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Writer's pictureSamuel A. Mullman

Repudiation of Fraudulent Act of Ratification Nullifies Said Ratification

The Court of Appeals of Georgia held that there is no ratification of any conduct or act where an alleged principal (1) obtains no benefit from an act sought to be ratified by a third-party; (2) engaged in no affirmative conduct that may be viewed as knowing acquiescence in the ratified act; and (3) instead took positive steps to repudiate the act before the party relying on seeking ratification had the opportunity to rely on it. U.S. Bank Trust National Association v. Chieftain Atlanta, L.P., A21A0796, 2021 WL 4260382 at *3 (Ga. Ct. App. Sept. 20, 2021).


The relationship of principal and agent may be established if one person, expressly or by implication, ratifies the acts of another on his behalf. Rains v. Dolphin Mtg. Corp., 241 Ga. App. 611, 614 (4) (525 SE2d 370) (1999). Ratification, the confirmation by one of an act performed by another without authority, is an affirmative defense, and the burden of proving it is on the party asserting it. Hendrix v. First Bank of Savannah, 195 Ga. App. 510, 511 (1) (394 SE2d 134) (1990).


The ratification must be made by the principal with knowledge of the material facts and "may be express or implied from the acts or silence of the principal.” Hendrix, 195 Ga. App. at 511 (1) (citation omitted) (quoting O.C.G.A. § 10-6-52). Thus, “[i]f the principal, with full knowledge of all the material facts, accepts and retains the benefits of the unauthorized act, he thereby ratifies the act.” Id.


The key question therefore becomes whether the party knowingly accepted benefits under the agreement through silence and/or performance. McKean v. GGNSC Atlanta, LLC, 329 Ga. App. 507, 511-513 (1) (b) (765 SE2d 681) (2014); American Computer Technology, Inc. v. Hardwick, 274 Ga. App. 62, 65-66 (2) (616 SE2d 838) (2005). The concept that ratification typically entails the acceptance of benefits extends to cases in which a party alleges that another forged his signature on a contract without his knowledge. Ferguson v. Golf Course Consultants, Inc., 243 Ga. 112, 112-113 (252 SE2d 907) (1979); Southtrust Bank of Ga. v. Parker, 226 Ga. App. 292, 294-295 (1) (486 SE2d 402) (1997). For instance, a forged signature is nonetheless binding if the person whose name was signed, “with full knowledge of all the material facts, accepts the benefits of an unauthorized act, or retains such benefits after discovering the material facts." Brock v. Yale Mtg. Corp., 287 Ga. 849, 854-855 (3) (700 SE2d 583) (2010). This concept extends beyond forgery and is true after the principal accepts and retains the benefits from a fraudulent act. Summit Automotive Group, LLC v. Clark, 298 Ga. App. 875, 883-884 (4) (681 SE2d 681) (2009).


Ultimately, the Court of Appeals stated that Chieftain had pointed to no evidence of any benefit retained by the forgery. U.S. Bank Trust National Association, 2021 WL 4260382 at *3.


Chieftain made an alternative argument that U.S. Bank's delay in repudiating the cancellation, standing alone, creates a jury question as to whether the length of delay constitutes a ratification. Id. Chieftain relied on the Supreme Court statement in Harris v. Underwood, that ratification may be implied from the acts or silence of the principal and that ratification will be presumed if the principal, upon learning of what the agent has done, fails to repudiate the act promptly or within a reasonable time. 208 Ga. at 250. The Court found that Harris was not directly on point because the cancellation deed that was forged was filed in September 2014, U.S. Bank filed an Affidavit Affecting Title To Land in May 2014, which was recorded with the county real estate records on May 22, 2014, and Chieftain received the land via a limited warranty deed on July 22, 2015. Therefore, the act of repudiation (filing the affidavit) was conducted before Chieftain ever had an interest in the land and did not represent a delay or silence. U.S. Bank Trust National Association, 2021 WL 4260382 at *3.


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