Carter v. Johnson

Atkinson, J.

(1, 2, 3, 6, 7, 8). The rulings announced in the first, second, third, sixth, seventh, and eighth headnotes do not require elaboration.

4. In this State, since the adoption of the first Code in 1863, there has been no vendor’s equitable lien for the purchase-money of lhnds. Civil Code (1910), § 3373; Jones v. Janes, 56 Ga. 325 ; Green v. Hall, 151 Ga. 728 ( 108 S. E. 42 ). The case first cited involved competition between the holder of purchase-money notes given for land and claims of general creditors. It.was held, inasmuch as the vendor’s equitable lien was abolished, that the purchase-money notes were not entitled to preference. It was remarked, however, that “ It is not pretended that the land was not conveyed to the vendee by absolute deed;” and the decision was rendered on the basis that the vendor had excuted to the vendee an absolute deed. The latter case was also one in which the vendor had executed to the vendee an absolute deed. Of course in all such cases the vendor retains nothing, as the deed conveys all that he had; and since the law no longer provides for a vendor’s equitable lien, the vendor will have no security whatever where he makes an absolute deed to the land, unless he acquires security by mortgage or other form of contract executed by the vendee. It is different where the vendor executes only a bond for title. In that case the contract of sale remains executory. The vendor retains legal title to the property as his security. Perhaps no direct ruling has been made by this court to that effect, but the plain common-sense of such a transaction is that the vendor retains title as his security, and it has been recognized by this court for many years. Tompkins v. Williams, 19 Ga. 569 ; Tumlin v. Vanhorn, 77 Ga. 315 ( 3 S. E. 264 ); Cade v. Jenkins, 88 Ga. 791 ( 15 S. E. 292 ), and cases cited; Littleton v. Spell, 77 Ga. 227 (3) ( 2 S. E. 935 ).

5. Treating the retention of title by the vendor as security for the purchase-money notes, as ruled in the preceding division, there is no reason why such security should not stand on the same basis as any other security, and be governed by the same legal principles, when it comes to the matter of a transfer or assignment of such security. In the case of Tompkins v. Williams, 19 Ga. 569 , it was held: “A vendor who gives to the vendee his bond for titles to land, taking his notes in payment of the purchase-money, and *211 afterwards transfers the notes without recourse over against him, can not maintain an action of ejectment against the vendee, on his own account, to recover the land.” This was a distinct recognition of the principle that a transfer of purchase-money notes for land, secured by the retention of title in the vendor by operation of his bond for title, would carry the security. The case of Van Pelt v. Hurt, 97 Ga. 660 ( 25 S. E. 489 ), involved a transaction where a promissory note was secured by a deed to land executed under the provisions of the code for securing a debt, and the transfer of the note by written assignment without any express transfer of the security. It was held that the transfer of the note carried with it an equitable interest in the security. It was said in the opinion: “ An assignment of a promissory note or other evidence of indebtedness, to secure which a deed to land has been given by the assignor, does not pass to the assignee the title to the land itself. The assignee acquires, however, an equitable interest in the security, which, when necessary to the collection of the debt, he may assert as against the debtor; and in such case a court of equity, upon proper pleadings and evidence, will afford appropriate relief. If the security had been a mortgage, instead of a deed conveying the legal title, the transfer of the debt secured by the mortgage would have carried with it the mortgage itself. (See Murray & Co. v. Jones, 50 Ga. 119 , and cases cited; Colebrook, Collateral Securities, § 144.) And so, where the security is a deed conveying the legal title, the transfer carries with it an equitable interest in the security, though not the legal title; and a court of equity will give effect to the transferee’s rights in the premises. See Henry v. McAllister, 93 Ga. 671 .” What is said above is applicable and controlling in this case upon the point ruled in the fifth headnote. See also Clark v. Havard, 122 Ga. 273 ( 50 S. E. 108 ). The principle above stated was the law before the Code of 1895, but for the first time it was carried into that code (§ 3684), which declared: “The transfer of notes secured by a mortgage or otherwise convej's to the transferee the benefit of the security. If more than one note is secured and the mortgagee transfers some and retains others, the holder of the transferred notes has a preference over the mortgagee if the security is insufficient to pay all the notes.” That code was adopted by act of the legislature and has the force of statutory *212 law. It appears from a marginal note therein that the section cited was taken in part from the case of Crowder v. Dunbar, 74 Ga. 109, 111 . That case involved a transaction where a vendor had received a certain amount of cash and purchase-money notes for a tract of land, and executed a bond conditioned to make title to the land when the purchase-money notes should be paid. In the course of the opinion it was said: ■ “ It is a general rule that when a note is transferred, which is secured by mortgage or other security, it carries with it the securities, and the transferee would be entitled to have his'debt paid first out of the money raised on the security. Roberts v. Mansfield, 32 Ga. 228 .” It was on the basis of this clause of the opinion the code section was formulated. It will be noted that the decision used the language “ secured by mortgage or other security.” As “ the security ” that was involved in that case was “the security” afforded by retention of title resulting from the execution of a bond for title, the words “ mortgage or other security ” manifestly included security which would result to an obligor by "retention of title in a bond for title. And where the statute used the language, “ secured by a mortgage or otherwise,” the word “ otherwise ” was manifestly intended to be broad enough to include a security resulting from retention of title in a bond for title. See also In re Elrod, 215 Fed. 253 . In the case of Berry v. Van Hise, 148 Ga. 27 ( 95 S. E. 690 ), it was said: “ These statutes in terms apply to notes secured by mortgage and other liens, and do not contemplate purchase-money notes which are not so secured but in connection with which there is a contract reserving title.” It was not necessary to a decision of that case to make such a ruling. That was an improper construction of the statute, and will not be followed. Giving the statute the proper construction as indicated above, which must be done in the light of its history, its application would require the ruling hereinbefore announced, based on the decisions of this court prior to the adoption of the Code of 1895.

Judgment affirmed.

All the Justices concur.

Russell, C. J., concurs in the result.