Claflin v. Ballance

• Decision Date: 27 March 1893
• Citation: 18 S.E. 309,91 Ga. 411
• Parties: CLAFLIN et al. v. BALLANCE et al.
• Court: Georgia Supreme Court

18 S.E. 309

91 Ga. 411

CLAFLIN et al. v. BALLANCE et al.

Supreme Court of Georgia

March 27, 1893

Syllabus by the Court.

1. In a contest between the mortgagee of an insolvent debtor and other creditors who attack the mortgage as fraudulent, acts and declarations of the debtor tending to prove fraudulent intent and notice on his part may be received in evidence for this purpose only, though such acts and declarations were subsequent to the execution, or even to the foreclosure, of the mortgage. They would, however, not affect the mortgagee without some evidence to connect him with the fraud of the mortgagor at or prior to the execution of the mortgage either by actual participation or by having notice or grounds for reasonable suspicion.

2. Declarations of the mortgagee's agent, who represented him in taking the mortgage, if made not at the time of its execution, but after its foreclosure, and while an official sale under it was in progress, the declaration not being pertinent to any business of the principal in which the agent was engaged at the time of making them, but only by way of recital either of what the agent had known or suspected, or of what he then knew or suspected, would not affect the mortgagee, his principal, so as to warrant any finding based thereon against the bona fides of the mortgage.

3. The evidence being wholly insufficient to warrant the jury in finding that the mortgagee either participated in the fraud of the mortgagor or was chargeable with notice of the same whether by reason of actual knowledge or grounds of reasonable suspicion, the court erred in not granting a new trial.

Error from superior court, Clarke county; N. L. Hutchins, Judge.

Action by Ballance & Sorrels and others against H. B. Claflin & Co. to cancel a mortgage. There was a verdict for plaintiffs, and a new trial denied. Defendants bring error. Reversed.

Lumpkin & Burnett, for plaintiffs in error.

T. W Rucker, Barrow & Thomas, A. S. Erwin, Tuck & Henley, and Thomas & Strickland, for defendants in error.

BLECKLEY C.J.

1. For a mortgage made by a debtor in favor of one of his creditors to be defeated by his fraudulent intent as against other creditors two things must be shown: First, that such fraudulent intent existed; and, second, that the mortgagee was connected with the fraud, either by participating in the intent, or by having notice of it, or grounds for reasonable suspicion. On the first of these questions, acts and declarations of the debtor, indicative of such intent, are competent evidence, without reference to whether they were known to the mortgagee or not; and to render them competent it is not necessary that all of them should have transpired at or before the execution of the mortgage, or...