Weihl, Probasco & Co. v. Atlanta Furniture Manufacturing Co.

*298 Judgment affirmed, with direction.

Demurrers and answers were filed by all the defendants. The answer of the Capital City Bank sets up that its mortgage is valid for money loaned, and the note it was given to secure bears the bona fide indorsement of A. J. Miller & Son, but the bank has no lien on two funds and no lien save its mortgage which was legally executed by authority of the stockholders of the furniture company at a legal meeting; that the bank is amply solvent and able to respond to any decree that may be rendered against it; that Weihl, Probasco & Co. knew of the existence of all the mortgages prior to the execution and acceptance by them of their mortgage, and took it subject to all existing mortgages; and that the property covered by the bank’s mortgage will not bring more than $22,000 or $23,000, and there is no reason for putting a receiver in charge of it when the mortgage debts on it aggregate $31,000. The answer of the Merchants & Mechanics Banking & Loan Co. alleged: On March 29, 1889, the furniture company borrowed from it $8,000 and gave a mortgage to secure its repayment, with interest as agreed upon, in monthly instalments as provided for by the charter of this defendant (Acts 1887, p. 379), and by an act as to building and loan associations (Acts 1888, p. 47). The mortgage was given with the express assent of all the stockholders in the mortgagor, and was executed by its vice-president who acted for it in the absence of its president and its general manager. Its charter and bylaw's provide that in the absence of the president the vice-president shall discharge all the duties of his office; it had no secretary or treasurer, and the duties of these officers as well as the practical management of its business affairs, were attended to by the general manager. In fact its president was seldom in Atlanta where its business was carried on, and the vice-president, his brother, really discharged the duties of president. It had no directors, but its business was managed by its officers or by the stockholders themselves. All the stock was represented at the meeting called to authorize and request this loan, except $3,000 owned by the president who was absent, but who knew of the application, of the making of the loan and the giving of the mortgage, and procured the vice-president to act for him in the execution of the notes and mortgage. These contain no usury. Part of the notes were paid, but the company failed to pay one note at maturity and all subsequent notes, and by provision in the mortgage the right was given, upon such failure, to proceed to collect the entire remainder of the debt, with attorney’s fees and cost; and this defendant thereupon proceeded to foreclose its mortgage. A. J. Miller was not president of the mortgagor, had no stock in it and no connection with it. The mortgaged property, being substantially the same as covered by all the mortgages, is not worth enough to satisfy them all, etc —The answers of the other defendants need not appear here. The mortgage to the Capital City Bank was dated March 26,1891, and recorded two days later; it covered the real estate of the furniture company as well as all its fixtures, machinery, etc. for making furniture; it was made to secure a loan of $13,000 due six months after date, with 8.per cent, interest after maturity, and costs of collection including attorney’s fees; and it contained a power, in case of default in payment when due, to advertise the property once a week for four weeks and to sell it at public outc'ry at the place of making sheriff’s sales, to the highest bidder for cash, making title to the purchaser. It was proved that the making of this, as well as the mortgage to the Merchants & Mechanics Banking & Loan Co., was authorized by the stockholders of the mortgagor. The mortgage last mentioned was dated March 29, and recorded April 3, 1889, was for $9,919.68 payable $206.66 every month, and stipulated that if default was made there should be the right to foreclose for the entire amount, principal, interest, and attorney’s fees. The sum of about $4,000 is due on it. The furniture company kept its account with the Capital City Bank, which had previously loaned it money, on all of which loans Miller & Son were indorsers; and when the mortgage was given, all the indebtedness was put into one note indorsed by Miller & Son, which note is the one the mortgage was made to secure. The real estate covered by the mortgages is worth from $20,000 to $25,000. "When Weíhl, Probasco & Co. took their mortgage they were informed of the existence of all the other mortgages. Their attorney objected to putting this fact in their mortgage, and was thereupon told by the attorney for the mortgagor that by leaving out this statement Weihl, P. & Co. were not to get any advantage, but must accept the mortgage subject to all the others. It was an issue, tinder the evidence, whether the mortgagor was insolvent, and known by the indorsers to be so, on March 26, 1891. The judge denied the injunction and receiver so far as the Capital City Bank and the Merchants & Mechanics Banking & Loan Co. were concerned, and allowed them to proceed with their mortgages ; but he appointed a receiver to take charge of all the assets of the furniture company, other than the property mentioned in these, two mortgages. The other defendant mortgagees were enjoined from proceeding with their mortgages, and the furniture company was enjoined from interfering with the receiver, who was directed to convert the assets into cash and hold them subject to the order of the court, and to receive any surplus or excess which might arise from the sale of the property covered by the two mortgages which were allowed to proceed, but -he was not authorized in any manner to interfere with the sale under these mortgages. The plaintiffs excepted to the refusal to put the entire property in the receiver’s hands, and to the refusal to enjoin the two mortgages mentioned. Walter R. Brown, for plaintiffs. Weil & Goodwin, King & Anderson and L. W. Thomas, for defendants.