National Bank of Athens v. Danforth

• Decision Date: 15 November 1887
• Citation: 7 S.E. 546,80 Ga. 55
• Parties: NATIONAL BANK OF ATHENS et al. v. DANFORTH et al. (two cases.)
• Court: Georgia Supreme Court

7 S.E. 546

80 Ga. 55

NATIONAL BANK OF ATHENS et al. v. DANFORTH et al. (two cases.)

Supreme Court of Georgia

November 15, 1887

Syllabus by the Court.

In taxing real property, and collecting the taxes thereon, the public authorities may treat it as belonging indifferently either to the maker or the holder of a bond for titles, when the latter is in possession; but, as between the parties to the bond, the one taking the rents and profits, or enjoying the use for the time being, is liable for the taxes.

Defects and irregularities in returning municipal taxes, and even omissions to return, are waived, and imperfect returns are cured, by pointing out property to be levied upon by virtue of a tax fi fa., the issuance of which presupposes returns duly made; and such waiver by the person assessed will affect others interested in the property taxed, but not beyond the unpaid taxes really due on the specific property.

Taxes on the mortgaged premises, properly paid by the mortgagee to protect his security, are charges on the property as against the mortgagor, and all persons holding or claiming under him by lien or purchase subsequent to the date of the mortgage but taxes not assessed on the specific property, though included in the same execution, and though paid by the mortgagee because so included, are not charges, except as against the defendant in execution.

To render a tax execution available to a transferee as a strict legal lien, to affect others than the defendant therein, the execution must be entered on the proper execution docket within 30 days after the transfer; and an entry not disclosing the name of the plaintiff, but giving the transferee as plaintiff, and not indicating that the execution is for taxes, is insufficient to uphold the lien save as against the defendant.

The lien of a contractor or mechanic for improvements is not a charge upon the premises or the improvements, as against prior liens or incumbrances put upon the property by a previous owner, and duly recorded.

A fi. fa. issued upon a judgment rendered for a debt secured by a deed made under section 1969 of the Code cannot be levied upon the realty conveyed as security until after the creditor has executed, filed, and had recorded a deed reconveying the property to the debtor; and a sale by the sheriff to the creditor, the levy having been made after the execution of such deed, but before it was either filed or recorded, is utterly void.

The result is that the fund now in question, when realized should be applied in order of priority, as follows: First, to the mortgage fi fa., and so much of the tax fi. fas. as represent the taxes for the years 1883, 1884, and 1885 on this specific property, to be ascertained by multiplying the assessment by the rate for each year; secondly, to the judgment for the debt covered by the security deed; thirdly, the overplus, if any, to be treated as belonging to the ultimate owner of the fee, (Mrs. Clayton,) and as her property, to be applied-- First, to the contractor's lien; secondly, to the residue of the tax fi. fas.; thirdly, the balance, if any, to be paid to her.

A contract to pay attorney's fees for collecting, in addition to principal and interest, is not, on its face, usurious; not does it become usurious by reducing the debt to judgment, and including in the judgment 10 per cent. for attorney's fees. ^[1]

Appeal from superior court, Richmond county; ROWLY, Judge.

The premises, consisting of a cotton warehouse in the city of Augusta, belonging to C. W. Clayton, were mortgaged by him to the National Bank of Athens, (White, cashier,) in 1877, to secure a debt of $4,500. The mortgage was duly recorded. In October, 1883, by security deed under section 1969 of the Code, he conveyed, subject to the mortgage, to Mrs. Danforth, to secure a debt of $2,000, and she made to him a bond to reconvey upon payment of the debt. The deed recognized counsel fees as a part of the debt, in addition to principal and interest, and was duly recorded. In November, 1883, he conveyed the premises to Mrs. Clayton, his mother, and transferred to her the bond for titles made by Mrs. Danforth. From September 1, 1883, to the close of 1885, Mrs. Clayton, by her tenants, occupied the premises, and she received as rent $100 to $106.66 per month. In or about September, 1884, Denning, under employment by C. W. Clayton, which was afterwards ratified by Mrs. Clayton, constructed improvements to the amount of $600 by building fire-proof brick walls dividing the warehouse into sections, and caused to be duly recorded a claim of lien of the premises as the property of C. W. Clayton, and also a like claim on them as the property of Mrs. Clayton; the claims, respectively, being made by him as a contractor, mechanic, and material man for work done and material furnished. A suit against Mrs. Clayton to enforce the lien was duly commenced, and is still pending. No suit was brought against C. W. Clayton. The improvements were proper and important. They added materially to the rental value; the rents being in fact increased thereby; and made continuous at the increased rate. In each of the years 1883, 1884, and 1885 a fi. fa. in favor of the city council of Augusta, for municipal taxes, was issued against Mrs. Clayton; none of the fi. fa. specifying any property as taxable, or out of which taxes were to be collected, but all being general fi. fas in personam. Two of them were levied upon the premises, August 27, and the other on October 3, 1885. Pending an advertisement for sale under these levies, the attorney of Mrs. Danforth, the grantee in the security deed, by letter to the cashier, gave notice to the bank of the levies and of the advertisement. The attorney of the bank went to Augusta, purchased the fi. fas., and had them transferred to the bank, by the proper officer of the city, on November 5, 1885; and within 30 days thereafter notice was given to Mrs. Clayton of the transfer, and the fi. fas. were entered on the proper execution docket as follows: "National Bank of Athens, plaintiff; Mrs. E. P. Clayton, defendant. Amount, $529.99," (the other two, for $593.44 and $637.33, respectively, being entered in like terms.) They were again entered on the same docket after the sheriff's sale under the fi. fa. of Mrs. Danforth, and after the 30 days from date of transfer had expired; in which entry the city council of Augusta was set out as plaintiff, and the bank as transferee. Mrs. Danforth, the creditor by security deed, having on October 13, 1885, obtained judgment upon her debt, (including 10 per cent. for attorney's fees,) reconveyed by deed to C. W. Clayton, her debtor, on January 6, 1886; which deed was filed in the clerk's office, January 30, and recorded February 1, 1886. The premises were levied upon January 29, 1886, (before the deed was either filed or recorded,) under a fi. fa. founded on the judgment, and were sold by the sheriff for $325 on April 6th, the creditor herself being the purchaser, to whom the sheriff made a deed, and she entered into possession. The tax fi. fas. were lodged by the bank to claim the money, and both the money and the fi. fas. are still in the sheriff's hands. The mortgage was foreclosed on the 28th of April, 1886, and a fi. fa. issued from the judgment of foreclosure was levied upon the premises on May 1st thereafter. Pending an advertisement of sale under this levy, Mrs. Danforth filed the present bill against the sheriff, Mrs. Clayton, Denning, administrator of Denning, (the contractor,) the bank, and its cashier; praying for general relief, and for an injunction to restrain the sale until the rank, dignity, and validity of the respective liens could be determined. A restraining order was granted, which was still in force at the hearing. The complainant sets up in the bill her security deed, her judgment, together with her title under the sheriff's sale. She admits the sale was made subject to the mortgage, and offers to pay off the mortgage on condition of being protected in her title to the fee unincumbered. She claims priority over everything except the mortgage; characterizes the retransfer of the tax fi. fas. as "pretended;" and applies the same epithet to the fi. fas. themselves. She urges against their validity that they were not properly issued; that they were not based upon returns made as by law required, nor as against specified property; but were issued as though Mrs. Clayton had actually returned specific property for taxation when in fact she had not. She contends that, if the fi. fas. had a lien upon the premises, it was lost by claiming the proceeds of the sheriff's sale under the fi. fa. in her favor; also that the fi. fas. embrace taxes on other realty of greater value than this, and therefore that to pay the fi. fas. in full out of this would be to charge her with taxes on the other property; also that the bank, as to these fi. fas., if they are a lien at all, has a lien upon two pieces of property, while she is confined to one, and therefore collection should be made out of the other; also that Mrs. Clayton, having received the rents and profits, is properly chargeable with the taxes. She alleges that her debtor is insolvent, and that she will lose her debt if not paid out of this property; and shows a return of nulla bona upon her fi. fa. against him. She denies that the lien of Denning is superior to her title, but submits to the court whether it is superior to the lien of the mortgage.

The answer of the bank and its cashier insists that the tax fi. fas. were legally issued, and were proceeding to sell the premises when transferred; that they are liens on all the property of Mrs. Clayton, and their lien is not discharged by any sale, judicial or any other; that, if the lien of...