1. The indebtedness stipulated, for which the deed to secure debt would stand as security, is a described note, "or any other present or future indebtedness or liability of first parties to second party." Two notes thereafter signed by only one of the "first parties" and a third person, are not obligations of "first parties" within the terms of the deed to secure debt.
2. Upon payment of the amount due under the terms of a deed to secure debt, it is the duty of the grantee in such deed to surrender and deliver it to the grantor with a proper entry showing payment, and the grantor may thereafter have it "satisfied" of record. A petition seeking to have the above rule complied with by the grantee is based upon a statutory right.
3. The allegations of the petition as to the statements of the president of the bank, that a tender would be refused if made, were sufficient as against the demurrers of the bank.
4. In order to avoid the payment of future interest, a tender must be continuous.
Mrs. Elma T. Giles filed a petition against Bank of LaFayette, and in substance alleged: In April, 1948, she and her husband, T. C. Giles, borrowed $2700 from the bank and executed their joint promissory note and deed to secure debt, securing the indebtedness. The note was renewed four times, the last renewal being held by the bank. On the date of the execution of the deed, she and her husband were owners in common of the real estate described in the deed, but subsequently, on February 2, 1949, her husband conveyed his interest in the real estate to her. Prior to the last renewal of the note, she advised the bank that she had acquired the interest of her husband in the real estate, and requested that she be permitted to renew the note in her name only. She was advised that, since the original indebtedness had been contracted by both parties, it would be necessary for the renewal note to have the signature of both parties, and she secured the signature of her husband. She is not indebted to the bank in any sum except the note of $2700. When the note became due, she was advised by the president of the bank that the note would not again be renewed. She asked for time to secure the money to pay the indebtedness, and was advised by the president of the bank that, if she tendered the entire amount due, the bank would not accept it, as the bank held other indebtedness against her husband, and would hold the deed until all other indebtedness had been paid in full. The other indebtedness of her husband is a note of $900, dated in November, 1948, and a note of $2500, dated in January, 1949, both notes being signed by her husband and J. A. Loughridge Jr. She is in no way obligated to pay either of said notes, and had no part in creating the indebtedness evidenced by them. The bank is now advertising her property for sale at public outcry, as shown by copy of advertisement attached, and unless enjoined and restrained, the bank will sell her property. The value of the real estate is greatly in excess of her indebtedness to the bank, and if permitted to proceed with the sale, the bank will apply the proceeds from the sale to indebtedness for which she is not liable. The deed executed by the plaintiff and her husband to the bank (copy being attached, marked Exhibit "A") contains the following: "This conveyance is made to secure a debt of $2700 under Title 67, Section 1301 of the Code of Georgia of 1933, or any other present or future indebtedness or liability of first parties to second party. The debt hereby secured is described as follows: One promissory note of even date herewith for the principal sum of $2700, bearing interest at the rate of six (6%) per cent. per annum, due ninety (90) days after date." Under the provisions of the deed, the only indebtedness secured is her indebtedness of $2700; but, if the deed could be construed to secure "any other present or future indebtedness or liability of first parties to second party," there is no other indebtedness of first parties to the bank. She does not owe any other debt to the bank, and is not jointly liable with her husband for any other debt to the bank. She is willing to pay the entire indebtedness secured by the deed and promissory note for $2700, and she now makes a continuous tender and offer of payment, although she is advised that the bank will not accept payment and mark the security deed "satisfied."
The prayers were that the bank be temporarily and permanently enjoined from selling the real estate described in the deed to secure debt, and that the bank be required to mark "satisfied" the deed and note, upon payment of $2700 with accrued interest.
The bank filed general and special demurrers to the petition, and an answer, in which it sought to have T. C. Giles made a party. In so far as germane to the rulings here made, the answer of the bank was in effect: The allegation of the petition, that the plaintiff advised it that she was the sole owner of the real estate at the time of the last renewal of the note, is admitted, but it had no other notice that she had acquired the sole title to the property. The president of the bank advised the plaintiff that it would accept payment of the note of $2700 and interest, but would not satisfy the deed and note; but would continue to hold the deed for the two notes of $900 and $2500, signed by T. C. Giles and J. A. Loughridge Jr. The original deed to secure debt secured the two notes of T. C. Giles in the amounts of $900 and $2500, respectively, and the one-half interest of T. C. Giles in the property was security for the two notes described. There has never been any tender of payment, and the bank has never advised the plaintiff that it would not accept the $2700 and interest. She is not entitled to a temporary restraining order or injunction. The bank is entitled to proceed to advertise and sell the property described in the deed. In the event the temporary restraining order is not vacated, the bank is entitled to a verdict and judgment foreclosing its special lien on the property, and a general judgment against all the property of the plaintiff and her husband for the principal sum of $2700 with interest. The purported deed made by her husband to the plaintiff was a voluntary deed, and was made for the purpose of hindering, delaying, and defrauding his creditors. On the date of the purported deed the husband was insolvent, and she knew of the insolvency of her husband. T. C. Giles is interested with her on the issue of whether or not the deed executed to the bank can be held for the indebtedness of the husband in the amounts of $900 and $2500.
The prayers were: (a) that the temporary restraining order be vacated and the bank be permitted to proceed to advertise and sell the property described in the deed to secure debt; (b) that, in the event the prayers in paragraph (a) should not be granted, a decree be entered declaring the property subject to the notes of $900 and $2500, executed by the husband to the bank, to the extent of his one-half interest in the property; (c) that, in the event the cause proceeds to trial, judgment be rendered in favor of the bank against the plaintiff and her husband, foreclosing its special lien on the property for the indebtedness of $2700 and interest, as provided in the note and deed, and a general judgment be rendered against all the property of the plaintiff and her husband for the indebtedness of $2700 principal, and interest thereon at six percent per annum from July 10, 1949, and costs of court; (d) that the purported deed executed by the husband to the wife, purporting to convey the property described in the deed to secure debt, be canceled and set aside; (e) that the husband be made a party, and a rule be issued requiring him to show cause why he should not be made a party in the cause; and (f) for other relief.
The bill of exceptions assigned as error: (a) the refusal of the court to make T. C. Giles a party; (b) the refusal to dismiss the petition because the debt of $2700 and interest were not tendered into court; (c) the overruling of the bank's demurrer to the plaintiff's petition; (d) the sustaining of the plaintiff's demurrer to the bank's answer; (e) the overruling of an oral motion to dismiss the case at the trial; (exceptions pendente lite were filed to the above rulings); (f) the overruling of the motion for new trial.
In the opinion the plaintiff in error will be referred to as the bank, and the petitioner in the court below as the plaintiff.
1. The primary question in this case is whether or not the deed to secure debt of the husband and wife to the bank secures two subsequent notes signed by T. C. Giles (the husband of the plaintiff) and J. A. Loughridge Jr., in addition to the original loan of $2700.
The bank insists that the promissory note signed by the husband and wife was a joint and several obligation, and that the deed to secure debt would therefore secure individual obligations of either of the two joint makers. It is a general rule that, where two or more persons sign a promissory note providing that "I promise to pay," the obligation is joint and several. Code, 14-217 (7). The note, however, does not change the terms and provisions of the deed to secure debt, which comes within the rule that "powers of sale in deeds of trust, mortgages, and other instruments shall be strictly construed and shall be fairly exercised." Code, 37-607; Doyle v. Moultrie Banking Co., 163 Ga. 140 (135 S. E. 501); Cadwell v. Swift & Co., 174 Ga. 313 (162 S. E. 814); Delray Inc. v. Reddick, 194 Ga. 676 (22 S. E. 2d, 599, 143 A. L. R., 519); Holbrook v. Dickson, 195 Ga. 821 (25 S. E. 2d, 671).
as used in the deed in the present case refers to T. C. Giles and Elma T. Giles; and a note signed by T. C. Giles and a third person is not an indebtedness of the "first parties" within the meaning of the deed to secure debt.
2. The bank contends that the trial court erred in overruling ground 2 of its special demurrer. The demurrer quotes from the petition, and avers that the allegations quoted made issues in which T. C. Giles has an interest, and that he should be "made a party to avoid a multiplicity of suits." Neither this, nor any other ground, of the special demurrers raised the question that T. C. Giles was an essential party under the rule that, where cancellation of a deed is prayed, both the grantors and the grantees are necessary parties.
The petition did not pray for cancellation of the deed to secure debt within the rule stated in State Highway Dept. of Ga. v. Peavy, 204 Ga. 99, 100 (48 S. E. 2d, 726) and like cases cited by the bank. The relief prayed for was the surrender of the deed to secure debt upon payment by the plaintiff of the original debt and interest, as provided by the Code, 67-1306, 67-117. See Citizens Bank of Moultrie v. Taylor, 155 Ga. 416 (3) (117 S. E. 247). The court did not err in overruling this ground of demurrer.
3. It was alleged in paragraph 7 of the petition that the president of the bank advised the plaintiff "that if she tendered the entire amount due on said note with accrued interest, he would not accept the same as the bank held other indebtedness against petitioner's husband, T. C. Giles, and that the bank would hold said security deed until this other indebtedness had been paid in full." In paragraph 13 it was alleged that the plaintiff "is willing and able to pay the said bank . . . the entire indebtedness with accrued interest thereon . . . secured by said security deed, the same being a promissory note for $2700 with accrued interest thereon, and she now makes a continuous tender and offer of payment of said note."
Under the rule that equity will not require a useless formality, and that a tender is unnecessary where the person to whom the money is due states that the tender would be refused if made, the allegations of the petition were sufficient to withstand the demurrers interposed. Ansley v. Hightower, 120 Ga. 719 (4) (48 S. E. 197); Miller v. Watson, 139 Ga. 29, 32 (76 S. E. 585); Tolbert v. Short, 150 Ga. 413, 414 (5) (104 S. E. 245); Fraser v. Jarrett, 153 Ga. 441, 451 (112 S. E. 487).
The other grounds of demurrer by the bank to the petition are without merit.
4. In its answer to the allegations of paragraph 7, the bank alleged that the plaintiff was told "that the defendant would accept the sum of $2700 and interest represented by said note at any time, but that the said defendant would not satisfy said security deed securing said note, but would continue to hold said security deed as security for two other notes executed by the said T. C. Giles to defendant subsequent to the execution of said security deed, one being for $900 and one being for $2500."
This allegation by the bank that it would accept payment of the note signed by the plaintiff at any time, but that it would not cancel the deed to secure debt until the separate debts of the husband and a third party were paid, was based upon the unauthorized conclusion (apparently insisted upon in good faith) that its security covered these separate debts. If the bank was willing to accept the money, as it alleged, the plaintiff would not be relieved of making a tender. If the allegations of the petition were true, the plaintiff would be relieved from the payment of interest on the note of $2700 from the date of the refusal of the bank to accept the money.
It is a general rule that a tender must be certain and unconditional, and must be in full of the specific debt; and, in order to prevent the running of interest, the tender must be continuing. The fact that it may be made and refused is not sufficient to stop the running of interest. It must appear that the party making the tender has at all times been ready, willing, and able to pay the amount tendered. Fitzgerald v. Vaughn, 189 Ga. 707, 710 (7 S. E. 2d, 78). The allegations of the petition do not show that the plaintiff had the money with which to pay her debt, and fail to show a continuous tender or the equivalent thereof.
5. If the bank was entitled under the allegations of its answer, in the nature of a cross-action, to any of the relief prayed against T. C. Giles, it was error for the court to refuse to make him a party in the case. There is not question involved as to the right of the bank to insist that the whole property is security for the original debt of $2700, and there is no contention that, by reason of the deed from the husband to the wife, the lien or security of the bank for the original loan of $2700 was in any way impaired. In its answer the bank attacked the deed dated February 2, 1949, from T. C. Giles to the plaintiff, as a voluntary conveyance, made for the purpose of hindering, delaying, and defrauding his creditors. The bank prayed, in the alternative that, if the deed to secure debt did not cover the indebtedness of T. C. Giles and J. A. Loughridge Jr., the deed from T. C. Giles to the plaintiff be canceled, and the one-half interest of T. C. Giles in the property be decreed to be subject to the notes of T. C. Giles and J. A. Loughridge Jr. to the bank, in the sums of $900 and $2500, respectively.
As a general rule creditors may attack as fraudulent any conveyance interfering with their rights, either in law or in equity. Code, 28-104. All contracts of any description had for the purpose of hindering or defrauding creditors, with such intention known to the party taking, are fraudulent in law, and as to such creditors shall be null and void. Code, 28-201.
The two notes of $900 and $2500, respectively, which the bank asserts it has the right to enforce against the alleged one-half interest of T. C. Giles in the property, were executed by T. C. Giles and J. A. Loughridge Jr. The notes provided that "We promise to pay," and there is nothing in either of the notes to indicate that Giles and Loughridge were not joint makers of the notes.
"Where two or more persons sign a promissory note as apparent principal makers, the note reciting that 'We promise to pay,' and there is nothing to indicate that such signers are not principal makers, the note is prima facie a joint, and not a joint and several, undertaking. Graham v. Marks, 95 Ga. 38 (21 S. E. 986); Elrod v. Camp, 150 Ga. 48, 50 (102 S. E. 357); Exchange Bank of Savannah v. Harper, 35 Ga. App. 786 (134 S. E. 789). It follows that a suit on such a note can not be maintained against one of the makers alone, without accounting in a legal way for not joining the others in the suit." Locher v. Gray, 46 Ga. App. 694 (168 S. E. 909); Smith v. Moore, 45 Ga. App. 708 (165 S. E. 765); Benson v. Henning, 50 Ga. App. 492 (178 S. E. 406).
The bank can not proceed against T. C. Giles on the two notes signed by Giles and Loughridge as joint makers, without joining Loughridge, or showing that he can not be served. The trial court did not err in refusing to make T. C. Giles a party on the basis of any relief sought against him in the present case.
DUCKWORTH, Chief Justice, and WYATT, Justice, dissenting. We dissent because this case is distinguishable from the case of Americus Finance Co. v. Wilson, 189 Ga. 635 (7 S. E. 2d, 259), in that here the deed refers to the "grantors" in the plural, while there the deed referred to them in the singular. Admittedly this is a fine distinction but, believing that the decision there is unsound and, hence, unwilling to extend the rule there applied beyond the identical facts upon which it was based, we are unwilling to apply it here.