Rembert v. Ellis , 195 Ga. 807 ( 1943 )

Where the transferee of a note secured by a deed forecloses thereon in equity, and makes the receiver of the insolvent assignor a party, and the receiver raises no question as to a partly erroneous description of the property in the petition and proceedings, but acknowledges service of a petition and rule nisi to confirm the sale of the property, as correctly advertised, sold, and described in the petition for confirmation, and the sale is thus confirmed with a correct deed to the purchaser, one who subsequently buys another note secured by the same deed is bound by such foreclosure. He can not maintain on his note a second foreclosure on the theory that the first proceeding was void because the pleadings and procedure therein contained the partly erroneous description of the property. Accordingly, the judge properly found for the defendants on their pleas of res judicata and estoppel.

No. 14423. APRIL 14, 1943. REHEARING DENIED MAY 8, 1943. The transferee of two notes for $250 each, secured by a deed to property described as lot 18, block 7, Peachtree Hills Place, known as 204 Fairhaven Circle, in Fulton County, brought an equitable foreclosure. Previously, a finance corporation, as transferee of a note for $2000 secured by the same deed, had brought an equitable foreclosure in the same court. The petition in the first foreclosure correctly described the lot as 18 in block 7, 204 Fairhaven Circle; but it subsequently referred to a page in a deed book on which a similar security deed to lot 17, block 7, known as 206 Fairhaven Circle, was recorded, and to an Exhibit B, attached to the petition, which erroneously referred to lot 17, 206 Fairhaven Circle. The verdict and decree partly correctly and partly erroneously followed the same description as in the petition. The commissioner, in his advertisement and sale of the land for $500 under the decree, and in his petition to the court to confirm the sale, and in his deed to the purchaser after an order of confirmation, correctly described the lot. The receiver of the insolvent grantee corporation, under which the present plaintiff claims, was a party to the foreclosure of the $2000 note. On the commissioner's petition for confirmation and the order to show cause why the sale, correctly describing the lot, should not be confirmed, the receiver of plaintiff's assignor made a written acknowledgment of service and waived "any and all other further service and notice." After this acknowledgment and waiver, and after confirmation of the sale of the property, as correctly described, the present plaintiff bought from receivers in another State his two $250 notes, which had been appraised there as worthless, for $12.50. Subsequently to all this, the plaintiff in the previous foreclosure proceedings made an ex parte amendment, correcting the inaccurate descriptions of the lot in its proceedings by inserting the correct lot number where it had been erroneously stated. On a trial of the present foreclosure, on the $250 notes, in which the present plaintiff contended that the previous foreclosure and amendment were void and ineffective, the purchasers at the sale in the previous foreclosure filed pleas of res judicata and of estoppel. Under the agreed and undisputed facts, the judge found against the present plaintiff. Although a mortgage or deed may secure several notes, ordinarily there can be but one foreclosure; and where the holder of one of the notes forecloses, the rights of other holders are transferred to the fund realized from the foreclosure sale. Berrie v. Smith, 97 Ga. 782, 786 (25 S.E. 757); Smith v. Bowne, 60 Ga. 484, 485; Strickland v.Lowry National Bank, 140 Ga. 653 (5, d) (79 S.E. 539);Irons v. American National Bank, 178 Ga. 160, 180 (172 S.E. 629); Swift Co. v. First National Bank, 161 Ga. 543 (2), 547 (132 S.E. 99). In the absence of a special contract, where a mortgagee or grantee in a security deed transfers one of the secured notes, and the transferee brings an equitable foreclosure thereon, the transferee will have priority over the mortgagee or grantee in the security deed, holding the untransferred notes, if the amount realized at the foreclosure sale is insufficient to pay all the notes. Code, § 14-1802;Crowder v. Dunbar, 74 Ga. 109, 111; Ottauquechee SavingsBank v. Elliott, 172 Ga. 656 (2) (158 S.E. 316); Roberts v. Mansfield, 32 Ga. 228; Georgia Realty Co. v. Bank ofCovington, 19 Ga. App. 219, 220, 223-229 (91 S.E. 267), and cit. Accordingly, where a foreclosure proceeding by the transferee of such a note has been completed, and the grantee in the security deed was a party to the proceeding, the decree and orders therein are res judicata as to any further rights of the grantee, or its transferees who may acquire title after such decree and orders.

Under these rules and the undisputed facts, the present plaintiff, as a subsequent transferee from the grantee of two $250 notes, was not entitled to maintain a second foreclosure. This is true since his purchase from the grantee was not made until the first transferee had completed the foreclosure on its $2000 note by a decree, a sale of the property for less than that amount, and a deed to the purchaser; and since the present plaintiff took no greater rights than the grantee had when the $250 notes were transferred. Before such transfer, the receiver of the grantee, as a party to the first foreclosure, had acknowledged service of the petition to confirm the first foreclosure sale and an order thereon to show cause why the sale should not be confirmed, in which petition the property was correctly described, and had waived all further service and notice, without questioning in any way the accuracy of descriptions of the property as made in the previous petition, verdict, or decree, or the procedure thereunder. Accordingly, the present plaintiff, as a privy of the grantee and its receiver, was bound by these acts of the receiver; and the judge did not err in finding against the plaintiff on the pleas of res judicata and estoppel filed by the defendants.

Judgment affirmed. All the Justices concur.