Opinion
38885.
DECIDED JUNE 26, 1961.
Claim. Muscogee Superior Court. Before Judge Calhoun.
Max R. McGlamry, Clyde L. Armour, Jr., for plaintiffs in error.
Foley, Chappell, Kelly Champion, Kenneth M. Henson, Hatcher, Smith, Stubbs Rothschild, Albert W. Stubbs, contra.
1. Where two separate and unrelated cases are consolidated solely for the purposes of trial and are tried together, even though separate judgments are rendered in each case, the losing party, or parties, may have the judgments reviewed in this court by a joint or single bill of exceptions.
2. A garnishee may file an answer to a summons of garnishment at any time before the plaintiff moves for a judgment against the garnishee.
3. Where the holder of a senior security deed sells the property conveyed thereby under a power of sale contained in the deed and where the holder of a second security deed purchases the property at such sale, the law will consider that the full purchase price is paid by the purchaser from the facts that the purchaser gives to the seller a letter of indemnity to cover the surplus in the purchase price over and above the amount due on the senior security deed and the giving of a bond by the purchaser to dissolve a garnishment against the seller instituted by a judgment creditor.
4. Under the facts of this case, upon the application of equitable principles, the claim of the purchasers at the sale under the power in the senior security deed has a superior claim to the fund derived from such sale in excess of the senior security deed holder's claim based upon their second security deed which was executed and recorded prior to the judgment liens upon which the plaintiffs' claims are based.
5. Under the facts of this case there was no such merger of title to the land involved as would prevent the claimants from asserting their rights under their second security deed to the surplus over and above the garnishee's claim under its first senior security deed.
The court did not err in holding that the claimants are entitled to the excess in the purchase price paid for the property by the claimants over and above the amount of the claim of the holder of the senior security deed.
DECIDED JUNE 26, 1961.
The cases under consideration were consolidated for the purposes of trial and were tried by agreement by the judge without the intervention of a jury upon a stipulation of the facts. The plaintiffs in error were the plaintiffs in the trial court and except to the rulings of the trial court by a joint bill of exceptions. The plaintiffs in the trial court were the Columbus Plumbing, Heating Mill Supply Co. and Columbus Iron Works Co. The defendant in execution, who is not a party to this case, was Ed Cooper. The Home Federal Savings Loan Association of Columbus, Georgia, is the garnishee. M. L. Leary, R. L. Leary and J. H. Green, doing business as Southern Hardware Building Material Co., are the claimants. The garnishee and the claimants are defendants in error. On September 4, 1958, Columbus Iron Works obtained a judgment against Ed Cooper and on October 15, 1958, the Columbus Plumbing, Heating Mill Supply Co. obtained a judgment against him. On February 3, 1959, the garnishee sold property of Ed Cooper at public sale under a power of sale contained in a first security deed given by him to secure a debt of $18,935.20 conveying such property. The property sold for $24,000 and was bought in by the claimants. On July 14, 1958, Ed Cooper gave a second security deed to claimants, which was subject to the first security deed held by the garnishee, the deed having been given to secure a promissory note in the amount of $9,000, dated July 14, 1958, and due on July 14, 1959. On February 3, 1959, the day on which the property was purchased at said public sale by claimants, the plaintiffs procured and had served summonses of garnishments on the garnishee. The claimants in the first instance paid to the garnishee only the amount of the debt due by Ed Cooper to the garnishee and retained the difference between $24,000 and the amount due the garnishee, namely, the sum of $5,064.80, to apply on the debt due the claimants by Ed Cooper. On February 5, 1959, the garnishee delivered a deed conveying the property to the claimants and on that date Ed Cooper in writing instructed the garnishee to pay the said $5,064.80 to the claimants. The claimants, instead of paying the said surplus to the garnishee, gave to the garnishee a letter of indemnity. The claimants filed their claim and bond in each of the garnishment proceedings. In their claims the claimants recited the above facts and the fact that the garnishments were dissolved in compliance with Code § 46-402, and, in the claims, prayed that the title to said excess sum of $5,064.80 be decreed to be in them by virtue of their alleged prior claim. The garnishee, on April 6, 1959, filed its answers denying possession of any funds, etc., which were traversed by the plaintiffs. The garnishee filed an amendment to its answers and on the same date also filed separate and additional answers, all of which were traversed. The court overruled the plaintiffs' motions to strike the amended answers of the garnishee and overruled the objections to the allowance of the amendments and additional answers, and held that the fund was not subject to either of the garnishments and that the security deed and note of the claimants were superior to the judgment liens of the plaintiffs. The plaintiffs except to these rulings.
This court transferred this case to the Supreme Court, without opinion, upon the theory that the allegations contained in the claims and the prayer that the title to the surplus sums be decreed to be the claimants', upon authority of Cromley v. Motor Liens, Inc., 164 Ga. 16 ( 137 S.E. 778), and Bowman v. Poole, 212 Ga. 261 ( 91 S.E.2d 770), made a case for the invocation of the superior powers of a court of equity to decree a transfer from a title to land to a title to a part of the funds derived from a sale of the land. The Supreme Court returned the case to this court, ruling that the questions in the case could be decided as any ordinary questions in a claim case by a court of law. See 216 Ga. 706 ( 119 S.E.2d 118). This ruling supersedes conflicting rulings, if any, in Smith v. C. I. T. Corp., 64 Ga. App. 481 ( 13 S.E.2d 731) and General Finance c. Corp. v. Bank of Wrightsville, 92 Ga. App. 808 ( 90 S.E.2d 93).
1. The garnishee and claimants moved to dismiss the writ of error on the ground that although the cases were consolidated for the purpose of trial, the Court of Appeals is without jurisdiction for the reason that the plaintiffs' rights of action are two separate and unrelated cases and required separate bills of exceptions. This question is answered by the case of Scales v. Peevy, 103 Ga. App. 42 ( 118 S.E.2d 193).
2. A garnishee may file an answer to a summons at any time before the plaintiff moves for a judgment against it, as in this case. Owen v. Moseley, 161 Ga. 62 ( 129 S.E. 787). Even if the first answers were not amendable, a question which it is not necessary to decide, the garnishee filed proper answers before motions for judgments by the plaintiffs were made. The Moseley case reviews, explains and distinguishes cases cited by the plaintiffs and supersedes decisions by this court to the contrary.
3. There was a fund subject to adjudication under garnishment and claim proceedings. While the garnishee may not have received in cash the surplus over and above the amount due under the garnishee's deed, the consequence of the claim and bond to dissolve the garnishment is a constructive receipt of the surplus. The same may be said of the letter of indemnity given by the claimant to the garnishee in lieu of actual payment of the surplus.
4. The gravamen of this case is whether the claimant under equitable principles, of which a court of law has been held to have jurisdiction, is entitled to the surplus contended for. The claimants held a recorded security deed to the real property in question. The general judgments of the plaintiffs were obtained against the debtor Cooper several months after claimants' security deed was recorded. On equitable principles when the claimants' title under their second security deed was extinguished by the sale by the garnishee under its prior deed the rights of the claimants under their second deed were transferred from the property to the proceeds of the sale over and above the amount due on the first security deed up to the amount due the claimants on their second security deed. East Atlanta Bank v. Limbert, 191 Ga. 486 ( 12 S.E.2d 865); Markey v. Langley, 92 U.S. 142 ( 23 L. E. 70); Parker v. Kidd, 32 Ga. App. 98 ( 122 S.E. 630); McIntire v. Garmany, 8 Ga. App. 802 ( 70 S.E. 198); Guaranty Investment c. Co. v. Athens Engineering Co., 152 Ga. 596 ( 110 S.E. 873).
5. There was no such merger of title to the land involved as would prevent the claimants from asserting their rights under their second security deed to the surplus over and above the garnishee's claim under its first security deed. The entire title to the property merged in the claimants, but to hold that the claimants' buying in the property at the sale under power by the garnishee to protect themselves precluded them from claiming the surplus would be unreasonable and unconscionable, in the absence of any fact or circumstance to show an intent on the part of the claimants to forego their rights to the surplus. The facts here are different from those in Franklin Mortgage Co. v. McDuffie, 43 Ga. App. 604 (1) ( 159 S.E. 599). There the original borrower sold the property subject to the first security deed and the purchaser sold the property to the Franklin Mortgage Co. which purchased the first security deed and notes. Neither does Wrenn v. Massell Investment Co., 56 Ga. App. 802 ( 194 S.E. 263) govern this case. There the holder of a security deed purchased the equity of redemption. Mergers are not allowed which produce inequitable results. See on this general subject: Perry v. First Mutual Bldg. c. Assoc., 174 Ga. 914 ( 164 S.E. 804); Coleman Burden Co. v. Rice, 115 Ga. 510 (4) ( 42 S.E. 5); Fraser v. Martin, 195 Ga. 683, 687 ( 25 S.E.2d 307); Seaboard Air-Line Ry. Co. v. Holliday, 165 Ga. 200 ( 140 S.E. 507); Landrum v. Carey, 185 Ga. 76 (3) ( 194 S.E. 362).
The effect of the court's judgment is to find that the claimants are entitled to the surplus involved so that any technical irregularities in the judgments need not be dealt with. The judgments are affirmed.
Judgments affirmed. Bell and Hall, JJ., concur.