1. The court did not err in refusing to strike the defendant's allegation that it is engaged in the business of lending money as a "like association" to a building and loan association as defined by chapter 16-1 of the 1933 Code, on the sole objection urged by demurrer that it was a mere conclusion of the pleader.
2. The defendant's allegation that "it had qualified with the office of the Secretary of State of the State of Georgia under the provisions of the securities act" was also a statement of fact, and was not subject to special demurrer on the ground that it was a mere conclusion of the pleader.
3. The cross-petition failed to allege sufficient grounds for the appointment of a receiver, and the court erred in overruling a demurrer based on this ground. The other grounds of demurrer were without merit.
4. In order to authorize the appointment of a receiver for property conveyed by bill of sale to secure a debt, upon the application of the grantee, both insolvency of the grantor and inadequacy of the security must appear. Inadequacy of security not appearing in the instant case, the court erred in appointing a receiver.
No. 13104. FEBRUARY 14, 1940. On September 16, 1938, John D. Wicks and Mrs. Mary Wicks, husband and wife, executed in favor of the Community Loan Investment Corporation a note for $399.60 with a bill of sale attached *Page 621 conveying certain household goods and a 1936-model Chevrolet sedan automobile. On January 7, 1939, they filed a petition to enjoin the Community Loan Investment Corporation from seizing the property described in the bill of sale, and from otherwise attempting to enforce the note and bill of sale. It was alleged that Mrs. Mary Wicks signed the note and bill of sale as surety for her husband and that they were therefore void as to her. Code, § 53-503. It was further alleged that the defendant corporation was engaged in the business of lending money in sums of $300 or less, but was not licensed as such (Ga. L. 1920, p. 215); that the note and bill of sale were given to secure a loan of $300 to John D. Wicks on which the defendant charged $99.60 interest, which is more than eight per cent. per annum; that the note and bill of sale are usurious and void; that the defendant had threatened to notify the husband's employer of the loan and thereby cause him to be suspended or lose his job; that the defendant's agents had gone to the home of petitioners and had in such a rough and boisterous manner threatened to seize their furniture as to cause the wife to suffer a nervous shock; and that unless enjoined the defendant would cause the petitioners irreparable damage.
The defendant filed an answer denying the allegations of suretyship and usury. The defendant denied that it was engaged in the small-loan business requiring a license under the small-loan act of 1920, and alleged that it was engaged in the business of lending money as a "like association" to a building and loan association as defined by the Code, § 16-101. It further alleged that the note and bill of sale were given to secure the payment of the agreed purchase-price of $399.60 for one of its three per cent. investment certificates bought jointly by petitioners; that the petitioners hypothecated the investment certificate to the defendant as security for a loan of $370 which it made to petitioners jointly; that before selling the investment certificate to the petitioners "it had qualified with the office of the Secretary of State of the State of Georgia under the provisions of the securities act;" that the automobile described in the bill of sale was in the possession of petitioners and was "deteriorating and depreciating in value;" that the petitioners were insolvent; and that the balance due on the note was $374.60. The defendant prayed for judgment on the note, that the plaintiffs be enjoined from disposing of the automobile, that a receiver be *Page 622 appointed to take possession of the automobile, and for general relief. The petitioners demurred specially and generally to the answer and cross-bill. They also filed an answer thereto in which they alleged, among other things, that the defendant is not a bona fide building and loan association or "like association," but pretends to be such only as a device for charging usury; that the plaintiffs are not insolvent; that the value of the furniture described in the bill of sale is $500; that the furniture and automobile are being kept in good condition and are worth $795; and that the value of this property is $395.40 more than the loan of $399.60 claimed by the defendant.
At an interlocutory hearing on which the evidence consisted of the sworn pleadings of the parties, the court overruled the demurrers to the answer and cross-bill, appointed a receiver to take charge of the automobile if the petitioners did not give bond in the sum of $200 within ten days, and continued the restraining orders in force. The petitioners excepted to the overruling of the demurrers and to the appointment of a receiver. 1, 2. Headnotes 1 and 2 do not require elaboration.
3. While the defendant alleged in its cross-bill that the petitioners were insolvent and that the automobile was deteriorating and depreciating in value, it was not alleged that the property was insufficient to pay the indebtedness in full or that the petitioners were allowing it to deteriorate in such a manner as to endanger the defendant's security. The cross-bill therefore failed to allege sufficient grounds for the appointment of a receiver, and the court erred in overruling the demurrer challenging the sufficiency of the cross-petition in this respect. The other grounds of demurrer are without merit.
4. Under the pleadings and evidence in this case it was error to appoint a receiver to take charge of the automobile described in the bill of sale. "Equity may appoint a receiver to take possession of, and hold subject to the direction of the court, any assets charged with the payment of debts, where there is manifest danger of loss, or destruction, or material injury to those interested." Code, § 55-305. The petitioners alleged in their answer to the *Page 623 cross-bill that the property described in the bill of sale was worth twice the amount of the indebtedness which it was given to secure. Whether or not the judge may have been authorized to discount the plaintiff's allegation that the automobile and furniture had not "deteriorated a bit" and were worth as much as when the bill of sale was executed, there was no evidence which would authorize the judge to find that the property had decreased in value to such an extent as to be inadequate security for the debt. As stated in Planters Oil Mill v. Carter, 140 Ga. 808 (79 S.E. 1120), "As a general rule, a receiver will not be appointed for mortgaged property upon the application of the mortgagees, in the absence of satisfactory proof of the inadequacy of the security and the insolvency of the mortgagor." Insolvency alone is not sufficient to authorize the appointment of a receiver in such a case. Inadequacy of security must also appear. Dixon v. Tucker, 167 Ga. 783 (146 S.E. 736);White v. Malone, 174 Ga. 886 (164 S.E. 672); Perry v.First Mutual Bldg. Loan Asso., 174 Ga. 914 (164 S.E. 804). Since such inadequacy was neither alleged nor proved, the court erred in appointing a receiver.
Judgment reversed in part, and affirmed in part. All theJustices concur.