Conway v. Caswell

• Decision Date: 12 November 1904
• Citation: 48 S.E. 956,121 Ga. 254
• Parties: CONWAY et al. v. CASWELL et al.
• Court: Georgia Supreme Court

48 S.E. 956

121 Ga. 254

CONWAY et al. v. CASWELL et al.

Supreme Court of Georgia

November 12, 1904

Syllabus by the Court.

1. Where a policy of insurance was transferred as security for a debt, the fact that the remedy on the latter was barred did not destroy the debt itself, nor did it prevent the holder of the collateral from enforcing her rights thereunder. Civ Code 1895, § 2735.

2. Nor did the fact that the personal judgment against the debtor had become barred render dormant that part of the decree which declared that the creditor held a valid legal title to the policy to the extent specified.

3. Where parties interplead, each occupies the position of plaintiffs in possessory actions, and must recover on the strength of his own title, rather than on the weakness of the other's title.

4. It affirmatively appears that until the payment of the debt secured thereby the plaintiffs in error have no title to the policy; and as to them, therefore, it is immaterial whether the transfer by the administrator to an heir of his intestate was at private sale, or without consideration.

5. The ancestor of plaintiffs in error consented in writing, and for 12 years acquiesced in the transfer of the policy to the defendant in error, who was the heir at law of the previous holder. She and her predecessors in title paid all the premiums, and the judgment in her favor as against the plaintiffs in error was demanded by the evidence.

Error from Superior Court, Richmond County; H. C. Hammond, Judge.

Action by L. W. Caswell and others against Limola Conway and others. Judgment for plaintiffs, and defendants bring error. Affirmed.

F. W Capers, for plaintiffs in error.

E. H. Callaway and W. H. Fleming, for defendants in error.

SIMMONS C.J.

The parties were having constant dealings, so that it was uncertain what would be the balance due at the time of the debtor's death. In 1875, therefore, G. W. Conway transferred his life policy to T. D. Caswell "as collateral *** to the extent of such interest as he [Caswell] may have when said policy becomes a claim." T. D. Caswell died in 1887. G. W. Conway died in 1903. His heirs insist that the debt secured, having become barred before the death of Conway, could not, under Civ. Code 1895, § 3433, be paid by his representative; that the debt did not exist, and therefore, by the very terms of the transfer, neither the estate nor transferee of Caswell had any "interest" "when the policy became a claim."

1. Treating the case as unaffected by the judgment rendered in 1890, and as controlled by the written transfer of March 1875, the question presented is not essentially different from that involved in the many decisions holding that, though the debt be barred, the creditor may still avail himself of the security. In some states, and now, probably, by statute in England, it has been held that the mortgage or other form of security is a mere incident to the debt, so that when the latter is barred the principal claim ceases to exist, leaving nothing to which the incident can attach. But the general current of authority is to the contrary. The text-writers and most of the cases hold that in creating the debt and in giving the security the debtor made two contracts and contracted for two remedies--one on the debt, the other on the security; that the debt itself was not extinguished by the statute, which only barred the remedy thereon; that, notwithstanding the operation of the statute of limitations, the debt continued, not only as a moral obligation, but as a legal claim, so far as to furnish a consideration sufficient to support a new promise; that the claim, therefore, remained in existence as a principal debt, to which the security still attached as an incident; and hence that the remedy on the security might be made effective, even though the remedy on the main debt was barred. And as an additional reason it would seem that the rule might be properly sustained upon a consideration of the very essence of the contract of hypothecation. It is intended to secure payment. The security may therefore be held until the debt is paid, not simply until it is barred. See, on the subject generally, Ware v. Curry, 67 Ala. 285; Coleb. Col. (2d Ed.) § 101; 1 Wood on Lim. 62; 13 Am. & Eng. Enc. L. (1st Ed.) 705; Kulp v. Kulp, 21 L.R.A. 550, and note. Nor is the rule limited to mortgages. It has been applied to deposits or pledges of personal property (Jones on Pl. and Col. [ 2d Ed.] § 582); to the vendor's equitable lien (Hardin v. Boyd, 113 U.S. 765, 5 S.Ct. 771, 28 L.Ed. 1141); to a lien on a judgment (Higgins v. Scott, 2 Barn. & Adol. 413); to a wharfinger's lien for general balance (Spears v. Hartley, 3 Esp. 81); to the lien of a corporation on the shareholder's stock ( Farmer's Bank v. Iglehart, 6 Gill, 50; Reading Trust Co. v. Reading Iron-Works, 137 Pa. 282, 21 A. 169, 170); to pledges of stocks and negotiable bonds (Hancock v. Franklin Ins. Co., 114 Mass. 155; Hartranft's Case, 153 Pa. 530, 26 A. 104, 34 Am.St.Rep. 717; Roots v. Salt Co., 27 W.Va. 484); and to the case where a note was transferred as security (Shipp v. Davis, 78 Ga. 201, 2 S.E. 549 [5]). Notwithstanding some conflict in the cases elsewhere, in this state the right of the creditor to retain possession and to sue on the security, though the main debt be barred, it not only recognized in Elkins v. Edwards, 8 Ga. 325, Shipp v. Davis, 78 Ga. 201, 2 S.E. 549 (5), and Allen v. Glenn, 87 Ga. 415, 13 S.E. 565, but it is also expressly provided in Civ. Code 1895, § 2735, that the creditor may avail himself of the mortgage or other security, even though the evidence of debt is barred. Of course, the remedy on the mortgage, collateral, pawn, or other form of security must be brought in due time and in due form. If the debt is barred, and the creditor holds an absolute deed as security, he may maintain ejectment thereon, but cannot obtain a money judgment. Duke v. Story, 116 Ga. 388, 42 S.E. 722. So, if the right of action on the main debt and on the security have both been barred, the creditor is defeated. But in the present case the cause of action on the policy was not so barred, for the right to...