Phillips & Co. v. Roquemore

Simmons, Chief Justice. In all cases of mistake a court of equity will, upon proper proof, reform a contract so as to make it speak the truth, and put the parties, as to each other, in the true position in which they thought they had placed themselves when they made the contract. This relief will not be confiued to the original parties alone, but will be extended both to and against their privies in estate and in law. The only exception to this rule is the case of a bona fide purchaser without notice. Code, §3119. Judge McCay, in the ease of Burke v. Anderson, 40 Ga. 539, gives the reason for this exception. He says: “A bona fide purchaser is protected because his purchase is upon the faith of the apparent rights of the seller. He has acted, paid out his money, upon the apparent facts of the case, as the parties have allowed them to exist. It is their fault if the papers do not speak the truth, and it is unjust that their mistake should be cured to his injury who has been misled by their failure to attend carefully to their own business.” Is a judgment creditor who extended credit on the faith of the apparent ownership of the property a bona fide purchaser without notice? We say that he is not. He is only a privy in law of the debtor. After explaining why a bona fide purchaser is protected, Judge McCay, in the same opinion, says: “A judgment creditor does not stand in this position. His lien does not exist by contract. He did not advance his money to get his lien. That is an incident attached by law to his judgment. By the contract he acquired no lien. It cannot, therefore, be said that the right he now sets up is the right of a purchaser of property acquired in good faith, in ignorance of this mistake, for a consideration which he would not have advanced had the mistake never occurred. It may, it is true, be said that perhaps he would not have given the credit had the true state of the case [726] been put in the mortgage. That may be true, but he got no lien at all by his original contract, and the setting up of the rights of the mortgagee does not take away any right which this creditor acquired by his contract. Ilis right in this specific property comes from his judgment; the law gives it to him, to wit: a lien on the property of the defendant. Not, as we have said, upon property to which the defendant has simply the legal title; his lien is good, as a general rule, upon property to which the defendant has simply the legal title, and it does not extend to property when the equitable title is in a third person, though the legal title may be in the defendant.” As far back as the case of Wall v. Arrington, 13 Ga. 88, it was held that a judgment creditor was not such a purchaser as would be protected in such cases. In that case Judge Lumpkin quotes with approval from Judge Story’s work on Equity Jurisprudence, as follows: “In all cases of mistake in written instruments, courts of equity will interfere as between the original parties, or those claiming under them, such as personal representatives, heirs, devisees, legatees, voluntary grantees, or judgment creditors, or purchasei's from them with notice of the facts.” (1 Story Eq. §165.) In Lowe v. Allen, 68 Ga. 225, it was held that “a judgment creditor whose debt was made before the making of a deed to land, but whose judgment was obtained after-wards, did not stand on the basis of a bona fide purchaser without notice, so as to prevent the correction of a mistake in the deed as against him.” There are numerous decisions of other courts to the same effect. When a mistake is clearly established and the instrument reformed, it relates back to the time when it was executed. So that although these plaintiffs in error may have extended credit upon the faith of the property in question, yet if it was satisfactorily established that Perryman, the debtor, had agreed to give Mrs. Roque [727] more a mortgage upon this property, and by mistake of the scrivener the instrument executed by Perryman for that purpose did not include the property, the instrument could be reformed so as to include it, and would then stand as if the omitted property had been inserted in the mortgage in the first instance, and the mortgage would take priority over the judgments of other creditors obtained subsequently to the execution and recording of the original mortgage. It was argued by counsel for the plaintiffs in error, that the mortgage should be postponed to their judgments, because the record of the mortgage did not include this particular property; and the case of Andrews v. Mathews, 59 Ga. 466, is relied on as sustaining this contention. That, however, was the case of a mortgage illegally recorded for want of probate, and the decision was based upon section 1957 of the code, which deals solely with unrecorded or defectively recorded mortgages. J udge McCat, in discussing the same section in Burke v. Anderson, supra, says: “The law makes it the duty of a mortgagee to record his mortgage, and if he fails, it puts the penalty upon him that, as to such liens as are cast upon the property by operation of law, he shall be postponed. If the mortgagee has failed to record, it is a piece of gross negligence which he ought to suffer for. If the record is defective, if the clerk is at fault, the mortgagee has his remedy against him. At any rate it is the positive provision of the statute that a failure to record or a defective record is not good against a judgment. Notice has nothing to do with it, since the judgment was not taken because there was no notice. It is simply a regulation of law providing for the priority of one lien over another, under certain prescribed and definite circumstances. But it extends only to the case mentioned in the statute, to wit, the case of an unrecorded or defectively recorded mortgage. It [728] does not extend to equitable rights generally. They still stand upon the footing that they are good against the parties and their privies, except only in the case of a bona fide purchaser without notice. We are not prepared, therefore, to extend this provision of the code further than its terms require. . . The right to have a plain mistake corrected is a well settled right, and it extends by express words of the code to parties and privies, and to this there is no exception save the case of a bona fide purchaser without notice, that is, one who without notice of the equity acquires a right in the property by the advance of his consideration.” The language of the code is that “equity will grant relief as between the original parties or their privies in law, in fact or in estate, except bona fide purchasers for value without notice.” (§3119.) This, under the rule expressio unius exclusio alterius forbids the idea that judgment creditors or any others than bona fide purchasers for value are excepted. See Zimmer v. Dansby, 56 Ga. 82. The evidence in this case fully warranted the verdict and authorized a decree reforming the mortgage. Judgment affirmed.