Thomas v. Hudson

• Decision Date: 10 July 1940
• Docket Number: 13186.
• Citation: 10 S.E.2d 396,190 Ga. 622
• Parties: THOMAS v. HUDSON et al.
• Court: Georgia Supreme Court

10 S.E.2d 396

190 Ga. 622

THOMAS v. HUDSON et al.

No. 13186.

Supreme Court of Georgia

July 10, 1940

Syllabus by the Court.

1. The due filing for record of a valid mortgage on realty affords good constructive notice of the instrument to subsequent purchasers and lienholders claiming under the mortgagor, even though the indexing and recording of the mortgage may be erroneously made on books not relating to realty.

2. Assignees from the mortgagee of such an instrument thus filed for record will not lose priority over subsequent purchasers or lienholders from the mortgagor by the fact that no assignment of the prior mortgage is recorded or filed for record.

3. As between the parties and their privies, including subsequent assignees of the mortgagor, except those without either actual or constructive notice, where a mortgage purports to create a lien in praesenti on property then owned by the mortgagor, although title may be in another, the subsequent acquirement of such title by the mortgagor will inure to the benefit of the mortgagee acting in good faith, or his assignee, and the lien will attach to the property the moment title is acquired.

4. A valid agreement not to sue on a demand until the happening of a certain event will suspend the running of the statute of limitations during such intervening period.

5. In so far as this petition by a purchaser from a subsequent grantee of the mortgagor sought a decree that the mortgage if held valid, should be first enforced against those portions of the mortgaged land which were acquired by defendant purchasers and lienholders after the deed to the petitioner was recorded, and sought to adjust the equities of the defendants with respect to such mortgage, the provision in the mortgage that it could not be enforced during the life of the mortgagor's father who is still living, rendered such part of the petition premature, whether or not any such equitable right may later exist.

6. In so far as the petition sought damages against the grantor in the deed to the petitioner and against the persons who conveyed the land to such grantor, on account of the alleged breach of their warranties of title, the petition showed no cause of action, since there was no averment that the petitioner had paid off the outstanding incumbrance.

7. Questions raised by other prayers, such as those for reformation of a subsequent recorded security deed, executed by the petitioner's grantor to a third person, so as to exclude petitioner's land from the description in such deed, not having been decided by the trial court, and not determined.

8. Under the preceding rulings, the court did not err in sustaining the general demurrers of the defendant assignees of the mortgage, and in dismissing the petition as to them.

The petition of F. G. Thomas against J. B. Waddell, J. B. Hudson Grover F. Hudson, J. P. Bush, Mrs. Laura M. Bush, C. C. Duncan, and the First National Bank of Atlanta, as amended alleged as follows: The petitioner, by warranty deed from J. B. Waddell, dated February 12, 1937, filed for record on the same date, holds title to eight acres of land, as described, in DeKalb County. J. B. Hudson and Grover F Hudson, as the heirs and next of kin of F. P. Hudson, who died in 1930, hold the legal or equitable title to a mortgage and note under seal, dated September 1, 1917, from J. P. Bush to F. P. Hudson, for $607.32. This instrument provided that it was due twelve months after date, with eight per cent. interest from date, but also contained under the same date a provision signed by the mortgagee as follows: 'I hereby covenant and agree with the giver of this note not to sue or enforce the collection of this note during the life of his father and mother, and also to give 12 months after their deaths.' The mortgage note, signed by the mortgagor, contained this further provision: 'I hereby covenant that I have the right to make this mortgage.' While the mother of the mortgagor has died, the father is still in life. The mortgage covered twenty-four acres of land, containing petitioner's eight acres. While it was filed for record on December 16, 1929, and recorded on December 19, 1929, it was not indexed and recorded in any book which indicated that it affected the title to realty, in that it was recorded in a chattel-mortgage book and indexed in a book relating to chattel mortgages. It had been the custom of the clerk of the superior court for a long number of years, known and relied upon by the public, to keep a system of books in which deeds, liens, and instruments affecting the title to realty were recorded, with a system of indexed books of grantors and grantees of such instruments, separate and distinct from a set of books for recording chattel mortgages and an index of such mortgagors and mortgagees, the wording of the index to realty deeds, and mortgages being in substance, 'Index to Deeds & Mortgages,' and the index to the chattel mortgage books being 'Filing Docket & General Index to Mortgages.' Before buying his eight acres from Waddell on February 12, 1937, petitioner caused an attorney to search the records as to the record title; and a careful search of the books where instruments affecting realty has been recorded according to the long prevailing system of the clerk's office failing to show any outstanding lien, petitioner purchased his property in good faith, without notice; and by reason of said defective record petitioner's title is superior to said mortgage. On February 22, 1937, ten days after petitioner's purchase, a proper entry as to said mortgage was made on the index book of deeds and mortgages affecting real estate.

The petition attacked the mortgage on the further grounds: That J. B. Hudson and Grover F. Hudson never recorded any assignment of the mortgage to them; that at the time J. P. Bush executed the mortgage in 1917, the title to the land was not in him but in his mother, who did not die until some time before 1930, and whose executor in that year executed a deed of the property to him, and therefore the mortgage was void as covering a mere possibility; and that the legal effect of the provision making the mortgage due twelve months after date, September 1, 1917, and of the mortgagee's covenant not to sue during the lives of the mortgagor's father and mother 'and also to give twelve months after their deaths,' the father being still in life, was to render the instrument barred by the statute of limitations, since more than twenty years have elapsed from the due date of the instrument.

The petition further alleged: In 1931, J. P. Bush and Laura M. Bush conveyed to C. C. Duncan a triangular tract which was a part of the twenty-four acres covered by the mortgage, but it is not a part of petition's eight acres. By a recorded warranty deed, dated January 22, 1937, J. P. Bush conveyed to J. B. Waddell title to the twenty-four acres, excepting only the tract previously conveyed to Duncan. After the warranty deed from Waddell to petitioner, covering eight acres, had been filed for record on February 12, 1937, and after a proper entry of the mortgage had been made on February 22, 1937, on the clerk's index of mortgages affecting realty, Waddell executed to the First National Bank of Atlanta a security deed for $918.03, dated April 14, 1937, and recorded April 17, 1937, which remains unsatisfied, and which purports to cover twenty-two acres of the land conveyed by Bush, without excepting the eight acres previously conveyed to petitioner. He cannot obtain a merchantable title to the eight acres until the 1917 mortgage to Hudson is canceled of record as invalid. Petitioner has unsuccessfully demanded of his grantor and warrantor, Waddell, that he clear the title to such property. In the event such mortgage should be held to be a valid lien, all persons interested in the land affected by the mortgage have been made parties to the petition, and the priorities and liabilities of all parties to the suit should be fixed by a decree. If the mortgage is valid, and the amount necessary to discharge it cannot be made out of the land remaining in Waddell after his conveyance of the eight acres to petitioner, then Waddell, J. P. Bush, and Laura M. Bush, as warrantors of the title, are liable to petitioner 'for any excess necessary to discharge said claim, together with costs' and a reasonable attorney's fee. If the property purchased by C. C. Duncan is also subject to said mortgage as valid, his rights and liabilities should be fixed in this suit; and if said mortgage is valid, 'it should be first set up and enforced against the property which remained in Waddell after the part thereof deeded to petitioner, and especially so without reference to any sum owed to [said] Bank;' and 'since said bank is not entitled to any conveyance covering any part of the property purchased by this petitioner, said bank's * * * security deed should be reformed to speak the truth and except your petitioner's land.' The prayers were: That the mortgage to Hudson be decreed null and void, and be canceled; that if it cannot be canceled, the remaining property of Waddell, on which the bank holds a security deed, be first subjected to the satisfaction of the mortgage; that as between the petitioner and the defendant, Duncan, the court adjust their rights and equities as may be reasonable and proper; that petitioner recover a reasonable attorney's fee; that in all events he recover a judgment against the defendants, Waddell, J. P. Bush, and Mrs. Laura M. Bush, as prior warrantors, of the title, for all damage, attorney's fees, and costs; and that he have such other and further relief as may seem just and proper.

Only the defendants, J. B. Hudson, Grover F. Hudson, and the First National Bank of Atlanta, filed...