Williams v. General Finance Corp. of Atlanta
| Decision Date | 16 July 1958 |
| Docket Number | No. 37250,No. 2,37250,2 |
| Citation | 98 Ga.App. 31,104 S.E.2d 649 |
| Parties | T. V. WILLIAMS, Revenue Commissioner, v. GENERAL FINANCE CORPORATION OF ATLANTA, etc |
| Court | Georgia Court of Appeals |
Syllabus by the Court
1. The Act of 1953 (Ga.L.1953 Nov. Sess., p. 168 et seq.) had the effect of amending Code, §§ 92-5707, 92-5708 and 92-8444 so as to provide that the lien for ad valorem taxes representing an assessment upon property of the owner other than property specifically subject to the title and operation of a security deed should be subordinate in rank to the security instrument whether recorded or not, and that the lien for specific or occupation taxes should be subordinate to a recorded security deed unless the tax execution had been entered on the general execution docket in the superior court of the county where the property is located prior to the recordation of such deed.
2. An affidavit of illegality is a remedy which lies only in favor of a defendant in execution and may not be prosecuted by a third party claiming title to property upon which the execution naming another as the defendant in fi. fa., has been levied.
T. V. Williams as Revenue Commissioner assigns error on a ruling of the Superior Court of Fulton County sustaining an affidavit of illegality of General Finance Corporation of Atlanta to its levy of a tax fi. fa. on certain automobiles in the possession of the latter to satisfy sums due the State of Georgia by Spray-Welborn Motors, Inc., as sales taxes collected under the provisions of Code Ch. 92-34A. Spray-Welborn Motors deals in the purchase and sale of automobiles. Under its floor-planning agreement with General Finance Corporation, the latter lent it sums of money for the purchase of three 1957 model automobiles, taking notes and bills of sale to secure debt on May 20, June 25 and June 27, 1957. The security instruments were not recorded until January 10, 1958, and on February 3, 1958, General Finance Corporation foreclosed on the automobiles and bought them in. Between March and August, 1957, Spray-Welborn Motors became indebted to the State for sales taxes in the amount of $3,599.97. A tax fi. fa. was issued on November 20, 1957, and was recorded on November 26, 1957.
The Revenue Commissioner first sought to collect the amount due from the proceeds of the foreclosure sale by notice to the marshal of the Civil Court of Fulton County that a lien for taxes was claimed, but without depositing the liens with such marshal. On a subsequent money rule brought by General Finance Corporation on February 5, 1958, in which counsel for the State argued their claim, the court held (1) that the Revenue Commissioner was not properly in court nor a party to the cause, and (2) that General Finance Corporation was entitled to priority in the distribution of the fund. No appeal was taken. The State then levied upon the automobiles which had been bought in by General Finance Corporation at the foreclosure sale. The latter filed an affidavit of illegality, which was traversed; the case was by agreement heard and decided by the court under a stipulation of fact as set out above, and a judgment was entered vacating the levy.
Eugene Cook, Atty. Gen., Ben F. Johnson, Jr., Hugh Gibert, Deputy Asst. Attys. Gen., for plaintiff in error.
Smith, Swift, Currie & McGhee, Atlanta, for defendant in error.
1. The act of 1953 (Ga.L.1953, Nov. Sess., p. 168) amended three Code sections by making new provisions relating to the respective priorities of tax liens and security deeds. The pertinent portions thereof are here set out, the italicized portions being those added by amendment: Code, § 92-5707. 'Taxes shall be paid before any other debt, lien or claim whatsoever and the property returned or held at the time of returning them, or thereafter, shall always be subject, except the title and operation of a security deed shall be superior to the taxes assessed against the owner of property when such tax represents an assessment upon property of such owner other than that property specifically subject to the title and opeation of the security deed.' § 92-5708. 'Liens for taxes, whether ad valorem, specific, or occupation, due the State, any county thereof, or municipal corporations therein, shall cover the property of taxpayers liable to tax, from the time fixed by law for valuation of the same in each year until such taxes are paid * * * Such liens for taxes are hereby declared superior to all other liens, except that the title and operation of a security deed shall be superior to the lien for taxes assessed against the owner of property when such lien for taxes represents an assessment upon property of such owner other than that property specifically covered by the title and operation of the security deed * * *' § 92-8444. 'Liens for taxes, whether ad valorem, specific, or occupation, due the State, any county thereof, of municipal corporation therein, shall cover the property of taxpayers liable to tax, from the time fixed by law for valuation of the same in each year until such taxes are paid * * * Such liens for taxes are superior to all other liens * * * Provided further, that the lien for any ad valorem tax shall not be superior to the title, and operation of a security deed when such tax represents an assessment upon property of such taxpayer other than that property specifically covered by the title and operation of a security deed, and that lien of a specific or occupation tax shall not be superior to the title and operation of a security deed title recorded prior to the time the execution for such tax shall have been entered on the general execution docket in the office of the superior court of the county in which the property affected is located.'
(a) A failure to record a bill of sale to secure debt has the same result as a failure to record a security deed or a deed of bargain and sale. Code, §§ 67-1305 and 29-401. Under general law, failure to record a security deed does not cause it to lose priority over a subsequent lien created by operation of law as to which it would otherwise be superior. Mackler v....
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