DAVIS et al. v. JOHNSON et al.
33020
Supreme Court of Georgia
DECIDED JUNE 28, 1978.
ARGUED JANUARY 9, 1978
241 Ga. 436
MARSHALL, Justice.
As the Baxter case, supra, shows, the easement of access “includes the right of ingress [entry], egress [exit], and regress [reentry], a right of way from a locus a quo to the locus ad quem, and from the latter forth to any other spot to which the party may lawfully go, or back to the locus a quo.” State Hwy. Bd. v. Baxter, supra, p. 133. It has not been shown that the motels’ right of ingress, egress and regress from the locus a quo to the locus ad quem and from there to any other spot or back to the locus a quo, has been taken. The evidence shows that they presently have a usable right of vehicular access by road to their property (cf. MARTA v. Datry, supra, 235 Ga. at 576-577), and from their property to that roadway, but they have not shown that they have a right of direct access under law to any particular type of highway. See Tift County v. Smith, 219 Ga. 68 (131 SE2d 527) (1963). Hence, the motels have not shown that they have a right to injunctive relief. State Hwy. Dept. v. Strickland, supra.
Motion for rehearing denied. All the Justices concur, except Bowles, J., who dissents.
MARSHALL, Justice.
In the present case, the Gwinnett County Bank seeks to set aside its cancellation of a deed to secure debt executed by the prior owner of certain real estate. The bank also seeks to enjoin Dealers Supply Company, a judgment creditor of the erstwhile owner, from foreclosing on the property. The trial court dismissed the complaint for failure to state a claim for relief. We have determined that the complaint does state a claim for relief. We therefore reverse.
These are the facts: The Gwinnett County Bank took a promissory note and deed to secure debt from Johnson, the original owner, to secure a purchase money
Unknown to either Davis or the bank, Dealers Supply had obtained a consent judgment against Johnson in the amount of $47,000; this judgment was recorded on the general execution docket of Gwinnett County on July 13, 1976.
On March 9, 1977, Dealers Supply, in execution of this judgment, levied on the real estate Johnson had conveyed to Davis. The Gwinnett County Bank filed the present action on March 30, 1977, praying that the foreclosure sale be enjoined. Davis’ promissory note to the bank was in default at the time this complaint was filed. The trial judge granted the bank‘s request that a temporary restraining order be issued, and Dealers Supply was ordered to appear and show cause why a permanent injunction should not be granted. Following the rule nisi hearing, the trial judge granted Dealers Supply‘s motion to dismiss the complaint, and its motion to dissolve the temporary restraining order was also granted. Held:
As this case is presented to us, we view the critical and dispositive question to be whether Dealers Supply has the senior lien on the property or whether the Gwinnett County Bank may set aside its cancellation of Johnson‘s security deed and be reinstated to its original priority position.
The trial judge reasoned that the bank‘s cancellation
The trial judge recognized the existence of the following principles, most notably exemplified by decisions of the court in McCollum v. Lark, 187 Ga. 292 (3, 4) (200 SE 276) (1938); Flournoy Plumbing Co. v. Home Owners Loan Corp., 181 Ga. 459 (182 SE 507) (1935); Wilkins, Neely & Jones v. Gibson, 113 Ga. 31 (38 SE 374) (1901); and Merchants &c. Bank v. Tillman, 106 Ga. 55 (31 SE 794) (1898): Where one advances money to pay off an encumbrance on realty either at the instance of the owner of the property or the holder of the encumbrance, either upon the express understanding or under circumstances under which an understanding will be implied that the advance made is to be secured by the senior lien on the property, in the event the new security is for any reason not a first lien on the property, the holder of the security, if not chargeable with culpable or inexcusable neglect, will be subrogated to the rights of the prior encumbrancer under the security held by him, unless the superior or equal equity of others would be prejudiced thereby; knowledge of the existence of an intervening encumbrance will not alone1 prevent the person advancing the money to pay off the senior encumbrance from claiming the right of subrogation where the exercise of such right will not in any substantial way prejudice the rights of the intervening encumbrancer; under the foregoing circumstances, equity will set aside a cancellation of such security and revive the same for the benefit of the party who paid it off. See also Murray v. Johnson, 222 Ga. 788 (152 SE2d 739) (1966); Young v. Hirsch, 187 Ga. 1 (199 SE 179) (1938); Eldridge v. Forman, 171 Ga. 367 (155 SE 476) (1930).
Although it may seem somewhat anomalous to allow someone to be subrogated to his own rights, we believe that the use of the subrogation doctrine under the circumstances of this case is entirely justified. As was stated in Cornelia Bank v. First Nat. Bank of Quitman, 170 Ga. 747, 750 (154 SE 234) (1930), “Subrogation . . . is of equitable origin and benevolence. It is founded upon the dictates of refined justice. Its basis is the doing of complete, essential, and perfect justice between all the parties, without regard to form, and its object is the prevention of injustice . . . The courts incline rather to extend than restrict the principle. The doctrine has been steadily growing and expanding in importance, and becoming general in its application to various subjects and classes of persons, the principle being modified to meet the circumstances of cases as they have arisen.” Southern R. Co. v. Overnite Transportation Co., 223 Ga. 825, 830 (158 SE2d 387) (1967).
The trial judge refused to allow the bank to be subrogated or reinstated to its rights under Johnson‘s security deed because, in the trial judge‘s opinion, the bank‘s lack of diligence in failing to discover the existence of Dealers Supply‘s judgment lien had put Dealers Supply to the unnecessary trouble and expense of levying on the property. Under the equitable maxim that he who seeks equity must do equity, the trial judge is fully authorized to
Therefore, in no legally cognizable sense will the judgment creditor be prejudiced by the bank‘s being restored to its rights under Johnson‘s deed to secure debt. The senior secured party‘s lack of diligence in failing to discover the existence of the intervening lien becomes material only where this has prejudiced the rights of the intervening lienholder.
The judgment is therefore reversed and the case remanded to the trial court for further proceedings not inconsistent with this opinion.
Judgment reversed and remanded. All the Justices concur, except Hall, J., who concurs in the judgment only, and Jordan and Hill, JJ., who dissent.
Webb, Fowler & Tanner, W. Howard Fowler, J. L. Edmondson, for appellants.
Alston, Miller & Gaines, G. Conley Ingram, Glyndon C. Pruitt, A. Mims Wilkinson, Jr., James M. Powell, John
HILL, Justice, dissenting.
A chronological statement of the facts will clarify both the facts and the errors of the majority.
On June 1, 1976, when Johnson contracted to sell the property to Davis, the Gwinnett County Bank held Johnson‘s 60-day promissory note and $21,000 deed to secure debt with dragnet clause. On July 13, Dealers Supply recorded its $47,000 consent judgment against Johnson on the general execution docket. On September 17, Johnson conveyed the property by warranty deed to Davis for $32,500, and Davis conveyed it by security deed to the bank to secure his $30,000 debt to the bank. On December 7, 1976, the bank had Johnson‘s deed to secure debt canceled of record.
Now the bank wants to set aside its cancellation of the original deed to secure debt executed by Johnson, and thereby regain its priority status as to Johnson‘s debt in the sum of $234,183.63.1 The trial court granted Dealers Supply‘s motion to dismiss and the majority reverse.
The majority say that the rights of the judgment creditor are inferior to the prior equitable rights of the mortgagee and that this “somewhat anomalous” right of subrogation is of equitable origin. The majority fail to explain how Dealers Supply, which did nothing but record its judgment, can lose in equity to Davis and the bank who acted with constructive notice of Dealers Supply‘s recorded judgment. “If a party, by reasonable diligence, could have had knowledge of the truth, equity shall not relieve; . . .”
Moreover, the majority find that the bank is entitled to be restored to its priority. Yet the cases cited by the majority, if they were applicable here, would allow Davis to be subrogated to the rights of the bank, not backwards as the majority does. In Cornelia Bank v. First Nat. Bank of Quitman, 170 Ga. 747 (154 SE 234) (1930), it was the purchaser (i.e., Davis in the case at bar), not the creditor (i.e., the bank), who was entitled to subrogation.
If Davis obtains subrogation, his priority equals $30,000, the amount of Johnson‘s indebtedness which Davis paid to the bank. If the bank obtains reinstatement of its security deed from Johnson, it can claim priority as to his existing indebtedness — $234,183.63. That must be what the majority mean when they say it may seem somewhat anomalous to allow the bank to be subrogated to its own rights. It‘s so anomalous to me that I dissent.