Archer v. Kelley
| Decision Date | 15 April 1942 |
| Docket Number | 14076. |
| Citation | 21 S.E.2d 51,194 Ga. 117 |
| Parties | ARCHER v. KELLEY. |
| Court | Georgia Supreme Court |
Rehearing Denied May 20, 1942.
Second Rehearing Denied June 17, 1942.
Syllabus by the Court.
1. A recorded quitclaim deed, when taken in good faith for a valuable consideration, without notice, will prevail over a prior unrecorded deed. This rule is not altered by the fact that the quitclaim deed conveys only the grantor's rights, title, and interest in and to the land, instead of conveying the land itself.
2. Where the deed conveyed land to Long Realty Company in consideration of the promise of the grantee to have satisfied and surrendered a debt of Security Mortgage Company against the grantor and the property conveyed, and some months thereafter the grantee discharged its obligation by the surrender and satisfaction of the debt, the grantee was a purchaser for value. Whether the grantee paid anything to the holder of the debt to obtain its satisfaction or whether the owner of the debt gave the same to the grantee does not affect the status of the grantee as a purchaser for value. Although the evidence showed that the owner of the debt secured the charter of Long Realty Company, owns most of its stock, and has pursued a policy of having title to land which it has taken to avoid foreclosure vested in and held by Long Realty Company, the deed to Long Realty Company disclosing no interest of others in the land, these facts constitute neither an express nor an implied trust. The evidence showing that Long Realty Company had no notice of the plaintiff's prior unrecorded security deed either at the time it received the quitclaim deed or at the time it paid the purchase-money therefor, it was a bona fide purchaser for value and without notice.
3. The recording statute is designed to protect innocent purchasers and to this end it renders ineffective a prior unrecorded deed as against a subsequent bona fide purchaser for value without notice. Therefore to apply the statute in this case does not have the effect of imputing a wrong to the grantor by having the quitclaim deed confer an interest in the premises which she did not own at the time it was executed. The grantor's motives are not involved under the recording statute.
4. Where the excluded evidence, if considered, would not authorize a different verdict, its exclusion, if error, was harmless and will not require a new trial.
Jeff Archer sued Mrs. Ila Chandler Kelley in ejectment, seeking to recover premises known as No. 40 Fulton Avenue. The pleadings show the following historys of the title: On June 15, 1927, Mrs. Bessie L. White, then the owner, executed a loan deed conveying the premises in dispute to Security Mortgage Company to secure a loan of $5,000. On November 23, 1927, Mrs. White conveyed the premises to Jeff Archer, the deed containing a clause by which Archer assumed the Security Mortgage Company loan. On February 25, 1930 Jeff Archer conveyed the property by warranty deed to Mrs. J. M. McAdams, the deed reciting that it was subject to the Security Mortgage Company loan, and that the grantee assumed that indebtedness. The last-named deed recited a consideration of a small sum of money and other valuable considerations, and that the consideration had been paid in full. Simultaneously with the execution of the lastnamed deed, the grantee, Mrs. McAdams, executed to the grantor, Archer, a loan deed to secure twenty notes of $50 each, as a part of the purchase-money. This loan deed was filed for record in the office of the clerk of the superior court on September 12, 1933. On May 24, 1932, Mrs. J. M. McAdams, being in possession of the premises, conveyed by quitclaim all her rights, title, and interest in the premises to Long Realty Company. This deed recited a consideration of $10, and was filed for record on June 7, 1932. Long Realty Company is a corporation organized by Security Mortgage Company for the purpose of holding title to lands belonging to the mortgage company, and to enable the mortgage company to avoid the necessity of foreclosures. Security Mortgage Company owns all the stock in Long Realty Company. Long Realty Company conveyed the premises by loan deed to Security Mortgage Company on December 1, 1932, to secure a debt of $4,200; and some time after the registration of the security deed from Mrs. McAdams to Archer, the Long Realty Company conveyed the premises to the defendant, Mrs. Kelley.
Upon the trial of the case the various deeds referred to in the pleadings were introduced. It was stipulated that both parties claim under Mrs. J. M. McAdams as the common grantor. Welborn B. Cody testified as a witness for the defendant, that he was attorney for and vice-president of Long Realty Company; that he also represented Security Mortgage Company; that at the time Mrs. McAdams executed the quitclaim deed to Long Realty Company the Security Mortgage Company held a loan deed against the property for $5,000; that the loan was in default, and two years' taxes were unpaid; that the loan was referred to him for foreclosure; that he allowed Mrs. McAdams some time in which to sell the property, and that rather than foreclose the loan deed Long Realty Company took a quitclaim deed from Mrs. McAdams, the consideration for the deed being that the grantee would see that the loan deed of Security Mortgage Company was canceled; that approximately six months thereafter Long Realty Company had the loan deed referred to satisfied of record. The witness further testified that he examined the title to the property at the time the quitclaim deed was accepted; that Mr. Archer was liable for the debt secured, and so was Mrs. McAdams; that he had to do one of two things, take the property back voluntarily or foreclose and sue the parties; that in his examination of the title there was no deed on record from Mrs. McAdams conveying the property to Archer to secure a debt; that his clients immediately took possession of the property, and they and their grantee, Mrs. Kelley, have held possession ever since; that the fact that the security deed was not recorded certainly had an influence on his conduct in taking the quitclaim deed; that he would not have passed the title and would not have accepted the quitclaim deed or allowed the Long Realty Company to accept it had he known of the security deed to Archer, but in such an event he would have foreclosed on the property and sued Mrs. McAdams, Mrs. White, and Mr. Archer; that the Long Realty Company satisfied the loan deed as consideration for the quitclaim deed; that at the time Mrs. McAdams executed the quitclaim deed the property was not worth the amount of the Security Mortgage Company claim, lacking a thousand or fifteen hundred dollars of having that value; and that Mrs. McAdams did not tell Long Realty Company about the security deed she had executed to Mr. Archer.
At the conclusion of the evidence the motion by the defendant to exclude from the evidence the security deed and notes from Mrs. McAdams to Mr. Archer, dated February 25, 1930, was sustained; and to this ruling the plaintiff excepted pendente lite. The court directed a verdict in favor of the defendant. The plaintiff excepted, assigning error on that direction and on the ruling excepted to pendente lite.
Durwood T. Pye, of Atlanta, for plaintiff in error.
Tye, Thomson & Tye, of Atlanta, for defendant in error.
1. The recording statutes of this State clearly define the rights of a grantee under an unrecorded security deed, as related to a bona fide purchaser for value and without notice. The Code, § 29-401, declares: To the same effect, see Dix v. Wilkinson, 149 Ga. 103, 99 S.E. 437; Wilkinson v. Dix, 151 Ga. 605, 107 S.E. 844; Randall v. Hamilton, 156 Ga. 661, 119 S.E. 595, 32 A.L.R. 342; Terry v. Ellis, 189 Ga. 698(4), 7 S.E.2d 282. It is declared in the Code, § 67-1305: In § 67-2501 it is provided that such deeds, as against third parties acting in good faith and without notice, shall take effect only from the time they are filed for record. The plaintiff's title is dependent upon his unrecorded deed to secure debt. He is entitled to a reversal of the judgment sustaining the defendant's title, which is dependent upon the quitclaim deed, only in the event that it is held that the plaintiff's deed, earlier in date but unrecorded, has priority over the subsequent recorded quitclaim deed.
At the outset it is necessary to determine whether or not the quitclaim deed entitled the grantee therein to the protection which the law confers upon a bona fide purchaser for value without notice. In Phoenix Title & Trust Co. v. Old Dominion Co., 31 Ariz. 324, 253 P. 435, 436, 59 A.L.R. 625 the court had under consideration a quitclaim deed which conveyed merely the 'right, title, and interest' of the grantor; and in the opinion it was said: 'In every case when the question could possibly arise it is not the one who took under the prior unrecorded instrument who was deceived; it is, on the contrary, the subsequent purchaser who has in good faith been diligent, and relied on the records, who has been misled to his injury by the first purchaser, who has neglected the plain warning of the statute. 'Equity favors the diligent and...
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