National City Bank v. Moss

Hill, J.

(After stating the foregoing facts.)

The National City Bank of Borne filed an amendment to the answer to the plaintiff’s petition, in which it prayed “ that a decree be entered, in case the deed from plaintiff to defendant is set aside, declaring 'that the conveyance from Luther Moss to his wife, the plaintiff in this case, dated June 11, 1920, is a conveyance in fraud of-the rights of the creditor of the said Luther Moss, that is to say, in fraud of the rights of the bank, and that the same be set aside and held null and void.” Another prayer of the amendment to the answer was “that the plaintiff, the said Mrs. Jennie Moss, be held and declared to be a trustee of said property for the benefit of the National City Bank of Borne, Georgia, a creditor of her said husband, Luther Moss, and such other creditors as may appear and interplead in this action, if there be other creditors.” This amendment was disallowed by the court. We are of the opinion that as to the first part of the answer the court did not commit error in disallowing it. As far back as the case of McCleskey v. Leadbetter, 1 Ga. 551, it was held: “A party claiming under a grantor, as distributee or legatee, can not impeach his deed for want of consideration, or because it was intended to defraud creditors. Both,the grantor and his privies are estopped from denying it.” Under the above decision, which has never been overruled so far as we are aware, the defendant would be estopped from having the deed from the husband to the wife canceled. Therefore the court below did not err in disallowing that portion of the amendment to defendant’s answer which sought to cancel the deed from the husband to the wife, the plaintiff.

However, we are of the opinion that the other portion of the amendment to the answer, which sought to declare the plaintiff a trustee of the property conveyed to her, for the benefit of the bank/ should have been allowed. The following sections of the Code of T910 throw light upon and are applicable to the present case: § 4519. “Equity jurisdiction is established and allowed for the protection and relief of parties, where, from any peculiar circumstances, the operation of the general rules of law would be deficient in protecting from an anticipated wrong, or relieving for injuries done.” § 4521. “ He who would have equity must do equity, and give effect to all equitable rights in the other party respecting the subject matter of the suit.” § 4522. “ Equity seeks always to do complete justice; and hence, having the parties before the court rightfully, it will proceed to give full relief to all parties in reference to the subject of the suit, provided the court has jurisdiction for.that purpose.” § 4523. “Equity considers that done which ought to be done, and directs its relief accordingly.” § 4532. “Equity will not force parties to litigate in order to have done what they ought, and are willing, voluntarily to do.”

In Blalock v. Newhill, 78 Ga. 245 (1 S. E. 383), this court held: “Where both parties t,o a suit for land derive title from a common grantor, the elder of the two would take precedence, in the absence of fraud or illegality therein; and where it appears that the holder of the junior title was put on such inquiry as was equivalent to notice of the senior title, a verdict finding in favor of the latter was demanded by the evidence. . . Where, on a bill in equity, a decree was rendered against the defendant, fixing the title in the complainant, to whom the defendant was indebted, the fact that the defendant had voluntarily made a deed to his wife while he owed the debt and was insolvent, and that he subsequently conveyed it to the complainant, did not make her conveyance void as being a pledge or sale of her separate property in payment of the debt of her husband.” In delivering the opinion of the court in the above stated case, Hall, J., said: “ Both parties derived title from a common grantor. The plaintiff’s title was the elder of the two; and in the absence of fraud or illegality in procurement, it took precedence of the defendant’s. The decree under which the plaintiffs obtained their title was older than the judgment on which the execution issued, which was levied on and sold the land when Blalock became the purchaser. Apart from the riile caveat emptor, which ordinarily obtains at such sales, there is ample evidence in this record to charge Blalock with actual notice of plaintiffs’ right to the properly, and to affect him with bad faith in bringing it to sale in disregard of their rights, for he knew of the pendency of the suits in which they obtained a decree for the land, and he is chargeable with notice of all the facts that could have resulted from a full investigation of the matter, which, in good conscience, he should have made, having been thus put upon inquiry. The technical defects he discovered in the proceeding at their instance, if they in fact existed, while they might have resulted in an erroneous or irregular decree, were not such as would have rendered it void. Nor did it matter that the title to the land was in the wife of the common grantor of the parties litigant-at the time the decree was rendered,' and that she subsequently conveyed it to the plaintiffs in execution, and that there was performance of this decree in their favor; it was not a pledge or sale of her separate property in payment of her husband’s debts in a legal sense, for she held under a voluntary conveyance from him at a time when he owed this debt and was utterly insolvent, and merely did voluntarily what, in honor and conscience, she should have done, and what she would have been compelled to do had the parties been forced to resort to law for the assertion and enforcement of their rights. As to the superiority of plaintiffs’ title over defendant’s, see Scott v. Singer, 54 Ga. 689; Wood v. McGuire’s Children, 17 Id. 303, 321; Miller v. Surls, 19 Id. 331, 333; Harrison v. Hatcher, 44 Id. 639. Without reference to any other question made by this record, we are of opinion that the verdict in this case is not only sustained, but imperatively demanded, by the law and evidence; and even if there was error in some other particulars (and we do not decide that there was), it could have no influence in bringing about a different result on another hearing, and therefore any discussion of the questions raised by them would be fruitless and unnecessary.”

In accord with the decision just cited is the case of Smith v. Smith, 143 Ga. 837, 839, 840 (85 S. E. 1034), where it was said: “ There is evidence to show that the debtor, Jim B. Smith, was insolvent at the time he executed the deed to his wife, and that the deed was made to defeat his creditors. This being so, the deed to the wife was void; and in a case like the present the law will not require a separate suit to cancel and set aside that deed and then subject the property, where the parties themselves have put the title where it properly belongs, in order to satisfy creditors with the proceeds of the propertjq which is subject to the creditors’ claims.” The pleadings show that at the time the plaintiff’s husband executed the voluntary conveyance to his wife, he was insolvent. That being true, the voluntary conveyance to his wife would be void as against his creditors. But, the husband having made the deed to the wife in the circumstances stated, the deed will be held to be to the wife in trust for the benefit of his creditors, and a court of equity will compel the parties to do what they ought to do (Civil Code of 1910, §§ 4523, 4532); and therefore, the wife having done what she ought to have done with her husband’s property, that is, conveyed it to one of the creditors of her insolvent husband, the-property should be held subject to the husband’s debt; and while, under the decisioh of McCleskey v. Lead-better, supra, the wife’s vendee can not have the deed canceled, a court of equity will compel the parties to do what in good con- . science they ought to do, and that is to have the property, which is worth more than the husband’s debts, subjected to the valid debts of the husband. The debt assumed by the wife to the bank, in the above view, will not be considered the debt of the wife, but that of the husband. The wife is not generally liable for the payment of this indebtedness. If the bank is successful in establishing its case as made in the amendment, which the court below refused, it would only be entitled to a decree subjecting the property to the payment of its debt, and in no event would the wife be liable for any deficiency in the judgment if this property did not bring enough to discharge the debt secured by the wife’s deed to the bank. In other words, if the bank establishes ’ its contention, it would be entitled to a judgment for the amount of its debt to be satisfied out of the property secured by the security deed, subject, of course, to the superior claim-of J. Z. Lynch, who, it is admitted, has a security deed older and superior to the bank’s deed to the property in controversy.

This conclusion also disposes of the question raised by the cross-bill of exceptions, wherein the plaintiff excepted to the ruling disallowing her amendment in which she prayed for a judgment for the amount alleged to have been paid by her to the bank on her husband’s debt. Inasmuch as plaintiff had secured the money with the property conveyed to her by her husband, who was insolvent at the time, which property was subject to his debts, she can not recover a judgment for the money so paid.

In the above view we do not construe the amendment to mean that the bank is denying the title of its grantor, nor denying the title of the husband or wife.

Judgment reversed in part and affirmed, in part on the main hill of exceptionsj and affirmed on the cross-hill of exceptions.

All the Justices concur.

Bussell, C. J., and Atkinson, J., concur in the result.