Cornelia Bank v. First Nat. Bank
| Decision Date | 15 July 1930 |
| Docket Number | 7567. |
| Citation | 154 S.E. 234,170 Ga. 747 |
| Parties | CORNELIA BANK v. FIRST NAT. BANK OF QUITMAN. |
| Court | Georgia Supreme Court |
Syllabus by the Court.
"Subrogation" is a substitution of another for creditor, so that substituted person succeeds to all rights of creditor.
"Subrogation" is the substitution of another person in the place of the creditor, so that the person in whose favor it is exercised succeeds to all the rights of the creditor. It is of equitable origin, being founded upon the dictates of refined justice, and its basis is the doing of complete, essential and perfect justice between the parties, and its object is the prevention of injustice.
Doctrine of subrogation will be extended, rather than restricted subject to particular circumstances.
The courts incline rather to extend than restrict the principle and the doctrine has been steadily growing and expanding in importance, and becoming general in its application to various subjects and classes, the principle being modified to meet the circumstances of cases as they have arisen.
Legal subrogation takes place as matter of equity without agreement and independent of creditor and debtor.
Legal subrogation takes place as a matter of equity, without any agreement to that effect made with the person paying the debt, and is independent of both creditor and debtor.
Volunteer paying debt without agreement for subrogation, and not obligated nor required to make payment, cannot secure benefit of subrogation.
It is never applied for the benefit of a mere volunteer who pays the debt of another without any assignment or agreement for subrogation, and who is under no legal obligation to make the payment, and is not compelled to do so for the preservation of any rights or property of his own.
Purchaser of land subjectto security deed, whose funds were applied to cancel another security deed, held entitled to subrogation to rights of holder of canceled security deed against debtor holding judgment junior to both security deeds.
Where a creditor of a debtor held separate security deeds to two tracts of land, and where another bought one of these tracts from the maker of these deeds, subject to the security deed thereon, agreeing to pay the same off, and where the purchaser sent to the creditor funds to discharge such indebtedness, and requested the creditor to cancel the deed securing the same and forward the canceled instrument to him and where the creditor, instead of applying these funds to the payment of such indebtedness, and instead of canceling the deed securing the same, applied the same to the payment of the indebtedness secured by the deed to the other tract of the debtor, thus leaving this tract clear of incumbrances, and where the purchaser did not discover the mistake and sent the canceled deed to the clerk of the superior court for cancellation of record, which was done, whereupon a third person holding a judgment against the common debtor, junior to both of said security deeds, had the execution issued thereon levied upon the tract incumbered by the canceled security deed, the purchaser who paid off the incumbrance upon the land so levied upon was entitled to be subrogated to the rights of the holder of the canceled security deed in preference to the judgment creditor; the defendant in the judgment being insolvent.
Purchaser whose funds were used to cancel wrong security deed held not mere volunteer as regards subrogation to canceled security deed.
The purchaser who paid off the debt secured by the canceled deed was not, under the circumstances above stated, a mere volunteer.
Purchaser whose funds were used to cancel wrong security deed held not so negligent, in failing to discover mistake, as to defeat right to subrogation to canceled security deed.
The bank whose funds were used by the creditor in payment of the indebtedness due it secured by the canceled security deed was not guilty of such culpable and inexcusable neglect as would defeat its right to subrogation, under the facts of this case.
Error from Superior Court, Brooks County; W. E. Thomas, Judge.
Execution by the Cornelia Bank against the land of S. O. Ingram, in which the First National Bank of Quitman filed a claim. Judgment for claimant, and plaintiff in execution brings error.
Affirmed.
Harrell & Lilly, of Quitman, for plaintiff in error.
Branch & Snow, of Quitman, for defendant in error.
At the March term, 1929, of the city court of Quitman, the Cornelia Bank obtained a judgment against S. O. Ingram. The execution issued on this judgment was levied upon a described tract of land containing 55 acres, more or less. The First National Bank of Quitman filed its claim to this land, and inaid thereof filed an equitable amendment in which it set up these facts: In the year 1926 the claimant was the owner of a tract of land in Brooks county, designated as the Alderman tract. At the same time Ingram owned two tracts of land, for convenience designated as tract No. 1 and tract No. 2. Each of said tracts was incumbered by a security deed in favor of Pearsons-Taft Company (name afterward changed to Taft & Company), each debt for approximately the same sum. Tract No. 1 contained approximately 55 acres, and tract No. 2 contained approximately 78 acres. On November 26, 1926, the claimant sold to Ingram the Alderman tract, and in part payment of the purchase price received from him a warranty deed to tract No. 2. The outstanding debt on tract No. 2 was for the principal sum of $1,200, and two installments of interest, one for $72.35, and the other for $78. Subsequently the claimant desired to discharge the lien on its land, and applied to Taft & Company to ascertain the amount which would be necessary to discharge the lien on tract No. 2. On receipt of this information the claimant, in November, 1928, paid to said company the indebtedness against said tract and requested that company to cancel the security deed thereon and forward the same to claimant. Instead of canceling the security deed against tract No. 2, said company applied this payment in discharge of the lien of the security deed upon tract No. 1, canceled the deed on that tract, and forwarded it to the claimant. When claimant received the canceled security deed, it assumed that the correct paper had been sent to it. Its officers neglected to examine the canceled instrument, but sent it to the clerk of the superior court for cancellation, and it was canceled of record on November 22, 1928. This left tract No. 1 free and clear of all liens and incumbrances. Discovering that tract No. 1 was free and clear of all liens, the plaintiff, on March 18, 1929, caused the execution from its judgment to be levied upon said tract, and proceeded to advertise it for sale. Ingram was and is insolvent, and there was no other property on which the plaintiff could enforce its judgment. The claimant sets up that it has an equitable lien upon tract No. 1 in the sum of $1,350.35, with interest, which it paid to Taft & Company, and which satisfied the indebtedness in favor of Taft & Company secured by the deed to tract No. 1; that in consequence it has been subrogated to the rights of Taft & Company under said security deed; and that said lien is superior to the lien of the Cornelia Bank. Claimant prays that tract No. 1 be sold, and out of the proceeds of the sale there be paid to it said sum, and that the balance, if any, be applied to the payment of the execution held by the Cornelia Bank.
The case was submitted to the trial judge, without a jury, upon an agreed statement of facts, from which the foregoing appears. The judge rendered judgment in favor of the claimant, holding that it was subrogated to the rights of Taft & Company under its security deed to tract No. 1, and ordered a sale and application of proceeds in accordance with the prayer of the amendment to the claim. To this judgment the plaintiff excepted upon the grounds: (a) That it is contrary to the evidence; (b) that it is contrary to law; (c) that it is contrary to the principles of equity and justice; (d) that the court held as a matter of law that the claimant, although admitting that it was guilty of negligence in causing the wrong instrument to be canceled, and although indirectly responsible for the mistake, could yet come into a court of equity and obtain subrogation to all the rights and priorities of the original lienholder; (e) that the court held as a matter of law and equity that the bank was not guilty of such negligence as would prevent it from obtaining subrogation; (f) that the court held as a matter of law and equity that the bank was entitled to subrogation even though there was no agreement, express or implied, with the debtor or creditor to be subrogated to the rights of the original lienholder merely by the payment of a debt which the bank was in no wise bound to pay; (g) that the court held as a matter of law and equity that the bank, having discharged a lien upon property in which it had no interest, having paid an indebtedness which it was not bound to pay or even requested to pay, and upon which the plaintiff had a vested lien, was entitled to be subrogated to the lien of the holder of the security deed; (h) that the court held as a matter of law and equity that the bank, having paid an indebtedness of the defendant without the knowledge or consent of the debtor, and having discharged a lien upon property on which it held no lien and in which it had no interest, and without any agreement, express or implied, with the debtor or creditor, was subrogated to the lien of the holder of the security deed paid off by it.
"Subrogation" is the substitution of another person in the place of a creditor, so that the person in whose favor it is exercised...
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