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MOSS & COMPANY v. STOKELY

Supreme Court of Georgia1899-04-20
107 Ga. 233

Summary

Holding. The trial court properly directed a verdict for the claimant. Where a grantee holding land as security for a debt is relieved of liability by a third party's payment of that debt, the grantee's conveyance of the land to the third party is supported by valuable consideration and does not revert title to the original owner or expose the land to creditor claims.

Stokely conveyed land to Arnold as security for a note that Arnold had indorsed at a bank. When creditors of Stokely obtained judgments and levied on the land, Stokely's wife paid off the note on which Arnold was indorser and received a conveyance of the land from Arnold in exchange. She then filed a claim to recover the land from execution. The trial court ruled in her favor, finding that Arnold held valid title at the time of the judgments and that his conveyance to the wife for the valuable consideration of relieving him from his indorsement obligation was proper and free from fraud or collusion.

The appellate court affirmed, holding that the wife stood in Arnold's position as the new owner of the land. The court rejected the argument that Arnold's title ceased when he was relieved of his obligation as indorser, finding no legal basis for such a reversion to Stokely. The conveyance to the wife was supported by valuable consideration—namely, her payment of the debt for which Arnold had become liable—and there was no evidence of fraud or scheme to defraud creditors.

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

Key issues

  • Whether title to land conveyed as security reverts when the secured debt is paid by a third party
  • Whether payment of a debt for which one is liable constitutes valuable consideration for a conveyance of secured property
  • The rights of creditors against land conveyed as security when the debtor has other creditors

Procedural posture

The case was tried on a claim to land brought by the claimant against a fi. fa. (execution) levy issued on the property, with the trial court directing a verdict for the claimant and the execution creditors appealing.

Authorities cited

No cited authorities resolved to law.co cases yet.

Opinion

majority opinion

Simmons, C. J.

From the record it appears that in January, 1896, Stokely was indebted to a bank in the sum of $150. Arnold indorsed Stokely’s note to the bank for that amount, and Stokely executed and delivered to Arnold a warranty deed, •absolute on its face, to certain land to secure Arnold on his indorsement. Subsequently, on May 2, 1896, Moss & Co. obtained four judgments against Stokely. Fi. fas. were issued •and levied, on January 16, 1897, on the land conveyed by .Stokely to Arnold. On January 19, 1897, Mrs. Stokely, the wife of the principal on the note, made arrangements with the •bank whereby she took up the note on which Arnold was in•dorser, by paying a part of it in cash and giving her individual note to the bank for the remainder. Thereupon Arnold, in consideration of his being relieved as indorser, conveyed the land to Mrs. Stokely, and she filed a claim to the land. On the trial of this claim, these facts being shown, and no point •being made or suggested that there was fraud or collusion or that the land was worth more than the $150, the judge directed .a verdict for the claimant. The plaintiffs in execution excepted.

The issue generally to be tried in a claim case is that of title. Was the title in the defendant in fi. fa. at the time the judgment was rendered, or was it in the claimant or some one under whom she claims? It is clear from the facts in the present case that at the time the judgments were rendered Stokely had no legal title to the land. The title was in Arnold, and Arnold having conveyed it to Mrs. Stokely for a valuable consideration, she stood in his shoes and could make the same claim to the land that Arnold could have made if he had not conveyed to Mrs. Stokely but had filed a claim to the land. It is-claimed by the plaintiff in error that when Arnold was relieved of his obligation as indorser on the note, by the arrangement made by Mrs. Stokely, his title to the land ceased and reverted to Stokely, and that for that reason the land could be levied upon by Stokely’s creditors and subjected to the payment. of Stokely’s debts. No authority was cited for this contention by counsel, and we have been unable to find any upon our own research. We do, however, find that where the owner of land borrowed money and conveyed the land as security for its repayment, the grantee in the conveyance could transfer-the note given for the money and convey the land to the transferee, and that the latter then had all the rights and remedies of the assignor of the note and deed for the enforcement of the collection of the debt. Hunt v. New Eng. Co., 92 Ga. 720. It is true that in this case Arnold did not transfer any note to Mrs. Stokely, but we do not see that it makes any difference-that Mrs. Stokely paid the note on which Arnold was indorser. It seems to us that when she paid that note and relieved Arnold, this was a sufficient and valuable consideration, operating for his benefit, to warrant him in conveying the land to her, there being no fraud or collusion between her and her husband or Arnold, and no suggestion that the arrangement was for the purpose of delaying or defrauding creditors.

Where land has been conveyed by the owner to secure a debt and he has other creditors, sections 5432 et seq. of the-Civil Code point out the rights of such creditors and the manner in which those rights are to be enforced. We do not now decide whether those sections would be applicable in this case,, for even if they were, the plaintiffs in error did not proceed. thereunder. "We think that the court properly directed a verdict for the claimant.

Judgment affirmed.

All the Justices concurring.