Court Opinion

ID: 9569035
Source: CourtListenerOpinion
Date Created: 2023-08-21 20:09:58.074074+00
Date Added: 2024-06-11T11:20:31.805545
License: Public Domain

*441Hill, Justice,
dissenting.
A chronological statement of the facts will clarify both the facts and the errors of the majority.
On June 1,1976, when Johnson contracted to sell the property to Davis, the Gwinnett County Bank held Johnson’s 60-day promissory note and $21,000 deed to secure debt with dragnet clause. On July 13, Dealers Supply recorded its $47,000 consent judgment against Johnson on the general execution docket. On September 17, Johnson conveyed the property by warranty deed to Davis for $32,500, and Davis conveyed it by security deed to the bank to secure his $30,000 debt to the bank. On December 7,1976, the bank had Johnson’s deed to secure debt canceled of record.
Now the bank wants to set aside its cancellation of the original deed to secure debt executed by Johnson, and thereby regain its priority status as to Johnson’s debt in the sum of $234,183.63.1 The trial court granted Dealers Supply’s motion to dismiss and the majority reverse.
The majority say that the rights of the judgment creditor are inferior to the prior equitable rights of the mortgagee and that this "somewhat anomalous” right of subrogation is of equitable origin. The majority fail to explain how Dealers Supply, which did nothing but record its judgment, can lose in equity to Davis and the bank who acted with constructive notice of Dealers Supply’s recorded judgment. "If a party, by reasonable diligence, could have had knowledge of the truth, equity shall not relieve; . . .” Code § 37-211. Davis and the bank had constructive knowledge of Dealers Supply’s recorded judgment. By checking the record (reasonable diligence) they would have had actual knowledge of it. A mistake which can be relieved in equity must be unmixed with negligence. Iverson v. Wilburn, 65 Ga. 103 (1880). Equity *442should not relieve these plaintiffs as against Dealers Supply where it has done nothing except comply with the law. Code §§ 37-107, 37-112.
Moreover, the majority find that the bank is entitled to be restored to its priority. Yet the cases cited by the majority, if they were applicable here, would allow Davis to be subrogated to the rights of the bank, not backwards as the majority does. In Cornelia Bank v. First Nat. Bank of Quitman, 170 Ga. 747 (154 SE 234) (1930), it was the purchaser (i.e., Davis in the case at bar), not the creditor (i.e., the bank), who was entitled to subrogation.
If Davis obtains subrogation, his priority equals $30,000, the amount of Johnson’s indebtedness which Davis paid to the bank. If the bank obtains reinstatement of its security deed from Johnson, it can claim priority as to his existing indebtedness — $234,183.63. That must be what the majority mean when they say it may seem somewhat anomalous to allow the bank to be subrogated to its own rights. It’s so anomalous to me that I dissent.

 The majority do not make clear whether the revival of Johnson’s security deed to the bank will revive that deed completely or only in the amount of Davis’ debt.