Johnson v. Brewer

• Decision Date: 15 July 1910
• Citation: 68 S.E. 590,134 Ga. 828
• Parties: JOHNSON et al. v. BREWER et al.
• Court: Georgia Supreme Court

68 S.E. 590

134 Ga. 828

JOHNSON et al. v. BREWER et al.

Supreme Court of Georgia

July 15, 1910

Syllabus by the Court.

Where a person borrowed money and gave a note therefor, with 16 accommodation indorsers and executed to 2 of them an absolute conveyance of real and personal property, in which they were "authorized to sell the same or any part thereof at private sale, or at public sale, for cash, paying the purchase price thereof on the promissory note," and to make such deeds, bills of sale, or other conveyances, in the name of the creditor, as might be necessary for carrying into effect the intention of the deed, and where it was provided that, if either of the grantees should fail or refuse to act in pursuance of the terms and conditions of the deed, the remaining grantee alone might do so, and that in the event of the death or resignation of both of them the indorsers should name a successor or successors, who should have all the powers of the original grantees, such a conveyance was a voluntary assignment for the benefit of creditors, and a compliance with the essential requirements of the statute was necessary to its validity.

This is true although the deed declared that it was made in order to indemnify the indorsers against loss; "the intention of this deed being for the express purpose of vesting the title of the property hereto conveyed in the said parties of the second part, for the use and benefit of them, the said indorsers." The instrument contained no clause of defeasance, and was not in the nature of a mortgage or mere security, but was an absolute conveyance to trustees to sell property and apply the proceeds to the payment of the note held by the creditor.

(Additional Syllabus by Editorial Staff.)

The word "assignment" has several meanings. In a broad sense it signifies the act by which one person transfers to another the entire right or property which he has in any realty or personalty in possession or in action or some share or interest therein, and is more particularly applied to a written transfer as distinguished by a transfer by mere delivery.

An "assignment for the benefit of creditors" is an assignment whereby a debtor, generally insolvent, transfers his property to another in trust to pay his debts or apply the property on their payment.

Error from Superior Court, Liberty County; P. E. Seabrook, Judge.

Action by C. G. Johnson and others against W. P. Brewer and others. Judgment for defendants, and plaintiffs bring error. Reversed.

Holden J., dissenting.

W. T Brewer, as tax collector of Liberty county, became indebted to it on account of taxes. In order to raise money to pay the amount thus due, he made a note to N. McQueen. On the same day, August 27, 1903, he executed a conveyance of certain real and personal property, including a mortgage held by him to J. R. Ryon and C. W. Hendry; the instrument being executed like a deed, and duly attested and recorded. After the description of the property, it proceeded as follows: "To have and to hold the above-described realty and personalty unto them, the said parties of the second part, with all and singular the rights, members, and appurtenances thereto appertaining, to the only proper use, benefit, and behoof of them, the said parties of the second part, and their heirs and assigns, in fee simple. The condition of the above conveyance is such, that, whereas the said party of the first part has this day made his promissory note for the sum of $2,645 payable to N. McQueen, in which he has become indebted to said McQueen in the sum above named, which said promissory note has, by [sixteen named persons, two of whom were the grantees, been] indorsed, whereby the said indorsers have become liable for the payment of the amount of the said promissory note; now in order to indemnify them, the said indorsers against loss by reason of said indorsement, the said party of the first part has this day sold and conveyed to the said parties of the second part all of the above-described property, who are authorized to sell the same or any part thereof at private sale, or at public sale for cash, paying the purchase price thereof on the promissory note above described, and in my name to make or cause to be made all deeds, bills of sale, or such other conveyances as may be necessary for the carrying into effect the intention of this deed, in as full and complete a manner as the said party of the first part could have done. And should either of the parties herein named as parties of the second part for any reason fail and refuse to act in pursuance of the terms and conditions of this deed, then the remaining party therein named as party of the second part may act as if no other party had been named; and in the event of death or resignation of both of the parties of the second part, then the indorsers of the said promissory note above referred to, or a majority of the same, shall name a successor or successors who shall have all the powers herein granted to the said parties of the second part; the intention of this deed being for the express purpose of vesting the title of the property herein conveyed in the said parties of the second part, for the use and benefit of them, the said indorsers." At the time of the execution of this conveyance, Brewer was insolvent, and was not indebted to McQueen, Ryon, or Hendry in any other manner than as above stated. On June 18, 1904, Ryon and Hendry, by virtue of the power contained in the deed to them from Brewer, conveyed the property to McQueen for the recited consideration of "$1,800 cash in hand paid." Several creditors of Brewer filed an equitable petition attacking these conveyances. The facts were not in controversy, and it was agreed that the case would be controlled by a determination of the question whether the transaction constituted an assignment or only a deed to indemnify certain indorsers. The presiding judge held that the deed did not constitute an assignment, and rendered judgment in favor of the defendants. The plaintiffs excepted.

Donald Fraser, for plaintiffs in error.

Garrard & Meldrim and S. B. Brewton, for defendants in error.

LUMPKIN, J. (after stating the facts as above).

The word "assignment" has several meanings. In a broad sense it is used to signify the act by which one person transfers to another, or causes to vest in such other, the entire right, interest, or property which he has in any realty or personalty, in possession or in action, or some share, interest, or subsidiary estate therein. It is more particularly applied to a written transfer, as distinguished from a transfer by mere delivery. An assignment for the benefit of creditors has been defined to be "an assignment whereby a debtor, generally an insolvent transfers to another his property, in trust to pay his debts or apply the property upon their payment." Black's L. Dic. The distinction between an assignment for the benefit of creditors and a conveyance to secure an indebtedness or to secure an indorser or security against loss is illustrated by two cases decided by this court in February, 1892. Kiser & Co. v. Dannenberg Co., 88 Ga. 541, 15...