Lee v. Holman

• Decision Date: 12 June 1936
• Docket Number: 11306.
• Citation: 186 S.E. 189,182 Ga. 559
• Parties: LEE et al. v. HOLMAN et al.
• Court: Georgia Supreme Court

186 S.E. 189

182 Ga. 559

LEE et al. v. HOLMAN et al.

No. 11306.

Supreme Court of Georgia

June 12, 1936

Error from Superior Court, Wilcox County; A.J. McDonald, Judge.

Action by Mrs. S.B. Holman and others against Mrs. W.H. Lee and others. Judgment for plaintiffs, and defendants bring error.

Affirmed.

See also, 183 S.E. 837.

Syllabus by the Court.

1. Subrogation is the substitution of another person in the place of the creditor, so that the person in whose favor it is exercised succeeds to all the rights of the creditor. It is of equitable origin, being founded upon the dictates of refined justice, and its basis is the doing of complete essential, and perfect justice between the parties, and its object is the prevention of injustice.

2. Subrogation is of two kinds; legal subrogation, which takes place as a matter of equity, without any agreement to that effect made with the person paying the debt, and conventional subrogation, which is applied where an agreement is made with the person paying the debt that he shall be subrogated to the rights and remedies of the original creditor.

3. The agreement between the debtor and the one paying his debt that the latter shall be subrogated to the rights of the original creditor need not be in writing.

4. The petition set forth a cause of action for conventional subrogation, and the court did not err in overruling the general demurrer.

Dorsey & Meeks, of Abbeville, for plaintiffs in error.

McDonald & McDonald, of Fitzgerald, for defendants in error.

GILBERT Justice.

Mrs S.B. Holman filed her petition against Mrs. W.H. Lee individually and as executrix of the estate of W.H. Lee, and against Anne Harriett Lee, the infant daughter of Mrs. W.H. Lee and her deceased husband, W.H. Lee, and against R.E. Lee and the Metropolitan Life Insurance Company, alleging substantially as follows: On September 16, 1919, R.E. Lee and W.H. Lee executed a promissory note for $2,000 in favor of Atlanta Trust Company, due October 1, 1924. That company indorsed and delivered this note to the insurance company, which became a holder in due course. Simultaneously with the execution of the note, R.E. Lee and W.H. Lee executed and delivered to the trust company a deed to certain land to secure the note. W.H. Lee died, and left surviving his wife and their minor daughter Anne Harriett. On November 18, 1919, the trust company transferred the note and conveyed the land to the insurance company. The petitioner is the sister of R.E. Lee and W.H. Lee. On October 10, 1924, the said brothers, being already indebted to her on a promissory note for $1,000, and being unable to pay the note held by the insurance company, agreed with her that, if she would advance the money to pay the note, she should become subrogated to the rights of the insurance company and should have the same lien on the land conveyed to secure the note that the insurance company had. In accordance with the agreement, she paid off the note, which, with the deed, she received from the insurance company, and now has possession of all the papers. The amount she paid was $1,700, and she is entitled to be subrogated to all the rights and remedies of the insurance company against W.H. Lee and R.E. Lee, and, in view of the fact that W.H. Lee is now dead, against his representatives and heirs; and she is entitled to a judgment against the administratrix of W.H. Lee and against R.E. Lee for $1,700 and accrued interest, and is entitled to a special lien on the realty from September 16, 1919. She prayed that a guardian ad litem be appointed for the infant daughter and heir of W.H. Lee, deceased; for judgment for the amount of principal and interest because of the payment to the insurance company under the agreement aforesaid; that the judgment be declared a special lien on the realty; that the realty be sold to satisfy the judgment; and that the purchaser obtain a fee-simple title to the same, etc. Mrs. W.H. Lee, individually and as administratrix, and as guardian ad litem for Anne Harriett Lee, demurred to the petition, on the ground that it did not set forth any cause of action at law or in equity. The court overruled the demurrer, and the defendants excepted.

The question involved is whether or not Mrs. Holman is entitled as against the defendants, to be subrogated to the rights of the insurance company. If so, the petition was good as against the general demurrer. Subrogation, which is derived from the old civil law, is of two kinds, legal subrogation, which arises by operation of law, and conventional subrogation, which is applied on equitable principles where the person paying a debt to a creditor of another does so under an agreement, express or implied, with the debtor or creditor, that he shall succeed to the rights of the creditor....