Hiers v. Exum

122 S.E. 784, 158 Ga. 19, 1924 Ga. LEXIS 72

• Court: Supreme Court of Georgia
• Decided: April 17, 1924
• Docket: Nos. 3877, 3878
• Status: Published

Opinion

Russell, C. J.

(After stating the foregoing facts.) There are three questions raised by the present record, which are determinative of all the issues involved.

1. It is insisted that the deed of Agnes C. Long, as administratrix of the estate of W. H. Long, to Mary Exum is void for the reason that, a legal sale could not be had unless first the deed of the Federal Land Bank of Columbia, S. C., had been paid and that bank had reinvested J. R. Hiers with title which might thereupon be levied and sold in satisfaction of other subsequent liens. This court has frequently held this contention to be without merit. Hnder the ruling of this court in Greenfield v. Stout, 122 Ga. 303 (50 S. E. 111), among other authorities which may be cited, the collection of a debt evidenced by the deed with power of sale may be enforced by a sale of the equity remaining in the grantor of the security deed. A sale whereby the purchaser buys subject to the rights of .the holder of a security deed, who for his own protection is invested with the title, does not in any way militate against or affect the rights of such holder of a security deed. This is especially true where, as in the present case, it is admitted that the holder of the security deed, the Federal Land Bank of Columbia, S. C., had given no bond for title to Hiers, the borrower. In the Greenfield case, this court ruled: “Where a warranty deed to secure a debt con tains no defeasance clause, and no bond to reconvey is executed contemporaneously therewith, the grantee being given the power to sell the land at public outcry upon default in the payment of the debt, it is not necessary that title be again placed in the grantor in order to bring the property to sale.” In the case of King v. Walker, 141 Ga. 63 (80 S. E. 312), a paper the same in verbiage as the deed with power of sale from Hiers to Long was before the court; and it was held that under the power of sale the grantee need not take possession to effect a valid sale, and that the grantee need not notify the grantor of his intention to sell. In Alexander v. Chipstead, 152 Ga. 851 (111 S. E. 552), the rulings announced in the Greenfield case were reaffirmed, though the express point before the court concerned only the invalidity of a sale where the grantor had died and the property was advertised and sold as the property of the grantor, when under the ruling in the Greenfield case it should have been sold as the property of the estate, as to which the court followed the ruling in the Greenfield case and distinguished the ruling in Sorrell v. British American Mortgage Co., 148 Ga. 513 (97 S. E. 441).

2. One of the main contentions of the plaintiffs in error is that Mrs. Hiers is entitled to be subrogated to the rights of W. H. Long, by reason of the fact that the note for $832 which J. R. Hiers owed to the First National Bank of Quitman, and which was indorsed by W. H. Long, was paid by Mrs. Hiers or from her individual funds. We cannot sustain this contention. Hiers executed to Long a security deed with power of sale, subject to the prior security deed to the Federal Land Bank of Columbia, but the conveyance was for the sole purpose of holding Long harmless against loss by reason of his indorsement of the note. The instrument did not bespeak any indebtedness to Long on the part of Hiers. It was not given to secure a loan by Long to Hiers. The lender, the First National Bank of Quitman, is not interested in -this deed, is not secured by it, and is not in any sense a party to it. Hpon payment of the note Mrs. Hiers was entitled to be subrogated to whatever rights the First National Bank of Quitman had, but she was not entitled to any right depending upon the status of Long or the deed to him. Subrogation may be either conventional or legal, the definition of each and the distinction being pointed out in Wilkins v. Gibson, 113 Ga. 31 (38 S. E. 374, 84 Am. St. R. 204). A conventional subrogation arises from agreement or contract; and before Mrs. Hiers could be subrogated to any right of Long, it would have been necessary for Long to assign the security deed to her. This was never done; and in fact Mrs. Long, as administratrix, very naturally refused to assign her rights as representative of Long’s estate, in view of the fact that by so assigning this contract of indemnity she would have diminished the value of her third deed securing the $300 note mentioned in the statement of facts. There can he no subrogation in this case, not only for the reason that the agreement to subrogate does not refer to the deed given to Long to secure him against loss upon the $832 note, but also for the all-sufficient reason that the payment of the note only subrogated Mrs. Hiers to the precise rights of the holder of the note; and as the First National Bank of Quitman had no power over, interest in, or concern with the individual transaction by which Long acquired a deed in the nature of a contract of indemnity, she acquired no interest therein by the mere payment of the note.

The provisions of the Civil Code of 1910 aré not applicable to the facts of this case. Section 3552 provides that “Payment by a surety or indorser of a debt past due entitles him to proceed immediately against his principal for the sum paid, with interest thereon, and all legal costs to which he may have been subjected by the default of his principal.” Section 3558 allows “Any surety on the original contract, or on stay of execution, or on appeal, or in any other way, or the representative of a deceased surety, who shall have paid oft or discharged the judgment or execution in whole or in part, and shall have the fact of such payment by him entered on such execution by the plaintiff or his attorney or the collecting officer, . . [to] have the control of such execution and the judgment upon which it is founded, to the same extent as if he were the original plaintiff therein, and be subrogated to all the rights of such plaintiff, for the purpose of reimbursing himself from his principal.” Section 3567 provides that “A surety who has paid the debt of his principal is subrogated, both at law and in equity, to all the rights of the creditor, and, in a controversy with other creditors, ranks in dignity the same as the creditor whose claim he paid.” It is plain that the facts of this case do not place Mrs. Hiers within any of these instances of subrogation expressly declared in the Code, nor does her case fall within the provision of section 3568, for Mrs. Hiers was not a surety for her husband, and this section has reference only to a surety. It says: “He is entitled, also, to be substituted in place of the creditor as to all securities held by him for the payment of the debt.” The doctrine of subrogation is also expressly recognized in sections 6038 -and 6076; but as the former section refers to those who have a judgment and take up prior liens to protect the value of their judgment, and the latter to purchasers at void or irregular judicial sales under mortgage foreclosures, it is evident that there is no application in the present case. The nature of the debt with power of sale which Hiers executed to Long for the sole purpose of indemnifying the latter against loss by reason of his indorsement and securityship upon the $832 note given by Hiers to the First National Bank of Quit-man is such that, being a mere contract of indemnity, upon payment of the note it had performed its function, became functus officio, and was avoided. The express terms of the instrument were such that there could not be a legal subrogation; and if a conventional subrogation were sought to be relied upon, it would have to appear that W. H. Long in his lifetime, or his representative after his death, assented to the agreement. Conventional subrogation may rest upon an agreement either with the debtor or the creditor by which the person discharging the obligation of another shall be subrogated to the rights of the creditor, and for this reason, under the facts alleged, Mrs. Hiers was perhaps subrogated to all of the rights of the First National Bank of Quitman. But its only right was to collect the note. It had no deed to any property to secure the debt; and even if by payment of the note Mrs. Hiers became entitled to proceed against Long as surety upon the note, her right would not extend any further and would not include a right to be subrogated to independent contracts by which he sought for his personal protection to indemnify himself.

The case might be different had Mrs. Hiers, at the time she paid the $832, been the holder of a security deed or other lien of any kind upon the 282 acres of land upon which she seeks to be subrogated to the rights of Long under the security deed to him in the amount of $832. But at the time Mrs. Hiers made the payment to the bank on September 22, 1920, she had no claim against the land, and it was not until October 12, 1922, nearly two years after the payment of the note, that Hiers executed to her a deed securing an alleged indebtedness of $4843. “The doctrine of subrogation is not applied for the mere stranger or volunteer, who has paid the debt of another, without any assignment or agreement for subrogation, being under no legal obligation to make the payment, and not being compelled to do so for the preservation of any rights or property of his own.” Sheldon, Sub. § 240. The doctrine of subrogation was borrowed from the civil law, and “Under the civil law it was said that the right would not pass to a stranger; that it was a personal privilege. In order to pass the right to him, it would be necessary to do so by stipulation for such agreement.” Harris, Law of Sub. § 792. As we have already said, the agreement for subrogation may be made either with the debtor or the creditor; but before any right of subrogation can exist there must be, in order to create a conventional subrogation, an agreement with one or the other, and it must concern the debtor or the creditor in a particular indebtedness. In the present case as related to the deed given to secure the $832 debt, Long was not in any sense a creditor. His contract was in effect really a contract of indemnity, which was discharged by the payment of the note to the First National Bank of Quitman; and therefore the agreement alleged did not include this kind of a contract or permit it to be affected by the doctrine of subrogation. There is no right of subrogation at law in this ease, because the right of subrogation springs out of the fact of the payment of a debt, and, under our Code, extends only in favor of a surety for the payment of a debt or in favor of one who is compelled to pay the debt to protect his own rights or interests. There can be no equitable conventional subrogation, because there is no interdependence or connection between the note which Mrs. Hiers paid to the bank and the deed with power of sale taken by Long, such as to subrogate it to the agreement between Mrs. Hiers and her husband, for the reason that so far as appears from the deed Long was not a creditor. A creditor is one to whom another is already indebted. On the contrary, the deed from Hiers to Long shows that it was expressly taken for the purpose of preventing, if possible, Hiers from becoming a debtor to Long in the sum of $832. In Ætna Life Ins. Co. v. Middleport, 124 U. S. 534, 549 (8 Sup. Ct. 625, 31 L. ed. 537), Mr. Justice Miller, delivering the opinion of the court, says that perhaps as clear a statement of the doctrine on this subject as is to be found anywhere is the ruling of Chancellor Johnson in Gadsden v. Brown, Speer’s Eq. (So. Car.) 37, 41, that “The doctrine of subrogation is a pure unmixed equity, having its foundation in the principles of natural justice, and from its very nature never could hate been intended for the relief of those who were in any condition in which they were at liberty to elect whether they would or would not be bound; and, as far as I have been able to learn its history, it never has been so applied. If one with the perfect knowledge of the facts will part .with his money, . . any rule of law which would restore him his money . . would subvert the rules of social order. It has been directed in its application exclusively to the relief of those that were already bound who could not but choose to abide the penalty.” In delivering the opinion of the court in Ætna Life Ins. Co. v. Middleport, supra, Mr. Justice Miller held that “The doctrine of subrogation in equity requires, 1, that the person seeking its benefits must have paid a debt due to a third party before he can be substituted to that party’s rights; and, 2, that in doing this he must not act as a mere volunteer, but on compulsion, to save himself from loss by reason of a superior lien or claim on the part of the person to whom he pays the debt, as in cases of sureties, prior mortgagees, etc. The right is never accorded in equity to one who is a mere volunteer in paying a debt of one person to another.” As already stated, it appears from the record that at the time Mrs. Hiers paid the note to the First National Bank of Quitman she held no lien upon the land and had no interest to protect. As held by this court in Wilkins v. Gibson, supra, “subrogation will arise only in those cases where the party claiming it advanced the money to pay a debt which, in the event of default by the debtor, he would be bound to pay, or where he had some interest to protect, or where he advanced the money under an agreement, express or implied, made either with the debtor or creditor, that he would be subrogated to the rights and remedies of the creditor.” See also Lutes v. Warren, 146 Ga. 641 (92 S. E. 58). Under this rule, even if Mrs. Hiers was subrogated to all the rights of the bank, her rights could not be extended to those accruing to Long under his contract of indemnity.

3. The assignments of error in the cross-bill of exceptions present for consideration the allowance of the intervention of Mrs. Neely Tolar (or Lane) Hiers, and the order making Mrs. Long, as administratrix of W. H. Long, deceased, a party to the cause. We think the court properly allowed the intervention of Mrs. Hiers. The 282 acres of land was a common subject-matter in the hands of the court, to an interest in which all the parties, including Mrs. Hiers, asserted an interest, legal or equitable. It was proper that the court of equity, having jurisdiction of the subject-matter and of all the parties, should adjudicate the rights of all parties interested, in order to avoid a multiplicity of suits.

4. For the same reason it was also proper that M'rs. Long, as administratrix of W. H. Long, should be made a party and be heard, since the title of Mrs. Exum was derived from her as the legal representative of the grantee of the deed with power of sale under which Mrs. Exum derived her title, and also in view of the fact that the deed from Hiers to Long to indemnify the latter was not formally cancelled until the day after the public sale; even though under facts developed at the hearing the defendants might be estopped to assert any rights dependent upon the failure to cancel, by reason of their knowledge that for several months the note which was the basis of. the contract of indemnity had been paid and discharged.

5. The court did not err in the appointment of a receiver. Despite the testimony in behalf of the defendants, the court was fully authorized to find that J. R. Hiers was insolvent, and that he was arbitrarily remaining upon the land, which he was not attempting to cultivate, and that the buildings and other improvements upon the place were greatly diminishing in value for lack of care and repairs. The facts in this case are stronger than those presented in Vizard v. Moody, 117 Ga. 67 (43 S. E. 426), and Gillespie v. Hunt, 145 Ga. 490 (89 S. E. 519), in both of which cases it was held that the appointment of a receiver to take charge of the land was not error. In the Vizard case, this court held: “Where one who has purchased land under a deed of trust to secure a debt is wrongfully excluded therefrom by the party in possession, who is insolvent, . . a court of equity should, upon a proper showing, grant the prayers of a petition ancillary to the action of ejectment, for an injunction to restrain the defendant from collecting the rents, and for the appointment of a receiver to take charge of the property and collect and preserve the rents and hold them to abide the final judgment in the case.” Were it not profitless, numerous authorities of this court to the same effect could be cited. It is strenuously insisted that the order of the judge is in fact a mandatory injunction. The contention is without merit, as it appears from the order that a receiver is appointed only to preserve the property and, if there be any proceeds or revenue therefrom, in'case the property can be rented or cultivated with profit, hold the same to abide the final judgment of the court.

6. The above rulings dispose of all the material issues raised in the main and cross-bill of exceptions. It is insisted however, that the deed from Mrs. Long as administratrix of W. H. Long, deceased, to Mrs. Mary Exum is invalid, because it was not stated in the notice or advertisement of the sale that the $300 debt evidenced by the note to secure which the deed with power of sale was given had matured and was past due. In the advertisement a reference was made to the record, from which any probable purchaser would have ascertained the fact that the note for $300 was several months past due. We hold that this reference to the record of the deed sufficiently incorporated in the notice of sale the fact that the indebtedness was past due, and that the sale was authorized by the very terms of the conveyance. As a general rule, the inclusion of precise reference to the particular place in the public records where full information as to important facts can be found is a sufficient inclusion of facts that can be accurately ascertained and authoritatively established by the record referred to.

There was no error in the order of the trial judge.

Judgment on main and cross-bills of exceptions affirmed.

All the Justices concur. Atkinson, J., concurs in the result.