Real Property - T. Daniel Brannan, Stephen M. Lamastra, and William J. Sheppard

• Publication year: 1994

Real Propertyby T. Daniel Brannan^*

Stephen M. LaMastra^** and

William J. Sheppard^***

This Article surveys case law and legislative developments in the Georgia law of real property for the period June 1,1993 to May 31, 1994. An overwhelming majority of cases decided by the Georgia appellate courts during the survey period reaffirmed established principles of real property law, albeit sometimes in unusual factual settings. The Georgia legislature was, however, actively creating new statutes and refining old ones. This article is intended to provide the practitioner with a convenient guide to both judicial and legislative activities during the survey period.

I. Land Lines and Boundaries

In Hatcher v. Hatcher,¹ Ernest Hatcher ("Hatcher") owned property in Laurens County and, in 1988, agreed to lease a portion of it to his nephew, J.R. Hatcher, for life.² Hatcher asked his attorney, Dale Thompson, to draw up a document leasing the tract to J.R. for life and giving J.R. fishing rights in a pond on Hatcher's land. Hatcher refused to have a survey of the property made and, consequently, Thompson described the leased tract from a simple drawing of the property. J.R. placed a camper in the approximate center of the leased tract.³

J.R. lived on the tract without incident for more than two years before a dispute arose. At that point, Hatcher dug a drainage ditch across the driveway on the leased tract, thereby preventing J.R. from driving onto the property. Hatcher brought an action alleging that the mobile home was not located on the leased tract.⁴

Hatcher based his argument on what he contended was an ambiguity in the description of the leased tract and argued that the lease was unenforceable for lack of an adequate description of the leased premises.⁵ The lease described the property as: "A tract of land fronting 60 yards on Hilbridge Road and extending back in equal width a depth of 130 yards in land lot 50 in the 18th land district of Laurens County."⁶ The trial court rejected Hatcher's argument that the lease did not sufficiently describe his intention regarding the quantity and location of the lease tract and found for J.R.⁷

The appellate court affirmed the trial court.⁸ The court quoted from Weisner v. Gulledge,⁹ stating that:

"Perfection in legal descriptions of tracts of land is not required. 'If the premises are so referred to as to indicate . . . [the grantor's] intention to convey a particular tract of land, extrinsic evidence is admissible to show the precise location and boundaries of such tract. The test as to the sufficiency of the description of property contained in the deed is whether or not it discloses with sufficient certainty what the intention of the grantor was with respect to the quantity and location of land therein referred to, so that its identification is practicable. [T]he key to the intention of the grantor must be found in the document itself.'"¹⁰

At trial, both J.R. and Hatcher presented testimony from expert witnesses (surveyors) "that when property is described as extending back 'in equal width' it is customarily interpreted as meaning at 90 degree angles."¹¹ Based on that testimony, the court concluded that the mobile home was within the leased tract.¹²

II. Title to Land

In First Rebecca Baptist Church, Inc. v. Atlantic Cotton Mills,¹³ the subject was the effect of a reverter clause in a deed to a charitable group.¹⁴ Atlantic Cotton Mills conveyed the property at issue to Rebecca Baptist Church pursuant to a deed which contained the following reverter clause:

The said Second Parties [Rebecca Baptist Church] to have and to hold the said lot of land and its appurtenances forever, in trust for the sole use, benefit and enjoyment of Rebecca and the members thereof, the same to be used as a place for divine worship by the congregation of said church, in fee simple, but only so long as said lot is used for such church purposes, it being expressly provided that if said lot of land should ever cease to be used for such church purposes, then the title thereto, that is all the right, title and interest hereby conveyed, shall immediately revert to the First Part, its successors and assigns.¹⁵

In 1979, the majority of the congregation known as Rebecca Baptist Church voted to move to Rivoli Crossing and chose as its name Rivoli Crossing Baptist Church. The minority of the congregation took the name First Rebecca Baptist Church ("FRB") and, with the permission of the majority, continued to worship at the property.¹⁶

Atlantic brought this action against Rivoli and FRB, seeking a declaration that the title to the property had reverted to it pursuant to the reverter clause contained in the deed to Rebecca Baptist Church. Rivoli and FRB answered and made competing claims to the property.¹⁷ The trial court held that Rivoli was the original church named in the deed from Atlantic and that the reverter clause was not activated by Rivoli's move to its new location.¹⁸ FRB appealed.¹⁹

The Georgia Supreme Court affirmed in part and reversed in part and found that Atlantic was the title owner of the property.²⁰ First, the court affirmed the finding that Rivoli was the same church that had received the original conveyance from Atlantic.²¹ According to Official Code of Georgia Annotated ("O.C.G.A.") section 14-5-43,²² the majority of the members of a church are presumed to constitute that church as an entity.²³ Because Rivoli represented the majority of the original church, that body retained all the original church's rights in the property upon the split with FRB.²⁴

Unfortunately for FRB and Rivoli, the court reversed the part of the trial court's opinion which denied Atlantic's claim under the reverter clause.²⁵ The court concluded that the language of the reverter clause was clear and demanded a finding in favor of Atlantic.²⁶ "[T]he property [was] to be used for the 'sole use, benefit and enjoyment of [Rivoli] and the members thereof, the same to be used as a place of divine worship by the congregation of said church,' and that title revert[ed] when the property [was] not used for 'such church purposes.'"²⁷ When the majority of the original church ceased using the Property as a place of worship, title reverted back to Atlantic.²⁸

The supreme court next considered whether the reverter clause was unenforceable as a matter of law, an issue not decided by the trial court.²⁹ The court affirmed the established rule in Georgia that reverter clauses in deeds to charitable organizations do not constitute an impermissible restraint on the alienation of land.³⁰ Accordingly, the provision at issue was enforceable pursuant to its terms.³¹

In Merrell v. Beckwith,³² the supreme court affirmed the judgment of the trial court setting aside the transfer of certain real property from Lillie Mae Merrell to her grandson as a fraudulent conveyance.³³ Merrell had executed a promissory note, due on demand, in favor of Bell Dalton Beckwith in 1981. Beckwith testified at trial that she orally demanded repayment of the note and had her attorney send a demand for repayment on August 5, 1983.³⁴ In response to Beckwith's requests for admission, Merrell admitted receiving the letter dated August 5, but did not recall when she received it.³⁵ On August 10, 1983, Merrell conveyed her home to her grandson ("McCart"), reserving a life estate in herself.³⁶

Beckwith filed an action based on Merrell's failure to pay the Note upon demand and obtained a judgment on the note.³⁷ Beckwith then filed an action seeking to set aside the transfer from Merrell to McCart as a fraudulent conveyance. Merrell made a motion for directed verdict at trial claiming that Beckwith had failed to produce evidence of Merrell's actual intent to defraud Beckwith and failed to produce evidence that McCart had knowledge of, or grounds to suspect, an intent to defraud.³⁸ That motion was denied. The jury returned a verdict in favor of Beckwith, and set aside the deed from Merrell.³⁹

On appeal, Merrell argued that the trial court erred in denying of her motion for directed verdict and that the evidence did not support the jury's verdict.⁴⁰ The appellate court rejected both arguments and affirmed.⁴¹ The court found that sufficient evidence existed both to require submitting the issue of Merrell's fraudulent intent to the jury and to support the jury's verdict.⁴² In reaching that conclusion the court referred to evidence of four points: 1) that Merrell transferred the property to McCart, a close family member, soon after an oral and written request for payment of the Note; 2) that Merrell had no other assets at the time of the transfer; 3) that the transfer was for very little, if any, monetary consideration; and 4) that Merrell remained in possession of the property for over seven years after the transfer.⁴³

The court also rejected Merrell's contention that the trial court erred in its jury instructions, by giving an erroneous instruction and by refusing to give an instruction requested by Merrell.⁴⁴ At Beckwith's request, the court instructed the jury as follows: "[transactions between relatives are to be scanned with care and scrutinized closely. And slight evidence of fraud between them may be sufficient to set aside the transaction."⁴⁵ The court found that charge was an accurate statement of the law and that it was supported by the evidence.⁴⁶ The court found, however, that the charge submitted by Merrell on the legal presumption arising from her continued possession of the property was "incomplete and misleading" when it stated that "continued possession of property by the grantor may create a 'badge of fraud' only if not satisfactorily explained."⁴⁷

For practitioners involved in cases of alleged fraudulent conveyances, this case provides several items of useful information. First, specific elements of proof are enumerated which, if proven, create a question of fact as to whether the intent to defraud existed. Second, the court has identified an...