Opinion
13574.
APRIL 18, 1941. ADHERED TO ON REHEARING, JUNE 17, 1941.
Petition for injunction, etc. Before Judge Franklin. Richmond superior court. October 11, 1940.
Bell Bell and Curry Curry, for plaintiff.
Hammond, Kennedy Yow, for defendants.
A conveyance by which the grantor transfers "his bond for title interest" in the land described, together with all of his "right, title, and interest" therein, for the purpose of securing a debt owing by him to the grantee, is one under which the benefit of after-acquired independent title inures to the benefit of the grantee, and the grantor and those holding under him are estopped thereafter to claim such after-acquired title as against such grantee, when the debt so secured remains unpaid. This is true although such conveyance contained no express covenant of warranty.
No. 13574. APRIL 18, 1941. ADHERED TO ON REHEARING, JUNE 17, 1941.
In 1926 Harry W. Perkins entered into a written contract with John D. O'Connell, whereby, on terms stated, Perkins agreed to purchase and O'Connell agreed to sell and, upon completion of payments therein provided for, to convey certain described real property. Payment of the purchase-price in 120 monthly installments was provided for. Provision was made for accelerating maturity of deferred payments in case of default, and in such case for power of sale, etc. On February 21, 1930, Perkins transferred his interest in this contract and in this property, for the declared purpose of securing a debt due by him, to Mrs. Kate A. Rhodes. The pertinent terms of that instrument of transfer are stated as follows (after describing the debt and stating the purpose of the conveyance): "I have this day bargained, sold, and transferred all of my right, title, and interest in and to a certain bond for title from Jno. D. O'Connell to me, dated 30th day of August, 1926, together with all of my right, title, and interest in and to the land therein described," followed by a full description of the property. The transfer then contained provisions for declaring all of said indebtedness due in case of the failure of Perkins to keep taxes paid when due or to keep property insured as "in said bond for title provided," and in such case or on maturity and non-payment otherwise the grantee "may advertise and sell all of my right, title, and interest in and to said bond for title and said described property, and make a good and sufficient conveyance to the purchaser thereof."
On March 11, 1930, O'Connell for a consideration of $1650 conveyed the property to Realty Savings Trust Company, and assigned to it the purchase-money notes of Perkins. This conveyance was in its terms stated to be "given subject to an outstanding bond for title on said property, dated September 1, 1926, not yet of record but to be recorded herewith, in favor of Harry W. Perkins, and party of the second part is hereby instructed to make title to said property to said Harry W. Perkins" upon payment of purchase-money installments. On July 7, 1931, Perkins being in default, Realty Savings Trust Company sold the property under power of sale, and became the purchaser at a stated consideration of $750. On August 1, 1931, Realty Savings Trust Company, for a consideration of $5 "and other good and valuable considerations," conveyed the same to Perkins, who on the same day reconveyed it to Realty Savings Trust Company to secure a debt in an amount not stated. All of the foregoing conveyances were duly recorded. On November 4, 1938, Perkins died. He was survived by his widow, the plaintiff in the present case, and other heirs, all of whom since his death conveyed to her whatever interest they had in this property. She is in possession. The last-mentioned security deed to Realty Savings Trust Company was canceled and satisfied on June 6, 1940. Mrs. Kate A. Rhodes also is deceased, and her heirs at law are the defendants in the present suit, which was brought by Mrs. Perkins to enjoin them from selling this property under power of sale in the conveyance from Perkins to Mrs. Rhodes, and to cancel the same as a cloud on plaintiff's title. The plaintiff had also applied for a year's support, but these defendants filed objections to the appraisers' return which set apart this property, and that proceeding is still pending. The defendants in the present case filed an answer denying the plaintiff's right to relief, and by way of cross-action sought as against the property a judgment on the note to Mrs. Rhodes. A stipulation of the foregoing facts was made, and the issues were submitted to the judge without the intervention of a jury. Under this stipulation it was agreed that in selling the property involved under the power contained in the contract of sale the Realty Savings Trust Company was acting within its rights and as purchaser at such sale obtained good title. The judge found in favor of the defendants on their cross-action, awarding to them judgment in rem to be made out of the described property for the amount of Mrs. Rhodes' note and interest, holding that the conveyance by Perkins to Mrs. Rhodes had the legal effect of a security deed, and that when Perkins acquired title from the Realty Savings Trust Company it inured to the benefit of Mrs. Rhodes and her heirs at law. Error is assigned on this decree.
1. If the conveyance from Perkins to Mrs. Rhodes of February 21, 1930, is one under which the grantee would get the benefit of after-acquired independent title by the grantor, we may skip over and not be concerned with the legal effect of the transactions and conveyances by which Realty Trust Savings Company acquired and subsequently conveyed title to Perkins. Under the stipulation, Realty Savings Trust Company finally had good title, conveyed it to him, he reconveyed to Realty Savings Trust Company to secure a debt, and this conveyance was canceled, reinvesting title in Perkins, where it reposed at his death, unless it was qualified by being subject to the conveyance to Mrs. Rhodes.
The rule that after-acquired title to real property will inure to the benefit of a previous grantee is recognized in this State by the Code, § 29-111: "The maker of a deed can not subsequently claim adversely to his deed under a title acquired since the making thereof. He is estopped from denying his right to sell and convey." It has frequently been applied. See Bivins v. Vinzant, 15 Ga. 521; Thursby v. Myers, 57 Ga. 155; Parker v. Jones, 57 Ga. 204; Linsey v. Ramsey, 22 Ga. 627; Goodson v. Beacham, 24 Ga. 150; O'Bannon v. Paremour, 24 Ga. 489; Crawford v. Mobile Girard R. Co., 67 Ga. 405, 420; Terry v. Rodahan, 79 Ga. 278, 292, 5 S.E. 38, 11 Am. St. R. 120); Hall v. Davis, 73 Ga. 101; Cowart v. Singletary, 140 Ga. 435 ( 79 S.E. 196, 47 L.R.A. (N.S.) 621, Ann. Cas. 1915A, 1116); Oliver v. Holt, 141 Ga. 126 ( 80 S.E. 630); Todd v. Williford, 169 Ga. 543 ( 150 S.E. 912); Donalson v. Yeates, 173 Ga. 30 ( 159 S.E. 856); Martin v. Citizens Bank of Marshallville, 177 Ga. 871 ( 171 S.E. 711); Bowlin v. Hemphill, 180 Ga. 435 ( 179 S.E. 341); Hill v. O'Bryan, 104 Ga. 137; Brown v. Story, 94 Ga. 288; Patterson v. Burns, 150 Ga. 198; Fite v. Walker, 183 Ga. 46 ( 187 S.E. 95); Kennedy v. Kennedy, 183 Ga. 432 ( 188 S.E. 722); Morris v. Butler, 184 Ga. 845 ( 193 S.E. 883); Shockley v. Storey, 185 Ga. 790 ( 196 S.E. 702). It is founded upon the fundamental doctrine of estoppel, as stated by most of the text-writers in this field of the law. See Morrison v. Whiteside, 116 Ga. 459 ( 42 S.E. 729). There are some decisions which hold that this doctrine is operative only where there has been an express covenant of warranty in the prior deed. In the comment made in the annotation of U.S. National Bank of LaGrande v. Miller, 122 Or. 285 ( 258 P. 205, 58 A.L.R. 339, 380), it is stated: "Although there are a few cases which directly or by implication support the view that a covenant of warranty of title is essential to estop the grantor from asserting an after-acquired title or interest, according to the great weight of authority at the present time it is not always necessary that a deed should contain covenants of warranty in order to operate by way of estoppel upon the grantor against setting up an after-acquired title or interest against the grantee." There is a discussion of this principle in 19 Am.Jur. 612, § 12, from which the following is taken: "Estoppel by deed to assert an after-acquired title may arise by virtue of express covenants of warranty or certain other covenants from statutory enactments passing an after-acquired title, asserting estoppel by operation of law in such cases, or implying covenants as a matter of law from the fact of a conveyance, and from express recitals or averments or language in the conveyance clearly indicating that it was the intention and contemplation of the parties thereto to transfer some particular interest or estate of particular quality."
It is insisted in the present case that since in our State under the terms of the Code, § 29-302 "there is no implied warranty" in the sale of land, and since in the conveyance here involved there were no express covenants of warranty, it would not be correct to apply the doctrine. In Thomas v. Hudson, 190 Ga. 622 ( 10 S.E.2d 396), which dealt with a mortgage, after pointing out that while in the decision of this court there cited there had been reference to the fact of warranty of title contained in the conveyance or mortgage, nevertheless the court had not gone "to the extent of directly holding the warranty necessary in order that the subsequently acquired title may inure to the benefit of the vendee or mortgagee," it was further stated: "We think therefore that the general rule as set forth by this court in the cases first cited in this division of the opinion [some of which had been reasoned upon the theory of warranty] should not be qualified by imposing as a condition the existence of an express warranty of title by the mortgagor. A different rule might obtain in a conveyance which went no further than merely to disclaim title. See Morrison v. Whiteside, 116 Ga. 459, 461 ( 42 S.E. 729); Taylor v. Wainman, 116 Ga. 795 ( 43 S.E. 58); Citizens Southern National Bank v. Ellis, 171 Ga. 717 (2, a), 729, 730 (156 S.E. 603)." The argument that a covenant of warranty is essential in the previous conveyance of course rests upon the proposition that there must have been something by way of representation by the grantor that he should not in equity be permitted later to repudiate. It is said that the instrument contained no express warranty, and that under our Code, as pointed out above, there is in such a transaction no implied warranty. But it must be remembered, as mentioned by Jenkins, J., in Thomas v. Hudson, supra, that the case does not involve a breach of warranty; it involves estoppel; and some courts have in such cases gone upon the theory that the character of the previous transaction out of which the conveyance resulted may be looked to, and that the intention of the parties will control. Certain it is that there may be other representations besides warranty itself, which equity would not allow the grantor to repudiate. These cases are referred to in the note in 58 A.L.R., supra. A great many of the decisions in other jurisdictions have also made a distinction between the case of a mortgagor and mortgagee and that of vendor and vendee. This distinction was recognized by us in Thomas v. Hudson, supra. It was said, in Clark v. Baker, 14 Cal. 612 (76 Am. D. 449), cited in Northrup v. Ackerman, 84 N.J. Eq. 117 ( 92 A. 909), to rest upon the following considerations: "The mortgagor holds a very different relation to the mortgagee from that of vendor to a vendee. By the execution of a conveyance without warranty, all relations between vendor and vendee are dissolved. They henceforth hold one another at arm's length, as they do the rest of the world. The dealing between them is completed — nothing further remains to be done. The reverse is the case between mortgagor and mortgagee. By the execution of the mortgage, the transaction between them is only begun. Every substantial part remains to be performed. The mortgagee is to return to the mortgagor the estate; and the mortgagor is to return to the mortgagee the money and interest secured; and until this is consummated, the obligation rests upon both to do nothing which can impair the rights of the other or embarrass their enforcement."
There is good reason to place the parties to a security deed with which we are now dealing, as respects the present question, on a different basis from that of the usual case of bargain and sale of land. The transaction out of which it arises is wholly different. In applying the doctrine of estoppel of the grantor to claim under after-acquired title as against his grantee in the security deed, such grantee was merely put, by the trial judge in this case, on a parity with the mortgagee in Thomas v. Hudson, supra. Under his contract of sale (or so-called bond for title) he was to obtain "a good and sufficient title." This, according to our decisions, meant a warranty title. Toomey v. Read, 133 Ga. 855 (7), 856 ( 67 S.E. 100). He thus professed to secure his debt at least (by virtue of the terms of the contract of sale) in contemplation of holding "good and sufficient title." The obvious purpose — indeed the stated purpose — of the conveyance to Mrs. Rhodes was to secure her debt against Perkins. It therefore could not under its terms be regarded as a mere disclaimer of title. He owned an equitable interest in the land. It was subject to transfer by him, and his conveyance of it for the purpose of securing his debt "will operate upon that equitable estate." Citizens Bank of Moultrie v. Taylor, 155 Ga. 416 ( 117 S.E. 247). By its very terms it conveyed his "bond for title" interest and his "right, title, and interest" in the land. Every purchase-money payment made by him inured to the benefit of his grantee, and made her security that much more valuable. It would not be doubted that if he had completed his payments and obtained full legal title, her claim would have attached to it as effectively as if he had owned it outright at the time of his conveyance. He was conveying to Mrs. Rhodes that title which it was contemplated under the bond he would get (together with what he already held). That title (which he would have acquired on compliance with his bond) he later acquired. His deed to it is still outstanding to secure his unpaid debt. It would therefore seem to be but an expression of the soundest principles of equity to say that he and those holding under him will be estopped to claim the property under a later-acquired title as against such grantee; and we so hold.
Judgment affirmed. All the Justices concur, except Duckworth, J., who dissents.
ON MOTION FOR REHEARING.
A rehearing was granted in this case, to determine whether an apparently erroneous statement of fact had caused us to arrive at an erroneous conclusion. The author of the opinion had recited that the last security deed had been canceled, "reinvesting title in Perkins, where it reposed at his death." The motion for rehearing called attention that this conveyance was not canceled until after his death, and made the contention that the cancellation was upon payment of the debt by the widow who not only claimed the property as an heir but also claimed the right to have it set apart as a year's support. It is contended that such right is superior to the right of Mrs. Rhodes or her heirs. We do not review our ruling as to the character of conveyance made by Perkins to Mrs. Rhodes, being satisfied with what was originally stated in reference to it, and nothing being presented in the later briefs to change these views; but we do re-examine the question as to the effect of this latter transaction. Careful re-examination of the record does not in any way disclose that the payment of Perkins' indebtedness to the grantee in the last security deed was made by the widow, albeit such may be the fact, since the date of cancellation of the deed is shown to be on a date after Perkins' death. Viewing the case in reference to Mrs. Perkins' claim to the property as for year's support, we reach the same conclusion as originally announced. Such a claim is of course subordinate to a valid outstanding transfer of title as by a security deed. See Lunsford v. Kersey, 191 Ga. 738 ( 13 S.E.2d 803); Smalley v. Bassford, 191 Ga. 642 ( 13 S.E.2d 662), and cit. The payment to the Realty Savings Trust having been voluntary, so far as the record here discloses, and there being no claim as by a transferee of the security deed (it appearing to have been canceled), and the claim made not being founded on subrogation, it follows that title, upon the cancellation of the deed, stood in the heirs at law or the assigns of Perkins; and the deed to Mrs. Rhodes not being satisfied, the property came under the terms of its conveyance, and the right of Mrs. Perkins to a year's support was subordinate to those holding under it.
The judgment is adhered to. All the Justices concur.