Adams v. Blalock , 1926 Ga. LEXIS 76 ( 1926 )

Beck, P. J.

(After stating the foregoing facts.) We are of the opinion that the court did not err in appointing a receiver. Under the evidence introduced at the trial, the court was authorized to find that the property in question, which Robert L. Adams had agreed to buy, was worth the sum of $12,500, and that the amount which he was to pay monthly was not more than the fair rental value of the property. We are of the opinion, however, that the contract created the relation of vendor and purchaser between the petitioner and Robert L. Adams. Nevertheless, where the amounts of the purchase-money to be paid monthly were no greater than the rental value of the property, and the defendant was far in arrears in the payment of this rent, and the insurance and taxes and assessments upon the property under municipal ordinances, the rights of the vendor in this case would not be protected except by the intervention of a court of equity and the application of the remedy which the court saw fit to apply under the evidence. It has been well said that “Receivers are not appointed as a matter of right, but to preserve rights.” And in such matters as these, courts of equity find directions as to caution, etc., in the Code. “The power of appointing receivers and ordering injunctions should be prudently and cautiously exercised, and except in. clear and urgent cases should not be resorted to.” Civil Code, § 5477. These maxims should be kept in mind by judges exercising jurisdiction in equity. See Planters Oil Co. v. Carter, 140 Ga. 808 (79 S. E. 1120); Ray v. Carlisle, 125 Ga. 316 (54 S. E. 119); Lytle v. Scottish American Mortgage Co., 122 Ga. 458 (50 S. E. 402). In Tumlin v. Vanhorn, 77 Ga. 315 (3 S. E. 264), it was said: “Where a contract of sale contemplated only the holding of title by the vendor as security for the unpaid purchase-money, it was improper, on the hearing of an application for injunction and receiver, for the chancellor to require the defendant to give security for the forthcoming of the rent notes taken from his tenants and for the appropriation of the rents of the land to the payment of complainant’s debt. The power of appointing receivers and ordering injunctions should be prudently and cautiously exercised, and except in clear and urgent cases should not be resorted to. Especially is this so where the party invoking the interposition of a court of chancery has a plain and adequate remedy at law by suit, garnishment and levy for the protection and enforcement of the rights reserved to him under the contract.” And the maxim that courts of equity should be prudent and cautious in the exercise of the power of appointing receivers and ordering injunctions is also, in this case, repeated and emphasized.

But what have we here ? The defendants are in possession of a house and lot worth more than $12,000. The rental value of it is, as the chancellor was authorized to find, $100 per month. The purchase-money note payable monthly for five or six years was only equal to the rental value per month, as the court was authorized to find under the evidence. The defendant was insolvent, had no property in Georgia; and if he is allowed to default in the payment of these notes, the petitioner will necessarily suffer, unless a receiver be appointed who can rent the property and collect the rent. But .the defendant insists that this would fnot entitle the petitioner to the appointment of a receiver, inasmuch as he was not less solvent than he was at the time of the purchase. The court was authorized to take a different view of this. He had allowed the installments which he was to make upon the purchase-price to accumulate without paying the same. He had not even paid the note for $450, according to the plaintiff’s testimony, which he alleged he had made as a payment on the property. The City of Atlanta had made an assessment of $522 for street improvements, which was a' charge against this property after the sale of the same to Eobert L. Adams. He had not paid the State and county and municipal taxes, $122. The petitioner in order to protect his property was compelled to pay these assessments and taxes, and in addition thereto to carry the insurance which the defendant had agreed to carry. According to the defendant’s own testimony, he made a tender, after the notice was served upon him, of the amount due on the notes, but did not tender the $600 or $700 which it was his equitable duty to pay for the assessments, taxes, and insurance. The clear, indisputable rights of the petitioner were in jeopardy. A court of equity will not compel a suitor under these circumstances, in order to protect his property, to bear the burden which an insolvent purchaser has agreed to bear and which in equity and good conscience he ought to bear. The defendants say in their answer that Eobert L. Adams “made considerable improvements on the property, including the construction of five garages and 100 feet of fencing.” The plaintiff’s evidence was to the effect’ that the cost of these improvements did not amount to more than two or three months rent; and the court had a right to give credit to that evidence.

But the defendants further set up this defense: “Defendant Eobert L. Adams ceased making said monthly payments upon plaintiff’s failure and refusal to comply with his agreement to place a $5,000 loan on said property. Defendant stands ready and willing to carry out his part of the contract when plaintiff shows willingness to comply with his obligations thereunder.” By this part of the answer the defendant rests his right and refusal to make the monthly payments as they fell due “upon plaintiff’s failure and refusal to comply with his agreement to place a $5,000 loan on said property.” This defense is without merit. There is a clause in the contract, rather ambiguous if we merely consider the wording of it, to this effect: “Said contract being made subject to a straight loan of $5,000.00.” But when considered in connection with the balance of the contract and the evidence in the case, it is dear that these words were intended to reserve to the vendor the right to borrow $5,000 as a loan on the house and lot in question, for his own benefit if he saw proper to do so. There is not a word in the contract to indicate that Eobert L. Adams was to get any part of this $5,000. It merely gave to Blalock, the privilege of borrowing the $5,000, securing it by a mortgage on the premises, and that when this was done the mortgage should be a charge on the land, and that Adams would carry this as he carried the balance of the debt for the purchase-money. This loan, if it was made, was to be made on March 1, 1935, and due March 1, 1930, as the contract stipulates, interest at six per cent, thereon payable semiannually. It will be remembered that this contract was made on February 30, 1935. The loan contemplated was to be dated March 1, 1935, and due after a term of five years. There is no word in the contract that imports a duty on the part of the vendor to make this loan, unless the words, “This contract is made subject to a straight loan of $5,000.00,” import such a duty. And we do not think that it can be so construed. But even if it could be, the maturity of the notes was in no way subject to this; certainly not, if the purchaser continued to hold the house and lot under the contract. If the words, “This contract is made subject to a straight loan,” etc., were a condition intended for the benefit of the purchaser, then, when he had paid the amount represented by the notes, he might have (and we do not rule that question now) the right to resist further payments until the loan was made.

It will be observed that under the order to which exception is taken the plaintiff in error is allowed to retain possession ,of the premises upon payment of the amounts due and with which he is chargeable up to the day of the order, and his continuing to pay the amounts agreed to be paid monthly. We conclude, from a consideration of the facts stated above and the evidence as introduced, that the court was authorized to find that under the express terms of the contract the plaintiff was entitled to recover possession of the premises; and therefore, that the court did not err in granting the qualified order naming a receiver. In addition to the prayer for possession of the property, there is a prayer for rescission;.but there is no allegation in the petition that the plaintiff had offered to return the notes given for future payments of the purchase money; and without such an allegation the petitioner would not be entitled to rescission. And upon final trial he will not be entitled to rescission unless there is an allegation of a tender of the notes given prior to the bringing of the suit; but failure to make allegations which would entitle him to rescission would not preclude his right to recover possession in accordance with the express stipulations in the contract.

Judgment affirmed.

All the Justices concur.