Washington Loan & Banking Co. v. Washington Exchange Bank

Beck, P. J. (After stating the foregoing facts.) We are of the opinion that 'under the facts alleged the court did not err in overruling the demurrer to the petition. The title of the Washington Exchange Bank and of the National Bank of Wilkes to the timber at the time of its conveyance by Anthony .to the lumber company was superior to any right or title that Anthony had to it; for he had been divested of any right or title under which he could sell the timber and appropriate to his own use the proceeds of such sale. The bank held not only the conveyance of the land from him, but also a conveyance of all his title and equity of redemption in the land, and he had transferred to the bank his bond for title to the same. The timber on the land went with the land, and the title to it went with the title to the land; and his attempted conveyance to the lumber company was a nullity until he should in some way have satisfied the claims of the bank, for the satisfaction of which this land was a pledge. When Anthony was enjoined from cutting timber and the receivers for the property were appointed, the right and title of the bank to the timber (and when we say bank here we refer to both the Washington Exchange Bank and the National Bank of Wilkes) was not destroyed or impaired. The possession of the receivers was possession for the benefit of creditors, subject to the rights of any prior lienholders or prior conveyances; and when the receivers had the timber cut, or when it was cut by virtue of an agreement with the receivers, and the same was sold, the fund derived therefrom was impressed with the equity and rights with which the bank was vested as completely as the timber itself was. The sale of the land by the holders of the first security deed under the power of sale contained in such deed did not divest the bank of its right to the fund. The property at the sale was bought in by those who acted for the bank, and the bank never lost its title to the land and timber. We think the contention of defendant in error is sound when it insists that, upon the receivers entering into an agreement for the lumber company to cut the timber and pay over to them a sum representing its value, the insurance company had the legal title to the timber as security for its loan to Anthony, and the bank had [509] title to Anthony’s equity of redemption therein as security for its loan to him. The first claim upon the fund in the hands of the receivers arising from the sale of the timber was in the insurance company, and the second in the bank. The bank settled with the insurance company by buying in the land at the sale for the amount of that debt, and became entitled to have such fund applied to its claim. It was held by this court in Small v. Slocumb, 112 Ga. 279 (37 S. E. 481, 53 L. R. A. 130, 81 Am. St. R. 50), that “The vendor of land who retains the title thereto for the purpose of securing the payment of the purchase-money can not by injunction prevent the vendee from clearing the land and cutfing the timber thereon, unless such acts impair the value of the vendor’s security.” And we think that this same rule would apply in a case where the owner of land has conveyed the title as security for a loan. The rule there stated has the proper qualification, and clearly could not be extended to hold that one who has parted with his title to land, including his equity of redemption, as a security for a debt, is authorized to denude the land of its merchantable timber growing thereon and convey title to the same as against the holder of the deed and the transferee of the bond executed by the grantee in the deed, for reconveyance of title. We think that what is' said above clearly shows that the court properly overruled the demurrer to the petition. And the conclusion which we have reached seems inescapable when we consider that the sale of the timber upon the land had been made by agreement with the receivers, and the fund in the hands of the receivers arose from the sale of that timber under that agreement. The judgment of the court below is therefore Affirmed,. All the Justices concur.