Brunswick Savings & Trust Co. v. National Bank of Brunswick , 102 Ga. 776 ( 1898 )

Lewis, J.

1. In some of the States any senior liens are unaffected by a sale under a junior judgment, and remain enforceable as before. In other States an execution sale transfers the title regardless of both junior and senior liens; their holders being relegated to proceedings for distribution of the proceeds in the sheriff’s hands. 22 Am. & Eng. Ene. L. (1st ed.) 637-639. Before this court was established, it had been the prevailing practice and the law of our courts for years, that the lien of a judgment no longer attaches to property after it is sold by the sheriff under a junior judgment, and that the remedy of the creditor is to claim the fund. In the case of Harrison v. McHenry, 9 Ga. 164, the soundness of this doctrine ivas questioned. In the opinion delivered in that case by Judge Nisbet, on page 171, he says: “But this is not an open question here. The decision of the judge in this case has been the law of our courts for j'-ears. Under that law the title to a vast amount of property has passed. The legislature has acquiesced in it. When a statute has by a long series of decisions received a construction which the people have acted upon, and in which the legislature has acquiesced, we do not feel at liberty, not feeling it to be an imperious obligation, to disturb that construction, more especially in cases where, as in this, serious injury would result to citizens who have rights originating under that construction. We leave the error for the consideration of the legislature. We recollect no instance in this State in which the rule has been settled different from the decision in this case.” '

We are inclined to the conviction that the rule above laid down is founded upon sound reason, and upon wise considerations of public policy. It certainly is to the interest of both the debtor and the creditor that when the debtor’s property is. exposed to sale for the purpose of satisfying his debts, it should be placed upon the market in such a way as to bring as much as possible. If the property should be' exposed to an execution sale with the idea prevailing in the public mind that it. might at any time again be. seized.under older judgments, this would necessarily have the effect of deterring bidders from incurring, the risk of giving anything, like the full value of the property. On the other hand, if it was understood that such sale divested all older judgment liens, and that -the purchaser would not have to look after either - the appropriation of the fund or. the extinguishment -of such liens, the title to the property thus acquired would be safer, and bidding would be freer and more liberal. Indeed this rule seems to be in accordance with the spirit of our law upon the "subject of protecting innocent purchasers at judicial sales. Section 5449 of the Civil Code declares that the purchaser must look for himself as to the title and soundness of all property sold under judicial process. Section 5454 declares, that the purchaser at judicial sales is not bound to look to the appropriation of the proceeds of the sale, nor to the returns made- -by the. officer. The innocent purchaser is bound onlyf to see that the officer has competent, authority to sell, and that he is apparently proceeding to sell under prescribed forms. If such senior liens were unaffected by a sale under junior judgments, it would render more or less uncertain all title to property thus acquired, and would materially add to litigations touching the purchaser’s title and the encumbrance on the land bought at sheriff’s sales. It would also-place it in the power of a judgment creditor to hold open his judgment and postpone junior judgment creditors indefinitely. But it is not necessary to inquire whether the doctrine laid down in this case is sound in reason. This court has uniformly held to the ruling in Harrison v. McHenry whenever the question has been made. See Dowdell v. Neal, 10 Ga. 148; Tarver v. Ellison, 57 Ga. 57. For over fifty years has the legislature acquiesced in this construction of the law. Title to property has been acquired under it, and it would be difficult to imagine a case where the principle of stare decisis could be invoked with more force and reason than in this instance.

But it is urged by the counsel for the defendant in error, that the above rule is not applicable to a sale under a junior mortgage fi. fa. It is true that the lien of a mortgage arises by contract; but a lien thus acquired differs from the imposed lien arising upon the rendition of a general judgment only in that the former binds the particular property covered by the mortgage, while the latter binds all the property of the debtor. The principle involved is, that an execution sale divests the liens of all general judgments against the debtor. When the lien of a mortgage is sought to be enforced by a sale of the property under a foreclosure proceeding, such sale has the same effect, so far as the interest of the defendant in execution is concerned, as though it were brought about under a general judgment against him; and if in the latter case the effect of a sale under such a judgment, is to pass to the purchaser the title to the property sold, freed from the encumbrance of a senior general judgment, we know of no reason why a sale of the property covered by a mortgage under a mortgage execution should not have a like effect, and in both instances the holder of a senior judgment be remitted to claim the fund realized from such sale. Indeed all the reasons mentioned above why sales under judicial process should divest older liens from the property, and transfer them to the fund, apply with as much force to a mortgage execution as to any other sort of court process. It is true, if the mortgage remains unforeclosed, the sale under a junior judgment will not divest the lien of -the mortgage without the consent of the mortgagor, the mortgagee, and the plaintiff in fi. fa. See Civil Code, §2759. The reason for this is patent. In the first place, the mortgage creditor with an unforeclosed mortgage is not in a position to assert a claim to the fund. Generally, a creditor can not claim the proceeds of a sale, when he has not the power himself to enforce a sale. Again, the debtor has the right.under the law to insist upon .a foreclosure before his property can be seized to satisfy the mortgage, and has the privilege of redeeming the property at any time pending the proceedings to foreclose and to sell. Hence, the statute requires his consent, as well as the'mortgagee’s, before a sale can divest this special lien. But as to sales by mortgage execution under a judgment of foreclosure,- the statute seems to place the mortgage-creditor upon the same footing with any general judgment creditor. Section 2741 of the Civil Code -declares: “ Property mortgaged may be sold under other process, subject to the lien of the mortgage. If the mortgage is foreclosed, the mortgagee may place his execution in the hands of the officer of the law making the sale, and cause the title unencumbered to be sold, and claim the proceeds according to the date of his lien.” Section 2758 declares: “ If other fi. fas. are levied on the mortgaged property, and the same is sold, the mortgage fi. fa. may nevertheless claim the proceeds of the sale, if its lien is superior.”

If we are correct in the above conclusion, then it follows that there is no equity in the petition filed in the present case, in so far as it rested upon the allegation that the plaintiff was the holder of a senior general judgment, and that it was doubtful whether a sale under a mortgage foreclosure based upon a mortgage junior in point of dignity to the senior general execution would pass the title freed from the encumbrance of such senior execution. There was no reason why any person should have hesitated to bid upon the property offered for sale under the mortgage foreclosure, for such person would have been protected against the lien of the senior general judgment, and the holder of the latter would have been remitted to his right to claim the proceeds of the sale.

2. It is insisted, however, that inasmuch as the senior general execution had been enjoined upon the petition of the defendant in fi. fa., the execution based upon the mortgage foreclosure should likewise be enjoined until the rights of the general judgment creditor could he fully adjudicated. The record fails to disclose that the plaintiff in the mortgage execution had anything whatever to do with this injunction; and why it should deter him from proceeding to enforce his lien we are at a loss to determine. The fact that the injunction was operating only-against the general execution to prevent it from sel-Iin-g-the property levied upon-,- did not -prohibit the general execution from claiming the fund -arising- from the mortgage sale-; and even if it had gone to that extent, it would have been the duty of the superior court judge rather to have modified the injunction previously granted against the general execution, than to have drawn into that litigation the mortgagee in the present •case, who was in no way concerned in its result.

Upon the principles above announced, we conclude that the court erred in granting the injunction prayed for; and the judgment is accordingly

Reversed.

All the Justices concurring.