Palmetto Capital Corporation “Palmetto” appeals from a grant of summary judgment to Michael and Shirley Smith “the Smiths” in the wake of Palmetto’s suit to enforce a security interest, including a right to foreclose, in real property located in Newnan. Because the collateral assignment granting Palmetto the security interest and its power to foreclose is enforceable, and because the Smiths took possession of the property with notice of that power, we reverse. As the parties stipulated in the trial court, the relevant facts are undisputed. In February 1998, Palmetto lent $200,000 to Cafe Franco Wholesale, Inc. “Franco”, in exchange for the latter’s promissory note for that amount and a security deed in the Newnan property. Palmetto recorded the Franco deed shortly thereafter in Coweta County. In July 1998, Franco filed for bankruptcy in federal court. In October 1998, with Franco now in default on its note, TravelBank, Inc. “TravelBank”, agreed to bring the Franco note current in exchange for Palmetto’s absolute assignment of the Franco note and the security deed to TravelBank. TravelBank financed its purchase of the loan through a new note to Palmetto, which was secured through a collateral assignment of the Franco note and security deed back to Palmetto. Palmetto retained both notes and recorded both assignments in Coweta County. TravelBank made payments to Palmetto under the new note until May 2004.
In May 1999, however, TravelBank recorded three deeds concerning transactions occurring earlier that year. The first was a deed under power of sale reciting that TravelBank had sold the property from Franco to itself. The second was a warranty deed reciting that TravelBank had sold the property to VEEU Corporation VEEU for $525,000. The third was a security deed in which VEEU transferred the property to TravelBank as security for a loan of $500,000. In August 1999, moreover, VEEU apparently executed a deed to secure debt and a security agreement conveying the property to Boca Raton First National Bank “the Bank” in exchange for a loan of $1,015,000. VEEU then vanished, along with the money.
