Smith v. Federal Land Bank

Bell, Justice.

1. Under the Federal farm-loan act of July 17, 1916, a Federal land bank has authority and “jurisdiction” to lend money to members of national farm-loan associations on security of mortgages on farm lands within its district, and it may in the State of Georgia take as security a deed to secure debt instead of a mortgage. 12 U. S. C. A. §§ 771, 781; Federal Land Bank v. Gaines, 290 U. S. 247 (54 Sup. Ct. 168, 78 L. ed. 298); Code, § 67-1301; Irons v. American National Bank, 178 Ga. 160 (3) (172 S. E. 629). Furthermore, one who has obtained a loan from such a bank, and others holding under him, will be estopped to deny the bank’s authority. Towers Excelsior & Ginnery Co. v. Inman, 96 Ga. 506 (23 S. E. 418); Ray v. Home &c. Investment Co., 98 Ga. 122(3) (26 S. E. 56).

2. Tire fact that such a loan is indorsed by the local farm-loan association, which may be required to make good a default, does not relieve the member to whom the loan is made by the land bank. 12 U. S. C. A. § 921; Federal Land Bank of Columbia v. Shingler, 174 Ga. 352 (162 S. E. 815); Hooper v. Federal Land Bank of Columbia, 178 Ga. 571 (173 S. E. 415).

3. A member of a local farm-loan association obtained a loan from a Federal land bank, and executed a security deed to land, containing a power of sale. The loan was indorsed by the farm-loan association in accordance with the statute. After death of the borrower and upon a default, the bank sought to exercise the power of sale contained in the security deed. A guardian of minor children of the deceased filed a suit to enjoin the sale, on the grounds (a) that the land bank was without any “jurisdiction” to make the loan, and (b) that the borrower was liable to the association, which in turn was liable to the bank. Held, under the rulings stated above, that the petition failed to state a cause of action. The court did not err in sustaining the demurrer and dismissing the action.

Judgment affirmed.

All tlie Justices eoneur.