Lay v. Seago

• Decision Date: 31 July 1872
• Parties: JAMES LAY, plaintiff in error. v. ALVIN K. SEAGO, defendant in error.
• Court: Georgia Supreme Court

47 Ga. 82

JAMES LAY, plaintiff in error. v. ALVIN K. SEAGO, defendant in error.

Supreme Court of the State of Georgia

(Atlanta, July Term, 1872.)

Conveyance by insolvent. Accommodation acceptance. Commissions. Usury. Principal and surety. Before Judge Parrott. Gordon Superior Court. February Term, 1872.

David B. Barrett, as administrator of Azariah P. Bailey, deceased, filed a bill against Alvin K. Seago, James Lay and others, creditors of his said intestate, to marshal the assets of the estate. The master appointed to audit the claims against said intestate reported that said Seago held a valid claim for $1,580 41, with interest thereon from December 13th, 1866, and that, by virtue of a deed dated July 19th, 1866, made by said Bailey to said Seago, he held a lien, in the nature of a mortgage, on lot of land number one hundred and seventy-eight, of the 15th district of the 3d section of Gordon county, and was entitled to be paid out of the proceeds of said land when sold.

James Lay filed the following exceptions to said report, to-wit: 1st. Because said deed was void, being for a usurious consideration.

2d. Because said deed was void, being a conveyance by a debtor insolvent at the time, reserving a trust for the benefit of the grantor.

3d. Because a part of said claim was for usury, paid by said Seago, with a knowledge that it was usury.

Seago joined issue upon these exceptions, and the questions of law and fact, by consent, were submitted to the decision of the Court without the intervention of a jury. *Seago introduced the report of the master and closed. Lay read the answer of said Seago to a bill filed against him by said Barrett as administrator, in which were the following statements: That on or about July 19th, 1866, Bailey applied to Seago to become his factor and business agent in Atlanta for the sale of the produce of said Bailey's mills in Gordon county, and represented that, in order to prosecute his business, it was necessary for him to have the use of from $1,500 00 to $2,500 00 with which to purchase wheat, to be ground into flour and sent to the Atlanta market, and that he desired to borrow said sum of money from Seugo; that Seago did not have the money, but agreed to employ his credit and give his personal attention to negotiating a loan for said Bailey, upon the express condition that said Bailey was to send the flour made at said mills, from the wheat purchased with said money, to Seago, at Atlanta, to be by him sold at customary rates and commissions, and that, for the risk which Seago was to run in becoming personally liable for the debt, he was to receive customary rates with other business men of the city of Atlanta for like risk and serving; that, by resolution of the Board of Trade of Atlanta, to which the business men conform, it was provided that factors and commission merchants of said city are to charge two and a half per cent, for every accommodation acceptance or renewal of the same, all of which was fully explained to said Bailey and agreed to by him; that in accordance with the agreement, said Bailey drew an inland bill of exchange on Seago, in favor of the Georgia National Bank, at thirty days, for $1,500 00, and upon this bill, when accepted by Seago, the bank paid the money to Bailey; that, upon being informed by Bailey that he would want, probably, as much as $2,500 00, and renewals of the paper to the extent of four months, Seago requested that security be given to compensate for increased risk, in addition to the proposed consignments of flour; that said Bailey, in accordance with said request, executed a deed to Seago to the property already described, containing the following condition:

"But this deed is made for the following uses and trusts, *and for no other purposes—that is to say, that I am indebted to said Seago in the sum of $2,500 00, by account. Now, if I should pay the said debt, that is to say, the account for the sum aforesaid, at the expiration of four months from this date, then this deed to be void; but if I should not, then the said A. K. Seago, as trustee, after giving thirty days\' notice of the time and place of sale in one of the public newspapers published in Atianta, may expose said land to public sale at the Court-house door in the county of Gordon, between the usual hours of sale, that is, form ten o\'clock a. m. to three o\'clock p. m., and sell it to the highest bidder for cash, and appropriate the proceeds, first, to the payment of the necessary expenses and costs; secondly, to the satisfaction of said debt so due said A. K. Seago, as aforesaid; thirdly, to pay the balance, if any, to me."

That the first bill of exchange was drawn on July 19th, 1866, for $1,500 00, at thirty days, four times renewed at thirty days and paid by seago; that a second bill of exchange was drawn on August 4th, 1866, for $500 00, at thirty days, three times renewed at thirty days and paid by Seago; that Bailey shipped only one hundred and twenty-five sacks of flour, which sold for the gross sum of $977 00; deduction from this gross amount charges for freights and other expenses, charges, commissions, insurance, and the premiums due Seago for negotiating and accepting said bills of exchange, together with $166 83 paid to the bank, by Bailey's instructions, for the use of the money, and allowing an account for one hundred and thirty-seven wheat sacks sold Bailey, $54 10, leaves $420 00 to be appropriated to said indebtedness, leaving still due, $1,580 00, with interest from December 13th, 1866; that, as to Seago, there was nothing usurious or otherwise illegal in the transaction; that the bank loaned its own money to Bailey, and Seago had no interest in the same; that, by being compelled to pay the drafts, his losses will exceed any profits appearing to have been made.

The evidence being closed, the Court decided that said deed was alegal and valid mortgage, creating a lien on said lot of *land: that there was no usury in...