Thompson v. Citizens Bank

Pee Curiam. The holder of a deed to secure a debt, which was junior in date to another deed to secure a debt, executed by the same grantor to a third party, brought a petition to foreclose, as an equitable mortgage, the security deed held by him, praying that the equity of redemption be forever barred and foreclosed, and that the deed of petitioner be declared a lien upon the property, superior to that of the other deed referred to, which is prior in date. Substantial relief was prayed against the grantor in the deed, the owner of the land, and against the holder of the older security deed; and the demurrer upon the ground that substantial relief was sought only against the latter was properly overruled. The parties defendant were properly joined in this action. The owner of land, Smith, executed three security deeds conveying the same land, which in the order of their dates were as [89] follows: The first was to the John Hancock Mutual Life Insurance Company, in connection with which a bond for reconveyance to Smith on payment of the debt was contemporaneously executed by the company. The second was a security deed to Thompson, which referred to the first deed and was expressly made subject thereto. The third was to the Citizens Bank of Dublin, which referred to the first two deeds and was expressly made subject to both of them. Contemporaneously with execution of the third deed Smith transferred to the grantee therein, as additional security, the bond for reconveyance which he had received from the John Hancock Mutual Life Insurance Company. The controlling question in this case is whether the Citizens Bank of Dublin or Thompson shall, prevail in a contest between their respective securities. The security deed of Thompson, being senior, would ordinarily prevail over the junior security deed of the Citizens Bank of Dublin, which was taken with actual notice of such older deed and was expressly made subject thereto. The question then arises, whether the transfer of the John Hancock Mutual Life Insurance Company’s bond for reconveyance by Smith to the Citizens Bank of Dublin, contemporaneously with the execution of his deed to that company, would render the bank’s security superior to the deed of Thompson. In Rountree v. Finch, 120 Ga. 743 (2) (48 S. E. 132), decided by the entire bench of six Justices, it was held: “Where land is conveyed by deed to secure a loan, bond for title being given for a reconveyance to the debtor upon payment of the debt, and the latter transfers the bond to another, who pays the debt and takes a reconveyance from the creditor, the right of a mortgagee to enforce his mortgage, given upon the land by the debtor after the execution of the security deed, depends, in the absence of an attack upon the bona fides of the transfer of the bond for title, upon whether the mortgage antedates the transfer; and where in such a case the mortgagee brings an equitable petition against the debtor and the transferee, who is holder of the title, to enforce the collection of the mortgage debt, a failure to allege that the mortgage antedated such transfer renders the petition subject to general demurrer.” Applying the principle ruled in this decision it must be held that the security of Thompson, under the facts of this case, is superior to the security of the Citizens Bank of Dublin. On the general subject as to the amount of interest which the [90] maker of a security deed retains in the property, and. his right to give a second security deed, see Citizens Bank of Moultrie v. Taylor, 155 Ga. 416 (117 S. E. 247). If there is anything to the contrary of what is here held in Wood v. Dozier, 142 Ga. 538 (83 S. E. 133), which was also decided by the entire bench of six Justices, the ruling in that case must yield to the decision in the former case of Rountree v. Finch, supra. It was erroneous to overrule the demurrer of Thompson to so much of the petition filed by the Citizens Bank of Dublin as sought relief on the basis of a superiority of the security of the Citizens Bank of Dublin over the security deed held by Thompson. It was also erroneous to grant an injunction restraining Thompson from exercising his right to advertise and sell the property in question, subject to the deed to John Hancock Mutual Life Insurance Company. Judgment reversed. All the Justices concur, except Russell, C. J., dissenting, and Gilbert, J., absent for providential cause.