Court Opinion

ID: 3401758
Source: CourtListenerOpinion
Date Created: 2016-07-05 19:13:32.090481+00
Date Added: 2024-06-11T14:03:05.486603
License: Public Domain

1. On exceptions to the overruling of a demurrer to an equitable petition, interlocutory exceptions such as made in this case to rulings made in the progress of the case prior to the demurrer can not be considered.
2. Even though a petition for extraordinary equitable relief is not properly verified as required by the Code, § 81-110, this does not as a matter of law demand its dismissal on general demurrer.
3. Where an insolvent debtor, for the purpose of hindering, delaying, and defrauding his creditors, uses his assets in the purchase of property, taking title in the name of a third person, who has full knowledge of the purpose of the transaction, such a transaction is fraudulent as to existing creditors; and, in a court of equity with the parties to the transaction made parties defendant, the defrauded creditor may have the transaction set aside.
                        No. 16193. MAY 13, 1948.
Atlanta Milling Company filed a creditor's bill against Morgan Carr, alleging in substance: that the defendant is the owner and operator of a feed and grocery store and is also the owner of certain real estate; that he is indebted to numerous persons, including an indebtedness of $1151.52 due the plaintiff for goods *Page 609 
purchased and used in maintaining a stock of merchandise to be sold at his place of business; that, although a demand for payment had been made, the defendant refuses to pay this indebtedness; that the defendant, in order to forestall his creditors, had given checks on certain banks, and these checks were returned, marked "insufficient funds;" that the defendant is failing to manage, direct, or supervise his business, permitting others to operate it, but through withdrawals of cash he is depleting the stock of goods and merchandise in the store and impairing his credit by his refusal to pay his creditors; that the defendant is hindering, delaying, and defrauding his creditors through the execution of notes and the payment of claims of others, of third parties, and by reason of such acts the defendant has used a substantial amount of his personal funds, which should have been paid to the plaintiff and other persons similarly situated; that the defendant's assets are being consumed and squandered, and unless a court of equity intervenes no assets will remain with which to pay the claims of the plaintiff and other creditors; that the defendant is insolvent. The plaintiff prayed for a receiver and an injunction, enjoining the defendant from committing acts of waste and from conveying, disposing of, or encumbering his property.
A receiver was appointed. Subsequently, on October 23, 1947, the receiver filed a report and request for instructions, in which he alleged that, upon information and belief, certain properties had been transferred by the defendant to Mrs. Hattie Harper for the purpose of hindering, delaying, and defrauding creditors. On January 20, 1948, the plaintiff filed an amendment to the petition, seeking to have Mrs. Hattie Harper made a party defendant. The amendment alleged in substance: that on November 1, 1946, the defendant purchased a described house and lot for $8500, on which he paid $4000 cash and assumed a mortgage of $5000; that immediately upon the purchase of this property he caused it to be conveyed to Mrs. Hattie Harper, who is now residing on the property; that from time to time thereafter, from January 1 to October 1, 1947, the defendant expended more than $2000 for furniture and equipment which was placed on this property on behalf of Mrs. Harper; that in September, 1947, *Page 610 
the defendant purchased a 1946 four-door Dodge sedan, motor No. D-24-121451; that immediately upon purchasing the car, the defendant delivered it to Mrs. Harper for her personal use; that the defendant conveyed, transferred, assigned, and delivered the described property to Mrs. Harper while he was insolvent and for the purpose of hindering, delaying, and defrauding creditors, which acts were done with the knowledge and connivance of Mrs. Harper; that at the time the transfers and deliveries were made, the plaintiff was a creditor of the defendant Carr; that the defendant Carr owes debts and claims in excess of $25,000 and has assets, including the property transferred to Mrs. Harper, which will not exceed $17,000; that, unless Mrs. Harper is enjoined from disposing of the described property, she will sell it and convert the funds to her own use. The plaintiff prayed, among other things, that Mrs. Hattie Harper be made a party defendant, and for general relief.
Mrs. Hattie Harper filed a general demurrer to the amendment and to the petition as amended. The trial court overruled the general demurrer, and to this judgment the plaintiff in error, Mrs. Hattie Harper, excepted, also assigning error on interlocutory decrees previously rendered by the court.
1. No exception was taken to the order appointing a receiver. Two of the assignments of error relate to interlocutory orders passed prior to the overruling of the general demurrer filed by the plaintiff in error. "Interlocutory exceptions can not be considered in this court until a final disposition of the case in the court below. Therefore, on exceptions to the overruling of a demurrer to a bill in equity, interlocutory exceptions to rulings made in the progress of the case prior to the demurrer can not be considered." Mechanics' Traders' Bank of Rome v. Harrison, 68 Ga. 463 (1); Hooks
v. Prince, 171 Ga. 688 (156 S.E.2d 683).
2. Even though a petition for extraordinary equitable relief is not properly verified as required by the Code, § 81-110, this *Page 611 
does not as a matter of law demand its dismissal on general demurrer. Williams v. Porter, 202 Ga. 113 (42 S.E.2d 475);Bracewell v. Cook, 192 Ga. 678 (16 S.E.2d 432).
3. "Creditors may attack as fraudulent a judgment or conveyance, or any other arrangement interfering with their rights, either at law or in equity." Code, § 28-104. "Since the uniform procedure act of 1887 a creditor may in one suit proceed for a judgment on his debt and to set aside a fraudulent conveyance made by his debtor." Keeter v. Bank of Ellijay,190 Ga. 525, 526 (9 S.E.2d 761), and cit. The Code, § 28-201, declares: "The following acts by debtors shall be fraudulent in law against creditors and others, and as to them null and void, viz: 1. Every assignment or transfer by a debtor, insolvent at the time, of real or personal property, or choses in action of any description, to any person, either in trust or for the benefit of, or in behalf of, creditors, where any trust or benefit is reserved to the assignor or any person for him. 2. Every conveyance of real or personal estate, by writing or otherwise, and every bond, suit, judgment and execution, or contract of any description, had or made with intention to delay or defraud creditors, and such intention known to the party taking. A bona fide transaction on a valuable consideration, and without notice or ground for reasonable suspicion, shall be valid. 3. Every voluntary deed or conveyance, not for a valuable consideration, made by a debtor insolvent at the time of such conveyance." By § 48-110 of the Code, it is provided: "An insolvent person may not make a valid gift to the injury of his existing creditors."
If an insolvent debtor, for the purpose of hindering, delaying, and defrauding his creditors, uses his assets in the purchase of property, taking title in the name of a third person, who has full knowledge of the purpose of the transaction, such a transaction is fraudulent as to existing creditors. In the instant case, the petition, as amended, alleges such a state of facts; and, on general demurrer, these facts must be accepted as true. In these circumstances, a defrauded creditor may, in a court of equity, have the fraudulent transaction set aside; and, for this purpose, the third party to the transaction would be a proper and necessary party. The amendment to the petition, which sought to *Page 612 
make Mrs. Hattie Harper a party defendant, was germane to the original cause of action and conducive to the grant of complete relief with respect to the same matter, and consequently it was not objectionable as adding a new and distinct cause of action.
Judgment affirmed. All the Justices concur. Bell, J., concursspecially.