O.C.G.A. § 10-7-57 (2019)

Annotations

JUDICIAL DECISIONS Section reaffirms equitable doctrine of subrogation. - Subrogation is not founded upon contract, express or implied, but upon principles of equity and justice. The doctrine was not limited or abrogated by this section, but positively reaffirmed. Argonaut Ins. Co. v. C & S Bank, 140 Ga. App. 807, 232 S.E.2d 135, 1976 Ga. App. LEXIS 1639 (1976). Effect of UCC. - Uniform Commercial Code does not abrogate, modify, affect, or abridge the equitable doctrine of subrogation. Argonaut Ins. Co. v. C & S Bank, 140 Ga. App. 807, 232 S.E.2d 135, 1976 Ga. App. LEXIS 1639 (1976); Pembroke State Bank v. Balboa Ins. Co., 144 Ga. App. 609, 241 S.E.2d 483, 1978 Ga. App. LEXIS 1706 (1978). Subrogation defined. - “Subrogation” is the substitution of another person in the place of the creditor whose obligation is paid so that the person in whose favor it is exercised succeeds to all the rights of the creditor; it is of equitable origin, being founded upon the dictates of refined justice, its basis is the doing of complete, essential, and perfect justice between the parties, and its object is the prevention of injustice. First Nat’l Bank v. American Sur. Co., 71 Ga. App. 112, 30 S.E.2d 402, 1944 Ga. App. LEXIS 293 (1944). Subrogation is legal as well as equitable right. - Former Code 1882, §§ 2176 and 2177 made subrogation a legal as well as equitable right. Hull v. Myers, 90 Ga. 674, 16 S.E. 653, 1892 Ga. LEXIS 233 (1892). What former Code 1882, §§ 2176 and 2177 did was to break down the exclusiveness of equity and carry the right of subrogation into law, so as to make equity and law concurrent and coequal with respect to this subject matter. Hull v. Myers, 90 Ga. 674, 16 S.E. 653, 1892 Ga. LEXIS 233 (1892). Regardless of its origin in equity, subrogation under former Code 1933, §§ 103501 and 103-502 was now a legal as well

as an equitable right. First Nat’l Bank v. American Sur. Co., 71 Ga. App. 112, 30 S.E.2d 402, 1944 Ga. App. LEXIS 293 (1944). Subrogation rights inchoate until principal unable to pay. - Contractor’s surety has subrogation rights with respect to any funds earned and paid to the contractor and still in the contractor’s hands. Until the surety is called upon to perform the surety’s obligation under a payment or performance bond, however, the right of subrogation is an inchoate one, which becomes choate only upon the maturing and performance of the obligation to pay, which occurs only when the principal finds itself unable to pay and calls upon the surety to pay in accordance with the terms of the bond. Cotton States Mut. Ins. Co. v. Citizens & S. Nat’l Bank, 168 Ga. App. 83, 308 S.E.2d 199, 1983 Ga. App. LEXIS 3374 (1983). Construction by courts. - Courts incline to extend rather than restrict the principle of subrogation. First Nat’l Bank v. American Sur. Co., 71 Ga. App. 112, 30 S.E.2d 402, 1944 Ga. App. LEXIS 293 (1944). Contract of suretyship alone does not give surety interest in security. - Surety has not, by virtue of the contract of suretyship alone, any right, title, or interest in property which the surety’s principal has pledged to a creditor as security for a debt. Conley v. Kelley, 43 Ga. App. 822, 160 S.E. 532, 1931 Ga. App. LEXIS 574 (1931). Subrogation of surety. - As soon as a debt is paid, the surety paying the debt is subrogated to the creditor’s rights and to any and all remedies for the enforcement thereof for the surety’s own reimbursement and is substituted in place of the creditor to all securities held by the latter for the payment of the debt. Hull v. Myers, 90 Ga. 674, 16 S.E. 653, 1892 Ga. LEXIS 233 (1892). Payment of debt is necessary. - Since the note maker brought action to cancel security deed after the creditor

assigned the note and security deed to the cosigner’s estate when the note was paid from the cosigner’s life insurance policy, the trial judge correctly refused to cancel the security deed which the creditor transferred to the cosigner’s estate. Aultman v. United Bank, 259 Ga. 237, 378 S.E.2d 302, 1989 Ga. LEXIS 180 (1989). Subrogation requires full payment. - Pro tanto assignment or subrogation will not be made upon payment of part of the debt. All of the debt must be paid before there is any subrogation. Erwin v. Brooke, 159 Ga. 683, 126 S.E. 777, 1925 Ga. LEXIS 39 (1925). When less than the total amount of the debt is tendered, subrogation is not permitted. Jessee v. First Nat’l Bank, 154 Ga. App. 209, 267 S.E.2d 803, 1980 Ga. App. LEXIS 3240 (1980). Party paying is surety. - To be substituted under this section for the creditor, it is necessary only that the payment of the debt should be made by a surety, it matters not whether the surety is a maker, endorser, drawer, acceptor, or what not. Hull v. Myers, 90 Ga. 674, 16 S.E. 653, 1892 Ga. LEXIS 233 (1892). Right extends to original security on which surety is bound. - “All securities” as used in this section will include the identical security, the judgment, promissory note, bill, bond, or other contractual instrument, upon which the surety and the cosureties are bound with and for the principal debtor. Though there was a conflict on the question, the better opinion was that the primary and original security, as well as all others, was embraced in the equitable right of subrogation as it existed prior to the Code, irrespective of any statute. Hull v. Myers, 90 Ga. 674, 16 S.E. 653, 1892 Ga. LEXIS 233 (1892). Co-debtor was not a surety of a debtor within the meaning of O.C.G.A. §§ 10-7-1, 10-7-45, and 10-7-57 as: (1) the note was executed so that both parties could buy a tract of land; (2) both parties received an equal benefit; (3) the debtor was solely liable for that portion of the loan that represented the payout of the previous mortgage on the debtor’s property, and both parties were required

to put up property in addition to the land they bought with the borrowed money; and (4) there was nothing in the agreement showing any intent by the parties that one was signing as the principal debtor and the other was signing as a surety. Johnson v. AgSouth Farm Credit, 267 Ga. App. 567, 600 S.E.2d 664, 2004 Ga. App. LEXIS 713 (2004). Surety acquires state’s security, not remedies. - Right of subrogation does not apply to the remedies which the state has against a citizen, but as to the security which the state has. That security passes to the surety who pays off a debt to the state. Irby v. Livingston, 81 Ga. 281, 6 S.E. 591, 1888 Ga. LEXIS 108 (1888). Section does not allow surety to escape part of deficiency if cosurety is insolvent. - Former Code 1933, §§ 103-501 and 103-502 have never been construed to allow a cosurety to escape paying part of the deficiency in the share of an insolvent cosurety. Todd v. Windsor, 118 Ga. App. 805, 165 S.E.2d 438, 1968 Ga. App. LEXIS 1528 (1968). Filing under UCC not necessary to preserve surety’s priority. - Surety is “secured” by the surety’s right of subrogation, which relates back to the issuance of the bond, to defeat intervening creditors. The Uniform Commercial Code does not abrogate, modify, affect, or abridge the equitable doctrine of subrogation, and a surety is not required to file under the UCC to preserve the surety’s priority under the equitable right of subrogation. Pembroke State Bank v. Balboa Ins. Co., 144 Ga. App. 609, 241 S.E.2d 483, 1978 Ga. App. LEXIS 1706 (1978). Sureties are discharged if creditor takes mortgaged property. - When a creditor on a promissory note signed by three persons, two of whom were sureties, having as further security for the debt a mortgage upon personal property, takes charge of such personalty, such property being sufficient in value to discharge the debt, and fails to appropriate it to a payment of the note, the sureties will be discharged from liability thereon. Barrett v. Bass Bros. & Co., 105 Ga. 421, 31 S.E. 435, 1898 Ga. LEXIS 528 (1898).

RESEARCH REFERENCES Am. Jur. 2d. 74 Am. Jur. 2d, Suretyship, § 119. Am. Jur. Pleading and Practice Forms. 23 Am. Jur. Pleading and Practice Forms, Subrogation, § 2. C.J.S. 72 C.J.S., Principal and Surety, § 181 et seq. ALR. Payment of entire claim of third person as condition of subrogation, 9 A.L.R. 1596; 32 A.L.R. 568; 46 A.L.R. 857; 53 A.L.R. 304; 91 A.L.R. 855. Adjudication as essential to right of surety or endorser to be subrogated to payee’s rights in collateral, 62 A.L.R. 551.

Right as between surety on contractor’s bond and assignee of money to become due on contract, 76 A.L.R. 917. Right of subrogation of fiduciary’s surety to claim of the estate against third person who knew or was chargeable with notice that fiduciary’s transaction with him involved breach of fiduciary’s obligation, 134 A.L.R. 997. Surety’s right to be subrogated to obligee’s right against third person as affected by equities in favor of latter which are insufficient to prevent his liability to obligee, 137 A.L.R. 700. Right of surety who has not paid debt to judicial protection of right of subrogation to creditor’s securities, 160 A.L.R. 421.

CHAPTER 8 ECONOMIC DEVELOPMENT COUNCIL Sec. 10-8-1 through 10-8-5. [Repealed].

10-8-1 through 10-8-5. [Reserved] History. Ga. L. 1976, p. 1098, §§ 1-4; Ga. L. 1977, p. 865, § 1; and Ga. L. 1978, p. 1434, §§ 1-2; repealed by Ga. L. 1987, p. 325, § 1, effective July 1, 1987.

Editor’s notes. Ga. L. 2009, p. 8, § 10 effective April 14, 2009, part of an Act to revise, modernize, and correct the Code, designated this chapter as reserved.

CHAPTER 9 GEO. L. SMITH II GEORGIA WORLD CONGRESS CENTER Sec.

Article 1 General Provisions Sec.

Short title. Re-creation of “Geo. L. Smith II Georgia World Congress Center Authority.” Definitions. Purpose of authority; powers generally. Adoption and enforcement of ordinances relating to property, affairs, and administration of authority; penalties. Transfer of duties of Department of Economic Development; actions to be performed by authority under contract with and on behalf of department; costs; ratification of past actions. Appointment and terms of members of board of governors; vacancies; travel expenses and per diem. Management of business and affairs of authority; bylaws, rules, and regulations; quorum; delegation of authority to committees. Meetings of board; notice; removal of members from board. Officers of board; terms; authority; compensation. Exemption of authority from taxation. Venue and jurisdiction of actions under chapter. Acceptance of grants, contributions, and gifts of money, property, or services. Moneys received considered trust funds; exception. Authority to fix charges for use; use of earnings; terms and conditions for use of

project; contract required; penalty for violation of commercial activity prohibition. Bylaws, resolutions, regulations, or ordinances governing use of facilities; exclusion of persons; grants for particular uses. Power of authority with regard to ensuring maximum use of project; rules and regulations for operation and use; security guards. Duties of Attorney General. Authority to contract with local entities with regard to local trade and convention center; provision of goods and services; costs, liabilities, and expenses. Disposition of real property not required by authority; excepted property. Powers declared supplemental and additional. Liberal construction of chapter. Accounts and audits. Article 2

Overview Committee

Geo. L. Smith II Georgia World Congress Center Authority Overview Committee created; composition; officers; duties. Cooperation of other state agencies; staff members and independent consultants. Authority to cooperate with committee; enforcement actions; annual committee reports. Criteria for evaluating authority. Expenditure of funds; expenses of committee members.

GEO. L. SMITH II GA WORLD CONG. CTR. Sec.

Article 3 Revenue Bonds Sec.

Issuance of bonds authorized; purpose. Terms and conditions of bonds; form. Signatures; seal. Tax exemption. Sale of bonds; interest rate. Use of proceeds; issuance of additional bonds in case of deficit; use of surplus. Interim revenue receipts, certificates, or bonds. Replacement of mutilated, destroyed, or lost bonds. Proceedings and conditions for issuance; resolution. Lease of facilities; terms and conditions; contracts with public entities. Enforceability against authority; limitation on state liability. Security; provisions in resolution or trust indenture for protection of bondholder

rights and remedies; sinking fund. Enforcement of rights by bondholder, receiver, or indenture trustee. Payment of sale proceeds to trustee. Use of services of Georgia State Financing and Investment Commission; professional services for projects. Refunding bonds. Bonds made securities for investment and deposit purposes. Validation of bonds; applicability of “Revenue Bond Law.” Legislative findings; state covenants. Inapplicability of “Georgia Uniform Securities Act of 2008.” Jurisdiction over actions. Cumulative nature of authority powers; power to pledge or assign rents, revenues, earnings, and funds as security for indebtedness.

JUDICIAL DECISIONS Main purpose of the General Assembly in passing this chapter was to construct and operate a World Congress Center. Greer v. State, 233 Ga. 667, 212

S.E.2d 836, 1975 Ga. LEXIS 1415 (1975) (decided under Ga. L. 1974, p. 174, prior to amendment by Ga. L. 1975, p. 435, § 1).

ARTICLE 1 GENERAL PROVISIONS