Durden v. Hilton Head Bank & Trust Co.

Beasley, Judge. Appellant William E. Durden and appellee Hilton Head Bank & Trust Company, N.A. each hold a deed to secure debt conveying the same parcel of property from Nan Sun Nakagawa. After fire destroyed the improvements on the property, the insurer filed this interpleader action and paid the proceeds of the insurance policy into the registry of the court. This appeal results from the trial court’s grant of summary judgment to the bank finding that its deed to secure debt took priority over Durden’s deed. Nakagawa and Durden approached attorney John Hunter after they agreed that Nakagawa would purchase the Lamp Post Lounge from Durden and asked Hunter to prepare a bill of sale, a promissory note and a deed to secure debt conveying Lot 58 of Greenbriar Subdivision from Nakagawa to Durden. Hunter did so. He was not asked to search the title on the property and did not do so. He did not make a file on this transaction. Upon execution of the documents, Durden took delivery and possession of the deed to secure debt. By its terms, the promissory note was due and payable in February 1986. The deed to secure debt was not recorded until May 16, 1987. In early November 1986, Nakagawa contacted Hunter and asked if he could handle a closing for her. Subsequently, the bank retained Hunter to act as closing attorney in connection with a loan it was making to Nakagawa to be secured by the same property described in the Durden deed. Hunter did not remember that fact and due to the non-recording of the earlier deed he did not discover it during the title examination performed in connection with the loan closing for the bank. The deed to secure debt in favor of the bank was recorded on November 5, 1986. The trial court recognized that Hunter was a dual agent of Nakagawa and of the bank. The trial court also recognized the principle set [233] out in Bean v. Barron, 176 Ga. 285 (2) (168 SE 259) (1932): “The law imputes to the principal, and charges him with, all notice or knowledge relating to the subject-matter of the agency which the agency acquires or obtains while acting as such agent and within the scope of his authority, or which he may previously have acquired, and which he then had in mind, or which he had acquired so recently as to reasonably warrant the assumption that he still retained it. ...” (Citation and punctuation omitted.) Id. at 285. The question is whether the bank had knowledge or notice, via what was in the mind of its agent, attorney Hunter, of the Durden deed to secure debt when it took a deed to secure debt on the same property. Bean v. Barron, supra. The question is not whether Hunter “should have remembered” that he had earlier prepared and transacted a deed on the same property. This is not a case of negligence, where duty standards of due care include what a person should have done or not done, but instead a case of knowledge or notice. It is affirmatively shown, and not refuted by any contradictory evidence, that Hunter did not remember the first deed when he drew the second for another client some months later. He explained why there was nothing to jog his memory. In addition to the circumstances described above, he noted that the deed had simply been additional collateral in a non-real estate related transaction, he never had any further connection with that transaction, and no one ever returned the deed to him to record. The mere fact tha.t only 11 months intervened between the two instances of legal services would not permit the jury to completely discard Hunter’s testimony as untruthful and replace it with an assumption that he did have the knowledge or notice about this particular piece of real estate in his mind. There is no conflict in the positive evidence on this point of fact, and there is nothing to even raise an inference of impeachment. To accept appellant’s argument would require ignoring the fundamental evidentiary principle, confirmed by the oath, that every witness is presumed to tell the truth. See Durham v. Holeman, 30 Ga. 619, 626 (6) (1860) and Suggested Pattern Jury Instructions, Vol. I: Civil, 2d ed., p. 15. In both Fowler v. Latham, 201 Ga. 68 (38 SE2d 732) (1946) and Faircloth v. Taylor, 147 Ga. 787 (95 SE 689) (1918), the agents whose knowledge at a particular time was at issue were dead, so that the assumption would have filled the evidentiary gap if the circumstances warranted it. That would be up to the trier of fact. Here we do notháve such a void. Durden could have protected his interest by recordation of his security deed but failed to do so and now relies instead on the subsequent memory of another’s agent. He cannot manufacture that memory from an assumption when all the evidence is to the contrary. Ap [234] plying the rules of summary judgment, see Marsden v. Southeastern Sash &c. Co., 193 Ga. App. 597, 599 (2) (388 SE2d 730) (1989), we hold that the trial court was correct. Durden will have to suffer the consequences of the rule of law contained in OCGA § 44-2-1. Judgment affirmed. Carley, C. J., Birdsong, Sognier and Cooper, JJ., concur. Deen, P. J., McMurray, P. J., Banke, P. J., and Pope, J., dissent.