Davidson v. Baier Corp.

Carley, Judge,

concurring in part and dissenting in part.

I concur in the majority’s reversal of the grant of summary judgment in favor of the plaintiff. However, in addition to granting the plaintiffs motion for summary judgment, the order from which this appeal is taken also denied defendant’s motion for summary judgment. I would reverse the judgment of the trial court not because — as the majority reasons — there is an ambiguity susceptible only to jury construction but because I believe that the application of the recognized rules of construction mandates an interpretation which is contrary to that articulated by the trial judge. Since under the construction which I believe to be correct, the defendant would be entitled to judgment as a matter of law, I would reverse not only the grant of summary judgment to plaintiff but also the denial of defendant’s motion for summary judgment. Accordingly, I dissent from the majority’s decision remanding the case for trial by jury.

*317The entire clause in dispute, a portion of which is quoted in the majority opinion, is as follows:

"Notwithstanding any other provision of this note, the undersigned shall have no obligation or liability fór the payment of this note beyond the undersigned’s interest in the real property described in the deed to secure debt hereinabove mentioned, including the rents, issues and profits thereof and the proceeds from a sale of said real property. By the acceptance of this note and said deed to secure debt, holder agrees that in the event of a default hereunder holder will rely solely for the payment hereof on the collateral securing this note pursuant to said deed to secure debt and will not sue or otherwise seek recourse against the undersigned for any deficiency remaining after a foreclosure of said deed to secure debt and a sale of said real property; provided, however, that at the time such foreclosure is commenced the undersigned is not in default for nonpayment of principal or accrued interest under any note which is secured by a deed to secure debt having a lien on said real property with a priority senior to the lien of the deed to secure debt securing this note. The foregoing provisions concern the liability of the undersigned and do not in any manner, and shall not be interpreted or construed to, affect or impair the rights of holder to pursue any remedy which holder may have under said deed to secure debt (including the right to take possession of said real property and collect the rents therefrom, if any, to foreclose and sell said real property, and to the appointment of a receiver) or the right, title and interest of holder in said real property.” (Emphasis supplied.)

I agree with the majority’s recognition of the rule that construction of a contract does not automatically become a question for a jury simply because there are two possible interpretations advanced by the parties. The mandate of Code Ann. § 20-701 makes it the duty of the court not only to construe unambiguous contracts but, by the application of the pertinent rules of construction, ambiguous contracts. Interpretation of a contract becomes a question for the jury only if it is ambiguous and if the ambiguity remains after the application of the rules of construction. Davis v. United Am. Life Ins. Co., 215 Ga. *318521 (2) (111 SE2d 488) (1959); Pisano v. Security Management Co., 148 Ga. App. 567 (251 SE2d 798) (1978).

As recognized by the majority, the cardinal rule of construction "is to ascertain the intention of the parties. If that intention be clear, and it contravenes no rule of law, and sufficient words be used to arrive at the intention, it shall be enforced, irrespective of all technical or arbitrary rules of construction.” Code Ann. § 20-702. Code Ann. § 20-704 provides several rules which, "among others,” are to be used in arriving at the "true interpretation of contracts.” Among these are that "[w]ords generally bear their usual and common signification . . .” (Code Ann. § 20-704 (2)) and that "[t]he construction which will uphold a contract in whole and in every part is to be preferred, and the whole contract should be looked to in arriving at the construction of any part” (Code Ann. § 20-704(4)). Although they may be disregarded if it is necessary to effectuate the intention of the parties, "[t]he rules of grammatical construction usually govern ...” (Code Ann. § 20-704 (6)).

Applying the pertinent rules of contract construction, it becomes clear that by including in the instruments the clause in question the intention of the parties was to relieve the defendant from any personal liability except as expressly provided by said clause "[notwithstanding any other provision of this note ...” I believe that the correct construction of the entire clause in issue requires a determination that, in this litigation, the plaintiff cannot assert against the defendant any claim arising out of or in connection with the promissory note.

It is true that the clause envisioned circumstances under which there would be some limitation of the exculpatory effect thereof. However, unlike the majority, I construe such proviso as modifying only the phrase immediately prior to the semicolon preceding the proviso so that the limitation upon the defendant’s exemption from personal liability applies only to the specific factual situation described, i.e., "... deficiency remaining after a foreclosure of said deed to secure debt and a sale of said real property.” In other words, if the plaintiff had foreclosed the deed to secure debland if there had been a *319deficiency for which the holder was otherwise entitled to sue, the exculpatory clause would not have prevented him from bringing an action against the defendant personally if, at the time of such foreclosure, the defendant had been in default under superior loan deeds. Since the lien effect of the deed to secure debt in this case was extinguished by the’prior foreclosure of superior loan deeds, the possibility of the vesting of the right to invoke this exception to defendant’s insulation from personal liability was likewise extinguished. Thus, whatever effect the proviso would have had in the event of foreclosure and later suit for deficiency cannot be considered now because the issue is moot.

That the proper application of the rules of contract construction requires the interpretation above advanced is seen more clearly by an analysis of the remedies which would have been available to the plaintiff had there been no exculpatory language whatsoever. In the absence of any exculpatory clause, the plaintiff could, immediately upon default, file a suit on the note against the defendant without foreclosing. Since such an action would not be an action to obtain a "deficiency judgment,” the absence of a foreclosure sale and the confirmation thereof would not constitute a defense. Gentry v. Hibbler-Barnes Co., 113 Ga. App. 1 (147 SE2d 31) (1966); Brown v. Ga. State Bank, 141 Ga. App. 570 (234 SE2d 151) (1977). Alternatively, the plaintiff, in such a situation, could exercise the power of sale and foreclose the loan deed in contemplation of an action for the deficiency. However, if the latter course of action were to be followed, statutory as opposed to contractual provisions would require that, as a condition precedent to any action for the deficiency, the foreclosure sale be confirmed by the superior court of the county in which the land lies. Ga. L. 1935, p. 381; Code Ann. §§ 67-1503 — 67-1506.

In this case, however, we do have the exculpatory clause and, under the clear, unequivocal, unconditional language contained in the initial sentence thereof, the first alternative (suit against defendant on the note prior to foreclosure) was unavailable to the plaintiff ab initio. If, however, while the lien of the loan deed was extant and the. power of sale viable, the plaintiff had exercised the *320power and if — there being a deficiency after foreclosure — the plaintiff had obtained an order confirming the foreclosure sale and if and only if at the commencement of the foreclosure, defendant had been in default under any note secured by a superior deed to secure debt, a subsequent action for the deficiency would not have been barred by the exculpatory clause.

However, as pointed out above, the factual situation in which the defendant would not be shielded by the clause granting him exculpation from personal liability did not arise and, under the undisputed facts shown by the record, can never arise.

Therefore, I concur in the reversal of the trial court’s judgment which I believe erroneously construes the contract. However, I think that the judgment is erroneous because the defendant is entitled to prevail as a matter of law; accordingly, I dissent from the majority’s failure to reverse the trial court’s denial of defendant’s motion for summary judgment.

I am authorized to state that Presiding Judge Quillian and Judges Shulman and Birdsong join in this dissent.