Cook v. Securities Inv. Co.

• Decision Date: 18 June 1937
• Docket Number: 11868.
• Citation: 192 S.E. 179,184 Ga. 544
• Parties: COOK et al. v. SECURITIES INV. CO.
• Court: Georgia Supreme Court

192 S.E. 179

184 Ga. 544

COOK et al. v. SECURITIES INV. CO.

No. 11868.

Supreme Court of Georgia

June 18, 1937

Error from Superior Court, Floyd County; C. H. Porter, Judge.

Suit in equity by the Securities Investment Company against J. M Cook and another. To review an order overruling demurrers to the petition, defendants bring error.

Affirmed.

RUSSELL C.J., and ATKINSON, J., dissenting.

Syllabus by the Court.

1. Where land is conveyed by a deed to secure a debt, and the debtor has no other property except his equity in the land the remedy of another creditor who subsequently obtains a judgment against him is, as a general rule, to redeem the land and otherwise proceed as provided in the Code, § 39-201.

2. Where, however, the debt is interest bearing and not due, and a redemption under the statute will cause the judgment creditor to lose a substantial sum approximating the amount of the unearned interest, the debtor having no other property from which to satisfy the judgment, the judgment creditor may proceed in equity for the appointment of a receiver for the purpose of selling the property subject to the principal of the debt and accrued interest.

3. Under the foregoing rulings, the petition filed in the instant case by a judgment creditor against a grantor and a grantee in a security deed, seeking the appointment of a receiver for the purpose of selling the property conveyed by the security deed, on conditions stated in the petition, was sufficient to allege a cause of action. The court did not err in overruling the demurrers.

Lanham & Parker, of Rome, for plaintiffs in error.

Wright & Covington, of Rome, for defendant in error.

BELL Justice.

The Securities Investment Company, a judgment creditor of J. M. Cook, who had executed a security deed to the Home Owners Loan Corporation, filed a suit in equity against Cook and the loan corporation, seeking the appointment of a receiver for the property conveyed to the loan corporation and a sale of the property by such receiver, on conditions stated in the petition. The defendants demurred generally, and after the petition was amended, renewed their original demurrers and filed a new murrer to the petition as amended. The court overruled the demurrers, and the defendants excepted. The petition as amended alleged substantially the following facts:

On September 12, 1936, the plaintiff investment company obtained a judgment against Cook for the total sum of about $2,000. Theretofore, on July 26, 1934, the defendant Cook conveyed to the Home Owners Loan Corporation a described tract of land to secure a loan of $3,121.95, with interest at the rate of 5 per cent. per annum. The actual amount of the principal now due on this loan is $2,571.71, and there is also due as interest a sum not exceeding $15. The loan, however, was made on the amortization plan, and it would take approximately $3,357.84 to pay off the loan together with interest to its maturity, the loan with interest being payable in monthly installments of $24.69 each. Accordingly, the unearned interest amounts to about $780. 'Petitioner further alleges, on information and belief, that said property is worth and has a reasonable market value of $4500; and that said Cook is insolvent,' and 'that said defendant Cook has an equity in said property of a small amount over and above that which may be necessary to pay the debt of the said Home Owners Loan Corporation in full, with interest to its maturity; however, the equity in said property on such basis is so small that if petitioner is required to pay off said loan, together with interest to its maturity, there would remain only a small amount to be applied to petitioner's said execution; whereas, on the other hand, said defendant Cook has a considerable equity in said property, taking into consideration the amount of said principal debt, together with interest accumulated to date, said debt with accumulated interest to date being approximately $2,580, and in the event of a sale of said property under the orders of this court, subject to said debt, said property would bring a considerable amount over and above the principal amount of said debt, together with interest to date.'

'Petitioner further alleges, on information and belief, that said Home Owners Loan Corporation will not accept from petitioner the principal amount remaining unpaid on said debt, together with interest to date. However, petitioner alleges that it is now ready and willing to pay to the said Home Owners Loan Corporation the principal amount of said debt remaining unpaid, together with interest to this date, or the date on which this hearing or any other hearing in this matter may be had. * * * Petitioner shows that if said property is sold at this time, or in the near future, by a reciver appointed by this court, subject to the principal amount of said debt unpaid, together with interest to date, with the purchaser assuming the balance due on said debt, as the same may mature and fall due, the same will bring at such a sale a considerable sum, approximately $780, more than if said property be sold subject to said debt with unearned and undue instalments to the maturity date of said indebtedness, as specified in said security deed; and therefore petitioner would have a considerable sum to apply to its said execution in the event this court should order a sale of said property by a receiver of this court, subject to the balance unpaid on said debt, with interest to date. * * * Petitioner shows that said defendant Cook has a considerable equity in said property, which your petitioner is unable to reach by ordinary processes of law, and which cannot be subject to your petitioner's said debt as represented by said execution unless this court take charge of said property through its receiver and sell the same, subject to said debt with accumulated interest to date. * * * Petitioner shows that it has no remedy at law under the facts and circumstances of this case, in order to subject the equity and interest of said defendant Cook in and to said property to your petitioner's said execution, and it brings this suit in equity.' There was no averment as to the solvency or insolvency of the plaintiff. The plaintiff prayed that a receiver be appointed to take charge of the property to rent and otherwise handle the same as the court may direct, and that the receiver be authorized to sell the property free of the lien of the security deed, the proceeds to be applied first to the indebtedness to the Home Owners Loan Corporation and next to the execution held by the plaintiff; also that if the court should not order a sale of the whole title by a receiver, then that the equity be sold, subject 'to the principal debt now due said Home Owners Loan Corporation, together with interest accumulated to date, the purchaser to assume the payments of future instalments on said debt,' and 'that such further and other relief be granted to your petitioner as the facts may warrant.'

Section 39-201 of the Code provides as follows: 'Where any person other than the vendor, or other than the holder or assignee of the purchase money or secured debt, shall have any judgment against a defendant in fi. fa. who does not hold legal title to property but has an interest or equity therein, such plaintiff in fi. fa. may take up the debt necessary to be paid by the defendant in order to give such defendant legal title to the property, by paying such debt with interest to date if due, and interest to maturity if not due; and thereupon a conveyance to the defendant in fi. fa., or, if he be dead, to his executor or administrator, shall be made by the vendor or holder of title given to secure the debt, or, if dead, by the executor or administrator thereof; and when such conveyance shall have been filed and recorded, the said property may be levied on and sold as property of the defendant. The proceeds shall...