Opinion
20479, 20480.
ARGUED MAY 11, 1959.
DECIDED JUNE 5, 1959. REHEARING DENIED JULY 8, 1959.
Interpleader. Lowndes Superior Court. Before Judge Lilly. March 21, 1959.
Tillman Brice, for plaintiffs in error.
Eberhardt, Franklin, Barham Coleman, H. C. Eberhardt, C. J. Taylor, W. W. Rehberg, R. E. Bradford, H. B. Edwards, Jr., B. Lamar Tillman, Ben F. Johnson, Jr., Deputy Assistant Attorney-General, contra.
1. No benefit could accrue to the debtor, or his wife, under the assignment in the present cases.
2. A wife is not entitled to legal subrogation based upon her act in becoming surety for the debt of her husband.
ARGUED MAY 11, 1959 — DECIDED JUNE 5, 1959 — REHEARING DENIED JULY 8, 1959.
The present cases arose out of the same receivership proceedings which were before this court in State of Georgia v. Parramore, 214 Ga. 578 ( 106 S.E.2d 1).
The cases of James A. Parramore v. George R. Williams, Receiver, (No. 20479), and Mrs. Wynona C. Parramore v. George R. Williams, Receiver, (No. 20480) involve the assignment by James A. Parramore to the Citizens Southern National Bank of certain policies of life insurance. The receiver sold certain real estate under a deed to secure debt from Parramore to the bank. The bank was unwilling to effect a cancellation of its deed to secure debt until all of its indebtedness was paid. In order to convey title to the purchaser, the receiver took other funds in his possession and paid the bank's claim in full. The receiver contended that he is subrogated to the rights of the bank under the assignment of the policies by reason of having paid the bank's claims in full from other assets of the debtor in his possession. The assignments to the bank of the insurance policies have not been canceled or assigned by the bank by written assignment to the receiver. The Parramores contended that payment by the receiver to the bank from other assets in the possession of the receiver extinguished the assignment of the policies, and that the receiver is not entitled to be subrogated to the rights of the bank under the assignment made by Parramore to the bank.
Various rulings on demurrer, which would not affect the ultimate rights of the parties, have been waived. Counsel agrees that the rights of the parties in and to these policies assigned to Citizens Southern National Bank should be determined by this court, under the rulings of the trial court adverse to the contentions of the Parramores, to which they except.
Mrs. Parramore in her intervention further asserted that she was surety for her husband in a loan made by First State Bank of Valdosta, that she assigned certain policies of life insurance to the bank to secure this loan, that the policies have been surrendered by the bank for their cash value, and she contends that she is entitled to legal subrogation against the receiver for the value of the insurance policies assigned by her to the bank. The receiver's demurrers to this contention by Mrs. Parramore were sustained, and error is assigned on this ruling in her bill of exceptions.
1. A policy of life insurance is a chose in action and may be assigned by the insured as security for a debt, under Code §§ 28-301, 56-903, and 85-1803, and generally the effect of such an assignment is to vest legal title to the policy in the assignee to the amount of the debt secured. Exchange Bank of Macon v. Loh, 104 Ga. 446 ( 31 S.E. 459); Morris v. Georgia Loan, Savings c. Co., 109 Ga. 12 ( 34 S.E. 378); Sprouse v. Skinner, 155 Ga. 119 ( 116 S.E. 606); Baldwin v. Atlanta Joint Stock Land Bank, 189 Ga. 607, 609 ( 7 S.E.2d 178); Chapman v. Lipscomb-Ellis Co., 194 Ga. 640, 643 ( 22 S.E.2d 393); Wages v. Wages, 202 Ga. 155, 162 ( 42 S.E.2d 481).
An assignment, however, "for value received" and which recites that "this is an absolute assignment" is an absolute assignment "as against the original beneficiary," and the insured under such an assignment would have "no interest in the policy after assignment." New York Life Ins. Co. v. Hartford Accident c. Co., 181 Ga. 55, 58 ( 181 S.E. 755).
The alleged cash surrender value of the policies here involved, and assigned to the bank, is less than the amount of the debt alleged which the policies were assigned to secure. A debtor may transfer choses in action as collateral security, the surplus in such cases not being reserved for his own benefit. Code § 28-301. "Under the facts alleged, the bank has the right under the assignment to elect to pay off the note from the proceeds of the policy without first exhausting the other security. The beneficiary, having only a divestible interest which is not a vested right, has been, in effect, divested of this interest by the assignment subject to the payment of the debt." Ruis v. Bank of Albany, 213 Ga. 41 ( 96 S.E.2d 580).
The rights of the beneficiary in the present case (Mrs. Parramore) and the rights of the debtor (James A. Parramore) having been subjected by the assignment to the full amount of the debt secured by the assignment of the policies (which debt exceeded the value of the policies), they have no further interest in such policies, and no rights to assert as to these policies in the receivership proceedings.
2. Property of the wife shall not be liable for the payment of any debt, default, or contract of the husband. Code § 53-502. while the wife may contract, she may not bind her separate estate by any contract of suretyship, nor by any assumption of the debts of her husband. Code § 53-503. "If the debt is the husband's the wife can not assume its payment, either by promising to pay the debt as surety, or by pledging her property to pay it." Magid v. Beaver, 185 Ga. 669, 677 ( 196 S.E. 422). "The plaintiff as a married woman was incapable in law of entering into a contract of suretyship, and this incapacity on her part prevented her from conveying her property as security for this debt." Cleaveland v. LaGrange Banking c. Co., 187 Ga. 65, 69 ( 200 S.E. 137).
In the present case, the wife alleges that, as to the loan negotiated with First State Bank, she was surety for her husband. For the purposes of the demurrer this allegation is treated as true. Under the prohibition imposed by our statutes, the wife could not bind her separate estate by any contract of suretyship for the obligation of her husband. There being no liability on such a contract as against the wife, she can not be subrogated in law to the claims of First State Bank against the receiver for her husband. Her action in paying the debt of her husband as surety for him was payment without legal obligation, and she stands in no better position as to legal subrogation than that of a mere stranger or volunteer. A mere volunteer paying the debt of another is not entitled to claim legal subrogation for the amount of such payment. Wilkins, Neely Jones v. Gibson, 113 Ga. 31, 42 ( 38 S.E. 374); Callan Court Co. v. Citizens Southern Nat. Bank, 184 Ga. 87, 134 ( 190 S.E. 831), and cases cited. See also Erwin v. Brooke, 159 Ga. 683, 685 ( 126 S.E. 777).
Judgment affirmed in both cases. All the Justices concur, except Wyatt, P. J., who dissents from the ruling in division 2 of the opinion and from the judgment of affirmance.