Summary
holding that, because a security deed's provisions are contractual remedies between the specific parties, a creditor is not barred from exercising such rights based on failure to conform to the confirmation requirement in OCGA § 44–14–161's predecessor statute
Summary of this case from Alstep, Inc. v. State BankOpinion
14986.
OCTOBER 6, 1944.
Trover. Before Judge Grantham. Douglas city court. June 21, 1944.
R. A. Moore, for plaintiff in error.
Mingledorff Roberts, contra.
1. The Code, § 107-102, which in certain instances permits defendants to plead a set-off or to recoup in damages, is limited to suits brought to recover personal property where the vendor retains title.
2. A judge will not be reversed for a ruling which is not harmful to the complaining party, even though it be erroneous.
3. The courts will not pass upon the constitutionality of an act of the General Assembly unless the determination of such question is essential to a disposition of the case.
4. The failure of the holder of a security deed to obtain an order of confirmation of sale, as provided by the act approved March 28, 1935 (Ga. L. 1935, p. 381), does not operate to invest the maker of the unpaid notes with title thereto.
No. 14986. OCTOBER 6, 1944.
Mrs. Bonnie Blalock Wren brought in the city court of Douglas, an action in trover against C. P. Powers, in which she alleged as follows:
1. On February 15, 1940, she purchased from the defendant the real estate and property described in the security deed, a copy of which was attached to the petition, and in connection with said purchase gave to the defendant said security deed and ninety-six promissory notes for $40 each, maturing monthly, the payment of all of said indebtedness being indiscriminately secured by said lien on said personalty and realty.
2. She paid in cash to the defendant the eight notes maturing monthly through November 15, 1940, and received all of said notes thus paid.
3. On January 29, 1941, the defendant, claiming a default in the payment of said secured notes, advertised all the property described in the security deed except the real estate for sale under the power of sale set out in said deed, for the purpose of paying all of said indebtedness, and at said sale himself became the purchaser of said property at and for the sum of $500, after which he still held said deed on said realty to secure the balance owing.
4. On March 4, 1941, the defendant, claiming a default under the terms of the security deed, advertised all the real estate described in said deed for sale under the power of sale therein, for the purpose of paying all the indebtedness secured thereby, and himself became the purchaser of said property at said sale at and for the sum of $500. This sale of the real estate was not confirmed by the superior court of said county, and all the remainder of said debt and the notes evidencing the same were fully satisfied by said unconfirmed sale of said realty, but said security deed and all of said notes except the eight previously referred to are still held by the defendant.
5. The said Powers, without title or right of possession, is holding said security deed and notes, which are fully described in exhibits A and B attached to the petition, to which she has title and the right of possession.
6. Said property is of the value of $3520, and the yearly value of the use thereof is $281.60.
7. She has demanded, and the said Powers has refused to deliver the said property to her, or to pay her the profits thereof.
The defendant's plea was: "Comes now the defendant in the above-named and stated case and, subject to his demurrer, pleads not guilty." Further answering, he averred that the allegations of an unconfirmed sale, set forth in the 4th paragraph of the petition, were obviously intended to refer to section 1 of the act approved March 28, 1935 (Ga. L. 1935, p. 381), as follows: "Be it enacted by the General Assembly of Georgia, and it is hereby enacted by authority of the same, that from and after the passage of this act when any real estate is sold on foreclosure, without legal process, under powers contained in security deeds, mortgages, or other lien contracts, and at such sale said real estate does not bring the amount of the debt secured by such deed, mortgage, or contract, no action may be taken to obtain a deficiency judgment unless the person instituting the foreclosure proceedings shall, within thirty days after such sale, report the sale to the judge of the superior court of the county in which the land lies for confirmation and approval thereon. The court shall require evidence to show the true market value of the property sold under such powers, and shall not confirm the sale unless he is satisfied the property so sold brought its true market value on such foreclosure sale. The court shall direct notice of the hearing to be given the debtor at least five days prior thereto, and at the hearing the court shall also pass upon the legality of the notice, advertisement, and regularity of the sale. The court may, for good cause shown, order a resale of the property." He further alleged that said act was, for various reasons, in conflict with certain provisions of the State constitution, and that the petitioner was indebted to him in the sum of $2520, besides interest, upon certain promissory notes, being a portion of the notes secured by the security deed, and asked for judgment against the petitioner therefor.
Mrs. Wren demurred to so much of the cross-action as sought to recover on certain notes, for the reason that the defendant sought to set off against her action in tort a counterclaim in assumpsit on the notes referred to. This demurrer was sustained. She also made an oral motion to strike the remainder of the plea, on the ground that it set forth no legal defense to the action. This motion also was sustained, and the plea was stricken.
The case then went to the jury, and the following evidence was introduced: Counsel for the defendant stated that the deed to secure debt and the notes secured thereby, which were sued for, were delivered by the defendant to the sheriff and were in his possession. Counsel for the plaintiff stated that she elected to take a verdict for the property sued for. Jimmie A. Wren testified: "I am the husband of the plaintiff. I negotiated the transaction in connection with which the notes and the deed to secure debt sued for were executed and delivered. Eight of the monthly installment notes were paid, at or about their respective maturities. On January 29, 1941, the deed to secure debt was foreclosed as to the personal property covered thereby. $500 was realized from this sale. On March 4, 1941, the deed to secure debt was foreclosed as to the realty covered thereby. $500 was realized from said sale. No other payments were made on the notes secured by said deed to secure debt."
No petition for confirmation of either sale was filed in the superior court of Coffee County, Georgia, as provided by the act of the General Assembly of Georgia approved March 28, 1935 (Ga. L. 1935, pp. 381-382). The defendant refused to deliver the notes and deed to secure debt, when a demand therefor was made.
The jury found for the plaintiff. Powers made a motion for new trial, which was overruled, and he excepted.
1. The first ruling on which error is assigned is the sustaining of a demurrer, seasonably interposed, to so much of the plea and cross-action of Powers as sought judgment on a series of notes held by him. The present action is a trover suit. The gist of such an action is conversion. Southern Express Co. v. Sinclair, 130 Ga. 372 ( 60 S.E. 849). It is one brought against a wrongdoer and sounds in tort. The cross-action was on contract. The two claims were not of a similar nature. This was a sufficient reason to strike the cross-action. McArthur v. Wilson, 13 Ga. App. 502 ( 79 S.E. 374); Hecht v. Snook Austin Furniture Co., 114 Ga. 921 ( 41 S.E. 74). Another reason why the demurrer was properly sustained is that with the one exception contained in the Code, § 107-102, which is not here applicable, no counterclaim is permitted to be urged in an action of trover, in the absence of exceptional circumstances sufficient to give rise to equitable relief. Barrow v. Mallory, 89 Ga. 76 ( 14 S.E. 878); Harden v. Lang, 110 Ga. 392, 396 ( 36 S.E. 100). The section above cited, codified from the act approved August 15, 1903 (Ga. L. 1903, p. 84), which in certain instances permits a defendant to plead a set-off or to recoup in damages, is limited to suits brought to recover personal property where the vendor retains title. This is not that kind of a case.
2. At the trial term, the plaintiff submitted an oral motion to strike "the remainder of defendant's plea on the ground that it sets forth no legal defense to plaintiff's action." After the court sustained the demurrer to the cross-action, referred to in division one of this opinion, all that was left was a general statement that, "Comes now the defendant in the above-named and stated case and subject to his demurrer, pleads not guilty," followed by an attack on the constitutionality of the act approved March 28, 1935 (Ga. L. 1935, p. 381). The bill of exceptions recites that, "By his plea of not guilty, the defendant was authorized to make his defense to the action." In view of this recital, certified to by the trial judge, and the language of the oral motion to dismiss, above quoted, limited, as will be seen, to the ground that the remainder of the plea sets forth no legal defense to the action, and in view of the fact that the plaintiff undertook to make out her case by submitting testimony, it is not certain that the judge intended to strike the plea of not guilty. If he did, he seems to have ruled correctly. The plaintiff brought her complaint by alleging in orderly, distinct, and separate paragraphs the facts on which she relied. The plea of not guilty was not a compliance with the provisions of the Code, § 81-306, that, "In all cases when the defendant desires to make a defense by plea or otherwise, he shall therein distinctly answer each paragraph of plaintiff's petition, and shall not file a mere general denial, commonly known as the plea of `general issue.' He may in a single paragraph deny or admit any or all of the allegations in any or all of the paragraphs of the petition." But if the plea of not guilty was stricken, the defendant, here the plaintiff in error, does not show that he was prejudiced, even had it been erroneous to strike the plea, because his adversary went to the jury with her proof, indicating that not only the trial judge but counsel for both parties treated the case as one where the plaintiff was obliged to prove her case in order to obtain a verdict; no objection appearing to such a course, and there being nothing in the record to indicate that the defendant was cut off from offering proof himself. Since it does not appear that the defendant was hurt by the ruling, the exception to so much of the order as struck "the remainder" of his plea is, so far as relates to the plea of not guilty, without merit.
3. The exception includes a complaint that the judge struck the defendant's attack on the constitutionality of the act. We do not mean to intimate any doubt as to the correctness of this ruling when we say that, if it was erroneous, it was harmless error. The defendant did not need to rely on the unconstitutionality of that act to prevail. He safely could have assumed that the act was valid, and yet, in an action ex delicto, such as trover, he could not file a counterclaim arising ex contractu. He could, however, rely upon the very evidence which the plaintiff incorporated in her petition, to show by way of defense that she was not entitled to a verdict. It is not necessary in this case to pass upon the validity of the act, that being true, the court will not do so. Hoover v. Pate, 162 Ga. 206 ( 132 S.E. 703); Wiley v. Douglas, 168 Ga. 659 ( 148 S.E. 735); Traylor v. Gormley, 177 Ga. 185 (3) ( 169 S.E. 850).
4. We pass over for the moment the other exceptions to the pleadings, in order to reach the controlling issue, which arises on the failure to grant a new trial on the general grounds that the verdict was contrary to the evidence and contrary to law. The original petition is set forth in substance in the accompanying statement. A reference thereto will disclose that, while the pleader asserted title to the notes sued for to be in her, and alleged their value and a conversion thereof by the defendant, the facts which are the basis of the claim of title are set forth in detail. It was alleged that the petitioner, having purchased from the defendant certain real estate, signed the notes and security deed and delivered them to the defendant. No facts were averred to show that title ever left the defendant. It was alleged that the defendant sold the real estate described in the deed to secure debt, bought it in himself, and that the sale was never confirmed by the superior court; and from this it was claimed that the outstanding notes were fully satisfied. The plaintiff placed one witness on the stand. His evidence went no further than to narrate the precise facts stated in the petition. No other evidence was offered. From the briefs filed herein, it is disclosed that the plaintiff relies on the act approved March 28, 1935 (Ga. L. 1935, p. 381), and takes the position that the effect of failure to obtain an order of confirmation is to reinvest her with title to the unpaid notes. The act does no such thing. It merely declares that, unless such an order is obtained, no action can be taken to obtain a deficiency judgment. The title to the unpaid notes was not altered. Good reasons might have suggested themselves to the lawmakers which induced them not to add a provision that the unpaid notes and the security deed should be delivered to the maker. Perhaps it occurred to them that the creditor would need them as evidence of his title, if he were, as here, the purchaser at the sale. It is true that he can never sue on them, but neither can be holder of a series of notes given by one who has obtained his discharge in bankruptcy obtain a judgment thereon against the maker, if a proper plea be interposed; but it would hardly be suggested that the discharge in bankruptcy would operate to place in the maker the title to the unpaid notes. In the instant suit, evidence from the sole witness sworn in the case showed affirmatively that the title to the property sued for was in the defendant. Therefore it was erroneous to deny the motion for new trial, and it becomes unnecessary to rule whether or not, even without the sworn testimony, a new trial would be proper because of the allegations of fact in the petition which negatived the plaintiff's right to recover. See Peacock v. Terry, 9 Ga. 137 (6); Porter v. LaGrange Banking Trust Co., 187 Ga. 528 ( 1 S.E.2d 441); Holton v. Mercer, 195 Ga. 47, 50 ( 23 S.E.2d 166); Gunn v. Johnson, 29 Ga. App. 610 ( 116 S.E. 921); Turner v. Fuller, 39 Ga. App. 184 ( 146 S.E. 494); New Zealand Fire Ins. Co. v. Brewer, 29 Ga. App. 773 ( 116 S.E. 922).
Judgment reversed. All the Justices concur.