Court Opinion

ID: 5624630
Source: CourtListenerOpinion
Date Created: 2022-01-11 04:48:38.695566+00
Date Added: 2024-06-11T08:37:33.703718
License: Public Domain

Jenkins, P. J.
dissenting.' I have not been able to concur in the decision of the majority of the court as to the effect of the evidence and the law applicable thereto. Although the instrument given by the defendants to the creditor is designated both as a mortgage and as a bill of sale, it is my opinion that it operated to pass title to the described property both by virtue of the express language of the instrument and by its reference to the Code of 1910, § 3306 (Code of 1933, § 67-1301). It is also true that the instrument gave to the creditor the right, after default, to take possession of the property and sell it “as the agent of [the defendants] in the open market in the usual way at private sale, 'or at public sale.” The rulings made in the majority opinion are apparently based on the theory that the rights given in the bill of sale were exercised by the creditor, and that it took sole possession, custody, and control *795over the property, with the consequent duty to account in detail to the defendants for the proceeds thereof; and that, having failed and refused on request of the defendants to sell the property at the time it was placed in its sole possession, custody, and control, it is accountable to them for the current market price on the date of its refusal. As I see it, the record does not bear out any such assumption. I do not understand that the right given by the bill of sale was ever exercised by the creditor, but on the contrary, on the day before the debt became due, the defendants entered into a written contract with the Georgia Cotton Growers Co-operative Association, whereby the defendants in terms agreed that the. cotton “be pooled for my account.” To the defendants’ signed application for membership in the association was attached a marketing agreement, providing that the pool of the cotton should “be for the full season,” and that the association should sell the cotton “at the best prices obtainable by it under market conditions,” and pay over “the net income received therefrom (less freight, insurance and interest)” to the growers named in the contract, “after deducting therefrom, within the discretion of the association, the cost of handling, grading, and marketing such cotton,” etc. Attached to this market agreement by the defendants was a paper signed by the creditor as lienholder, agreeing to such pooling, and providing that the net proceeds from sales be remitted directly to it as mortgagee to the extent of its claim. While the defendants’ affidavit of illegality sets forth that the creditor “persuaded and advised” them to pool the cotton with the Cotton Growers Association, there was no pleading or evidence to the effect that anjr fraud or duress was practiced on the defendants in connection with the pooling agreement made by them with the association or the delivery of the cotton to the association in furtherance of the terms of the pooling agreement. It would seem to be clear that the mere fact that the bill of sale gave to the creditor the right, after maturity of the debt, to seize and sell the crop of cotton in the manner provided by the instrument as a method of collecting its indebtedness did not give to the creditor any sort of right, power, or authority to pool the cotton, or compel the defendants to do so, with a third person with discretion vested in such third person as to the time and manner of sale. The creditor having no right or power under the bill of sale to compel the defendants to pool the cotton with the *796association, their doing so must be taken as their own voluntary act, irrespective of any persuasion or advice given by the creditor, in the absence of fraud or duress. Accordingly, under the undisputed oral testimony and writings in evidence, the Cotton Association must be accounted as the agent of the defendants by whom the cotton was pooled, and to a limited extent as also the agent of both the defendants and the creditor in that the association was required to remit directly to the creditor the net proceeds received from cotton sales by the association up to the amount of the lien.
The pooling of the cotton by the defendants must necessarily be taken as their own voluntary act, not only for the reason just stated, that the creditor had no right or power to compel any such action on the part of the defendants, but for the additional reason that, according to the affidavit of illegality, at the time the cotton was pooled with and surrendered to the association by the defendants, its value was more than enough to pay off and discharge the obligation owing by the defendants to the creditor. This being true, the defendants, if they cared to sell the cotton and discharge the creditor’s debt, were authorized to do so without infringing any right of the creditor or any rule of law. The penal prohibition which prevents the wrongful sale of property under a lien applies only where such a sale is made “with intent to defraud” and where “loss shall thereby be sustained by the holder” of the lien. Penal Code (1910), § 720 (Code of 1933, § 67-9901). A mere tender by the defendants or by the purchaser of the property of the amount due to the creditor would have discharged its lien, even if for any unaccountable reason it had refused to accept payment in full of its claim. Bourquin v. Bourquin, 120 Ga. 115 (7, b), 119, 120 (47 S. E. 639); McCalla v. Clark, 55 Ga. 53. It therefore seems that the act of the defendants in pooling the property with the Cotton Association was altogether voluntary, and that the creditor was not in a position to exercise and could not have exercised any sort of power in requiring the action which was in fact taken by the defendants themselves. In pooling the cotton as they did, they voluntarily took the chance of the price going up or down. If it had gone up, they would have been the gainers. The creditor had nothing to gain by the price going up. If it had gone down, however (as it did), the security of the creditor might have been impaired. It thus appears that the defendants, and not the creditor, *797were the ones who might have gained by the pooling transaction.
Eeference is made in the majority opinion to the fact that the agreement with the association was signed by only one of the two defendants. While this is true, the defendant signing the agreement papers, who was the mother of the other defendant, was the owner of the lands on which the cotton was grown, according to the recital in the bill of sale signed by both of the defendants. No question was raised as to the participation of the son in all of the transactions, including the pooling and delivery of the cotton to the association under the signed agreement of the mother. The son himself testified, “My brother and myself delivered the cotton. . . When we delivered it, we sent them [the Cotton Growers Association] the bill of lading and also this paper signed November 11, 1925, by Mrs. S. S. Goldin,” the mother.
As I see the case, under no conceivable theory were the defendants entitled to prevail. If it were to be assumed, contrary to the undisputed facts 'set forth in the record, that the property was actually in the hands, custody, and sole control of the creditor, even then and in that event, under the decisions in this State the statements made in the counter-affidavit and the testimony as to the defendants’ alleged request to sell the cotton would not entitle them to recover damages because of a refusal of their request, and would not constitute a legal defense to an action for the indebtedness, even though there was a subsequent depreciation in the value of the property. In First National Bank of Blakely v. Hallaway, 172 Ga. 731 (158 S. E. 565, 77 A. L. R. 375), the Supreme Corrrt held: “One who receives collateral security is bound to the use of reasonable diligence in connection therewith. If the collateral be promissory notes or like evidences of debt, he is bound to use ordinary diligence to collect them. But when chattels, personal property, such as cotton, was deposited as collateral security, the creditor was not compelled, on failure of the debtor to pay the debt, to sell the collateral, although he had the option to do so, in the manner provided by the Code, § 3530. His not selling, although the pledgor demanded that he sell the same and there was a subsequent depreciation of the value of the cotton, constituted no defense to the action on the indebtedness.” The court followed and in the opinion quoted from the earlier decisions of Colquitt v. Stultz, 65 Ga. 305, and Napier v. Central Georgia Bank, 68 Ga. 637 (2). *798Thus, eyen if, under the evidence, it could be inferred, as the majority of the court holds, that the creditor took “possession of and assumed dominion over the property under the right given it in the bill of sale,” there would have arisen no consequent obligation to sell the cotton security upon the request of the defendants, such as would create a liability for any such refusal. Upon the theory of possession by the creditor, the case would be controlled by' the above decisions, and the defendants would not have been entitled to prevail.'
With regard to the burden of proof, in showing how much cotton had been sold by the association, the prices paid, accounting for the proceeds, and showing the nature of the credits, I can not agree that this burden rested on the plaintiff, that it failed to carry the burden, and -that the verdict was therefore without evidence to support it. The plaintiff pleaded and introduced the $3200 note, showing on its face credit entries of $1490.20 and $964.21, and showing that the balance due was the $745.59 principal sued for. There was no defense filed and no evidence that there had been any total or partial payments different from those pleaded and shown on the note, either by way of money or proceeds from the cotton. The sole defense pleaded was that the defendants owed nothing because the plaintiff had not agreed to a sale of the cotton on the day before it was pooled, when the price would have paid off the debt, and that the plaintiff itself took charge of the cotton, pooled it, and collected the proceeds. This is quite different from a plea of total or partial payment, or a plea contesting the correctness of the alleged credits. The right of the creditor, under the defendants’ own pooling agreement, was limited to the right to- receive directly such “net proceeds” as the association might remit from sales of the cotton, over which the creditor retained no control. Its only duty to the defendants was to credit on the note the “net proceeds” received from the association as the agent of both parties.- Prima facie, when the note was admitted in evidence with the credit entries thereon, these amounts were correct, unless questioned by pleading or at least controverting evidence from the defendants. There was no such pleading or evidence. The defendant son testified as to these credits, “I never did make any other payments in any other way except this cotton on this paper,” and “Of course I know [the credits] came from this cotton.” All the credits thus admittedly *799coming from sales of the cotton by the association, and the correctness of the- credit entries as representing the “net proceeds” actually received by the plaintiff creditor being in no wise questioned, the trial judge properly directed a verdict in favor of the plaintiff and properly refused a new trial, except as to attorney’s fees. There being no notice to the defendants so as to authorize their recovery, in my opinion the judgment should be affirmed upon condition that this erroneous item be written off.