Georgia Securities Co. v. Prim , 191 Ga. 267 ( 1940 )

1. "A discharge in bankruptcy under the act of 1898, as amended, does not affect the lien of a general judgment nor the lien of a mortgage obtained more than four months prior to the filing of the petition in bankruptcy, relatively to property set apart as exempt under the bankrupt's claim of homestead exemption, although holders of such liens may have proved their claims in bankruptcy." McBride v. Gibbs, 148 Ga. 380 (96 S.E. 1004).

(a) By analogy such a discharge in bankruptcy does not affect the lien of a general judgment obtained more than four months before the filing of the petition in bankruptcy, relatively to property then owned by the bankrupt, which was not set apart as exempt, but which, after withdrawal by the bankrupt of claim for exemption and dismissal of a claim of lien by the plaintiff as not having been filed within six months from the adjudication in bankruptcy, is by order of the referee in bankruptcy surrendered to the bankrupt as property not administered for the benefit of creditors.

2. The lien of such previous general judgment on which execution has been duly issued and entered on the general execution docket applies alike to all present property of the bankrupt. Accordingly where, before the judgment, the defendant had conveyed described realty, thus vesting legal title in the grantee as security for a loan, retaining the right to pay the debt and redeem the land, commonly called equity of redemption (Williams v. Foy Mfg. Co., 111 Ga. 856, 36 S.E. 927; Beckcom v. Small, 152 Ga. 149, 102 S.E. 542; Citizens Bank of Moultrie v. Taylor, 155 Ga. 416, 117 S.E. 247; Smith v. Farmers Bank of Glenwood, 165 Ga. 470, 141 S.E. 203; Sims v. Etheridge, 169 Ga. 400 (5), 150 S.E. 647), and after surrender of the property to the defendant as a bankrupt, and his discharge in bankruptcy, the land on payment by the plaintiff of the balance of the secured debt, in order to revest title in defendant for the purpose of levy and sale as provided in the Code, § 67-1501, is reconveyed to the grantor by the executors of the grantee since deceased, and such deed of reconveyance is recorded, such reconveyance revests legal title to the land in the defendant, subject to the lien of the general judgment and to levy and sale under the execution. The principle was applied in O'Connor v. Georgia Railroad Bank, 121 Ga. 88 (48 S.E. 716); Sloan v. Loftis, 157 Ga. 93 (120 S.E. 781); Kidd v. Kidd, 158 Ga. 546 (124 S.E. 45, 36 A.L.R. 798).

(a) The rulings in this and the preceding division are applicable and controlling in the instant case.

(b) A different ruling is not required by the decision in Sosnowski v. Rape, 69 Ga. 548, and cit., decided before the act of 1894 (Ga. L. 1894, p. 100 (Code, § 67-1501).

3. The second special ground of the motion for a new trial was not approved by the trial judge.

4. In so far as any of the remaining special grounds of the motion are sufficient to present any question for decision, they are without merit.

5. The evidence demanded the directed verdict declaring the property subject to the execution levied. The judge erred in granting a new trial.

Judgment reversed. All the Justicesconcur.

No. 13408. NOVEMBER 29, 1940. E. V. Arnold, owner of described realty, conveyed it to Mrs. S.E. Maxwell, as security for a loan, and the deed was duly recorded. While the legal title was thus outstanding, the Georgia Securities Company obtained a general judgment for a stated amount against E. V. Arnold, upon which execution was issued and duly entered on the general execution docket, and was levied on the land as property of Arnold. Before interposition of a claim by Mrs. Maxwell, Arnold filed a voluntary petition in bankruptcy, in which he listed the land as part of his assets, and Mrs. Maxwell as a secured creditor. Eight months thereafter, by amendment allowed over objection raised by special appearance, he for the first time listed the Georgia Securities Company as a creditor. One month later the Georgia Securities Company presented to the referee in bankruptcy a petition to establish in bankruptcy its general judgment as a special lien on the land, and a general lien upon all property of the bankrupt. To this petition the trustee in bankruptcy interposed objections on the grounds, that "said claim was not presented within six months after adjudication as required by statute," and that the lien was an incident to the debt, for which the petitioner had elected not to enter the jurisdiction of the court of bankruptcy and claim benefits thereunder within six months after adjudication. More than two years thereafter the referee in bankruptcy passed an order sustaining the trustee's objections and disallowing the claim. The order also recited, that, "the bankrupt having withdrawn his claim for homestead or exemption" and "it appearing that no creditors proved claims in this case, it is ordered that all assets be delivered to the bankrupt upon payment of all costs in the bankruptcy court," and the taxes which had accrued since beginning of the year. Several months thereafter the Georgia Securities Company paid to the executors of the estate of Mrs. Maxwell, deceased, the balance due on the security deed, and caused the land to be reconveyed by quitclaim deed to Arnold, which was duly recorded for the purpose of levy and sale under the above mentioned execution. The execution was again levied upon the land as property of Arnold, the former levy having been previously dismissed without prejudice. To the last levy Warren W. Prim interposed a claim. On trial of the claim case a verdict was directed, declaring the property subject. On motion by the claimant, based on general and special grounds, a new trial was granted. The Georgia Securities Company excepted.