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FOURTH NATIONAL BANK OF COLUMBUS v. HOWELL, Sheriff, et al.
35907.
Money rule. Before Judge Calhoun, presiding. Muscogee Superior Court. July 28, 1955.
GARDNER, P. J.
1. Under the fact of this case, the vice-president of the bank, not a stockholder therein, was not disqualified in his capacity as a notary public to attest a bill of sale to which the bank was a party.
2. Priority of recording gives priority of lien as among concurrently dated bills of sale to secure debt, if taken without notice to the others.
3. The trial court did not err in his judgment of distribution of the funds involved.
This is a direct appeal from a judgment of the Superior Court of Muscogee County wherein Honorable Hubert Calhoun, Judge of the City Court of Columbus, presided. The judgment in this money-rule proceeding awarded the entire fund in controversy, after payment of costs, to the Columbus Bank & Trust Company, and the Fourth National Bank, hereinafter called the plaintiff, filed a direct bill of exceptions.
At the trial of the case all evidence was stipulated; no conflict appeared, and only questions of law were involved. The following resume of stipulated facts was adduced at the trial:
On July 21, 1954, Harold Thomason purchased a 1954 Pontiac and borrowed from the plaintiff $2,000 with which to pay the purchase price, and he executed to the plaintiff a purchase money bill of sale to secure debt for a stated consideration of $2,355.10, which was duly recorded on July 23, 1954. On July 27, 1954, Thomason borrowed $2,291.28 from the First National Bank of Columbus, a defendant here, and executed to it a bill of sale to secure debt covering the same Pontiac automobile, which bill of sale to secure debt was never recorded.
On March 2, 1955, Thomason, while the foregoing bills of sale to secure debt were still outstanding, traded the Pontiac automobile to Cliff M. Averett, Inc., for a new 1955 Buick automobile, and executed to it a bill of sale warranting the Pontiac automobile to be free of liens, and executing a conditional-sale contract wherein the seller reserved title in the Buick automobile to secure a balance due of $1,846.68.
On March 3, 1955, sometime between banking hours, between 10:00 a.m. and 2:00 p.m., the exact time being unknown, Thomason advised the plaintiff that he had traded the Pontiac for the new Buick, and that he had already paid the seller the difference, and requested the plaintiff to substitute the Buick as security for the Pontiac and to make an additional loan of $746.00, all to be secured by a bill of sale to secure debt on the new Buick. Relying upon his representations the plaintiff accepted his note and bill of sale to secure debt conveying the new Buick automobile in the total sum of $2,700 in good faith, and canceled the outstanding bill of sale to secure debt on the Pontiac automobile in the sum of $1,654, a cash advance of $746, and $390 interest for the period of the loan. The plaintiff forwarded its bill of sale to secure debt to the Clerk of the Superior Court of Muscogee County by mail on March 4, 1955, and it was filed for record on March 5, 1955.
On the same date, to wit, March 3, 1955, sometime between 10:00 a.m. and 2:00 p.m., the exact time being unknown, Thomason went to the Columbus Bank & Trust Company, a defendant here, and requested said bank to make a loan to him in the sum of $1,846.68, representing that he had purchased a new Buick and owed the seller this amount, and that this was the only indebtedness due on this Buick automobile. Relying upon his representations the bank made a loan to Thomason and accepted in good faith his note and bill of sale to secure debt conveying the Buick automobile in the sum of $2,285.45. The consideration for the loan was $2,077.68 and interest in the sum of $207.77 for the period of the loan. The proceeds of the loan were deposited to the personal bank account of Thomason, and for the principal amount of the loan was used to pay collision insurance on the automobile during the period of the loan with the defendant Columbus Bank & Trust Company, and the remainder of the loan proceeds in the sum of $1,846.68 was used by Thomason to pay the seller of the Buick automobile sometime during March 3, 1955. The bill of sale to secure debt to the bank was mailed for record to the Clerk of the Superior Court of Muscogee County on the afternoon of March 3, 1955, and it was filed for record on March 4, 1955. This bill of sale to secure debt was attested by W. H. Chandler, as notary public, who was at the time one of the vice-presidents of the defendant Columbus Bank & Trust Company but he was not a stockholder thereof.
On the same day, to wit, March 3, 1955, sometime between 10:00 a.m. and 2:00 p.m., the exact time being unknown, Thomason requested the First National Bank of Columbus, another defendant bank, to substitute the new Buick for the Pontiac automobile as security for his existing loan, and to make an additional loan of $706.71 to him, representing that this was the only indebtedness on the Buick automobile. Relying upon these representations, the First National Bank of Columbus canceled its existing second unrecorded bill of sale to secure debt on the Pontiac automobile, and accepted in good faith Thomason's note and bill of sale to secure debt on the new Buick in the sum of $2,530.08. The consideration for this loan was the net balance due on the existing said second unrecorded bill of sale to secure debt in the sum of $1,593.29, $230.08 interest over the period of the loan, and a cash advance of $706.71. The bill of sale to secure debt was filed for record on April 1, 1955.
It was agreed that all banks acted in good faith and without notice of any facts which would put them on notice, and that it is unknown which bill of sale to secure debt was executed by Thomason first in point of time, or in what order the three bills of sale to secure debt were executed.
On March 31, 1955, the plaintiff foreclosed its bill of sale to secure debt, and levy was made upon the Buick automobile pursuant to the fi. fa. issued thereon. On April 1, 1955, the defendant Columbus Bank & Trust Company foreclosed its bill of sale to secure debt, and on April 18, 1955, the defendant First National Bank of Columbus foreclosed its bill of sale to secure debt. On April 18, 1955, pursuant to an order of sale, the sheriff sold said automobile for $2,610 pursuant to the fi. fa. issued in favor of the plaintiff. At the time of the sale all three of the respective executions of the plaintiff and the two defendant banks were in the hands of the sheriff, and claims were duly filed to these funds by the defendant banks on the day of the sale.
After the filing of the money rule by the plaintiff, Columbus Bank & Trust Company filed its pleading claiming the entire fund and asserting priority because of priority of records; and the plaintiff filed its pleading asserting a purchase-money priority in the sum of $1,654, this being the balance due on the bill of sale to secure debt on the Pontiac which was traded for the Buick, and in the alternative, if no purchase priority existed, asserting that each of the claimants to the fund was entitled to participate prorata according to their respective equities, and that priority of record among bona fide bills of sale to secure debt, conveying the same property and executed by the same vendor on the same date when it was unknown which was executed first or in what order the same were executed, gave no priority of right, and if such were the case the defendant Columbus Bank & Trust Company could not assert such priority because its bill of sale was improperly attested in that it was attested by its vice-president, and as such stood upon the same footing as though not recorded at all; and further asserting that since the present considerations advanced and released by the claimants to the fund to Thomason on March 3, 1955, exceeded the amount of the fund, the items of unearned interest, prepaid collision insurance, and attorneys fees were not entitled to participate in the prorata distribution of the fund, but instead only the present considerations advanced and released to Thomason on March 3, 1955 were entitled to participate in the fund.
Questions Presented.
(a) Does attestation by a vice president of a banking corporation, as a notary of public, of a bill of sale to secure debt payable to said banking corporation render it improperly executed, so as to make it not eligible for record, and hence the record thereof is not constructive notice to persons dealing with the vendor, and consequently make it stand on the same footing as though not recorded at all?
(b) Does priority of record among three recorded bills of sale to secure debt executed by the same vendor conveying the same property on the same date to three separate bona fide vendees, each taken without notice of the other, and where it is unknown which of the bills of sale to secure debt was executed first in point of time or in what order the same were executed, give priority of rights, or do the said bills of sale to secure debt stand equal in priority regardless of priority of record and thereby share a fund derived from the sale of the property conveyed by each of the bills of sale to secure debt according to their respective equities?
(c) If the answer to question (b) is that priority of record gives no priority of right, is the plaintiff vested with a purchase-money equity in the fund in controversy to the extent of $1,654, same being the amount due on the outstanding bill of sale to secure debt held by the plaintiff conveying the Pontiac automobile and which was a valid first lien thereon, under its contentions that the cancellation thereof inured exclusively to the benefit of the seller of the Buick automobile and such constituted a part of the original consideration therefor?
(d) If the plaintiff is entitled to a purchase-money equity, should the remainder of said funds be distributed prorata among the respective claimants according to the present cash considerations paid by the three claimants on March 3, 1955, to the maker of the bills of sale to secure debt?
(e) If the plaintiff is not entitled to a purchase-money equity, should the entire fund in controversy, after payments of costs, be distributed among the claimants prorata according to the present considerations advanced and released on March 3, 1955 by the three claimants to the maker of the bills of sale to secure debt?
1. As to whether or not a notary public is disqualified as a witness to a bill of sale because he is a corporate officer, counsel for the plaintiff cite Barrow v. E. Tris Napier Co., 16 Ga. App. 309 (85 S. E. 267), wherein Judge Russell, speaking for the court, held that a secretary and treasurer of a corporation cannot render a mortgage properly executed when such officer witnesses the instrument as a notary public. The Supreme Court held in Worley v. Planters Cotton Oil Co., 180 Ga. 81 (178 S. E. 289) as follows: "In Barrow v. E. Tris Napier Co., 16 Ga. App. 309 (85 S. E. 267), it was said by Mr. Chief Judge Russell, of the Court of Appeals (now Chief Justice of this Court): 'A mortgage attested by a notary public who is secretary and treasurer of the corporation to which it is given is not properly executed, and therefore not admissible for record; and a record of such mortgage is not constructive notice to persons dealing with the mortgagor.' But this ruling should not be confused with the ruling laid down by this court as follows: 'The secretary and manager of a corporation, who owns no stock in the corporation and is not otherwise beneficially or pecuniarily interested therein, is qualified to witness an instrument of writing to which the corporation is a party.' Farmers Warehouse Co. v. First National Bank, 152 Ga. 262 (109 S. E. 900). See also Citizens Trust Co. v. Butler, 152 Ga. 80 (108 S. E. 468), and cit." In the Citizens Trust Company case the Supreme Court said: "1. In this State, a secretary of a banking corporation who is not a stockholder therein, or otherwise beneficially or pecuniarily interested in the transaction, is not disqualified from attesting, as an official witness, a deed of conveyance in which the corporation is the grantee; there being no express statute forbidding such officer to act. [Citing 1 C. J. 808, see. 117 and authorities from other jurisdictions]. Analagous cases in this State are those in which an attorney at law for a mortgagee or grantee in a security deed has been held to be a competent official witness to the execution of the paper. Jones v. Howard, 99 Ga. 451 (27 S. E. 765, 59 Am. St. R. 231); Alston v.
874 FOURTH NATIONAL BANK &c. v. HOWELL. 92 Ga.
Southern Home Asso., 122 Ga. 439 (50 S. E. 382); Harvard v. Davis, 145 Ga. 580 (89 S. E. 740).
"(a) In Hastey v. Roberts, 149 Ga. 479 (100 S. E. 569), it was said: 'A stockholder or officer, though incompetent to take an acknowledgment of a mortgage on realty as a notary, because he is a stockholder or officer of the mortgagee corporation, is not incompetent as a non-official witness to the signature of the mortgage.' That case did not involve the power of an official witness to attest the paper, and the record filed in this court shows further that the attesting witness was a stockholder. In the light of the facts, the language of this court above quoted did not amount to a binding ruling that an officer who was not also a stockholder . . . was incompetent as an official witness to the paper." That case reversed the Court of Appeals in Citizens Trust Co. v. Butler, 25 Ga. App. 623 (103 S. E. 852) in which the Court of Appeals based the decision entirely on Barrow v. E. Tris Napier Co., supra, although the Court of Appeals had been specifically requested to review and reverse the Barrow case. We construe the ruling of the Supreme Court to effectually abolish the ruling in Barrow v. E. Tris Napier Co., supra. See also First National Bank of Cartersville v. State Mutual Life Ins. Co., 163 Ga. 718 (137 S. E. 53, 51 A.L.R. 1524).
In view of the above authorities and many others not cited here, we hold that a vice-president of a bank who is not a stockholder therein is not disqualified in his capacity as a notary public to attest a bill of sale to which the bank is a party.
2. Counsel for the plaintiff argues that priority of record among three recorded bills of sale to secure debt executed by the same vendor conveying the same property to three separate bona fide vendees, each taken without notice of the other, where it is unknown which of the three bills of sale to secure debt was executed first in point of time, gives no priority of right, but the said bills of sale to secure debt, in competition with each other, stand equal in priority regardless of priority of record, and share a fund derived from the sale of the hypothecated property according to their respective equities. Counsel for the plaintiff cites Russell v. C. D. Can & Co., 38 Ga. 459, in support of this contention. In that case the court said: "Two mortgages executed on the same day are of equal date, and if both are recorded in time, are entitled to share prorata in a fund not sufficient to satisfy them both." At page 462 of the same decision the court said: "The registry laws and other positive legislation provide for preferences and priorities between liens when there is no transfer of possession." This case was decided in 1868. Coleman & Co. v. Carhart, 74 Ga. 392, cited by the plaintiff, was decided in 1884. In that case each mortgagee knew of the execution and delivery of the mortgages to the others, at the time. This is not true in the case at bar. Priorities were determined by statute in Georgia in 1889 (Ga. L. 1889, p. 106). It is codified as Code 67-2501 which reads as follows: "When instruments requiring record take effect. --Deeds, mortgages, and liens of all kinds, which are required by law to be recorded in the office of the clerk of the superior court, shall, as against the interests of third parties acting in good faith and without notice, who may have acquired a transfer or lien binding the same property, take effect only from the time they are filed for record in the clerk's offIce. The said clerk shall keep a docket for such filing, showing the day and hour thereof, which docket shall be open for examination and inspection as other records of his office." (Italics ours.) The two cases immediately hereinabove cited are not applicable after the passage of the Act of 1889 if for no other reason. In Mitchell v. West End Park Co., 171 Ga. 878 (156 S. E. 888), the priority of recording was not recognized in that the deed to secure debt between the buyer and the seller contained an agreement whereby the buyer was required to erect houses on the two lots purchased, and in the same instrument the owner agreed to subordinate his deed to secure debt to a deed to secure debt in order to obtain money to build the houses. The purchaser did borrow such money with the knowledge and consent of the owner. That deed was recorded subsequent to the deed held by the original owners. The court stated that in such event the deed to secure debt given in order to build the houses, such deed being given with the consent of the owners of the first deed (which deed was recorded first and contained the special stipulation hereinabove mentioned), would have precedence over the original owner's deed to secure debt. That case is not authority for reversal of the instant case. Donovan v. Simmons, 96 Ga. 340 (22 S. E. 966), reads in part as follows:
"The danger of a failure to record a deed is the exposure of it to defeat by a subsequent vendee without notice of the prior purchase. The only change made in the law by the Act of 1889, so far as deeds are concerned, is to fix their time of going into effect and becoming operative relatively to the interests of certain persons. The first section of the act declares, 'that deeds, mortgages and liens of all kinds, which are now required by law to be recorded in the office of the clerk of the superior court of each county' within a specified time, shall, as against the interest of third parties acting in good faith and without notice, who may have acquired a transfer or lien binding the same property, take effect only frown the time they are filed for record in the clerk's office?" (Italics ours.) It appears that this case is avocative to the contentions of the plaintiff and rather supports the contentions of the defendants. Such is likewise true of Dix v. Wilkinson, 149 Ga. 103 (99 S. E. 437), and Caldwell v. Northwest Atlanta Bank, 194 Ga. 370 (21 S. E. 2d 619). The record does not reveal which lien was given first in the instant case, and all parties agree that such fact was not known. At any rate; this is immaterial. The Supreme Court said in Michael v. Poss, 209 Ga. 559 (74 S. E. 2d 742): "A junior deed, properly recorded, taken without notice of an unrecorded senior deed from the same vendor and for a valuable consideration, has priority over such unrecorded senior deed." Code 29-401 deals exclusively with deeds conveying land. Code 29-413 deals with bills of sale to personalty. Under either Code section, recording is necessary to give constructive notice. Counsel for the defendant cites a case which is rather expressive of the principles of law many times decided and which we are here deciding again, i.e., Wadley Lumber Co. v. Lott, 130 Ga. 135, 141 (60 S. E. 836), wherein the Supreme Court said: "Omitting the matter of notice, as against each other, competing deeds are effective only from and after being filed for record. Such is the clear import of the language of sections 2778 and 3618. [Now 67-2501 and 29-401.] Upon consideration of these statutes, we are of the opinion that, in a contest between deeds upon a valuable consideration, from the same grantor, conveying the same property, such deeds, as against each other, where taken without notice, will take priority only from and after the date of lawful record or filing for record, and that neither deed, upon being recorded, will relate back so as to affect the rights of the parties touching the subject-matter of the deed at any time before the deed is filed for record." (Italics ours.) The same principle of law applies to bills of sale. Manchester Motors, Inc. v. Farmers & Merchants Bank of Manchester, 91 Ga. App. 811 (87 S. E. 2d 342), is not applicable, since there a mechanic's lien and a bill of sale were involved.
3. In our opinion the above answers all questions properly before this court in this case. All other questions propounded by counsel for the plaintiff are included in divisions 1 and 2 above, and in the last paragraph of this decision. It is, indeed, regrettable that in some instances our laws, dictated by expediency and formulated to help the masses, sometimes seem uninspired to the few who suffer as some of the litigants here involved must suffer. However, if one studies law day by day one marvels that there are so few who could not be aided by legal compendium as developed by statute and decisions of the appellate court.
The trial court issued the following judgment of distribution: "Judgment of distribution: Pursuant to stipulation of the parties, the above-styled matter regularly came on to be heard before me on June 24, 1955, all parties appearing and being represented by counsel, at which time an agreed stipulation of facts was made a matter of record, and further proceedings were continued until July 1, 1955. On said latter date, argument of counsel was heard and taken under advisement. After full consideration of all matters and issues prescribed by said facts and judgments of counsel, it is ordered, that the fund of $2,610.00 in the hands of the defendant, E. F. Howell, Sheriff, be paid by said officer to the claimant, Columbus Bank & Trust Company, after deducting from said fund the sum of $28.50 costs of this money-rule proceedings, and the further sum of $69.12, representing the sheriff's costs and fees incident to the levy and sale whereby said fund was raised by said officer, leaving a balance of $2,512.38 which said officer is hereby ordered to pay forthwith to said Columbus Bank & Trust Company. In open court, this July 28th, 1955. [Signed] Hubert Calhoun, Judge pro hac vice, Muscogee Superior Court." We adopt this judgment of distribution as correct except that it appears from the record that the unearned interest included in the note of Thomason should cease to accrue to the benefit of the Columbus Bank & Trust Company after the payment of the principal by the sheriff to the Columbus Bank & Trust Company. Therefore, it is directed that the principal sum of $2,077.68, plus interest to the date the money is paid by the sheriff, be paid to the Columbus Bank & Trust Company and the balance be paid by the sheriff to the Fourth National Bank of Columbus, that lien having been on March 5, 1955, thus being second in priority of recording of liens against the undistributed funds in the hands of the sheriff.
The record reveals that the attorneys' fees claimed by the parties at interest did not accrue until after the fi. fas. had issued, and only by amendment.
The record reveals that the insurance premium was paid by Thomason out of the loan procured from the Columbus Bank & Trust Company. The said bank is not obliged to account for the amount of unearned premiums with the insurance company.
Judgment affirmed with direction. Townsend and Carlisle, JJ., concur.
E. F. Howell, Sheriff, Swift, Pease, Davidson & Champion, Hatcher, Smith & Stubbs, W. M. Page, contra.
Foley, Chappell, Kelly & Champion, Kenneth M. Henson, for plaintiff in error.
DECIDED OCTOBER 17, 1955 -- REHEARING DENIED NOVEMBER 4, 1955.
Saturday May 23 02:55 EDT


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