Alropa Corporation v. Pomerance

1. The action is founded on alleged breach of covenant to assume and pay an outstanding debt secured by a mortgage on land in the State of Florida. The case is for decision on demurrer to the petition. The petition does not set forth the laws of Florida applicable to the case. Held:

(a) This court can not take judicial cognizance of the laws of the State of Florida.

(b) If the State of Florida had been one of the original thirteen States of the Union, or had been carved out of the territory of one of the original States, it would be presumed that the common law of England, in so far as pertinent, was of force in that State, and the case would be decided with reference to the common law of England. Eubanks v. Banks, 34 Ga. 407; Selma, Rome Dalton Railroad Co. v. Lacy, 43 Ga. 461; Woodruff v. Saul, 70 Ga. 271; Jones v. Rice, 92 Ga. 236 (18 S.E. 348); Patillo v. Alexander, 96 Ga. 60 (22 S.E. 646, 29 L.R.A. 616); Massachusetts Benefit Life Asso. v. Robinson, 104 Ga. 256 (30 S.E. 918, 42 L.R.A. 261); Patillo v. Alexander, 105 Ga. 482 (30 S.E. 644); McIntyre v. Moore, 105 Ga. 112 (31 S.E. 144); Coyle v. Southern Railway Co., 112 Ga. 121 (37 S.E. 163); Ellington v. Harris, 127 Ga. 85 (56 S.E. 134, 119 Am. St. R. 320); Lay v. Nashville, Chattanooga St. Louis Railway Co., 131 Ga. 345 (62 S.E. 189); Georgia, Florida Alabama Railway Co. v. Sasser, 4 Ga. App. 276, 286 (61 S.E. 505); Hill v. Chattanooga Railway Light Co., 21 Ga. App. 104 (93 S.E. 1027).

(c) However, as the State of Florida was not one of the original thirteen States and not carved out of one of them, but was a part of the Spanish possessions on this continent before becoming a part of the Union, it will not be presumed that the common law of England prevailed in that State. If it prevails there, it must be by virtue of some statutory provision of which this court can not take judicial notice. 189 Ga. 807.

(d) As no Florida law was alleged in the petition, the case must be decided on the law of this State. Flato v. Mulhall, 72 Mo. 522; Brown v. Wright, 58 Ark. 20 (22 S.W. 1022, 21 L.R.A. 467); Wharton on Evidence (3d ed.) 274, § 314; 15 C. J. S. 876, § 9, notes 96, 97; Pritchard v. Norton, 106 U.S. 124 (1 Sup. Ct. 102, 27 L. ed. 104).

2. It is declared in the Code, § 29-102: "When a grantee accepts a deed and enters thereunder, he will be bound by the covenants contained therein, although the deed has not been signed by him."

(a) Warde, having title to land, encumbered it by mortgage to Mack to secure his notes to Mack, aggregating $3000. Afterwards in a different transaction Warde executed a warranty deed conveying the land to Pomerance. The deed contained a recital that as part of the consideration Pomerance agreed to assume and pay the mortgage debt to Mack. Pomerance accepted the deed, but did not enter actual possession of the land thereunder. Held, that in these circumstances the recital contained in the deed as to assumption and payment of the debt of Warde to Mack does not, in virtue of the Code section just quoted, bind Pomerance as a covenant to pay the debt of Warde to Mack.

(b) This does not mean that if Pomerance had also signed the deed, or had otherwise in writing or parol expressly promised Warde as part of the consideration of the deed to pay Warde's debt to Mack, or had entered into actual possession of the land, he would not be bound by his promise after the promisee on the basis thereof had acted to his injury by executing the deed.

3. The petition did not allege a cause of action for breach of covenant under the deed.

4. Contemporaneously with the execution of the deed mentioned above, Pomerance executed a mortgage on the same land back to Warde, to secure his notes to Warde aggregating $1500. The mortgage expressly refers to an outstanding "first mortgage in the sum of three thousand ($3000) dollars," on the land, and contains a promise "to pay all . . liabilities obligations, and incumbrances of every nature on said described property." Held:

(a) The promise thus expressed in the mortgage is a sufficient promise by Pomerance over his own signature to obligate him to pay the debt owed by Warde to Mack which was secured by mortgage and was an outstanding encumbrance on the land.

(b) The binding effect of this obligation is not dependent upon application of § 29-102, quoted above.

5. There was a series of transfers of the notes and security held by Mack. Alropa, the last transferee, was holder of the notes and security, and occupied the position of Mack had he retained the notes and security. All of the parties to the deeds, notes, and mortgages and instruments of transfer were residents of the State of Florida, except Pomerance, who was a resident of Richmond County, Georgia. In these circumstances Alropa could maintain a suit in equity for a personal judgment against Pomerance in the county of his residence, upon his assumption of Warde's debt to Mack, as expressly promised by the language of his mortgage. Bell v. McGrady, 32 Ga. 257; Sheppard v. Bridges, 137 Ga. 615 (74 S.E. 245).

6. In such an action, the promise of Pomerance being contained in the mortgage which was executed by Pomerance under seal, the applicable statute of limitations would be Code § 3-703, limiting the time to twenty years from the time the right of action accrued. Kytle v. Kytle, 128 Ga. 387 (57 S.E. 748); Brice v. National Bondholders Cor., 187 Ga. 511 (2) (1 S.E.2d 426). The action in the instant case, based on the promise contained in the mortgage, was not barred by the statute of limitations.

7. Relatively to the demand based on the promise expressed in the mortgage from Pomerance to Warde, the petition alleged a cause of action, and was not subject to any of the grounds of demurrer. It was erroneous to dismiss the action in its entirety.

No. 13050. MARCH 25, 1940. On April 14, 1925, Paul C. Warde and Nan C. Warde (hereinafter referred to as Warde) in Miami, Florida, executed to Charles D. Mack (hereinafter referred to as Mack) two promissory notes for $1500 each, payable respectively one and two years after date, and contemporaneously therewith a mortgage on described realty in the City of Miami. Opposite the names of the makers of each note was the word "Seal," but there was no mention of "seal" in the body of the instruments. On the next ensuing August 31, 1925, Warde executed a warranty deed under seal conveying the same land to A. Pomerance (hereinafter called Pomerance). The consideration expressed was "ten dollars ($10) and other good and valuable considerations." Following the description of the land was the clause: "This deed is made subject to a first mortgage in the sum of three thousand ($3000) dollars, from Paul C. Warde, and wife, to Chas. D. Mack, which as part of the consideration for this conveyance grantee assumes and agrees to pay." Contemporaneously with this deed Pomerance executed to Warde three promissory notes for five hundred dollars each, payable respectively on or before one, two and ____ years after date, and also a mortgage on the same land as security for the notes. This mortgage contained the recitals that mortgagor is "now seized and possessed, and in actual possession" of the land, also: "This mortgage is a second mortgage, subject to a first mortgage in the sum of $3000;" also the mortgagors "hereby covenant and agree . . 2. To pay all and singular the taxes, assessments, levies, liabilities, obligations and encumbrances of every nature on said described property. . . 6. To perform, comply with and abide by each and every the stipulations, agreements, conditions and covenants in said promissory note and in this deed set forth." On the back of the first above mentioned two notes from Warde to Mack were entries: "Nov. 14-25 Int Pd 60.00." This was followed by the endorsement "without recourse (signed) Charles D. Mack." On January 28, 1938, Mack executed an instrument purporting to transfer to L. P. Kaufman Inc. (hereinafter referred to as Kaufman) the first above mentioned mortgage from Warde. The consideration was recited in this instrument of transfer as "ten dollars and other valuable considerations." Upon a similar purported consideration Kaufman executed, on March 24, 1938, an instrument of transfer of the mortgage and notes, assigning the same to Alropa Corporation (hereinafter referred to as Alropa). On August 24, 1938, Alropa instituted an equitable action in the Superior Court of Richmond County, Georgia, against Pomerance. The petition set forth copies of the several notes, mortgages, and other instruments above mentioned, and alleged that all the parties to them except Pomerance are residents of the State of Florida, and that the latter is a resident of Richmond County, Georgia. The petition was in one count. The suit was to recover a personal judgment for the balance due on the two notes executed by Warde to Mack. Alropa was suing as remote transferee of the notes and mortgage securing them. The alleged liability of Pomerance was his assumption and agreement to pay the notes made by Warde to Mack. The alleged assumption and agreement to pay was based (1) on the quoted recitals in the deed from Warde to Pomerance and (2) on the quoted recitals contained in the mortgage from Pomerance to Warde. The prayers were for a general judgment for the amount of principal, interest, and attorneys' fees due under the notes; also that it be decreed that the defendant Pomerance assumed the indebtedness and is liable therefor. Also for process and general relief. The defendant demurred to the petition on the grounds (1-2) of non-joinder of specified necessary parties; (3-4) that a cause of action is not alleged; (5) that it appears that the action is barred by the statute of limitations; (6) to the allegations of paragraph 8 and exhibit E therein referred to (which relate to the mortgage from Pomerance to Warde) on the ground that the mortgage confers no right on the plaintiff or its predecessors in title to the notes sued on. The demurrer was sustained on every ground, and the action was dismissed. The plaintiff excepted. The rulings announced in headnotes 1, 3, 4, 5, 6, and 7 do not require elaboration.

2. There is no question about Alropa being a successor in title to the notes and mortgage executed by Warde to Mack, or that the notes and security were outstanding at the time of the deed from Warde to Pomerance. That deed contained the clause: "This deed is made subject to a first mortgage in the sum of three thousand ($3000) dollars, from Paul C. Warde and wife, to Chas. D. Mack, which as part of the consideration for this conveyance grantee assumes and agrees to pay." A question arises, did the foregoing clause in the deed duly signed by the grantor, but not by the grantee, amount to assumption or agreement to pay the debt of Warde to Mack? Mack was not a party to that transaction, and consequently Pomerance did not purport to agree with him to assume the debt of Warde. Whether Pomerance promised Warde, as a part of the consideration of the deed to him, to pay the debt of Warde to Mack depends on the provisions of the deed, and application of the law. It is declared in the Code, § 29-102: "When a grantee accepts a deed and enters thereunder, he will be bound by the covenants contained therein, although the deed has not been signed by him." This language first appeared in the Code of 1895, § 3600. That Code was adopted by the legislature, and in virtue thereof its provisions became binding as a statute.Central of Georgia Railway Co. v. State, 104 Ga. 831 (2) (31 S.E. 531, 42 L.R.A. 518); Elder v. Home Building LoanAsso., 188 Ga. 113 (3 S.E.2d 75, 122 A.L.R. 738). A marginal reference to § 3600 embodied a principle involved inGeorgia Southern Railroad v. Reeves, 64 Ga. 492, showing that it was founded on that principle. The facts of the case referred to were that Reeves executed to the Selma, Rome and Dalton Railroad Company a deed conveying a right of way through his land, for location of the company's railroad. The company was to build the road and pay Reeves $25 in money. It was provided in the deed that "a depot and station" should be permanently located on the land, to be used by Reeves and his assigns and the general public. Under that conveyance the company proceeded "to enter upon, locate, grade, and construct" the railroad, but failed to establish the station and build the depot. By proper conveyance the Georgia Southern Railroad Company succeeded to all the rights, privileges, franchises, and property of the Selma, Rome and Dalton Railroad Company; and the successor company having also failed to establish the station and build the depot, Reeves brought his action against that company. It was held by this court: "Where the grantor, in consideration of $25, and of the building of the railroad, conveyed to a company, its successors or assigns forever, in fee simple, the right of way through his land, and added in the deed the following words: ``It is hereby agreed and understood a depot and station is to be located and given to said Osborne Reeves, on the land or strip above conveyed, to be permanently located for the benefit of said Osborne Reeves and his assigns, and to be used for the general purposes of the railroad company,' the grantee, by accepting such deed, entered into a covenant to comply with its terms, and this covenant ran with the land and became obligatory upon any second company which became the purchaser, under proper legal direction, of all the rights, privileges, franchises, and property of the former."

It will be perceived that while the facts showed acceptance of the deed by the grantee, and entry of possession of the land by the grantee by constructing and maintaining the railroad on the right of way so granted, the language of the decision by this court went so far as to say "the grantee, by accepting such deed, entered into a covenant to comply with its terms," omitting express reference to the additional matter of entry ofpossession thereunder. When the legislature went to deal with the matter as in the Code, § 29-102, it could have stopped with the language "when a grantee accepts a deed," he will be bound, etc., as the decision of this court declared in effect; but the legislature did not stop there. It added, "and enters thereunder," etc., thus declaring the whole principle that the facts of the case involved. The purport of the statute was to put in the mouth of the grantee, by implication, a promise not expressed nor signed by him, but with the qualification that he "enters thereunder." These qualifying words can not be written out of the statute, but must be given effect. If they could be written ten out of the statute, the preceding words which they qualify "when a grantee accepts a deed," could just as well be written out. If either were excluded, it would obviously defeat the legislative design. The qualifying words refer to entry of actual possession of the land, as was the fact in the Reeves case that called forth the enactment. On proper construction of the Code, § 29-102, applied to the instant case, there was no binding covenant in the deed from Warde to Pomerance that the grantee should pay the debt of Warde to Mack. This accords with the rulings in Union City Realty Trust Co. v. Wright, 138 Ga. 703 (76 S.E. 35); Williams Co. v. American Tie Timber Co.,139 Ga. 87 (76 S.E. 675); Louisville Nashville RailroadCo. v. Nelson, 145 Ga. 594, 598 (89 S.E. 693); Anderson v. Higginbotham, 174 Ga. 565 (163 S.E. 477); Smith v.Kingsley, 178 Ga. 681 (173 S.E. 702); Wiggins v. FirstMutual Building Loan Asso., 179 Ga. 618 (176 S.E. 636);Federal Land Bank of Columbia v. Paschall, 180 Ga. 224 (178 S.E. 659); Interstate Investment Co. v. McCullough,188 Ga. 206 (3 S.E.2d 733); Austell Bank v. NationalBondholders Cor., 188 Ga. 757 (4) (4 S.E.2d 913), in which assumption of a debt by a grantee owed by a grantor to a third person, in virtue of a covenant expressed in a deed to the grantee, depended on both his acceptance of the deed and his possession of the property thereunder. If it is opposed to the ruling in National Mortgage Cor. v. Bullard, 178 Ga. 451 (173 S.E. 401), and First National Bank of Quitman v.Rountree, 173 Ga. 117 (159 S.E. 658), both decided on demurrer, or to Ottauquechee Savings Bank v. Elliott,172 Ga. 656 (158 S.E. 316), the attention of the court was not called in those cases to § 29-102, supra, and that section was not construed or otherwise mentioned by the decisions rendered in those cases. Neither of those decisions is a binding precedent for construing or applying that provision of the Code; and consequently the rulings that it was erroneous to sustain the demurrers and dismiss the petitions do not require a ruling in the instant case that the clause of the deed in question amounted to a promise by Pomerance to pay the debt of Warde.

Judgment reversed. All the Justices concur, except Bell andGrice, JJ., who concur in the result, but dissent from the rulingin division 2 of the decision.