McCollum v. Loveless

• Decision Date: 16 November 1938
• Docket Number: 12584.
• Parties: McCOLLUM v. LOVELESS.
• Court: Georgia Supreme Court

200 S.E. 115

187 Ga. 262

McCOLLUM v. LOVELESS.

No. 12584.

Supreme Court of Georgia

November 16, 1938

Error from Superior Court, DeKalb County; James C. Davis, Judge.

Proceeding by F. M. Loveless against J. W. McCollum and others for reformation of a certain loan deed and notes. Judgment overruling a general demurrer to plaintiff's petition and the named defendant brings error.

Affirmed.

Syllabus by the Court.

1. Equity will grant relief as between the original parties or their privies in law, in fact, or in estate, except bona fide purchasers for value without notice. Code, § 37-213.

2. A petition seeking reformation of a deed, which alleges that the deed was executed by John W. McCollum in favor of 'Sarah J. Mosby Estate,' to secure the payment of a note; that the plaintiff purchased the loan deed from Mrs Sarah M. White, Miss Carrie K. Mosby, and Mrs. Annie H Thomas, who were the sole surviving heirs at law of Sarah J Mosby, deceased; that by mistake of the draughtsman, a clerk in the office of Weyman & Connors, loan brokers, the parties were designated in said loan deed as 'Sarah J. Mosby Estate'; that 'said mistake consisted in supposing that the name 'Sarah J. Mosby Estate' was the proper designation of the parties beneficially interested therein, which mistake was indulged in mutually by lenders and borrower'; that likewise, in the indorsement and transfer of the deed and note to the plaintiff, the parties acted in the utmost good faith and made a mutual mistake as to the sufficiency of the use of the name and designation 'Sarah J. Mosby Estate'; that the form of said deed and note 'violates the manifest intention of the parties thereto, and is contrary to the intention to effectuate which said instruments were executed,' will not be dismissed on demurrer on the ground that the petition does not specifically set forth allegations of fact which show that the mistake was a mutual one indulged in by both parties, and does not point out how or in what manner the parties participated in the mistake.

3. The negligence of the complaining party, preventing relief in equity, is that want of reasonable prudence, the absence of which would be a violation of legal duty. Relief may be granted even in cases of negligence by the complainant, if it appears that the other party has not been prejudiced thereby. Code, § 37-212.

4. While authorities generally recognize the principle that a void deed can not be reformed, reformation will not be denied in this case on the ground that the deed is void because the grantee therein, 'Sarah J. Mosby Estate,' is not a legal entity; it being alleged that the parties to the deed intended by the use of the words 'Sarah J. Mosby Estate' to designate the persons beneficially interested therein, who are legal entities.

5. The judge committed no error in overruling certain grounds of the special demurrer to the petiton, and in refusing to dismiss the action on general demurrer.

F. M. Loveless filed his petition in DeKalb superior court against John W. McCollum, a resident of DeKalb County, and Mrs. Annie H. Thomas and E. Forrest Thomas, non-residents of the State of Georgia, alleging that the plaintiff and the named defendants are the only known persons who have any interest in the subject matter of the suit, or who claim any interest in the property described in a certain loan deed and notes which petitioner seeks to have reformed for reasons hereinafter stated; that Mrs. Annie H. Thomas and E. Forrest Thomas are the only heirs at law of Sarah J. Mosby, who died before February 19, 1926, leaving no will; that there has been no administration upon her estate; that on February 19, 1926, John W. McCollum borrowed $3,000 through loan brokers, to secure the payment of which he executed and delivered his promissory note for that amount, as well as interest-coupon notes, made payable to 'Sarah J. Mosby Estate,' and contemporaneously with the execution and delivery of these notes McCollum executed and delivered a security deed to described realty, in which McCollum was designated as grantor and 'Sarah, J. Mosby Estate' as grantee; that subsequently McCollum applied in writing to petitioner to finance all of his past-due indebtedness and furnish him the necessary money from time to time to keep his payments met promptly, agreeing to give petitioner a mortgage on any part of his property to secure him for any money so paid out by petitioner, promising to turn the rents and the collection of them over to petitioner, and that petitioner would not be required or expected to refinance the 3,000 loan above referred to when it should become due three years later. Operating under that contract, petitioner received from McCollum mortgages, subject to all prior incumbrances, to secure advances made by petitioner, but receipts were not sufficient to meet petitioner's advances, so that upon the approaching maturity of the $3,000 indebtedness McCollum admitted his inability to refinance that and other loans, and requested petitioner to buy the same and have them transferred to petitioner. In order to protect himself, petitioner paid to each of the holders of security deeds the amounts due them by McCollum, and received from them transfers of the notes which they held and transfers of their security deeds by quitclaim deed in each case, among them being the notes and the security deed covering the $3,000 transaction first above mentioned, the transfer of the note and the quitclaim deed being each signed 'Sarah J. Mosby Estate, Mrs. Annie H. Thomas, E. Forrest Thomas.' McCollum admits that that indebtedness has not been paid. Petitioner avers that the $3,000 note executed by McCollum and payable to 'Sarah J. Mosby Estate,' and the security deed executed by him in favor of 'Sarah J. Mosby Estate' as grantee, should have been made payable and in favor of Mrs. Annie H. Thomas and E. Forrest Thomas, as sole heirs at law of Mrs. Sarah J. Mosby; that the mutual mistake consisted in the parties to these instruments supposing that the name 'Sarah J. Mosby Estate' was the proper designation of the parties beneficially interested therein, whereas, under legal construction, the word 'estate' refers to property rather than persons beneficially interested. Petitioner prays that the original notes and security deed, and the transfers of the same, be reformed, so that wherever the name 'Sarah J. Mosby Estate' appears, there be substituted therefor 'Mrs. Annie H. Thomas and E. Forrest Thomas.'

McCollum filed a demurrer to the petition, the first two grounds of which were general in nature. The allegation that 'McCollum admits he received and has never paid back' the money advanced by petitioner is demurred to specially on the ground that it is too vague and indefinite, and that the plaintiff should be required to set forth whether the...