Hill v. Smith

• Decision Date: 15 October 1926
• Docket Number: 5477.
• Citation: 135 S.E. 423,163 Ga. 71
• Parties: HILL et al. v. SMITH.
• Court: Georgia Supreme Court

135 S.E. 423

163 Ga. 71

HILL et al. v. SMITH.

No. 5477.

Supreme Court of Georgia

October 15, 1926

Syllabus by the Court.

The instrument in question, which is in all respects in form of a security deed passing title and executed to secure a debt having a caption denominating it a "warranty deed" and in the body referring to it as a "deed," with the usual habendum and attesting clauses, is a deed and not a mortgage, notwithstanding the fact that it contains the clause, "it is further understood and agreed that when said note together with all accrued interest and cost shall have been fully paid, this deed is to become void, and the clerk of the superior court of Barrow county is hereby granted authority to cancel as of record."

Error from Superior Court, Barrow County; W. W. Stark, Judge.

Application for dower by Mrs. Emma N. Smith, contested by J. E. Hill executor, and others. Judgment for applicant, and contestants bring error. Reversed.

Atkinson and Hill, JJ., dissenting. Cooley, of Jefferson, and G. A Johns, J. C. Pratt, and Jos. D. Quillian, all of Winder, for plaintiffs in error.

H. H Chandler, of Winder, for defendant in error.

GILBERT J.

The defendant in error insists that the rule is as follows:

"The test, then, whether an instrument be a deed or mortgage is necessarily whether the interest acquired by the holder of an instrument is such an interest as can be extinguished by the voluntary act of the debtor alone. If it can be, the instrument is defeasible, and does not pass *** absolute title," etc.

She contends that the terms of this instrument bring it within the general rule, and that the instrument will be construed to be a mortgage. This general rule was applied in the following decisions of this court: Frost v. Allen, 57 Ga. 326; Pirkle v. Equitable Mortgage Co., 99 Ga. 524, 28 S.E. 34; Scott v. Hughes, 124 Ga. 1000, 53 S.E. 453; Burckhalter v. Planters' Bank, 100 Ga. 428, 28 S.E. 236; Sims v. Jones, 158 Ga. 384, 123 S.E. 614.

On the other hand, the plaintiffs in error insist that the instrument with which we are dealing in this case is a security deed, passing title, and that the interest is not such "as can be extinguished by the voluntary act of the debtor alone." They point out the provision in the instrument that when the debt has been fully paid, "this deed is to become void, and the clerk of the superior court is hereby granted authority to cancel as of record."

The instrument to be construed in this case is strikingly similar to the instrument construed in Pitts v. Maier, 115 Ga. 281, 41 S.E. 570. The words are not exactly the same; but when we consider the effect placed upon the words in that case, we are forced to the conclusion that the meaning is the same. In that case the instrument contained the words, "reconveyance of said property to be made upon fulfillment of all the conditions of this instrument." In that case it was contended that the words just quoted determined the character of the instrument to be that of a mortgage. It will be seen by what was said in the opinion written by Mr. Presiding Justice Lumpkin that the rule applied in Frost v. Allen, and Pirkle v. Mortgage Co., supra, was modified. The court expressly overruled the two former cases in so far as anything said in them conflicted with the latter case. In the opinion it was said:

"A stipulation for an actual reconveyance upon payment of the secured debt is, for all practical purposes and in essence, the same as a stipulation for surrender and cancellation which shall under a statute operate as a reconveyance. The end to be accomplished is, in each instance, precisely the same, the only difference being as to the method to be employed for accomplishing the desired result, viz.: That the title which has passed from the debtor to the creditor shall go back to the former. Were we, therefore, to adhere to the ruling made in the Pirkle Case, we would be constrained to hold that the paper on which we are now called upon to pass was a mere mortgage. The decision therein is, however, under review, and we are fully satisfied of its unsoundness. Indeed, we were much disposed to take this view soon after it was rendered. See the comment made thereon by Mr. Justice Cobb in the case of Williamson v. Insurance Co., 100 Ga. 794 . In passing the act of November 12, 1889 (Acts of 1889, p. 118), the General Assembly was expressly undertaking to deal with instruments which actually passed title to property for the purpose of securing the payment of debts. The subject-matter of the legislation was deeds, not mortgages; and the only object of the statute was to substitute for a formal reconveyance of title a mere surrender and cancellation of the instrument executed by the debtor, the cancellation to be entered of record by the clerk of the superior court 'in the same manner that cancellations of mortgages are now entered.' See Civil Code,§ 2774, which sets forth the provisions of this act. The legislative purpose was not to provide for the cancellation of liens, but for the reconveyance of title. We therefore made a grave mistake in holding that a stipulation in a security deed for the cancellation and surrender thereof in accordance with the statute just mentioned was the equivalent of such a defeasance clause as is usually inserted in a mortgage, and that, as a consequence, a deed manifestly designed to pass title became a mere mortgage. This is our first opportunity to correct this mistake, and we do so by overruling the decision in the Pirkle Case to the extent here indicated. The decision rendered in the case of Frost v. Allen, 57 Ga. 326, is likewise under review; and in so far as it conflicts with what is now laid down, it also is overruled."

We reach the conclusion, based upon the reasoning in the case of Pitts v. Maier, that the instrument is a deed. In addition to what was said in that case, there are other reasons which lead us to that conclusion. One is from reading Civil Code 1910, § 3306, which is as follows:

"Whenever any person in this state conveys any real property by deed to secure any debt to any person loaning or advancing said vendor any money or to secure any other debt, and shall take a bond for titles back to said vendor upon the payment of such debt or debts, or shall in like manner convey any personal property by bill of sale and take an obligation binding the person to whom said property is conveyed to reconvey said property upon the payment of said debt or debts, such conveyance of real or personal property shall pass the title of said property to the vendee till the debt or debts which said conveyance was made to secure shall be fully paid, and shall be held by the courts of this state to be an absolute conveyance, with the right reserved by the vendor to have said property reconveyed to him upon the payment of the debt or debts intended to be secured agreeably to the terms of the contract, and not a mortgage."

It will be noted that this Code section as originally enacted contemplated the taking of a bond for title binding the grantee or creditor to reconvey the property to the debtor upon the full payment of the debt, and declared that "such conveyance of real or personal property shall pass the title of said property to the vendee till the debt or debts which said conveyance was made to secure shall be fully paid." But the Legislature, not content with that declaration, followed it, in immediate connection, with the following words: "And shall be held by the courts of this State to be an absolute conveyance," etc. The statute so remained for many years until, in 1924 (Acts 1924, p. 56), the General Assembly amended it by providing, "no bond to reconvey shall be necessary where such deed shows upon its face that it is given to secure a debt." Park's Ann. Code Supp. 1926, § 3306. The instrument in the present case on its face recites:

"This deed is given to secure a loan of

$35,000.00, as is evidenced by a note for a like amount, bearing even date with this deed," etc.

Here it will be noted that twice in the same sentence the instrument is denominated a "deed." Moreover, the caption is "Warranty Deed, Georgia, Barrow County: This indenture," etc. The habendum clause contains the usual language found in deeds, to wit, "To have and to hold," etc., as well as the usual warranty clause, the attestation clause, and the attestation as for a deed. Thus it will be seen that the maker of the deed executed an instrument in perfect harmony with the usual form of deeds and quite unlike the usual form of mortgage, and in addition denominated it a deed in the caption, and throughout the body of the instrument. Clearly, therefore, it...