Atlanta Banking & Savings Co. v. Johnson

Bell, J.

An administratrix brought a suit in equity to cancel a deed to secure debt alleged to have been made by the plaintiff’s intestate while insane. The petition did not allege that the intestate had ever been adjudged insane, nor was it alleged that the defendant bank did not act in good faith, or that it had knowledge of the insanity or any reasonable ground to suspect the same. By an amendment it was alleged that the consideration of the deed had been dissipated by the insane person, and for this reason no part of the consideration came into the hands of the plaintiff administratrix or could be restored. The plaintiff did not offer to restore the status, and did not otherwise attempt to excuse or explain her failure to do so. The court overruled a general demurrer to the petition as amended, and the defendant excepted.

1. Construing the allegations most strongly against the plaintiff, as must be done on general demurrer, it is apparent that the plaintiff’s intestate was never adjudicated to be insane; also that the defendant bank in accepting the conveyance acted in good faith, and did not know of the insanity or have any cause to suspect the same.

2. In the circumstances indicated, the plaintiff can not obtain the equitable relief of cancellation without restoring the status quo; and this is true even though it may be impossible for her to do so. The deed was not void, but was merely voidable; and where the bank acted in good faith in extending the loan, and was not in any sense chargeable with knowledge of the borrower’s insanity, the security deed should not be avoided in equity without a restoration of the status.

3. The plaintiff is seeking affirmative relief in a court of equity, and can not have the relief sought without observing the equities of the transaction.

4. In connection with the foregoing rulings see Civil Code (1910), § 4521; Strodder v. Southern Granite Co., 94 Ga. 626 (19 S. E. 1022); Perry v. Reynolds, 137 Ga. 427 (2) (73 S. E. 656); Mayer v. Waterman, 150 Ga. 613 (3) (104 S. E. 497); Wynne v. Fisher, 156 Ga. 656 (2) (119 S. E. 605); Fields v. Union Central Life Ins. Co., 170 Ga. 239 (152 S. E. 237); Whiteley v. Downs, 174 Ga. 839 (2, 5) (164 S. E. 318); Jones v. Union Central Life Ins. Co., 178 Ga. 591 (173 S. E. 845); Sparrowhawk v. Erwin, 30 Ariz. 238 (246 Pac. 541, 46 A. L. R. 413, notes). See also 32 C. J. 733, § 510.

5. A distinction should be made between cases of this sort and cases at law involving the acts of insane persons, such as Orr v. Equitable Mortgage Co., 107 Ga. 499 (33 S. E. 708); Woolley v. Gaines, 114 Ga. 122 (39 S. E. 892, 88 Am. St. R. 22); Joiner v. Southern Land Cor., 158 Ga. 752 (124 S. E. 518).

Judgment reversed.

All the Justices concur, except Bussell, C. J., who dissents.