Brice v. National Bondholders Corp.

• Decision Date: 15 February 1939
• Docket Number: 12626.
• Citation: 1 S.E.2d 426,187 Ga. 511
• Parties: BRICE v. NATIONAL BONDHOLDERS CORPORATION.
• Court: Georgia Supreme Court

1 S.E.2d 426

187 Ga. 511

BRICE v. NATIONAL BONDHOLDERS CORPORATION.

No. 12626.

Supreme Court of Georgia

February 15, 1939

Syllabus by the Court.

1. The absence of an allegation in the petition that the plaintiff therein was the holder of the promissory note in question which was indorsed in blank, not being pointed out by demurrer nor mentioned, so far as the record shows, except in the brief of counsel and argument in this court, was an amendable defect that was cured by verdict.

2. 'When a grantor accepts a deed, and thereby becomes bound by the covenants therein, and the instrument is under seal the period of limitation applicable to a suit brought for breach of the covenant is twenty years.' Kytle v Kytle, 128 Ga. 387, 57 S.E. 748. So much of the ruling of the trial court as struck the plea of the statute of limitations based upon the ground that this suit, which was of the nature above indicated, was brought more than four years after the accrual of the right of action, was correct.

3. The promise of the defendant to assume the payment of the indebtedness represented by a security deed on the property purchased by him, being a part of the consideration he agreed to pay for the property, does not bring his promise within the operation of the statute of frauds, and so far as his assignment of error in this case relates to the statute of frauds it is without merit.

4. When a person enters upon land by virtue of a deed conveying title to him, he will be bound by the covenants contained in such deed, and will not be allowed, over a timely demurrer thereto, to set up as his defense a contention that a provision in the deed violates previous verbal negotiations respecting the terms of the sale to him, he not alleging in his answer any fraud or that he was in any manner prevented from ascertaining what the deed contained.

5. Where one purchases real estate from another and there is a provision in the deed to him that he assumes an outstanding mortgage debt against the property, and he and his grantor thereafter rescind the transaction and the property is reconveyed by the grantee to his grantor by quitclaim deed, the mortgage holder not changing his position in respect to his mortgage, can not then maintain an action against the grantee in the deed containing the assumption clause, even though such grantee had for a time paid interest on the mortgage debt direct to the mortgagee.

National Bondholders Corporation, in January, 1938, brought suit in Fulton superior court against W. E. Brice, the petition containing the following allegations: That on December 1, 1927, I. N. and H. H. Wilson executed two promissory notes to Mortgage Guarantee Company of America, one for $200 and one for $4,800; that the $200 note was paid, but the $4,800 note, which fell due December 1, 1932, was not paid; that contemporaneously with the execution of these notes the Wilsons also executed a security deed to described real estate in the City of Atlanta, conveying the same to Mortgage Guarantee Company. A copy of this deed is not attached to the petition, but a quotation therefrom is made to the effect that any taxes, assessments, or premiums of insurance not paid by the makers of the security deed when due, might be paid by the grantee in such deed, and the amounts so paid could be added to the amount of the principal debt and should draw interest from the time of their payment. It was alleged that in pursuance of that provision in the deed certain taxes and insurance premiums were paid by the grantee. It was also alleged that the security deed also provided that in case the debt to secure which the deed had been executed was not paid when it matured, the grantee or his assigns might sell the property, collect the proceeds, and if the proceeds exceeded the entire indebtedness, the balance should be paid to the makers of the security deed; and that in pursuance of that provision in the deed the property was sold July 7, 1936, for the consideration of $1,000. Who sold the property is not stated in the petition, nor does the petition alleged whose property was sold.

It is also alleged that I. N. and H. H. Wilson conveyed the real estate in question to the defendant W. E. Brice for a recited consideration of $10 and other valuable consideration, the conveyance being dated March 28, 1928, and recorded March 15, 1929; and that that deed contained the following provision: 'As a part of the above consideration the party of the second part hereto agrees to assume payment of an indebtedness of $5,000 bearing 7% interest, now against the above described property, secured by a loan deed dated December 1, 1927, to Mortgage Guarantee Company of America; also to assume accrued interest on this loan of $105.55 from December 1, 1927, to March 20, 1928;' that Brice accepted this warranty deed and went into possession of the property, and that by his acceptance of the deed he became liable to the noteholder and the creditor for the payment of the debt. And petitioner prayed that the court decree Brice to be liable for the payment of the balance of the debt of the Wilsons, and liable to the plaintiff in the principal sum of $5,949.74, together with interest thereon from July 7, 1936, and the costs of court. The security deed to Mortgage Guarantee Company is not set forth, but a copy of the note for $4,800, executed to it by the Wilsons, is attached and shows that the same was indorsed in blank on its back, but the date of such indorsement is not shown.

The defendant filed his answer and admitted that he did agree to purchase the property subject to the $5,000 debt against it; that his agreement was made in the office of an agent of the Wilsons, and he at once went into possession of the property; that he was not given the deed which was executed to him by the Wilsons, who assured the defendant that he was buying subject to their mortgage, and the Wilsons told him that he would get his deed when the full amount outstanding against the property had been paid; that the defendant relied upon those representations and was never aware of the clause that he was to assume payment of the Wilsons' debt until this suit was filed against him. The defendant further pleaded that business conditions became adverse and he soon saw that he could not keep and pay for the property, and accordingly surrendered it to the Wilsons, 'who agreed with him that he should forfeit what he had paid and rescind the sale, provided defendant would reconvey the said property to them. Accordingly, defendant did carry out and perform said rescission agreement and did agree to lose what he had paid thereon and did reconvey the said property to the said I. N. and H. H. Wilson,' and executed his conveyance to them in June, 1929, 'and it was accordingly agreed between the said parties that by the making and execution of said deed of reconveyance by defendant to grantors, the defendant would be released in full from all further obligation which he originally entered into in reference to said property. Whereupon, I. N. and H. H. Wilson immediately took repossession of said property.'

Defendant further stated that when the property was foreclosed and sold on July 7, 1936, it was sold as the property of the Wilsons, and that neither the Mortgage Guarantee Company of America nor its successors, transferees or assignee ever recognized, accepted, or relied upon defendant as obligor in any respect on the first mortgage, and neither has the defendant ever done any act in reference thereto which would authorize them to change their position. And the defendant pleaded the statute of frauds, Code, § 20-401, paragraphs 2, 4 and 5; and the statute of limitations, Code, §§ 3-706, 3-711, and 3-712.

The plaintiff filed demurrers, general and special, and contended that defendant's plea and answer should be stricken. The court so agreed, sustained the general demurrers, and adjudged that the plea and answer be stricken. Thereupon the court directed the jury to return a verdict in favor of the plaintiff, which was done, and the court entered judgment accordingly. The defendant excepted.

J. Wightman Bowden and J. Richard Bowden, both of Atlanta, for plaintiff in error.

Pearce & John S. Matthews, of Atlanta, for defendant in error.

GRICE Justice.

1. The failure of the petition to allege that the plaintiff therein was the holder of the note was not pointed out by demurrer, and so far as the record shows was mentioned by plaintiff in error for the first time in his brief in this court. The absence of an allegation that the plaintiff was the holder of the note was an amendable defect and was cured by verdict. The note was indorsed in blank. For the purposes of this case we shall assume that National Bondholders Corporation acquired whatever rights Mortgage Guarantee Company of America had. This ruling is not in conflict with Allen v. Commercial Credit Company, 155 Ga. 545, 117 S.E. 650. Compare Dorris v. Farmers' & Merchants' Bank, 144 Ga. 233, 86 S.E. 1093.

2. Error is assigned on the ruling of the trial court in striking the answer of the defendant. A part of the answer was a plea of the statute of limitations. The contention of counsel for plaintiff in error is that when a suit is brought on a covenant of assumption, as in the case at bar, it is not an action on a contract under seal, as contemplated by Code, § 3-703, nor a simple contract in writing as contemplated by Code, § 3-705, but in respect to the statute of limitations the case falls under Code, § 3-711, and must be brought within four years from the accrual of the right of action. The position of counsel can not be sustained. It was ruled in Kytle v. Kytle, supra, that 'When a grantee accepts a deed, and thereby becomes bound by the covenants...