LAW.coLAW.co

Crowder vs. Dunbar

Supreme Court of Georgia1884-11-11
74 Ga. 109

Summary

Holding. The judgment is reversed. The trial court erred by refusing to instruct the jury on Crowder's theory that the parties had agreed to equal pro-rata protection of both notes from the land's security, when Crowder's own testimony, combined with other evidence, was sufficient to support such an instruction.

Crowder sold land to Marchman, retaining two promissory notes for part of the purchase price and giving a bond to convey title once payment was made. Crowder later sold one note to Dunbar and conveyed the land to him by deed. Dunbar took over Crowder's bond obligation, agreeing to convey title when both notes were paid. When both men obtained judgments against Marchman and the land sold at foreclosure, a dispute arose over how to distribute the proceeds between Dunbar's judgment (secured by the note he held and the land deed) and Crowder's judgment (secured by the note he retained). The trial court directed the jury to prioritize Dunbar's claim, rejecting Crowder's theory that the parties had agreed to share the proceeds proportionally.

The central question was whether Crowder and Dunbar had entered into an understanding that Crowder's retained note would receive equal protection from the land's security alongside Dunbar's transferred note. Although the general legal rule gives a note holder priority over funds raised from security for that note, parties may contractually agree to distribute such proceeds differently. Crowder argued that testimony supported an agreement for pro-rata sharing.

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

Key issues

  • Priority of judgment creditors in funds from foreclosed security when notes are transferred between creditors
  • Whether parties may contractually alter the statutory priority rules for secured debt
  • Whether evidence supported a finding of an agreement for pro-rata sharing of security proceeds

Procedural posture

Crowder appealed after the trial court overruled his motion for a new trial and directed judgment in favor of Dunbar's claim to priority payment from the foreclosure proceeds.

Authorities cited

No cited authorities resolved to law.co cases yet.

Opinion

majority opinion

Blandeobd, Justice.

Crowder sold Marchman a tract of land for one thousand dollars cash, and took his two notes, one for one thou ■ sand dollars and one for six hundred and forty-four dollars, and gave Marchman his bond conditioned to make titles to the land when the purchase money, as secured by the two notes, was paid Crowder sold the one thousand dol lar note to John W. Dunbar, and conveyed the land by deed to him. Marchman surrendered Crowder’s bond for titles to Dunbar, and Dunbar made to Marchman a bond conditioned to make titles to the land when Marchman paid the note for one thousand dollars, which Dundar held, and also the note of six hundred and forty-four dollars, which Crowder held for the purchase money of the land. Crowder and Dunbar having at the same time obtained judgments on their notes against Marchman, the land was levied on and brought fourteen hundred dollars; the money being in the sheriff’s hands, they, the plaintiffs, brought their rules severally against the sheriff, each claiming to be paid their respective claims. The two cases were consolidated and tried together, and the jury found that Dunbar’s judgment be first paid, and that the balance be paid to Crowder’s fi. fa A motion for hew trial was made by Crowder, which was overruled by the court, and Crowder excepted, and brings the case here for review.

The plaintiff in error requested the court lo charge the jury: “If you believe from the evidence that Crowder sold land to Marchman and gave him a bond for titles, and held two notes of Marchman for the purchase money; and if you believe that Dunbar took up one of the notes, and Crowder passed the title to Dunbar, with the understanding that the note he, Crowder, kept was to be paid; and if you believe that Dunbar, pursuant to such understanding, executed a bond for titles, in which it was provided that, when bothnotes should be paid, a title would be made by Dunbar, then Dunbar and Crowder would each have a pro rata share of the fund, if their judgmen ts are of equal date.”

This request to charge the court was refused, and this forms the principal ground of error assigned in the record,— the only one Ave need consider. It is a general rule that, when a note is transferred, which is secured by mortgage or other security, it carries with it the securities, and the transferee would be entitled to have his debt paid- first out of the money raised on the security. 32 Ga., 228; 38 Id., 452. While this is the general rule, the parties may stipulate among themselves that the money raised from the security may be appropriated in a particular manner and different from that in which the law would appropriate the fund. And it is contended by the learned counsel for plaintiff in error, that in the case before us, it was stipulated between Crowder and Dunbar, at the time Crowder transferred to Dunbar Marchman’s note, and when he made him the deed to the land, that the note which Crowder held on Marchman for the purchase money should ibe equally protected with the note so transferred to Dunbar. If this is true, then Crowder would be entitled to share in the fund in the sheriff’s hands, raised from the sale of the land secured by the deed from Crowder to Dunbar and the bond for titles from Dunbar to Marchman, pro rata with Dunbar. 2 Jones on Mortgages, section 1700. The request prayed for, as before set out, should have been given in charge to the jury, if there was sufficient evidence to authorize it. The testimony of Crowder himself, in connection with other facts, was a sufficient foundation to have authorized the charge. This was the theory of plaintiff’s case, and this theory was not fairly submitted to the jury by the court below; indeed, it was not submitted at all; this is the only error we find in the charge. Let the judgment of the court below be reversed.