Opinion
25293, 25294.
SUBMITTED JULY 15, 1969.
DECIDED SEPTEMBER 8, 1969.
Equitable petition. DeKalb Superior Court. Before Judge Morgan.
E. T. Hendon, Jr., for appellant.
Edward D. Wheeler, Inslee M. Johnson, for appellees.
Where the purchase price of real estate purchased at a sale conducted under the power of sale contained in a deed to secure debt is approximately 3% of its value and the grantee in such deed to secure debt has informed the grantor therein that the sale date is different from that actually advertised, a court of equity is authorized to set the sale aside.
SUBMITTED JULY 15, 1969 — DECIDED SEPTEMBER 8, 1969.
Michael E. Kouros filed the present action against The peoples Bank and Joseph M. Sewell seeking to have a conveyance set aside which was purportedly made under a power of sale contained in a deed to secure debt from the plaintiff to The Peoples Bank. The petition as finally amended alleged that the indebtedness covered by the deed to secure debt was approximately $350, that the sale price was $550, that the value of the property (a residence) was $25,000 with first and second mortgages of $14,000 thereon. It was further alleged that the plaintiff was notified by the bank's attorney that the sale would take place on the first Tuesday in May 1967. It was not sold on such date, but was sold on the first Tuesday in June 1967, thereby effectively preventing the plaintiff from being present at the sale since the plaintiff had no notice that the sale would take place on any day other than on the first Tuesday in May as he had been notified by the bank's attorney. The plaintiff tendered into the registry of the court $550, the amount of the proceeds of the purported sale. On the trial of the case the jury found for the plaintiff and against both defendants. The defendants each filed a motion for new trial and a motion for a judgment notwithstanding the verdict. Thereafter, the defendant bank dismissed its motions and the trial court granted the defendant Sewell's motion for a judgment notwithstanding the verdict and overruled the motion for new trial. The plaintiff appealed and enumerated as error the judgment granting the judgment notwithstanding the verdict. The defendant Sewell filed a cross appeal and enumerates as error the overruling of his motion for new trial.
The general rule is that a bona fide purchaser for value at a judicial sale will be protected although the grantee in a security deed is guilty of fraud and responsible to the grantor for whatever damages he has suffered because of such fraud. See Garrett v. Crawford, 128 Ga. 519 ( 57 S.E. 792, 119 ASR 398, 11 AC 167); Mathis v. Blanks, 212 Ga. 226 (4) ( 91 S.E.2d 509). And, as has been frequently held: "Inadequacy of price at a public sale under power will not of itself be a sufficient ground to set aside a sale; yet when it is grossly inadequate and is connected with fraud, mistake, misapprehension, surprise, or other circumstances which tend to bring about such inadequacy, to the injury of parties interested, the sale will be set aside by a court of equity." Croft v. Sorrell, 151 Ga. 92 (1) ( 106 S.E. 108). In Smith v. Ga. Loan c. Co., 114 Ga. 189 ( 39 S.E. 846), cited as authority in Croft v. Sorrell, supra, it was held: "While inadequacy of price at a sheriff's sale will not, of itself, be a sufficient ground to set aside the sale, yet when it is grossly inadequate and is connected with fraud, mistake, misapprehension, surprise, or other circumstances which tend to bring about such inadequacy, to the injury of parties interested, the sale will be set aside by a court of equity. When, therefore, upon a day of sale counsel for the plaintiff in execution and also the defendant therein requested the sheriff not to expose the property for sale until a certain agreement had been executed by the plaintiff and the defendant, and the sheriff assented to the request, but subsequently, through mistake or misapprehension, sold the property, worth from $2,000 to $3,000, before the agreement was executed and before the parties arrived at the place of sale, for the sum of $40, the inadequacy was so gross as to authorize a court of equity under the circumstances to set it aside. This is true although the purchaser at such sale was not in fault and had no notice of any irregularity, for by purchasing he subjected himself to the power of the court, upon a proper showing, to set aside the sale upon equitable terms." In that case the purchaser had done nothing except bid on and pay the amount of his bid for the property. The mistake was not the fault of the purchaser or the grantee in the security deed but that of the sheriff.
In the present case the testimony was that the value of the property was approximately $25,000 consisting of a 12-room residence with 5 bedrooms, and 3 1/2 baths. There was approximately $8,000 owed on a "first mortgage." Another deed to secure debt, junior to the one to the bank, was also outstanding. Accordingly, the purchase price of $550 was approximately .03% of the only value testified to. This, together with the undisputed evidence that the attorney for the bank informed the plaintiff by letter of a sale date different from the date when the sale took place was sufficient to authorize the verdict setting aside the sale. Inasmuch as the verdict was authorized, the judgment granting the motion of the defendant Sewell for a judgment notwithstanding the verdict was error. The judgment complained of in the cross appeal overruling this same defendant's motion for new trial based on the usual grounds only is affirmed.
Judgment reversed on main appeal; affirmed on cross appeal. All the Justices concur.