Real Property - T. Daniel Brannan and William T. Sheppard

• Jurisdiction: Georgia,United States
• Publication year: 1999
• Citation: Vol. 51 No. 1

Real Propertyby T. Daniel Brannan^* and

William J. Sheppard^**

I. Introduction

This Article surveys case law and legislative developments in the area of real property law in Georgia during the period from June 1, 1998, to May 31, 1999. As in past surveys, the authors do not attempt to chronicle each case and statute that affects real property law. Rather, the authors selected the decisions and statutes discussed in this Article for their significance and interest to participants in the everyday practice of real estate law in this state. Several cases decided during the survey period present issues on which the appellate courts were sharply divided and provide lively discussions of the judges' differing viewpoints.

II. Title to Land

The supreme court in Atlanta-East, Inc. v. Laird¹ resolved the issue of who held title to certain property after title became confused as a result of multiple transfers from an entity acting as trustee for different trusts.² The property at issue in Laird was a 160-acre tract ("property") located in Gilmer County, Georgia. In 1917 McCorkle received title to an undivided one-fourth interest in the property. When he died in 1930, his one-fourth interest passed to his daughter-in-law, Margaret

McCorkle. In 1942 Ms. McCorkle transferred her interest in the property to the Charleston National Bank ("Bank") by a deed of trust. The Bank was acting as administrator of the estate of a third party ("Porter Estate"). According to Ms. McCorkle's deed of trust, the Porter Estate owned the remaining three-fourths interest in the property. In 1983, acting as the trustee of the Porter Estate, the Bank purported to transfer fee simple title to the Property to Burnt Mountain Company. Shortly thereafter, Burnt Mountain transferred fee simple title to the property to Laird.³

Atlanta-East's claim to the property originated with a deed executed in June 1991. In that deed, the Bank, acting as trustee of the McCorkle Trust, transferred Ms. McCorkle's one-fourth interest in the property to John and Gwendolyn McCorkle. Later that year, they transferred their interest in the property to Atlanta-East. In April 1996 Atlanta-East filed an action seeking a declaration that it was the owner of an undivided one-fourth interest in the property. On cross-motions for summary judgment, the trial court ruled that Laird owned the property free and clear of any interest claimed by Atlanta-East. Atlanta-East appealed from entry of judgment based on that order.⁴

In a divided opinion, the supreme court affirmed the trial court's grant of summary judgment to Laird.⁵ In finding that Laird held fee simple title to the property, the court concluded that the Bank's execution of the 1983 deed to Burnt Mountain was sufficient to transfer both Ms. McCorkle's one-fourth interest and the Porter Estate's three-fourths interest.⁶ The court relied on the terms of Ms. McCorkle's deed of trust to the Bank in support of that finding.⁷ The deed of trust stated, in pertinent part, as follows:

"Whereas [McCorkle] and the Estate of. . . Porter are the owners of [the property] and . . . the [Bank] is one of the administrators of the Estate of . . . Porter, and . . . is handling and endeavoring to sell or lease the undivided interest of said Estate in and to said real estate, and it is believed that said property can be handled, sold or leased more advantageously as a whole . . . [McCorkle] doth grant, bargain, sell, release, and forever quitclaim unto the [Bank], all of the right, title, interest, claim or demand [she has] in all real estate situate [sic] in Gordon, Pickens, and Gilmer Counties, Georgia .... Said lands shall include [the Property] .... To have and to hold . . . in trust. . .

with the following powers, rights, duties, and obligations ... (4) to make sale and conveyance of [the Property] or any part thereof."⁸

Based on that language, the court concluded that Ms. McCorkle intended "to vest the Bank as trustee with absolute title to her one-fourth interest in the Property, and to authorize the Bank to sell that one-fourth interest."⁹

The court found further support for its conclusion in another provision of Ms. McCorkle's deed of trust. That provision stated as follows:

"It is expressly provided that there shall be no duty or responsibility on the part of any purchaser ... [of the Property] to make inquiry as to the nature of the trust under which it is held by the [Bank], and . . . any purchaser . . . shall be protected in dealing with [the Bank] in all respects as if the . . . Bank, as Trustee, were the sole and absolute owner of [McCorkle's] interest in said real estate in fee simple."¹⁰

From that provision, the court concluded that Ms. McCorkle "intended to shield purchasers of her undivided one-fourth interest in the Property from claims that the Bank was without authority to sell that interest."¹¹ Laird was the successor of Burnt Mountain, whom the court found had taken title from the Bank acting as Ms. McCorkle's trustee.¹²

Because the court found that the 1983 deed from the Bank to Burnt Mountain was sufficient to pass fee simple title to the property, the court concluded that the Bank's 1991 purported transfer of an undivided one-fourth interest to Atlanta-East's predecessor was entirely ineffective.¹³ Therefore, the court held that Atlanta-East's claim failed and that the trial court properly entered summary judgment for Laird.¹⁴

Justice Carley presented a well-reasoned dissent, which Justice Hustein joined, based on the capacity in which the Bank purported to execute the 1983 deed to Burnt Mountain.¹⁵ The dissent noted that a trust is a distinct legal entity, and when a trust purports to transfer title to real property, the deed '"should be executed by the trustee, as trustee.'"¹⁶ While the failure to execute a deed in that manner does not affect the validity of the deed when the trustee has no interest in the subject property except that of trustee, the dissenters opined that a different result occurs when a trustee occupies more than one position with regard to a single tract of land.¹⁷ In this case the dissent noted that the Bank was both the administrator of the Porter Estate and the trustee of the McCorkle Trust.¹⁸ Because the deed from the Bank to Burnt Mountain only referenced a transfer of title by the Bank as representative of the Porter Estate, it was effective only to transfer the Porter Estate's interest in the property.¹⁹ To properly convey Ms. McCorkle's one-fourth interest, the deed to Burnt Mountain was required to have been executed by the bank as trustee of the McCorkle Trust.²⁰

In Blizzard v. Moniz,²¹ the supreme court determined that a purchaser of property under a tax deed must actually take possession of the property before its title may become vested and not subject to redemption under section 48-4-48 of the Official Code of Georgia Annotated ("O.C.G.A.").²² The property at issue in Blizzard consisted of approximately twenty-three acres located in Troup County, Georgia. Lucy Hilderbrand, plaintiffs' mother, had owned the property for more than forty years when she conveyed it to Fogal in July 1987. Hilderbrand financed Fogal's purchase of the property, and Fogal executed a deed to secure debt in favor of Hilderbrand. In 1988 Fogal transferred partial undivided interests in the property to seven people but retained an undivided 8.54% interest for himself. The deeds transferring those partial interests were recorded shortly after Fogal executed them.²³

Fogal failed to pay the 1990 ad valorem taxes due on the property. In 1991 the Troup County Tax Commissioner issued a tax fi. fa. against Fogal, but did not issue a fi. fa. against any of the other tenants in common whose title was of record. The commissioner then advertised and conducted a tax sale. Blizzard was the high bidder at the tax sale and received a tax deed to the property.²⁴

In 1994 Fogal defaulted on his repayment obligations to Hilderbrand under the purchase money deed to secure debt. On March 31, 1994, Fogal and his other tenants in common executed a deed in lieu of foreclosure reconveying the property to Hilderbrand. Hilderbrand died later that year, and the property passed to her daughters, who were plaintiffs in the trial court. In early 1996, plaintiffs learned of the previous tax sale to Blizzard. Thereafter, they filed an action seeking to quiet title to the property in themselves after they tendered the sum necessary to redeem the property from Blizzard. The trial court concluded that plaintiffs were entitled to redeem the property upon payment of $9252.21 to Blizzard. Blizzard appealed that ruling.²⁵

In the trial court and again on appeal, Blizzard contended that plaintiffs' right to redeem the property was time barred because O. C.G.A. section 48-4-48 provided for an absolute limitation period for redeeming property sold at a tax sale.²⁶ Section 48-4-48(b) provided in pertinent part that "'[a] title under a tax deed executed on or after July 1, 1989, shall ripen by prescription after a period of four years from the date of execution of that deed.'"²⁷ In an extremely short opinion, a unanimous court concluded that "the plain language of OCGA Sec. 48-4-48 (1989) requires . . . adverse possession by the tax deed grantee in order for title to ripen under the statute" and thus foreclose the tax debtor's right to redeem the property.²⁸ The court relied on the two-word phrase "by prescription" to justify its conclusion.²⁹ According to the court, for title to be acquired by prescription, there must be some adverse possession.³⁰ Because it was "uncontroverted that Blizzard never occupied the property, nor committed any acts or exhibited any conduct which would amount to adverse possession of the property," the court found that Blizzard had failed to foreclose plaintiffs' right of redemption.³¹

The issue decided in Blizzard is not as simple as the court's truncated opinion makes it appear. In Moultrie v. Wright,³²...