Opinion
22632.
ARGUED SEPTEMBER 15, 1964.
DECIDED OCTOBER 8, 1964.
Equitable petition. Richmond Superior Court. Before Judge Hardin.
Hull, Willingham, Towill Norman, Walter Reiser, for plaintiffs in error.
Cumming, Nixon, Eve, Waller Capers, contra.
Where there is no evidence to show that lumber in which the intervenors claim an interest was taken into a certain lumber yard and there mingled with the yard's inventory, they will not be allowed to recover a portion of such inventory.
ARGUED SEPTEMBER 15, 1964 — DECIDED OCTOBER 8, 1964.
State Bank Trust Company of Greenwood, South Carolina (hereinafter referred to as State Bank), brought its equitable petition in the Richmond Superior Court against Southeastern Pine Corporation (hereinafter referred to as Southeastern) and its president, J. G. Howard. The petition alleged that Southeastern was indebted to State Bank in an amount in excess of $500,000; that Southeastern was insolvent and Howard was fraudulently transferring lumber which was given as security for the debt. The petition sought the recovery of the amount of the debt, the appointment of a receiver, and that the defendants be temporarily and permanently enjoined from disposing of the corporate assets. After the appointment of a receiver Southland Timber Corporation (hereinafter referred to as Southland) and Cherokee Timber Corporation (hereinafter referred to as Cherokee) filed their petitions to intervene. Cherokee and Southland alleged that certain pine lumber found in Southeastern's lumber yard was, and is, their sole property and not the property of Southeastern.
The basic facts, as stipulated by the parties, under which this controversy arose are as follows: In 1960 and 1961 Southeastern gave State Bank security deeds to certain described property including a lien on its inventory of lumber stored at its yard in Richmond County, Georgia. The deeds provided that Southeastern would maintain an inventory of lumber, at all times, with a value of over $250,000. In 1962 Southland sold timber to Southeastern under a written contract providing that the price would be based on "Mill Scale" (that is, where the timber is cut into logs, made into lumber and then measured at the mill to ascertain the board feet) and that "[t]he Seller in no way relinquishes his title to the above described timber until each tree is severed from the stump and payment is received under the terms of this agreement." This agreement was not recorded. The timber was cut and moved from the land, but never paid for. In the same year Cherokee sold timber to Southeastern under an oral agreement similar to Southland's. The timber was cut and moved, and Cherokee was given two checks in payment which were dishonored.
The intervenors Southland and Cherokee attempted to establish their right to a portion of the inventory of lumber kept at Southeastern's lumber yard based on their contention that the lumber which they sold to Southeastern was still their property, since title had never passed, and that such lumber had been mingled with other lumber on Southeastern's yard. The trial judge found, in two separate orders, that the claims of the intervenors were inferior to the lien of the State Bank and hence denied their prayers for recovery.
The instant case involves a question of priority of liens between the intervenors Southland and Cherokee and the plaintiff State Bank. Both the intervenors' claims arose out of their contentions that their title to, or lien, was superior to that of State Bank or a portion of the lumber included in the inventory contained in Southeastern's lumber yard in Richmond County, Georgia, which was subject to State Bank's deed to secure debt. We find no merit in such contention.
Since the basis of the intervention was that certain lumber in Southeastern's yard was the sole property of the intervenors and not that of Southeastern, a fact requisite to the intervenors' cause is that such lumber actually came into Southeastern's yard. Their contention presupposes the fact that lumber in which Southland and Cherokee claimed an interest was taken into Southeastern's yard in Richmond County, Georgia, and was there mingled with the other lumber contained in the inventory. However, there is no evidence to support such an assumption. Instead the stipulation of fact to which all the parties agreed recites: (1) "The timber of both intervenors had been harvested and made into lumber at a place other than Southeastern's yard in Richmond County, Georgia, prior to the appointment of the receiver." (2) "Neither the receiver nor State Bank Trust Company nor Southland nor Cherokee is able to say whether or not all or any part of the lumber made from the saw timber, which had been cut by Southeastern pursuant to the contracts with Southland and Cherokee, were included in the inventory found on Southeastern's lumber yard. Southeastern had, prior to the receivership, exclusive possession of the logs and lumber covered by the described contracts with Southland and Cherokee."
Without some evidence that any of the lumber contained in the inventory might be that in which the intervenors claim an interest, Code § 37-302, upon which counsel for the intervenors relies, would not be applicable. "To follow trust funds, it must be possible to identify them, to show that they have gone into the property sought to be subjected." Vason v. Bell, 53 Ga. 416, 425 (4); Ober c. Co. v. Cochran, 118 Ga. 396, 399 ( 45 S.E. 382, 98 ASR 118); Town of Douglasville v. Mobley, 169 Ga. 53 (4) ( 149 S.E. 575).
The trial judge did not err in denying the prayers of the intervenors.
Judgment affirmed. All the Justices concur.