Mill v. Carter

• Court: Georgia Supreme Court
• Writing for the Court: PISH, C. J
• Citation: Mill v. Carter, 79 S.E. 1120, 140 Ga. 808 (Ga. 1913)
• Decision Date: 17 November 1913
• Parties: PLANTERS' OIL MILL. v. CARTER et al.

79 S.E. 1120

(140 Ga. 808)

PLANTERS' OIL MILL.

v.CARTER et al.

Supreme Court of Georgia.

Nov. 17, 1913.

(Syllabus by the Court.)

1. Mortgages (§ 468*)—Foreclosure—Receives.

As a general rule, a receiver will not be appointed for mortgaged property upon the application of the mortgagees, in the absence of satisfactory proof of the inadequacy of the security and the insolvency of the mortgage*.

[Ed. Note.—For other cases, see Mortgages, Cent. Dig. §§ 1374, 1375; Dec. Dig. § 46S.*]

2. Mortgages (§ 468*)—Foreclosure—Receiver.

Where a mortgage provides that the mortgagor shall keep the property insured for a given amount for the benefit of the mortgagee as his interest may appear, and that upon the failure of the mortgagor so to do the mortgagee may have the property insured for a like amount, and, that all sums paid by the mortgagee shall become a part of the mortgage debt and be secured by the mortgage lien, a failure to insure by the mortgagor will not ordinarily authorize the appointment of a receiver for the property.

[Ed. Note.—For other cases, see Mortgages, Cent. Dig. §§ 1374, 1375; Dec. Dig. § 468.*]

3. Mortgages (§ 468*)—Foreclosure—Injunction and Receiver.

Under the facts of the ease, the judge erred in appointing a receiver and granting rn interlocutory injunction unless the mortgagor should, within a reasonable time, pay or cause to be paid the taxes, and have the property insured for a stated amount.

[Ed. Note.—For other cases, see Mortgages, Cent. Dig. §§ 1374, 1375; Dec. Dig. § 468.*]

Error from Superior Court, Hall County; J. B. Jones, Judge.

Action by J. & J. S. Carter and others against the Planters' Oil Mill. Judgmentfor plaintiff, and defendant brings error. Reversed.

On March 6, 1913, J. & J. S. Carter, Georgia Railway & Power Company, Z. T. Castle-berry, J. S. Carter, H. H. Dean, Mrs. A. M. Jaquish, and G. P. Hughes brought an equitable petition against the Planters' Oil Mill, the Gainesville Cotton Oil Company (domes-tie corporations), J. C. Cooper, Marshall C. McKenzie, and Harold C. McKenzie. The substance of the material allegations of the petition was as follows: On April 11, 1912, the Planters' Oil Mill, hereinafter referred to as the defendant, or mortgagor, duly executed 17 promissory notes, aggregating the sum of $34,339.12, four of which were for $1,000 each payable to J. & J. S. Carter, and due respectively on July 1, August 1, October 1, and November 1, 1912; four were for $5,000 each, payable to J. & J. S. Carter, one on January 5, and the other three on April 1, 1913; two were for $2,500 each payable to J. & J. S. Carter on April 1, 1913; one was tor $1,615, payable to J. & J. S. Carter on April 1, 1913; one was for $719.12 payable to the Georgia Railway & Power Company on April 1, 1913; one was for $540, and another for $1,570 payable to H. H. Dean on April 1, 1913; one was for $400 payable to Z. T. Castleberry on April 1, 1913; one was for $417 payable to Mrs. A. M. Jaquish on April 1, 1913; and one was for $78 payable to G. F. Hughes on April 1, 1913. At the time these notes were given, the defendant executed and delivered to the payees thereof, to secure the payment of the same, a mortgage upon its entire oil mill plant, including realty and personalty of every description connected therewith. The mortgage contained the stipulations that, if default should be made in the payment of any one of the notes, then all should become due, at the option of the holders, with a right to then foreclose; and that the mortgagor should at all times keep the mortgaged property insured to the amount of $27,000, the policy, in case of loss by fire, payable to the mortgagees as their several interests may appear, and, upon default of the mortgagor to keep the property so insured, that the mortgagees, or any one or more of them, should have the right to have the property insured for the amount above named, and that all money so paid for insurance should become a part of the mortgage debt and be secured by the mortgage lien. The first two notes for $1,000 each, payable to J. & J. S. Carter, were paid. The other two notes for $1,000 each, and the one for $5,000 due January 5, 1913, payable to J. & J. S. Carter, have not been paid, and the defendant has been notified by petitioners that they have elected to declare all the notes due, in accordance with their option so to do contained in the mortgage. The $5,000 note just mentioned was transferred to and belongs to the First National Bank of Gainesville Ga., and so does the note for $540 payable to H. H. Dean. (The bank is not a party to the suit.)

It is alleged that the defendant "is insolvent and unable to pay its indebtedness; that said material and said machinery is depreciating in value; that the same is not worth more than the amount of your petitioners' claims; that, if the said defendant is allowed to keep and run the said mill and machinery, it will greaty depreciate in value, and will result in great loss to your petitioners." On September 19, 1912, the defendant leased its oil mill plant for the season of 1912 and 1913, terminating on July 1, 1913, to the Gainesville Cotton Oil Company, in pursuance of a contract entered into by the latter company, Marshall C. and Harold C. McKenzie, and the defendant; by the terms of which agreement the defendant, after certain named expenses in the operation of the plant were paid, was to receive one-half of the net profits. To better secure the payment of the notes held by petitioners, the lease contract was transferred and assigned to them by the defendant and the Gainesville Cotton Oil Company, on February 17, 1913. The transfer stipulated that "all profits arising from said lease contract to be prorated upon their respective claims." In reference to the lease, "your petitioners show that said profits have been made by running and operating said mill, and that they have not been ascertained or paid." The defendant insured the mortgaged property for $30,000 or $35,000, but has failed to pay the premiums, and the insurance companies are threatening to cancel the policies, and will do so unless the premiums be paid. Among other things, the petition prayed that a receiver be appointed for the Planters' Oil Mill, and that the Gainesville Cotton Oil Company, and the McKenzies be enjoined from paying to the Planters' Oil Mill any of the profits derived from the operation of its plant, and that the mortgage be foreclosed. In an amendment to the petition it was alleged that the defendant had failed to pay its state, county, and municipal taxes for the year 1912; that executions had been issued for such taxes, which would be enforced against the property of the defendant unless their collection was restrained; and that a number of common-law judgments had been rendered against the defendants in favor of various creditors, who would put it in bankruptcy unless a receiver was appointed by the state court to take charge of its assets.

In its answer, the defendant denied its liability on the notes to the amount set out in the petition, and averred that there was a failure of consideration to the amount of at least $25,000 represented by the notes. It denied that it was insolvent, and averred that it was in better financial condition than at the time the mortgage was executed. It further denied that the mortgage property had depreciated in value, and averred thatthe machinery in its plant had been added to and its value increased since the execution of the mortgage, and that the value of the mortgaged property was much greater than the claims of the plaintiffs. In the language of the answer: "Defendant admits that it has not paid the said insurance premiums, and unless they have already been paid this defendant is ready to cause or procure the same to be paid." The defendant "amends its answer by offering to cause the taxes or tax fi. fas. against defendant, set forth in the amendment to petition of plaintiffs, to be taken up and held so as not to be j enforceable until after a final decree in this cause."

Upon the interlocutory hearing for a receivership, J. Carter, of the firm of J & J. S. Carter, testified as follows: "All they [Planters' Oil Mill] owe is in that mortgage they gave. They didn't owe us [J. & J. S. Carter] anything individually at the time they gave the mortgage. They owed us on several notes we were indorsers on; the State National Bank of Greenville $7,200, another for $5,000, and another for $2,700. The notes and the mortgage were given to secure the notes which we had indorsed for them in Carolina and here in Georgia, and were given to take the place of those notes which we had indorsed. They gave us these notes secured by the mortgage, and we were to take up the other notes we were indorser on. I haven't taken up those notes, and they are still outstanding against the Planters' Oil Mill,...