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PEOPLES LOAN & FINANCE CORPORATION OF ROME v. MCBURNETTE.
37791.
Trover. Floyd City Court. Before Judge Maddox. May 19, 1959.
TOWNSEND, Judge.
1. "Where the court sustains any or all demurrers to pleading, and allows time for the filing of an amendment, such judgment or order shall not be subject to, exception or review, but the court shall render a judgment on the sufficiency of the pleadings after the expiration of the time allowed for amendment which shall supersede the judgment allowing time for amendment." Code (Ann.) 81-1001.
2. Where the terms of a bill of sale to secure debt give the debtor the right to sell the secured property, the proceeds to be held in trust for the payment of the debt, such sale divests the property from the lien of the security instrument.
3. Although the debtor here, an automobile dealer, did not in fact sell the automobile in the ordinary course of business as provided by the terms of the security instrument, a purchaser for value of the property from the person to whom such dealer transferred it, without knowledge of these facts, is not guilty of conversion so as to render him liable in a trover action for the recovery of the property or its value brought by the original lender. One who gives to another the external indicia of the right of disposing of his property is, upon a sale thereof to an innocent purchaser, divested of his title.
4. A cause of action in trover against two persons who are alleged to be guilty of conversion in that one sold and the other purchased property belonging to the plaintiff is not a joint, but a joint and several cause of action, since the plaintiff may elect to sue either or both of such persons and need not join them in the same suit. The judgment of the trial court sustaining the demurrer of one of the defendants and dismissing the petition as to him is a final judgment as to that defendant. Accordingly, the motion to dismiss the bill of exceptions on the ground that it was prematurely sued out as to this defendant is without merit.
Peoples Loan & Finance Corporation filed a bail trover proceeding in the City Court of Floyd County against the defendants Fred McBurnette, Jr., and Arnold Minish, which, as amended, alleged the following: that plaintiff loaned $1,350 to Jack Harwell d/b/a Harwell Motor Company, taking as security a bill of sale to secure debt to a 1957 Mercury automobile which was duly recorded; that the defendants have converted this automobile to their own use; that Minish obtained possession of the automobile from Harwell in payment of a gambling debt owed by Harwell to Minish in December, 1958; that in February, 1959, Minish sold said automobile to the defendant McBurnette and at the time of said sale the automobile had a reasonable market value of $1,450; that McBurnette now has possession of said automobile and is holding it under a claim of title and refuses to deliver possession to the plaintiff although demand has been made; that by reason of these facts Minish obtained no title to the automobile against this plaintiff and the defendant McBurnette is therefore also without title thereto; that Harwell never sold the automobile and it remained in his possession until delivered to Minish in payment of the gambling debt. The bill of sale to secure debt attached to the petition conveys title to the Mercury automobile to the plaintiff and recites that the property is to be kept in storage by the maker until the indebtedness is paid in full. It then recites: "Notwithstanding any other provisions of this instrument, it is understood that the maker is a dealer in automobiles. He is hereby permitted to sell the above described property. In the event of any such sale, the proceeds shall immediately become impressed with a trust for the use and benefit of the holder of this instrument. The said funds shall immediately be used to retire this instrument and for no other purpose."
The defendant McBurnette demurred to the petition and the demurrer was sustained with leave to amend. Demurrers to the first amendment were likewise sustained, and, after a second amendment, on demurrer to the petition as amended, the action was dismissed as to him. Error is assigned on these judgments.
1. Where after demurrers are sustained with leave to amend and an amendment is filed pursuant to such order, the questions raised by the demurrer prior to amendment become extinct and nugatory and are not a subject of review by this court. Code (Ann.) 81-1001; McCormick v. Johnson, 213 Ga. 544 (100 S. E. 2d 195); Adams v. Ricks, 91 Ga. App. 494 (1b) (86 S. E. 2d 329). Jackson v. Jackson, 214 Ga. 619 (106 S. E. 2d 783), apparently holding to the contrary, may be distinguished on the ground that in the McCormick case, as here, the original demurrers were not renewed, and on the further ground that the rulings on special demurrer in the Jackson case did in fact constitute a final judgment as to an essential element of the cause of action, whereas here, as in the McCormick case, the special demurrers were on technical grounds and the plaintiff amended so as to set out the same matter in a manner which would meet the objections of the demurrer. If, however, the cases are in conflict in spite of these distinctions, then the McCormick case, being older, would be controlling. It follows that only the judge's final order, based on the general demurrer to the petition as finally amended, will be considered here.
2. While ordinarily a properly recorded conditional-sale contract or bill of sale to secure debt securing title in the vendor or lender until the debt is paid places in the lender legal title to the property paramount to the title of a purchaser from the owner of the remaining equity, it is nevertheless a good defense to a trover action brought by the owner of the security instrument against a bona fide purchaser for value of the property that the plaintiff agreed to a resale and agreed, in that event, to substitute the fund realized from the sale of the property in place of the security. In such case the purchaser takes free and clear of the lien of the security instrument. National City Bank v. Adams, 30 Ga. App. 219 (3) (117 S. E. 285); Ezzard v. Frick & Co., 76 Ga. 512 (3); 47 Am. Jur. 57, Sales, 863; Automobile Financing, Inc. v. Downing Motors, 95 Ga. App. 711 (98 S. E. 2d 643). The bill of sale to secure debt here permitted the debtor Harwell, an automobile dealer, to sell the vehicle and provided that in such event the proceeds of the sale would become impressed with a trust in favor of the plaintiff. As to a bona fide purchaser of the property, accordingly, by agreement of the parties the sale would divest the plaintiff's security title.
3. It is contended, however, that Minish was not a bona fide purchaser because the consideration passing from him to Harwell, being the payment of a gambling debt, is void as against public policy under Code 20-504, and that for this reason the defendant McBurnette, although a purchaser for value and without notice of any defect, cannot obtain good title to the vehicle as against the plaintiff. It does not follow that, simply because neither Harwell nor Minish acted within the terms of the bill of sale to secure debt in such manner as to divest the lien as to Minish, McBurnette, who was entirely without knowledge of this fact, did not take the property free and clear of the encumbrance. Code 96-207 provides: "Where an owner has given to another such evidence of the right of selling his goods as, according to the custom of trade or the common understanding of the world, usually accompanies the authority of disposal, or has given the external indicia of the right of disposing of his property, a sale to an innocent purchaser divests the true owner's title." Under such circumstances, the owner may still prosecute an action for conversion against all except a third party who is a purchaser for value and without notice. Code 96-208; Hogg v. Simmons, 94 Ga. App. 83 (93 S. E. 2d 779). McBurnette, who purchased from Minish without notice that Harwell, an automobile dealer, had not sold the automobile to Minish in the regular course of business, and under circumstances which gave Harwell the apparent authority to transfer title to Minish and thereby divest the property of the lien, is in the same position as though he had purchased in like manner direct from Harwell. As to him no conversion is shown and no cause of action is set out. This case differs from Northern Finance Corp. v. Hollingsworth, 52 Ga. App. 337 (2) (183 S. E. 73) in that there "The petition showed only that the defendant was in possession, and failed to show that he had acquired an adverse interest in good faith and without notice." The petition here affirmatively shows that McBurnette was a purchaser for value under circumstances where, in the absence of actual notice on his part, he would be protected, and it alleges no facts from which an inference could be drawn that this defendant had notice of any irregularity in the transaction between Harwell and Minish. The trial court accordingly did not err in sustaining the general demurrer of McBurnette to the petition as amended.
5. From what has been said above it is apparent that any course of action which was attempted to be alleged against Minish and McBurnette was not joint but joint and several. See Billiter v. Ledbetter-Johnson Contractors, 60 Ga. App. 1 (1) (2 S. E. 2d 677). The motion to dismiss the bill of exceptions in this court based on the proposition that the judgment is not final because the case is still pending in the trial court as to the codefendant Minish must be denied. Millers Nat. Ins. Co. v. Hatcher, 194 Ga. 449 (1) (22 S. E. 2d 99); Moore v. Harrison, 202 Ga. 814 (1) (44 S. E. 2d 551).
The trial court did not err in sustaining the general demurrer of the defendant McBurnette and dismissing the petition as to him.
Judgment affirmed. Gardner, P. J., and Carlisle, J., concur.
Fullbright & Duffey, Harl C. Duffey, Jr., contra.
Wright, Rogers, Magruder & Hoyt, Clinton J. Morgan, for plaintiff in error.
DECIDED JULY 16, 1959.
Saturday May 23 00:51 EDT


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