Rembert v. Ellis

1. If upon the hearing of a demurrer to a petition the plaintiff make profert of a writing which is not the foundation of the suit and not set forth in the petition or exhibits thereto, it does not thereby become a part of the petition so as to be considered on demurrer, notwithstanding the order of the judge recites that it was agreed by counsel that the court might consider the same on demurrer.

2. A petition which, among other allegations, sets out that the plaintiff is the present owner of two promissory notes signed by H. L. Bowden for the principal sum of two hundred and fifty dollars each, which are past due and are part of a series of notes aggregating three thousand dollars, payable to Union Title Guarantee Company Inc.; that the company was declared insolvent and placed in the hands of receivers; that the receivers sold said two notes to petitioner at public outery; that, to secure the whole of said indebtedness, Bowden executed to said company a security deed on certain designated property, the fair market value of the same being less than the amount of the indebtedness secured thereby; the petition praying, among other things, for foreclosure of the security deed as an equitable mortgage, set forth a cause of action.

No. 13856. OCTOBER 25, 1941. In February, 1941, W. S. Rembert filed in Fulton superior court his petition against Frampton E. Ellis as administrator of the estate of H. L. Bowden, Mrs. H. L. Bowden, Reconstruction Finance Corporation, Harry J. Gordon, Archie I. Hamilton, and Decatur Building and Loan Association; all but the defendant last named alleged to be resident of Fulton County. The allegations of the petition were in substance as follows: In November, 1928, H. L. Bowden executed to Union Title Guarantee Company Inc. a deed to secure an indebtedness of $3000, represented by promissory notes, one for $2000, and the other four being for $250 each. The Union Title Guarantee Company was decreed insolvent, and was placed in the hands of receivers. In September, 1936, its receivers sold to petitioner two of the $250 notes above referred to, which had matured, one on December 1, 1930, and the other on December 1, 1931. Petitioner is the present owner thereof; he is informed and believes that the Reconstruction Finance Corporation is the holder and owner of the $2000 note of the same series, and that the security deed was delivered to it by the Union Title Guarantee Company at the time that it acquired the $2000 note. After the death of H. L. Bowden his widow had set apart to her as a year's support the described realty located at 204 Fairhaven Circle in Fulton County, conveyed by the security deed, subject to the outstanding indebtedness. Petitioner is informed and believes that Bowden was insolvent at his death, and that there are no other assets out of which any deficiency decree could be satisfied. The Reconstruction Finance Corporation purports to have sold the property to Archie I. Hamilton, who in turn executed a security deed to the Decatur Building and Loan Association. Hamilton purports to have conveyed the property to defendant Gordon, who executed a security deed to Hamilton. The deeds have been recorded. The fair market value of the realty is less than the principal and interest of the indebtedness heretofore referred to; and it is necessary for a court of equity to intervene and by receiver collect and conserve the rents and proceeds, pending a final decree. The plaintiff prays, that a second original be issued and served on the Decatur Building and Loan Association; that Hamilton, Gordon, and the Decatur Building and Loan Association be required to show what interest, if any, either of them may have in and to any proceeds derived from a sale of the realty under this foreclosure proceeding; that if either of them has any equity, title, or right, it be forever barred by foreclosure of the security deed; that it be decreed that petitioner have the benefit of the security by the deed given to secure the notes; that he be allowed to foreclose said security deed as an equitable mortgage; that Ellis, administrator of the estate of Bowden, pay into the registry of the court the sum of money found by the court to be due on the security deed; that any amount or amounts thus paid be retained by the court until after appropriate notice to all parties at interest, and then be distributed by order of court to petitioner and such other party or parties to whom it rightfully belongs; that pending a final decree a receiver be appointed to hold, rent, and manage the property; and that the plaintiff have and recover such other and further relief as to the court may seem meet and proper.

Attached to the petition is a copy of one of the notes sued on, containing the recital that it is secured by a security deed made in conformity with the law specified therein, and that it was intended to be recorded forthwith, "to which deed reference is made in the terms thereof; and this note is made subject to all conditions of said deed." A copy of the security deed itself is not attached, but the petition contains a description of the property conveyed by the security deed referred to, which description is that of the realty located at 204 Fairhaven Circle.

Each of the defendants demurred generally to this petition, Hamilton, Gordon, and Reconstruction Finance Corporation demurring also specially, and contending that it does not appear from the petition that petitioner has or owns any estate or interest in the property described; that it does not appear that the receivers of Union Title Guarantee Company on the date of the alleged sale to petitioner had or claimed any interest in the real estate described, or that they were authorized to make the alleged sale, or were vested with any right, title, or interest in the security deed. At the hearing of these demurrers profert of the proceedings in the case of Reconstruction Finance Corporation vs. Mrs. H. L. Bowden et al., No. 108914 of Fulton superior court, was made. At the conclusion of the hearing the court rendered a decree wherein it was recited that it was agreed by counsel that the plaintiff's case would turn on the validity or invalidity of the foreclosure proceedings in that case, and that after argument the court held that the proceedings referred to were valid. The demurrers were sustained and the action dismissed. To this judgment the plaintiff excepted. 1. A preliminary question is presented. The sole exception is to the sustaining of a demurrer to the petition. The judge's order recites that on the hearing it was agreed by counsel "that plaintiff's case would turn on the validity or invalidity of the foreclosure proceedings as recorded in the case of Reconstruction Finance Corporation vs. Mrs. H. L. Bowden, No. 108914 in this court. And it was agreed that the court might consider, on the demurrer, the foreclosure proceedings referred to;" and a copy of the proceedings in said case No. 108914 is attached to the bill of exceptions as an exhibit. This court is asked, in passing on the demurrer, to treat what is set forth only in the exhibit attached to the bill of exceptions as a part of the petition. This can not be done. The trial court is a court of record; and what was done does not ipso facto become a part of the record in the case. There was no order taken allowing it as an amendment to the petition, which order would have been necessary to make it a part of the same. The court can not look outside of the petition. Constitution Publishing Co. v. Stegall, 97 Ga. 405 (24 S.E. 33); Augusta Savannah R. Co. v. Lark,97 Ga. 800 (25 S.E. 175); Candler v. Kirkland, 112 Ga. 459 (37 S.E. 715); Mitchell v. Southern Railway Co., 118 Ga. 845,847 (45 S.E. 703). The plaintiff in error relies onChicago Building c. Co. v. Talbotton Creamery c. Co.,106 Ga. 84 (31 S.E. 809). That decision does not sustain counsel's position; for there the writing of which profert was made was the writing which was the foundation of the suit, and that fact is clearly brought out in the opinion and in the authorities relied on to support it. In Mann v. Showalter, 145 Ga. 268, 274 (88 S.E. 968), the court was dealing with what it was sought to show by the record in another suit. In holding that although some recitals were made as to what the allegations were in the other suit, and the expression "all the allegations of which will be shown to the court" was used, this did not make the former petition a part of the pleading in the present case, this court said: "In the petition in the present case it is recited that the former suit was brought, attacking and seeking to have set aside the decree of divorce granted in Tennessee, and endeavoring to have declared void the subsequent marriage of Showalter. There were some recitals as to the allegations made in that petition, and the expression was used, `all of the allegations of which will be shown to the court.' This did not make the former petition a part of the pleading in the present case; nor did it authorize the petition in that case to be brought to this court by specification as a part of the present record. That it was so brought up does not authorize its consideration here on demurrer. The ruling in Chicago Building c. Co. v. Talbotton Creamery c.Co. [supra], decided by four Justices, where, upon the hearing of a demurrer to a petition, profert was made of a written contract which was the foundation of the suit, and it was produced and read, will not be so extended as to make a part of the record every paper in another case which is mentioned or partly described, so that it can be considered on demurrer to the petition, or brought to this court by specification as part of the record."

2. The report preceding this opinion, taken in connection with such allegations as are summarized in headnote 2, discloses such facts as prima facie entitle the plaintiff to some of the relief sought. Irons v. American National Bank, 178 Ga. 160, 180 (172 S.E. 629), and cit. Counsel for the defendants press upon us the view that under the authority of Dalton City Co. v.Johnson, 57 Ga. 398, the plaintiff showed no title to the notes. It is alleged in the instant case, that the notes were payable to the order of Union Title Guarantee Company Inc.; that the company was placed in the hands of receivers; that the receivers at public outcry sold the notes to petitioner; that petitioner is the present owner of said notes. In the Johnson case, supra, there was no purchase of the notes, as here, and therefore no equitable right of the plaintiff therein. The opinion of Judge Bleckley in that case contains an argument to demonstrate that under the allegations and the proof the complainant had no title, either legal or equitable. It is true that here it is not alleged in so many words that petitioner paid value for the notes; but when it is alleged that he purchased them at public outcry at receiver's sale, it will be presumed, as against a general demurrer, that he was a purchaser for value. If he was, he is in equity the owner of these notes and has a standing in a court of equity. It was erroneous to dismiss the action on general demurrer.

We reverse the judgment, with direction that the judge pass upon the special grounds of demurrer separately, and, if he sustains any of them, that he allow counsel for the plaintiff such reasonable opportunity to amend as he may deem proper in the exercise of a sound discretion. If no amendment is made, or, if made, it fails to cure the defects, if any, held to exist in the petition, it can then be properly dealt with. Buchan v.Williamson, 131 Ga. 501, 509 (62 S.E. 815, 819).

Judgment reversed, with direction. All the Justices concur,except