Federal Land Bank of Columbia v. Bank of Lenox

• Decision Date: 17 May 1941
• Docket Number: 13640.
• Citation: 16 S.E.2d 9,192 Ga. 543
• Parties: FEDERAL LAND BANK OF COLUMBIA et al. v. BANK OF LENOX.
• Court: Georgia Supreme Court

16 S.E.2d 9

192 Ga. 543

FEDERAL LAND BANK OF COLUMBIA et al. v. BANK OF LENOX.

No. 13640.

Supreme Court of Georgia

May 17, 1941

Adhered to After a Rehearing June 20, 1941.

Second Motion for Rehearing Denied July 17, 1941.

Error from Superior Court, Cook County; W. R. Smith, Judge.

first security deed, and conveyed property to owner who had also executed a second security deed, and third persons furnishing purchase money for insurance company's conveyance to owner took still other security deeds for such purchase money and certain nonpurchase moneys advanced, and third persons' security deeds were superior to bank's second security deed as to purchase money, and were inferior to bank's second security deed as to nonpurchase moneys advanced, and owner made payments to third persons without directing that payments be applied to purchase-money indebtedness or nonpurchase-money indebtedness, payments should not be applied entirely to nonpurchase-money indebtedness, but should be prorated in proportion to the respective amounts of purchase-money indebtedness and nonpurchase-money indebtedness. Code, § 20-1006.

Syllabus by the Court.

1. The bill of exceptions was not subject to dismissal as failing, under the Code, § 6-901, to sufficiently 'specify the decision complained of and the alleged error.'

2. Where a grantor executes a junior mortgage or security deed which, while referring to a senior mortgage or security deed purports to convey the property itself, and contains a covenant of warranty against himself and all other persons and where the senior lienholder buys in the property at a sale under a power in its security deed, and conveys the property back to the original grantor, the title or lien of the junior incumbrance, as against the original grantor and his privies with notice, is not extinguished, but subsists as a priority or first lien.

3. However, where a privy of the original debtor, contemporaneously with the deed made by the senior security-deed holder back to the debtor, furnishes the purchase money for such reconveyance, and takes a mortgage or security deed covering both this amount and moneys advanced for other purposes, the lien and rights of the last creditor will be superior to those of the original junior lienholder as to the purchase money, but not as to the other amounts advanced.

4. In a contest between the junior lienholder and the last creditor, under the Code, § 20-1006, providing that if the debtor does not direct how payments on indebtedness shall be applied, and the creditor has made no particular application, 'the law will direct the application in such manner as is reasonable and equitable, both as to parties and third persons,' the trial court should not apply all the payments to the part of the last creditor's indebtedness which did not represent purchase money, so as to leave all of the purchase money unpaid and give its lien complete superiority over that of the junior lienholder; but the court should prorate the debtor's payments in proportion to the respective amounts of purchase money and money lent for other purposes, which together constituted the indebtedness covered by the mortgage of the last creditor.

5. Under the undisputed facts, the court erred in holding that the original junior incumbrance was entirely superior to the rights of the last creditor, and in failing to decree as to the relative priorities of the parties in accordance with the preceding rulings.

DUCKWORTH, J., dissenting in part.

A. L. Parrish, of Adel, and Harry D. Reed and G. Stokes Walton, both of Columbia, S. C., for plaintiffs in error.

H. L. Jackson, of Nashville, and Franklin & Eberhardt, of Valdosta, for defendant in error.

Under the agreed statement of facts and undisputed averments, Metropolitan Life Insurance Company held a first security deed, made in 1921 by Medford, securing a debt originally for some $10,000. Bank of Lenox held a recorded second security deed, made in 1931, for $2,000, on the same land. The junior security deed purported to 'grant, bargain, sell, * * * and convey' the land itself; recited that 'it is agreed and understood that the Metropolitan Life Insurance Company holds first-mortgage deed on the above-described tract in the amount of $6,000;' and after the habendum clause, contained a covenant of warranty, that the grantor 'the said bargained premises unto the said [grantee], its heirs, successors, and assigns, against the said [grantor], his heirs, successors, and assigns, and against all and every other person or persons, shall and will warrant and forever defend by virtue of these presents.'

In 1932 the Insurance Company, under a power of sale in its senior security deed, sold the land and at the sale acquired full title, free of the inferior lien of the Bank of Lenox. Subsequently, in 1934, the Insurance Company sold the land back to Medford for $7,783.75; the two present plaintiffs, Federal Land Bank of Columbia and Federal Farm Mortgage Corporation, contemporaneously furnishing the purchase money to Medford and taking security deeds from Medford therefor, plus $1,216.25 representing the amount of an additional loan, the new security deeds covering a total loan of $9,000.

Medford paid to these plaintiffs on the principal of the debt sums amounting to $1,400 and also paid interest, without giving any direction as to whether such payments should be applied on the portion of the loan representing purchase money or on the additional advances of $1,216.25. The record fails to show any application by the plaintiffs on any particular portion of the indebtedness.

In 1940, Bank of Lenox advertised the land for sale under a power in its security deed. The Federal corporations filed this petition to enjoin the Bank from selling the land, and prayed for other equitable relief and for general relief.

The judge, hearing the case on the agreed statement of facts and other undisputed facts, without a jury, found in favor of Bank of Lenox, and that its security deed was entirely superior to the security deeds of the plaintiffs. The plaintiffs excepted to this final decree.

The defendant in error moves to dismiss the writ of error on the ground that the assignments of error in the bill of exceptions are not legally sufficient. The exceptions are as follows: 'To the judgment and decree, * * * as aforesaid, plaintiffs then and there excepted, and now except, and assign error thereon, as bing contrary to law and contrary to the evidence. Plaintiffs say that the court erred in holding that the security deed of defendant, Bank of Lenox, is superior to the security deeds of plaintiffs, and that the court erred in denying the permanent injunction * * * to enjoin the defendant bank * * * from selling the land referred to in the pleadings in evidence, under the power of sale in the defendant's security deed. Plaintiffs further say that the court erred in denying the permanent injunction * * * to enjoin the defendant * * * from selling the land under the power of sale, in such manner as to affect the security deeds owned by plaintiffs, or the liens, rights, title, or interest of plaintiffs thereunder. Plaintiffs say that the court should have held that plaintiffs' security deeds are superior to the security deed of the defendant, Bank of Lenox, and that the court erred in holding otherwise. * * * The court should have held, that although plaintiffs' loans to [the debtor] were greater than the amount of the purchase money loaned for the repurchase of the land by [the debtor] from [the holder of the senior security deed], and parts of plaintiffs' loan were used for purposes other than the repurchase of the land, yet plaintiffs are not legally required to apply the amount paid by [the debtor] on the loans to the reduction of the amount loaned for the repurchase of the land; and that the court erred in not so holding. Plaintiffs say that the court should have held that plaintiffs' security deeds are superior to the security deed of the Bank of Lenox, to the extent of the full amount of the unpaid balance of plaintiffs' loans to [the debtor] with unpaid interest thereon, that balance being less than the amount loaned for the repurchase of the land, with interest thereon; and that the court erred in not so holding.'

JENKINS Justice.

1. As to the motion to dismiss the writ of error, the Code, § 6-901, requires that a bill of exceptions 'shall specify plainly the decision complained of and the alleged error.' The instant case does not fall within the rule in Greenfield v. Harvey, 191 Ga. 92, 11 S.E.2d 776, 778, where it was held that a mere 'statement in a bill of exceptions that 'plaintiff excepts to said verdict and judgment as being contrary to law' is not a valid assignment of error, and will not be considered by this court;' and that 'by analogy this [rule] applies in a case where there is no verdict, but only a judgment rendered upon a submission to the judge without a jury to pass on all questions of law and fact.' See also, to the same effect, Groover v. Inman, 60 Ga. 406(5); Fidelity & Deposit Co. v. Anderson, 102 Ga. 551, 28 S.E. 382; Rodgers v. Black, 99 Ga. 142, 25 S.E. 20; Newberry v. Tenant, 121 Ga. 561, 49 S.E. 621; Carmichael v. Mobley, 50 Ga.App. 574, 178 S.E. 418, and cit. The instant exceptions are not limited, as in the Greenfield case, to a statement that the judgment is 'contrary decision, and the error complained of, and decision, and the error comlained of, and the grounds of complaint. While, under the mandate of the Code, the unsuccessful party must plainly specify the decision complained of and the alleged error, it is not the purpose of the law to require that he shall seek to demonstrate in his bill of exceptions the incorrectness of the ruling.

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