Harry L. Winter Inc. v. First National Bank of Quitman

Supreme Court of Georgia1927-06-20No. No. 5815

164 Ga. 364

Summary · law.co

Holding. The court affirmed the judgment, which held that when multiple lien creditors of equal priority hold security interests in distinct properties of an insolvent debtor, a tax execution against all such property should be apportioned between the creditors based on the relative assessed valuations of their respective properties, regardless of whether one creditor has already obtained a judgment and purchased its property.

A debtor executed security deeds to two separate creditors: Harry L. Winter Inc. held a lien on land, while First National Bank of Quitman held a lien on personal property. When a general tax execution was issued against the insolvent debtor for taxes on both properties, a dispute arose over how the tax burden should be allocated between the two lien creditors. The trial court determined that each property should bear its proportionate share of the total tax liability based on the assessed valuations of the respective properties.

The court affirmed this allocation approach, holding that equitable principles require apportionment of a tax execution lien between multiple creditors of equal priority according to the relative values of the properties subject to their respective liens. The fact that one creditor had already reduced its debt to judgment and purchased the property at a sheriff's sale did not change the equitable obligation to divide the tax burden ratably. The court rejected cases cited by Winter that involved absolute title holders rather than lien creditors of equal standing.

Summary generated by law.co from the public-domain opinion. The opinion text itself is public domain.

Key issues

Allocation of tax execution liability among multiple lien creditors of equal priority
Application of equitable principles to apportion tax burdens based on property valuations
Whether prior judgment and property purchase by one creditor affects ratable division of taxes

Procedural posture

The case was submitted to the trial judge on an agreed statement of facts without a jury, resulting in judgment for proportional tax allocation, and Winter Inc. appealed.

Authorities cited

No cited authorities resolved to law.co cases yet.

Opinion · public domain

majority opinion

G-ilbebt, J.

1. Where two creditors of a common debtor, who is insolvent, each has, relatively to the other, the highest lien, each having a security deed upon distinct property belonging to such debtor, and there is outstanding against the debtor a tax execution issued generally, the burden of discharging the lien of the tax execution should, as a general rule, upon equitable principles, be apportioned between the two lien creditors by making each of the separate properties liable ratably for its proportion of the whole amount of the taxes according to the respective valuations at which the properties were assessed and .returned for taxation. Brooks v. Matledge, 100 Ga. 367 (28 S. E. 119).

2. The fact that one of the lien creditors reduced his debt to judgment, subjected thereto the property covered by his lien, and, buying in the property, secured a sheriff’s deed thereto prior to the issuing of the tax fi. fa., and the fact that the other creditor has not sued his debt to judgment, “does not affect the equity which requires a division of this tax burden ratably between them.” Brooks v. Matledge, supra, 370.

3. Merchants &c. Bank v. McWilliams, 107 Ga. 532 (33 S. E. 860), Askew v. Scottish &c. Co., 114 Ga. 300 (40 S. E. 256), Noles v. Few, 155 Ga. 471 (117 S. E. 374), cited by-plaintiff in error, were eases where property was sold and conveyed by a common grantor at different times to different persons as holders of absolute title, or where purchasers were treated as such; and not where taxes accrued when different creditors held liens of relatively the same priority.

4. The court did not err in refusing to allow the amendment offered by the plaintiff, setting up the payment by plaintiff of taxes in previous years and not included in the tax fi. fa. levied.

Mortgages, 41 C. J. p. 523, n. 75.

Taxation, 37 Cyc. p. 1145, n. 35.

No. 5815.

June 20, 1927.

Claim. Before Judge W. E. Thomas. Brooks superior court. November 10, 1926.

Knight executed a security deed to land to the Sessions Loan & Trust Company, to secure borrowed money, on November 20, 1919. This indebtedness together with the security deed was later transferred to Harry L. Winter Incorporated. Knight also borrowed money from the First National Bank of Quitman in 1921 and executed a security deed on personal property to secure the same. Harry L. Winter Inc. sued its note to judgment with a special lien on the land included in its security deed, July 10, 1922. Execution issued and was recorded on the general execution docket on the same day. On February 19, 1924, the tax fi. Ea. against the property for 1923 was transferred to Harry L. Winter Incorporated. On August 23, 1922, that corporation executed a quitclaim deed to Knight, for purposes of levy and sale. On September 21, 1923, a fi. fa. was levied, and in November, 1923, the land was sold by the sheriff and bought in by Harry L. ’ Winter Inc. On December 20, 1923, a general tax fi. fa. was issued against Knight for taxes due on all of the property possessed by him on the first of that year, including the land bought in by Harry L. Winter Inc. and the property contained in the security deed held by the bank. The owner of the property is insolvent, and owns no other property out of which the tax execution can be satisfied. On April 7, 1924, the tax fi. fa. was levied on the personal property above mentioned, and the bank filed a claim based upon its security deed.

The case was submitted to the judge on an agreed statement of facts, without .a jury. He rendered a judgment holding that the respective parties were liable for the proportion of tax represented by the comparative values of the respective properties, and “that the said Harry L. Winter Inc. have judgment against the First National Bank of Quitman, to be made out of the property-levied on, in the sum of $11.26, the same being 5.17 per cent, of said fi. fa.; and -that the cost of this proceeding be divided equally between the two parties.” To this judgment Harry L. Winter Inc. excepted.

Judgment affirmed.

All the Justices concur.

Baum & Baum, for plaintiff. Branch & Snow, for defendant.