Carmichael v. Citizens' & Southern Bank

• Court: Georgia Supreme Court
• Writing for the Court: ATKINSON, J.
• Citation: Carmichael v. Citizens' & Southern Bank, 162 Ga. 735, 134 S.E. 771 (Ga. 1926)
• Decision Date: 23 September 1926
• Docket Number: 5032.
• Parties: CARMICHAEL v. CITIZENS' & SOUTHERN BANK et al.

134 S.E. 771

162 Ga. 735

CARMICHAEL v. CITIZENS' & SOUTHERN BANK et al.

No. 5032.

Supreme Court of Georgia

September 23, 1926

Syllabus by the Court.

A trust is implied "whenever the legal title is in one person but the beneficial interest, either from the payment of the purchase money, or other circumstances, is either wholly or partially in another." Civil Code 1910, § 3739; Stern v. Howell, 160 Ga. 261, 127 S.E. 776; Williams v. Smith, 128 Ga. 306, 57 S.E. 801. If a person purchases real estate partly with his individual funds and partly with funds which he holds fort his minor daughter the amount of which exceeds the amount of individual funds paid for the property, and takes a deed purporting to convey the land in separate equal shares, one to himself individually and the other to himself as trustee for the use of his minor daughter, an express trust will be created thereby with the father as trustee as to one half undivided interest, and a trust will be implied for the benefit of the minor daughter in the other half interest in proportion to the amount of the daughter's funds used by the father to pay for such interest.

"The purchaser from a trustee, with notice actual or constructive of the trust, holds as trustee for the beneficiaries; if the purchase be bona fide and without notice, the purchaser holds the property freed from the trust." Civil Code 1920, § 3762. See, also, section 4531. Under application of the foregoing principle, if a person who has received a deed purporting to convey land in equal shares to himself as trustee and to himself individually as tenants in common whose individual share is impressed with an implied trust as mentioned in the preceding division borrows money individually from a third person, and executes a security deed purporting to convey his undivided half interest in the land as security for the amount loaned, the lender will occupy the position of a bona fide purchaser without notice relatively to the minor daughter, and the conveyance to him will not be subordinate to the implied trust.

A purchaser of land is charged with notice of recitals in the deed to his vendor, to the effect that the land was purchased with proceeds of the sale of trust funds. Cheney v. Rodgers, 54 Ga. 168; Hancock v. Gumm, 151 Ga. 667 (3), 107 S.E. 872, 16 A.L.R. 1003; Rosen v. Wolff, 152 Ga. 578, 585, 110 S.E. 877. But he is not charged with notice of such recitals when contained in a deed by the vendor to another person, even though the deed purports to convey a part of the same general tact. The recital, in order to charge notice to the purchaser, must be in an instrument constituting a link in his chain of title. Hancock v. Gumm, supra.

(a) A prior security deed embracing described land was executed to a person individually, and to him as trustee for his minor daughter as security for described notes, which security deed stated that the greater amount of the notes were payable to the defendant as trustee. The notes were subsequently extinguished, under a new agreement, by conveyance of a part of the property to the said person individually and to him as trustee for his minor daughter as tenants in common, expressly stating that their shares were equal, but such conveyance did not mention the security deed or show that the greater amount of the notes was trust funds. Held, that under application of the foregoing principle the said security deed to the trustee was not a link in the chain of title of the grantee named in a subsequent security deed executed by the father purporting to convey his apparent one-half undivided interest in the land as security for his individual liability to a bank; and consequently such grantee was not charged with notice of the recitals in the said prior security deed executed to the father as trustee.

At an interlocutory hearing on application for injunction, the trustee testified by affidavit to facts tending to show part payment for the one-half undivided interest in the land conveyed to him by the deed with trust funds. Such evidence was followed by a statement of circumstances under which the affiant procured the individual loan, in the course of which it was stated to the lender "that he and his daughter [the cestui que trust] *** jointly owned said lands, and as cotenants, and that he had used and occupied said lands to the entire exclusion of the said [cestui que trust], *** and had received all of the rents, benefits, uses, and profits of the same, and had never accounted to the said [cestui que trust] *** for her interest in same; *** that [he explained] *** fully to the said Lane the conditions relative to the lands and the relation between the cotenants as is hereinabove set out." There was other evidence tending to contradict the foregoing. Held, that the credibility of the witnesses was for decision by the judge as trier of the question of fact, and his finding on such conflicting evidence will not be reversed. Heibert v. Enns, 127 Ga. 378, 56 S.E. 406; Mathews v. Taylor County, 129 Ga. 630, 59 S.E. 273.

All other evidence submitted by the plaintiff had reference to other issues in the case, and none of such other evidence tended to sustain the plaintiff's contentions on the issue as to notice of an implied trust.

"Wherever two or more persons, from any cause, are entitled to the possession, simultaneously, of any property in this state, a tenancy in common is created. Tenants in common may have unequal shares; they will be held to be equal unless the contrary appears. The fact of inequality does not give the person holding the greater interest any privileges, as to possession, superior to the person owning a lesser interest, so long as the tenancy continues." Civil Code 1910,§ 3723. Under application of this law, if a trustee acquires title to specific realty for his individual use and also for the use of his cestui que trust, the entire estate will be an estate in common, and the trustee and the cestui que trust will be tenants in common.

A statutory mortgage in this state does not convey title, but only creates a lien on property. Civil Code 1910, § 3256. A statutory security deed conveys title to property as security, and is expressly declared to be "not a mortgage." Civil Code 1910, § 3306. It has been declared to be in effect an equitable mortgage (Merchants' & Mechanics' Bank v. Beard, 162 Ga. 446, 134 S.E. 107), but vastly different rights arise from the effect of the two classes of security (Bennett Lumber Co. v. Martin, 132 Ga. 491, 64 S.E. 484).

"If one tenant in common receives more than his share of the rents and profits, he is liable therefor as agent or bailiff of the other cotenant; and in equity the claim for such indebtedness is superior to liens placed on his interest by the tenant in possession receiving the profits." Civil Code 1910,§ 3727. This law is statutory and not derived from the common law, and, properly construed, provides for personal liability against a tenant in common in favor of his cotenant for rents and profits where he receives more than his share, and renders a claim against him therefor in equity superior to liens placed by him on his interest in the common property, but does not make such claim superior to a security deed made by such tenant in common individually, purporting to convey his undivided interest in the realty to a third person as security for his personal obligation.

The foregoing rulings dispose of the controlling questions in the case, and the judge did not err in refusing a temporary injunction.

Error from Superior Court, Emanuel County; R. N. Hardeman, Judge.

Suit by S. L. Carmichael against the Citizens' & Southern Bank and others. Judgment for defendants, and plaintiff brings error. Affirmed.

A. W. Jordan and I. W. Rountree, both of Swainsboro, and Phillips & Abbot, of Louisville, for plaintiff in error.

Price & Spivey, of Swainsboro, and ...