Colonial Hill Co. v. Mortgage Bond & Trust Co.
| Decision Date | 13 January 1932 |
| Docket Number | 8539. |
| Citation | 162 S.E. 531,174 Ga. 204 |
| Parties | COLONIAL HILL CO. et al. v. MORTGAGE BOND & TRUST CO. |
| Court | Georgia Supreme Court |
Rehearing Denied Feb. 13, 1932.
Syllabus by the Court.
Creditor making loan for paying off secured debt under agreement with debtor for suceeding to lien, is entitled to subrogation.
Person paying off prior lien must show unequivocal agreement for subrogation, or facts from which agreement will be implied.
Estoppel certificate by which debtor asserted security deed was first lien held insufficient to constitute agreement for creditor's subrogation to lien paid with proceeds of loan.
1. The judgment of the court approving the auditor's finding in overruling the demurrer to the plaintiff's petition was not erroneous. The petition alleged a cause of action based upon estoppel and subrogation.
2. The auditor made a finding of fact that the allegations in regard to estoppel were not supported by evidence. The court properly approved this finding.
3. The auditor made a finding of fact that petitioner was entitled to be subrogated to the benefits of the lien held by West Lumber Company, that the cancellation of such liens be set aside, and that the liens be restored for the benefit of the petitioners. The court approved this finding of fact. This judgment was erroneous, because it was not supported by evidence.
4. The question of subrogation is controlling in the case. All other portions of the decree rendered by the trial judge were incidental, and made for the purpose of carrying out the judgment finding in favor of subrogation.
5. The judgment is reversed for further action appropriate to the findings here made.
Error from Superior Court, Fulton County; John D. Humphries, Judge.
Suit by the Mortgage Bond & Trust Company against the Colonial Hill Company and others. Decree for plaintiff, and defendants bring error.
Reversed.
Person paying off prior lien must show unequivocal agreement for subrogation, or facts from which agreement will be implied.
Colonial Hill Company owned two building lots which are particularly described in the pleadings in this case and designated by the parties as No. 309 and No. 401 Newnan avenue, East Point. On January 16, 1928, and January 10, 1928, respectively Colonial Hill Company conveyed the two lots to Mrs. Loma Dell Gibson. On January 16, 1928, and January 10, 1928 respectively, Mrs. Gibson conveyed the lots by security deeds to Colonial Hill Company. The security deeds of Gibson to Colonial Hill Company were filed for record at 2:45 p. m March 23, 1928, and were recorded March 28, 1928. The security deeds of Gibson to Atlanta Trust Company, trustee, were filed for record at 3:30 p. m., March 28, 1928, and were recorded March 29, 1928. On January 18, 1928, and Jan. 11, 1928, respectively, Mrs. Gibson conveyed the two lots toWest Lumber Company by security deeds to secure the respective amounts $2,500 and $2,250, representing material furnished for the improvement of the lots. These deeds were recorded on January 31, 1928, and January 18, 1928, respectively. Mrs. Gibson procured from Mortgage Bond & Trust Company loans of $2,250 and $2,750 on the respective lots after dwellings had been erected on them. The security deeds and other papers representing these loans were made to Atlanta Trust Company, trustee, and were dated March 15, 1928. From the proceeds of the loans made by Mortgage Bond & Trust Company to Mrs. Gibson the debts due by Mrs. Gibson to West Lumber Company were discharged. The loan deed covering lot 309 was canceled by West Lumber Company. The loan deed covering lot 401 having been lost, West Lumber Company executed to Mrs. Gibson a quitclaim deed.
From the foregoing it will be seen that the security deeds of Gibson to West Lumber Company were recorded prior to the security deeds from Gibson to Colonial Hill Company, and that the latter deeds were filed for record and recorded prior to the deeds from Gibson to Atlanta Trust Company, trustee. Later Mrs. Gibson conveyed the two lots to other persons. Default having occurred in the payment of installments due under the security deed held by Atlanta Trust Company, trustee, it foreclosed those deeds, and at sheriff's sale bid the two lots in, and afterward conveyed them to Mortgage Bond & Trust Company. In the meantime, Colonial Hill Company had exercised the power of attorney contained in the security deeds of Gibson to itself, and as attorney in fact for Gibson had conveyed both lots to itself. Lot 309 was then conveyed by warranty deed to Cobb Operating Company, which conveyed it to Mortgage Holding Company. The deed of Colonial Hill Company, attorney in fact, conveying lot 401 to itself, was assigned by Colonial Hill Company to Cobb Operating Company, which conveyed it by warranty deed to Mortgage Holding Company. The suit was brought by Mortgage Bond & Trust Company against Colonial Hill Company, John S. Owens, Cobb Operating Company, Mortgage Holding Company, Mrs. Loma Dell Gibson, West Lumber Company, and W. W. Hanson. No defense was made by the three defendants last named. To the petition as amended the four defendants first named demurred generally and specially, and answered. The matter was referred by the court to an auditor, who was empowered to settle all issues arising upon the pleadings, and to pass upon all questions of law and fact. The auditor sustained some grounds of the demurrer, overruled other grounds, and made report of findings of fact and law. The four defendants first named moved to recommit the case to the auditor, and excepted to his findings of fact and law. The motion and the exceptions were overrule; the report was confirmed and decree entered.
The petition alleges that at the time its loans were made Mortgage Bond & Trust Company was ignorant of the security deeds by Gibson to Colonial Hill Company; that it was the understanding, agreement, and intention of petitioner and Mrs. Gibson that the security deeds made by Gibson to Atlanta Trust Company, trustee, should be first and prior incumbrances against the property; that Owens, the president of Colonial Hill Company, knowing that the loans were about to be made by Mortgage Bond & Trust Company, did not assert or disclose any lien or equity against the property, but with the intent to deceive and mislead the Bond & Trust Company, concealed the existence of the loan deeds in favor of Colonial Hill Company; that the security deeds of Gibson to West Lumber Company constituted first and prior liens against the property; that the loans of the Bond & Trust Company were "made for the express purpose of paying off the debts secured by said deeds to West Lumber Company, and *** it was expressly understood and agreed between the said Mrs. Gibson and your petitioner Mortgage Bond & Trust Co. that the said Atlanta Trust Company as trustee was to succeed to the lien and priorities of said West Lumber Company and that to this end the aforesaid deeds to secure debt from the said Mrs. Gibson to Atlanta Trust Company as trustee were to be first and prior encumbrances against the property therein described; and that at the instance of the said Mrs. Gibson a sufficient amount of the proceeds of the loan from *** petitioner to Mrs. Gibson was paid over to West Lumber Company to satisfy the balance due said West Lumber Company by Mrs. Gibson, and that the deeds to secure debt from Mrs. Gibson to West Lumber Company were then duly cancelled and satisfied"; that by reason of these facts petitioner became subrogated to the lien of West Lumber Company under said prior incumbrances, and therefore, to the extent of the amount paid to West Lumber Company, acquired liens prior and superior to the liens of the loan deeds from Gibson to Colonial Hill Company; that at the time of the assignment and deed to Cobb Operating Company and the conveyances to Mortgage Holding Company both of these companies were charged with full knowledge and notice of all the facts alleged, and knew that in equity and good conscience and in law the loan deeds of Gibson to Atlanta Trust Company, trustee, constituted first and prior incumbrances on the property, and that the conveyances to Cobb Operating Company were without consideration; that because of claim of title asserted by Mortgage Holding Company the sheriff had refused to place petitioner in possession, and that Colonial Hill Company, John S. Owens, or Mortgage Holding Company were collecting the rents; and that Mrs. Gibson was insolvent. The prayers, so far as necessary to be stated, are (1) that the priority of the security deeds of Gibson to Atlanta Trust Company, as trustee, as first and prior incumbrances over the security deeds to Colonial Hill Company, be established; (2) that the decree establish the fact that the lien of the security deeds of Gibson to Colonial Hill Company, and the rights of all claiming thereunder, had been divested by the sheriff's sale under foreclosure of the security deeds of Gibson to Atlanta Trust Company, trustee; (3) that the cancellation of the security deeds of Gibson to West Lumber Company be set aside, and that those securities be revived for the benefit of petitioner to the extent of the moneys paid from the proceeds of its loans to ...
To continue reading
Request your trial