Carmichael v. Citizens & Southern Bank , 162 Ga. 735 ( 1926 )

Atkinson, J.

The rulings announced in headnotes one to seven inclusive, and headnote nine, do not require elaboration.

In this case the claim of the cestui que trust as a tenant in common for her share of “rents and profits” and “waste” against her cotenant, who was also her trustee, comes in competition with a security deed covering the individual undivided interest of her cotenant, executed by him under the provisions of the Civil Code (1910), § 3306, to a bank to secure his individual indorsement upon a note for money loaned by the bank. There is a question as to priority between such claim of the cestui que trust upon the undivided share of her said cotenant and the security deed held by the bank to the same undivided share in the common property as security for the individual liability of said cotenant. In deciding this question the right to an accounting as between the two cotenants may be conceded. As to this see Shiels v. Stark, 14 Ga. 429, a case between cotenants not involving third persons, decided in 1854; Huff v. McDonald, 22 Ga. 131 (68 Am. D. 487), also a case between tenants in common and not involving third persons, and decided in 1857; Civil Code (1910), § 3724, which first appeared in the Code of 1863, § 2283, and was formally adopted by the legislature and became binding as a statute. But conceding the right to such accounting as against the eotenant, how would it affect a third person who had loaned money and received a security deed from the cotenant? The case of Hines v. Munnerlyn, 57 Ga. 32, 35, 36, decided in 1876, involved competition between a claim of a tenant for profits against his cotenant who had taken exclusive use of the common estate, and a mortgage executed by such cotenant upon the entire estate as security for his individual debt. In that ease it was said: “Another of the questions made here was whether the complainants, as tenants in common, were entitled to have a decree out of the corpus of the property, on a partition, for the exclusive use thereof by Munnerlyn, their coten.ant, since the death of their grandmother. On the part of the defendants it was insisted that the exclusive use of the joint property by Munnerlyn, the cotenant, only created a debt in favor of the complainants as against him, and that that debt created no lien upon the joint property, or upon Munnerlyn’s half of it. Whilst it may be true that the complainants have not strictly a legal lien upon the corpus of the joint property, or upon their cotenant’s half of it for what he may be indebted to them for the exclusive use of the joint property, still the complainants have a clear equitable right, on a bill filed for partition and account against their co-tenant, to have his share of the joint property charged with such indebtedness in the decree for partition, the more especially when their cotenant is insolvent, as in this case: 1 Story’s Equity Jurisprudence, sections 654, 655; Code section 3185 [Civil Code 1910, § 5357].”

Subsequently to renditiez. of this decis’O? the Code of 1895 was compiled and formally adopted by the legislature, and its provisions as to new matter, so far as constitutional, became binding as a statute. Central of Georgia Railway Co. v. State, 104 Ga. 831 (5) (31 S. E. 531). It contained the following new matter which now appears in the Civil Code of 1910, § 3727: “If one tenant in common receives more than his share of the rents and profits, he is liable therefor as agent or bailiff of the other cotenant; and in equity the claim for such indebtedness is superior to liens placed on his interest by the tenant in possession receiving the profits.” A marginal note in the Code of 1895 cites the three above-mentioned decisions as the source from which the section was compiled. As will be noted, the case of Hines v. Munnerlyn, supra, involved a mortgage on realty, which under the laws of this State creates only a lien. Civil Code (1910), § 3256. In adopting the code section above quoted, the term “mortgage” was not used, but “lien” was used in describing the subject of which the cotenant’s “claim” for “rents and profits” should be superior. The term“lien” would include a mortgage, because the office of a mortgage is only to create alien (Civil Code (1910) § 3256), and that is the kind of lien that was involved in the case of Hines v. Munnerlyn — a technical lien at law, — but it is not sufficiently broad to comprehend a conveyance of title to realty. No language in said section of the code is sufficient to extend to any such conveyance. There were ample reasons why the language of the statute should have restricted the subject to technical “liens” and should not have extended its provisions to conveyances of title unconditionally or as security for a debt. In the first place, it was known at the time of the adoption of the code section there were existing statutes providing for conveyance of legal title as security for a debt, which expressly declared that such conveyances “shall pass the title . . till the debt . . shall be fully paid, and shall be held by the courts of this State to be an absolute conveyance, . . and not a mortgage” (Civil Code (1910), § 3306); also that there were statutory provisions for mortgages, and that 'mortgages do not pass title but only create liens (§ 3256); and that vastly different rights arise under application of the two forms of security. It is not to be supposed, in the absence of express language requiring it, that the legislature in adopting the said section in the Code of 1895 intended to uproot or unsettle the previous legislation, or change results that would follow from application of the different forms of security. It must also have been in the mind of the legislature that in Pope v. Tift, 69 Ga. 741, a case where a widow, being a tenant in common with her minor child, had mortgaged the whole property and on foreclosure of the mortgage the property had been sold, this court decided in 1882 that the sale conveyed the interest of the widow but not that of the child, and that “the child did not have any equitable claim on the interest of the widow, on account of imprudent management of the rest of the estate, superior to -the title of the purchasers under the mortgage fi; fa.”

If the claim of a tenant against the undivided interest of his cotenant, as referred to in § 3727 of the Civil Code of 1910, should be superior to a conveyance of legal title as security for a debt or to an absolute conveyance of the separate interest of the cotenant, there is no provision of law for record notice of such claim, and the tenant could have unascertainable secret equities as against the interest of the cotenant, which condition would greatly injure tenants in common by impairing the market value of their interests, because of the apprehension on the part of persons contemplating the purchase of such interests, or otherwise dealing 'with them, that claims for rents might be established as superior liens. A fair construction of the code § 3727 is that the “lien” there referred to had reference to a technical lien at law, of which kind was the mortgage that was the subject of consideration in the case of Hines v. Munnerlyn, supra, and upon which the code section was in part predicated; also that it was not intended to include absolute conveyances of legal title to secure debt or for any other purpose. No reference has been'made to decisions in other jurisdictions,-because the case is governed by local statutes and application of principles recognized by this court, but the decision that the claim of the tenant for rents and profits against the individual share of the co-tenant in the common property is not superior to the rights of a third person under -a security deed from the cotenant is in harmony with the weight of authority in other jurisdictions. As to this see 7 R. C. L. p. 836, § 32, under the head Co-tenant; and elaborate note to the ease of Airington v. Airington, 27 A. L. R. 182. The recent case of Bank of Eton v. Owens, 146 Ga. 464 (3) (91 S. E. 476), involved a competition between an equitable claim of a tenant and a mortgage executed by his cotenant on the common property; and the ruling there made does not conflict with what has been said above.

Judgment affirmed.

All the Justices concur, except Gilbert, J., disqualified.