23 S.E.2d 430 | Ga. | 1942
A creditor who on the same day receives from a debtor two security deeds conveying the same property, one to secure an indebtedness of forty thousand dollars and the other five hundred dollars, the latter deed *143 containing a general covenant of warranty excepting only the deed first referred to, and also containing a statement that it is made subject to the other deed, and that it is agreed that the title thereby conveyed shall not be merged with the title conveyed by the other deed, and the creditor thereafter delivers to another party its deed whereby it conveys to the latter all its rights, title, interest in and to the deed first mentioned, the indebtedness thereby secured, and all its right, title, and interest in and to the real estate therein described, and the grantee in the last mentioned conveyance by exercising the power of sale contained in the first deed sells the property and purchases the same, and then, agreeing that the original debtor might repurchase the same, makes him a deed to the property, he in turn giving a security deed to the same, and in default of some of the covenants therein sells the property under a power contained therein and purchases the same: Held, that neither under the rule of the merger of estates contained in the Code, § 85-710, nor under the doctrine of after-acquired title embraced in § 29-111, nor under any other principle of law or equity is the creditor first named entitled to share in the proceeds of the sale under the deed last referred to.
Under this state of facts the Atlanta Trust Company insists that while it is in the position of being subordinated to the actual purchase-money advanced by the Federal Land Bank, it has a superior claim to the non-purchase-money advanced for the other purposes set forth above. This insistence embodies the contention that when the Federal Farm Mortgage Corporation became the successful bidder at the foreclosure sale, it thus acquired the fee-simple *145 title, subject only to the Atlanta Trust Company's lien, and that at that instant the title it held under its security deed became merged into the greater title, to wit, the fee-simple title it acquired at the sale, subject only to the claim of the Atlanta Trust Company under the latter's $500 security deed, and that as a result the title held by the mortgage corporation under its security deed became extinguished.
The position of the Atlanta Trust Company can not be sustained. There is no attack on the validity of the sale exercised under the power of sale and the purchase thereat by the Federal Farm Mortgage Corporation; and the case falls within the general rule that a sale under a regularly exercised power in a security deed is equivalent to a foreclosure proceeding, and divests all junior encumbrances. Mutual Loan Banking Co. v.Haas,
The plaintiff in error relies on Federal Land Bank v. Bankof Lenox,
In the Bank of Lenox case the junior deed contained an unlimited warranty. In the instant case the covenant of warranty was unlimited, "excepting only the incumbrances hereinafter referred to," to wit, the $40,000 deed to Atlanta Trust Company. As to this, the opinion in the Bank of Lenox case said: "While our decision might properly be grounded solely on the doctrine of estoppel, as in the Bowlin and Perkins cases, it is not necessary to do so, for the reason, as stated, that the junior security deed in *148 this case not only conveyed the title to the land itself absolutely, and not `subject' to the senior lien, but contained an express covenant of unlimited warranty." Then followed a citation of authorities as to unlimited warranties. Lastly, it is to be noted that in the deed involved in the Bank of Lenox case there was no provision as to merger, or the absence of it.
In the deed in the present record there is a statement to the effect that it is distinctly contracted and agreed that the title therein conveyed shall not merge with the other title. Even in the absence of such an agreement as that last referred to, it may be doubted whether the two estates were merged, since "The doctrine of merger of estates is designed primarily for the benefit of one who acquires an interest in property greater than he possessed in the first instance, and will not be held to apply against his will to his disadvantage." Seaboard Air-Line Ry. v.Holliday,
It is unnecessary to determine whether what has been referred to as the junior security deed conveyed the legal title or only the equity of redemption, as the same result must follow in either instance.
Under the agreed statement of facts the plaintiff in error was not entitled to any of the relief sought.
Judgment affirmed. All the Justices concur.