Georgia State Sav. Ass'n v. Wilson

• Court: Georgia Supreme Court
• Writing for the Court: GRICE, Justice.
• Citation: Georgia State Sav. Ass'n v. Wilson, 189 Ga. 21, 5 S.E.2d 14 (Ga. 1939)
• Decision Date: 14 September 1939
• Docket Number: 12949.
• Parties: GEORGIA STATE SAV. ASS'N et al. v. WILSON.

5 S.E.2d 14

189 Ga. 21

GEORGIA STATE SAV. ASS'N et al. v. WILSON.

No. 12949.

Supreme Court of Georgia

September 14, 1939

Rehearing Denied Oct. 13, 1939.

Syllabus by the Court.

1. A petition containing allegations appropriate to foreclosure of a materialman's lien against Love, and a statement that the defendant association holds a security deed against the property improved, which deed was taken with actual notice of Wilson's unrecorded claim, and praying that his lien be established as against Love, and that it be adjudged and decreed that the association's deed is inferior to the plaintiff's claim of lien, sets forth a cause of action. Compare De Lacy v. Hurst, 83 Ga. 223, 9 S.E 1052; Bennett Lumber Co. v. Martin, 132 Ga. 491, 64 S.E. 484.

2. It being a material issue under the pleadings whether or not H. was the agent of the association it was erroneous to admit evidence of a newspaper advertisement in which Heath was represented to be the agent of the association, in the absence of any proof that said advertisement was inserted at the instance of or with the knowledge or approval of the association. National Building & Loan Association v. Quin 120 Ga. 358, 47 S.E. 962.

3. It was erroneous to admit in evidence, over proper objection, testimony as to the manner in which the association had handled other loans in reference to the discharge of liens. Compare McGarr v. Green, 143 Ga. 97, 84 S.E. 435; Georgia Railroad, etc., Co. v. Walker, 87 Ga. 204(2), 13 S.E. 511.

4. A grantee in a security deed is presumed to be a purchaser in good faith. Johnston v. Neal, 67 Ga. 528; Williams v. Smith, 128 Ga. 306, 57 S.E. 801.

5. An unrecorded claim of a materialman's lien is inferior to a security deed on the property improved, taken without actual notice of the unrecorded claim of lien. Bennett Lumber Co. v. Martin, 132 Ga. 491, 64 S.E. 484; Milner v. Wellhouse, 148 Ga. 275, 96 S.E. 566; Oglethorpe Savings & Trust Co. v. Morgan, 149 Ga. 787, 792, 102 S.E. 528; Picklesimer v. Smith, 164 Ga. 600, 139 S.E. 72; Dwight v. Acme Lumber & Supply Co., 183 Ga. 139, 187 S.E. 668; Id., 186 Ga. 825, 199 S.E. 178.

6. That the judge, in instructing the jury how to ascertain where the preponderance of the evidence lies, omitted from the language of the Code, § 38-107, the words 'the nature of the facts to which they testified,' was not an error of sufficient gravity to require the grant of a new trial.

7. The evidence failed to show that the holder of the security deed had actual notice of the unrecorded claim of the materialman, or did anything to estop it from asserting its superior right as against the conflicting claim of the materialman.

Anderson, Cann & Dunn, of Savannah, J. B. Moore, of Baxley, and Heath & Heath, of Douglas, for plaintiffs in error.

Robt. Asa Sapp, John Rogers, and Newt Gaskins, all of Hazlehurst, for defendant in error.

GRICE Justice.

This was a contest between the plaintiff Wilson, a materialman, and the defendants Georgia State Savings Association, the holder of a security, and V. E. Love, the owner and grantor in that deed. The material was furnished to Love from July 7 to December 3, 1937. The Savings Association parted with the money on October 7, 1937. Wilson's lien was recorded on October 23. The judge in his charge to the jury in effect directed a verdict against the Savings Association, to which timely exceptions were taken by both the Savings Association and Love, as well as to the refusal to sustain a demurrer the petition. A motion for new trial was made by both the defendants, the special grounds of which are indicated in the headnotes. It was overruled, to which ruling exceptions were taken, as well as to the refusal to sustain a demurrer to the petition.

It is insisted by defendant in error that notice of his unrecorded claim was brought home to Heath, and that Heath was the agent of plaintiff in error. In Merck v. American Freehold Land Mortgage Co., 79 Ga. 213, 7 S.E. 265, the borrower signed an application constituting certain persons his agents to negotiate a loan. The loan was obtained, the borrower delivering his note for $400. The lender actually parted with $400, sending it, as instructed by the lender, to his named agents, who deducted 20 per cent. thereof as the charges which the borrower had agreed to pay them for obtaining the loan. When suit was brought to foreclose, the borrower pleaded usury, taking the position that the middlemen were not his agents, but those of the lender. This court held that by using intermediaries as channels of transmission for papers, relying on their inspection of property and examination of titles, made at the borrower's instance, and forwarding the money through them also at his instance, the lender does not constitute them his agents to make the loan, and is not chargeable with the consequences of dealings between them and the borrower, whether those dealings be public or private, known or unknown. In Peabody v. Fletcher, 150 Ga. 468, 104 S.E. 448, there was an instrument which by its terms constituted Frank Scarboro Company the agent of Paulk to procure a loan. It also contained a privision authorizing Frank Scarboro Company to receive the loan for Paulk, and to pay out of the proceeds thereof all liens, judgments, taxes, or other encumbrances on the property, the balance to be paid over to Paulk. The controlling question was whether Frank Scarboro Company was the agent of the lender or of the borrower. It was insisted that Frank Scarboro Company was the agent of the lenders, because it was shown that the money was sent in checks payable jointly to Paulk, Frank Scarboro Company, and Skeen, an attorney; that the lenders did not send out the notices of the maturity of the principal and interest coupons, but that Frank Scarboro Company did, and also collected the installments of interest. It was further insisted that though it be conceded that at the outset Scarboro was the agent of Paulk to procure the loan, yet the lenders made Scarboro their agent for the purpose of receiving and disbursing the proceeds of the loan. This contention was examined by this court, and the result reached was that the facts relied upon did not have the effect of changing the relationship of Frank Scarboro Company from that of agent of the borrower to that of agent for the lenders.

The application for the loan in this case contained a provision expressly appointing Heath the borrower's agent, authorizing him to do and perform 'acts necessary to be done and performed towards the procuring of said loan.' Is this case differentiated in principle from the Merck and Peabody cases, supra, by reason of the contents of the letter from the Georgia State Savings Association to Heath, dated October 7, and particularly the following language therein: 'You will also require Mr. Love to satisfy you that he has paid all bills for labor and material used in construction of building recently erected on lot mortgaged to this association, or to furnish you with a memorandum of all outstanding amounts, so that you may see that they are paid from proceeds of our checks'? In 2 C.J.S., Agency, § 24(c), p. 1054, it is said that it frequently happens that the agent of one party to a transaction is appointed by the adverse party as his agent for certain purposes, in which case each party is principal, but only as to such matter as he intrusts to the agent. It has been held that where the intermediary is authorized or required by the lender to retain all or a portion of the loan and to pay off encumbrances, he is the agent of the lender, but otherwise if the borrower is responsible for the retention by the intermediary. The part of the application for a loan by Love to the Georgia State Savings Association which had reference to the agency of Heath was in the following language: 'For the purpose of negotiating for and procuring a loan on the property described herein, I have appointed Chas. W. Smith as my agent; and he is hereby authorized, as my agent, to do and perform acts necessary to be done and performed towards the procuring of said loan.' It makes Heath Love's agent to do and perform acts necessary to be done towards procuring the loan. True, we find here no reference to bills for labor and material. In a communication from the savings association to Love on August 19, it agreed to make him the loan on certain specified conditions. One of these was that he show title to the property free of all liens or encumbrances. Nor is there any direct statement that he must pay for the material used in the house. When the association sent to Heath the check payable to Love, representing the loan, it was not stated that the check would be delivered to Love only on condition that Love did certain other things; but it contains the statements: 'You will also require Mr. Love to satisfy you that he has paid all bills for labor and material. * * * You will then require Mr. Love to have the enclosed abstract brought down to date. * * * And you will also require Mr. Love to receipt for the loan.' This letter did not direct Heath himself to pay out of the proceeds of the check any unpaid claims of laborers or materialmen. The check was not payable to Heath. We are of the opinion that the facts of this case bring it within the ruling of the two cases last cited, and that Heath was the agent of the borrower, and not the lender, and hence any notice that may have come to him of the unrecorded claims of the materialmen can not affect the lender's rights.

It is next contended that, independently of the fact that such notice was traced to Heath as would bind the association, there is other evidence in the record which demanded a finding that the association had notice. The insistence is that it was in possession...