First Nat. Bank Of Gainesville v. Etal

• Decision Date: 14 January 1927
• Docket Number: (No. 5467.)
• Citation: 163 Ga. 551,136 S.E. 528
• Parties: FIRST NAT. BANK OF GAINESVILLE. v. POUNDS etal.
• Court: Georgia Supreme Court

163 Ga. 551

136 S.E. 528

FIRST NAT. BANK OF GAINESVILLE.

v.POUNDS etal.

(No. 5467.)

Supreme Court of Georgia.

Jan. 14, 1927.

(Syllabus by Editorial Staff.)

Error from Superior Court, Banks County J W. W. Stark, Judge.

Action by Lou Pounds and others against the First National Bank of Gainesville. Judgment for plaintiffs, and defendant brings error. Reversed.

A. C. Wheeler, of Gainesville, for plaintiff in error.

Horace & Frank Holden, of Athens, and S. R. Jolly and J.. B. G. Logan, both of Homer,, for defendants in error.Syllabus Opinion by the Court.

HINES, J. [1] 1. While as to lands purchased by a mother with funds belonging jointly to herself and her children, to which she took title in her own name, a resulting trust immediately arose in favor of the children, they cannot assert ownership thereof as against a third person who, in ignorance and without notice of their secret equity, and on the faith of the mother's apparent title, makes to the mother in good faith a bona fide loan secured by a deed to the lands so held in trust. Under such circumstances the grantee in the security deed, or one holding under him, to the extent of his interest in the lands so conveyed, stands upon the same footing as a bona fide purchaser without notice of the trust; aliter, if he had such notice. Thrasher v. Partee, 37 Ga. 392; Lane v. Partee, 41 Ga. 202; Sumner v. Bryan, 54 Ga. 613 (5); Lewis v. Equitable Mortgage Co., 94 Ga. 572(3), 21 S. E. 224; Parker v. Barnesville Savings Bank, 107 Ga. 052, 34 S. E. 365; Talley v. Mozley, 149 Ga. 529, 101 S. E. 120; Civil Code 1910, § 4531.

2. A transfer of a note secured by deed to land conveys to the transferee the benefit of the security. Civil Code 1910, § 4276; Rob erts v. Mansfield, 32 Ga. 228. If such trans fer did not carry the legal title to the land embraced in the security deed, it carried with it an equitable interest in the security; and a court of equity will give effect to the transferee's rights in the premises. Henry v. McAllister, 93 Ga. 671, 20 S. E. 66; Van Pelt v. Hurt, 97 Ga. 660(2), 25 S. E. 489; Shumate v. McLendon, 120 Ga. 396, 48 S. E. 10; Clark v. Havard, 122 Ga. 273, 50 S. E. 108; Carter v. Johnson, 156 Ga. 207, 211, 119 S. E. 22.

3. If one with notice sells to one without notice, the latter is protected. Civil Code 1910, § 4535. If the grantee in the security deed, with notice of the equity of the claimants in the lands therein conveyed, transferred for value the note thereby secured to another, without notice of such equity, and who took the same in good faith, the latter acquired at least an equitable interest in such land as a purchaser, and holds such interest free from the secret equity of the claimants and the implied trust set up. Civil Code 1910, § 3762. In Planters' Bank of Ft. Valley v. Prater, 64 Ga. 609, the notes were transferred by mere delivery and without indorsement. Besides, in that case, the notes were payable to order, and had not been assigned in writing by indorsement or otherwise to the holder.

4. Where the legal title to land was in the mother, and she held the possession thereof under such title, and the title and possession so remained until a creditor who gave credit on the faith that the property was the mother's, without any notice of the children's equity, reduced his debt to judgment, the lien of such judgment will bind the land and will be enforced against the secret equity of the children resulting from the fact that their money paid in part for the land. Zimmer v. Dansby, 56 Ga. 79; Ford v. Blackshear...