Shemwell v. Garrett

Hines, J. (After stating the foregoing facts.) The competition here is not between an older lien, embracing two funds or properties, and a junior lien, embracing only one of such funds or properties; but is between the holder of one of a series of purchase-money notes and the holder of the remainder of such notes, which were secured by liens of the same date on land and personalty for the purchase-money of which they were in part given. The lien on the land arose by reason of the fact that the vendor executed and delivered to the purchasers his bond for title in which he obligated himself to convey to them the land upon the payment of their notes given for the purchase-money of both [226] land and personalty. The lien on the personalty arose by virtue of the fact that the vendor retained, in his bond for title, title to the personalty until certain"of said notes were paid, in which event, which did not happen, the title to the personalty was to pass to the purchasers. Garrett acquired from the vendor one of these 'notes, amounting to $1490, under an indorsement without recourse. Afterwards Shemwell became the transferee and holder of the remainder of said notes without such limited indorsement. Garrett, in effect, conceded in the court below that he did not have a lien or claim on the land or its proceeds. It is unnecessary to determine the question whether Garrett .obtained any interest in or lien on the land by reason of the acquisition of said note under such limited indorsement, for the reason that he does not complain of the ruling of the court which, in effect, held that he did not have such interest or lien. On this question see Ray v. Anderson, 119 Ga. 926 (47 S. E. 205); McLeod v. Bank of Abbeville, 147 Ga. 33 (92 S. E. 645); Berry v. Van Hise, 148 Ga. 27 (95 S. E. 690); Jordan Mercantile Co. v. Brooks, 149 Ga. 157 (99 S. E. 289); Carter v. Johnson, 156 Ga. 207 (119 S. E. 22); Civil Code (1910), § 4276. Whatever may be the rights of Garrett in the land, certainly the assignment of said note to him under such indorsement did not operate to divest it of its character as a debt for purchase-money under the retention of title to the personal property for which it was in part given. Such transfer vested in Garrett, pro tanto, title to the personalty as security for the payment of this note, and created in his favor a lien upon such property for such purpose. Jordan Mercantile Co. v. Brooks, supra; Napier v. Bank of LaFayette, 31 Ga. App. 703 (121 S. E. 694). Nor is the question whether Garrett as the transferee of this note had a preference as to the personal property over Shemwell, who afterwards acquired the other purchase-money notes given for the land and personalty, on the ground that the security was insufficient to pay all the notes, for decision by this court. On this question see Setze v. First Nat. Bank of Pensacola, 140 Ga. 603 (79 S. E. 540); Berry v. Van Hise, supra. This question is not for decision, for the reason that Garrett does not except to the judgment of the court which has the effect of denying to him such preference. It was agreed between the parties that the sole question for decision by the court below was the amount, if any, that [227] was due Garrett as the holder of the ¿bove note out of the personalty. So the sole question for our decision is what are the rights of Garrett and Shemwell in the personal property or its proceeds. It is insisted by counsel for Shemwell that Garrett was only entitled to 1490/23,248 of $1365, which was the value of the personal property, on the ground that the entire indebtedness was originally $23,248, of which Shemwell bought $21,758 and Garrett $1490. We can not agree to this contention. This contention would only be sound on the assumption that both parties acquired the original lien of the vendor, amounting to $23,248, in the ratio of $1490 to $21,758. Treating the transaction between the vendor and purchasers as creating two separate liens, one on the land and the other on the personalty, for the security of these notes, then, in the event that both the land and the personalty were insufficient to discharge all the notes, the land should be charged with its full value; and this value, which was treated by the parties as the equivalent of the proceeds of the land, should be applied toward the extinguishment of the lien on the land; and the value of the personalty, this value being treated by the parties as the equivalent of the proceeds of such property, should be prorated between Garrett and Shemwell in the proportion which the amount due the former bears to the balance due the latter, after the latter’s indebtedness has been reduced by the value of the land. This is so, because, if the liens are separate and distinct, the land or its proceeds must necessarily go to extinguish the lien on it, and the personalty or its proceeds should go to discharge the debts secured by the lien on it, which debts can only consist of such balance due Shemwell and the amount due Garrett. If this transaction be held to create but one lien on land and personalty, to secure the purchase-money of both, and Shemwell acquired the entire lien on the land, and he and Garrett acquired the lien on the personalty, to secure the respective purchase-money notes of which each became the holder, then it would be inequitable to permit Shemwell to share in the value of the personalty in proportion to the amounts of the purchase-money notes acquired by each, and at the same time appropriate the value of the land. Such a distribution would practically wipe out the lien of Garrett. Suppose the purchasers had made a payment on the notes in an amount equal to the value of the land, could he [228] then claim that he would be entitled to the proceeds of the personalty in the ratio which Garrett’s debt bore to his original claim? Certainly not. He would only be entitled to be paid out of the personalty in the proportion which his claim, reduced by such payment, bore to the demand of Garrett. The same result follows when he got the land in partial extinguishment of his claim. Civil Code (1910), § 3220; Semmes v. Boykin, 27 Ga. 47; Sims v. Albea, 72 Ga. 752. Counsel for Shemwell contends that, under the bond for title, upon the payment of the two purchase-money notes due December 1, 1923, and December 1, 1924, the title to this personal property vested absolutely in the purchasers, and that for this reason Garrett had no further interest in the personalty. We do not think that this is the proper construction of the bond for title. The title to this property was not to vest in the purchasers until they had paid all of the indebtedness due the vendor and the other indebtedness assumed by them, with the exception of their two notes, payable to the vendor on December 1, 1923, and December 1, 1924. They could not acquire absolute title to the personalty by the payment of these excepted notes. They could only acquire such title by the payment of all their indebtedness except these two notes. Not having paid all this indebtedness, the absolute title to the personalty did not pass to them; and the interest of Garrett therein was not.defeated by the payment of the two excepted notes. So we are of the opinion that the court below did not err as against Shemwell in the judgment rendered by him in this case. Judgment affirmed. All the Justices concur.