Court Opinion

ID: 5585080
Source: CourtListenerOpinion
Date Created: 2022-01-11 01:51:06.914094+00
Date Added: 2024-06-11T08:35:58.242993
License: Public Domain

Hines, J.
(After stating the foregoing facts.) Whether the trial judge erred in his instructions to the jury, and whether the verdict is contrary to the law and evidence, or either, depends upon *551the proper answers to two questions: first, whether the vendor in the security deed, in possession under a bond for title from the vendee, had any interest in or title to the land conveyed by such deed, to which the lien of the subsequent judgment against him attached, independently of any mala tides in the subsequent transaction under which the'vendee acquired absolute title to the property embraced in the security deed; and second, if he had such interest or title, whether it could be sold under an equitable petition filed in aid of the levy of the execution, without payment or tender to the vendee in such instrument of the amount of the loan thereby secured, where the vendee had acquired from the vendor the absolute title to the land after the rendition of the judgment, in the manner set out in the statement of facts, and had filed a statutory claim thereto when so levied upon.
Undoubtedly, “when land is sold and a portion of the purchase-money is paid by the vendee, and when the vendor delivers to the vendee a bond for title conditioned to make title upon the payment of the balance of the purchase-money, both the vendor and the vendee have a beneficial interest in the land which either may sell or assign.” Dunson v. Lewis, 156 Ga. 692, 700 (119 S. E. 846); Georgia State B. & L. Asso. v. Faison, 114 Ga. 655 (40 S. E. 760). The same principle is applicable in the ease of the vendor and vendee in a security deed. In such an instrument the vendee has the legal title which he holds as security for the payment of the money thereby secured; and the vendor has an equitable interest in the premises conveyed, which he can sell or to which he can make a valid second security deed, or on which he can create a valid second lien, subject to the paramount right of the original grantee to have all the land appropriated to the payment of his debt. Williams v. Foy Mfg. Co., 111 Ga. 856 (36 S. E. 927); Willingham v. Huguenin, 129 Ga. 835 (60 S. E. 186); Owens v. Keeney, 146 Ga. 257 (91 S. E. 65); Beckcom v. Small, 152 Ga. 149 (108 S. E. 542); Cook v. Georgia F. & O. Co., 154 Ga. 41 (113 S. E. 145); Carter v. Johnson, 156 Ga. 207 (119 S. E. 22). A judgment against the vendor in a security deed, obtained after its execution, binds his equitable interest and estate thereby conveyed. O'Connor v. Georgia R. Bank, 121 Ga. 88 (48 S. E. 716); Sloan v. Loftis, 157 Ga. 93 (120 S. E. 781). This being so, the vendor in such security deed cannot defeat the lien of such judgment by *552surrendering -the land therein conveyed to the vendee therein in payment of the debt secured by such instrument, especially where the value of the land exceeds the debt secured thereby. Rawson v. Coffin, 55 Ga. 348; Stewart v. Berry, 84 Ga. 177 (10 S. E. 601). The judgment creditor has a right to have the property sold, and, if it brings more than the secured debt, to have the excess applied to his judgment. The status of the vendee in Such a case is like that of a landlord who, having a special lien upon the crop of his tenant for rent or supplies, cannot, by purchasing the crop from the tenant at private sale, acquire a title thereto which he can set up to defeat a common-law judgment against his tenant, but must, in order to secure the priority of his lien over such judgment, foreclose the same, cause the crops of the tenant to be sold thereunder, and claim the proceeds of the sale. Almand v. Scott, 80 Ga. 95 (4 S. E. 892, 12 Am. St. R. 241); Duncan v. Clark, 96 Ga. 263 (22 S. E. 927); Lightner v. Brannon, 99 Ga. 606 (27 S. E. 703); Hall v. McGaughey, 114 Ga. 405 (40 S. E. 246). The case at bar is different from Wiggins v. Tumlin, 96 Ga. 753 (23 S. E. 75). In that case the mortgage was given to secure the full purchase-money of a chattel. After the maturity of the purchase-money debt, the mortgagor, without requiring the foreclosure of the mortgage, in good faith and without fraud of any kind returned the property to his creditor in satisfaction of the mortgage debt, the full value of the property not being greater in amount than the purchase-money thus paid. Under these circumstances this court in thatrease held that the ¡property was not subject to a judgment rendered prior to the execution of the mortgage. In that case the mortgagor had acquired no interest in the property by the payment of any part of the purchase-money. Such a case is different from that where the owner of land conveys it to secure a loan and then surrenders the property in satisfaction of the loan after a common-law judgment has been obtained against him, and where the value of the property thus surrendered exceeds the secured debt. In such a case the vendee who takes the property in satisfaction of the secured debt takes the same subject to the lien of the common-law judgment.
A more serious and important question in this case is' whether the plaintiff in ii. fa. proceeded by the proper method to subject this land to the lien of his judgment. It is well settled *553that the grantor in a security deed has no leviable interest in the land thereby conveyed until the judgment creditor redeems it by payment to the grantee of the full amount of his secured debt. Civil Code (1910), § 6038; Shumate v. McLendon, 120 Ga. 396 (48 S. E. 10) ; Va.-C. Chemical Co. v. Williams, 146 Ga. 482 (91 S. E. 543); First Nat. Bank v. McFarlin, 146 Ga. 717 (92 S. E. 69). In other words, the junior judgment creditor cannot enforce his judgment by levy and sale of the property embraced in the security deed, without redemption. Ordinarily he must first pay in full the secured debt, procure the vendee in the security deed to reeonvey the property thereby conveyed to the vendor, have the deed of reconveyance recorded, and then proceed to levy and sell. Unless this is done, the claimant can take advantage of non-compliance with these provisions, and is entitled to prevail in the absence of such compliance. Under these circumstances a verdict in a claim case, where the vendee in the security deed is the claimant, finding the property subject, is contrary to law. Black v. Gate City Coffin Co., 115 Ga. 15 (41 S. E. 259); Sloan v. Loftis, supra. These were claim cases; and the plaintiffs in fi. fa. therein did not invoke equitable aid to' enforce their judgments. Is redemption required where the vendor in the security deed, after judgment is obtained against him in favor of another, pays the secured debt by surrendering to the vendee the property embraced in the security deed and by giving to the latter an instrument in writing providing that the security deed shall operate to vest absolute title in the vendee? In other words where there is a total novation of the status of the parties to the security deed by • which the relation of debtor and creditor is extinguished and that of seller and purchaser takes its place, and where the vendor is insolvent, must the judgment creditor pay to the vendee in the security deed the full amount' of the secured debt before a court of equity, in aid of a levy of an execution on such judgment, will subject the land as an equitable asset to the payment of such judgment, by ordering the land sold, the secured debt paid in full, and the excess applied to the liquidation of such judgment ? In Swift v. Lucas, 92 Ga. 796 (19 S. E. 758), this court held that an equitable petition setting up that the land had been conveyed by an absolute deed to secure a loan, bond for title having been given for a reconveyance to the debtor upon payment of the debt, and *554that the latter had no property except his interest in the land, presented no grounds for equitable relief, in the absence of further allegations setting forth that the tender of the amount due the secured creditor had been made and refused, or that the petitioner was unable from poverty or other cause to make such tender. In that case the status of the vendee in the security deed had not been changed. He was still the creditor of the vendor. He was not asserting absolute title to the land embraced in the security deed. He was not occupying a position of hostility to that originally created by said deed. In Va.-C. Chemical Co. v. Rylee, 139 Ga. 669 (78 S. E. 27), this court held: “In the absence of equitable ground, the mere fact that the lien of a judgment creditor, obtained against the grantor subsequently to the making of the security deed, cannot be enforced by levy and sale until the grantor’s title has become revested by redemption, is insufficient to subject the grantor’s interest in the land as ah equitable asset.” In that case this court further said: “Perhaps a judgment creditor, unable by reason of his insolvency or inability to redeem the land, might go into equity and subject the interest of his debtor in land conveyed to another to secure a debt, without redemption; but no such ground for equitable interference is made in this case.” The comments made on the case of Swift v. Lucas, supra, are applicable to the case last cited. In that case the status of the parties to the transaction, evidenced by the security deed, had not been changed. The vendee therein was still a creditor of the vendor therein. The creditor was not setting up absolute title to the property embraced in the security deed. He was not occupying a position of hostility to the subsequent judgment creditor. In First Nat. Bk. v. McFarlin, supra, certain creditors obtained judgments against B in 1915. In 1904 B had purchased certain land for which A had advanced the purchase-price, taking a deed directly to himself and executing a bond agreeing to convey the land to B upon repayment of the debt; and B entered into possession of the property. In 1911 B executed a contract of sale of the land to 0, upon consideration of a stated sum in cash paid, and the assumption of the debt to A. B still retained possession. In 1914 B executed a paper purporting to convey her equity of redemption to D, which expressed a money consideration, but the only purpose thereof was to secure an existing debt owed *555by B to D. In March, 1915, B executed a promissory note to E, to secure which she transferred the bond for title issudd to her by A. Subsequently D transferred her interest in the property to E. The conveyance by B to D was made for the purpose of avoiding payment of the debts owed the plaintiffs, which fact was known to D and to E at the time D received her conveyance from B and transferred her interest to E. B died in 1915, leaving her husband in possession, who was collecting the rents. The land was worth a sufficient sum to pay the plaintiffs and all valid liens against it. This court held “that a petition in an equitable action instituted by creditors against A, C, D, E, and the husband of B, to require all of the parties to interplead and adjust their claims in one action, and to have a receiver appointed to take charge of the property and collect rents, and to have the property sold and the proceeds applied to the claims of all parties as their interests might be determined by the decree, which alleged facts as above stated, but did not allege that A, the obligor in the bond for title, had been paid his debt, was properly dismissed on general demurrer.” In the case last cited the comments made on the two cases cited preceding it are applicable. In the case last cited A was still the creditor of B. The status between A and B had not been changed. He was not claiming title to the land embraced in his security deed under any novation of the contract, evidenced by the security deed, by which novation he asserted title to the land in dispute as its absolute owner.
In the three cases last cited the vendees in the security deeds were still creditors of their vendors; and were not asserting absolute title in hostility to the rights of other creditors who, subsequently to the execution of the security deeds, had obtained judgments against the vendors therein. Under such circumstances the subsequent judgment creditors should be required to pay off the secured debts before levying upon and selling the property embraced in the security deeds. The secured creditors should not be forced into litigation when the subsequent judgment creditors could pay their claims, and then levy upon and sell the lands conveyed by the security deeds. Thus the subsequent judgment creditors had an ample and complete remedy at law by which they could bring to sale the lands embraced in the security deeds involved in the cases cited. This being so, a' resort to equity to *556enforce their judgments was not necessary. But in the case at bar the situation is different. The vendee in the security deed involved in this case no longer occupied the relation of a creditor of the defendant in judgment. He claimed to be the absolute owner of the premises in dispute. He denies that the plaintiff in fi. fa. has the right to redeem this land upon payment to him of the amount of the debt originally secured by the deed to this land, under which he acquired title as security for such debt. If the plaintiff in fi. fa. had offered to redeem, he would have refused to accept the money, and would have declined to reconvey the property to the judgment debtor so that it could be levied upon under the plaintiff’s execution. Undoubtedly the plaintiff would have made a good case for equitable relief, if he had alleged the tender to the claimant of the debt secured and his refusal to accept payment in full thereof when so tendered. As the claimant would have refused such tender, as he was asserting absolute title to this land, any tender of payment by the plaintiff in fi. fa. was excused. Where the claimant by conduct or declaration proclaimed that, if a tender had been made, acceptance would have been refused, tender is excused. Miller v. Watson, 139 Ga. 29 (76 S. E. 585); Burkhalter v. Roach, 142 Ga. 344 (2) (82 S. E. 1059); Fraser v. Jarrett, 153 Ga. 441 (3) (112 S. E. 487).
Under the facts of this case, we think the true rule is this: “Where a creditor holds an absolute deed as security for a debt, with his bond to reconvey outstanding, and, upon the debtor after-wards becoming insolvent,, he takes the property in payment of the debt, the value being, largely in excess of the amount of the debt, other creditors may have the property administered in equity as the assets of an insolvent, and the proceeds applied first to the secured debt, and the surplus to their own claims. This may be done without -first tendering to the secured creditor payment of his claim.” Pool v. Gramling, 88 Ga. 653 (7) (16 S. E. 52).
So we are of the opinion that the trial judge did not err in the instructions given by him to the jury, of which claimant complains; and that the verdict is supported by the evidence.

Judgment affirmed.

All the Justices concur.