Robinson v. Reynolds , 194 Ga. 324 ( 1942 )

1. The beneficent purpose of loans made by Federal agencies under and pursuant to the emergency farm mortgage act of 1933 (48 Stat. 48, § 32, 12 U.S.C.A. § 1016 (e)), was to enable persons in debt and without ability to make payment to constitute such agencies the sole creditors, thereby eliminating by way of compromise all other creditors. Contracts that obviously and directly tend in a marked degree to bring about results that the law seeks to prevent can not be made the ground of a successful suit. Kniefel v. Keller, 207 Minn. 109 (290 N.W. 218, 220), and cit. Accordingly, a new obligation assumed by a debtor to a lien creditor, in violation of the expressed terms of the creditor's acceptance, as in full payment of an amount less than his debt, from a Federal agency, making a loan to the debtor, under the farm mortgage act, of an amount insufficient to pay lien indebtedness, is void as against public policy. Federal Land Bank of Columbia v. Blackshear Bank, 182 Ga. 657 (186 S.E. 724); Kinard v. Bank of Lenox, 57 Ga. App. 819 (196 S.E. 920); Oregon Western Colonization Co. v. Johnson, 164 Or. 517 (102 P.2d 928, 932); Federal Land Bank v. Koslofsky, 67 N.D. 322 (271 N.W. 907); Jones v. McFarland, 178 Miss. 282 (173 So. 296); Smeltzer v. McCrory (Tex.Civ.App.), 101 S.W.2d 850. See analogous decisions as to such transactions under the home owners loan act of 1933 (12 U.S.C.A., § 1461 et seq.); Cook v. Donner, 145 Kan. 674 (66 P.2d 587), and cit.; notes in 110 A.L.R. 250, 121 A.L.R. 119, and cit.

2. Where a debtor and his secured creditor sign a statement to a Federal land bank that upon receipt by the creditor of the stated full amount the debt and lien would be satisfied in full, and where the land bank then tenders to the creditor and debtor a draft in an amount less than that mentioned by the debtor and creditor, but which draft recites on its face that "this amount is accepted in full settlement of the indebtedness represented by a certain security deed against [a described] lot of land," this being the lien theretofore referred to, and where the creditor accepts, indorses, and cashes the draft thus tendered, he is bound by the condition embraced in the terms of the draft; with the result that a subsequent new lien taken by the creditor from the debtor for the difference between the amount of the draft and the amount of the original debt would be unenforceable as contrary to public policy. This is true even though the creditor had previously notified the Federal land bank that the lien debt would not be canceled for less than its full amount.

3. Under the preceding rulings, the question propounded by the Court of Appeals must be answered in the affirmative.

All the Justices concur.

No. 14127. JUNE 18, 1942. REHEARING DENIED JULY 16, 1942. The Court of Appeals in Case No. 29269 certified to this court the following question: "A debtor owed his creditor $2319.09, the balance due on the purchase-price of land lot No. 171 in the 14th district of Seminole County, Georgia. Both signed an application for a loan from the Federal Land Bank of Columbia, to enable the debt to be paid. The bank agreed to make a loan for $2200, which was insufficient to pay the debt and the expenses of the loan. To induce the creditor to agree to the loan, the debtor agreed to execute a new note for the balance of his debt after the payment to the creditor of the net proceeds of the loan, the new note to be secured by a bill of sale to certain personal property of the debtor and by a second security deed to the above-described land. The creditor's consent to the loan was further induced by the statement of the lawyer who prepared the loan application, that, in his opinion, if the creditor informed the bank that he was not accepting the net amount of the loan in full settlement of the debt, he would not be prevented from thereafter collecting the balance thereof. Subsequently the creditor and debtor signed ``a creditor's agreement' and sent it to the bank, together with the following letter from the lawyer: ``We also call your attention to the fact that the lienholder will not accept the amount of the commitment, but the applicant [debtor] expects to raise the difference from another source.' Upon receipt of said agreement and letter, the bank made a loan of $2200. After deducting the expenses of the loan, the net proceeds amounted to $1914.50. The bank sent a draft for that amount payable to the debtor and the creditor, and the debtor indorsed the draft over to the creditor. The draft recited on its face that ``this amount is accepted in full settlement of the indebtedness represented by a certain security deed against lot of land No. 171 in the 14th district of Seminole County, Georgia.' The debtor executed his new note, bill of sale, and the second security deed after he had indorsed over the draft, but these papers were delivered to the creditor at the same time that he received and accepted the draft. The only indebtedness listed in the creditor's agreement was the sum of $2313.09 owed by the debtor to the creditor as the unpaid balance on the purchase-price of the land in question. In that agreement it is recited as follows: ``The undersigned has agreed and does hereby agree to accept in full and complete settlement in payment of all indebtedness and obligations of and claims and liens against applicant and property offered by applicant as security for a loan, in favor of, owned, or held by the undersigned, of any kind or nature, whether secured or unsecured, liquidated or unliquidated, whether or not scheduled above, and whether or not the same be now due and payable, the sum of $2313.09. Upon receipt of said amount applicant will not be indebted to or owe to the undersigned any sum or thing whatsoever, and the undersigned will mark paid, cancel, and satisfy all instruments, papers, and records representing, evidencing, and securing any and all indebtedness and obligations of and claims and liens against applicant and property offered by applicant as security for a loan in favor of or owned or held by the undersigned. . . Any claim, lien indebtedness, or obligation omitted from the foregoing schedule, or inaccurately described therein, is covered by and included in the terms of this agreement. There is no understanding or agreement that the undersigned, or any one whomsoever, is to be paid an additional amount upon the indebtedness, claims, liens, and obligations herein agreed to be settled, directly or indirectly, in cash or otherwise, or that the undersigned, or any one whomsoever, will be given any security or evidence of indebtedness or obligation therefor; and the undersigned will not attempt to collect, demand, or accept payment of the difference, or any part thereof, between the total amount of the indebtedness herein stated and agreed to be accepted in full settlement thereof, and will not demand, accept, or receive any obligation, evidence of indebtedness, lien, or security for said difference, or any part thereof. This statement and agreement is made to assist the above-named applicant to obtain a loan [and] to induce the Federal Land Bank of Columbia, the Land Bank Commissioner, and the Federal Farm Mortgage Corporation, or any one or more of them, to make a loan to said applicant, and to release, distribute, and pay out the proceeds from such loans, with the full understanding that any loan that may be made to said applicant will be upon the consideration and condition that this statement and agreement be furnished, be true and correct, and be fully and faithfully performed, and not otherwise.' Was the contract, evidenced by the new note, the bill of sale, and the second security deed, void as against public policy?"