Opinion
15272.
JANUARY 9, 1946.
REHEARING DENIED FEBRUARY 21, 1946.
Equitable petition. Before Judge Harper. Crisp Superior Court. June 17, 1945.
George W. Williams and E. F. Strozier, for plaintiff in error.
Leonard Farkas, Walter H. Burt, and J. W. Dennard, contra.
1. "A deed made to secure debt conveys the title to land, and a homestead therein will avail nothing as against such title. There is nothing in the debtor upon which a homestead can operate save the equity of redemption; if he never redeems, there is nothing to which it can attach." Kirby v. Reese, 69 Ga. 452; West v. Bennett, 59 Ga. 509; Mozley v. Fontana, 124 Ga. 378 ( 52 S.E. 443); Morgan v. Community Loan Investment Co., 195 Ga. 675 (4) ( 25 S.E.2d 413). Where no legal redemption of the land is alleged, or claimed, but the redemption, if such be shown, is entirely an equitable one, persons claiming thereunder must assert their equitable demands within a reasonable time, for "equity will reward the vigilant, not the slothful," and where the delay is such as to render the ascertainment of the truth difficult, equity will give no relief. Code, § 37-119.
2. "When a person is defrauded and has knowledge of the fraud, the law expects him to ask redress, if at all, within the period of limitation. If he waits for a longer period, he is bound by his laches." McWhorter v. Cheney, 121 Ga. 547 ( 49 S.E. 603). Where the action is an equitable table one to obtain possession of lands, it has been analogized to the rule of law permitting title by adverse possession to be acquired in seven years under color of title, and the plaintiffs would be barred after such time. Robinson v. Smith, 159 Ga. 269 (6) ( 125 S.E. 593).
3. When an express trust is denied by the trustee, and he claims to hold trust property as his own, adversely to his cestui que trust, the latter having knowledge of that fact, prescription will begin to run in favor of such express trustee from the time of such adverse possession. Keaton v. Greenwood, 8 Ga. 97 (2); Teasley v. Bradley, 110 Ga. 501 ( 35 S.E. 782, 78 Am. St. R. 113).
4. Where a homestead never became legally operative by reason of a deed made prior to the application for homestead, and where the alleged equitable redemption of the property under such deed was never asserted by proper legal or equitable proceedings, and none of the persons interested were shown to be laboring under disabilities, the claim of homestead would not prevent title by prescription from ripening in persons in adverse possession of the property for over forty years under a claim of right. Code, §§ 85-406, 85-407; Danielly v. Lowe, 161 Ga. 279 (3) ( 130 S.E. 687).
No. 15272. JANUARY 9, 1946. REHEARING DENIED FEBRUARY 21, 1946.
Mrs. Sallie Barber, as administratrix of the estate of John H. Shrouder, in her equitable petition alleged: On December 24, 1883, a constitutional homestead of real estate and personal property, including all of lot 58 in the 14th district of Dooly County (now Crisp County) was set aside and approved by the ordinary of Dooly County to John H. Shrouder, the head of a family consisting of his wife, Sallie E. Shrouder, and four minor children; and such homestead proceedings were duly recorded in the clerk's office, Superior Court of Dooly County. John H. Shrouder was the owner and in possession of said lot of land when the constitutional homestead was issued. Prior to the homestead proceeding, Shrouder had given a deed, in form a warranty deed, but in fact a security deed, to Eliza Clements in December, 1879, on the whole of said lot of land, to secure his indebtedness to her in the sum of $300, and the homestead was thus effectual as to the equity of redemption in said lands.
In January, 1895, Mrs. S.E. Shrouder made an agreement with J. H. Raines, authorizing him to manage and control said lands, and collect the rents, until her indebtedness to him of $300 was paid. Raines, after gaining control of the lands for that purpose, took up the security deed of Eliza Clements in December, 1896, paying to her $500. Raines received the rents and profits of the lands for the years 1895, 1896, 1897, and 1898, of the value of $250 per year, and was paid $62 by Mrs. Shrouder in November, 1897. He removed 150 cords of wood, valued at 50 cents per cord, for more than 3 years; and cut timber from the lands. In January, 1899, Raines, claiming that his indebtedness had not been paid, sought to acquire title by arrangement with Mrs. Shrouder for him to have title to the north half of said lot, and for her to take title to the south half. No such agreement was made by her mother with Raines, and her mother always repudiated the same. Raines, under his alleged title from Mrs. Clements, conveyed the north half of said lot in December, 1903, to J. O. Slade. Raines and Slade both had knowledge of the homestead covering the whole of lot 58. Raines did not own title to the lot and could not convey it.
The petitioner's mother, with knowledge that Raines had gotten the rents and use of the lands for more than sufficient time to repay him, began to reassert her homestead interest, and in the years 1903 and 1904 removed the fence erected by Raines to exclude petitioner's mother from the north half of said lot. Petitioner's mother was indicted as a trespasser and her conviction was set aside by the Supreme Court on a ruling that the evidence did not authorize the verdict. John H. Shrouder died in July, 1905. The homestead continued in effect until the death of petitioner's mother, the last beneficiary, in November, 1943, when the heirs of John H. Shrouder became entitled to possession of said lands.
Miss Ruth Slade, daughter of J. O. Slade, is now in possession of the north half of lot 58, having acquired said lands in the division and distribution of Slade's estate, and is named defendant. Plaintiff is the legal representative of her father's estate and is entitled to possession of said lands for administration and distribution to the heirs. Defendant refuses to deliver possession upon demand. If plaintiff's intestate is indebted in any amount under Eliza Clement's paper, plaintiff offers to do equity and pay the sum found to be due on accounting. Plaintiff is entitled to rents and profits from November, 1943.
The prayers are for title to the north half of lot 58 in the 14th district of Crisp County to be decreed in the estate of John H. Shrouder, deceased; judgment for mesne profits; and process.
The defendant, Ruth Slade, demurred to the petition as filed, and thereafter the plaintiff by amendment, duly approved and allowed, alleged that she was appointed administratrix of the estate of John H. Shrouder on March 3, 1919. At the time of the execution of the deed by Shrouder to Eliza Clements her father was in possession of the land, remained in possession continuously until obtaining the homestead, and even thereafter, until plaintiff's father went to Indian Territory in 1892, leaving his wife and children in possession of the homestead property. In January, 1895, her mother gave a power of attorney to Raines, as per copies attached, marked exhibits "A" and "B," and Raines acquired permissive possession of the lands in 1895 to manage, control and collect the rents. Raines having possession for said purpose, advanced $500 to Eliza Clements to take up her security deed claim against the property. Raines received the rents and income from all the lands from 1895 to 1898 inclusive, and in January, 1899, attempted to take the north half of said lot for his claim of indebtedness, and thereafter he received the rents and income from the north half until he conveyed the same to his son-in-law, J. O. Slade, in 1903. The rent for the use of the north half of said land was of the value of $125 per year. The rents and income more than repaid Raines for all of his advances of money, and thus the land was redeemed from the Eliza Clements security deed, and title revested in plaintiff's father prior to Raines' deed to his son-in-law, thus making the homestead effectual as to the legal title. Slade had actual knowledge of the homestead proceedings, and the circumstances under which Raines acquired possession, and knew of his grantor's lack of right to convey the land.
Defendant renewed her demurrer to the plaintiff's petition as amended. The trial judge overruled the demurrer, and the defendant excepted.
1. It is alleged that John H. Shrouder, the head of a family consisting of his wife, Sallie E. Shrouder, and four minor children, was the owner, and in possession of all of land lot No. 58 in the 14th district of Dooly (now Crisp) County at the time of his application for homestead, which was duly allowed and approved by the ordinary in December, 1883. This allegation as to ownership at the time of the application for homestead is qualified by the allegation that in 1879 Shrouder had made to Eliza Clements an instrument which was a warranty deed in form, but a security deed in fact, covering all of lot 58, to secure an indebtedness of $300. Thus, at the time of the application for homestead, all that was vested in Shrouder was possession of the lands with a right of redemption. West v. Bennett, 59 Ga. 509; Kirby v. Reese, 69 Ga. 452; Mozley v. Fontana, 124 Ga. 378 (supra); Morgan v. Community Loan Investment Co., 195 Ga. 675 (4) (supra).
It is insisted that Raines "did take up the Eliza Clements deed," and that Raines collected rents and profits from the land in an amount sufficient to pay the indebtedness of Mrs. Shrouder to Raines and to pay the amount due Raines for taking up the security deed from Shrouder to Eliza Clements, and that the homestead thus became operative. It is not alleged or contended that there was any transfer from Raines to Shrouder or to Mrs. Shrouder of such title as Raines may have acquired under the Eliza Clements deed. Eliza Clements having a warranty deed to the lands, in order for Raines to take up the debt of Shrouder, there must have been some conveyance from Clements to Raines. Since no transfer is alleged from Raines to Shrouder or his wife, there was no legal redemption of the property under the Eliza Clements deed, and the homestead did not become operative as a matter of law as against such interest as Raines may have acquired by taking up the Eliza Clements deed.
If there was an equitable redemption of the property as contended, then Shrouder, as trustee for the beneficiaries of the homestead, under the ruling in Taylor v. James, 109 Ga. 338 ( 34 S.E. 674), should have moved in his lifetime to recover possession of the north half of lot 58, and if he was absent from home, Mrs. Shrouder should have brought proceedings to recover possession. The application for homestead having been made in 1883, those named as minor beneficiaries in such application were of lawful age at the time of the death of their father in 1905. Under the law of this State, upon the death of the owner of any estate in realty, which estate survives him, title vests immediately in his heirs at law, subject to administration by the legal representative, if there be one, and the right of recovery is in the legal representative, if one; if none, the heirs may sue in their own name. Code, § 113-901. In this instance the right of recovery was in the heirs of Shrouder, since there was no administration upon his estate until 1919.
The homestead having never legally become operative against the title originally held by Eliza Clements, and later by Raines, a right, if any, purely equitable in its character cannot now be asserted for the first time, when it could have been asserted forty years or more ago. Shrouder is dead; his wife, Mrs. Sallie E. Shrouder, is dead. J. O. Slade, from whose heir the plaintiff now seeks to recover the possession of lands, is dead. Eliza Clements was lending money in her own name in 1879. She must have been a mature woman at the time. If she is not dead, she is far past the Biblical three score and ten years. If living, from old age and lack of memory she may not be able to testify. The same conclusions must apply to J. H. Raines. Can the full truth of what occurred more than sixty years ago be now fairly established? The deaths of those known to be dead show that it cannot be. A delay of forty years or more, and the death of essential witnesses, when the truth of matters in controversy cannot be fairly established, makes the doing of equity either doubtful or impossible, and will bar the action. Citizens Southern Bank v. Ellis, 171 Ga. 733 ( 156 S.E. 603); Stephens v. Walker, 193 Ga. 331 ( 18 S.E.2d 537).
2. Legal title to lot 58 having been voluntarily conveyed by Shrouder to Eliza Clements as security for a loan, and Raines' claim against the property having been acquired by payment to Eliza Clements, whatever transfer was taken from Clements to Raines was neither forged nor fraudulent within the meaning of the Code, § 85-407. The allegation that Slade at all times had knowledge of the homestead and the circumstances under which Raines acquired possession, is insufficient to charge fraud to Slade, since it is not shown that there was ever any legal redemption of the property by the Shrouders, and the homestead could not attach to the property as against the warranty deed made to Eliza Clements. If any fraud is alleged in the petition, Shrouder and his heirs had full knowledge of such fraud. "Fraud which must have been discovered, if usual and reasonable diligence had been exercised, is not a good reply to the statute of limitations." Sutton v. Dye, 60 Ga. 449. No legal or equitable proceedings were brought by Shrouder or Mrs. Shrouder prior to his death in 1905 to recover possession of the north half of lot 58. The heirs of Shrouder were of legal age in 1905. If Slade had been guilty of fraud, the heirs of Shrouder should have sought redress against him in their own name, since there was no administration upon Shrouder's estate until 1919.
In McWhorter v. Cheney, 121 Ga. 547 ( 49 S.E. 603), this court held: "Eighteen years have elapsed since the alleged fraud was committed; the husband is dead, and the ascertainment of the truth made more difficult. Equity follows the analogy of the law; and even in suits to recover land, when fraud is charged, it has been held that `the period of limitations applicable to an action . . for the fraud is the same as that which would apply to an action for the land, to wit; seven years from the discovery of the fraud.' Cade v. Burton, 35 Ga. 280. `If the defendant has been guilty of a fraud by which the plaintiff has been debarred or deterred from his action, the period of limitations shall run only from the time of the discovery of the fraud.' Civil Code, § 3785. The statute of limitations is a statute of repose. When a person is defrauded and has knowledge of the fraud, the law expects him to ask redress, if at all, within the period of limitation. If he waits for a longer period, he is bound by his laches."
In the present suit, there is no merit in the contention that because of the fraudulent conduct of Raines and Slade title by prescription could not ripen in Slade and his heirs.
3. Attached to the petition in the court below, as an exhibit, is a copy of an agreement whereby Mrs. S.E. Shrouder in January, 1895, named J. H. Raines "to manage and control" and to rent out or lease said lands and collect the rents and profits. Insofar as the plaintiff may rely upon the principle that the permissive use or occupancy of lands cannot be the basis of prescription, she is confronted with the allegation of her petition, that Raines received the rent and income from all the lands for the years 1895 to 1898 inclusive, and after January, 1899 — when he attempted to take the north half of the lot for his claim of indebtedness — he received the rents and income from the north half until he conveyed the same to his son-in-law Slade in 1903, which clearly shows that in January, 1899, Raines asserted a claim to the north half of said lot, that he claimed said land as his own, and that such adverse claim and possession was fully known by the beneficiary of the trust, Mrs. S.E. Shrouder. "The statute of limitations does not begin to run against express trusts, created by the act of the parties, or by the appointment of the law, so long as the trust continues, and is acknowledged to be a continuing, subsisting trust, for the reason that the possession of the trustee is the possession of the cestui que trust; but when the trust is denied by the trustee, and he claims to hold the trust funds or the trust property, as his own, adversely to his cestui que trust, the latter having knowledge of that fact, the statute will begin to run in favor of such express trustee from the time of such adverse claim or possession." Keaton v. Greenwood, 8 Ga. 97 (2) (supra); Teasley v. Bradley, 110 Ga. 501 (supra).
4. J. O. Slade entered into possession of the lands in 1903. It is contended that Mrs. Shrouder always repudiated the arrangement for Raines to have the north half of lot 58 and her the south half, and as evidence of such repudiation her indictment for trespass in 1904 is set forth. It is the function of the courts in proper proceedings brought for such purpose to determine title to lands. One act of physical violence cannot be substituted for a proper judicial determination, which was not sought in time for the truth to be ascertained. All legitimate inferences which can be drawn from the pleadings are to be construed most strongly against the pleader, and it is strongly inferred that after her conviction for trespass Mrs. Shrouder did not again interfere with the possession of Slade, and his possession and that of his successors in title has been continuous and adverse since that time.
By reason of the allegation that Raines was in possession of the land under his claim arising out of his having taken up the Eliza Clements deed, and by reason of his contention that he had not been repaid, Slade under his deed from Raines was in possession of the property under at least a color of title. Connell v. Culpepper, 111 Ga. 805 ( 35 S.E. 667); Street v. Collier, 118 Ga. 470 ( 45 S.E. 294); Turner v. Neisler, 141 Ga. 27 (6) ( 80 S.E. 461); Byrom v. Riley, 154 Ga. 580 ( 114 S.E. 642); City of Barnesville v. Stafford, 161 Ga. 588 ( 131 S.E. 487, 43 A.L.R. 1045).
The heirs of Shrouder were of legal age at the time of their father's death in 1905, and such heirs are not shown to have been laboring under any disability otherwise. Whatever rights may have existed under the alleged homestead were not sufficient to prevent title by prescription from ripening in Slade prior to the appointment of the plaintiff as administratrix of her father's estate in 1919. Code. § 85-413; Danielly v. Lowe, 161 Ga. 279 (3) (supra); Payne v. Ormond, 44 Ga. 514. Slade and his heirs held the land in question in adverse possession and under a claim of right for more than forty years, and title by prescription was acquired by them. Code, §§ 85-406, 85-407.
The present case is distinguished from that of Davis v. Jones, 95 Ga. 788 ( 23 S.E. 79), relied upon by the defendant in error, in that in the latter case legal title was in the applicant for homestead at the time the application was made. In the present case Shrouder had only an equity of redemption in the lands set apart as a homestead, and the lands were never legally redeemed. Thus, before the claim of homestead could be pleaded to prevent prescription from running against the heirs of Shrouder, it would be necessary to obtain an adjudication that the lands were equitably redeemed, and, as before held, the length of time which has elapsed prevents the truth of matters in controversy from being fairly established, and bars such action.
The court should have sustained the general demurrer and dismissed the petition.
Judgment reversed. All the Justices concur.