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 Ga. LEXIS 100 (1927); Autry v. Southern Ry., 167 Ga. 136 , 144 S.E. 741 , 1928 Ga. LEXIS 111 (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, 1969 U.S. Dist. LEXIS 9732 (N.D. Ga. 1969).

This section is the basis for the “clean hands” doctrine. Partain v. Maddox, 227 Ga. 623 , 182 S.E.2d 450 , 1971 Ga. LEXIS 800 (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 Ga. LEXIS 459 (1957), overruled in part, Ledford v. Bowers, 248 Ga. 804 , 286 S.E.2d 293 , 1982 Ga. LEXIS 665 (1982).

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 Ga. LEXIS 459 (1957), overruled in part, Ledford v. Bowers, 248 Ga. 804 , 286 S.E.2d 293 , 1982 Ga. LEXIS 665 (1982).

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 Ga. LEXIS 175 (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 , 1898 Ga. LEXIS 438 (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 Ga. LEXIS 215 (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 Ga. App. LEXIS 87 (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 Ga. LEXIS 535 (1954).

One with unclean hands cannot obtain relief in equity. Morgan v. Wright, 219 Ga. 385 , 133 S.E.2d 341 , 1963 Ga. LEXIS 461 (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 Ga. LEXIS 461 (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 Ga. LEXIS 1110 (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 Ga. App. LEXIS 159 (2006), cert. denied, No. S06C1236, 2006 Ga. LEXIS 765 (Ga. Sept. 8, 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 Ga. App. LEXIS 293 (2013), cert. denied, No. S13C1235, 2013 Ga. LEXIS 776 (Ga. Sept. 23, 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 Ga. App. LEXIS 372 (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 Ga. App. LEXIS 184 (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 Ga. App. LEXIS 159 (1929); Snell v. Spalding Foundry Co., 180 Ga. 582 , 180 S.E. 218 , 1935 Ga. LEXIS 492 (1935); Wright v. City of Metter, 192 Ga. 75 , 14 S.E.2d 443 , 1941 Ga. LEXIS 390 (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 Ga. LEXIS 451 (1934), overruled in part, dismissed, Bass v. Milledgeville, 295 U.S. 721, 55 S. Ct. 926 , 79 L. Ed. 1675 , 1935 U.S. LEXIS 354 (1935), dismissed, Wilson v. United States, 295 U.S. 759, 55 S. Ct. 926 , 79 L. Ed. 1701 , 1935 U.S. LEXIS 506 (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 Ga. App. LEXIS 519 (2006), cert. denied, No. S06C1706, 2006 Ga. LEXIS 703 (Ga. Sept. 8, 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, 1994 U.S. Dist. LEXIS 14551 (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, 1994 U.S. Dist. LEXIS 14551 (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 Ga. LEXIS 37 (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 Ga. App. LEXIS 1918 (1981); Zappa v. Automotive Precision Mach., Inc., 205 Ga. App. 584 , 423 S.E.2d 286 , 1992 Ga. App. LEXIS 1331 (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 Ga. LEXIS 325 (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, 1992 U.S. Dist. LEXIS 21531 (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 Ga. LEXIS 37 (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 Ga. LEXIS 37 (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 Ga. LEXIS 800 (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 Ga. LEXIS 800 (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 Ga. LEXIS 979 (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 Ga. LEXIS 467 (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 Ga. App. LEXIS 190 (2010), cert. denied, No. S10C1216, 2010 Ga. LEXIS 666 (Ga. Sept. 7, 2010), cert. denied, 563 U.S. 988, 131 S. Ct. 2447 , 179 L. Ed. 2 d 1210, 2011 U.S. LEXIS 3766 (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 Ga. App. LEXIS 985 (2010), cert. denied, No. S11C0418, 2011 Ga. LEXIS 243 (Ga. Mar. 7, 2011).

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 Ga. LEXIS 254 (2012).

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 Ga. LEXIS 458 (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 Ga. LEXIS 564 (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 Ga. LEXIS 235 (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 Ga. LEXIS 729 (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 Ga. App. LEXIS 475 (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 Ga. LEXIS 549 (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 Ga. LEXIS 354 (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 Ga. App. LEXIS 109 (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 Ga. LEXIS 793 (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 Ga. LEXIS 483 (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 Ga. LEXIS 37 (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 Ga. LEXIS 573 (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 Ga. LEXIS 818 (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 Ga. LEXIS 586 (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 Ga. LEXIS 279 (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 Ga. App. LEXIS 188 (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 Ga. App. LEXIS 130 (2020), cert. denied, No. S20C1299, 2020 Ga. LEXIS 973 (Ga. Dec. 7, 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 Ga. App. LEXIS 145 (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 Ga. LEXIS 852 (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 Ga. LEXIS 1499 (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 Ga. LEXIS 300 (1934); Redwine v. Frizzell, 184 Ga. 230 , 190 S.E. 789 , 1937 Ga. LEXIS 486 (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 Ga. LEXIS 713 (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 Ga. LEXIS 713 (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 Ga. LEXIS 302 (1961); Wright v. Intercounty Properties, Ltd., 238 Ga. 492 , 233 S.E.2d 160 , 1977 Ga. LEXIS 1070 (1977); P.B.R. Enters., Inc. v. Perren, 243 Ga. 280 , 253 S.E.2d 765 , 1979 Ga. LEXIS 890 (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 Ga. LEXIS 440 (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 Ga. LEXIS 277 (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 Ga. LEXIS 535 (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 Ga. LEXIS 535 (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 Ga. LEXIS 458 (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 Ga. LEXIS 363 (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 Ga. LEXIS 472 (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 Ga. LEXIS 825 (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 Ga. LEXIS 818 (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 Ga. LEXIS 1229 (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 Ga. LEXIS 280 (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 Ga. LEXIS 613 (1938); Holloway v. De Vane, 212 Ga. 182 , 91 S.E.2d 350 , 1956 Ga. LEXIS 300 (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 Ga. LEXIS 528 (1936); Elder v. Home Bldg. & Loan Ass'n, 185 Ga. 258 , 194 S.E. 745 , 1937 Ga. LEXIS 731 (1937); Clisby v. City of Macon, 191 Ga. 749 , 13 S.E.2d 772 , 1941 Ga. LEXIS 361 (1941); Kiker v. Hefner, 224 Ga. 511 , 162 S.E.2d 731 , 1968 Ga. LEXIS 836 (1968); Adcock v. Sutton, 224 Ga. 505 , 162 S.E.2d 732 , 1968 Ga. LEXIS 834 (1968); Allen v. Thomas, 225 Ga. 650 , 171 S.E.2d 132 , 1969 Ga. LEXIS 598 (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 Ga. LEXIS 575 (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 Ga. LEXIS 613 (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 Ga. LEXIS 665 (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 Ga. LEXIS 630 (1940).

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 Ga. LEXIS 410 (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 Ga. LEXIS 341 (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 Ga. LEXIS 455 (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 Ga. LEXIS 584 (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 Ga. LEXIS 584 (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 Ga. LEXIS 765 (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 Ga. LEXIS 410 (1941); Cook v. Young, 225 Ga. 26 , 165 S.E.2d 727 , 1969 Ga. LEXIS 362 (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 Ga. LEXIS 446 (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 Ga. LEXIS 253 (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 , 1947 Ga. LEXIS 592 (1947).

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 Ga. LEXIS 350 (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 Ga. LEXIS 350 (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 Ga. App. LEXIS 216 (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 Ga. LEXIS 1499 (1977); Krauth v. Bagley, 243 Ga. 87 , 252 S.E.2d 504 , 1979 Ga. LEXIS 818 (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 Ga. LEXIS 1499 (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 Ga. LEXIS 818 (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 Ga. LEXIS 454 (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 Ga. LEXIS 561 (1937); Durham v. Smith, 186 Ga. 565 , 198 S.E. 734 , 1938 Ga. LEXIS 665 (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 Ga. LEXIS 721 (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 Ga. LEXIS 731 (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 Ga. LEXIS 483 (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 Ga. LEXIS 483 (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 Ga. App. LEXIS 428 (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 , 1933 Ga. LEXIS 382 (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 Ga. LEXIS 382 (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 Ga. App. LEXIS 1538 (1993), cert. denied, No. S93C1821, 1993 Ga. LEXIS 1127 (Ga. Dec. 3, 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 Ga. App. LEXIS 1450 (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 Ga. App. LEXIS 1440 (1991), cert. denied, No. S92C0156, 1991 Ga. LEXIS 992 (Ga. Nov. 21, 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 , 1933 Ga. LEXIS 382 (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 Ga. LEXIS 279 (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 , 1963 Ga. App. LEXIS 969, aff'd, 219 Ga. 498 , 134 S.E.2d 39 , 1963 Ga. LEXIS 491 (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 Ga. App. LEXIS 1142 (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 Ga. App. LEXIS 782 (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 Ga. App. LEXIS 93 (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 , 1966 Ga. App. LEXIS 1072, rev'd, 222 Ga. 472 , 150 S.E.2d 620 , 1966 Ga. LEXIS 522 (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 Ga. App. LEXIS 1057 (2008).

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 , 1966 Ga. App. LEXIS 1072, rev'd, 222 Ga. 472 , 150 S.E.2d 620 , 1966 Ga. LEXIS 522 (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 Ga. App. LEXIS 1409 (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 , 1966 Ga. App. LEXIS 1072, rev'd, 222 Ga. 472 , 150 S.E.2d 620 , 1966 Ga. LEXIS 522 (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 , 1966 Ga. App. LEXIS 1072, rev'd, 222 Ga. 472 , 150 S.E.2d 620 , 1966 Ga. LEXIS 522 (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 , 1966 Ga. App. LEXIS 1072, rev'd, 222 Ga. 472 , 150 S.E.2d 620 , 1966 Ga. LEXIS 522 (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 , 1966 Ga. App. LEXIS 1072, rev'd, 222 Ga. 472 , 150 S.E.2d 620 , 1966 Ga. LEXIS 522 (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 Ga. App. LEXIS 590 (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 Ga. App. LEXIS 748, 1949 Ga. App. LEXIS 749 (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 Ga. LEXIS 627 (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 Ga. App. LEXIS 184 (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 Ga. App. LEXIS 882 (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 Ga. App. LEXIS 1398 (2006), cert. denied, No. S07C0460, 2007 Ga. LEXIS 145 (Ga. Feb. 5, 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 Ga. LEXIS 535 (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 Ga. App. LEXIS 344 (2013), cert. denied, No. S13C1255, 2013 Ga. LEXIS 774 (Ga. Sept. 23, 2013).

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 Ga. LEXIS 361 (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 Ga. App. LEXIS 1144 (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 Ga. App. LEXIS 344 (2013), cert. denied, No. S13C1255, 2013 Ga. LEXIS 774 (Ga. Sept. 23, 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 Ga. LEXIS 785 (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 Ga. LEXIS 37 (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 Ga. LEXIS 37 (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 Ga. App. LEXIS 1144 (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 Ga. LEXIS 497 (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 Ga. App. LEXIS 1082, aff'd, 225 Ga. 373 , 169 S.E.2d 165 , 1969 Ga. LEXIS 502 (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. Largan v. Largan, 224 Ga. 399 , 162 S.E.2d 405 , 1968 Ga. LEXIS 795 (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. Largan v. Largan, 224 Ga. 399 , 162 S.E.2d 405 , 1968 Ga. LEXIS 795 (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 Ga. App. LEXIS 1292 (1970); Shield Ins. Co. v. Kitt, 143 Ga. App. 48 , 237 S.E.2d 515 , 1977 Ga. App. LEXIS 2183 (1977), rev'd, 240 Ga. 619 , 241 S.E.2d 824 , 1978 Ga. LEXIS 740 (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 Ga. LEXIS 843 (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 Ga. LEXIS 473 (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 Ga. App. LEXIS 900 (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 Ga. LEXIS 144 (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 Ga. App. LEXIS 364 (2015).

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 Ga. App. LEXIS 529 (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 Ga. LEXIS 596 (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 Ga. LEXIS 623 (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, 1944 U.S. App. LEXIS 2563 (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 Ga. LEXIS 473 (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 , 1933 Ga. LEXIS 382 (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 Ga. LEXIS 382 (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 Ga. LEXIS 339 (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 Ga. LEXIS 592 (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 Ga. LEXIS 592 (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, 2013 Bankr. LEXIS 4269 (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, 2010 Bankr. LEXIS 760 (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 Ga. LEXIS 404 (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 Ga. LEXIS 479 (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 Ga. LEXIS 460 (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 Ga. LEXIS 415 (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 Ga. LEXIS 243 (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 Ga. LEXIS 22 (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 Ga. LEXIS 534 (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 Ga. LEXIS 376 (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, 1944 U.S. App. LEXIS 2563 (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 Ga. LEXIS 829 (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, 2012 Bankr. LEXIS 1117 (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, 2013 Bankr. LEXIS 4269 (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, 2017 Bankr. LEXIS 4052 (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), No. 15-55379-BEM, No. 18-5064-BEM, 2019 Bankr. LEXIS 2883 (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 Ga. LEXIS 489 (1939); Collins v. Freeman, 226 Ga. 610 , 176 S.E.2d 704 , 1970 Ga. LEXIS 610 (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), No. 04-77191-PWB, No. 06-6235, 2007 Bankr. LEXIS 1020 (Bankr. N.D. Ga. Feb. 23, 2007), amended, No. 04-77191-PWB, No. 06-6235, 2007 Bankr. LEXIS 1569 (Bankr. N.D. Ga. Apr. 3, 2007), aff'd, 306 Fed. Appx. 455, 2008 U.S. App. LEXIS 25653 (11th Cir. 2008).

Unpublished decision: 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), 306 Fed. Appx. 455, 2008 U.S. App. LEXIS 25653 (11th Cir. 2008).

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, 2013 Bankr. LEXIS 4532 (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, 2013 Bankr. LEXIS 4269 (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 Ga. App. LEXIS 884 (2009), cert. denied, No. S09C2080, 2010 Ga. LEXIS 2 (Ga. Jan. 12, 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., 465 Bankr. 336, 2012 Bankr. LEXIS 757 (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 Ga. LEXIS 101 (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, 2018 Bankr. LEXIS 1003 (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 Ga. App. LEXIS 364 (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 Ga. LEXIS 190 (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, 1981 U.S. Dist. LEXIS 15151 (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 Ga. LEXIS 548 (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), No. 06-6008, 2006 Bankr. LEXIS 4653 (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. 752 , 44 S.E.2d 543 , 1947 Ga. LEXIS 514 (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 Ga. LEXIS 548 (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 Ga. App. LEXIS 716 (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 Ga. LEXIS 596 (1969).

Negligent ignorance is equivalent to knowledge. Southern Ry. v. Watson, 74 Ga. App. 317 , 39 S.E.2d 707 , 1946 Ga. App. LEXIS 529 (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 Ga. App. LEXIS 928 (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 Ga. App. LEXIS 716 (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 Ga. LEXIS 503 (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 Ga. LEXIS 477 (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 Ga. App. LEXIS 2956 (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 Ga. App. LEXIS 723 (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 Ga. App. LEXIS 538 (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 Ga. LEXIS 514 (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. 752 , 44 S.E.2d 543 , 1947 Ga. LEXIS 514 (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 Ga. App. LEXIS 2969 (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 Ga. App. LEXIS 329 (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 Ga. App. LEXIS 1229 (1998), cert. denied, No. S99C0206, 1999 Ga. LEXIS 210 (Ga. Feb. 19, 1999).

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 Ga. LEXIS 574 (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 Ga. LEXIS 269 (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 Ga. LEXIS 171 (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 Ga. LEXIS 588 (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 , 1938 Ga. LEXIS 600, cert. denied, 305 U.S. 637, 59 S. Ct. 107 , 83 L. Ed. 410 , 1938 U.S. LEXIS 592 (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 Ga. LEXIS 311 (1933); Carmichael Tile Co. v. Yaarab Temple Bldg. Co., 177 Ga. 318 , 170 S.E. 294 , 1933 Ga. LEXIS 171 (1933); Ingram & Le Grand Lumber Co. v. McAllister, 188 Ga. 626 , 4 S.E.2d 558 , 1939 Ga. LEXIS 588 (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 Ga. LEXIS 588 (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 Ga. LEXIS 171 (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 Ga. LEXIS 269 (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 Ga. LEXIS 269 (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 Ga. LEXIS 269 (1930); Walker v. Houston, 176 Ga. 878 , 169 S.E. 107 , 1933 Ga. LEXIS 311 (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 Ga. LEXIS 297 (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 Ga. LEXIS 412 (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 Ga. LEXIS 311 (1933).

Lis pendens does not apply to choses in action. Shadburn Banking Co. v. Streetman, 180 Ga. 500 , 179 S.E. 377 , 1935 Ga. LEXIS 459 (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 Ga. LEXIS 436 (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 Ga. LEXIS 647 (2010).

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 Ga. LEXIS 304 (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 Ga. LEXIS 342 (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 Ga. LEXIS 517 (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 Ga. LEXIS 454 (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 Ga. LEXIS 385 (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 Ga. LEXIS 588 (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 Ga. LEXIS 232 (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 Ga. LEXIS 400 (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 Ga. LEXIS 385 (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 Ga. LEXIS 647 (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 Ga. App. LEXIS 1082 (2010), cert. denied, No. S11C0595, 2011 Ga. LEXIS 359 (Ga. Apr. 26, 2011).

Purchasers entitled to protection of bona fide purchaser for value. —

There was no error in the trial court’s grant of summary judgment to a bank and nursery in a daughter’s action to cancel deeds executed by her mother before her death to the bank and the nursery because they were entitled to the protection of bona fide purchaser for value under O.C.G.A. §§ 23-1-19 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 Ga. App. LEXIS 463 (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 Ga. LEXIS 484 (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 Ga. LEXIS 385 (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 Ga. LEXIS 304 (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 Ga. LEXIS 355 (1969); Kitchens v. Atlantic Steel Co., 123 Ga. App. 812 , 182 S.E.2d 530 , 1971 Ga. App. LEXIS 1398 (1971), aff'd, 228 Ga. 708 , 187 S.E.2d 824 , 1972 Ga. LEXIS 892 (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 Ga. App. LEXIS 1652 (1989).

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 Ga. LEXIS 629 (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 Ga. LEXIS 335 (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 Ga. LEXIS 355 (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 Ga. LEXIS 355 (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 Ga. LEXIS 335 (1950); Fulford v. Fulford, 225 Ga. 9 , 165 S.E.2d 848 , 1969 Ga. LEXIS 355 (1969); Floyd v. Hoover, 141 Ga. App. 588 , 234 S.E.2d 89 , 1977 Ga. App. LEXIS 2006 (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 Ga. LEXIS 594 (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 Ga. App. LEXIS 531 (1964), aff'd, 220 Ga. 639 , 140 S.E.2d 840 , 1965 Ga. LEXIS 588 (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 Ga. App. LEXIS 531 (1964), aff'd, 220 Ga. 639 , 140 S.E.2d 840 , 1965 Ga. LEXIS 588 (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 Ga. LEXIS 395 (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 Ga. App. LEXIS 531 (1964), aff'd, 220 Ga. 639 , 140 S.E.2d 840 , 1965 Ga. LEXIS 588 (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 Ga. App. LEXIS 2006 (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 Ga. App. LEXIS 1398 (1971), aff'd, 228 Ga. 708 , 187 S.E.2d 824 , 1972 Ga. LEXIS 892 (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 Ga. App. LEXIS 234 (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 Ga. App. LEXIS 234 (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 Ga. App. LEXIS 234 (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 Ga. LEXIS 20 (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 Ga. LEXIS 560 (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 Ga. LEXIS 597 (1937).

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 Ga. LEXIS 597 (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 Ga. LEXIS 415 (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 Ga. LEXIS 597 (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 Ga. LEXIS 597 (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 Ga. LEXIS 597 (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 Ga. LEXIS 560 (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 Ga. App. LEXIS 659 (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 Ga. LEXIS 371 (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 Ga. LEXIS 632 (1940); Davis v. Newton, 217 Ga. 75 , 121 S.E.2d 153 , 1961 Ga. LEXIS 381 (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, 1981 Bankr. LEXIS 4908 (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 Ga. LEXIS 254 (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 Ga. LEXIS 240 (2017).

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 Ga. LEXIS 434 (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 Ga. LEXIS 525 (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 Ga. LEXIS 434 (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 Ga. LEXIS 390 (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 Ga. LEXIS 525 (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 Ga. LEXIS 574 (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 Ga. LEXIS 383 (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 Ga. LEXIS 478 (1931).

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 Ga. LEXIS 646 (1939); Yablon v. Metropolitan Life Ins. Co., 200 Ga. 693 , 38 S.E.2d 534 , 1946 Ga. LEXIS 332 (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 Ga. LEXIS 409 (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, 1981 Bankr. LEXIS 4908 (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 Ga. LEXIS 452 (1931); Johnson v. Sears, 199 Ga. 432 , 34 S.E.2d 541 , 1945 Ga. LEXIS 321 (1945); Cooper v. Aycock, 199 Ga. 658 , 34 S.E.2d 895 , 1945 Ga. LEXIS 409 (1945); Parker v. Fisher, 207 Ga. 3 , 59 S.E.2d 715 , 1950 Ga. LEXIS 371 (1950); Welch v. Welch, 215 Ga. 198 , 109 S.E.2d 757 , 1959 Ga. LEXIS 434 (1959); Ehrhart v. Brooks, 231 Ga. 272 , 201 S.E.2d 464 , 1973 Ga. LEXIS 670 (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 Ga. LEXIS 452 (1931); Flemister v. Billups, 202 Ga. 132 , 42 S.E.2d 376 , 1947 Ga. LEXIS 372 (1947); Welch v. Welch, 215 Ga. 198 , 109 S.E.2d 757 , 1959 Ga. LEXIS 434 (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 Ga. LEXIS 321 (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 Ga. LEXIS 385 (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 Ga. LEXIS 548 (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 Ga. LEXIS 598 (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 Ga. LEXIS 321 (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 Ga. LEXIS 383 (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 Ga. LEXIS 409 (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 Ga. LEXIS 574 (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 Ga. LEXIS 1420 (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 Ga. LEXIS 467 (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 Ga. LEXIS 1420 (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 Ga. LEXIS 632 (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 Ga. App. LEXIS 604 (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 Ga. LEXIS 332 (1946); Whitfield v. Whitfield, 204 Ga. 64 , 48 S.E.2d 852 , 1948 Ga. LEXIS 548 (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 Ga. App. LEXIS 659 (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 Ga. LEXIS 451 (1934), overruled in part, dismissed, Bass v. Milledgeville, 295 U.S. 721, 55 S. Ct. 926 , 79 L. Ed. 1675 , 1935 U.S. LEXIS 354 (1935), dismissed, Wilson v. United States, 295 U.S. 759, 55 S. Ct. 926 , 79 L. Ed. 1701 , 1935 U.S. LEXIS 506 (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 Ga. App. LEXIS 155 (1943); Johnson v. Sears, 199 Ga. 432 , 34 S.E.2d 541 , 1945 Ga. LEXIS 321 (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 Ga. LEXIS 409 (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 Ga. LEXIS 409 (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 Ga. LEXIS 598 (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 Ga. LEXIS 527 (1969).

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 Ga. LEXIS 383 (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 Ga. LEXIS 385 (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 Ga. LEXIS 385 (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 Ga. LEXIS 383 (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 Ga. LEXIS 383 (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 Ga. LEXIS 434 (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 Ga. LEXIS 659 (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 Ga. LEXIS 509 (1960), overruled, City of Chamblee v. Maxwell, 264 Ga. 635 , 452 S.E.2d 488 , 1994 Ga. LEXIS 894 (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 Ga. LEXIS 448 (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 Ga. LEXIS 371 (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 Ga. LEXIS 574 (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 Ga. LEXIS 814 (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 Ga. LEXIS 791 (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 Ga. LEXIS 389 (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 Ga. LEXIS 658 (1939); Davis v. Newton, 217 Ga. 75 , 121 S.E.2d 153 , 1961 Ga. LEXIS 381 (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 Ga. LEXIS 392 (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 Ga. App. LEXIS 1466 (2004), cert. denied, No. S05C0651, 2005 Ga. LEXIS 263 (Ga. Mar. 28, 2005).

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 Ga. LEXIS 491 (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 Ga. LEXIS 311 (1957); Titshaw v. Carnes, 224 Ga. 57 , 159 S.E.2d 420 , 1968 Ga. LEXIS 670 (1968); Jackson v. Rich, 227 Ga. 149 , 179 S.E.2d 256 , 1971 Ga. LEXIS 620 (1971); Harrell v. Wilson, 233 Ga. 899 , 213 S.E.2d 871 , 1975 Ga. LEXIS 1478 (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 Ga. LEXIS 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 Ga. App. LEXIS 545 (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 Ga. LEXIS 601 (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 Ga. LEXIS 509 (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 Ga. LEXIS 661 (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 Ga. LEXIS 405 (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 Ga. LEXIS 381 (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 , 1953 Ga. LEXIS 343 (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 Ga. LEXIS 430 (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 Ga. LEXIS 491 (1959); Thomas v. Garrett, 265 Ga. 395 , 456 S.E.2d 573 , 1995 Ga. LEXIS 239 (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 Ga. LEXIS 487 (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 Ga. App. LEXIS 1114 (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 Ga. LEXIS 381 (1943); Ealy v. Tolbert, 209 Ga. 575 , 74 S.E.2d 867 , 1953 Ga. LEXIS 343 (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 , 1953 Ga. LEXIS 343 (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 Ga. LEXIS 505 (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 Ga. LEXIS 1128 (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 Ga. LEXIS 547 (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 Ga. LEXIS 933 (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 Ga. LEXIS 332 (1946); Prince v. Friedman, 202 Ga. 136 , 42 S.E.2d 434 , 1947 Ga. LEXIS 379 (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 Ga. LEXIS 558 (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 Ga. App. LEXIS 1454 (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 Ga. LEXIS 489 (1937); Whipple v. County of Houston, 214 Ga. 532 , 105 S.E.2d 898 , 1958 Ga. LEXIS 482 (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 Ga. LEXIS 489 (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 Ga. LEXIS 489 (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 Ga. LEXIS 489 (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 Ga. LEXIS 489 (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 , 1934 Ga. LEXIS 276 (1934).

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 Ga. App. LEXIS 221 (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 Ga. LEXIS 660 (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 Ga. App. LEXIS 606 (2016).

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 Ga. LEXIS 755 (1939); Yablon v. Metropolitan Life Ins. Co., 200 Ga. 693 , 38 S.E.2d 534 , 1946 Ga. LEXIS 332 (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 Ga. LEXIS 332 (1946); Prince v. Friedman, 202 Ga. 136 , 42 S.E.2d 434 , 1947 Ga. LEXIS 379 (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 Ga. LEXIS 379 (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 Ga. LEXIS 379 (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 Ga. LEXIS 430 (1959).

“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 Ga. LEXIS 65 (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 Ga. LEXIS 489 (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 Ga. LEXIS 552 (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 Ga. LEXIS 482 (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 Ga. App. LEXIS 127 (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 Ga. LEXIS 332 (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 Ga. App. LEXIS 691 (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 Ga. LEXIS 295 (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 Ga. App. LEXIS 447 (2008), cert. denied, No. S08C1572, 2008 Ga. LEXIS 666 (Ga. Sept. 8, 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 Ga. App. LEXIS 358 (2020), cert. denied, No. S20C1451, 2021 Ga. LEXIS 114 (Ga. Mar. 1, 2021).

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, 2018 Bankr. LEXIS 1004 (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., No. 1:09-CV-2985-RWS, 2010 U.S. Dist. LEXIS 133794 (N.D. Ga. Dec. 17, 2010), aff'd, 677 F.3d 1039, 2012 U.S. App. LEXIS 2276 (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 Ga. App. LEXIS 360 (2010).

Mutual mistake not established.

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., No. 1:09-CV-2985-RWS, 2010 U.S. Dist. LEXIS 133794 (N.D. Ga. Dec. 17, 2010), aff'd, 677 F.3d 1039, 2012 U.S. App. LEXIS 2276 (11th Cir. 2012).

Trial court erred in granting the bank’s motion for summary judgment on its equitable reformation claim as the bank failed to establish a mutual mistake because the bank had not met its heavy burden of establishing by clear, unequivocal, and decisive evidence that the parties intended Tracts 6 and 7 to be included in the secured collateral for the 2012 security deed, subsequent modifications, or related deed under power. Rome Granite, Inc. v. Pinnacle Bank, 872 S.E.2d 895 , 2022 Ga. App. LEXIS 357 (Ga. Ct. App. 2022)

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 Ga. LEXIS 379 (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 Ga. LEXIS 371 (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 Ga. LEXIS 379 (1947); Barham v. United States, 715 F. Supp. 1091, 1989 U.S. Dist. LEXIS 8425 (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 Ga. LEXIS 1132 (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 Ga. App. LEXIS 691 (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 Ga. LEXIS 476 (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 Ga. LEXIS 584 (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 Ga. LEXIS 65 (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 Ga. LEXIS 387 (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, 1984 U.S. Dist. LEXIS 22570 (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 Ga. LEXIS 6 (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, 2016 Bankr. LEXIS 901 (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 Ga. LEXIS 1132 (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 Ga. LEXIS 1132 (1978).

Parol evidence can be offered to prove mistake. Vann v. Williams, 165 Ga. App. 457 , 299 S.E.2d 908 , 1983 Ga. App. LEXIS 1904 (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 Ga. LEXIS 430 (1959).

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 Ga. LEXIS 552 (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 Ga. App. LEXIS 691 (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 Ga. LEXIS 707 (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 Ga. LEXIS 67 (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 Ga. App. LEXIS 928 (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 Ga. App. LEXIS 1498 (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 Ga. App. LEXIS 1281 (1994), cert. denied, No. S95C0482, 1995 Ga. LEXIS 476 (Ga. Feb. 23, 1995).

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 Ga. App. LEXIS 545 (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 Ga. LEXIS 331 (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 Ga. App. LEXIS 604 (2011).

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 Ga. LEXIS 271 (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, 1976 U.S. App. LEXIS 11744 (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 Ga. LEXIS 283 (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. 752 , 44 S.E.2d 543 , 1947 Ga. LEXIS 514 (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 Ga. LEXIS 581 (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 Ga. LEXIS 550 (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 Ga. LEXIS 550 (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 Ga. LEXIS 521 (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 Ga. App. LEXIS 2956 (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 Ga. LEXIS 104 (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 Ga. App. LEXIS 598 (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 Ga. LEXIS 315 (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 Ga. LEXIS 674 (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 Ga. App. LEXIS 691 (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 Ga. LEXIS 981 (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 Ga. LEXIS 841 (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, 1968 U.S. Dist. LEXIS 9835 (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 Ga. App. LEXIS 128 (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 Ga. LEXIS 445 (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 Ga. LEXIS 445 (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 Ga. LEXIS 445 (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 Ga. LEXIS 550 (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 Ga. App. LEXIS 31 (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 Ga. LEXIS 457 (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 Ga. LEXIS 294 (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 Ga. LEXIS 445 (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 Ga. App. LEXIS 913 (1965).

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 Ga. LEXIS 584 (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 Ga. LEXIS 755 (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 Ga. LEXIS 474 (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 Ga. LEXIS 558 (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 Ga. LEXIS 436 (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 Ga. LEXIS 590 (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 Ga. LEXIS 1132 (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 Ga. LEXIS 1132 (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 Ga. LEXIS 1132 (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 Ga. LEXIS 584 (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 Ga. LEXIS 584 (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 Ga. App. LEXIS 913 (1965).

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 Ga. LEXIS 584 (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 Ga. LEXIS 487 (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 Ga. LEXIS 859 (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 Ga. App. LEXIS 358 (2020), cert. denied, No. S20C1451, 2021 Ga. LEXIS 114 (Ga. Mar. 1, 2021).

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 Ga. LEXIS 755 (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 Ga. LEXIS 590 (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 Ga. LEXIS 822 (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 Ga. LEXIS 521 (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 Ga. LEXIS 529 (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 Ga. App. LEXIS 598 (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 Ga. App. LEXIS 447 (2008), cert. denied, No. S08C1572, 2008 Ga. LEXIS 666 (Ga. Sept. 8, 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 Ga. App. LEXIS 822 (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 Ga. LEXIS 521 (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 Ga. App. LEXIS 25 (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 Ga. LEXIS 761 (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 Ga. LEXIS 350 (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 Ga. LEXIS 350 (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 Ga. LEXIS 303 (1955).

Lack of standing in equity. —

Unpublished decision: 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., 610 Fed. Appx. 866, 2015 U.S. App. LEXIS 7552 (11th Cir. 2015).

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 Ga. App. LEXIS 747 (2015), cert. denied, No. S16C0661, 2016 Ga. LEXIS 335 (Ga. Apr. 26, 2016).

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 Ga. LEXIS 303 (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 Ga. LEXIS 755 (1939); Hilton v. Hilton, 202 Ga. 53 , 41 S.E.2d 880 , 1947 Ga. LEXIS 350 (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 Ga. App. LEXIS 323 (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 Ga. LEXIS 260 (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 Ga. LEXIS 660 (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 Ga. LEXIS 660 (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 Ga. LEXIS 761 (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 Ga. LEXIS 761 (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 Ga. LEXIS 302 (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, 2018 Bankr. LEXIS 1003 (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., No. 5:06-cv-301, 2009 U.S. Dist. LEXIS 66362 (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 Ga. LEXIS 75 (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 Ga. LEXIS 489 (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 Ga. LEXIS 728 (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 Ga. LEXIS 728 (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 Ga. LEXIS 303 (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, 2012 Bankr. LEXIS 1117 (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 Ga. LEXIS 660 (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, 2012 Bankr. LEXIS 1117 (Bankr. N.D. Ga. 2012).

General Consideration

History generally. —

This section was derived from Trippe & Slade v. Ward, 2 Ga. 304 (1847) andDeLaperriere v. Williams v. Williams, 167 Ga. 648 , 146 S.E. 482 , 1929 Ga. LEXIS 13 (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 Ga. App. LEXIS 526 (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 Ga. App. LEXIS 1276 (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 Ga. App. LEXIS 186 (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 Ga. LEXIS 567 (1949).

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 Ga. LEXIS 567 (1949).

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 Ga. LEXIS 384 (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 Ga. LEXIS 385 (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 Ga. LEXIS 389 (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 Ga. LEXIS 425 (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 Ga. LEXIS 567 (1949).

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 Ga. LEXIS 988 (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 Ga. App. LEXIS 188 (1934).

Fraud is not always perpetrated by willful misrepresentations. Sapp v. ABC Credit & Inv. Co., 243 Ga. 151 , 253 S.E.2d 82 , 1979 Ga. LEXIS 840 (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 Ga. App. LEXIS 1645 (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, 1981 U.S. App. LEXIS 17762 (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, 1981 U.S. App. LEXIS 17762 (5th Cir. 1981).

Fraud Generally

1.In General

Fraud is either actual or constructive, and either constitutes legal fraud. Jordan v. Belvin, 57 Ga. App. 719 , 196 S.E. 132 , 1938 Ga. App. LEXIS 373 (1938); Gaultney v. Windham, 99 Ga. App. 800 , 109 S.E.2d 914 , 1959 Ga. App. LEXIS 966 (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 Ga. LEXIS 1 (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 Ga. App. LEXIS 966 (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 Ga. LEXIS 840 (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 Ga. App. LEXIS 1645 (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 Ga. App. LEXIS 683 (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 Ga. LEXIS 500 (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 Ga. App. LEXIS 186 (1934); Thompson v. Wilkins, 143 Ga. App. 739 , 240 S.E.2d 183 , 1977 Ga. App. LEXIS 2483 (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 Ga. App. LEXIS 186 (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 Ga. App. LEXIS 186 (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 Ga. App. LEXIS 188 (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 Ga. App. LEXIS 668 (1948).

Innocent misstatement may amount to negligence but is not fraud. Day v. Randolph, 159 Ga. App. 474 , 283 S.E.2d 687 , 1981 Ga. App. LEXIS 2655 (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 Ga. App. LEXIS 674 (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 Ga. App. LEXIS 2105 (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 Ga. App. LEXIS 2105 (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 Ga. App. LEXIS 908 (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 Ga. App. LEXIS 2813 (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 Ga. App. LEXIS 3200 (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 Ga. App. LEXIS 3200 (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 Ga. LEXIS 279 (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 Ga. LEXIS 758 (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 Ga. App. LEXIS 2120 (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 Ga. App. LEXIS 966 (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 Ga. App. LEXIS 966 (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 Ga. App. LEXIS 268 (1907); Gaultney v. Windham, 99 Ga. App. 800 , 109 S.E.2d 914 , 1959 Ga. App. LEXIS 966 (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 Ga. App. LEXIS 966 (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 Ga. LEXIS 389 (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, 1974 U.S. Dist. LEXIS 9220 (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 Ga. App. LEXIS 966 (1959); Romedy v. Willett Lincoln-Mercury, Inc., 136 Ga. App. 67 , 220 S.E.2d 74 , 1975 Ga. App. LEXIS 1247 (1975); C.P.D. Chem. Co. v. National Car Rental Sys., 148 Ga. App. 756 , 252 S.E.2d 665 , 1979 Ga. App. LEXIS 1645 (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 Ga. App. LEXIS 1881 (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 Ga. App. LEXIS 2655 (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. App. 719 , 196 S.E. 132 , 1938 Ga. App. LEXIS 373 (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 Ga. App. LEXIS 2461 (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 Ga. App. LEXIS 1737 (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, 2008 U.S. Dist. LEXIS 2051 (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 Ga. LEXIS 273 (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 Ga. App. LEXIS 966 (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, 1937 U.S. App. LEXIS 2883 (5th Cir. 1937), cert. denied, 304 U.S. 566, 58 S. Ct. 948 , 82 L. Ed. 1532 (1938), cert. denied, 304 U.S. 566, 58 S. Ct. 949 , 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 Ga. App. LEXIS 444 (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 Ga. App. LEXIS 966 (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 Ga. App. LEXIS 46 (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 Ga. App. LEXIS 601 (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, 1986 U.S. Dist. LEXIS 20439 (M.D. Ga. 1986), aff'd, 817 F.2d 98, 1987 U.S. App. LEXIS 6168 (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 , 1981 Ga. App. LEXIS 3195 (1981).

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 Ga. App. LEXIS 341 (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 Ga. App. LEXIS 587 (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 Ga. App. LEXIS 1611 (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, No. 1:04-CV-2068-TWT, 2005 U.S. Dist. LEXIS 30296 (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 Ga. App. LEXIS 1260 (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 Ga. LEXIS 243 (2009), overruled, SRM Group, Inc. v. Travelers Prop. Cas. Co. of Am., 308 Ga. 404 , 841 S.E.2d 729 , 2020 Ga. LEXIS 235 (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, 1974 U.S. Dist. LEXIS 9220 (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 Ga. App. LEXIS 741 (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 Ga. App. LEXIS 188 (1934); Daugert v. Holland Furnace Co., 107 Ga. App. 566 , 130 S.E.2d 763 , 1963 Ga. App. LEXIS 908 (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 Ga. LEXIS 355 (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 Ga. LEXIS 373 (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 Ga. LEXIS 373 (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 Ga. App. LEXIS 2031 (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 Ga. App. LEXIS 2031 (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, 1981 U.S. App. LEXIS 17762 (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 Ga. App. LEXIS 2461 (1982).

General Consideration

Fraud is either actual or constructive, and either constitutes legal fraud. Jordan v. Belvin, 57 Ga. App. 719 , 196 S.E. 132 , 1938 Ga. App. LEXIS 373 (1938); Southeastern Greyhound Lines v. Fisher, 72 Ga. App. 717 , 34 S.E.2d 906 , 1945 Ga. App. LEXIS 683 (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 Ga. App. LEXIS 851 (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 Ga. App. LEXIS 683 (1945).

Actual fraud. —

In a sexual abuse by a priest case, the plaintiff’s negligent supervision, training, and retention, negligent failure to warn and provide adequate security, breach of fiduciary duty, and fraudulent misrepresentation and concealment claims were improperly dismissed as the plaintiff adequately pled actual fraud for purposes of tolling as the plaintiff could possibly establish the existence of a confidential relationship between the plaintiff and the defendants, and that the defendants’ alleged fraudulent concealment about the abusive priest debarred or deterred the plaintiff from discovering the plaintiff’s causes of action; and the plaintiff could show that the plaintiff exercised reasonable diligence to discover the defendants’ fraud. Doe v. St. Joseph's Catholic Church, 313 Ga. 558 , 870 S.E.2d 365 , 2022 Ga. LEXIS 59 (2022).

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. Auto. Ins. Co. v. Anderson, 107 Ga. App. 348 , 130 S.E.2d 144 , 1963 Ga. App. LEXIS 838, cert. dismissed, 219 Ga. 218 , 132 S.E.2d 556 , 1963 Ga. LEXIS 407 (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 , 1963 Ga. App. LEXIS 838, cert. dismissed, 219 Ga. 218 , 132 S.E.2d 556 , 1963 Ga. LEXIS 407 (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 Ga. App. LEXIS 851 (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, 1980 U.S. App. LEXIS 14446 (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, 1986 U.S. Dist. LEXIS 20439 (M.D. Ga. 1986), aff'd, 817 F.2d 98, 1987 U.S. App. LEXIS 6168 (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 Ga. App. LEXIS 1596 (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 Ga. App. LEXIS 986 (1994).

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 Ga. App. LEXIS 2267 (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 Ga. App. LEXIS 2483 (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 Ga. App. LEXIS 2267 (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 Ga. App. LEXIS 683 (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 Ga. App. LEXIS 2267 (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 Ga. App. LEXIS 1099 (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 Ga. LEXIS 981 (1968).

When there is a material misrepresentation, a policy (of insurance) may be voided. State Farm Mut. Auto. Ins. Co. v. Anderson, 107 Ga. App. 348 , 130 S.E.2d 144 , 1963 Ga. App. LEXIS 838, cert. dismissed, 219 Ga. 218 , 132 S.E.2d 556 , 1963 Ga. LEXIS 407 (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, 1937 U.S. App. LEXIS 2883 (5th Cir. 1937), cert. denied, 304 U.S. 566, 58 S. Ct. 948 , 82 L. Ed. 1532 (1938), cert. denied, 304 U.S. 566, 58 S. Ct. 949 , 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 Ga. LEXIS 548 (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 Ga. LEXIS 981 (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 Ga. App. LEXIS 851 (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, 1980 U.S. App. LEXIS 14446 (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 Ga. App. LEXIS 2156 (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 Ga. App. LEXIS 2031 (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 Ga. App. LEXIS 2031 (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 Ga. App. LEXIS 851 (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 Ga. LEXIS 424 (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 Ga. LEXIS 561 (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, 1961 U.S. App. LEXIS 3024 (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 , 1985 Ga. App. LEXIS 1795, aff'd in part and rev'd in part, 254 Ga. 734 , 334 S.E.2d 308 , 1985 Ga. LEXIS 849 (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 Ga. LEXIS 980 (1968).

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 Ga. LEXIS 380 (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 Ga. LEXIS 380 (1951); Thompson v. Alpine Motor Lodge, Inc., 296 F.2d 497, 1961 U.S. App. LEXIS 3024 (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, No. 3:03-CV-31, 2007 U.S. Dist. LEXIS 74897 (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 Ga. LEXIS 340 (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 Ga. LEXIS 340 (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, 1961 U.S. App. LEXIS 3024 (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, 1961 U.S. App. LEXIS 3024 (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 Ga. LEXIS 561 (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 Ga. LEXIS 351 (1953).

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 Ga. LEXIS 561 (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 Ga. LEXIS 483 (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 Ga. LEXIS 380 (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, 1961 U.S. App. LEXIS 3024 (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 Ga. LEXIS 980 (1968).

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, 2010 U.S. App. LEXIS 9373 (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, 963 F. Supp. 2d 1309, 2013 U.S. Dist. LEXIS 109381 (N.D. Ga. 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 Ga. LEXIS 561 (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 Ga. LEXIS 561 (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 Ga. LEXIS 561 (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 Ga. LEXIS 614 (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 Ga. LEXIS 561 (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 Ga. LEXIS 483 (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, 1961 U.S. App. LEXIS 3024 (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 Ga. LEXIS 483 (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 Ga. LEXIS 877 (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, 1961 U.S. App. LEXIS 3024 (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, 1961 U.S. App. LEXIS 3024 (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 Ga. LEXIS 877 (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 Ga. LEXIS 877 (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, 2010 U.S. Dist. LEXIS 60639 (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 Ga. LEXIS 564 (1942).

This section is peculiarly applicable in transactions between husband and wife. Strobel v. Gormley, 50 Ga. App. 358 , 178 S.E. 192 , 1935 Ga. App. LEXIS 323 (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 Ga. LEXIS 1074 (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 Ga. LEXIS 570 (1942); Kazakos v. Soteres, 120 Ga. App. 258 , 170 S.E.2d 50 , 1969 Ga. App. LEXIS 732 (1969); Henry v. Allstate Ins. Co., 129 Ga. App. 223 , 199 S.E.2d 338 , 1973 Ga. App. LEXIS 954 (1973), overruled, Tucker v. Chung Studio of Karate, Inc., 142 Ga. App. 818 , 237 S.E.2d 223 , 1977 Ga. App. LEXIS 1386 (1977).

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 Ga. App. LEXIS 1148 (1965).

Circumstances creating a mere suspicion are not sufficient to prove fraud. Watson v. Brown, 186 Ga. 728 , 198 S.E. 732 , 1938 Ga. LEXIS 664 (1938); Kamlapat v. Purvis-Wade Carpet Mills, 112 Ga. App. 781 , 146 S.E.2d 138 , 1965 Ga. App. LEXIS 1148 (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 Ga. App. LEXIS 803 (1970); McNeil v. Cowart, 186 Ga. App. 411 , 367 S.E.2d 291 , 1988 Ga. App. LEXIS 382 (1988); Lloyd v. Kramer, 233 Ga. App. 372 , 503 S.E.2d 632 , 1998 Ga. App. LEXIS 806 (1998), cert. denied, No. S98C1757, 1998 Ga. LEXIS 1188 (Ga. Nov. 20, 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 Ga. App. LEXIS 238 (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 Ga. LEXIS 605 (2016).

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 Ga. LEXIS 874 (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 Ga. LEXIS 332 (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 Ga. LEXIS 598 (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 Ga. LEXIS 465 (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 Ga. LEXIS 234 (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 Ga. LEXIS 283 (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 Ga. LEXIS 509 (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 Ga. LEXIS 1257 (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 Ga. App. LEXIS 2525 (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 Ga. App. LEXIS 408 (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 Ga. LEXIS 430 (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 Ga. App. LEXIS 332 (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 Ga. App. LEXIS 408 (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, 1984 U.S. Dist. LEXIS 22570 (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 Ga. App. LEXIS 1801 (1982); Horne v. Claude Ray Ford Sales, Inc., 162 Ga. App. 329 , 290 S.E.2d 497 , 1982 Ga. App. LEXIS 2156 (1982); Minuteman Press Int'l, Inc. v. Hedrick, 167 Ga. App. 453 , 306 S.E.2d 718 , 1983 Ga. App. LEXIS 2520 (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 Ga. App. LEXIS 2736 (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 Ga. App. LEXIS 1338 (2008), cert. denied, No. S09C0643, 2009 Ga. LEXIS 115 (Ga. Mar. 9, 2009).

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 Ga. App. LEXIS 977 (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 Ga. LEXIS 171 (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 Ga. LEXIS 684 (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 Ga. LEXIS 656 (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 , 1991 Ga. App. LEXIS 1087 (1991), cert. denied, No. S91C1515, 1991 Ga. LEXIS 570 (Ga. Sept. 6, 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 Ga. App. LEXIS 2483 (1977).

General Consideration

This section is not applicable to confidential relations for the purposes of exclusion of evidence. Guy v. State, 138 Ga. App. 11 , 225 S.E.2d 492 , 1976 Ga. App. LEXIS 2032 (1976).

Because there was no evidence of a confidential relationship between a manufacturer and a broker beyond the contractual obligation for the broker to post bonds on behalf of the manufacturer, and the broker did not act on the manufacturer’s behalf in any business transactions and was obligated only to secure the posting of the needed bonds, it was nothing more than an arms-length transaction, and the trial court’s charge to the jury on agency and fiduciary relationships was error. Aon Risk Servs. v. Commercial & Military Sys. Co., 270 Ga. App. 510 , 607 S.E.2d 157 , 2004 Ga. App. LEXIS 1423 (2004), cert. denied, No. S05C0582, 2005 Ga. LEXIS 270 (Ga. Mar. 28, 2005).

Confidential relationship distinguished from trade secret. —

An item may be considered confidential in the context of a business relationship without rising to the level of a trade secret. A confidential relationship is distinguished by the expectations of the parties involved, while a secret is identified through rigorous examination of the information sought to be protected. Roboserve, Ltd. v. Tom's Foods, Inc., 931 F.2d 789, 1991 U.S. App. LEXIS 10383 (11th Cir.), op. withdrawn, sub. op., 940 F.2d 1441, 1991 U.S. App. LEXIS 20568 (11th Cir. 1991).

There is never a presumption of confidential relationship. The burden is upon the party asserting the relationship to establish its existence. United States ex rel. Meva Corp. v. Northeast Constr. Co., 298 F. Supp. 1135, 1969 U.S. Dist. LEXIS 10671 (S.D. Ga. 1969); Anderson Chem. Co. v. Portals Water Treatment, Inc., 768 F. Supp. 1568, 1991 U.S. Dist. LEXIS 8911 (M.D. Ga. 1991), aff'd in part and rev'd in part, 971 F.2d 756, 1992 U.S. App. LEXIS 18210 (11th Cir. 1992).

A confidential relationship does not exist prior to the contract or legal relationship creating it, unless it exists for other reasons. Cole v. Cates, 113 Ga. App. 540 , 149 S.E.2d 165 , 1966 Ga. App. LEXIS 1128 (1966).

Whether or not the confidential relationship of partners applies to transactions outside of the scope of the partnership, it does not apply where it appears that the partnership was not in existence at the time of the transaction under consideration. Hancock v. Gunter, 195 Ga. 646 , 24 S.E.2d 772 , 1943 Ga. LEXIS 527 (1943).

Fiduciary relationship must exist. —

In order for this O.C.G.A. § 23-2-58 to be applicable, a definite fiduciary relationship must exist between plaintiff and the other party. Anderson Chem. Co. v. Portals Water Treatment, Inc., 768 F. Supp. 1568, 1991 U.S. Dist. LEXIS 8911 (M.D. Ga. 1991), aff'd in part and rev'd in part, 971 F.2d 756, 1992 U.S. App. LEXIS 18210 (11th Cir. 1992).

Summary judgment was properly granted to the defendants on the plaintiff’s breach of fiduciary duties in a partnership venture claim because the plaintiff never argued during the summary judgment phase that a confidential relationship existed between the parties as partners. Laymac v. Kushner, 349 Ga. App. 727 , 824 S.E.2d 768 , 2019 Ga. App. LEXIS 165 (2019), cert. denied, No. S19C1091, 2019 Ga. LEXIS 871 (Ga. Dec. 23, 2019).

Aiding and abetting breach of fiduciary duty. —

Georgia law does not recognize the tort of aiding and abetting a breach of fiduciary duty, and a Georgia court faced with the issue would not be likely to create such a cause of action since the imposition of aider and abettor liability for such breaches essentially extends fiduciary obligations beyond the scope of the confidential or special relationship upon which these duties are based. Munford, Inc. v. Munford, 188 Bankr. 860, 1994 U.S. Dist. LEXIS 20794 (D. Ga. 1994), aff'd, 97 F.3d 449, 1996 U.S. App. LEXIS 26466 (11th Cir. 1996), aff'd, 97 F.3d 456, 1996 U.S. App. LEXIS 26468 (11th Cir. 1996), aff'd in part and rev'd in part, 98 F.3d 604, 1996 U.S. App. LEXIS 27795 (11th Cir. 1996).

Party to confidential relationship may rely upon representations of other party. —

The reason for the rule that a party to a confidential or fiduciary relationship may rely upon representations made is that by the very terms or circumstances of the arrangement of dealings between the parties there rests upon the party acting for another the duty of protecting and furthering the interests of the person for whom he is acting, not those of himself or of any one else. The person so placing trust in him by virtue of this confidential relationship is justified by the situation of this interest in believing that the other party will act fairly and make true representations. Dover v. Burns, 186 Ga. 19 , 196 S.E. 785 , 1938 Ga. LEXIS 545 (1938).

Required degree of care to detect fraud is much less when there is a confidential relationship between two parties than in cases when parties deal at arm’s length. United States ex rel. Meva Corp. v. Northeast Constr. Co., 298 F. Supp. 1135, 1969 U.S. Dist. LEXIS 10671 (S.D. Ga. 1969).

Failure to protect confidential information. —

Dismissal of the plaintiff’s cause of action against a state agency for disclosure of private information for failure to state a cause of action was affirmed because in alleging that the plaintiff gave the agency personal information as a prerequisite to receiving services, with the expectation that it would protect the plaintiff’s information, the plaintiff failed to assert in the complaint facts showing that the agency owed the plaintiff a confidential duty to protect that information. McConnell v. Department of Labor, 337 Ga. App. 457 , 787 S.E.2d 794 , 2016 Ga. App. LEXIS 356 (2016), vacated, 302 Ga. 18 , 805 S.E.2d 79 , 2017 Ga. LEXIS 783 (2017).

Ordinary diligence not required when confidential relationship exists. —

The numerous decisions to the effect that a party who can read must read, and that fraud which will relieve a party who can read must be such as prevents the party from reading, apply to situations where the parties are dealing with each other at arms length, and have no application to a situation where the confidential and fiduciary relation of principal and agent is involved. Harrison v. Harrison, 214 Ga. 393 , 105 S.E.2d 214 , 1958 Ga. LEXIS 438 (1958); Allen v. Sanders, 176 Ga. App. 647 , 337 S.E.2d 428 , 1985 Ga. App. LEXIS 2536 (1985).

Bankruptcy. —

O.C.G.A. § 23-2-58 does not create the kind of trust necessary to create a fiduciary relationship under the federal bankruptcy law. Blashke v. Standard, 123 Bankr. 444, 1991 Bankr. LEXIS 76 (Bankr. N.D. Ga. 1991).

Confidential Relations Generally

1.In General

This section does not attempt to comprehensively enumerate the cases wherein the relation of mutual confidence is present. The showing of a relationship in fact which justifies the reposing of confidence by one party in another is all the law requires. Cochran v. Murrah, 235 Ga. 304 , 219 S.E.2d 421 , 1975 Ga. LEXIS 861 (1975); Vitner v. Funk, 182 Ga. App. 39 , 354 S.E.2d 666 , 1987 Ga. App. LEXIS 1608 (1987).

The relationships listed as examples in this section are not exclusive, as shown by the use of the abbreviation “etc.” and the phrase “where one party is so situated . . .” Cochran v. Murrah, 235 Ga. 304 , 219 S.E.2d 421 , 1975 Ga. LEXIS 861 (1975).

This section goes beyond the strict fiduciary relations of the parties to the particular circumstances of the case. Cochran v. Murrah, 235 Ga. 304 , 219 S.E.2d 421 , 1975 Ga. LEXIS 861 (1975).

Although some confidential relationships are created by law and contract (e.g., partners), others may be created by the facts of the particular case. Cochran v. Murrah, 235 Ga. 304 , 219 S.E.2d 421 , 1975 Ga. LEXIS 861 (1975).

In addition to partners and principals and agents, it has been held that confidential relationships may exist between husband and wife, brother and sister, and even banks and creditors of a depositor. Cochran v. Murrah, 235 Ga. 304 , 219 S.E.2d 421 , 1975 Ga. LEXIS 861 (1975).

The mere fact that one reposes trust and confidence in another does not create a confidential relationship. See Thomas v. Eason, 208 Ga. 822 , 69 S.E.2d 729 , 1952 Ga. LEXIS 354 (1952); Lewis v. Alderman, 117 Ga. App. 855 , 162 S.E.2d 440 , 1968 Ga. App. LEXIS 1265 (1968); United States ex rel. Meva Corp. v. Northeast Constr. Co., 298 F. Supp. 1135, 1969 U.S. Dist. LEXIS 10671 (S.D. Ga. 1969); Anderson Chem. Co. v. Portals Water Treatment, Inc., 768 F. Supp. 1568, 1991 U.S. Dist. LEXIS 8911 (M.D. Ga. 1991), aff'd in part and rev'd in part, 971 F.2d 756, 1992 U.S. App. LEXIS 18210 (11th Cir. 1992); Bowen v. Hunter, Maclean, Exley & Dunn, 241 Ga. App. 204 , 525 S.E.2d 744 , 1999 Ga. App. LEXIS 1540 (1999), cert. denied, No. S00C0585, 2000 Ga. LEXIS 372 (Ga. May 1, 2000); Burgess v. Coca-Cola Co., 245 Ga. App. 206 , 536 S.E.2d 764 , 2000 Ga. App. LEXIS 856 (2000), cert. denied, No. S00C1927, 2000 Ga. LEXIS 828 (Ga. Oct. 27, 2000).

The fact that an unlearned and uneducated person reposes trust and confidence in another does not create a confidential relationship. Clinton v. State Farm Mut. Auto. Ins. Co., 110 Ga. App. 417 , 138 S.E.2d 687 , 1964 Ga. App. LEXIS 654 (1964).

The mere fact that the defendant had confidence in the party with whom one contracted does not constitute a confidential relationship or a “similar relationship of mutual confidence” within the meaning of former Code 1933, § 37-707 (see O.C.G.A. § 23-2-58 ) so as to require the application of former Code 1933, § 37-708 (see O.C.G.A. § 23-2-59 ). Cole v. Cates, 113 Ga. App. 540 , 149 S.E.2d 165 , 1966 Ga. App. LEXIS 1128 (1966).

No confidential relationship created. —

The fact that it is alleged that a plaintiff reposed trust and confidence in the defendant does not create a confidential relationship. In the majority of business dealings opposite parties have trust and confidence in each other’s integrity, but there is no confidential relationship by this alone. This state of facts does not bring the plaintiff within the protection of this section. Dover v. Burns, 186 Ga. 19 , 196 S.E. 785 , 1938 Ga. LEXIS 545 (1938).

Allegation that defendant was a frequent visitor in the plaintiff’s home and that he had been a close personal, confidential and business adviser to the plaintiff did not establish the existence of a confidential relationship between them within the meaning of this section. Charles v. Simmons, 215 Ga. 794 , 113 S.E.2d 604 , 1960 Ga. LEXIS 343, cert. denied, 364 U.S. 871, 81 S. Ct. 113 , 5 L. Ed. 2 d 93, 1960 U.S. LEXIS 331 (1960).

Although the plaintiffs offered evidence demonstrating that defendant was their personal friend and had conducted business with them on matters not relating to investments, this evidence is not sufficient to establish a confidential relationship between the parties so as to justify the plaintiffs reposing trust in defendant. Garland v. Advance Med. Funding L.P., 86 F. Supp. 2d 1195, 2000 U.S. Dist. LEXIS 2547 (N.D. Ga. 2000).

Statements made by a corporate officer and owner to investors of a mortgage company that the officer would be obligated on each and every loan and would personally manage their money and be involved with the management of the company did not create a confidential relationship; additionally, the investors had their own financial advisor. Albee v. Krasnoff, 255 Ga. App. 738 , 566 S.E.2d 455 , 2002 Ga. App. LEXIS 749 (2002), cert. denied, No. S02C1578, 2002 Ga. LEXIS 747 (Ga. Sept. 6, 2002).

Factual question as to whether confidential relationship existed. —

Trial court did not err in denying the motion for summary judgment filed by a corporation’s general counsel/vice-president because questions of fact existed regarding the existence of a confidential relationship between the general counsel/vice-president and the investors, which were for a jury to decide. Cushing v. Cohen, 323 Ga. App. 497 , 746 S.E.2d 898 , 2013 Ga. App. LEXIS 678 (2013), cert. denied, No. S13C1810, 2013 Ga. LEXIS 936 (Ga. Nov. 4, 2013), cert. denied, No. S13C1715, 2013 Ga. LEXIS 941 (Ga. Nov. 4, 2013).

Existence or reliance on relationship issue for jury. —

Whether a confidential relationship existed between plaintiff and his employer’s agents, and whether plaintiff justifiably relied on representations regarding group insurance coverage, were questions for the jury. Capriulo v. Bankers Life Co., 178 Ga. App. 635 , 344 S.E.2d 430 , 1986 Ga. App. LEXIS 1733 (1986).

A confidential relationship is distinguished by the expectations of the parties involved, while a trade secret is identified through rigorous examination of the information sought to be protected. The jury is empowered to decide whether a confidential relationship exists under the facts of a particular case. Roboserve, Ltd. v. Tom's Foods, Inc., 940 F.2d 1441, 1991 U.S. App. LEXIS 20568 (11th Cir. 1991).

2.Specific Relationships

Attorney-client relationship. —

There was insufficient evidence to establish that the attorney for the purchaser of land was also the attorney for the sellers during the time of the transactions at issue. McLendon v. Georgia Kaolin Co., 782 F. Supp. 1548, 1992 U.S. Dist. LEXIS 631 (M.D. Ga. 1992).

Trial court erred in granting summary judgment with respect to a client’s breach of fiduciary duty claim, which was not a mere duplication of the legal malpractice claim that was based on the establishment of a fiduciary, attorney-client relationship that was breached, as: (1) material fact issues remained as to whether an attorney-client relationship existed between the client and the attorney; (2) the question of legal malpractice remained an issue; and (3) the client had the right to plead alternative theories, and the jury should be permitted to decide the breach of fiduciary duty claim should they find no attorney-client relationship existed. Both v. Frantz, 278 Ga. App. 556 , 629 S.E.2d 427 , 2006 Ga. App. LEXIS 288 (2006), cert. denied, No. S06C1372, 2006 Ga. LEXIS 674 (Ga. Sept. 8, 2006).

Creditors’ 11 U.S.C. § 523(a) (4) claim against a Chapter 13 debtor, their attorney, was dismissed for failure to state a claim, as the creditors failed to allege a contract or other agreement establishing a technical trust, but instead cited O.C.G.A. § 23-2-58 , which the court held did not establish fiduciary capacity, as the statute did not designate trust property or impose trust duties. Further, none of the Georgia Rules of Professional Conduct cited by the creditors, Ga. St. Bar R. 4-102(d):1.1, 1.3, 1.6, and 1.7(a), mentioned trust property and, thus, those rules were ineffective to establish fiduciary capacity for purposes of 11 U.S.C. § 523(a) (4). Crisler v. Farr (In re Farr), No. 10-11904-JDW, No. 11-1009, 2011 Bankr. LEXIS 1875 (Bankr. M.D. Ga. May 18, 2011).

Attorney breached fiduciary duties to a bankruptcy debtor since the debtor’s reliance on the attorney as a family attorney and the attorney’s controlling influence over the debtor established an attorney-client relationship with regard to a real property transaction, and the attorney induced the debtor to execute documents which were not in the debtor’s best interests and instead benefitted the attorney and other parties. Boudreaux v. Holloway (In re Holloway), No. 09-30446, No. 10-03015, 2015 Bankr. LEXIS 1040 (Bankr. S.D. Ga. Mar. 31, 2015), modified in part, No. 09-30446, No. 10-03015, 2015 Bankr. LEXIS 2786 (Bankr. S.D. Ga. Aug. 21, 2015), aff'd, 680 Fed. Appx. 866, 2017 U.S. App. LEXIS 3359 (11th Cir. 2017).

Accountant and client. —

When a company sued its accountants for breach of fiduciary duty regarding a sale of the company’s assets, summary judgment was properly granted in favor of the accountants because the evidence was insufficient to create a factual dispute as to whether the accountants exercised a controlling influence over the will, conduct, and interest of the company, as required under O.C.G.A. § 23-2-58 for a fiduciary relationship to arise. R.W. Holdco, Inc. v. Johnson, 267 Ga. App. 859 , 601 S.E.2d 177 , 2004 Ga. App. LEXIS 807 (2004), cert. denied, No. S04C1779, 2004 Ga. LEXIS 890 (Ga. Oct. 12, 2004).

Bank and its customers. —

There is no confidential relationship between a bank and its customers merely because the customer had advised with, relied upon, and trusted the bankers in the past. Pardue v. Bankers First Fed. Sav. & Loan Ass'n, 175 Ga. App. 814 , 334 S.E.2d 926 , 1985 Ga. App. LEXIS 2389 (1985); Russell v. Barnett Banks, Inc., 241 Ga. App. 672 , 527 S.E.2d 25 , 1999 Ga. App. LEXIS 1622 (1999), cert. dismissed, No. S00C0715, 2000 Ga. LEXIS 392 (Ga. May 5, 2000).

The trial court correctly determined that there was no evidence of special circumstances imposing upon the bank the duties of a fiduciary in favor of borrowing petroleum companies such that summary judgment as to any claim for breach of fiduciary duty was correct. Russell Corp. v. BancBoston Fin. Co., 209 Ga. App. 660 , 434 S.E.2d 716 , 1993 Ga. App. LEXIS 960 (1993), cert. denied, No. S93C1769, 1993 Ga. LEXIS 1015 (Ga. Oct. 22, 1993).

Trial court did not err in granting judgment on the pleadings to a bank as to a customer’s claim for breach of a duty of confidentiality because the customer failed to assert in the complaint facts showing that the bank owed the customer a confidential duty or invaded the customer’s privacy, and the customer did not plead any special circumstances showing that the customer had a particular relationship of trust or mutual confidence with the bank; the bank-customer relationship is not confidential. Jenkins v. Wachovia Bank, N.A., 314 Ga. App. 257 , 724 S.E.2d 1 , 2012 Ga. App. LEXIS 172 (2012), rev'd, 293 Ga. 162 , 744 S.E.2d 686 , 2013 Ga. LEXIS 541 (2013), vacated in part, 325 Ga. App. 376 , 752 S.E.2d 633 , 2013 Ga. App. LEXIS 997 (2013).

Businessmen. —

In the majority of business dealings, opposite parties have trust and confidence in each other’s integrity, but there is no confidential relationship by this alone. Lewis v. Alderman, 117 Ga. App. 855 , 162 S.E.2d 440 , 1968 Ga. App. LEXIS 1265 (1968).

A confidential relationship may exist between businessmen, depending on the facts. Cochran v. Murrah, 235 Ga. 304 , 219 S.E.2d 421 , 1975 Ga. LEXIS 861 (1975).

The entire business structure of the parties, their interactions and dealings over the course of several years, and their common goal all furnished a basis for a jury to find a relationship in fact which justified the reposal of confidence on the part of one party and good faith on the part of the others. Vitner v. Funk, 182 Ga. App. 39 , 354 S.E.2d 666 , 1987 Ga. App. LEXIS 1608 (1987).

Facts would not support finding a confidential relationship between real estate developers and a supermarket regarding their shared goal of finding a site and constructing a shopping center in which the supermarket would lease space, where the parties fought over the terms of the lease agreement for approximately six months. Doll v. Grand Union Co., 925 F.2d 1363, 1991 U.S. App. LEXIS 3748 (11th Cir. 1991).

Relationship between the parties, close and lengthy as it might have been, was merely a business relationship between two independent concerns; therefore, no fiduciary duties were created. Automated Solutions Enters. v. Clearview Software, Inc., 255 Ga. App. 884 , 567 S.E.2d 335 , 2002 Ga. App. LEXIS 790 (2002).

Parties’ merger agreement and post-merger relationship did not establish a confidential or fiduciary relationship between the parties since the plaintiff did not exercise sole and exclusive control over the termination of a lease held by the defendant; also, the mere fact that the plaintiff’s signature was required on instructions to the escrow agent for the release of escrow funds did not establish a confidential relationship. Interland, Inc. v. Bunting, No. 1:04-CV-444-ODE, 2005 U.S. Dist. LEXIS 36112 (N.D. Ga. Mar. 31, 2005).

Evidence that an appellant breached an agreement with the appellee; was unjustly enriched by keeping the profits of the parties’ business during the months the appellee was entitled to operate it; and committed civil conspiracy when, in concert with the parties’ lessor, prevented the appellee from operating the business, supported an award of lost profit damages to the appellee. Asgharneya v. Hadavi, 298 Ga. App. 693 , 680 S.E.2d 866 , 2009 Ga. App. LEXIS 739 (2009), overruled in part, Jordan v. Moses, 291 Ga. 39 , 727 S.E.2d 460 , 2012 Ga. LEXIS 436 (2012).

Genuine issues of fact existed as to whether fiduciary duty owed between business people. —

Trial court erred by granting summary judgment to the defendants on the part owner’s claim for breach of contract because there were genuine questions of fact regarding whether the defendants owed the part owner a fiduciary duty, whether the defendants breached the duty, and whether any breach proximately caused the part owner damage. Bedsole v. Action Outdoor Adver. JV, LLC, 325 Ga. App. 194 , 750 S.E.2d 445 , 2013 Ga. App. LEXIS 887 (2013), cert. denied, No. S14C0572, 2014 Ga. LEXIS 340 (Ga. Apr. 22, 2014).

Business relationship. —

Trial court erred by denying summary judgment to a subcontractor on the contractor’s breach of fiduciary claim because the evidence did not raise an issue of fact regarding the existence of a special agency or any other confidential relationship between the parties as the business relationship was an arms-length one and even adversarial. UWork.com, Inc. v. Paragon Techs., Inc., 321 Ga. App. 584 , 740 S.E.2d 887 , 2013 Ga. App. LEXIS 355 (2013), cert. denied, No. S13C1277, 2013 Ga. LEXIS 823 (Ga. Oct. 7, 2013).

Members of a partnership or an LLC undoubtedly shared a special relationship under Georgia law, but the fiduciary relationship addressed in the Bankruptcy Code exception to discharge had to be demonstrated by evidence of an express trust. Keys v. Allen (In re Allen), No. G11-24718-REB, No. G11-24718-REB, No. 12-2047, 2013 Bankr. LEXIS 5084 (Bankr. N.D. Ga. Oct. 25, 2013).

Managing and non-managing members of LLC. —

In a suit arising out of the winding up of an LLC, neither res judicata nor collateral estoppel barred the non-managing member’s breach of contract and fiduciary duty counterclaims involving the sale of the LLC property based on a prior suit between the same parties because the current claims related to conduct occurring after the first trial. Eichenblatt v. Piedmont/Maple, LLC, 341 Ga. App. 761 , 801 S.E.2d 616 , 2017 Ga. App. LEXIS 272 (2017).

Manager of joint venture. —

Trial court did not err in denying a manager’s motion for summary judgment as to the joint venturers’ counterclaim for breach of fiduciary duty because questions of fact existed regarding whether the manager exercised good faith by depleting the business funds and suspending distributions. Maree v. ROMAR Joint Venture, 329 Ga. App. 282 , 763 S.E.2d 899 , 2014 Ga. App. LEXIS 672 (2014), cert. denied, No. S15C0250, 2015 Ga. LEXIS 29 (Ga. Jan. 12, 2015), cert. denied, No. S15C0361, 2015 Ga. LEXIS 49 (Ga. Jan. 12, 2015), overruled in part, SRM Group, Inc. v. Travelers Prop. Cas. Co. of Am., 308 Ga. 404 , 841 S.E.2d 729 , 2020 Ga. LEXIS 235 (2020).

Clergyman and parishioner. —

It can be found that a clergyman occupies a confidential relationship toward a member of his church. Bryan v. Norton, 245 Ga. 347 , 265 S.E.2d 282 , 1980 Ga. LEXIS 792 (1980).

In a sexual abuse by a priest case, the plaintiff’s negligent supervision, training, and retention, negligent failure to warn and provide adequate security, breach of fiduciary duty, and fraudulent misrepresentation and concealment claims were improperly dismissed as the plaintiff adequately pled actual fraud for purposes of tolling as the plaintiff could possibly establish the existence of a confidential relationship between the plaintiff and the defendants, and that the defendants’ alleged fraudulent concealment about the abusive priest debarred or deterred the plaintiff from discovering the plaintiff’s causes of action; and the plaintiff could show that the plaintiff exercised reasonable diligence to discover the defendants’ fraud. Doe v. St. Joseph's Catholic Church, 313 Ga. 558 , 870 S.E.2d 365 , 2022 Ga. LEXIS 59 (2022).

Whether a wife consented to the sexual relationship would be irrelevant when the bishop was, by virtue of the bishop’s confidential relationship, in a position to manipulate the wife into giving that consent by not only being a bishop but also the wife’s employer. Brewer v. Paulk, 296 Ga. App. 26 , 673 S.E.2d 545 , 2009 Ga. App. LEXIS 112 (2009).

Employer and employee. —

Employee and employer is not the type of relationship such as that of principal and agent from which the law will necessarily imply confidentiality. Cochran v. Murrah, 235 Ga. 304 , 219 S.E.2d 421 , 1975 Ga. LEXIS 861 (1975).

Even though generally the relationship between an employer and employee is that of arms length bargaining, this is not to say, however, that under a particular fact situation a confidential relationship can never exist between an employer and his employee (e.g., an employer signing checks prepared by his secretary-bookkeeper). Cochran v. Murrah, 235 Ga. 304 , 219 S.E.2d 421 , 1975 Ga. LEXIS 861 (1975).

When assurances between a real estate broker and his former real estate director, an at-will employee, would not have been made but for the prior employer-employee relationship, and because they were not made while the relationship existed, the assurances did not cause the employer and employee relationship to evolve into a fiduciary relationship. Atlanta Mkt. Ctr. Mgt. Co. v. McLane, 269 Ga. 604 , 503 S.E.2d 278 , 1998 Ga. LEXIS 740 (1998).

When there was no evidence showing that employees could create obligations on behalf of their employer or bring third parties into contractual relations with it, they were not agents owing a fiduciary duty to the employer. Physician Specialists in Anesthesia, P.C. v. Wildmon, 238 Ga. App. 730 , 521 S.E.2d 358 , 1999 Ga. App. LEXIS 924 (1999).

Evidence that a former executive officer of a product development company, while still employed, pursued opportunities in the same market for the officer’s own benefit, to the company’s detriment, and appropriated a presentation and its information, showed a triable issue as to a confidential relationship under O.C.G.A. § 23-2-58 . Glades Pharms., LLC v. Murphy, No. 1:04-CV-3817-TWT, 2005 U.S. Dist. LEXIS 36198 (N.D. Ga. Dec. 16, 2005).

There is little question that a former employee’s relationship with the employer was one which required confidence under O.C.G.A. § 23-2-58 . The undisputed evidence showed that the employee was intimately involved in the negotiations leading up to and the continuous administration of the contracts with a contractor; not only was the employee responsible for bringing the contractor to the employer, the employee was charged with supervision and inspection of the contractor’s contract work. GIW Indus. v. JerPeg Contr., Inc., 530 F. Supp. 2d 1323, 2008 U.S. Dist. LEXIS 2051 (S.D. Ga. 2008).

On a breach of fiduciary duty claim against a former employee concerning the employee’s alleged solicitation of the employee’s co-workers, the trial court did not err in granting summary judgment in favor of the employee because, even assuming that the employee had the authority to bind the employer with respect to customer contracts, there was no evidence that the employee had the authority to bind the company on employment matters or relations. Thus, although the employee may have owed the company a fiduciary duty with respect to the customer contracts the employee entered into on its behalf, there was no evidence that the employee occupied a similar confidential relationship with respect to employee relations. Gordon Document Prods. v. Serv. Techs., 308 Ga. App. 445 , 708 S.E.2d 48 , 2011 Ga. App. LEXIS 211 (2011).

Trial court properly denied a personal assistant’s motion for a directed verdict on a couple’s claim for breach of fiduciary duty based upon the assistant’s withdrawal of $49,000 remaining in a joint account held with the wife because there was evidence that the assistant was not entitled to any portion of that account since the assistant was a fiduciary only. Lee v. Choi, 323 Ga. App. 370 , 744 S.E.2d 871 (2013).

Because the employer failed to point out specific evidence giving rise to a triable issue as to the former employee’s status as an agent owing a fiduciary duty to the principal, the employer failed to show error in the trial court’s grant of summary judgment to the employee on the employer’s claim for breach of fiduciary duty. Avion Sys. v. Bellomo, 338 Ga. App. 141 , 789 S.E.2d 374 , 2016 Ga. App. LEXIS 442 (2016).

Evidence was insufficient to convict the defendant of criminal attempt to commit theft by taking by a fiduciary as the relationship between the defendant and the employer was merely that of employer-employee because, although the defendant was responsible for creating invoices, the defendant did not have authority to act for the employer beyond weighing the metals and assigning to the weight a dollar amount that had been previously fixed by the employer; and the defendant could not negotiate with the customers or independently determine how much the metals were worth; thus, although the conviction for criminal attempt to commit theft by taking stood, the felony sentence, based on the defendant being a fiduciary, was reversed. Scott v. State, 344 Ga. App. 412 , 810 S.E.2d 613 , 2018 Ga. App. LEXIS 44 (2018).

Employee benefit plan claims administrator and utilization review provider. —

No fiduciary duty existed between a participant in an employee benefit health plan and the claims administrator for the plan or an independent plan medical utilization review provider; therefore, the participant could not assert a claim for breach of fiduciary duty against the claims administrator or the review provider. Monroe v. Bd. of Regents of the Univ. Sys., 268 Ga. App. 659 , 602 S.E.2d 219 , 2004 Ga. App. LEXIS 937 (2004), cert. denied sub nom. Blue Cross & Blue Shield of Ga., Inc. v. Monroe, No. S04C2023, 2004 Ga. LEXIS 908 (Ga. Oct. 12, 2004), cert. denied sub nom. Monroe v. Blue Cross & Blue Shield of Ga., Inc., No. S04C1996, 2004 Ga. LEXIS 891 (Ga. Oct. 12, 2004).

Executor and legatee. —

The relation between an executor and the devisees under a will is to a certain extent a relation of confidence and trust. Dorsey v. Green, 202 Ga. 655 , 44 S.E.2d 377 , 1947 Ga. LEXIS 508 (1947).

The policy of the law forbids that administrators, executors, or trustees, having duties to perform in reference to property for their cestuis que trust, should deal with the beneficiaries with respect thereto, except upon the footing of the utmost candor and upon considerations demonstrative of the absence of any undue advantage. Dorsey v. Green, 202 Ga. 655 , 44 S.E.2d 377 , 1947 Ga. LEXIS 508 (1947).

An executor cannot purchase property from himself, directly or indirectly, and if he does so the sale will be set aside at the instance of a legatee who is not in laches, however fair and honest it may have been. He may, however, purchase the property from a legatee who is sui juris and laboring under no disability, where all the circumstances of the transaction are fair and open, and no advantage is taken by him of the legatee by concealment, misrepresentation, or omission to state any important fact, or by the exercise or undue influence, and the legatee understands the nature and effect of his act. Dorsey v. Green, 202 Ga. 655 , 44 S.E.2d 377 , 1947 Ga. LEXIS 508 (1947).

A court of equity looks upon the purchase of estate property by the executor from a legatee with jealous eye, and will not uphold it, unless it appears that the sale is fair, and that there is no fraud, no concealment, and no advantage taken by the executor of information acquired by him in his character as such. Dorsey v. Green, 202 Ga. 655 , 44 S.E.2d 377 , 1947 Ga. LEXIS 508 (1947).

Business did not have a confidential relationship with a corporation where the parties had similar but separate business objectives that did not merge into a common business objective; the business’s insistence on status as a platform company was inconsistent with a confidential relationship because a bid prepared by the business with another company was not evidence of such a relationship, even though the corporation’s president was an officer in the other company, as there was no showing that the corporate entities should be disregarded. Infrasource, Inc. v. Hahn Yalena Corp., 272 Ga. App. 703 , 613 S.E.2d 144 , 2005 Ga. App. LEXIS 287 (2005), cert. denied, No. S05C1304, 2005 Ga. LEXIS 605 (Ga. Sept. 19, 2005).

Trial court properly denied the motions for a directed verdict and for a judgment notwithstanding the verdict filed by the executors of a will and trust because there was sufficient evidence to support the jury’s finding that the documents were invalid as a product of undue influence based on the executors taking complete control of the elderly testator and isolating the testator from the testator’s sons, as well as substituting the executors’ desires and having the testator sign a new will and trust, which benefitted the executors and excluded the testator’s wife and sons. Davison v. Hines, 291 Ga. 434 , 729 S.E.2d 330 , 2012 Ga. LEXIS 642 (2012).

Friendship. —

That the defendant was or had been a friend of the plaintiff would not alone create a relation of trust or confidence between them. Norris v. Hart, 74 Ga. App. 444 , 40 S.E.2d 96 , 1946 Ga. App. LEXIS 563 (1946).

Evidence was sufficient to support a jury’s finding that there was a confidential relationship pursuant to O.C.G.A. § 23-2-58 between an attorney, who was dying of leukemia, and the attorney’s former client and friend, from whom the attorney sought to borrow money on the attorney’s life insurance policy. Stamps v. JFB Props., LLC, 287 Ga. 124 , 694 S.E.2d 649 , 2010 Ga. LEXIS 328 (2010).

Lender’s claims against borrowers for discharge of documents the lender signed without reading, which discharged a $1.2 million note and released the lender’s security interest in the borrowers’ property, were subject to summary judgment. The lender’s close, personal friendship with the borrowers did not create a confidential relationship under O.C.G.A. § 23-2-58 and did not excuse the lender’s failure to read the documents. Arko v. Cirou, 305 Ga. App. 790 , 700 S.E.2d 604 , 2010 Ga. App. LEXIS 749 (2010), cert. denied, No. S10C2080, 2011 Ga. LEXIS 356 (Ga. Apr. 26, 2011).

Boyfriend and girlfriend. —

The trial court did not err in denying a boyfriend a directed verdict on a fraud in the inducement claim asserted by the boyfriend’s girlfriend, given evidence of the personal nature of their relationship which caused the girlfriend to place trust and confidence in the boyfriend’s repeated promises of marriage and believe that the boyfriend was acting in the girlfriend’s best interest by taking the monies loaned to use for a business, which would ultimately allow the boyfriend to repay the girlfriend and support them after they were married. Tankersley v. Barker, 286 Ga. App. 788 , 651 S.E.2d 435 , 2007 Ga. App. LEXIS 825 (2007), cert. denied, No. S07C1821, 2007 Ga. LEXIS 742 (Ga. Oct. 9, 2007).

Husband and wife. —

It is plain that under Georgia law a confidential relationship exists between husband and wife. ITT Com. Fin. Corp. v. Dilkes (In re Analytical Sys.), 113 Bankr. 91, 1990 U.S. Dist. LEXIS 20824 (N.D. Ga. 1990), rev'd, 933 F.2d 939, 1991 U.S. App. LEXIS 12203 (11th Cir. 1991).

Wife’s personal injury action against her husband arising from the husband’s infection of the wife with genital herpes was not barred by statute of limitations; the parties enjoyed a confidential relationship pursuant to O.C.G.A. § 23-2-58 , and thus, the wife was entitled to repose confidence and trust in the husband, and because the husband failed to admit the truth to the wife, he was guilty of a false representation and that falsehood deterred the wife from instituting suit and tolled the statute of limitation. Beller v. Tilbrook, 275 Ga. 762 , 571 S.E.2d 735 , 2002 Ga. LEXIS 965 (2002).

Wife could not claim that she had a confidential relationship with her husband when she signed a prenuptial agreement, thereby relieving the wife of any obligation to verify the agreement’s representations, because when the wife signed the agreement they were not married, so the confidential relationship applicable to husbands and wives did not exist and, under Georgia law, there was no such relationship applicable to putative spouses. Mallen v. Mallen, 280 Ga. 43 , 622 S.E.2d 812 , 2005 Ga. LEXIS 815 (2005).

Husband, his father, and the father’s friend were not entitled to summary judgment in an action by the Securities Exchange Commission against them for insider trading under 17 C.F.R. § 240.10b-5 because a reasonable factfinder could conclude that the husband violated a fiduciary duty to his wife under O.C.G.A. § 23-2-58 by disclosing information about the wife’s employer, leading to his father and the friend purchasing stock options in the wife’s employer on the basis of material, non-public information. United States SEC v. Goodson, No. 1:99-cv-2133-MHS, 2001 U.S. Dist. LEXIS 26493 (N.D. Ga. Mar. 6, 2001).

After the husband engaged counsel to draw up a formal post-nuptial agreement, and the husband moved to enforce the agreement when the wife filed for divorce, the post-nuptial agreement was unenforceable as the wife testified that the wife signed the agreement because the husband represented to the wife that, if the wife signed the agreement, the husband would understand that the wife loved the husband, and the husband would tear up the agreement; the husband procured the wife’s signature on the agreement under the pretense that the agreement would never be enforced and, in fact, that the agreement would be destroyed, and the evidence was sufficient to establish the existence of fraud in procuring the agreement. Murray v. Murray, 299 Ga. 703 , 791 S.E.2d 816 , 2016 Ga. LEXIS 605 (2016).

Paramours. —

As to a breach of fiduciary duty claim in a defamation suit, one of the defendants, by virtue merely of the status as a paramour of the plaintiff, owed no fiduciary duty to the plaintiff and, thus, the breach of fiduciary claim failed. Bickerstaff v. SunTrust Bank, 299 Ga. 459 , 788 S.E.2d 787 , 2016 Ga. LEXIS 469, cert. denied, 580 U.S. 1020, 137 S. Ct. 571 , 196 L. Ed. 2 d 447, 2016 U.S. LEXIS 7351 (2016).

Insurance agent and non-insured. —

Summary judgment was properly awarded the insurer with respect to a fraud claim where the record was devoid of any evidence from which to conclude that a confidential relationship existed between insurance agent and plaintiff who was neither a party to the insurance contract, a named insured, nor an owner of the vehicle. Clark v. Superior Ins. Co., 209 Ga. App. 290 , 433 S.E.2d 394 , 1993 Ga. App. LEXIS 851 (1993).

Insurance agent and insured. —

When an insured sued an insurance agent for fraud and breach of fiduciary duty because the agent allegedly misrepresented the coverage afforded by a policy the insured purchased through the agent, the insured did not show the presence of a confidential relationship with the agent which would have negated the insured’s duty to read the policy the insured purchased because: (1) the insured knew what kind of insurance coverage the insured wanted when approaching the agent, so the insured did not rely on the agent’s expertise to obtain the correct insurance; and (2) the insured’s past dealings with and trust in the agent did not create a confidential relationship. Canales v. Wilson Southland Ins. Agency, 261 Ga. App. 529 , 583 S.E.2d 203 , 2003 Ga. App. LEXIS 694 (2003).

Wife and agent. —

Defendant, as decedent’s wife and agent under the power of attorney, enjoyed a relationship with decedent which was both confidential and fiduciary in nature. Wheeless v. Gelzer, 780 F. Supp. 1373, 1991 U.S. Dist. LEXIS 18594 (N.D. Ga. 1991).

Lender and borrower. —

There is no confidential relationship between lender and borrower for they are creditor and debtor with clearly opposite interests. Pardue v. Bankers First Fed. Sav. & Loan Ass'n, 175 Ga. App. 814 , 334 S.E.2d 926 , 1985 Ga. App. LEXIS 2389 (1985).

Mortgagee and mortgagor. —

There is no confidential relationship between mortgagee and mortgagor for they are creditor and debtor with clearly opposite interests. Pardue v. Bankers First Fed. Sav. & Loan Ass'n, 175 Ga. App. 814 , 334 S.E.2d 926 , 1985 Ga. App. LEXIS 2389 (1985).

Mortgage companies were not liable for a breach of fiduciary duty to real estate investors whose credit scores allegedly were injured after the companies’ failure to timely pay a tax bill triggered the filing of a county tax lien and after they erroneously reported having foreclosed a mortgage granted to the investors because the investors failed to show the existence of a confidential relationship between the parties within the meaning of O.C.G.A. § 23-2-58 . Burch v. Chase Manhattan Mortg. Corp., No. 1:07-CV-0121-JOF, 2008 U.S. Dist. LEXIS 76595 (N.D. Ga. Sept. 15, 2008).

Homeowner sufficiently alleged a claim for breach of contract against the homeowner’s mortgage lender based on a promise in the security agreement that the lender would foreclose “fairly” while acting as the owner’s agent; the homeowner was not required to perform the homeowner’s obligation of payment because the lender’s obligations as to reinstatement and foreclosure were triggered by the failure to pay. Stewart v. SunTrust Mortg., Inc., 331 Ga. App. 635 , 770 S.E.2d 892 , 2015 Ga. App. LEXIS 216 (2015).

Hospital and patient. —

In an action between a group of uninsured patients and a non-profit hospital in which the patients alleged, among other things, a breach of fiduciary duty, absent authority recognizing a fiduciary relationship between a hospital and a patient with respect to the prices the hospital charged, said claim was properly dismissed. Cox v. Athens Reg'l Med. Ctr., Inc., 279 Ga. App. 586 , 631 S.E.2d 792 , 2006 Ga. App. LEXIS 647 (2006), cert. denied, No. S06C1722, 2006 Ga. LEXIS 721 (Ga. Sept. 8, 2006).

Hospital and doctors. —

In a suit by doctors against a hospital where they had served as anesthesiologists alleging that the hospital’s failure to rehire the doctors was motivated by malice, summary judgment to the hospital was proper based on peer review immunity under O.C.G.A. § 31-7-132(a); the doctors’ claim for breach of fiduciary duty failed because the relationship between the doctors and the hospital was governed by a contract and no fiduciary relationship was shown. Cancel v. Medical Center of Central Ga., Inc., 345 Ga. App. 215 , 812 S.E.2d 592 , 2018 Ga. App. LEXIS 197 (2018), cert. denied, No. S18C1054, 2018 Ga. LEXIS 769 (Ga. Nov. 5, 2018).

Partners. —

Partners stand in a confidential relationship to each other. Crosby v. Rogers, 197 Ga. 616 , 30 S.E.2d 248 , 1944 Ga. LEXIS 312 (1944).

Petitioner was justified in failing to read deed which he signed or to examine the records, and in relying upon the defendant, because of the confidential relationship existing between them as partners, and where suit was brought promptly upon learning of the defendant’s breach of faith the petitioner was not estopped by laches although 14 years had passed since the deed attacked was executed. Crosby v. Rogers, 197 Ga. 616 , 30 S.E.2d 248 , 1944 Ga. LEXIS 312 (1944).

Under the evidence as to the existence of a partnership between the petitioner and the defendant and their agreement to jointly purchase the land involved, and evidence that the petitioner paid one-half of the purchase money and trusted the defendant to close the deal and obtain a conveyance naming them both as grantees, the defendant could not obtain an interest in the land antagonistic to that of the petitioner; and where the defendant procured a deed, in his own name only, equity would annul the conveyance and decree title in the petitioner to his share. Crosby v. Rogers, 197 Ga. 616 , 30 S.E.2d 248 , 1944 Ga. LEXIS 312 (1944).

Summary judgment was not appropriate for a guaranty partner’s allegations that an investment bank partner, which was also a creditor of the partnership, breached its fiduciary duty towards the guaranty partner by using coercive and deceptive tactics in its efforts to restructure the partnership because a jury question existed as to whether the investment bank partner breached its fiduciary duty owed to the guaranty partner. AAF-McQuay, Inc. v. Willis, 308 Ga. App. 203 , 707 S.E.2d 508 , 2011 Ga. App. LEXIS 155 (2011).

Court of appeals erred in granting an attorney’s motion for summary judgment in the court’s action to dissolve a partnership because the court cited disapproved language that the tort of wrongful dissolution of a partnership required the attempt to appropriate the “new prosperity” of the partnership; the gravamen of a wrongful dissolution claim is a partner’s attempt to appropriate, through the dissolution, the assets or business of the partnership, which may include prospective business, without adequate compensation to the remaining partners. Jordan v. Moses, 291 Ga. 39 , 727 S.E.2d 460 , 2012 Ga. LEXIS 436 (2012).

Franchisor and franchisee. —

A franchise contract did not create a confidential relationship between the franchisor and franchisee. Allen v. Hub Cap Heaven, Inc., 225 Ga. App. 533 , 484 S.E.2d 259 , 1997 Ga. App. LEXIS 300 (1997).

Principal and agent. —

Since the relation of principal and agent was established when the owner, listed her property for sale with the realty company, such being a confidential or fiduciary relation, it imposed on the agent the duty of exercising the utmost good faith and loyalty toward the principal. It became the duty of the agent to act primarily and solely for the benefit of the principal in all matters connected with the agency. Dolvin Realty Co. v. Holley, 203 Ga. 618 , 48 S.E.2d 109 , 1948 Ga. LEXIS 497 (1948).

The relationship of principal and agent is fiduciary in character, and imposes upon the parties the duties of exercising toward each other the utmost good faith. Reisman v. Massey, 84 Ga. App. 796 , 67 S.E.2d 585 , 1951 Ga. App. LEXIS 800 (1951).

The law implies as a part of the contract by which every agency arises that the agent agrees to have and exercise for and toward his principal loyalty and absolute good faith, and any breach of this implied contract on his part forfeits his right to commissions. Reisman v. Massey, 84 Ga. App. 796 , 67 S.E.2d 585 , 1951 Ga. App. LEXIS 800 (1951).

The relationship of principal and agent, being confidential and fiduciary in character, demands of the agent the utmost loyalty and good faith to his principal. Any breach of this good faith whereby the principal suffers any disadvantage and the agent reaps any benefit is a fraud of such nature as to preclude the agent from taking or retaining the benefit. Harrison v. Harrison, 214 Ga. 393 , 105 S.E.2d 214 , 1958 Ga. LEXIS 438 (1958).

The law implies, as a part of the contract by which every agency arises, that the agent agrees to have and exercise towards his principal diligence, loyalty and absolute good faith. Anderson v. Redwal Music Co., 122 Ga. App. 247 , 176 S.E.2d 645 , 1970 Ga. App. LEXIS 843 (1970).

Real estate and brokers and clients. —

Whatever may be the reciprocal duties imposed by law on a real estate broker and his principal, the relationship is one of mutual confidence, and the law requires that the broker, in the discharge of his duties, act towards his principal in the utmost good faith. Lyle v. Etheridge, 40 Ga. App. 808 , 151 S.E. 531 , 1930 Ga. App. LEXIS 708 (1930).

Although a real estate broker, when obtaining for the owner of real estate a tenant for the property, is under no duty, arising out of the relationship to his principal, to guarantee the financial standing of the lessee and the lessee’s ability to perform the proposed lease contract, yet where the broker makes a knowingly false representation to his principal, the owner of the property, as to the financial standing of the lessee and the lessee’s ability to perform the proposed lease contract, and thereby induces the principal to accept the tenant procured by the broker and to pay to the broker a commission for his services in procuring the tenant, he thereby perpetrates a fraud upon his principal, for which the principal, in a suit against the broker, may recover for the damages sustained. Lyle v. Etheridge, 40 Ga. App. 808 , 151 S.E. 531 , 1930 Ga. App. LEXIS 708 (1930).

Gifts and purchases of agents scrutinized. —

It is for the common security of mankind “that gifts procured by agents, and purchases made by them, from their principal, should be scrutinized with a close and vigilant suspicion.” Harrison v. Harrison, 214 Ga. 393 , 105 S.E.2d 214 , 1958 Ga. LEXIS 438 (1958).

Real estate brokers and clients. —

Answer, alleging that the plaintiff broker misrepresented the financial ability of the buyer, that is, that the buyer was ready, willing and able to buy on the terms stipulated by the seller, thereby inducing the defendant to accept the buyer’s offer and to enter into a contract which the buyer was unable to perform, set out a breach of the broker’s duty of exercising the utmost good faith toward his principal, the seller, which was a defense to the broker’s action for commissions. Reisman v. Massey, 84 Ga. App. 796 , 67 S.E.2d 585 , 1951 Ga. App. LEXIS 800 (1951).

If the agent practices upon the principal any deception (whether intentional or not) whereby the principal is misled and damaged and the agent would reap any benefit, the transaction is fraudulent, and the courts will not allow the agent to take or retain the benefit. Reisman v. Massey, 84 Ga. App. 796 , 67 S.E.2d 585 , 1951 Ga. App. LEXIS 800 (1951).

Because of fiduciary relationship, the petitioner was justified in relying upon the representations of her agent and in failing to read and know the contents of the various deeds signed by her. Harrison v. Harrison, 214 Ga. 393 , 105 S.E.2d 214 , 1958 Ga. LEXIS 438 (1958).

When the fiduciary relationship of principal and agent existed between the petitioner and the defendant, the latter could not make advantage or profit for the agent out of the relationship to the injury of one’s principal. Harrison v. Harrison, 214 Ga. 393 , 105 S.E.2d 214 , 1958 Ga. LEXIS 438 (1958).

The mere fact that one of the two parties to a contract of sale between them is known to the other to be a real estate broker, when the broker is not acting as the agent for the buyer but is himself the seller of the property, will fail to show a fiduciary relationship. Lewis v. Alderman, 117 Ga. App. 855 , 162 S.E.2d 440 , 1968 Ga. App. LEXIS 1265 (1968).

Fiduciary relationship in insurance transaction. —

Should the jury find that an agency relationship existed between an insurance agent and an insurance applicant, the jury would be required further to treat that relationship as a fiduciary relationship. Stewart v. Boykin, 165 Ga. App. 868 , 303 S.E.2d 50 , 1983 Ga. App. LEXIS 2046 (1983).

An agent can do nothing more disloyal to his principal than contacting his principal’s employer and taking over the latter’s position with the company. Koch v. Cochran, 251 Ga. 559 , 307 S.E.2d 918 , 1983 Ga. LEXIS 907 (1983).

One of the areas where the law finds a confidential or fiduciary relationship is in the case of principal and agent. Tigner v. Shearson-Lehman Hutton, Inc., 201 Ga. App. 713 , 411 S.E.2d 800 , 1991 Ga. App. LEXIS 1535 (1991).

Fiduciary relationship was created between a brokerage firm and a mentally disabled client, after the firm exercised a “controlling influence” over the client and had accepted one’s account with the understanding that one needed complete guidance in the management and handling of one’s money. Tigner v. Shearson-Lehman Hutton, Inc., 201 Ga. App. 713 , 411 S.E.2d 800 , 1991 Ga. App. LEXIS 1535 (1991).

When the cotenant was a relative to the other heirs and acted as agent for the purchaser of land during the sale, the agent’s confidential relationship with the other heirs was imputed to the purchaser; and a jury could find that the purchaser, through the agent’s confidential relationship with the other heirs, was so situated as to exercise a controlling influence over the will, conduct, and interest of the other heirs. McLendon v. Georgia Kaolin Co., 782 F. Supp. 1548, 1992 U.S. Dist. LEXIS 631 (M.D. Ga. 1992).

Inquiry of manufacturer’s customers whether, in the event representative (agent) left the appellant’s employment in the future, they would consider continuing to place their orders through him did not result in profit at manufacturer’s expense during his actual employment. Nilan's Alley, Inc. v. Ginsburg, 208 Ga. App. 145 , 430 S.E.2d 368 , 1993 Ga. App. LEXIS 405 (1993), cert. denied, No. S93C1070, 1993 Ga. LEXIS 752 (Ga. July 1, 1993).

In a breach of fiduciary duty and fraud action wherein an investment company obtained a jury verdict in the company’s favor against a site manager, the manager’s spouse, and others, the trial evidence supported the conclusion that a fiduciary relationship arose between the site manager and the investment company as the investment company entrusted significant financial responsibility and authority to the site manager, who engaged in a financial kickback scheme diverting thousands of dollars from the investment company. Wright v. Apt. Inv. & Mgmt. Co., 315 Ga. App. 587 , 726 S.E.2d 779 , 2012 Ga. App. LEXIS 367 (2012), cert. denied, No. S12C1410, 2012 Ga. LEXIS 915 (Ga. Oct. 29, 2012).

An agent cannot place himself in a position in which his duty and interest conflict with that of his principal, or be permitted to make a secret profit out of his agency. Franco v. Stein Steel & Supply Co., 227 Ga. 92 , 179 S.E.2d 88 , 1970 Ga. LEXIS 402 (1970), cert. denied, 402 U.S. 973, 91 S. Ct. 1661 , 29 L. Ed. 2 d 137, 1971 U.S. LEXIS 1982 (1971).

Insurance agent and insured. —

A confidential relationship did not exist between an insured and his agent which would have enabled the insured to place trust and reliance on oral representations by the agent, inconsistent with the terms of the form. The mere fact that one reposes trust and confidence in another does not create a confidential relationship. Trulove v. Woodmen of World Life Ins. Soc'y, 204 Ga. App. 362 , 419 S.E.2d 324 , 1992 Ga. App. LEXIS 830 (1992), cert. denied, No. S92C1142, 1992 Ga. LEXIS 621 (Ga. July 2, 1992).

Purchaser of automobile and financer. —

Purchaser of automobile has no confidential relationship with the financer of the purchase. Doxie v. Ford Motor Credit Co., 603 F. Supp. 624, 1984 U.S. Dist. LEXIS 22662 (S.D. Ga. 1984).

Relatives. —

A confidential relationship does not exist because of brother and sister-in-law relationship, or because of past dealings and trust and confidence reposed in brother-in-law by sister-in-law and her husband, defendant’s brother. Dixon v. Dixon, 211 Ga. 557 , 87 S.E.2d 369 , 1955 Ga. LEXIS 389 (1955).

While the fact that the plaintiff and the decedent were brother and sister would not of itself create a confidential or fiduciary relationship between them solely because they were so related, plaintiff’s allegations were sufficient to charge the existence of a confidential relationship between them requiring the utmost good faith and fair dealings on his part. Sutton v. McMillan, 213 Ga. 90 , 97 S.E.2d 139 , 1957 Ga. LEXIS 311 (1957).

The fact that the plaintiff and the defendant are brothers does not of itself create a confidential or fiduciary relation between them. If such relation exists between brothers, it must be shown by proof, and the burden is upon the party asserting the existence of such relationship to affirmatively show the relationship. Hancock v. Hancock, 223 Ga. 481 , 156 S.E.2d 354 , 1967 Ga. LEXIS 577 (1967).

The facts that the bank officer was the brother of plaintiff’s daughter-in-law, solicited plaintiff and induced him to place his business with the bank, promised to keep his affairs confidential, and to treat plaintiff right, are insufficient to create a confidential relationship. First Am. Bank v. Bishop, 244 Ga. 317 , 260 S.E.2d 49 , 1979 Ga. LEXIS 1222 (1979).

Parent and child. —

In a wrongful death case, the surviving spouse acts as the children’s representative and owes them the duty to act prudently in asserting, prosecuting and settling the claim and to act in the utmost good faith. Home Ins. Co. v. Wynn, 229 Ga. App. 220 , 493 S.E.2d 622 , 1997 Ga. App. LEXIS 1383 (1997).

Jury question was presented as to whether two trustees of their children’s trusts acted against the interests of the beneficiaries (their children) in bad faith by amending a partnership agreement to concentrate all voting power in themselves to the exclusion of the beneficiaries, who otherwise would have become partners when they turned 45. Likewise, the trustees as partners owed duties to the trusts as partners in the partnership. Rollins v. Rollins, 338 Ga. App. 308 , 790 S.E.2d 157 , 2016 Ga. App. LEXIS 453 (2016), cert. denied, No. S17C0096, 2017 Ga. LEXIS 286 (Ga. Apr. 17, 2017).

Vendor and vendee. —

Under the facts no confidential relationship was shown between wholesale vendor of liquor and purchaser who claimed that vendor had misrepresented the tax status of the liquors purchased. Bernstein v. Peters, 69 Ga. App. 525 , 26 S.E.2d 192 , 1943 Ga. App. LEXIS 130 (1943).

In a suit by vendor against purchaser for reformation of a deed to land to show reservation of timber, where neither fraud nor the existence of a confidential relationship was alleged or proved, it was reversible error to charge that, if the jury found that the vendor relied on the representations of the purchaser as being true due to a confidential or fiduciary relationship between the parties, and if the vendor was ignorant of the fact that reservation should have been inserted in the deed, purchaser would be guilty of fraud, and that equity will reform instrument when there was ignorance or mistake on one side and fraud or inequitable conduct on the other. Cochran v. Kendall, 210 Ga. 336 , 80 S.E.2d 273 , 1954 Ga. LEXIS 311 (1954).

The vendor and vendee of property are not, by virtue of such fact, placed in a confidential relationship to each other, but on the contrary are presumed to be dealing at arm’s length. Lewis v. Alderman, 117 Ga. App. 855 , 162 S.E.2d 440 , 1968 Ga. App. LEXIS 1265 (1968).

Buyer and seller. —

Directed verdict for the seller on the buyers’ breach of confidential relationship claim was reversed because there was a fact issue as to whether the seller exercised a controlling influence over the buyers in their application for mobile home permit such that the buyers were kept from discovering zoning for the property or that the seller had an increased duty to disclose the zoning. Howard v. Barron, 272 Ga. App. 360 , 612 S.E.2d 569 , 2005 Ga. App. LEXIS 294 (2005).

Tenants in common. —

Purchaser of land had no duty to disclose its knowledge of a kaolin deposit to seller by virtue of its relationship as a tenant in common, since the confidential relationship between cotenants does not extend to encompass the circumstance of one tenant purchasing another cotenant’s interest. McLendon v. Georgia Kaolin Co., 782 F. Supp. 1548, 1992 U.S. Dist. LEXIS 631 (M.D. Ga. 1992).

Purchaser of property and real estate investing company. —

Since plaintiff’s decision to buy property was based on plaintiff’s confidence that it could be used in the way defendant suggested and that defendant would rent the property on plaintiff’s behalf as defendant agreed to do, a jury issue existed regarding whether the parties were in a confidential relationship at the time of the alleged fraud. Yarbrough v. Kirkland, 249 Ga. App. 523 , 548 S.E.2d 670 , 2001 Ga. App. LEXIS 552 (2001).

Resident. —

Trial court did not err in granting a homeowners’ association summary judgment on a resident’s claim of breach of fiduciary duty because the resident’s mere reliance upon status as a resident of the development, without more, failed to establish a fiduciary or confidential relationship. Campbell v. Landings Ass'n, 311 Ga. App. 476 , 716 S.E.2d 543 , 2011 Ga. App. LEXIS 765 (2011).

Mining leases. —

Royalty leases for the mining of kaolin were not shown to have been intended to place the parties in a confidential relationship, and the presumption remained that the agreements were entered at arm’s length between persons on equal footing. Manning v. Engelhard Corp., 929 F. Supp. 1508, 1996 U.S. Dist. LEXIS 9003 (M.D. Ga. 1996), aff'd, 111 F.3d 897, 1997 U.S. App. LEXIS 8465 (11th Cir. 1997).

Investors and bank. —

Breach of fiduciary duty action filed by two investors against a bank was dismissed by summary judgment because, according to the terms of an investment agreement, there was no such relationship between the parties; further, there was no evidence that the bank exercised a controlling influence over the investors’ will, conduct, or interests nor did the investors establish that they relied upon the bank to make decisions on their behalf. Newitt v. First Union Nat'l Bank, 270 Ga. App. 538 , 607 S.E.2d 188 , 2004 Ga. App. LEXIS 1514 (2004).

Creditors failed to prove the existence of a technical trust, either by contract or by O.C.G.A. §§ 14-11-301(1), 14-11-305(1) , or 23-2-58 , and, as a consequence, could not prove a fiduciary defalcation by the debtors. Thus, any debt arising from the debtors’ management of a limited liability company was dischargeable under 11 U.S.C. § 523(a) (4). Tarpon Point, LLC v. Wheelus (In re Wheelus), No. 07-30114-JDW, No. 07-3022, 2008 Bankr. LEXIS 348 (Bankr. M.D. Ga. Feb. 11, 2008).

Evidence of breach by trustee shown to survive summary judgment. —

In a trustee’s suit against a company and the company’s manager for interfering with trust assets, the trial court erred by granting summary judgment to the company and the company’s manager on the trustee’s breach of fiduciary claim because the evidence showed that they unilaterally transferred the trust’s property interest and, although the transfer was deemed invalid, the trust’s interest was invaded, creating a jury question as to injury and resulting damage, either actual or nominal. Schinazi v. Eden, 338 Ga. App. 793 , 792 S.E.2d 94 , 2016 Ga. App. LEXIS 549 (2016), cert. denied, No. S17C0487, 2017 Ga. LEXIS 393 (Ga. May 15, 2017), cert. denied, No. S17C0486, 2017 Ga. LEXIS 399 (Ga. May 15, 2017).

Stockbroker and stockholder. —

In response to a certified question asking whether, under Georgia law, a brokerage firm owed a fiduciary duty to the holder of a non-discretionary account, the supreme court answered that the fiduciary duties owed by a broker to a customer with a non-discretionary account were not restricted to the actual execution of transactions; the broker will generally have a heightened duty, even to the holder of a non-discretionary account, when recommending an investment which the holder has previously rejected or as to which the broker has a conflict of interest. Holmes v. Grubman, 286 Ga. 636 , 691 S.E.2d 196 , 2010 Ga. LEXIS 144 (2010).

Presumption of Undue Influence

Evidence of confidential relationship raises presumption of undue influences. —

While a mere allegation of weakness of mind not amounting to imbecility is not sufficient to set forth a cause of action for cancellation of a deed, there being no allegation of fraud or undue influence, nevertheless, where the mental weakness is pronounced, such as would prevent the grantor from understanding the nature of his act at the time the deed was executed and especially where as alleged such mental impairment is united with alleged undue and controlling influence on the part of one occupying a confidential relationship with the illiterate grantor, it will authorize a cancellation on the ground of fraud. Mullins v. Barrett, 204 Ga. 11 , 48 S.E.2d 842 , 1948 Ga. LEXIS 545 (1948).

When the evidence and the pleadings show that the deceased was an infirm and aged woman, suffering from a brain tumor, whose mental and physical condition declined during the last years of her life, weakened by the damage to her brain by the illness from which she died, and that the defendants stood in a confidential and fiduciary capacity to her, whereby they administered her medicines to her and cared for her in her illness, took care of her personal business, hired nurses for her, cared for her in their home, and she changed her bank account to make it a joint one with her nephew, one of the defendants, there arose a presumption of undue influence, and the court should have charged on undue influence and the shifting of the burden of proof, and erred in failing to charge thereon. McGahee v. Walden, 216 Ga. 352 , 116 S.E.2d 559 , 1960 Ga. LEXIS 469 (1960).

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 Ga. LEXIS 1128 (1978).

Jury instruction on undue influence. —

Trial court erred in giving a jury instruction that stated that the jury could infer that undue influence existed if it found a confidential relationship was present; the testator made a gift of realty, and the testator was in a weakened mental state and feeble-minded, so the jury was entitled under those circumstances to presume, not merely infer, that undue influence had been shown. White v. Regions Bank, 275 Ga. 38 , 561 S.E.2d 806 , 2002 Ga. LEXIS 251 (2002).

Undue influence question for jury. —

Evidence presented by a testator’s child, which proved the testators’s disease, medication, and its effects, the testator’s dependence on the care givers, their isolation of the testator from the child; their active encouragement and arrangements for the drafting and execution of a new will, the testator’s short-term relationship with them, the testator’s sporadic contact with and lack of trust towards one of the challenged beneficiaries, and the testator’s long-standing expressions of testamentary intent to leave all of the testator’s property to the child, which the testator repeated the day after execution of the disposition, supplied sufficient evidence to support the child’s claim of undue influence to support the jury verdict in the child’s favor and not a directed verdict entered by the trial court in the face of this evidence; although this evidence did not demand a finding that the will was the product of undue influence, it was sufficient to authorize the submission of that question to the jury. Bailey v. Edmundson, 280 Ga. 528 , 630 S.E.2d 396 , 2006 Ga. LEXIS 355 (2006).

A trial court correctly denied an executor’s motion for directed verdict in an action wherein the child of the testator filed a caveat and objection to the probate of the testator’s last will and testament on the grounds that the will was the product of undue influence as sufficient evidence existed to support the conclusion that undue influence was used to have the testator bequeath the only asset, namely a home, to the caregiver who was hired by the executor. The record established that the executor blocked calls from the testator’s child, refused to let the child see the testator, and a confidential relationship was established between the caregiver and the testator as the caregiver took an active role in the planning, preparation, and execution of the will. Bean v. Wilson, 283 Ga. 511 , 661 S.E.2d 518 , 2008 Ga. LEXIS 419 (2008).

General Consideration

A court of equity will not lend its aid to a party to a contract founded upon an illegal or immoral consideration; if the contract is executed, it will be left to stand, and if it be executory, neither party can enforce it. Fender v. Crosby, 209 Ga. 896 , 76 S.E.2d 769 , 1953 Ga. LEXIS 438 (1953).

A person executing an instrument is not defrauded because he failed to read or understand it. Manget Realty Co. v. Carolina Realty Co., 169 Ga. 495 , 150 S.E. 828 , 1929 Ga. LEXIS 388 (1929).

When one party fraudulently induces one’s adversary to withdraw one’s defense, the judgment will be set aside. Walker v. Hall, 176 Ga. 12 , 166 S.E. 757 , 1932 Ga. LEXIS 371 (1932).

When a litigant keeps the opposite party from court, equity will relieve against the judgment obtained in his absence. Walker v. Hall, 176 Ga. 12 , 166 S.E. 757 , 1932 Ga. LEXIS 371 (1932).

The mere failure of a party to disclose to the court or to his adversary matters which would defeat his own claim or defense is not such fraud as will justify or require a vacation of the judgment. Buice v. T. & B. Bldrs., Inc., 219 Ga. 259 , 132 S.E.2d 784 , 1963 Ga. LEXIS 422 (1963).

A mere failure to comply with a promise on the part of a grantee is insufficient to establish fraudulent intent. However, where a petition alleges an oral promise by the grantee to perform an act in the future as the inducement or consideration for the execution of the deed by the grantor and where the promise is made with the present intention on the part of the grantee not to comply with it, the petition sets forth a cause of action for cancellation. Smith v. Merck, 206 Ga. 361 , 57 S.E.2d 326 , 1950 Ga. LEXIS 354 (1950); Sutton v. McMillan, 213 Ga. 90 , 97 S.E.2d 139 , 1957 Ga. LEXIS 311 (1957); Hinson v. Hinson, 221 Ga. 291 , 144 S.E.2d 381 , 1965 Ga. LEXIS 437 (1965); Cowart v. Gay, 223 Ga. 635 , 157 S.E.2d 466 , 1967 Ga. LEXIS 642 (1967); Dye v. Dye, 231 Ga. 533 , 202 S.E.2d 418 , 1973 Ga. LEXIS 769 (1973); Cone Mills Corp. v. A.G. Estes, Inc., 377 F. Supp. 222, 1974 U.S. Dist. LEXIS 9220 (N.D. Ga. 1974).

The mere failure to comply with a promise to perform an act in the future is not fraud in a legal sense. Hinson v. Hinson, 221 Ga. 291 , 144 S.E.2d 381 , 1965 Ga. LEXIS 437 (1965); Lanning v. Sockwell, 137 Ga. App. 479 , 224 S.E.2d 119 , 1976 Ga. App. LEXIS 2498 (1976).

While the mere failure to comply with a promise is insufficient to establish an inceptive fraudulent intent, fraud will authorize equity to cancel and annul a deed no matter how solemnly executed. Sutton v. McMillan, 213 Ga. 90 , 97 S.E.2d 139 , 1957 Ga. LEXIS 311 (1957).

Equitable Relief Generally

To determine whether equity will set aside an award for fraud, former Code 1933, §§ 37-709 and 37-711 (see O.C.G.A. §§ 23-2-54 and 23-2-60 ) must be construed together. Tinsley v. Maddox, 176 Ga. 471 , 168 S.E. 297 , 1933 Ga. LEXIS 203 (1933).

Fraud will authorize a court of equity to set aside a written instrument. Lanning v. Sockwell, 137 Ga. App. 479 , 224 S.E.2d 119 , 1976 Ga. App. LEXIS 2498 (1976).

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. Hinson v. Hinson, 221 Ga. 291 , 144 S.E.2d 381 , 1965 Ga. LEXIS 437 (1965); Lanning v. Sockwell, 137 Ga. App. 479 , 224 S.E.2d 119 , 1976 Ga. App. LEXIS 2498 (1976).

When it is alleged that the sole consideration for the execution of the deed from the grantor to the grantee is the promise of the grantees to support, maintain, provide, and care for a third party, and that this promise is made by the grantees fraudulently and for the purpose of securing the signature of the grantor, to the conveyance, and that the grantees never intend to comply with their agreement, the allegations are sufficient to state a cause of action on the ground of inceptive fraud. Bucher v. Christopher, 211 Ga. 317 , 85 S.E.2d 760 , 1955 Ga. LEXIS 309 (1955).

Obligation to read written contract. —

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 Ga. LEXIS 445 (1942).

A cancellation obtained by fraud or mistake without payment may itself be canceled by equity. Grimmett v. Barnwell, 184 Ga. 461 , 192 S.E. 191 , 1937 Ga. LEXIS 584 (1937); Lanning v. Sockwell, 137 Ga. App. 479 , 224 S.E.2d 119 , 1976 Ga. App. LEXIS 2498 (1976).

Contract procured by fraud admissible for cancellation of deed. —

If the execution of the contract was merely one of the incidents or stages by which the deed plaintiff sought to cancel was procured, evidence tending to show that the contract itself was procured by fraud was admissible for the purpose of canceling the deed. Morton v. Wallace, 177 Ga. 856 , 171 S.E. 720 , 1933 Ga. LEXIS 448 (1933).

Deed induced by fraud. —

When land is owned by two persons, and one obtains a deed from the other to his interest by means of an intentionally false and fraudulent promise to sell the land at its true value and pay off an encumbrance and account for the balance, or failing to find a purchaser, he will procure a new loan to discharge the present encumbrance, and after obtaining the title he retains and claims the property as absolutely his own, this transaction by which the ownership is obtained is such a fraud as will entitle the grantor to have the deed canceled. Smith v. Merck, 206 Ga. 361 , 57 S.E.2d 326 , 1950 Ga. LEXIS 354 (1950).

While the terms of an absolute deed cannot be varied by limiting the grantee to a use of the land in a manner not restricted by the express terms of the deed, it may nevertheless be alleged and proved that it was induced by fraud, without denying or varying any of the stipulations or conditions contained in the deed. Bucher v. Christopher, 211 Ga. 317 , 85 S.E.2d 760 , 1955 Ga. LEXIS 309 (1955).

Application of equity when intoxication renders one incapable of transacting business. —

When a party at the time of entering into a contract or executing an instrument is intoxicated to such a degree as to deprive him of his reason and to disqualify his mind to apprehend the nature of his act and its probable consequences, a court of equity may grant relief by rescission and cancellation. McKaig v. Hardy, 196 Ga. 582 , 27 S.E.2d 11 , 1943 Ga. LEXIS 381 (1943); Ealy v. Tolbert, 209 Ga. 575 , 74 S.E.2d 867 , 1953 Ga. LEXIS 343 (1953).

Equity will grant relief where the transfer of a valuable property has been fraudulently extorted, for a grossly inadequate consideration, from a person while in such a state of intoxication as to render him incapable of transacting business. Ealy v. Tolbert, 209 Ga. 575 , 74 S.E.2d 867 , 1953 Ga. LEXIS 343 (1953).

Equity affording to widow right to cancel. —

As against one who by fraud during the lifetime of deceased husband induced the latter to execute to him a deed to realty, equity will afford the widow, as personal representative, a remedy to cancel and set aside the deed and incidentally to preserve and apply rents issuing from such realty. Ealy v. Tolbert, 209 Ga. 575 , 74 S.E.2d 867 , 1953 Ga. LEXIS 343 (1953).

Equity has jurisdiction to reform written instruments where there has been a mistake on the part of one of the parties, accompanied by fraud or inequitable conduct on the part of the other party, just as in cases where there is a mutual mistake. Thompson v. Thompson, 203 Ga. 128 , 45 S.E.2d 632 , 1947 Ga. LEXIS 581 (1947); Wellborn v. Johnson, 204 Ga. 389 , 50 S.E.2d 16 , 1948 Ga. LEXIS 454 (1948).

Petition contained sufficient allegations to show mistake on the part of the petitioner and fraud on the part of her own attorney, known to the attorney for the husband, and alleged a cause of action for reformation of contract between the parties and for modification of the judgment in the divorce suit accordingly. Thompson v. Thompson, 203 Ga. 128 , 45 S.E.2d 632 , 1947 Ga. LEXIS 581 (1947).

The general rule that an infant is bound by a judgment rendered in a suit in which he is represented by a next friend, to the same extent as though he were an adult, is subject to an exception in case of fraud, collusion, or like conduct on the part of the next friend, in which case the judgment may be set aside at the instance of the minor, even though it may be a consent judgment. Nelson v. Estill, 190 Ga. 235 , 9 S.E.2d 73 , 1940 Ga. LEXIS 443 (1940).

A decree adversely affecting the interests of minors, even though it be entered by consent of their father as next friend, may, if induced by fraud, duress, or the like, be set aside at their instance in a proper proceeding, and for that purpose they may sue by their mother as next friend. Nelson v. Estill, 190 Ga. 235 , 9 S.E.2d 73 , 1940 Ga. LEXIS 443 (1940).

As between the original parties thereto, fraud in its procurement voids a contract, and this upon the theory that, the consent of the parties being necessary to the binding force of a contract, if one, apparently consenting by the execution of a written contract, can show that he did not in fact consent to its terms as therein expressed, but that his apparent consent was induced by false and fraudulent practices, by means of which he was overreached by the other party, and, without negligence upon his own part, really deceived as to the terms of the contract, he would be entitled to be relieved from its apparent obligations. McKaig v. Hardy, 196 Ga. 582 , 27 S.E.2d 11 , 1943 Ga. LEXIS 381 (1943).

Statute of Limitations

An action to cancel a fraudulent deed must be brought within seven years from the discovery of the fraud. Harrison v. Holsenbeck, 208 Ga. 410 , 67 S.E.2d 311 , 1951 Ga. LEXIS 395 (1951).

While a deed to land procured by fraud will not ripen into prescriptive title regardless of the period of time possession is held thereunder, yet an action to cancel such deed upon the ground that it was fraudulently procured must be brought within seven years from the time the fraud is discovered, and is barred thereafter. Harrison v. Holsenbeck, 208 Ga. 410 , 67 S.E.2d 311 , 1951 Ga. LEXIS 395 (1951).

Pleading and Practice

While fraud may not be presumed, being in itself subtle, slight circumstances may be sufficient to carry conviction of its existence. Ringer v. Lockhart, 240 Ga. 82 , 239 S.E.2d 349 , 1977 Ga. LEXIS 1403 (1977).

Slight evidence of fraud and undue influence may authorize the jury to cancel the deed. Harper v. Harper, 229 Ga. 583 , 193 S.E.2d 616 , 1972 Ga. LEXIS 684 (1972).

It is incumbent upon a party who attempts to rescind a contract for fraud to repudiate it promptly upon discovery of the fraud. Webb v. City of Atlanta, 188 Ga. 485 , 4 S.E.2d 154 , 1939 Ga. LEXIS 556 (1939).

Possession retained by the vendor, after an absolute sale of real or personal property, is prima facie evidence of fraud, which may be explained, and after the possession is proven, the burden of explaining it rests upon those who claim under the sale. Schoen v. Home Fed. Sav. & Loan Ass'n, 154 Ga. App. 68 , 267 S.E.2d 466 , 1980 Ga. App. LEXIS 2046 (1980).

With proper pleadings and parties a judgment may be set aside in a court of law for fraud. Benton v. State Hwy. Dep't, 220 Ga. 674 , 141 S.E.2d 396 , 1965 Ga. LEXIS 603 (1965).

General Consideration

An accounting may be had at law. —

The mere necessity of accounting to ascertain the amount due on a contract is insufficient to give equity jurisdiction to order an accounting. Insurance Ctr., Inc. v. Hamilton, 218 Ga. 597 , 129 S.E.2d 801 , 1963 Ga. LEXIS 270 (1963).

Therefore, an equitable accounting is not a proceeding to which every litigant has a right. It is granted only in carefully prescribed and determined circumstances, such as when an accounting at law is inadequate, and when the relationships and dealings between the parties are as set forth in this section. Herring v. Standard Guar. Ins. Co., 238 Ga. 261 , 232 S.E.2d 544 , 1977 Ga. LEXIS 984 (1977).

An equitable accounting is evidentiary in nature but the determination that an equitable accounting will be ordered is an interlocutory or preliminary matter separate and distinct from the equitable accounting itself. Herring v. Standard Guar. Ins. Co., 238 Ga. 261 , 232 S.E.2d 544 , 1977 Ga. LEXIS 984 (1977).

Right to attorney fees. —

Because there were no excess proceeds from the foreclosure sale to which a condominium association would have been entitled, and regardless of whether it was the owner of the condominium at the time of the foreclosure it was not entitled to an equitable accounting, the association was also properly denied attorney fees under O.C.G.A. § 13-6-11 resulting from the bank’s failure to provide an equitable accounting. Riverview Condo. Ass'n v. Ocwen Fed. Bank, FSB, 285 Ga. App. 7 , 645 S.E.2d 5 , 2007 Ga. App. LEXIS 280 (2007), cert. denied, No. S07C1254, 2007 Ga. LEXIS 705 (Ga. Sept. 24, 2007).

This section contemplates only petitions in equity involving the traditional filing of the action and the issuance and service of process. Bodrey v. Bodrey, 225 Ga. 822 , 171 S.E.2d 614 , 1969 Ga. LEXIS 660 (1969), transferred, 122 Ga. App. 23 , 176 S.E.2d 234 , 1970 Ga. App. LEXIS 765 (1970), overruled, Wiley v. Wiley, 233 Ga. 824 , 213 S.E.2d 682 , 1975 Ga. LEXIS 1455 (1975).

Equity does not have jurisdiction merely because the application for partition prays for an accounting as to common grantors when there was no filing of an action and summons and process. Bodrey v. Bodrey, 225 Ga. 822 , 171 S.E.2d 614 , 1969 Ga. LEXIS 660 (1969), transferred, 122 Ga. App. 23 , 176 S.E.2d 234 , 1970 Ga. App. LEXIS 765 (1970), overruled, Wiley v. Wiley, 233 Ga. 824 , 213 S.E.2d 682 , 1975 Ga. LEXIS 1455 (1975).

When a fiduciary relation exists, an accounting in equity is proper. Atlanta Trust Co. v. National Bondholders Corp., 188 Ga. 761 , 4 S.E.2d 644 , 1939 Ga. LEXIS 608 (1939).

When petitioners, remainder legatees under their mother’s will, sued defendant in three different capacities, namely, as trustee for the life estate under the will, as executrix, and as an individual, seeking an injunction against the sale of realty of the estate, partition, judgment, an accounting, and other and further relief, petitioners were entitled to an accounting. Matson v. Crowe, 193 Ga. 578 , 19 S.E.2d 288 , 1942 Ga. LEXIS 438 (1942).

In a proceeding to obtain an accounting, the complainant is not obliged to show how much is due, provided he avers facts sufficient to indicate that something will be found to be due him by the defendant. Atlanta Trust Co. v. National Bondholders Corp., 188 Ga. 761 , 4 S.E.2d 644 , 1939 Ga. LEXIS 608 (1939).

An injunction may be granted to continue during an accounting. Henderson v. Turner, 36 Ga. 263 (1867).

Action for accounting pending in court of law not automatically subject to injunction by filing equitable action. —

Where it appears from a petition praying for an accounting that there was pending in another court an action by the corporate defendant against the plaintiff, such court being empowered to render an accounting between the parties, and no special reason being set out why a court of equity should assume jurisdiction for such purpose, equity will not enjoin the proceedings and processes of a court of law in the absence of some intervening equity or other proper defense of which the party, without fault on his part, cannot avail himself at law. Peeples v. Peeples, 193 Ga. 358 , 18 S.E.2d 629 , 1942 Ga. LEXIS 397 (1942).

There must be some special reason why a court proceeding in equity should take charge of an action where an accounting is requested, the petition must show, and this means more than the mere assertion of a conclusion, some reason why the remedy at law is inadequate. Peeples v. Peeples, 193 Ga. 358 , 18 S.E.2d 629 , 1942 Ga. LEXIS 397 (1942).

When transfer of accounting case from Supreme Court to Court of Appeals mandatory. —

A suit for an accounting case, on appeal, must be transferred to the Court of Appeals from the Supreme Court, where the alleged facts show no unusual complication in the transactions or other ground for equitable relief additional to the relief which might be afforded by an accounting and judgment at law. Universal Garage Co. v. Fowler, 184 Ga. 604 , 192 S.E. 299 , 1937 Ga. LEXIS 596 (1937), transferred, 57 Ga. App. 668 , 196 S.E. 198 , 1938 Ga. App. LEXIS 363 (1938).

Borrower was not entitled to an equitable accounting because the borrower failed to allege facts sufficient to show that the borrower lacked an adequate remedy at law to ascertain the amount due on the borrower’s loan. Phillips v. Ocwen Loan Servicing, LLC, No. 1:12-cv-3861-WSD, 2013 U.S. Dist. LEXIS 129721 (N.D. Ga. Sept. 10, 2013).

Mutual Accounts

Mutual accounts may be setoff at law by former Civil Code 1910, § 4341 (see O.C.G.A. § 13-7-4 ) although equity has jurisdiction under former Civil Code 1910, § 4586 (see O.CG.A. § 23-2-70 ). Hardin v. Stanton, 14 Ga. App. 299 , 80 S.E. 698 , 1914 Ga. App. LEXIS 224 (1914).

An agent must account to his principal where he has sold unknown quantities of goods to third persons. Mitchem v. Georgia Cotton Oil Co., 139 Ga. 519 , 77 S.E. 627 , 1913 Ga. LEXIS 494 (1913).

Complicated and Intricate Accounts

Facts rendering equitable accounting proper. —

The life tenant having sustained a fiduciary relationship to the plaintiff, a remainderman, and the subject matter of the accounting being shown to be complicated because of the life tenant confusing and commingling her own funds with the money which upon her death became part of the remainder estate, the accounting, properly granted, is an equitable accounting. Perkins v. First Nat'l Bank, 221 Ga. 82 , 143 S.E.2d 474 , 1965 Ga. LEXIS 389 (1965).

Equitable accounting was unavailable absent allegations that the accounts were particularly complicated or that the amount owed could not be determined through the discovery process. Ralls Corp. v. Huerfano River Wind, LLC, 27 F. Supp. 3d 1303, 2014 U.S. Dist. LEXIS 87414 (N.D. Ga. 2014).

Trust Fund Account

Remedy when trustee’s funds commingled with trust funds. —

When a trustee has so mingled the trust funds with the trustee’s own estate that they cannot be distinguished, a cestui que trust may bring a bill in equity to reach the trustee’s interest. Evans v. Pennington, 50 Ga. App. 146 , 177 S.E. 357 , 1934 Ga. App. LEXIS 664 (1934).

Partners or Tenants in Common

A court of equity has jurisdiction in all cases of an accounting and settlement between partners. Smith v. Hancock, 163 Ga. 222 , 136 S.E. 52 , 1926 Ga. LEXIS 51 (1926).

An accounting without dissolution will be granted where one partner refuses to allow another to participate in the business. Hogan v. Walsh, 122 Ga. 283 , 50 S.E. 84 , 1905 Ga. LEXIS 178 (1905); Zerounis v. Berry, 199 Ga. 410 , 34 S.E.2d 275 , 1945 Ga. LEXIS 309 (1945).

A prayer that one partner be compelled to pay another one-half of the net profit of the business includes a prayer for accounting. Bennett v. Woolfolk, 15 Ga. 213 , 1854 Ga. LEXIS 26 (1854).

Depreciation of assets subsequent to the dissolution must be borne by the partnership. Houston v. Polk, 124 Ga. 103 , 52 S.E. 83 , 1905 Ga. LEXIS 662 (1905).

Partners may have a receiver appointed to settle the partnership affairs. Bennett v. Smith, 108 Ga. 466 , 34 S.E. 156 , 1899 Ga. LEXIS 275 (1899).

The waiver of discovery by a partner is immaterial. Huger v. Cunningham, 126 Ga. 684 , 56 S.E. 64 , 1906 Ga. LEXIS 515 (1906).

When equitable action not maintainable. —

Where the plaintiff contends all partnership relations between the plaintiff and the defendant have come to an end, that a balance has been struck, and that an indebtedness is allegedly due by the defendant to the plaintiff, which cannot be affected by any transactions between the partnership and its creditors or debtors, this is not an equitable action by a member of a firm against his copartner, but an action of law, one man against another who had formerly been his partner, upon an indebtedness a part of which grew out of the formerly existing partnership between them. Manry v. Hendricks, 192 Ga. 319 , 15 S.E.2d 434 , 1941 Ga. LEXIS 464, transferred, 66 Ga. App. 442 , 18 S.E.2d 97 , 1941 Ga. App. LEXIS 531 (1941).

Action for accounting not tenable in equity. —

Where the partnership has been fully dissolved by written contract and the rights of each party definitely established, in case of a breach of such contract equity will not order an accounting, as the remedy is at law. Manry v. Hendricks, 192 Ga. 319 , 15 S.E.2d 434 , 1941 Ga. LEXIS 464, transferred, 66 Ga. App. 442 , 18 S.E.2d 97 , 1941 Ga. App. LEXIS 531 (1941).

When an accounting is involved a city court is without jurisdiction. Dixon v. Hyde, 25 Ga. App. 84 , 102 S.E. 910 , 1920 Ga. App. LEXIS 610 (1920).

Cotenant may be compelled in equity to account to another for a just share of the profits. Huff v. McDonald, 22 Ga. 131 , 1857 Ga. LEXIS 131 (1857).

Equity has concurrent jurisdiction with courts of law, over matters of account between tenants in common, and when asserted, a court will hold and exercise equitable jurisdiction for the purpose of settling all the equities between the tenants, growing out of the tenancy in common. Bailey v. Bell, 209 Ga. 566 , 74 S.E.2d 881 , 1953 Ga. LEXIS 349 (1953).

A case in equity is presented by a petition which not only embraces a statutory application for partition, but also prays for an accounting from cotenants for rents and profits. Werner v. Werner, 196 Ga. 1 , 25 S.E.2d 676 , 1943 Ga. LEXIS 296 (1943).

Exercise by the superior court of its equity jurisdiction to fully and adequately resolve all issues between tenants in common would not be an interference with the orderly administration of estate. Evans v. Little, 246 Ga. 219 , 271 S.E.2d 138 , 1980 Ga. LEXIS 1057 (1980).

When action for partitioning and accounting proper. —

Where a number of cotenants are in possession of all of the common property, and are collecting the rents and profits thereof, an equitable action for partitioning and accounting by those not in possession of the property is a proper remedy. Bailey v. Bell, 209 Ga. 566 , 74 S.E.2d 881 , 1953 Ga. LEXIS 349 (1953).

Accounting between cotenants for a just share of the profits is applicable where a partition of the land is granted. Turnbull v. Foster, 116 Ga. 765 , 43 S.E. 42 , 1902 Ga. LEXIS 252 (1902).

A court may entertain a partition proceeding without trying first, or in connection therewith, a suit for accounting concerning the same property held in cotenancy. Lankford v. Milhollin, 200 Ga. 512 , 37 S.E.2d 197 , 1946 Ga. LEXIS 392 (1946).

It is within the power of the court to order a sale of the common property prior to the trial of the main accounting suit. Whether such partition proceeding is heard before the trial of the suit for accounting is a matter resting within the sound discretion of the court. Lankford v. Milhollin, 200 Ga. 512 , 37 S.E.2d 197 , 1946 Ga. LEXIS 392 (1946).

While equity jurisdiction ceased when the General Assembly gave a specific remedy at law, and while a specific legal remedy for partition was provided by statutory partition (O.C.G.A. § 44-6-160 ) and under former Code 1933, § 85-1501 (see O.C.G.A. § 44-6-140 ) equity will not ordinarily take cognizance of a partition proceeding unless the remedy at law was insufficient, or peculiar circumstances render the proceeding in equity more suitable and just, accounting between tenants in common will alone and of itself give a court of equity jurisdiction of a partition proceeding, whether or not there were other peculiar circumstances which render the proceeding in equity more suitable and just. Mills v. Williams, 208 Ga. 425 , 67 S.E.2d 212 , 1951 Ga. LEXIS 385 (1951).

Counterclaim for partition by sale proper. —

Where a tenant-in-common sues his cotenant for an accounting and for rents and profits, and a cross action (now counterclaim) is filed by the latter for partition by sale of the common property, such cross action (now counterclaim) is germane to the original action, and the court may direct partition by sale where it appears that the common property cannot be fairly and equitably divided by metes and bounds and it is proper for the decree to direct that the funds be held in court pending the trial of the action for accounting. Lankford v. Milhollin, 200 Ga. 512 , 37 S.E.2d 197 , 1946 Ga. LEXIS 392 (1946).

Distribution of sales proceeds upheld. —

In a dispute over real property and specific performance of a Redemption Agreement, the trial court did not abuse the court’s discretion in making an equitable award because O.C.G.A. §§ 44-6-140 and 44-6-141 granted the court the authority to adjust the accounts and claims of the parties as required by the circumstances and, more specifically, authorized the trial court to consider all of the circumstances, including any circumstances that occurred after the making of the contract. Bagwell v. Trammel, 297 Ga. 873 , 778 S.E.2d 173 , 2015 Ga. LEXIS 671 (2015).

Accessory to misapplication of trust funds accountable to injured person. —

One who aids and assists a trustee in misapplying trust funds, with knowledge of his misconduct, is directly accountable to the person injured by such misapplication, even though the person thus assisting the trustee does not himself reap the fruits of the misappropriation. Atlanta Trust Co. v. National Bondholders Corp., 188 Ga. 761 , 4 S.E.2d 644 , 1939 Ga. LEXIS 608 (1939).

Person injured by the misconduct may join in one suit the person occupying the fiduciary relationship and one who aids and assists one in misapplying trust assets. Atlanta Trust Co. v. National Bondholders Corp., 188 Ga. 761 , 4 S.E.2d 644 , 1939 Ga. LEXIS 608 (1939).

Some evidence admissible in accounting action. —

In an action for accounting and other relief between joint owners of property, tax receipts tending to show that one of the owners had paid the tax on the joint property for certain years were admissible. Head v. Lee, 203 Ga. 191 , 45 S.E.2d 666 , 1947 Ga. LEXIS 589 (1947).

Effect of consent decree on equitable action between cotenants. —

Where one tenant in common brings an equitable action against his cotenants for partition of land and for an accounting of rents, issues, and profits, and a consent decree is taken, fixing the rights and liabilities of the parties as between themselves, and decreeing their respective interests in the land, in the further progress of the case, where the decree is not attacked, the parties will not be permitted to go behind the decree so as to reopen the subject. All prior agreements and controversies between the parties, whether such were expressly pleaded or not, are merged in the decree. Johnson v. James, 246 Ga. 680 , 272 S.E.2d 692 , 1980 Ga. LEXIS 1248 (1980).

Multiplicity of Actions

Equitable jurisdiction not grounded on avoidance of multiplicity of actions alone. —

While avoidance of a multiplicity of actions, in a proper case, may be considered as an independent ground of equitable jurisdiction, and not a mere auxiliary to other equities present, it does not alone create an equitable cause of action, regardless of other circumstances. Dobbs v. FDIC, 187 Ga. 569 , 1 S.E.2d 672 , 1939 Ga. LEXIS 442, transferred, 61 Ga. App. 502 , 6 S.E.2d 375 , 1939 Ga. App. LEXIS 468 (1939).

Consolidation of actions seeking equitable accounting warranted. —

Where the issue in dispossessory warrant and distress warrant proceedings is the same, to wit: does the lessee in those cases owe any rent to the lessor therein? and where a third case involves the same lease contract, the same parties, and the same claims for rent, and the lessee’s petition asserts a defense to the lessor’s claims on the ground that, upon an equitable accounting, it will be found that the lessee does not owe the lessor any sum as rent, but that on the contrary the lessor is liable to the lessee, and the lease contract has not terminated, the three cases should be consolidated. West View Corp. v. Thunderbolt Yacht Basin, Inc., 208 Ga. 93 , 65 S.E.2d 167 , 1951 Ga. LEXIS 287 (1951).

Because an employee had a breach of contract claim for failure to pay the employee severance that came with the availability of extensive discovery, the employee had an adequate remedy at law, and the trial court did not err in granting the employer’s motion for summary judgment on the employee’s equitable accounting claim. Vernon v. Assurance Forensic Accounting, LLC, 333 Ga. App. 377 , 774 S.E.2d 197 , 2015 Ga. App. LEXIS 381 (2015), cert. denied, No. S15C1837, 2015 Ga. LEXIS 864 (Ga. Nov. 2, 2015).