McCrimmon v. National Bank

Jenkins, P. J. 1. An instrument which recites that it is given to secure a debt, and which by its terms purports to convey the absolute and unconditional title to property, will, in the absence of a defeasance clause, be construed as a deed and not as a mortgage, although it confers upon the grantee the right or option, upon default by the debtor, to appoint a trustee with power to sell the property and pay the debt. A defeasance clause is such a provision as will of itself render the instrument null and void upon the mere payment of the obligation by the debtor and without the interposition of any act on the part of the grantee. Pitts v. Maier, 115 Ga. 281 (41 S. E. 570); Scott v. Hughes, 124 Ga. 1000, 1002 (53 S. E. 453); Powell on Actions for Land, § 387. Under the ruling made in Ward v. Lord, 100 Ga. 407 (28 S. E. 446), although the form of the conveyance may be absolute, yet if the instrument further provides that the property be held in trust for the payment of the debt, and only so long as the debt remains unpaid, the creation of a trust under such terms operates as a defeasance and converts the instrument into a mortgage-—-this for the reason that by the terms of the instrument the trust becomes executed upon the payment of the debt. But where the title to the property is. absolutely and unconditionally passed to the creditor, that is, without any provision that it is to remain in him only so long as the debt remains unpaid, and where the payment of the debt is'not made to pass the title, but only affects the right of the trustee to exercise his power to sell, the mere option to 'appoint such a trustee, or even the actual appointment of such by the instrument itself, would not have the [829] effect of rendering the instrument defeasible. Brice v. Lane, 90 Ga. 295 (15 S. E. 833); Ward v. Lord, supra. 2. Irrespective of whether or not the instrument from Gillis to the Durden Lumber & Timber Company amounted within itself to an absolute sale of the timber (see in this connection Loud v. Pritchett, 104 Ga. 648, 30 S. E. 870), the court did not err in refusing to permit the plaintiff to introduce it in evidence for the purpose of showing that the Durden Company, the bank’s grantor, had no title at the time the deed was executed. The plaintiff and the bank both being dependent upon the title of the Durden Company, it was not incumbent upon the latter to show title in its grantor. Florida Pine Co. v. Flint River Co., 140 Ga. 331 (78 S. E. 900); Moore v. Daugherty, 146 Ga. 176 (91 S. E. 14). If, as the plaintiff insists, the title of the Durden Company became good only after its conveyance to the bank, such subsequent acquisition of title would inure first to the benefit of the bank rather than to the plaintiff, since it is undisputed that the deed of the bank is much older than the lien of McCrimmon. Parker v. Jones, 57 Ga. 304 (3). Judgment on main hill of exceptions affirmed; cross-hill dismissed. Stephens and Smith, JJ., concur.