Opinion
19159.
ARGUED NOVEMBER 14, 1955.
DECIDED JANUARY 10, 1956. REHEARING DENIED FEBRUARY 16, 1956.
Petition for injunction. Before Judge Rees. Macon Superior Court. September 1, 1955.
A. C. Felton, III, Wm. T. Roberts, for plaintiff in error.
W. F. Blanks, J. Frank Myers, contra.
1. We will first deal with the defendant Albert H. Davis' general demurrer, which the trial judge sustained. The petition alleges that the relation of attorney and client existed between the defendants Blanks and Davis, and that the former knew of fraudulent acts which had been committed for the purpose of defeating the plaintiff's right to alimony. It is well settled that notice to an attorney is notice to the client employing him, and that knowledge of an attorney is knowledge of his client, when such notice and knowledge come to the attorney in and about the subject matter of his employment. Citizens Bank of Vidalia v. Citizens So. Bank, 160 Ga. 109 (4) ( 127 S.E. 219), and cases there cited; Lewis v. Foy, 189 Ga. 596 ( 6 S.E.2d 788). In the Citizens Bank of Vidalia case this court, citing 6 C. J. 639 § 144, as authority therefor, said: "It is necessary that the knowledge of the attorney be gained in the course of the particular transaction in which he is employed by his client." And in Lewis v. Foy, supra, it was unanimously held that the above-stated rule respecting the relation of attorney and client, and imputable notice, applies only to the parties while the relation exists and with reference to the matter involved in that relationship. In the case at bar, it is not alleged that the defendant Blanks, as attorney or otherwise, represented the defendant Davis in acquiring the property here involved; and it is an elementary rule of construction, as applied to a pleading, that it will be construed on demurrer thereto most strongly against the pleader. Johnson v. Sears, 199 Ga. 432 ( 34 S.E.2d 541); Clements v. Hollingsworth, 205 Ga. 153 ( 52 S.E.2d 465). Since the petition in the instant case does not allege that the relation of attorney and client existed between the defendant Blanks and the defendant Davis in the latter's acquisition of the subject property, and there is no other allegation that the defendant Davis knew of the plaintiff's alleged equity, we must and do hold that it is insufficient to negative the presumption that the defendant Davis was a bona fide purchaser for value and without notice of any equitable right which the plaintiff may have had in the property he purchased.
2. Code § 37-111 declares: "A bona fide purchaser for value, and without notice of an equity, will not be interferred with by equity." In Gamble v. Brooks, 170 Ga. 662 ( 153 S.E. 759), it was said: "This doctrine proceeds on the idea that the equity of the innocent purchaser is superior to that of the cestui que trust, who stands silently by and permits such purchaser to act to his own injury, or who is guilty of laches in not sooner asserting a mere secret equity. A bona fide purchaser without notice acquires an unqualified legal right and title to the property purchased; and a court of equity has no jurisdiction to interfere with such vested legal right and title." To the same effect see Parker v. Barnesville Savings Bank, 107 Ga. 650 ( 34 S.E. 365); Martin v. Home Owners Loan Corp., 203 Ga. 480 ( 48 S.E.2d 376). Where property is regularly sold under a power of sale contained in a security deed, the sale is equivalent to one under a decree in equity. Ellis v. Ellis, 161 Ga. 360 ( 130 S.E. 681).
( a) Even if it can be said that the allegations of the petition are sufficient to show that the defendant James P. Brown was not a bona fide purchaser for value, it is a well-settled rule that, if one with notice sells to one without notice, the latter is protected; or if one without notice sells to one with notice, the latter is protected, as otherwise a bona fide purchaser might be deprived of selling his property for full value. Code § 37-114; Collins v. Heath, 34 Ga. 443, 454.
3. Married women are as much bound by estoppel as other persons, and a wife is estopped as to an innocent purchaser for value where she has knowledge that property in which she claims an equity is being sold and remains silent until after the sale. Dotterer v. Pike, 60 Ga. 29, 30; Ford v. Blackshear Mfg. Co., 140 Ga. 670 (3) ( 79 S.E. 576); DeLoach v. Sikes, 169 Ga. 465 ( 150 S.E. 591). In this case the petition affirmatively shows that the plaintiff and her counsel knew that the property involved was being advertised for public sale on a specified date to satisfy three secured notes executed by her husband; that she made arrangements to buy the property in at the sale for the amount due G. A. Tye and sons; and that she refrained from bidding solely because of a representation which the defendant Blanks allegedly made to her counsel as to the amount due.
4. Where property is sold in accordance with a power of sale contained in an uncanceled security deed, but after the secured debt has been paid, a purchaser for value who has no knowledge of the fact that the secured debt has in fact been paid will be protected in his title. Garrett v. Crawford, 128 Ga. 519 ( 57 S.E. 792, 119 Am. St. R. 398, 11 Ann. Cas. 167); Ellis v. Ellis, supra; Phelps v. Palmer, 192 Ga. 421 ( 15 S.E.2d 503). As between the grantor and the grantee, a sale under the power when the debt has been satisfied is, of course, a fraud upon the grantor, and the grantee would be responsible to the grantor for whatever damages he sustained on account of the fraud thus perpetrated upon him, but an innocent purchaser at the sale will be protected in his title. Garrett v. Crawford, supra.
5. The petition alleges that the security deeds from Ralph N. Mathis to Fred Mathis and Emory J. Mathis were without consideration, dated back and made for the fraudulent purpose of defeating the plaintiff's right to alimony, but it is not alleged that the defendant Davis had any knowledge of this and it is well settled that a purchaser for value, without notice of fraud in the vendor's title, is protected as to the title he acquires. Collins v. Heath, supra; Ratteree v. Conley, 74 Ga. 153.
6. As the petition shows, the defendant Davis, for a consideration of $4,375, received a deed from James P. Brown embracing all of the interest which the defendant Ralph N. Mathis previously owned in the property involved, and his status as a bona fide purchaser for value was not changed, as the plaintiff contends, because he, at the time of his purchase from Brown, also took a quitclaim deed from the defendant Ralph N. Mathis for the same land, paying him, according to a copy of the deed which is attached to the petition as an exhibit, a consideration therefor of $10. To charge that the defendant Davis was not a bona fide purchaser for value as to her, it was necessary for the plaintiff to allege in her petition that the defendant Davis had actual or imputable notice of her equity at the time of his purchase from Brown, and the fact that he took a quitclaim deed from her husband — the grantor in the security deeds — does not remotely amount to an allegation that he had notice or knowledge of any equity she had in the property at the time he acquired title to it. See Hammond v. Crosby Co., 68 Ga. 767; Marshall v. Pierce, 136 Ga. 543 ( 71 S.E. 893); Moelle v. Sherwood, 148 U.S. 21 ( 13 Sup. Ct. 426). Nor was the plaintiff injured by the quitclaim deed, since the defendant Ralph N. Mathis was completely divested of all interest and title he had in and to the property when it was sold under the security deeds given by him.
7. In addition to the prayer for cancellation, the remaining prayers of the petition are: (1) that the defendants and each of them be enjoined from changing the status of the property which is the subject matter of this suit; (2) that a receiver be appointed to take charge of the property, insure it and preserve it pending a determination of the cause; (3) that equitable title to the property in question be decreed in the plaintiff; and (4) that she have such other relief as is equitable and just. By our preceding rulings we have held that the allegations of the petition are insufficient to show any right in the plaintiff to cancel the instruments placing title to the land in question in the defendant Davis; and this being true, it necessarily follows that the plaintiff is not entitled to any of the other relief prayed for. Hence, the petition failed to state a cause of action against the defendants Blanks and Davis, and the court did not err, as contended, in sustaining their general demurrers and dismissing the petition as to them.
Judgment affirmed. All the Justices concur.
ARGUED NOVEMBER 14, 1955 — DECIDED JANUARY 10, 1956 — REHEARING DENIED FEBRUARY 16, 1956.
Mrs. Lessie Mathis filed a suit on February 14, 1955, to cancel several instruments, including five deeds, and for other equitable relief against Ralph N. Mathis, Fred Mathis, Emory J. Mathis, W. F. Blanks, James P. Brown, Albert H. Davis, G. A. Tye, Sr., and his four named sons. The petition is lengthy, and we do not think it is necessary to state its allegations in extenso. As to the rulings made, they show: The plaintiff is the wife of the defendant Ralph N. Mathis. They separated October 2, 1954. She has a suit for divorce and alimony pending against him, but the record does not show when it was filed. Her husband is represented in that litigation by the defendant Blanks. Under a recited date of June 15, 1952, her husband conveyed to the defendant Fred Mathis, his brother, a described house and lot in Montezuma, Georgia, for the purported purpose of securing a loan of $500. Under the same recited date, he conveyed the same property to Emory J. Mathis, another brother, for the purported purpose of securing a loan of $400. These two deeds were not executed on the date recited therein, but subsequently. They were not made for the purpose of securing any bona fide indebtedness due by her husband to the grantees, but they were signed and left with the defendant Blanks solely for the purpose of being used to defeat her claim for alimony. They were not recorded until December 1, 1954. They were transferred and assigned on January 3, 1955, to the defendants G. A. Tye and sons for a recited consideration of $1 and other valuable considerations, but in fact for no consideration. On November 19, 1952, her husband borrowed $3,750 from the defendants G. A. Tye and sons, and as security therefor conveyed to them the house and lot previously conveyed to Fred and Emory J. Mathis. Each mentioned deed contains a power of sale in case of default in payment of the secured debt. During January, 1955, and pursuant to the power of sale contained in the three deeds from her husband, the defendants G. A. Tye and sons, through their attorney W. F. Blanks, advertised the property for sale on the first Tuesday in February, 1955, reciting in the advertisement that the maker was in default as to payment of his secured debts. Shortly before sale day, the plaintiff's attorney requested a statement from the defendants G. A. Tye and sons, showing the amount due by the defendant Ralph N. Mathis on the three secured loans. The defendant Blanks called his office and stated to his secretary that $5,515.34 was the correct amount then due his clients, and that they or he for them would bid that amount at the sale. The sum of $5,515.34 was not the correct amount due the defendants Tye and sons on any one or all of the security deeds, and that fact was well known to the defendant Blanks. The incorrect information as to the total amount due on the three secured loans was given by the defendant Blanks to chill bidding at the sale and in furtherance of a fraudulent scheme to prevent the plaintiff from acquiring the pledged property. She had made arrangements to buy the property at the sale but refrained from bidding because of the incorrect information which the defendant Blanks furnished her attorney. She had made payments on the Tye note, and it has been paid in full, and she is entitled to have the two fraudulent conveyances by her husband to his brothers canceled. The property was put up for sale on February 1, 1955, under the powers contained in the security deeds, and the defendant Blanks acted as auctioneer. James P. Brown bid $4,375 and, being the highest bidder, the property was knocked off to him. The defendant Blanks, as attorney in fact for Ralph N. Mathis, conveyed the property to him on the day it was sold; a copy of the deed, being attached to and made a part of the petition, acknowledges full payment of the purchase price. The defendant Brown announced at the sale that he was bidding for himself, but he was at that time a partner of the defendant Blanks in Flint Realty Company, and a confidential relationship existed between them. For a recited consideration of $1 and other valuable considerations, the defendants Tye and sons transferred and assigned the three security deeds to the defendant Brown and conveyed to him the property described therein. The defendant Brown transferred and assigned the three security deeds to the defendant Albert H. Davis and for a consideration of $4,375 conveyed the property in question to him on February 4, 1955. The relationship of attorney and client existed between the defendant Blanks and the defendant Davis. By quitclaim deed, which recites a consideration of $10, the defendant Ralph N. Mathis conveyed the property involved to the defendant Davis on February 4, 1955. The defendants Blanks and Davis separately demurred to the petition on both general and special grounds. Their demurrers were sustained, and the petition was dismissed as to them. The plaintiff excepted to those judgments. There is a prayer that all of the above-mentioned instruments be canceled.