Under the conflicting evidence the jury was authorized to find that the plaintiff was not estopped to collect the promissory notes sued on by having concealed from Home Owners Loan Corporation an unrecorded security deed to him and another.
DECIDED JANUARY 18, 1945. W. D. Brisendine, as transferee, sued Mrs. Alice Johnson on a series of promissory notes, originally payable to the plaintiff and T. F. Maddux, to recover principal, interest, and attorney's fees, and to set up a special lien on land described in a security deed *Page 23 given by Mrs. Johnson to secure the payment of the notes. The defendant filed her answer admitting the uncontroverted allegations of the petition and denying the others, and alleged the following facts as a defense to the action: "(3) a. That she is not indebted to the plaintiff in the sum sued for or any other sum whatever. b. That she executed said notes and deed, but that the said transaction was a nudum pactum and without consideration; c. That defendant never negotiated for, or borrowed from plaintiff and his transferor, any loan of money, or other indebtedness, and that at the time defendant executed the notes and deed sued on she did not owe plaintiff and his transferor any sum whatever as is hereinafter shown and set forth. (4) That the equity in No. 1671 Flat Shoals Road, S.E., formerly owned by Mrs. L. C. Huey, subject to a loan deed in favor of Atlanta Title Trust Company, as trustee, given to secure a note of $1500, and to a loan deed in favor of W. F. Kinney, given to secure notes aggregating $1750. That on or about July 16, 1932, due to the economic depression the said Mrs. L. C. Huey's equity became worthless and she conveyed her record title to the said W. F. Kinney. (5) That subsequently and on account of the continuance of the economic depression, the equity of the said W. F. Kinney became valueless, and he conveyed his record title to W. D. Brisendine and C. L. Floyd, upon their promise to pay 1932 city and State and county taxes, and the Atlanta Title Trust Company loan mentioned in paragraph four above. (6) That subsequently and on or about February 10, 1933, this defendant was prevailed upon by the said W. D. Brisendine and C. L. Floyd to buy said premises and move therein, defendant on said date executing and delivering to the said Brisendine and Floyd, a deed to secure debt, evidenced by 54 notes, twenty-three of said notes being for $15 each and twenty-nine for $20 each, and this defendant does not know what the other two notes were for. That no deed was delivered to defendant conveying said property to defendant although defendant signed and executed and delivered to plaintiff and his transferor the notes and loan deed described for the reason that plaintiff and his transferor did not have title, of record, vested in them, and for the further reason that plaintiff and his transferor were unwilling to deliver defendant a deed until they saw whether defendant could meet the payments on said place and pay the 1932 taxes. *Page 24 (6) That defendant moved into said premises and was unable to comply with the terms of the loan deed to Atlanta Title Trust Company, trustee, and with the terms of the loan deed to plaintiff and his transferor, which was by them not recorded and defendant defaulted on said obligations. (7) That after said default the plaintiff came to the defendant and suggested that she go to the Home Owners Loan Corporation and apply for a loan on said property in order to pay off the Atlanta Title Trust Company, trustee, loan and asked her not to disclose to the said corporation that plaintiff and C. L. Floyd held a second loan deed from defendant on said property. (8) That plaintiff made application to the said corporation for a loan on said property in order to pay off the Atlanta Title Trust Company, trustee, loan. (9) That the attorney examining the title for the Home Owners Loan Corporation, an instrumentality of the U.S. Government, reported that no title of record was in the defendant, the deed to her and the deed from W. F. Kinney to W. D. Brisendine and C. L. Floyd never having been delivered and recorded. (10) That plaintiff then delivered to Home Owners Loan Corporation or its attorney, C. R. Hall, on or about May 26, 1934, the unrecorded deeds, (a) from W. F. Kinney to W. D. Brisendine and C. L. Floyd, and (b) from W. D. Brisendine and C. L. Floyd to this defendant, and upon the occasion of said delivery, did give, swear to, and execute an affidavit, substantial copy of which is hereto attached and annexed marked `exhibit A,' and by this reference made a part hereof as fully and completely as though in this paragraph incorporated. (11) That the loan deed given by this defendant to W. D. Brisendine and C. L. Floyd on February 10, 1933, and never recorded, bears the following: Georgia, DeKalb County. For value received I hereby assign, sell, and convey to T. F. Maddux, all my rights, titles, and interest in the within and aforegoing deed in and to the property and notes therein described, This the 23d day of June, 1933. C. L. Floyd. Signed, sealed, and delivered in the presence of: L. C. Dotson, C. B. Copeland, N. P. Georgia, State at Large. (12) That upon the occasion of the giving of the affidavit incorporated in paragraph ten above by the plaintiff, he with intent to either cheat the government or to mislead those acting under its authority did omit from said affidavit, conceal, and hide from the Home Owners Loan Corporation, and its servants, intentionally *Page 25 the fact that he and another held an unrecorded loan deed upon the property, upon which application for a loan was pending from said corporation knowing that if the existence of said loan were disclosed that said loan would not be made. (13) That, among other things, one of the purposes of the home owners loan act, enacted by Congress, was to relieve and protect home owners from exploitation by lenders and to enable such persons (in debt) and without ability to make payment to constitute such agency the sole creditor. (14) That subsequently to making of the HOLC loan above mentioned plaintiff procured this defendant to execute to him and T. F. Maddux, a loan deed dated September 22, 1934, and notes (54) in an aggregate amount of $811.24, with interest at seven per cent. per annum, without any consideration whatsoever moving to this defendant for and on account of the execution and delivery of said notes. (15) That defendant is a housewife and mother, and is without knowledge of business practice, and plaintiff led her to believe that if she did not execute the said papers that he would eject her from her house, and without giving her any money, check, or other thing of value, got her signature to said loan deed and notes. (16) That defendant has paid nine of the notes, or an aggregate amount of $135, and shows that said payments were wholly and totally without consideration and that she is entitled to judgment against the plaintiff for the amount of said payments with interest from the several dates of the said payments. (17) That defendant's husband furnished the material and baked pies, and delivered them to the plaintiff to be by plaintiff sold and the proceeds therefrom applied as a credit on said notes, in the amount of $850, and defendant prays that the plaintiff be required to account to her for the value and monies received by the plaintiff for and on account of the said pies, and that she have judgment and [against] the said plaintiff for the amount thereof. (18) That the taking of the notes by plaintiff and T. F. Maddux from this defendant was an attempt on their part to defeat the intent and purpose of the home owners loan act, enacted by Congress, and the collection of the said notes, being without consideration as aforesaid, is against public policy." The jury found in favor of the plaintiff. The defendant's motion for a new trial was overruled, and she excepted. *Page 26 1. The evidence shows that Mrs. Johnson executed a series of notes to Brisendine and C. L. Floyd, and executed and delivered to them a security deed which was second to a deed held by Atlanta Title Trust Company; that C. L. Floyd transferred his interest in the notes, deed, and property to T. F. Maddux; that when Mrs. Johnson applied for a loan on the property from Home Owners Loan Corporation it was found that her warranty deed from Floyd and Brisendine had not been recorded; that Brisendine executed an affidavit for the purpose of enabling Mrs. Johnson to obtain the loan, the affidavit being as follows: "Georgia, Fulton County. Personally appeared before me, the undersigned officer authorized to administer oaths, W. D. Brisendine, who being by me first duly sworn, deposes and says on oath that Mrs. Alice T. Johnson purchased property known as No. 1671 Flat Shoals Road, S.E., Atlanta, Georgia, from affiant and C. L. Floyd. Deponent further deposes and says that this property was purchased by Mrs. Alice T. Johnson under date of Feb. 10, 1933, and on said date affiant and C. L. Floyd executed warranty deed to Mrs. Alice T. Johnson and that said deed was delivered to her on that date; that the unrecorded warranty deed, bearing said date and conveying said property, now in the hands of Cecil R. Hall, DeKalb County attorney for Home Owners Loan Corporation, is the original deed that was executed and delivered on said date to Mrs. Alice T. Johnson. This affidavit is made to be used by her in her application to Home Owners Loan Corporation for a loan on said property, said application being No. 9-A-3499. W. D. Brisendine. Sworn to and subscribed before me this 26 day of May, 1934. C. R. Hall, Notary Public, Georgia, State at Large." Without quoting the evidence in detail, the jury was authorized to find that Mr. Brisendine did not conspire with Mrs. Johnson to conceal her debt to Brisendine and Maddux from Home Owners Loan Corporation, or the fact that it was secured by an unrecorded security deed, and to find that Mr. Brisendine did not know that Home Owners Loan Corporation was not informed of the indebtedness to him and Mr. Maddux. The finding was authorized that Mr. Brisendine told the attorney for Home Owners Loan Corporation about the indebtedness. The contention of Mrs. *Page 27 Johnson is that it was Mr. Brisendine's duty, in making the affidavit above set forth concerning the warranty deed to Mrs. Johnson, to reveal the existence of the security deed and the debt secured thereby, and that when Mr. Brisendine returned the old notes and deed to Mrs. Johnson uncancelled, it revealed a scheme to evade the policy of the Home Owners Loan Corporation legislation, which, she contends, would have been wiped out if Home Owners Loan Corporation had known about them. The answer to the first contention is that if Mr. Brisendine had no reason to suspect that Home Owners Loan Corporation did not know about the security deed in question he owed no duty to reveal the information in giving information on an entirely different subject, assuming that otherwise he would have been under such a duty. The fact that the affidavit contained Mrs. Johnson's Home Owners Loan Corporation application number does not mean that Mr. Brisendine had read the application or knew its contents. Moreover, although Mrs. Johnson in one or more places stated in her application that there was not a second loan on the property, she stated also in the application that there had been a default in the payment of a second loan, but did not state to whom it was owed. This authorized the jury to find that the notice was sufficient to put Home Owners Loan Corporation on inquiry as to the existence of the second loan, and even if Mr. Brisendine is charged with knowledge of the contents of the application the jury could have found that he was justified in assuming that Home Owners Loan Corporation had notice of its existence from the application. The fact that Mr. Brisendine delivered the old security deed to Mrs. Johnson without canceling it has no significance. The deed was not recorded, so there was no necessity of cancellation on the public records, and it could have been defaced or destroyed by Mrs. Johnson. We recognize the public policy of the law and are aware of the decisions to the effect that a creditor cannot agree to cancel a debt or reduce it in consideration of a Home Owners Loan Corporation loan and then attempt to override his agreement and the policy of the law by reinstating the debt or a part thereof by another agreement. SeeRobinson v. Reynolds, 194 Ga. 324 (21 S.E.2d 214); Kayv. United States, 303 U.S. 1, 8 (58 Sup. Ct. 468,82 L. ed. 607); Federal Land Bank v. Blackshear Bank, 182 Ga. 657 (186 S.E. 724); Willcox v. Cobb, *Page 28 58 Ga. App. 39 (197 S.E. 517); Jordan v. Robinson, 63 Ga. App. 745 (12 S.E.2d 121). Under the authorized findings the plaintiff was not estopped to collect the notes sued on.
2. There is no merit in any of the exceptions to the charges of the court. The court fully and fairly submitted the contentions of both parties. The court did not err in overruling the motion for a new trial.
Judgment affirmed. Sutton, P. J., and Parker, J., concur.