First Nat. Bank v. Pounds

• Decision Date: 14 January 1927
• Docket Number: 5467.
• Citation: 136 S.E. 528,163 Ga. 551
• Parties: FIRST NAT. BANK OF GAINESVILLE v. POUNDS et al.
• Court: Georgia Supreme Court

136 S.E. 528

163 Ga. 551

FIRST NAT. BANK OF GAINESVILLE
v.
POUNDS et al.

No. 5467.

Supreme Court of Georgia

January 14, 1927

Syllabus by Editorial Staff.

Under Civ. Code 1910, § 4531, children, though minors, in whose favor resulting trust arose in land purchased by their mother from funds belonging jointly to mother and children, cannot assert ownership of land against third person loaning money to mother and taking security deed without notice that lands were held in trust; grantee in security deed standing in position of bona fide purchaser without notice.

Under Civ. Code 1910, § 4276, transfer of note secured by deed conveys to transferee benefit of security, and if transfer did not carry legal title, it carried with it an equitable interest in security which will be given effect by equity.

Under Civ. Code 1910, §§ 3762, 4535, where grantee in security deed with notice of equity of claimants in land conveyed transferred note secured for value to one having no notice of such equity, transferee acquired equitable interest in land free from secret equity of claimants or implied trust.

Where creditor, loaning money to mother holding legal title, without notice of children's equity, reduced debt to judgment, lien of judgment binds land and is enforceable against secret equity of children, though minors, resulting from use of their money in part payment of land.

Where credit is extended to mother holding legal title to land, children having equitable title permitting mother to hold property and use it to obtain credit are estopped from asserting their title against lien of judgment obtained by creditor having no knowledge of children's equities, though mother had conveyed land to children before judgment was obtained.

Error from Superior Court, Banks County; 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. [136 S.E. 529.]

Syllabus OPINION.

HINES, J.

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...