Blue Ridge Apartment Co. v. Telfair Stockton & Co.

• Court: Georgia Supreme Court
• Writing for the Court: HEAD, Justice.
• Citation: Blue Ridge Apartment Co. v. Telfair Stockton & Co., 54 S.E.2d 608, 205 Ga. 552 (Ga. 1949)
• Decision Date: 13 July 1949
• Docket Number: 16643.
• Parties: BLUE RIDGE APARTMENT CO., Inc. v. TELFAIR STOCKTON & CO., Inc. et al.

54 S.E.2d 608

205 Ga. 552

BLUE RIDGE APARTMENT CO., Inc. v. TELFAIR STOCKTON & CO., Inc. et al.

No. 16643.

Supreme Court of Georgia

July 13, 1949

Syllabus by the Court.

1. The 'indenture and bill of sale' between The Mortgage-Bond Company and The Mortbon Corporation did not pass the title to property held by The Mortgage-Bond Company in fee, nor did it pass the legal title to property held by The Mortgage-Bond Company under deeds to secure debt.

2. Where the grantee in a security deed is in possession of property under a sheriff's deed made in pursuance of an alleged illegal sale, such deed, being color of title, will bar the grantor in the security deed in seven years, if acquiesced in by him for that length of time.

3. One who in good faith acquires the legal title to land by a deed to secure debt, from a grantor who is the holder of the record title, and who is also in possession of the property, will be protected from one who seeks to assert a right hostile to the record and to the possession.

This is the fourth case appearing in this court based upon a contract or 'indenture and bill of sale,' dated October 21 1935, between The Mortgage-Bond Company and The Mortbon Corporation, both of New York. In Trust Company of Georgia v. Mortgage-Bond Co., 203 Ga. 461, 46 S.E.2d 883, the Mortgage-Bond Company had filed a petition for scire facias to revive a judgment obtained on January 7, 1936 against W. H. Wynne, States Realty Co., Inc., and Wynndham Court Apartment Co., Inc. By amendment it was alleged that the assets of The Mortgage-Bond Company had been sold and conveyed to The Mortbon Corporation (under the 'indenture and bill of sale'), and that the name of The Mortbon Corporation was changed to Telfair Stockton & Co., Inc. The petition, as amended, prayed that the action proceed in the name of the plaintiff for the use of Telfair Stockton & Co., Inc. In the decision rendered by this court the legal effect or validity of the 'indenture and bill of sale' was not considered or passed upon. It was held that a corporation whose charter has expired can not be treated as a legal entity with capacity to sue or be sued, and that section 36 of the Corporation Act of 1938, Laws 1937-38, Ex.Sess., p. 242, does not by its terms apply to foreign corporations.

The next case was that of Telfair Stockton & Co., Inc., v. Trust Company of Georgia, 203 Ga. 802, 48 S.E.2d 532. In that case Telfair Stockton & Co., Inc., as successor in title to The Mortbon Corporation, sought to have revived in equity, in its own name, a judgment issued in favor of The Mortgage-Bond Company. In the statement of facts in that case a copy of the 'indenture and bill of sale' between The Mortgage-Bond Company and The Mortbon Corporation is set out. It was alleged that the effect of the 'indenture and bill of sale' was to convey to The Mortbon Corporation the promissory notes, deeds to secure debt, and legal title to the property involved in the case. By cross-action it was alleged that The Mortgage-Bond Company entered into possession by agreement of the parties, and that the quitclaim deed made by The Mortgage-Bond Company for the purpose of levy and sale was ineffectual and void, for the reason that at the time of the execution of such deed The Mortgage-Bond Company had conveyed all of its title to The Mortbon Corporation. The cross-action sought an accounting and recovery of the property. The judgment of the lower court sustaining demurrers to the petition and cross-action was affirmed.

Wynndham Court Apartment Co., Inc., v. First Federal Savings & Loan Association of Atlanta, 204 Ga. 501, 50 S.E.2d 611, was an action to have declared void a sale of property on execution issued in the name of The Mortgage-Bond Company, it being contended that the quitclaim deed was null and void for the same reason set out in the Telfair Stockton case. An accounting and recovery of the property was sought. The judgment of the lower court, sustaining a general demurrer to the petition was affirmed. No ruling was made by this court with reference to the validity or effect of the 'indenture and bill of sale' between The Mortgage-Bond Company and The Mortbon Corporation, it being held that the petition failed to state a cause of action by reason of alternative allegations of the plaintiff with reference to payment.

In the present case the plaintiff seeks to recover property based upon its contention that the 'indenture and bill of sale' between The Mortgage-Bond Company and The Mortbon Corporation, dated October 21, 1935, passed the title of the assets of the Mortgage-Bond Company, that a quitclaim deed, made for the purpose of levy and sale, by The Mortgage-Bond Company, dated January 5, 1936, was therefore null, void, and ineffectual, and that the debt had been paid in full from the rents and profits collected by The Mortgage-Bond Company and its successors, under an agreement with The Mortgage-Bond Company (while the suit was pending and before judgment), whereby the property was surrendered for such purpose.

In the present case it is alleged, in brief, that: At the time the plaintiff acquired a warranty deed to the property in dispute it was encumbered by a deed to secure debt to The Mortgage-Bond Company, which deed was duly recorded. On August 13, 1935, The Mortgage-Bond Company filed suit on the notes. On the same day the plaintiff consented and agreed for The Mortgage-Bond Company to enter into possession of the property and collect the rents and profits and apply them on the debts of the plaintiff. On October 21, 1935, The Mortgage-Bond Company executed an 'indenture and bill of sale' to The Mortbon Corporation of New York, the effect of which was to sell, transfer, assign, and convey to The Mortbon Corporation the promissory notes on which suit was pending and the deed to secure debt. The Mortgage-Bond Company continued to prosecute the suit in its own name, and on January 7, 1936, obtained a judgment. The prosecution of the suit after delivery of the 'indenture and bill of sale' by The Mortgage-Bond Company was for the benefit of The Mortbon Corporation. On January 5, 1936, The Mortgage-Bond Company executed a quitclaim deed which recited that it was for the purpose of levy and sale.

The quitclaim deed was ineffectual to convey title because at that time The Mortgage-Bond Company had already conveyed all title to the property to The Mortbon Corporation. The attempted levy was void. At the attempted sale the property was knocked off to Joseph A. West, for a purported consideration of $1,000, and a deed was executed to West by the sheriff. West was the nominee and agent of The Mortbon Corporation. On March 5, 1936, West executed a deed, which was duly recorded, to the Southwall Corporation for a recited consideration of $100. E. H. Sims, first as agent of The Mortgage-Bond Company, and later as agent of The Mortbon Corporation, continued in possession and management of the property until February 11, 1943, when The Mortbon Corporation, acting through its creature and subsidiary, attempted to convey the property (with other property) to E. H. Sims and W. K. Grant. Sims and Grant have been in possession since the date of their attempted purchase. The Mortbon Corporation, its agents or creatures, did not acquire any prescriptive title by reason of the void sheriff's deed. (Subsequently to the ruling in Wynndham Court Apartment Co., Inc., v. First Federal Savings & Loan Association, supra, the petition was amended to strike, allegations of payment in the alternative, and to make more specific the allegations of payment.) Sims and Grant, on July 30, 1945, made a deed to secure debt to the First Federal Savings & Loan Association, which is duly recorded. The Association is a corporation and should be made a party. Subsequently to the ruling in Telfair Stockton & Co., Inc., v. Trust Company of Georgia, supra, the plaintiff amended its petition and alleged that the 'indenture and bill of sale' 'was executed for a valuable consideration which was fully paid;' 'all of the obligations and conditions imposed by said indenture and bill of sale were fully performed and complied with by the parties;' 'all limitations imposed by said indenture and bill of sale were fully discharged and everything necessary to effectuate said indenture and bill of sale was done by the parties to said instrument;' and 'the parties * * * operated under said indenture and bill of sale and fully and completely performed all of its terms.' The prayers were for an accounting, recovery of the property, and other relief.

The trial court sustained the general demurrers of the defendants to the petition as amended, and dismissed the petition. The exception is to that judgment. In so far as material to the judgment in this case, specific allegations of the plaintiff's petition will be set forth in the opinion.

Poole Pearce & Hall, Margaret Hills, James A. Branch, Thomas B. Branch, Jr., Atlanta, for plaintiff in error.

T. M. Smith, MacDougald, Troutman, Sams & Branch, Atlanta, for Telfair Stockton & Co., Inc.

Grant, Wiggins, Grizzard & Smith, Wm. G. Grant, Herbert Johnson, Atlanta, for First Federal Savings & Loan Assn.

Tye, Thomson & Tye, Jno. S. Bell, Atlanta, for E. H. Sims and W. K. Grant.

Charles D. Hurt, J. Corbett Peek, Jr., Bryan, Carter & Ansley, W J. Parker, Jr., Clarke & Anderson, Alex McLennan, McLennan & Cook, G. S. Peck, Walter McElreath, Mitchell & Mitchell, Atlanta, Erwin, Nix & Birchmore, Athens, Johnson & Johnson, Gainesville, J. Mack Barnes, Waycross, J. Glenn Giles, Marietta, Wright, Rogers, Magruder & Hoyt, Rome, Albert Fendig, Brunswick, Bright & McLamb, J. D. McLamb, Savannah, Harvey L. Jay, Fitzgerald, C. A. Christian, Tifton, O. B. McElvey, Pelham, Hardin & McCamy...