Forgot your password?
Please enter your email & we will send your password to you:
My Account:
Copyright © International Chamber of Commerce (ICC). All rights reserved. ( Source of the document: ICC Digital Library )
1997 LC CASE SUMMARIES 483 S.E.2d 668 (Ga. Ct. App. 1997)
Topics:
Reimbursement; Anti-deficiency Statute (GA).
Type of Lawsuit:
Issuer against applicant for amount due pursuant to promissory note executed to reimburse the issuer for the amount paid under a letter of credit.
Parties:
Plaintiff/Issuer- Bank South
Defendant/Applicant- Hammock, et al.
Beneficiary- Decatur Federal Savings & Loan
Counsel
For Hammock: David P. Darden of Talley & Darden.
For Bank South: Joseph R. Carragher of King & Carragher.
Underlying Transaction:
Construction of retail shopping center.
LC:
Standby credit for US$ 125,000. Silent as to the UCP.
Decision:
The Court of Appeals of Georgia, Banke, S.J., Eldridge and Ruffin, J.J., affirmed summary judgment in favor of issuer.
Rationale:
A lawsuit involving a promissory note executed to reimburse the issuer of a letter of credit does not involve the LC itself and, therefore, defenses that may be raised by the applicant in connection with the credit do not nullify its obligation on the note.
Article
Factual Summary:
In order to obtain a mortgage loan in connection with the construction of a retail shopping center, applicant caused the issuance of a letter of credit in favor of the lender. The applicant defaulted on the mortgage loan and the beneficiary made demand under the credit and was paid. The beneficiary then foreclosed on the shopping center and sold the property. It then sought to confirm the foreclosure sale, as required by Georgia law. The trial court found that the property was sold for less than its true value and did not confirm the foreclosure sale. The beneficiary was, therefore, precluded from pursuing a deficiency judgment against the applicant.
Subsequently, the applicant executed a promissory note to the issuer for reimbursement of the amount it paid under the credit. After default on the promissory note, the issuer brought this action against the applicant for the amount due. The trial court granted issuer's motion for summary judgment. The applicant appealed.
Legal Analysis:
On appeal, the applicant contended that the trial court erred in granted summary judgment in favor of the issuer because it was, in effect, attempting to recover a prohibited deficiency under the credit, not under the note, in violation of Georgia law. The court found that the applicant's argument was "totally without merit" because the dispute involved a promissory note and not the letter of credit and affirmed summary judgment in favor of the issuer.
©1998 INSTITUTE OF INTERNATIONAL BANKING LAW & PRACTICE
COPYRIGHT OF THE INSTITUTE OF INTERNATIONAL BANKING LAW & PRACTICE
The views expressed in this Case Summary are those of the Institute of International Banking Law and Practice and not necessarily those of ICC or the other partners in DC-PRO.