RICHEY v. FIRST NATIONAL BANK OF COMMERCE

Supreme Court of Georgia1935-06-22No. No. 10756

180 Ga. 751

Summary · law.co

Holding. The court affirmed the trial court's judgment in favor of the bank and sheriff, holding that a security deed may lawfully be executed to secure an indorser's contingent liability, and that the instrument in question was properly characterized as a security deed rather than a mortgage.

J. O. Richey executed a promissory note to First National Bank of Commerce in 1926, with Claud Montgomery serving as indorser. Richey granted Montgomery a security deed to secure Montgomery's liability as indorser. After Richey's death, the bank obtained a judgment against both the widow (as administratrix) and Montgomery. The property covered by the security deed was then levied upon and sold to satisfy the judgment. Richey's widow sought to block the sale and claimed a lien on the proceeds for her statutory year's support, arguing that no other estate assets were available to satisfy that claim.

The widow also contended that the instrument was actually a mortgage rather than a security deed, based on the absence of a note directly between the parties, lack of possession transfer, and the conditional language in the deed. The trial court rejected all arguments and entered judgment for the bank and sheriff. On appeal, the court affirmed, holding that a security deed may validly be executed to secure contingent liability such as an indorser's obligation, and that the form and language of the instrument supported its characterization as a security deed rather than a mortgage.

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

Key issues

Whether a security deed may be executed solely to secure an indorser's contingent obligation
Whether the instrument should be recharacterized as a mortgage based on the absence of a direct note, non-delivery of possession, and conditional language
The priority of a widow's statutory year's support claim against proceeds from a sale under a security deed

Procedural posture

The widow filed suit to enjoin the bank and sheriff from proceeding with a dispossessory action and sale under a security deed, claiming entitlement to a lien on the sale proceeds for her statutory year's support; after trial before the judge without a jury, judgment was rendered against the widow.

Authorities cited

No cited authorities resolved to law.co cases yet.

Opinion · public domain

majority opinion

Bell, Justice.

This case involves a contest between a security deed and a subsequent judgment of the court of ordinary, awarding a sum of money to the widow of the grantor as a year’s support, which award was made “without objection from any one.” In 1926, J. 0. Richey executed a note to the First National Bank of Commerce, and “Claud Montgomery signed said note as indorser.” Richey at the same time executed to Montgomery a security deed reciting that it was made “to secure him for indorsing” such note. Richey died, and his widow was appointed administratrix. Subsequently the bank recovered a judgment against her as administratrix, and against Claud Montgomery as indorser, for the amount of the note. An execution was issued, and the property described in the security deed was levied on and sold as the property of Claud Montgomery, the bank being the purchaser. Mrs. Richey, who was in possession, refused to vacate, and a writ of possession was issued against her. At this point, Mrs. Richey brought the present suit against the bank and the sheriff, to enjoin them from interfering with her possession and proceeding with the dispossessory warrant. She alleged that on the day of the sale and before the day of the sale she filed with the sheriff “her demand for the money due her as a year’s support, to- be -paid out of the proceeds of said sale, together with interest on said sum, there being no other property of said estate out of which her year’s support could be collectedand that such demand was refused. She prayed that the-defendants be restrained from changing the status of the prop erty involved, until all rights can be adjudicated; that the sheriff’s deed be canceled, or that her claim for a year’s support be declared as a first lien on the proceeds of the sale; and that the sheriff be ordered to pay the same over to her. By an amendment she alleged that the instrument executed by her husband to Claud Montgomery was a mortgage, and not a security deed, for the following reasons: the grantor did not execute any note or other evidence of indebtedness to such grantee, and did not deliver possession of the land; the grantee did not execute any bond for title for reconveyance to the grantor; the recital "this deed is made to the said Claud Montgomery to secure him for indorsing” the note as described constituted a defeasance clause, and made the instrument a mortgage and not a security deed.

The defendant filed a demurrer and an answer, and the case was later tried before the judge without a jury. The evidence consisted only of the documents referred to in the plaintiff’s petition. The judgment of the court was in favor of the defendants, and Mrs. Bichey excepted.

In addition to the contentions expressly made in the petition, it is insisted by brief that the law does not authorize the execution of a security deed merely as security for an indorsement; and that since the liability assumed thereby is contingent only, the instrument must, as a matter of law, be considered as a mortgage, though in the form of a security deed. There is no merit in any of these contentions. Under the principles stated in the headnotes, which do not require elaboration, the court did not err in rendering judgment against the plaintiff and in favor of the bank and the sheriff.

Judgment affirmed.

All the Justices concur.