Federal Land Bank of Columbia v. Farmers' & Merchants' Bank
| Decision Date | 10 August 1933 |
| Docket Number | 9348. |
| Citation | 170 S.E. 504,177 Ga. 505 |
| Parties | FEDERAL LAND BANK OF COLUMBIA v. FARMERS' & MERCHANTS' BANK et al. |
| Court | Georgia Supreme Court |
Syllabus by the Court.
Tax execution against insolvent debtor having several secured creditors held apportionable between creditors by making separate properties liable ratably therefor, where tax lien accrued after instruments securing creditors were issued (Civ. Code 1910, §§ 3220, 4588, 4598, 4599, 4609, 6029).
Record of transfer of tax fi. fa. is necessary to preserve lien only as to persons purchasing property bona fide subsequently to transfer.
Taxpayer's personalty held subject to levy and sale for taxes on his realty, although personalty was not returned or assessed for taxation (Civ. Code 1910,§§ 1174, 1140, 3333).
Farm products, although tax exempt, could be levied on and sold for taxes due upon other property of their owner (Laws 1913 p. 122).
Where creditor made advances used in making crops, crops held not required to bear entire burden of tax lien against insolvent debtor, whose property was in distinct parts subject to liens in favor of various creditors and to tax lien, but taxes were apportionable ratably.
1. Where each of two or more creditors of a common debtor who is insolvent has, relatively to the other, the highest lien with respect to distinct property belonging to such debtor, and there is outstanding against the debtor a tax execution issued generally, the burden of discharging such lien should as a general rule, be apportioned among the creditors, by requiring each of the separate properties to bear its proportionate part of the taxes, according to value. This was the rule to be applied in the present case, being founded upon the equitable principle of contribution as distinguished from the principle of marshaling.
2. The record of a transfer of a tax fi. fa. is not necessary to preserve the lien as against the taxpayer; nor is such record necessary to preserve the priority of the lien against others, except as to persons who may have purchased the property bona fide subsequently to the transfer.
3. Property which was not returned or assessed for taxation is nevertheless subject to levy and sale for taxes accruing upon other property which was returned or assessed for such purpose. The fact that the unreturned property may be required to pay its own taxes at some time in the future is not a defense against the enforcement of a valid lien against the same for taxes due upon other property.
4. Farm products which are themselves exempt from taxation may nevertheless be levied on and sold for taxes due upon other property of the same owner.
5. Money and supplies furnished for the making of a crop may in equity be considered as having the nature of purchase money and, where such advances have actually entered into the creation of the crops, it would be inequitable and unjust, as against the creditor making such advances that the crops should be required to bear the entire burden of a tax lien against the debtor, where the debtor is insolvent and his other property is in distinct parts subject to liens in favor of other creditors, and all of it is subject to the tax lien. Under the facts of this case, each of the creditors should contribute ratably according to the value of the properties now held or claimed by them respectively, or of which either has received the benefit since the tax lien accrued.
Error from Superior Court, Meriwether County; L. B. Wyatt, Judge.
Execution proceeding by the Federal Land Bank of Columbia against W. J Estes, wherein the Farmers & Merchants Bank and Daniel's Sons were claimants. Judgment for claimants, plaintiff in fi. fa.'s motion for a new trial was overruled, and plaintiff in fi. fa. brings error.
Reversed.
N. F. Culpepper, of Greenville, and R. M. Sasnett, Jr., of Columbia, S. C., for plaintiff in error.
Stanford Arnold, of Newnan, for defendants in error.
In October, 1925, W. J. Estes, a resident of Coweta county, obtained a loan of $7,000 from Federal Land Bank of Columbia, and secured the same by a deed to 624 acres of land in Meriwether county. At this time there was an outstanding security deed in favor of another person to 115 acres of the land, and the bank lost its security as to this part of the tract. The indebtedness to the bank was not paid at maturity, and the remaining portion of the land, 509 acres, was sold by the bank under a power of sale contained in its security deed. This sale occurred on November 5, 1929. The bank became the purchaser for the sum of $5,000, which was about $2,000 less than the amount due upon the loan to Estes. In the year 1929, Estes returned the entire tract of 624 acres for taxation in Meriwether county, at a valuation of $4,370. On January 1, 1929, Estes was the owner of five head of mules, which were used and kept by him on the farm in Meriwether county. These mules were not returned for taxation either in Coweta or in Meriwether county for the year 1929, and they were not assessed for taxation in either county. On April 1, 1927, Estes executed a bill of sale to Farmers' & Merchants' Bank of Senoia, conveying the title to these mules to secure an indebtedness of $1,325. On April 6, 1929, Estes executed a bill of sale to C. P. Daniel's Sons, conveying title to all the crops on lands owned or controlled by him "in the upper 9th district of Meriwether County," to secure a note of even date for $1,000. On July 22, 1929, a second bill of sale to the crops was made between the same parties, to secure notes of the same date for $150 and $350, respectively. In each of the bills of sale made to Daniel's Sons was a recital that the indebtedness secured thereby represented money and advances made to Estes to enable him to "plant, cultivate, and harvest the crops," grown by him.
In December, 1929, an execution was issued by the tax-collector of Meriwether county for state and county taxes due in that county for the year 1929. The land bank paid the full amount of this execution, and it was duly transferred to the land bank by the sheriff. The execution and the transfer were properly recorded in Meriwether county within the time prescribed by law, but were never recorded in Coweta county, in which Estes resided. The execution represented the tax due upon the entire tract of land conveyed as security to the land bank, including the 115 acres the title to which failed as to the land bank. The execution did not include taxes upon any other property. The land bank as transferee caused the execution to be levied on the five mules described in the bill of sale to Farmers' & Merchants' Bank, and upon 350 bushels of corn and 3,000 bundles of fodder. Farmers' & Merchants' Bank filed a claim to the mules, and Daniel's Sons filed a claim to the corn and fodder. Before trial Farmers' & Merchants' Bank filed an equitable amendment in which it was alleged that the payment of the taxes by the land bank was in extinguishment of the tax lien, and that this bank as transferee had no legal or equitable right to collect the taxes from the property of this claimant. The amendment further alleged that the taxes should be apportioned among the two banks and Daniel's Sons as creditors, according to the respective valuations "at which the properties were assessed and returned for taxation." Daniel's Sons was made a party, and thereafter adopted the allegations and prayers contained in the amendment of the other claimant. The court on the trial directed a verdict in favor of the claimants, finding the property not subject to the tax execution. The Federal Land Bank excepted to the overruling of its motion for a new trial.
The facts stated above were established without dispute by the pleadings and the evidence; and the following additional facts were developed by the evidence: The indebtedness of Estes to Farmers' & Merchants' Bank was unpaid at the time of the levy of the tax execution. The indebtedness to Daniel's Sons had been reduced by the proceeds of other crops grown by Estes upon this farm and sold prior to levy. The entire tract of land originally conveyed to the land bank was situated partly in the "upper 9th district" and partly in the Tenth district of Meriwether county, and the same was true of the 509 acres which were sold and bought in by the land bank under its power of sale. The bills of sale executed to Daniel's Sons, while describing the crops as located in the "upper 9th district," were actually intended by the parties to cover all crops grown and cultivated upon any of the lands used by Estes during the year 1929, the evidence authorizing the inference that the parties acted upon the mistaken belief that all of the lands were located in that district. A portion of the corn and fodder claimed by Daniel's Sons was produced in each district. The evidence showed that, in accordance with the recitals in the bills of sale, the indebtedness secured thereby represented money and advances furnished by the claimant to enable Estes to produce the crops in each district, including the corn and fodder to which the claim was asserted. The prior credits upon the indebtedness in favor of Daniel's Sons amounted to several hundred dollars, and were derived from crops which in like manner were produced partly in each district. There was no sufficient evidence as to the value of the properties claimed respectively by Farmers' & Merchants' Bank and Daniel's Sons, and there was no offer by either of these parties to do equity in the premises. Estes, the common debtor, is insolvent, and there is no other property from which the taxes may be paid.
1. The court erred in directing the verdict in favor of the claimants. Under the facts of this case the court should have applied the...
To continue reading
Request your trial