Johnson v. Brewer, 134 Ga. 828

Johnson v. Brewer

134 Ga. 828 | Ga. | 1910

Lead Opinion

Lumpkin, J.

(After stating the foregoing facts.) The word “assignment” has several meanings. In a broad sense it is used to signify the act by which one person transfers to another, or causes to vest in such other, the entire right, interest, or property which he has in any realty or personalty, in possession or in action, or some share, interest, or subsidiary estate therein. It is more particularly applied to a written transfer, as distinguished from a transfer by more delivery. An assignment for the benefit of creditors has been defined to be “an assignment whereby a debtor, generally an insolvent, transfers to another his property, in trust to pay his debts or apply the property upon their payment.” Black’s L. Lie. The distinction between an assignment for the benefit of creditors and a conveyance to secure an indebtedness or to secure an indorser or security against loss is illustrated by two cases decided by this court in February, 1892: Kiser & Co. v. Dannenberg Co., 88 Ga. 541 (15 S. E. 17), and Importers and Traders Bank v. McGhees & Co., 88 Ga. 702 (16 S. E. 27). In the former case an insolvent debtor assigned to one of the creditors notes and accounts to the amount of about $3,000 as collateral security, and made to him a mortgage upon a stock of goods and other personal property to secure an indebtedness of $3,4-00, the mortgage containing a power to sell the goods at wholesale or retail; and the creditor, by *831contemporaneous writings, stipulated.to pay off the debt of another creditor out of the proceeds of the notes, accounts, and mortgaged property, and also to pay over to such other creditor all the money realized over and above $2,600, and further that the stock when sold should bring 80 per cent, of invoice cost! It was held that the mortgage, together with the contemporaneous writings, constituted an assignment, and that it was void for failure to comply, with the requirements of the statute on the subject of assignments for the benefit of creditors. In the opinion Mr. Justice Simmons said: “"Whether the trust was merely for one of the defendants, or, as was contended, for the entire body of creditors, we need not consider. It is the element of trust which brings it within the statute. Nor does it matter that the conveyance was in form a mortgage. It is sufficient that the security inures not merely to the benefit of the mortgagee, but also to that of another creditor for whom he holds in trust.’ In the second of the two cases cited a mortgage was given by the principal debtor to his indorser, not as a security for the debt, but solely for the indemnit,y of the indorser-, to secure him against any loss that he might sustain by reason of such indorsement. It was held that, under section 2164 of the Code of 1882 (§ 2983 of the Civil Code of 1895) the indorser could not proceed against the mortgaged property until judgment had been rendered against him in favor of the creditor; and that prior to that time the creditor could not claim any right of subrogation to enforce the mortgage. In the opinion Chief Justice Bleckley said: “Notwithstanding decisions of some other courts to the contrary, there is manifestly no element of trust in a mortgage of this character. It does not by its own vigor devote or appropriate the property embraced in it to the payment of the debt, but only to the indemnüy of the indorser in the event he should sustain loss by reason of his indorsement, and it is recited that he indorsed the notes for accommodation. The mortgage created a mere lien, and therefore could not raise any trust by reason of passing title into the mortgagee. It passed no title, under the law of this State. In Hoffman v. Mackall, 5 Ohio St. 124 (64 Am. D. 637), an assignment or unconditional deed of trust was distinguished from a mortgage, or deed of trust in the nature of a mortgage, thus: “There is a manifest and well-settled distinction between an unconditional deed of trust and a mortgage, or deed of trust in the nature of a *832mortgage. The former is an absolute and indefeasible conveyance of the subject-matter thereof for the purposes expressed; whereas the latter is conditional and defeasible. A mortgage is the conveyance of an estate, or pledge of property, as security for the payment of money or the performance of some other act, and conditioned to become void upon such payment or performance. A deed of trust in the nature of a mortgage is a conveyance in trust by way of security, subject to a condition of defeasance, or redeemable at any time before the sale of the property. A deed eonveying land to a trustee as mere collateral securit}'' for the payment of a debt, with the condition that it shall become void on the payment of the debt when due, and with power to tbe trustee to sell the land and pay the debt in ease of default on the part of the debtor, is a deed of trust in the nature of a mortgage. By an absolute deed of trust the grantor parts absolutely with the title, which rests in the grantee unconditionally for the purpose of the trust. The latter is a conveyance to a trustee for the purpose of raising a fund to pay debts, while the former is a conveyance in trust for the purpose of securing a debt, subject to a condition of defeasance.” See also Crow v. Beardsley, 68 Mo. 435, 438; DeWolf v. Sprague Mfg. Co., 49 Conn. 282, Burrill on Assignments (6th ed.), § 8.

Tested by the principles above announced, the deed from Brewer to llyon and Hendry was a voluntary assignment. Brewer made a promissory note to McQueen, with sixteen indorsers. Being insolvent at the time, he conveyed realty and personalty to two of these indorsers. Tt was stated in the deed that it was made in order to indemnify the indorsers against loss, and that it was for the express purpose “of vesting the title of the property herein conveyed in the said parties of the second part, for the use and benefit of them, the said indorsers.” But it was not conditioned upon the indorsers being held'liable, or suffering loss. There was no clause of defeasance in case they did not have to pay the indebtedness or did not incur any loss. The conveyance was absolute. It was not a deed of trust in the nature of a mortgage. The two grantees named were trustees to do certain acts. It was expressly declared that if either of them failed or refused “to act in pursuance of the terms and conditions of this deed,” the other should have power to do so; and that in the event of the death or resignation of both of them, the indorsers should *833name a successor or successors, who should have all tlie' powers of the original grantees. Clearly this created a trust with certain' powers to be executed. What they were to do is thus' stated in the deed: they “are authorized to sell the same or any part thereof at private sale, or at public sale for cash, paying the purchase-price therefor on the promissory note above described, and in my name to make or cause to be made all deeds, bills of sale, or such other' conveyances as may be necessary for the carrying into effect the intention of tliis deed.” There was no conveyance by the debtor to the principal creditor, either in payment of the debt or to secure it. There was not a mere security given to the indorsers to indemnify them against loss. There was an absolute trust deed to two of the indorsors, with power in the trustees to sell and convey the property, and appropriate the proceeds to the payment of the note. Under such a deed, they could not exercise the'power for any other purpose. Even precatory or recommendatory words will suffice to create a trust if they are sufficiently imperative to show that it is not left discretionary with the party to act or not, and if the subject-matter of the trust is defined with sufficient certainty, and if the object is also clearly defined, and the mode in which the trust is to be executed. Civil Code, § 3162. While the' primary purpose alleged for the making- of the deed was the benefit of the indorsers, yet that benefit was to be worked out, without regard to any loss or payment by the indorsers or judgment against them, by means of a payment to the creditor, to be made by the trustees. This constituted an assignment.

Judgment affirmed,.

All the Justices concur, except

Dissenting Opinion

Holden, J.,

dissenting. I can not concur in the judgment of the other members of the court, but must dissent therefrom. The deed in question expressly states that it was made “in order to indemnify them, the said indorsers, against loss by reason of said indorsement,” and further declares, “the intention of this deed being for the express purpose of vesting the title of the property herein conveyed in the said parties of the second part, for the use and benefit of them, the said indorsers.” The indorsers were not creditors of the grantor. The fact that authority was given-for a sale-of the property and the payment of the proceeds thereof to the pajree of the note did not make the deed one of Ssignment. The cardinal rule of construction of instruments in writing is to arrive *834at the intention of the parties. The intention of the parties to this instrument was that the deed should operate merely as a security to the indorsers. As before stated, the deed expressly declares that it is made “in order to indemnify them, the said indorsers, against loss by reason of said indorsement,” and the Civil Code, § 2983, provides: “If the principal executes any mortgage or gives other security to the surety or indorser to indemnify him against loss by reason of his suretyship, the surety or indorser may proceed to foreclose such mortgage, or enforce such other lien or security, as soon as judgment shall be rendered against him on his contract.” In Importers Bank v. McGhees, 88 Ga. 702, 708 (16 S. E. 27), in discussing the section just quoted, the court says: “We think this prescribes a rule which was intended to be general, and that it comprehends all cases of the class mentioned. By clear implication it negatives any right of foreclosure until the surety or indorser has paid something on the debt, or judgment has been rendered against him on his contract. In the present case neither of these events has occurred. The indorser is consequently without any right to inaugurate any proceeding to foreclose the mortgage. As to him the mortgage is immature, there has been no breach of its condition, it is not yet due and payable and may never become so. Tt logically follows that the creditor can not proceed on his own behalf to enforce the mortgage, although the petition 'alleges that the indorser, as well as the principal debtors, is insolvent. Notwithstanding decisions of some other courts to the contrary, there is manifestly no element of trust in a mortgage of this character. It does not by its own vigor devote or appropriate the property embraced in it to the payment of the debt, but only to the indemnity of the indorspr in the event he should sustain loss by reason of his indorsement, and it is recited that he indorsed the notes for accommodation.” Under the code section above quoted, the indorsers would have no right to exercise the power of sale contained in the deed to them until judgment had been rendered against them, or until they had paid the debt, or some part thereof. The deed recited that it was made “in order to indemnify them, the said indorsers, against loss by reason of said indorsement,” and further recited, “the intention of this deed being for the express purpose of vesting the title of the property herein conveyed in the said parties of the second part, for the use and benefit of them, the *835said indorsers.” In view of these statements in the deed, and the provision of the code section above quoted (the meaning of which is that the power of sale could not be exercised until judgment has been rendered against the indorsers, or until they have paid the debt, .or some part thereof), the deed, properly construed, conveyed the title to the property simply for the purpose of indemnifying the indorsers, and can not properly be held to be an assignment for the benefit of any creditor or creditors of the maker of the deed.