Court Opinion

ID: 5576913
Source: CourtListenerOpinion
Date Created: 2022-01-11 01:27:05.649542+00
Date Added: 2024-06-11T08:35:57.817494
License: Public Domain

Lumpkin, J.
(After stating the foregoing facts.)
Under the facts of this case, we can not say that the trial court committed such error as to require a reversal. The complaint of the intervenor, in regard to the mortgage under which the plaintiffs claimed, was based on four leading grounds: (1) That it was void for want of contracting parties; (2) for want of consideration; (3) for want of delivery; (4) because it was given to hinder, delay, or defraud creditors of Jones, the mortgagor. The first of these grounds, if meritorious, was as much so and as apparent ever since the making and recording of the mortgage as it is now; and so far as the second rested on a delivery by the mortgagor to himself as executor, that was also patent on the face of the record. In this connection see Rutledge v. Montgomery, 30 Ga. 900. There is no claim that these things were lately discovered. Mrs. Jones and her children first filed an equitable intervention in the district court of the United States as a court of bankruptcy, after Jones became a bankrupt, seeking substantially the same relief as that later sought by them in this case. The trustee in bankruptcy was a party defendant. The district judge granted a decree. This was reversed, on appeal, because the action was “in no proper sense a bankruptcy proceeding,” and the district court was without jurisdiction. In the opinion filed there was some discussion of the validity of the mortgage, under the evidence then introduced, but no adjudication, as it was held that there was no jurisdiction. Brumby v. Jones, 141 Fed. 318 (72 C. C. A. 466). After that decision, Mrs. Jones and her children filed the present equitable petitioh in the State court. It was not alleged that the trustee in bankruptcy did not know of its pendency. No effort was made to intervene or to file a separate equitable petition in any court having jurisdiction, until the trustee knew that, by agreement, the court had entered a decree declaring the mortgage, under which Mrs. Jones and her children claimed, to be a valid and binding lien, and reserving only an accounting as to the amount. Then he applied to the United States district court as a court of bankruptcy, seeking to enjoin the parties from proceeding further in the State court. The court of bankruptcy does not ordinarily interfere with the foreclosure of a mortgage in a State court. Its equity jurisdiction is not inherent and general, but such only as the bankrupt act has conferred on it in connection *270with the collection, sale, and distribution of bankrupt estates. Brumby v. Jones, supra, and cases cited. If there be a valid mortgage lien, the trustee in bankruptcy has no absolute right to lay hold of the property. He is interested only in the surplus above the debt, if any.
The Lowry mortgage showed on its face that it was given to an endorser. It was not directly alleged that in fact no such debt existed, or that it was not for the amount stated, but it was alleged that upon payment of $250 to Mrs. Brumby by Jones and $1,000 by Munford, that mortgage had been cancelled, and that the intervenor until then had no notice that the Lowry mortgage was only a valid lien for $1,250, or that he had any interest, as the size of the mortgage was so large, or that there was “no life, genuineness of claim, or willingness to establish and assert” it. It was not denied that' Jones was indebted to the estate of his testator; nor was there any effort to disprove the amount of the debt shown by the evidence ($5,158.43 and interest). The intervenor alleged that the property was worth about $5,000. He further made some allegations as to relationship of the parties, and some charges of fraud which were of a general character, such as that the mortgage, under which the plaintiffs claimed, was made by Jones to hinder, delay, or defraud his creditors. If this were true, it was apparent in the first suit in the Federal court, before this one was brought. Many of his allegations were subject to the special grounds of demurrer. He did not show any good reason why, when he entered this litigation by intervention in the manner above described, he did not take it as he found it.
We do not mean to commend as a practice the cutting up of simple cases into parts, nor to say that in no case would it be held erroneous. But in equity practice, especially in matters involving many branches, adjudications of certain questions before the complete termination of the case are not by any means unknown; and here, all the parties to the case having reached an adjustment, and agreed to a decree, leaving only the amount of the secured indebtedness to be determined, we can not say that such decree was void as to those so agreeing or as to this intervenor, who intervened as set out above. Nor has he shown any sufficient reason for holding what had already been done to be void as to him. This was not an application, with sufficient allegations, to set aside or *271reopen a judgment or order. It was an intervention, seeking to have the previous order or decree in the case declared void, and the property delivered to the trustee, on- vague and unsatisfactory allegations. If at the sale there should be a surplus over the indebtedness to the plaintiffs, nothing here said will prevent the trustee in bankruptcy from claiming it. He did not pray for a decree to that effect, and the decree entered declared only that any surplus should be applied “as the law directs.” See, on the general subject, Charleston etc. Ry. Co. v. Pope & Fleming, 122 Ga. 577 (50 S. E. 374); 16 Cyc. 202; Goodrich v. City Loan & Bldg. Assn. of Augusta, 54 Ga. 98 (3); 11 Enc. Pl. & Pr. 509.
There is nothing in what is here said which conflicts with the decision in Loudon v. Blandford & Garrard, 56 Ga. 150. A trustee in bankruptcy will be allowed to intervene in a litigation in a State court in a proper case; and this trustee was allowed to file his intervention. But as an intervenor he is not exempt from the necessity for proper pleadings and evidence, under the State laws, nor given by law the right to watch a litigation in equity (in which it is sought to establish and foreclose a mortgage against certain land of the bankrupt, as a lien superior to another mortgage; and have proceedings under the latter enjoined) until months after its commencement, and after a partial decree has been rendered by consent, and then oh general pleadings have all ■that has been done considered a nullity so far as it hurts him, but leave to stand that part of the settlement or agreement, on which the decree was based, which discharged the other mortgage, and removed the contestants from the litigation.

Judgment affirmed.

All the Justices concur.