Citizens & Southern National Bank v. Bougas

Supreme Court of Georgia

Citizens & Southern National Bank v. Bougas

265 S.E.2d 562, 245 Ga. 412, 1980 Ga. LEXIS 810

CourtSupreme Court of Georgia

DecidedFebruary 20, 1980

Docket35095

StatusPublished

Cited by19 cases

This text of 265 S.E.2d 562 (Citizens & Southern National Bank v. Bougas) is published on Counsel Stack Legal Research, covering Supreme Court of Georgia primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook

Citizens & Southern National Bank v. Bougas, 265 S.E.2d 562, 245 Ga. 412, 1980 Ga. LEXIS 810 (Ga. 1980).

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Opinions

Bowles, Justice.

Certiorari was granted to review the Court of Appeals’ decision in Citizens & Southern Nat. Bank v. Bougas, 149 Ga. App. 722 (256 SE2d 37) (1979) .and to decide whether a creditor who becomes aware during the course of litigation that he is not entitled to all or part of a demanded debt is subject to an award of punitive damages against him by virtue of pursuing the litigation.

Briefly, the facts show that respondent Nick Bougas was the guarantor on a note made by his son in favor of the Citizens & Southern National Bank. Respondent Bougas pledged a savings bond as security for this note. As the result of another transaction with Bougas’ son, the bank accelerated the maturity of the note and called for full [413]*413payment on a stated date. When payment was not made, the bank declared the note in default and set-off the indebtedness against respondent’s savings bond. Thereafter, the bank mailed Bougas a check for the remainder of the amount of the bond after set-off. A month and a half later, the bank notified Bougas that it was deducting an additional $1,500.02 against the savings bond for attorney fees incurred in collection of the debt. Payment on the first check was stopped, and a new check was issued to Bougas.

Bougas brought suit against the bank alleging tortious conversion of his savings bond and demanded $26,040 actual damages, $100,000 punitive damages and $8,500 attorney fees. The trial court directed a verdict of $1,500.02, the amount of the bank’s attorney fees, for Bougas. The jury awarded Bougas $13,000 punitive damages and $8,500 attorney fees. On appeal, the Court of Appeals affirmed the directed verdict and award of punitive damages, and reversed the award of attorney fees.

In upholding the jury award of punitive damages under Code Ann. § 105-2002, the Court of Appeals held "[wjhere a creditor should have become cognizant during the litigation of circumstances indicating it was in error in demanding a part or all of the debt its failure to rectify its position creates a jury question as to whether the tortious misconduct was intentional or due to that entire want of care which would raise a presumption of conscious indifference. Southern R. Co. v. O’Bryan, 119 Ga. 147 (45 SE 1000) (1903).” The Court of Appeals found evidence in the record to support the finding that the bank should have known at some point during this litigation that it had no right to collect attorney fees for the set-off of indebtedness. We reverse.

Code Ann. § 105-2002 provides, "In every tort there may be aggravating circumstances, either in the act or the intention, and in that event the jury may give additional damages, either to deter the wrongdoer from repeating the trespass or as compensation for the wounded feelings of the plaintiff.” There is no provision for punitive damages arising because of conduct occurring during the litigation. The aggravating circumstance must relate to [414]*414the tort being sued on, which in this case was wrongful conversion. The actions of the bank in setting off the amount it had expended for attorney fees in trying to collect a debt that was clearly due and owing, when viewed at the time it was taken, does not satisfy the statutory test for submission of punitive damages to the jury. Neither is there authority, statutory or otherwise, for allowing the refusal to correct past errors discovered during the course of litigation, to become the basis of a punitive damage award. This is not to say that evidence of this failure to rectify errors might not form the basis of a claim for attorney fees under Code Ann. § 20-1404 should it be shown that the defendant has acted in bad faith, or has been stubbornly litigious, or has caused the plaintiff unnecessary trouble , and expense. Under the facts of the case, however, we agree with the Court of Appeals that attorney fees were not recoverable.

Argued September 17,1979 Decided February 20, 1980 Rehearing denied March 13, 1980. Alston, Miller & Gaines, William C. Humphreys, Jr., for appellant. Harrison, Kovacich & Naughton, Michael J. Kovacich, for appellee.

We reverse Division 1 (d) of the Court of Appeals’ opinion in Citizens & Southern Nat. Bank v. Bougas, supra, and hold that Bougas was not entitled to an award of punitive damages in any amount.

Judgment reversed in part.

Undercofler, P. J., Jordan, Hill, Marshall and Clarke, JJ., concur. Judge Joel J. Fryer concurs specially. Nichols, C. J., disqualified.

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Bowles, Justice.

Certiorari was granted to review the Court of Appeals’ decision in Citizens & Southern Nat. Bank v. Bougas, 149 Ga. App. 722 (256 SE2d 37) (1979) .and to decide whether a creditor who becomes aware during the course of litigation that he is not entitled to all or part of a demanded debt is subject to an award of punitive damages against him by virtue of pursuing the litigation.

Briefly, the facts show that respondent Nick Bougas was the guarantor on a note made by his son in favor of the Citizens & Southern National Bank. Respondent Bougas pledged a savings bond as security for this note. As the result of another transaction with Bougas’ son, the bank accelerated the maturity of the note and called for full [413]*413payment on a stated date. When payment was not made, the bank declared the note in default and set-off the indebtedness against respondent’s savings bond. Thereafter, the bank mailed Bougas a check for the remainder of the amount of the bond after set-off. A month and a half later, the bank notified Bougas that it was deducting an additional $1,500.02 against the savings bond for attorney fees incurred in collection of the debt. Payment on the first check was stopped, and a new check was issued to Bougas.

Bougas brought suit against the bank alleging tortious conversion of his savings bond and demanded $26,040 actual damages, $100,000 punitive damages and $8,500 attorney fees. The trial court directed a verdict of $1,500.02, the amount of the bank’s attorney fees, for Bougas. The jury awarded Bougas $13,000 punitive damages and $8,500 attorney fees. On appeal, the Court of Appeals affirmed the directed verdict and award of punitive damages, and reversed the award of attorney fees.

In upholding the jury award of punitive damages under Code Ann. § 105-2002, the Court of Appeals held "[wjhere a creditor should have become cognizant during the litigation of circumstances indicating it was in error in demanding a part or all of the debt its failure to rectify its position creates a jury question as to whether the tortious misconduct was intentional or due to that entire want of care which would raise a presumption of conscious indifference. Southern R. Co. v. O’Bryan, 119 Ga. 147 (45 SE 1000) (1903).” The Court of Appeals found evidence in the record to support the finding that the bank should have known at some point during this litigation that it had no right to collect attorney fees for the set-off of indebtedness. We reverse.

Code Ann. § 105-2002 provides, "In every tort there may be aggravating circumstances, either in the act or the intention, and in that event the jury may give additional damages, either to deter the wrongdoer from repeating the trespass or as compensation for the wounded feelings of the plaintiff.” There is no provision for punitive damages arising because of conduct occurring during the litigation. The aggravating circumstance must relate to [414]*414the tort being sued on, which in this case was wrongful conversion. The actions of the bank in setting off the amount it had expended for attorney fees in trying to collect a debt that was clearly due and owing, when viewed at the time it was taken, does not satisfy the statutory test for submission of punitive damages to the jury. Neither is there authority, statutory or otherwise, for allowing the refusal to correct past errors discovered during the course of litigation, to become the basis of a punitive damage award. This is not to say that evidence of this failure to rectify errors might not form the basis of a claim for attorney fees under Code Ann. § 20-1404 should it be shown that the defendant has acted in bad faith, or has been stubbornly litigious, or has caused the plaintiff unnecessary trouble , and expense. Under the facts of the case, however, we agree with the Court of Appeals that attorney fees were not recoverable.

Argued September 17,1979 Decided February 20, 1980 Rehearing denied March 13, 1980. Alston, Miller & Gaines, William C. Humphreys, Jr., for appellant. Harrison, Kovacich & Naughton, Michael J. Kovacich, for appellee.

We reverse Division 1 (d) of the Court of Appeals’ opinion in Citizens & Southern Nat. Bank v. Bougas, supra, and hold that Bougas was not entitled to an award of punitive damages in any amount.

Judgment reversed in part.

Undercofler, P. J., Jordan, Hill, Marshall and Clarke, JJ., concur. Judge Joel J. Fryer concurs specially. Nichols, C. J., disqualified.

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265 S.E.2d 562, 245 Ga. 412, 1980 Ga. LEXIS 810, Counsel Stack Legal Research, https://law.counselstack.com/opinion/citizens-southern-national-bank-v-bougas-ga-1980.

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