Johnson v. Giraud , 191 Ga. 577 ( 1941 )

1. Where the bill of exceptions states the names of the parties in whose favor the ruling complained of was made, and assigns error thereon, and all such parties acknowledge service or are served with the bill of exceptions, and by amendment the defendants in error and the plaintiffs in error are specifically designated, the bill of exceptions will not be dismissed because it fails to designate parties thereto. Neither will it be dismissed because a party in the trial court who is not interested in the judgment excepted to is not made a party defendant in error. A bill of exceptions is not conditionally certified where the certificate, after having asserted that the bill of exceptions is true, recites that all the record necessary is specified, and the judge adds, "except" designated pleadings.

2. Although an intervenor takes a case as he finds it, this rule does not prevent him from seeking to have his lien decreed a first lien on property in the hands of a receiver, when previously thereto a decree has fixed the priority of claims as of date of such decree. Although an unrecorded attorney's lien is good as against the client and his existing creditors, it must be recorded within thirty days, to have priority over bona fide purchasers, or liens of subsequent mortgage or judgment creditors.

3. The lien of an attorney is kept alive where the original open account is within four years converted into a note under seal, and the lien may be foreclosed at any time before suit on the note has become barred by the statute of limitations.

No. 13617. FEBRUARY 12, 1941. Emilie S. Giraud brought suit against Colonial Hill Company, Mrs. John S. Owens, Mrs. E. B. Hall alias C. O. Hall, and Cobb Operating Company. The petition alleged that the plaintiff held a judgment against Colonial Hill Company, dated October 5, 1937, that the charter of Colonial Hill Company had expired, that Mrs. John S. Owens was the president and sole owner of the corporation, and that she was also president of Cobb Operating Company. The petition set out numerous deeds from Colonial Hill Company, some to Cobb Operating Company and others to Mrs. E. B. Hall alias C. O. Hall, conveying described lands in the City of Atlanta, and alleged that such conveyances were fraudulent and made for the purpose of defrauding the creditors of Colonial Hill Company, and prayed for their cancellation. It was alleged that there were other creditors of Colonial Hill Company, and it was prayed that they be allowed to intervene and set up their claims, and that a receiver be appointed for the purpose of handling the assets realized by the cancellations prayed for, and of paying creditors, the petition alleging that Colonial Hill Company was insolvent. The First National Bank of Atlanta filed its intervention as a creditor holding a judgment dated April 2, 1937. Cam D. Dorsey filed his intervention claiming a judgment dated July 1, 1933; and Virlyn B. Moore Jr., intervened and set forth an attorney's lien, duly recorded, against that property described in the petition as having been conveyed by Colonial Hill Company to Mrs. E. B. Hall alias C. O. Hall, the lien being based upon the recovery of the described property in behalf of Mrs. Hall. On December 30, 1939, by consent of all parties, a judgment of the court was entered, appointing a receiver for Colonial Hill Company; cancelling all conveyances from Colonial Hill Company to Cobb Operating Company described in the petition; decreeing the conveyances described in the petition from Colonial Hill Company to Mrs. Hall to be valid, and awarding a portion of the lands covered by such conveyances to Virlyn B. Moore Jr., in full satisfaction of his claim as set forth by his intervention; approving the claims of plaintiff, the First National Bank and Cam D. Dorsey in stated amounts, and fixing the priority of such claims; and releasing all other assets of the defendants except real estate belonging to the Colonial Hill Company or its successors in land lot 134 of the 14th district of Fulton County, Georgia, located in Colonial Hill Subdivision, and notes and other evidences of debt representing purchase money for lots in said subdivision previously sold by Colonial Hill Company, but not paid for, and vesting title to such lands, mortgages, loan deeds or other evidences of debt in the receiver.

On April 18, 1940, the plaintiff made a written motion that an order be granted fixing the time for filing of interventions, and requiring the same to be published as provided by law, and providing that any lien or claim against the assets in the hands of the receiver thereafter be transferred from the assets to the proceeds. On the same date an order was entered requiring all parties claiming an interest in the assets of defendants in the custody of the receiver, including lands in Colonial Hills Subdivision, and notes, mortgages, and security deeds relating thereto, to intervene in the case not later than June 22, 1940, or be forever barred from intervening in the case.

On June 13, 1940, Paul E. Johnson, surviving partner of the law firm of Mayson Johnson, composed of James L. Mayson and Paul E. Johnson, and Mrs. Fannie M. Mayson, the widow and legatee of James L. Mayson, deceased, filed their intervention, in which it was alleged that the law firm of Mayson Johnson represented Colonial Hill Company in extensive litigation with Cobb Land Company in which Colonial Hill Company prevailed, recovering all of the lands described in the plaintiffs' petition; and that John S. Owens, who was president of the Colonial Hill Company, paid a part of the attorney's fees in said litigation and executed a note payable to James L. Mayson, the senior member of the firm of Mayson Johnson, dated June 3, 1927, and due June 3, 1931, bearing interest from date at six per cent., for the sum of $4000. The intervention alleged that the intervenors have a special lien against all of the property and funds held by the receiver in the present case, and that their liens are superior to the claims of all other parties in the suit. The prayer was for judgment for $4000 principal, and interest thereon at six per cent, from June 3, 1927, and that said judgment be a first lien against all the property or funds in the hands of the receiver and against any property or funds that might later come into the hands of the receiver. On June 20, 1940, Paul E. Johnson as the surviving partner of the law firm of Mayson Johnson and Mrs. Fannie M. Mayson, the widow and legatee of James L. Mayson, filed a written motion to set aside the portions of the judgment and decree of December 30, 1939, awarding described lands to Virlyn B. Moore Jr., (and the deed of the receiver carrying the award into effect), and fixing the priority of the claims of the plaintiff and the other intervenors, and praying that the lien of movants as set out in their intervention be set up as a prior lien against the property and funds in the hands of the receiver. To the intervention the plaintiff, the First National Bank, Cam D. Dorsey, Virlyn B. Moore Jr., Mrs. John S. Owens, and Cobb Operating Company severally filed demurrers, and on October 15, 1940, the court rendered judgment as follows: "The foregoing demurrer coming on to be heard and plaintiff having urged same to the intervention as filed and to the petition filed June 21, 1940, seeking to set aside the decree rendered in this case and having orally moved to dismiss said petition as failing to set out any ground for relief, the said demurrer and motion are hereby sustained and the intervention and petition stricken in so far as they seek to set up a claim based on a lien for attorney's fees, and in so far as it seeks to set aside the decree complained of. The same ruling is hereby made on the demurrers of First National Bank, Cam D. Dorsey, Virlyn B. Moore Jr., Mrs. M. D. Owens and Cobb Operating Company." To this ruling Paul E. Johnson and Mrs. Fannie M. Mayson filed exceptions pendente lite.

On November 25, 1940, judgment was entered in favor of Paul E. Johnson and Mrs. Fannie M. Mayson and against Colonial Hill Company for the principal sum of $4000 and $3220 interest, and reciting that the judgment shall rank in priority next after the claims the priority of which were fixed in the judgment dated December 30, 1939. The intervenors excepted, assigning error on the latter judgment and on the exceptions pendente lite to the judgment sustaining the demurrers and dismissing the petition or motion to set aside portions of the judgment of December 30, 1939. 1. A motion was filed in this court to dismiss the writ of error, on the grounds, (1) that the bill of exceptions fails to show who are necessary parties; (2) that it fails to name any party as defendant in error; (3) that the certificate of the trial judge fails to certify that the bill of exceptions specifies all of the record material to a clear understanding of the errors complained of, and is qualified by the following words: "except a petition of these intervenors filed Sept. 24, 1940, and order thereon;" and (4) that Mrs. E. B. Hall alias C. O. Hall is not named as a party, and she is interested in sustaining the judgment refusing to set aside a previous judgment which was in her favor. The bill of exceptions names the parties to the rulings complained of, and these parties were served or acknowledged service of the bill of exceptions. By amendment the plaintiffs in error specifically designated proper parties as plaintiffs in error and others as defendants in error. Grounds 1 and 2 of the motion to dismiss are without merit. Code, §§ 6-912, 6-913. The clerk of the trial court construed the certificate of the judge as specifying the additional record as a part of the record to be certified to this court, and it was accordingly certified and transmitted. The clerk correctly construed the certificate of the judge, and the writ of error is not subject to dismissal on the ground that the bill of exceptions is not unconditionally certified. The decree of December 30, 1939, awarded to Mrs. E. B. Hall, alias C. O. Hall, all the lands involved in the litigation to which she made claim, and neither the intervention of plaintiffs in error nor their petition to vacate portions of the decree of December 30, 1939, affect the rights of this party. Her rights under the judgment are not questioned, and will not be affected, regardless of who prevails on the issues made in the present record. She is not a necessary party, and in fact would not be a proper party, to the present case; and this ground of the motion to dismiss is without merit. The motion to dismiss is overruled.

2. One question presented by the record is whether or not the petition to vacate portions of the decree of December 30, 1939, should have been dismissed. It is contended by the defendants in error that the plaintiffs in error were subject to the rule that an intervenor takes the case as he finds it. They rely upon the rulings in Seaboard Air-Line Railway v. Knickerbocker TrustCo., 125 Ga. 463 (54 S.E. 138); Atlanta Carolina RailwayCo. v. Carolina Portland Cement Co., 140 Ga. 650 (2) (79 S.E. 555);Worsham v. Ligon, 147 Ga. 39 (92 S.E. 756); Perkins v.Talmadge, 147 Ga. 527 (94 S.E. 1003); American NationalBank of Atlanta v. Lamb, 147 Ga. 667 (95 S.E. 227). If the contentions of intervenors were correct, then they were not seeking to change the case as it stood with relation to the other parties. The court, in fixing the priorities on December 30, 1939, dealt only with the interests of the various parties to the litigation in the property in the hands of the court or subsequently coming into the hands of the court. If the plaintiffs in error were correct in their claim of a prior lien, the court never had jurisdiction of that portion of the property subject to such prior lien; and since intervenors sought merely to establish their prior lien, and since this was a question not theretofore dealt with by the court, they were not barred by the rule that an intervenor takes the case as he finds it. But the fatal weakness of their case, in so far as obtaining a priority by virtue of their lien is concerned, is the fact that their claim of such lien was never recorded as provided by law; and the other intervenors in the case, having procured judgments giving them an interest in the property of Colonial Hill Company, occupy positions similar to that of bona fide purchasers without notice. A mortgage who in good faith parts with his money in ignorance that a person other than the holder of the legal title has a secret equity in the mortgaged property stands precisely in the position of a bona fide purchaser, and is entitled to the same protection. Parker v. Barnesville Savings Bank, 107 Ga. 650 (34 S.E. 356). To the same effect see Zimmer v. Dansby,56 Ga. 79; Gorman v. Wood, 68 Ga. 524; Brown v. West,70 Ga. 201; Kennedy v. Lee, 72 Ga. 39; Hobbs v. GeorgiaLoan Trust Co., 96 Ga. 770 (22 S.E. 331); Dill v.Hamilton, 118 Ga. 208 (41 S.E. 989); Bennett v. SouthernPine Co., 123 Ga. 618 (51 S.E. 654); Ford v. BlackshearManufacturing Co., 140 Ga. 670 (3) (79 S.E. 576); Steele v.Graves, 160 Ga. 120 (4) (127 S.E. 465). An unrecorded mortgage is inferior to a subsequent judgment. Shepherd v.Burkhalter, 13 Ga. 443 (58 Am. D. 523); Richards v.Myers, 63 Ga. 762; Cambridge Tile Co. v. Scaife SonsCo., 137 Ga. 281 (2) (73 S.E. 492).

A mortgage is a lien, and so is the claim of an attorney on property recovered or defended by him. The purpose of our recording statutes is to protect both the lienholder and innocent persons acting in good faith but without means of discovering the lien of another. An attorney is given the privilege of protecting his lien by recording his claim thereto, and his failure to avail himself of such privilege brings upon him the same disaster that befalls other lienholders who neglect to record the lien as authorized by law. As to the judgment of December 30, 1939, the undisclosed lien of the plaintiffs in error is subordinate. InColeman v. Austin, 99 Ga. 629 (27 S.E. 763), it was held that in order to render the lien of an attorney binding upon bona fide purchasers, it is incumbent upon him to file his claim of lien for record, but that such filing is not essential to the validity of a lien as between the attorney and his client, or as between him and other creditors of the client. See alsoMorrison v. Ponder, 45 Ga. 167; Walton v. Little,50 Ga. 599; O'Brien v. Whitehead, 75 Ga. 751; Lovett v.Moore, 98 Ga. 158 (26 S.E. 498); Suwannee Turpentine Co. v. Baxter, 109 Ga. 597 (35 S.E. 142). It is contended by the plaintiffs in error that as to all parties in the present case recording of their lien was not required. However, every decision holding that recording of the claim of lien was not necessary in order to bind the client and his creditors dealt with creditors existing at the time that property was recovered by the attorney. The rule is therefore limited to such existing creditors, and has no application whatever to future creditors. None of the pleadings of the plaintiffs in error show that the claims of any of the other parties are based upon debts existing at the time the property was recovered and their lien came into existence by operation of law. Since, under the pleadings, these other parties extended credit to Colonial Hill Company after the time of the creation of the lien of plaintiffs in error, and reduced their claims to judgment creating a lien on the property, the undisclosed lien of plaintiffs in error can not take precedence over their claims. Therefore the petition to vacate portions of the judgment of December 30, 1939, fixing priorities, was without merit, and it was not error to dismiss the same upon motion.

3. The plaintiffs in error sought by their intervention to foreclose an attorney's lien given to them by law under the Code, § 9-613(3). This claim of lien was not filed and recorded within thirty days, as provided in the Code, § 9-613(4). While originally the debt of the plaintiffs in error was in the form of an open account and was subject to the statute of limitations of four years, and had it remained in the form of an open account for a period exceeding four years it would have become barred by limitation, and if the debt is barred then the lien likewise is barred (Peavy v. Turner, 107 Ga. 401, 33 S.E. 409), yet, as set forth in the intervention, the statute of limitations was avoided by taking a note as evidence of the debt, and no claim is here made that the note is barred by the statute of limitations. Accordingly, the ruling in Peavy v. Turner, supra, has no application, and the intervention alleges a valid lien. The judgment dismissing on demurrer the portions of the intervention setting up and seeking to foreclose the attorney's lien is erroneous. Although the lien of plaintiffs in error is subordinate to the liens of the other parties to this action, yet this does not constitute ground for dismissing the portions of the intervention seeking to set up and foreclose the attorney's lien. It is true that final judgment on the debt was entered in favor of the plaintiffs in error, but this fails to give the priority to which they are entitled by a foreclosure of their lien as against creditors existing at the time their lien came into being by operation of law.

Judgment reversed in part and affirmed in part. Costs aretaxed against the defendants in error. All the Justices concur,except Atkinson, P. J., and Bell, J., disqualified.