Sims v. Jones, (No. 3988.)

• Decision Date: 10 June 1924
• Docket Number: (No. 3988.)
• Parties: SIMS. v. JONES et al.
• Court: Georgia Supreme Court

158 Ga. 384

123 S.E. 614

SIMS.

v.JONES et al.

(No. 3988.)

Supreme Court of Georgia.

June 10, 1924.

(Syllabus by the Court.)

Error from Superior Court, Lincoln County; E. T. Shurley, Judge.

Action by M. H. Jones and others against A. C. Sims and others. Judgment for plaintiffs, and defendant named brings error. Reversed.

M. H. Jones, Bank of Sampson, and Walter F. Peterson brought an equitable petitionagainst Anna C. Sims, W. S. Harrison, sheriff, and W. S. Harrison, Jr., deputy sheriff, in which the plaintiffs sought to enjoin a sale by the sheriff and deputy sheriff of certain standing timber of M. H. Jones, under an execution based upon a general judgment in favor of Anna C. Sims against M. H. Jones. The defendant Sims filed a demurrer and a verified answer. It was admitted that the instrument described in the petition, dated November 7, 1917, from M. H. Jones, D. C. Johnson, Eula M. Jones, and Sudie Johnson to Walter P. Peterson, as trustee of the Bank of Sampson, was executed in the state of North Carolina; that Exhibit A attached to the complaint was a true copy of the original instrument; that all the parties to the instrument at the time of its execution were residents of the state of North Carolina; that the note secured by the instrument was executed and made payable in North Carolina; that the makers and payee were all residents of the state of North Carolina at the time of the execution of the note; and that the common-law rule that a mortgage passed the title to the property mortgaged, and did not merely create a lien thereon at the time of the execution of the instrument, was and still is of force in the state of North Carolina. M. H. Jones testified that $8,200 and interest of the indebtedness secured by the instrument was still unpaid by him to the Bank of Sampson; that the unpaid indebtedness was past due; and that at the time of the execution of the instrument neither he nor any of the parties thereto knew of the law of Georgia on the subject of mortgages, or that it differed from the North Carolina law. The trial judge granted the injunction prayed for, holding that the law of North Carolina controlled in determining whether the title passed by the instrument.

To this judgment Anna C. Sims excepted on the grounds: (1) That at the time of the rendition of the judgment in favor of Anna C. Sims against M. H. Jones the title to the standing timber levied on was in the defendant in fi. fa., and the same was subject to levy and sale under the execution issued upon the judgment, and no legal reason appeared why it should not be subjected to the fi. fa.; (2) that the instrument and note thereby secured were executed in North Carolina and by residents of North Carolina and the note was payable in North Carolina, and the court ruled that the effect of the instrument as passing the title to Georgia realty or merely creating a lien thereon was to be determined by the law of North Carolina; (3) that the court held that at the time of the levy of the execution the title of the standing timber had passed out of M. H. Jones into W. F. Peterson, trustee of the Bank of Sampson, by virtue of the instrument of November 7, 1917; (4) that the court refused to sustain, as cause against the grant of the injunction, the grounds of demurrer presented; (5) that the judgment is contrary to law and the admitted facts of the case. The instrument in question is in the form of a warranty deed to the timber, timber rights, franchises, privileges, and easements referred to, with a proviso that if the parties of the first part or their legal representatives shall pay over to the party of the third part or to its assigns the full sum of $21,300, "according to the terms and conditions named in the note hereby secured, then and in that event this deed shall be utterly null and void." There is also a provision, in case of default in the payment of the note, for the party of the second part to advertise and sell and convey the land to the highest bidder in fee simple, etc.

Hamilton Phinizy, of Augusta, for plaintiff in error.

O. Lee White, of Augusta, and C. J. Perryman, of Lincointon, for defendants in error.

HILL, J. (after stating the facts as above). [1] 1. On the trial it was admitted that the instrument described in plaintiff's petition was dated November 7, 1917, was signed by M. H. Jones, D. C. Johnson, Eula M. Jones, and Sudie Johnson, to Walter F. Peterson, as trustee of the Bank of Sampson, and that it was executed in the state of North Carolina, and that Exhibit A attached to the petition, which is. in the form of a warranty deed with a defeasance clause, conveying the timber in question, is a true copy of the original instrument, and that all the parties to the instrument at the time of the execution were residents of the state of North Carolina. It was further admitted that the note secured by the instrument was executed and made payable in North Carolina, and that the makers and payee were residents of North Carolina at the time of the execution of the note; that the common-law rule that a mortgage passed the title to the property mortgaged, and did not merely create a lien thereon, at the time of the execution of the instrument was still of force in the state of North Carolina.

The controlling question in the case is whether the instrument, the substance of which is set out in the statement of facts, is to be construed according to the laws of North Carolina or according to the laws of Georgia. It was pleaded and proved, as well as admitted, by both parties, that the law of North Carolina provides that mortgages pass title to the mortgagee, and do not merely create a lien on the property mortgaged or conveyed. So, for the purposes of this case, we will not pursue that question further. The court below evidently took the view that the law of North Carolina controlled, and. granted the injunction.

The defendant In error relies on the Civil Code 1910, § 8, which provides that—

'The validity, form, and effect of all writings or contracts are determined by the laws of the place where executed. When such writing or contract is intended to have effect in this state, it must be executed in conformity to the laws of this state, excepting wills of * * * persons domiciled in another state or country."

It is insisted that the cardinal rule of construction and interpretation of contracts is to ascertain the intention of the parties to the contract, and that that rule applies to the contract under review here. In support of their contention the defendants in error cite 2 Elliott on Contracts, § 1113, which declares that—

"As a rule, the law of the place where the contract is made is, without any express assent or agreement of the parties, incorporated into and forms a part of the contract, and the rule that contracts are to be construed according to the law of the place of their execution, and that the law, including city ordinances, in force upon any subject that is made the subject-matter of any contract enters into the same, has been held to apply just as if the law were actually and expressly made a part of the agreement between the contracting parties."

And see section 1110 of the same author.

Civil Code, § 8, supra, seems to be broad and sweeping in its effect. It provides that—

"The validity, form, and effect of all writings or contracts [italics ours] are determined by the laws of the place where executed, " etc.

There is no statute, so far as we are aware, on which this section was based. It has, however, all the binding force of an act of the Legislature, because of the adoption by the Legislature of the Codes wherein it appears. Wilensky v. Central Ry. Co., 136 Ga. 889, 891, 72 S. E. 418, 419. It was said in that case that—

"It has been several times held by this court that a section of the Code, not of original statutory origin, would be construed merely as a codification of the existing law, unless there be words in the section which manifestly demand a construction which would change the rule in force at the time the Code was adopted."

The section of the Code referred to was not intended to change the rule in Georgia so as to require our courts to apply the law of lex loci as to the construction of contracts where the title to real estate in this state is involved, unless the words used manifestly demand a different construction. We are of the opinion that the words used in the statute do not demand the construction contended for.

Coming to the real question in the case, we are of the opinion the lex loci rei sitæ controls as to the effect that all instruments executed out of the state have on real estate located in this state. The outside authorities seem to sustain this position. We cite a few of them:

"Every nation, having authority to prescribe rules for the disposition and arrangement of all property within its own territory, may impress on it any character which it may choose; and therefore the law of the place where property is situated, the lex loci rei sitæ, must be resorted to determine whether it be 'real' or 'personal'; and when a sovereignty prescribes that a certain class of property shall be deemed movable, or shall be deemed immovable, or shall have that character, no other state may impugn the classification." 5 R. C. L. 924.

In 12 C. J. 456, the rule is thus laid down:

"The lex situs, lex loci rei sitae, or the law of the place where the thing is situated, is universally regarded as furnishing the rules governing the transfer, incumbrance, or devolution of real or immovable property. * * * "

Again:

"Under these rules the lex situs governs as to the transfer of land, covenants running with the land, conversion of property from realty into personalty, construction and...