Georgia Baptist Orphans Home Inc. v. Moon , 192 Ga. 81 ( 1941 )

1. "Before one who has given a deed to secure his debt can have set aside in equity a sale by the creditor in exercise of the power conferred by the deed, and injunction to prevent interference with the debtor's possession of the property conveyed by the deed, he must pay or tender to the creditor the amount of principal and interest due."

2. While the facts in the present case are different from those in the case cited, they are yet of such nature as to make the principle ruled therein applicable. Other cases distinguished.

3. The court did not err in sustaining the general demurrers and dismissing the action as to the demurrants.

No. 13578. APRIL 15, 1941. REHEARING DENIED MAY 16, 1941. The exception is to the sustaining of general demurrers to the petition. The plaintiffs were Georgia Baptist Orphans Home Inc., and Mrs. Alma Irene Makison individually and as coexecutrix of the will of Mrs. Annie Brownlee. The defendants were J. W. Weaver, E. W. Moon, Mrs. Victoria Barnes, and American Savings Bank, a corporation. Each of the defendants, except Weaver, filed a general demurrer. The following is a statement of the substantial allegations of the petition as amended:

Mrs. Annie Brownlee died testate in 1939. Her will was probated in common form in 1940, and Mrs. Alma Irene Makison, one of the plaintiffs, and J. W. Weaver, one of the defendants, were named in the will as executors, and qualified. Under the terms of the will, Mrs. Makison was left a life-estate in one described tract of land, and another person was left a life-estate in two other tracts. The remainder interest in all three tracts was devised to Georgia Baptist Orphans Home Inc. Mrs. Brownlee died seized of the property, against which there existed a deed to Miss Carrie Farr, with power of sale, to secure an indebtedness to her, which amounted to $595 on February 29, 1940. On that date the defendants Weaver and Moon induced Miss Farr to sell and transfer to Moon the note and the security deed, together with all interest of Miss Farr in the property described in such deed. Moon advertised the property under the power of sale in the security deed, and exposed it for sale on April 2, 1940, at which sale only two bids were made, one by Moon for $775 and one by Mrs. Victoria Barnes for $776. The property was knocked off to Mrs. Barnes, and deed to her was executed under the power. On April 3, 1940, Mrs. Barnes executed to the American Savings Bank a security deed conveying the same property to secure a loan of $1250.

The plaintiffs alleged, that the transfer of the security deed to E. W. Moon, the purchase at the foreclosure sale by Mrs. Barnes, and the borrowing of $1250 from the American Savings Bank, and execution by Mrs. Barnes of a security deed conveying said property were the result of a scheme or conspiracy on the part of Weaver, Moon, and Mrs. Barnes for the purpose of acquiring all assets of the estate of Mrs. Brownlee to the benefit of themselves and the detriment of the legatees under the will and creditors of the estate, it being alleged that there were debts of the estate unpaid. Mrs. Makison and Weaver were coexecutors of the estate of Mrs. Brownlee. Mrs. Makison was wholly unfamiliar with legal procedure in the administration of estates, and in all matters depended on her coexecutor for counsel and guidance, he being an attorney at law. Mrs. Makison knew nothing of the advertisement of the sale until the afternoon of Tuesday, April 2, 1940, the day the property was sold. Other allegations were made for the purpose of showing fraud and irregularity in the sale, and action on the part of Weaver to prevent this plaintiff from knowing of the sale until just before it occurred, all as part of a scheme or conspiracy entered into by Weaver, Moon, and Mrs. Barnes for the purpose of cheating and defrauding the estate of Mrs. Brownlee of all its assets by selling this property at an inadequate price and having the same bid in by one of their number; it being alleged in effect that the property was worth several times the amount for which it was sold. The many allegations made for the purpose of showing such fraud and conspiracy, and the part which each of the three alleged conspirators played, need not be stated in detail. Still other allegations were made with a view of showing notice to the American Savings Bank, before it made the loan to Mrs. Barnes. The plaintiffs prayed that the sale of the property under the power of sale be declared void; that the deed to Mrs. Barnes and the security deed from her to the American Savings Bank be canceled; that Weaver be removed as coexecutor of the estate of Mrs. Brownlee; that the defendants be enjoined from interfering with Mrs. Makison in her possession and enjoyment of the property of which she was in possession as life-tenant; and for general relief. "Before one who has given a deed to secure his debt can have set aside in equity a sale by the creditor in exercise of the power conferred by the deed, and injunction to prevent interference with the debtor's possession of the property conveyed by the deed, he must pay or tender to the creditor the amount of principal and interest due." Biggers v. HomeBuilding Loan Association, 179 Ga. 429 (176 S.E. 38). While the facts of the present case are different from those in the case cited, they are yet of such nature as to make applicable the principle ruled therein. To the same effect, see Latimer v.Lyon, 177 Ga. 888 (171 S.E. 562); Guardian Life InsuranceCo. v. Collins, 179 Ga. 444 (176 S.E. 39); Smith v.Bukofzer, 180 Ga. 209 (178 S.E. 641); Redwine v.Frizzell, 184 Ga. 230, 237 (190 S.E. 789); Harton v.Federal Land Bank, 187 Ga. 700 (2 S.E.2d 62). The present case differs from Forbes v. Hall, 102 Ga. 47 (28 S.E. 915, 66 Am. St. Rep. 152), where two separate tracts of land were levied on and sold in bulk, for the grossly inadequate sum of $25, the property being of the aggregate value of $1400, which was nearly twenty times the amount of the fi. fa. It was held in that case that the sale was void and conveyed no title to the purchaser, and that a tender was unnecessary. That case was distinguished in Durham v. Smith, 186 Ga. 565 (198 S.E. 734). The case of Benedict v. Gammon Theological Seminary,122 Ga. 412 (50 S.E. 162), is also materially different. In that case the grantee in a security deed obtained a judgment against the borrower for the amount of the debt, and had the execution levied on the land conveyed by the security deed, without first reconveying the land and having such deed of reconveyance recorded as required by statute. It was held that such sale was illegal and "absolutely void." Also, that in such case interference with the debtor's possession of the property in pursuance of such sale would amount to nothing less than a trespass, and that under the facts appearing a tender was not required. Coates v. Jones, 142 Ga. 237 (1-b) (82 S.E. 649), was similar to the Benedict case, but it was further alleged therein that the rents, issues, and profits had fully paid the debt, and an accounting was prayed. The Benedict case was distinguished in Smith v. Bukofzer, supra. While theForbes, Benedict, and Coates cases are thus clearly different in their facts from the present case, it would really seem that the ruling as to trespass in the Benedict case is itself contrary to previous decisions indicating that a purchaser in such case would not be a trespasser, even though the sale may have been void. A security deed passes title; and it has been repeatedly held by this court that the grantee therein may recover the land in ejectment if the debt is not paid at maturity. Carswell v. Hartridge, 55 Ga. 412; Biggers v.Bird, 55 Ga. 650; Cameron v. Phillips, 60 Ga. 434;Woodson v. Veal, 60 Ga. 562; Robinson v. Alexander,65 Ga. 406; Oellrich v. Georgia Railroad, 73 Ga. 389. This necessarily implies a right of entry. Capps v. Smith,175 Ga. 795 (4) (166 S.E. 234); Powell on Actions for Land, § 386. "It is true that the statute (Civil Code, § 5432) gives another remedy, that is, to obtain a judgment on the debt, reconvey to the grantor, levy on and sell the land; but the remedy thus given is by no means exclusive." Ashley v. Cook, 109 Ga. 653, 655 (35 S.E. 89). The holder of the security deed may pursue both remedies concurrently, and neither is an obstacle to the other until the debt has been satisfied through one or the other proceeding. Ray v. Pitman, 119 Ga. 678, 681 (46 S.E. 849);Clark v. Havard, 122 Ga. 274 (50 S.E. 108).

In Glover v. Cox, 130 Ga. 476, 478 (61 S.E. 12), it was said: "Under the rulings in Ashley v. Cook, 109 Ga. 653 (35 S.E. 89), and Askew v. Patterson, 53 Ga. 209, assuming that the sheriff's sale was void, the purchaser entering possession in pursuance of the sale acted under color of law, and did not become a trespasser." In thus distinguishing the Forbes and Benedict cases, we do not by any means intend to imply that the mere fact that an instrument which a party seeks to have canceled is void rather than merely voidable will, as a rule, relieve such party from the necessity of a tender, where he is indebted to the opposite party for money or other thing with respect to the subject-matter. The Code, § 37-104, does not seem to make any such distinction, nor do the decisions generally.Peacock v. Terry, 9 Ga. 137 (5); Liles v. Bank of CamdenCounty, 151 Ga. 483 (107 S.E. 490); Echols v. Green,140 Ga. 678 (3, 5) (79 S.E. 557). From what has been said, the rulings in the Forbes and Benedict cases will not be extended to the great length that would be necessary in order to apply them in the present case; and this is true whether they should be considered sound or unsound as applied to their particular facts, and limited to identical situations. Cf. Weaver v. Carter,101 Ga. 206, 209 (28 S.E. 869).

Counsel for the plaintiffs present the contention that where a party has advanced money in pursuance of a fraudulent scheme on his part, a tender by the opposite party is not required as a condition of affirmative equitable relief; citing 21 C. J. 175-178 Gilbert v. Hoffman, 2 Watts (Pa.), 66 (26 Am. D. 103). Whether the citations support the contention made, such is not the rule in this State. Code, § 20-906; Miller v. Cotten,5 Ga. 341 (4); Craft v. Link, 135 Ga. 521 (69 S.E. 742);Garner v. Butler, 144 Ga. 441 (87 S.E. 471); Cabaniss v.Dallas Land Co., 144 Ga. 511 (87 S.E. 653); Wynne v.Fisher, 156 Ga. 656 (2) (119 S.E. 605); Henderson v.Lott, 163 Ga. 326, 335 (136 S.E. 403). In Williams v.Fouche, 157 Ga. 227 (121 S.E. 217); it was held that a party seeking rescission on account of fraud must not only restore or offer to restore what he has received, but must do so before entering his suit. In the opinion it was said: "The party who is charged with the fraud should be given an opportunity to redress the wrong before being subjected to a suit for rescission. He might be willing, without suit, to give back to the complaining party what he received under the contract, and to take back from such party what the latter received from him thereunder. This would end the controversy and save litigation."

While the case of Interstate Bond Co. v. Cullars,189 Ga. 283 (5 S.E.2d 756), did not involve fraud, an observation there made is pertinent here, to wit, that the maxim under consideration is one of the oldest principles in equity jurisprudence, and has been referred to as the golden rule of equity, being similar to another golden rule: "All things whatsoever ye would that men should do to you, do ye even so to them; for this is the law and the prophets." In the same decision attention was also called to the statement by Judge Bleckley inBarnes v. Mays, 88 Ga. 696, 698 (16 S.E. 67): "The general morality of the law is higher than many good people suppose. . . The standard it has in view is not merely conscience, but enlightened conscience." In Columbian National Life InsuranceCo. v. Mulkey, 146 Ga. 267 (91 S.E. 106), the party defrauded was not seeking equitable relief. The action was at law, and the alleged fraud was asserted merely as alegal defense.

Notwithstanding what has been said as to necessity of tender as a general rule, even in cases of fraud, it may be observed further that the amount which we are saying the plaintiffs here should have tendered (or as to which they should have alleged sufficient reason for failure to tender) did not represent any money or thing which the defendants or any of them had advanced in a fraudulent transaction, but it was the principal and interest of an honest debt owed by the testatrix, for which the security deed was given. While neither of the plaintiffs had received any part of this sum, they are yet claiming as devisees under the will of such debtor, and are necessarily standing in her shoes. The rule as to doing equity by tendering the principal and interest of the debt is binding upon them to the same extent as it would have bound the testatrix, Mrs. Brownlee, if she had remained in life and had been confronted with the same alleged misconduct on the part of the defendants. Atlanta Banking c.Co. v. Johnson, 179 Ga. 313 (175 S.E. 904, 95 A.L.R. 1436); Cooper v. Peevy, 185 Ga. 805, 808 (196 S.E. 705). This statement does not conflict with the decision in DeVaughn v. Griffith, 149 Ga. 697 (101 S.E. 794), where heirs at law sued to set aside an administrator's sale as void, on the ground that the attorney for the administrator had become the purchaser. This court, in holding that the plaintiffs were not required to refund to the attorney the amount of the purchase-price paid by him, for the reason that it did not appear that they had received any part of such purchase-money, was referring, of course, to distribution to the heirs at law. If as such heirs at law they had received any part of the funds, seemingly they would have ratified the sale and would then have been estopped to attack it, or at least in such event they should have made a tender. Here the testatrix as debtor did receive the money, or owed the debt, for which the security deed was executed. The amount of this debt is all that we are holding the plaintiffs should have paid or tendered. Whether the petition was otherwise sufficient need not be decided. The court did not err in sustaining the general demurrers and in dismissing the action as to the demurrants.

Judgment affirmed. All the Justicesconcur.