpe & Co., 41 Ga. App. 788 , 154 S.E. 716 (1930).

When a vendor agrees to sell a designated tract of land to another and points out to the latter its boundaries and if such boundaries include lands to which the vendor has no title, in consequence of which the purchaser loses the land, the purchaser can setoff at law the value of the portion of the land so lost, against the purchase money whether the representations were designedly made by the vendor to deceive the purchaser, or were innocently made. Bonner v. Cotton, 223 Ga. 843 , 159 S.E.2d 61 (1968).

When there is a material misrepresentation, a policy (of insurance) may be voided. State Farm Mut. Ins. Co. v. Anderson, 107 Ga. App. 348 , 130 S.E.2d 144 , cert. dismissed, 219 Ga. 211 , 132 S.E.2d 556 (1963).

Voiding insurance policy when guilty of fraud. - When insured furnished false evidence which was relied upon by the insurance company in reinstating insurance policies the insured was guilty of fraud in law which would void the policy, whether the insured was in good or bad faith and whether the insured intended to deceive or not. New York Life Ins. Co. v. Odom, 93 F.2d 641 (5th Cir. 1937), cert. denied, 304 U.S. 566, 58 S. Ct. 948 , 82 L. Ed. 1532 (1938).

Ordinary Diligence

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

While the doctrine of caveat emptor would charge the purchaser with looking out for the title which the seller had to the tract offered for sale as his, it would not charge him with looking out for the boundaries of that tract when the seller undertook to locate and point them out, thus professing to know them sufficiently to enable them to furnish this information to purchasers instead of leaving the latter to their own resources in acquiring the information. Bonner v. Cotton, 223 Ga. 843 , 159 S.E.2d 61 (1968).

Blind reliance exists where it cannot be said that the purchase originated in fraud so much as in the carelessness of the purchaser to exercise ordinary care for his own interest. Adkins v. Lee, 127 Ga. App. 261 , 193 S.E.2d 252 (1972).

One cannot claim to be defrauded by the false representation of another when, by the exercise of ordinary diligence, such person could have discovered the falsity of the representations before acting thereon. Barrett v. Independent Order of Foresters, 625 F.2d 73 (5th Cir. 1980).

Failure to open trunk of car represented as new. - It cannot be said as a matter of law that failure of plaintiff to open trunk of car represented as new in order to inspect for damage, either at time of purchase or within three and a half months thereafter amounted to failure of due diligence. Horne v. Claude Ray Ford Sales, Inc., 162 Ga. App. 329 , 290 S.E.2d 497 (1982).

Pleading and Practice

In order to give rise to an action for damages, the defendant's fraud must be actual, i.e., the misrepresentation must be made either knowingly or with reckless disregard for the consequences. Irvin v. Lowe's of Gainesville, Inc., 165 Ga. App. 828 , 302 S.E.2d 734 (1983).

"Innocent" or "constructive" fraud exists only as an equitable doctrine and will not support an action in tort for damages. Irvin v. Lowe's of Gainesville, Inc., 165 Ga. App. 828 , 302 S.E.2d 734 (1983).

Questions of fraud, bad faith and materiality of misrepresentation are ordinarily for a jury. Adkins v. Lee, 127 Ga. App. 261 , 193 S.E.2d 252 (1972).

A contention that fraud is a personal defense or plea, and could be made only by the party deceived, is without merit. Houston v. Horton, 202 Ga. 307 , 43 S.E.2d 90 (1947).

General Consideration

Construction of section. - This section is remedial in nature, is designed for the suppression of fraud, and should be liberally construed. Kay Jewelry Co. v. Kapiloff, 204 Ga. 209 , 49 S.E.2d 19 (1948).

Application of section. - In place of an affirmative showing of specific intent, Georgia courts will apply this section when it is shown that: (1) the defendant was put on notice or had knowledge of the plaintiff's trade name and (2) the similarity in names is likely to confuse or mislead the public. Thompson v. Alpine Motor Lodge, Inc., 296 F.2d 497 (5th Cir. 1961).

Damages already sustained recoverable. - Plaintiff seeking damages for trade name use infringement may seek recovery for damage already sustained where the illegal use has not ceased. Miller & Meier & Assocs. v. Diedrich, 174 Ga. App. 249 , 329 S.E.2d 918 , aff'd in part, rev'd in part on other grounds, 254 Ga. 734 , 334 S.E.2d 308 (1985).

Cited in Gordy v. Dunwody, 209 Ga. 627 , 74 S.E.2d 886 (1953); East Ga. Motor Club v. AAA Fin. Co., 212 Ga. 408 , 93 S.E.2d 337 (1956); Royal v. Royal Poultry Co., 213 Ga. 813 , 102 S.E.2d 44 (1958); Pearl Optical, Inc. v. Pearle Optical of Ga., Inc., 218 Ga. 701 , 130 S.E.2d 223 (1963); Multiple Listing Serv. v. Metropolitan Multi-List, 225 Ga. 129 , 166 S.E.2d 356 (1969); White's Wig Imports v. Wigmaster's Import Co., 226 Ga. 779 , 177 S.E.2d 678 (1970); Tri-State Culvert Mfg., Inc. v. Tri-State Drainage Prods., Inc., 236 Ga. 157 , 223 S.E.2d 202 (1976); Rolls-Royce Motors, Ltd. v. A & A Fiberglass, Inc., 428 F. Supp. 689 (N.D. Ga. 1977); Robert B. Vance & Assocs. v. Baronet Corp., 487 F. Supp. 790 (N.D. Ga. 1979); Original Appalachian Artworks, Inc. v. Toy Loft, Inc., 489 F. Supp. 174 (N.D. Ga. 1980); Southern Bell Tel. & Tel. Co. v. Associated Tel. Directory Publishers, 756 F.2d 801 (11th Cir. 1985); Morton B. Katz & Assocs. v. Arnold, 175 Ga. App. 278 , 333 S.E.2d 115 (1985).

Prior Use

1. Trade Name

Effect of prior use of trade name. - While generic names, geographical names, and names composed of words which are merely descriptive are incapable of exclusive appropriation, words or names which have a primary meaning of their own, such as words descriptive of the goods, service, or place where they are made, or the name of the maker, may nevertheless, by long use in connection with the business of the particular trade, come to be understood by the public as designating the goods, service, or business of a particular trader. Multiple Listing Serv., Inc. v. Metropolitan Multi-List, Inc., 223 Ga. 837 , 159 S.E.2d 52 (1968), later appeal, Kidd v. Finch, 188 Ga. 492 , 4 S.E.2d 187 (1939).

A person, by long and exclusive use, may acquire a trade name; and when thus acquired, such trade name is as much descriptive of the manufacturer or producer as is his own name, and the infringement of such trade name of an individual will be enjoined by a court of equity when a proper case is made. Womble v. Parker, 208 Ga. 378 , 67 S.E.2d 133 (1951).

Knowledge of prior use of trade name raises presumption of fraud. - When a person knows of a trade name used by another person, and, notwithstanding this knowledge, uses a similar name in his own business operations, the courts will presume that he has encroached upon the name of the other intentionally and fraudulently. Womble v. Parker, 208 Ga. 378 , 67 S.E.2d 133 (1951); Thompson v. Alpine Motor Lodge, Inc., 296 F.2d 497 (5th Cir. 1961).

Because plaintiff corporation produced no evidence from which a reasonable jury could have concluded that it had exclusively and continuously used "CCI" as a trade name such that it was entitled to trade name protection, the corporation's claim for trade name infringement under O.C.G.A. § 23-2-55 was summarily dismissed. Corrpro Cos. v. Meier, F. Supp. 2d (M.D. Ga. Oct. 5, 2007).

2. Color

Effect of prior use of particular color. - While the color of merchandise or its wrapper or container may be one of the important indicia of a fraudulent purpose, if accompanied by other confusing factors such as size, shape, name, printing, or design in the make-up of the article, yet color alone, except possibly where some peculiar and distinctive combination of colors is employed, is not sufficient to establish fraudulent intent, since no one is permitted from the mere prior use of such an all-belonging thing as a color to obtain a monopoly in its use for any particular purpose. Seybold Baking Co. v. Derst Baking Co., 196 Ga. 391 , 26 S.E.2d 536 (1943).

Testimony of defendant's manager, that he was forced to discontinue less expensive white waxed paper and use more costly "tango" colored cellophane wrapper for his whole wheat bread in order to meet the competition of the plaintiff, could not be taken to establish a fraudulent purpose as a matter of fact, when the act itself did not so indicate, where he also testified that cellophane was a more desirable and more attractive wrapper, and that the color was a more suitable and appropriate transparent wrapper for the brown bread, and where the product was without any other similarities as to the plainly printed labels both inside and outside the wrapper, the ones outside being strikingly different in color. Seybold Baking Co. v. Derst Baking Co., 196 Ga. 391 , 26 S.E.2d 536 (1943).

Unfair Competition

1. In General

The general purpose of the law controlling trade names and unfair competition is the prevention of fraudulent interference with rights of the lawful holder of a trade name and protection of the public from imposition. Thompson v. Alpine Motor Lodge, Inc., 296 F.2d 497 (5th Cir. 1961).

The basic principle of the law of unfair competition is that no one has a right to dress up his goods or business or otherwise represent the same in such a manner as to deceive an intending purchaser and induce him to believe he is buying the goods of another, and that no one has the right to avail himself of another's favorable reputation in order to sell his own goods. Thompson v. Alpine Motor Lodge, Inc., 296 F.2d 497 (5th Cir. 1961).

The good will and reputation of a business is as much an asset as its physical properties, and it may as well be the subject of a fraudulent encroachment by an infringer. Kay Jewelry Co. v. Kapiloff, 204 Ga. 209 , 49 S.E.2d 19 (1948).

An encroachment on the business of another may be made without direct market competition. Gordy v. Dunwody, 209 Ga. 627 , 74 S.E.2d 886 (1953), later appeal, 210 Ga. 810 , 83 S.E.2d 7 (1954).

The words "encroach upon the business of a trader" cannot be said to limit the equitable relief available to those in direct and actual market competition with an alleged infringer or to those cases where it is shown that there has been an actual diversion of trade from one business to another. Kay Jewelry Co. v. Kapiloff, 204 Ga. 209 , 49 S.E.2d 19 (1948).

2. Confusing Similarity

Similarity must confuse the public. - Unless it appears that there is or will probably be a deception of ordinary buyers and the general public into thinking that the goods or business of one is the business or goods of another and thus bring about the sale of one man's goods as the goods of the other, the case is damnum absque injuria for which no action lies. Atlanta Paper Co. v. Jacksonville Paper Co., 184 Ga. 205 , 190 S.E. 777 (1937).

While geographical names and words which are merely descriptive are not generally the subject of exclusive appropriation as trade-marks or trade-names, such names and words when used so long and exclusively by a trader, manufacturer, or producer that they are generally understood to designate his business or merchandise, may acquire a secondary signification or meaning indicative not only of the place of manufacture, but of the name of the manufacturer or producer, or of the character of the product, so that the name or title thus employed, including the geographical name and descriptive words, may be the subject of protection against unfair competition in trade, and authorize equity to enjoin a newcomer competitor from the appropriation and use of a trade-name or trade-mark bearing such resemblances to those of the pioneer as to be likely to produce uncertainty and confusion, and to pass off the goods or business of one as those of the other. Womble v. Parker, 208 Ga. 378 , 67 S.E.2d 133 (1951).

Although the rights in a trade name are exclusive within certain geographical limits, this section does not create rights good against anyone, anywhere. The outer limits are set by the requirement that the plaintiff must show a similarity that is confusing to the public. Thompson v. Alpine Motor Lodge, Inc., 296 F.2d 497 (5th Cir. 1961).

An infringement upon the real name or trade-name of an individual or corporation is such a colorable imitation of the name that the general public, in the exercise of ordinary care, might think that it is the name of the individual or corporation first appropriating the name. Multiple Listing Serv., Inc. v. Metropolitan Multi-List, Inc., 223 Ga. 837 , 159 S.E.2d 52 (1968), later appeal, 225 Ga. 129 , 166 S.E.2d 356 (1969).

Actual confusion. - Promoter presented sufficient evidence of the strength of the promoter's marks and of actual confusion amongst the relevant consumer class to avoid summary judgment, and the appellate court reversed the district court's grant of summary judgment for the group and remanded for trial on the claims of infringement under the Lanham Act, 15 U.S.C. § 1114, false designation of origin under 15 U.S.C. § 1125, deceptive trade practices under O.C.G.A. § 10-1-372 and unfair competition under O.C.G.A. § 23-2-55 et seq., because: (1) the car dealership promoter had shown actual confusion and the district court erred by overvaluing lack of confusion exhibited by the general public; (2) "Slash-It! Sales Event" attained federal incontestable status, so the district court erred in holding that the mark was merely descriptive and not entitled to strong protection; (3) the promoter created a disputed issue of material fact that the slasher slogans left the same impression, weighing in favor of likelihood of confusion; and (4) the similarities between the two sales allowed for the inference that a reasonable consumer could possibly attribute the products here to the same source. Caliber Auto. Liquidators, Inc. v. Premier Chrysler, Jeep, Dodge, LLC, 605 F.3d 931 (11th Cir. 2010).

Confusion found. - Summary judgment was inappropriate as to trademark infringement liability and unfair competition claims because while the "Xylem" mark was at least suggestive, the marks were substantially similar, and the trademark holder documented over 100 instances of actual confusion resulting from misdirected checks, phone calls, faxes, and emails, the court could not find that no reasonable juror would find there was no confusion created by the accused infringer's use of the Xylem name and mark. ITT Corp. v. Xylem Group, LLC, F. Supp. 2d (N.D. Ga. Aug. 5, 2013).

3. Proof

A. In General

Grant of equitable relief notwithstanding absence of evidence of actual unfair competition authorized. - It is not essential, as a prerequisite to the granting of equitable relief in an action for infringement of a trade name, that actual and direct market competition between the litigants be shown, and that the test as to whether equitable relief is available, should not be limited to those cases where it is shown that there has been an actual diversion of trade from one business to another. Kay Jewelry Co. v. Kapiloff, 204 Ga. 209 , 49 S.E.2d 19 (1948).

The early common-law rule, and the rule still maintained in some jurisdictions, has been to the effect that there must be shown actual or direct competition between the litigants as an essential prerequisite to relief in an action for infringement of a trade name or unfair trade competition. Under this view, the exclusive test is whether there is a diversion of trade from one business to another, and injury to the good will and reputation of the original user of the trade name, or other injuries as contemplated by the theories of relief afford no basis for equitable relief. Under the modern view, the emphasis is no longer on direct and actual market competition, or diversion of trade from one business to another, but rather on the injury suffered by the complaining party and the public from the confusion resulting from the infringer's acts. Kay Jewelry Co. v. Kapiloff, 204 Ga. 209 , 49 S.E.2d 19 (1948).

Diversion of trade and the attendant direct loss of sales is not the only injury that may result from infringement of a trade name, but other injuries would necessarily follow, such as an injury to the complaining party's reputation and good will. Kay Jewelry Co. v. Kapiloff, 204 Ga. 209 , 49 S.E.2d 19 (1948).

Plaintiff's established infringement of trade name warranting injunction. - Plaintiffs made requisite showing that trade name reacquired upon foreclosure of their security interest had acquired such a secondary meaning and that defaulting buyers knowingly had adopted a confusingly similar name, which had in fact confused plaintiffs' former customers, thus entitling plaintiffs to injunction. Reis v. Ralls, 250 Ga. 721 , 301 S.E.2d 40 (1983).

B. "Passing Off" Rule

The "passing off" rule is sufficient to afford a test as to whether there is unfair competition. The test under this rule is whether the goods or business of one are in fact "passed off" as the goods or business of another, and it has been said, in cases between litigants in actual and direct market competition, that nothing less than such conduct will constitute unfair competition. Kay Jewelry Co. v. Kapiloff, 204 Ga. 209 , 49 S.E.2d 19 (1948).

Actionable unfair competition. - Any conduct, the nature and probable tendency and effect of which is to deceive the public so as to pass off the goods or business of one person as and for the goods or business of another, constitutes actionable unfair competition. The essence thereof consists in the sale of the goods of one manufacturer or vendor for those of another. Atlanta Paper Co. v. Jacksonville Paper Co., 184 Ga. 205 , 190 S.E. 777 (1937).

Any conduct, the nature and probable tendency and effect of which is to deceive the public so as to pass off the goods or business of one person as and for the goods or business of another, constitutes actionable unfair competition. Thompson v. Alpine Motor Lodge, Inc., 296 F.2d 497 (5th Cir. 1961).

C. Intent to Deceive

Intent to deceive public as basis of unfair competition. - In Georgia, to have a word or words claimed as a trade mark protected by injunction from use by another, it should appear that the defendant's use of them was with intent to deceive or mislead the public. Atlanta Paper Co. v. Jacksonville Paper Co., 184 Ga. 205 , 190 S.E. 777 (1937).

Relief depends upon showing of intent to deceive. However, this intent may be presumed if encroachment is done with knowledge of the prior right. Giant Mart Corp. v. Giant Disct. Foods, Inc., 247 Ga. 775 , 279 S.E.2d 683 (1981).

Words, acts and conduct prove intent, and are the usual and ordinary means adopted by courts of justice to establish it. Thompson v. Alpine Motor Lodge, Inc., 296 F.2d 497 (5th Cir. 1961).

Although intent must be found to warrant an injunction, when it comes to finding intent courts look to the effect of a defendant's "words, acts and conduct" and ask the objective questions of whether the plaintiff held an exclusive right to the trade mark or name and whether the defendant encroached upon it. Thompson v. Alpine Motor Lodge, Inc., 296 F.2d 497 (5th Cir. 1961).

Finding of intent to deceive. - Injunctive relief cannot be grounded on O.C.G.A. § 23-2-55 if the court makes no finding of intent to deceive. Giant Mart Corp. v. Giant Disct. Foods, Inc., 247 Ga. 775 , 279 S.E.2d 683 (1981).

Intent may be presumed if encroachment is done with knowledge of the prior right. Giant Mart Corp. v. Giant Disct. Foods, Inc., 247 Ga. 775 , 279 S.E.2d 683 (1981).

Knowing and willing participant in alteration of cellular telephones. - Because plaintiff cellular telephone trademark holder's complaint properly alleged that defendant competitor was a knowing and willing participant in an enterprise that bought the holder's phones in bulk then altered the phones to circumvent prepaid airtime then resold those phones under the holder's marks, the complaint properly stated claims for unfair competition and deceptive trade practices. Tracfone Wireless, Inc. v. Zip Wireless Prods., 716 F. Supp. 2d 1275 (N.D. Ga. 2010).

General Consideration

This section is particularly applicable in family transactions. Mattox v. West, 194 Ga. 310 , 21 S.E.2d 428 (1942).

This section is peculiarly applicable in transactions between husband and wife. Strobel v. Gormley, 50 Ga. App. 358 , 178 S.E. 192 (1935).

Section not applicable to suits to set aside judgments. - Rule that fraud may be shown by slight circumstances, contained in O.C.G.A. § 23-2-57 , is not applicable to suits to set aside judgments. Leventhal v. Citizens & S. Nat'l Bank, 249 Ga. 390 , 291 S.E.2d 222 (1982).

Fraud may not be presumed, and while it may be proved by circumstances, it must nevertheless be proved. Adams v. Higginbotham, 194 Ga. 292 , 21 S.E.2d 616 (1942); Kazakos v. Soteres, 120 Ga. App. 258 , 170 S.E.2d 50 (1969); Henry v. Allstate Ins. Co., 129 Ga. App. 223 , 199 S.E.2d 338 (1973).

Though a transaction between near relatives is to be scanned closely, yet some proof of its fraudulent nature must appear, and until that proof appears this rule has no application. Kamlapat v. Purvis-Wade Carpet Mills, 112 Ga. App. 781 , 146 S.E.2d 138 (1965).

Circumstances creating a mere suspicion are not sufficient to prove fraud. Watson v. Brown, 186 Ga. 728 , 198 S.E. 732 (1938); Kamlapat v. Purvis-Wade Carpet Mills, 112 Ga. App. 781 , 146 S.E.2d 138 (1965).

Fraud is "in itself subtle," and circumstances apparently trivial or almost inconclusive, if separately considered, may by their number and joint operation be sufficient to constitute conclusive proof. Grainger v. Jackson, 122 Ga. App. 123 , 176 S.E.2d 279 (1970); McNeil v. Cowart, 186 Ga. App. 411 , 367 S.E.2d 291 (1988); Lloyd v. Kramer, 233 Ga. App. 372 , 503 S.E.2d 632 (1998).

Transfers of assets before death. - Evidence was sufficient to sustain the jury's verdict under the plaintif's theory of fraudulent transfer and civil conspiracy as some evidence authorized the jury to find that a deed conveying the property owner's sole interest to the real property to the owner and one defendant as joint tenants with right of survivorship without any money exchanged prior to death was to evade the plaintiff before a promissory note was paid. Bloom v. Camp, 336 Ga. App. 891 , 785 S.E.2d 573 (2016).

Fraud in post-nuptial agreements. - After the husband engaged counsel to draw up a formal post-nuptial agreement, and the husband moved to enforce the agreement when the wife filed for divorce, the post-nuptial agreement was unenforceable as the wife testified that the wife signed the agreement because the husband represented to the wife that, if the wife signed the agreement, the husband would understand that the wife loved the husband, and the husband would tear up the agreement; the husband procured the wife's signature on the agreement under the pretense that the agreement would never be enforced and, in fact, that the agreement would be destroyed, and the evidence was sufficient to establish the existence of fraud in procuring the agreement. Murray v. Murray, 299 Ga. 703 , 791 S.E.2d 816 (2016).

Cited in Haas & Howell v. Godby, 33 Ga. App. 218 , 125 S.E. 897 (1924); Carter v. Moody, 160 Ga. 849 , 129 S.E. 163 (1925); Boyles v. Morgan, 168 Ga. 804 , 149 S.E. 149 (1929); Citizens & S. Nat'l Bank v. Kontz, 185 Ga. 131 , 194 S.E. 536 (1937); Dwight v. Acme Lumber & Supply Co., 189 Ga. 473 , 6 S.E.2d 586 (1939); Durham Iron Co. v. Durham, 62 Ga. App. 361 , 7 S.E.2d 804 (1940); Horton v. Johnson, 192 Ga. 338 , 15 S.E.2d 605 (1941); Quinton v. Peck, 195 Ga. 299 , 24 S.E.2d 36 (1943); Jones v. Hogans, 197 Ga. 404 , 29 S.E.2d 568 (1944); Scott v. Gillis, 202 Ga. 220 , 43 S.E.2d 95 (1947); Boney v. Smallwood, 202 Ga. 411 , 43 S.E.2d 271 (1947); Hinchcliffe v. Pinson, 87 Ga. App. 526 , 74 S.E.2d 497 (1953); Rountree v. Davis, 90 Ga. App. 223 , 82 S.E.2d 716 (1954); Tillman v. Byrd, 211 Ga. 918 , 89 S.E.2d 479 (1955); Griffin v. Kelley, 227 F.2d 258 (5th Cir. 1955); Sutton v. McMillan, 213 Ga. 90 , 97 S.E.2d 139 (1957); Leverett v. Awnings, Inc., 97 Ga. App. 811 , 104 S.E.2d 686 (1958); Walker v. General Ins. Co., 214 Ga. 758 , 107 S.E.2d 836 (1959); Powell v. Grimes, 223 Ga. 56 , 153 S.E.2d 434 (1967); Patterson v. Castellaw, 119 Ga. App. 712 , 168 S.E.2d 838 (1969); Parker v. Spurlin, 227 Ga. 183 , 179 S.E.2d 251 (1971); Darden v. Darden, 227 Ga. 647 , 182 S.E.2d 480 (1971); W.H. Mulherin Constr. Co. v. Betterton, 135 Ga. App. 223 , 217 S.E.2d 454 (1975); Clark v. Aenchbacher, 143 Ga. App. 282 , 238 S.E.2d 442 (1977); Tolar Constr. Co. v. GAF Corp., 154 Ga. App. 127 , 267 S.E.2d 635 (1980); Bob Maddox Dodge, Inc. v. McKie, 155 Ga. App. 263 , 270 S.E.2d 690 (1980); Rose Mill Homes, Inc. v. Michel, 155 Ga. App. 808 , 273 S.E.2d 211 (1980); Sanders v. Looney, 247 Ga. 379 , 276 S.E.2d 569 (1981); Marriott Corp. v. American Academy of Psychotherapists, Inc., 157 Ga. App. 497 , 277 S.E.2d 785 (1981); Everson v. Franklin Disct. Co., 248 Ga. 811 , 285 S.E.2d 530 (1982); McGaha v. Kwon, 161 Ga. App. 216 , 288 S.E.2d 289 (1982); Plough Broadcasting Co. v. Dobbs, 163 Ga. App. 264 , 293 S.E.2d 526 (1982); Marshall v. York, 165 Ga. App. 795 , 302 S.E.2d 711 (1983); Lenny's, Inc. v. Allied Sign Erectors, Inc., 170 Ga. App. 706 , 318 S.E.2d 140 (1984); Macon ChryslerPlymouth v. Sentell, 179 Ga. App. 754 , 347 S.E.2d 639 (1986); Jackson v. Paces Ferry Dodge, Inc., 183 Ga. App. 502 , 359 S.E.2d 412 (1987); Graham v. Hogan, 185 Ga. App. 842 , 366 S.E.2d 219 (1988); Harden v. Vertex Assocs., 226 Ga. App. 322 , 487 S.E.2d 12 (1997); Chandler v. MVM Constr., Inc., 232 Ga. App. 385 , 501 S.E.2d 533 (1998); ReMax North Atlanta v. Clark, 244 Ga. App. 890 , 537 S.E.2d 138 (2000).

Proving Existence of Fraud

Proof of fraud generally. - Since proof of fraud is seldom if ever possible by direct evidence, recourse to circumstantial evidence is a necessity, and there is no kind of action wherein it can be held with greater reason that the fact in issue may be inferred from other facts proved. Durrence v. Durrence, 224 Ga. 620 , 163 S.E.2d 740 (1968).

Rarely, if ever, can a fraudulent intent be shown by direct proof, and when transactions between relatives are under review, slight circumstances are often sufficient to induce belief on the part of the jury that there was fraud between the parties. Bucher v. Murray, 212 Ga. 259 , 91 S.E.2d 610 (1956).

Attack on wills. - An attack on a will as having been obtained by undue influence may be supported by a wide range of testimony, since such influence can seldom be shown except by circumstantial evidence. Thus, a confidential relation between the parties, the reasonableness or unreasonableness of the disposition of the testator's estate, old age, or disease affecting the strength of the mind, tending to support any other direct testimony or any other proven fact or circumstance going to show the exercise of undue influence on the mind and will of the testator, are relevant. While the quantity of influence varies with the circumstances of each case, according to the relations existing between the parties and the strength or weakness of mind of the testator, the amount of influence necessary to dominate a mind impaired by age or disease may be decidedly less than that required to control a strong mind. Bowman v. Bowman, 205 Ga. 796 , 55 S.E.2d 298 (1949).

Amount of influence required to control weak versus strong mind. - According to the relations existing between the parties and the strength or weakness of mind of a testator, the amount of influence necessary to dominate a mind impaired by age or disease may be decidedly less than that required to control a strong mind. Fowler v. Fowler, 197 Ga. 53 , 28 S.E.2d 458 (1943).

Grantor under influence of family member. - Where the grantor of an "improvident or profuse" deed was not wholly incapable of entering into such a contract, but was possessed of little or no will power and was greatly under the influence of the nephew to whom the deed was executed, an inference of fraud could have been drawn by the jury, and, the evidence for the defendant grantee not being such as to rebut the inference as a matter of law, the court was authorized to charge the jury upon the subject of fraud. Stanley v. Stanley, 179 Ga. 135 , 175 S.E. 496 (1934).

Broad statement of fraud insufficient. - While the broad statement that the conduct of the defendant constituted fraud would be insufficient without an allegation of circumstances from which the court might determine whether the pleader reached the right conclusion in saying that a fraud was committed, still it is not essential to state more facts than may be necessary to carry conviction of the existence of fraud. Wall v. Wall, 176 Ga. 757 , 168 S.E. 893 (1933).

Setting aside deed in equity. - "Great inadequacy of consideration, joined with great disparity of mental ability in contracting a bargain, may justify equity in setting aside a sale or other contract." Under that principle, a deed may be set aside in equity, on proof to the two elements stated, "without proof of anything else" as to fraud. A fortiori, the same rule would apply with at least equal force in case of such mental disparity and a total absence of consideration. Stow v. Hargrove, 203 Ga. 735 , 48 S.E.2d 454 (1948).

Imbalance of mental abilities. - The evidence showing that a 75-year old woman, uneducated, with neither the ability to read nor write, was dealing with an experienced businessman under circumstances indicating a fraud establishes that there was an imbalance or "disparity of mental ability in contracting a bargain." Top Quality Homes, Inc. v. Jackson, 231 Ga. 844 , 204 S.E.2d 600 (1974).

Trivial things together can be conclusive proof. - Circumstances apparently trivial or almost inconclusive, if separately considered, may by their number and joint operation, especially when corroborated by moral coincidences, be sufficient to constitute conclusive proof. Kelly v. Cubbedge, 143 Ga. App. 830 , 240 S.E.2d 162 (1977).

Proof of fraud is seldom, if ever, susceptible of direct proof; thus, recourse to circumstantial evidence usually is required. Brown v. Mann, 237 Ga. App. 247 , 514 S.E.2d 922 (1999).

In every case slight circumstances must be considered, and may be sufficient to establish the existence of fraud, in transactions between husband and wife fraud might be so completely concealed that creditors could not expose it, and in order that the public might not suffer from such concealment, the law imposes upon the husband and wife the duty of affirmatively establishing their good faith when creditors attack such transactions for fraud. Arrington v. Awbrey, 190 Ga. 193 , 8 S.E.2d 648 (1940).

Slight circumstances often sufficient in transactions between relatives. - When transactions between relatives are under review, slight circumstances are often sufficient to induce belief on the part of a jury that there was fraud or collusion between the parties, and authorize them to find against the claimant and in favor of the plaintiff in fi. fa. A claimant must, generally speaking, come into court with hands unstained by any suggestion of collusion with the defendant in fi. fa. to defeat or defraud the creditors of the latter; and a claimant who fails to make a clear showing of both legal and moral right to the property in dispute must generally suffer the loss thereof at the hands of a jury, if there be any circumstances in proof, even though slight, which may be sufficient to authorize the inference of fraud or collusion. Scruggs v. Blackshear Mfg. Co., 49 Ga. App. 205 , 174 S.E. 732 (1934).

Since fraud is inherently subtle, slight circumstances of fraud may be sufficient to establish a proper case. Brown v. Mann, 237 Ga. App. 247 , 514 S.E.2d 922 (1999).

Evidence of fraud to be of "clear, unequivocal, and decisive" quality. - In a diversity based suit in equity to set aside or deny res judicata effect to a prior state court judgment on the grounds of fraud and mutual mistake, the plaintiffs had to prove their claims by something more than a mere preponderance of the evidence. The evidence had to preponderate in the plaintiffs' favor, but it also had to be of "clear, unequivocal, and decisive" quality. Ahrens v. Katz, 595 F. Supp. 1108 (N.D. Ga. 1984).

Sufficient evidence to create jury issue as to fraud. - See Gibbs v. Jim Wilson Chevrolet Co., 161 Ga. App. 171 , 288 S.E.2d 264 (1982); Horne v. Claude Ray Ford Sales, Inc., 162 Ga. App. 329 , 290 S.E.2d 497 (1982); Minuteman Press Int'l, Inc. v. Hedrick, 167 Ga. App. 453 , 306 S.E.2d 718 (1983).

Jury to determine fraud in automobile odometer case. - When the evidence established that at time automobile was purchased by seller of automobile the certificate of ownership listed 14,229 miles as the car's mileage, that when it was sold by seller to buyer, the odometer read 14,179 miles, and when the buyers test-drove the car the odometer read approximately 7,000 miles, there is considerable conflict regarding the actual mileage of the car, and it is the province of the jury to determine whether seller altered or knew of the alteration of the odometer. Joseph Charles Parrish, Inc. v. Hill, 173 Ga. App. 97 , 325 S.E.2d 595 (1984).

Jury could have found that at least some of the numerous repairs a buyer made to a house after discharging a contractor were to correct defects the contractor passively concealed that the buyer could not have reasonably discerned. Since O.C.G.A. § 23-2-57 provides that slight circumstances may be sufficient to prove fraud, the contractor was not entitled to a directed verdict in the contractor's favor on the buyer's fraud claim. Lumpkin v. Deventer N. Am., Inc., 295 Ga. App. 312 , 672 S.E.2d 405 (2008).

Trial court erred in granting summary judgment to a surety because jury questions existed as to whether two subcontractors were the same company, whether an owner acted as an agent on behalf of one of those subcontractors when the owner procured the bonds, and whether the bonds were intentionally written fraudulently based on admissions made by counsel for the surety during the hearing. Choate Constr. Co. v. Auto-Owners Ins. Co., 318 Ga. App. 682 , 736 S.E.2d 443 (2012).

Evidence insufficient to go to the jury. - In taxpayers' claim against a purchaser's assignee for rescission of a redemption agreement, the facts did not support rescission. The assignee's attorney did not defraud them or conceal any facts, but advised them to hire an attorney, and any failure to advise them of their legal rights was an opinion as to a matter of law and not a material fact. Boyd v. JohnGalt Holdings, LLC, 294 Ga. 640 , 755 S.E.2d 675 (2014).

Pleading and Practice

Slight evidence of fraud and undue influence may authorize the jury to cancel the deed. Harper v. Harper, 229 Ga. 583 , 193 S.E.2d 616 (1972).

When the facts and circumstances shown by the evidence submitted by both parties on a motion for summary judgment are sufficient to authorize inferences as to fraudulent intent, the issue should be resolved by a jury on a trial, as there is a genuine issue of material fact. Nixon v. Brown, 225 Ga. 811 , 171 S.E.2d 512 (1969).

Evidence necessary to defeat abusive litigation claim. - In a suit for fraud, misrepresentation, and civil conspiracy allegedly arising out of a real estate transaction, and a counterclaim for abusive litigation, where the record revealed hotly contested versions of what the parties considered to have transpired in the complex real estate transaction, given that the law requires only slight circumstances to establish fraud and conspiracy, the trial judge was authorized to find as a matter of law that the plaintiffs had pierced an essential element of the defendant's abusive litigation claim and were thus entitled to the grant of summary judgment thereon. Seckinger v. Holtzendorf, 200 Ga. App. 604 , 409 S.E.2d 76 , cert. denied, 200 Ga. App. 897 , 409 S.E.2d 76 (1991).

Whether a note or other writing was procured by fraud is a question of fact for the determination of a jury. Thompson v. Wilkins, 143 Ga. App. 739 , 240 S.E.2d 183 (1977).