FEDERAL LAND BANK OF COLUMBIA v. PASCHALL

Supreme Court of Georgia1935-02-12No. No. 10203

180 Ga. 224

Summary · law.co

Holding. The court affirmed the trial court's decision sustaining the general demurrer, holding that the bank's petition did not adequately allege the defendant's acceptance of the deed and property, which were necessary elements to bind the defendant to the assumption clause contained in the deed.

The Federal Land Bank of Columbia sued to collect on a promissory note executed in 1922, claiming that the defendant Paschall had assumed the debt through an assumption clause in a warranty deed dated 1924. The bank attached a copy of the deed to its petition, which contained language stating that the grantee assumed two loans, including the Federal Land Bank loan. Paschall filed a general demurrer to the petition, which the trial court sustained.

On appeal, the court considered whether the assumption clause in the deed was sufficient to bind Paschall to pay the debt. While Georgia law established that a grantee who accepts a deed containing an assumption clause becomes bound by that clause even without signing the instrument, the court found that the bank's petition failed to allege critical facts necessary to invoke this principle. Specifically, the petition did not allege that Paschall actually accepted the deed or received the property it purported to convey—both of which are essential prerequisites to binding a grantee to an unsigned covenant in a deed.

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

Key issues

Whether an assumption clause in a deed binds a grantee who did not sign the instrument
Whether acceptance of the deed and property by the grantee is a required allegation in a complaint seeking to enforce an assumption clause
Whether presumptive evidence of delivery from the recorded deed dispensed with the need to allege acceptance by the grantee

Procedural posture

The trial court sustained a general demurrer filed by the defendant Paschall to the bank's petition, and the bank appealed.

Authorities cited

No cited authorities resolved to law.co cases yet.

Opinion · public domain

majority opinion

Atkinson, Justice.

In 1933 an action was instituted by the Federal Land Bank of Columbia against H. and P. It is alleged in the petition that the defendants are indebted in a stated amount to petitioner as payee and presentholder of a promissory note for the principal sum of $3000, executed by EL in 1922, for which amount it seeks a general judgment against both defendants; also that P. assumed the terms of the note and agreed to pay the indebtedness evidenced thereby, in virtue of “an assumption clause contained in a certain warranty deed from” EL to P., recorded in “Book 1, page 33” of the office of the clerk of thesuperior court. A copy of the deed was attached as an exhibit and as a part of the petition. The attached copy showed that the deed was dated “--day of May,” 1924, but did not show any certificate of filing or record. It purported to bear the signature of IT. under seal, contained the usual attesting clause “signed, sealed, and delivered,” and to be duly attested by two witnesses, one of whom was an officer authorized by law to attest deeds. The “assumption clause” stated: “This deed is made subject to a loan deed heretofore made to Federal Land Bank of Columbia, recorded in book 1 of deeds, page 43, records of office of clerk of Gordon superior court, securing loan of $3000; and also subject to loan deed W. A. Keed securing loan of $2686.54, and recorded in book of deeds No. 2, page 122, records of clerk Gordon superior court, both of which said debts are assumed by party of second part.” A general demurrer interposed by P. was sustained, and the petitioner excepted. In the bill of exceptions he did not make EL a party.

Though interested in reversing the judgment, H. was not interested in sustaining it. Consequently the bill of exceptions will not be dismissed on motion of P., on the ground that El. was not made a party. Code of 1910, § 6176; Code of 1933, § 6-1202.

It has been held: “Where a debtor conveyed, by an instrument in the form of a deed, real and personal property, and included in the conveyance a statement that the grantee agreed to pay a certain debt which the grantor owed, and the grantee received such deed and the property conveyed thereby, and the grantor became insolvent, the holder of a note of the grantor for such debt, or a part thereof, upon its becoming due and remaining unpaid, could file an equitable proceeding, with proper parties, to enforce the payment of such debt by the grantee. . . Where a provision of the character indicated . . was contained in a deed conveying realty and personalty, and the grantee accepted the deed and received the property conveyed, this made a contract between hinn and the grantor, binding upon him, although he did not sign the instrument.” Union City Realty & Trust Co. v. Wright, 138 Ga. 703 (76 S. E. 35). See Louisville & Nashville Railroad Co. v. Nelson, 145 Ga. 594 (89 S. E. 693); Morgan v. Argard, 148 Ga. 123 (95 S. E. 986); Whitehurst v. Holly, 162 Ga. 323 (133 S. E. 861); Williams Co. v. American Tie & Timber Co., 139 Ga. 87 (76 S. E. 675); Reid v. Whisenant, 161 Ga. 503 (131 S. E. 904, 44 A. L. R. 599); Dunson v. Lewis, 156 Ga. 692 (119 S. E. 846); National Mortgage Corporation v. Bullard, 178 Ga. 451 (173 S. E. 401). The question in the instant case having arisen on demurrer, the allegations of the petition must be taken most strongly against the petitioner. There is no allegation that P. actually accepted the deed or the property which it purported to convey. Unless there was acceptance of the deed by him, the clause in question would not show his assent to its terms, and if he did not receive the property there would be no consideration to support the stated covenant. If there was such acceptance of the deed and propertjq it was an essential part of the plaintiff’s case to allege those facts. Presumptive evidence of delivery from record of the deed (Chattahoochee Fertilizer Co. v. Quinn, 169 Ga. 801, 151 S. E. 496; Henderson v. Kemp, 155 Ga. 489, 117 S. E. 244) would not dispense with the necessity of alleging acceptance of the deed and property by the grantee as prerequisite to bind him to the performance of a covenant in the deed which he did not sign. The petition by its allegations does not meet the requirements of the principle stated above. The judge did not err in sustaining the general demurrer .to the petition.

Judgment affirmed.

All the Justices concur.

On rehearing the former judgment is adhered to.

All the Justices concur, except Gilbert and Bell, JJ., who dissent.