# Petitioners Brief — Scott v. Paisley

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## Record

- **Collection:** Supreme Court brief
- **Document type:** Petitioners Brief
- **Published:** January 1, 1926
- **Citation:** 271 U.S. 632

## Text

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INDEX OF SUBJECTS

BRIEF OF ARGUMENT:
Page
BIATEMENT OF THE CASE.............00c00c05. 1
ASSIGNMENT OF ERRORS....................... 4

The Statute Defining the Substantive Rights under
the Security Deed Statute of Georgia is merely De-
clamatory of the Common Law.................. 7

Section 6037 is not a Substantive Law, does not enter
into the Contract of the Parties, and Plaintiff in
Error is not Estopped to Attack same............ )

The Interest in Property remaining in the grantor
after the Execution of a Security Deed under the
Law of Georgia, Constitutes Property............ ll

Said Property may be sold and the Purchaser acquires
all the interest, and is subrogated to all the Rights
I Rs PRP ie ee 12

Plaintiff in Error was Divested of her Property
through the Operation of Section 6037, contrary to
Settled Usages and Modes of Procedure, and in

Derogation of the Common Law and Equity...... 13
Plaintiff in Error was not Properly Privy to Said
er AS inne ev ea 15

The JIndicial Proceeding Prescribed by Section 6037,
did not Accord Plaintiff in Error Due Process of
RR aia ashi ra engi ta Ais a hk OW Wea 4 Woe 16
(a) Because she was not a party to same.

(b) Because she did not have proper notice of same.
(c) Because she had no opportunity to be heard in
the course of same.

Levy and Sale Prescribed by Section 6037 does not of
itself Constitute a Proper Summary Proceeding to

Deprive Plaintiff in Error of Her Equity........ 19
Such Taking as Authorized in Section 6037 cannot
be Justified as an exercise of Police Power........ 22

IERIE TE EA SATHANA Ee tee a sane Ree ae

a

INDEX TO AUTHORITIES CITED

Pages of

Brief

Akin vs. Kingsbury, 151 SEER ORE AS — 10

Allen vs. Frost, 62 Ga., 659...................... 7

BY Archuleta vs. Archuleta, 123 P.821............._. 17

: Artope vs. Barker, 72 SSO eae 18

Bartero vs. Real Estate Savings Bank, 10 Mo.

3 si de Brees ROPE CPT OP ESO, ee 14
a Benedict vs. Gammon Theological Seminary, 122

a scp cy OE OS ge STD A A, RE a 1

i Biggers vs. Bird, 55 Ga., 650...................... 7- 8

4 Bodega vs. Perkerson, 60 | CPR AL PPA een 20

i Braswell vs. Suber, 61 Ga., 398................... 7-11

- Broach vs. Barfield, 57 Ga., 601................... 7

a Brooks vs. Lowry National Bank, 141 Ga., 206..... 17-18

4 Burdick vs. People, 36 N. E., 948................. 23

% Carsten vs. Pilsbury, 158 P.,218.................. 17

q Carswell vs. Hartridge, 55 Ga., 412................ 7

Central of Ga. Ry. Co. vs. Wright, 124 Ga., 630.... 12
Central of Ga. Ry. Co. vs. Wright, 166 Fed., 153.... 12-13

$ City of Atlanta vs. S. A. L. Ry. Co., 137 Ga., 805... 18
3 Coe vs. Armour Fertilizer Works, 237 U,

4 1 ca dle OES PRE OES Ds epee 10-17-18-19
4 Coleman vs. Slade, 75 Ga., 61..................... 14
2 let: oonadfoterring. Do. o.e YEE TE ee 22
5 erty sh--aynciiest uo, kg NOSED Soa Poe ane er 17
Z Sie SN, MONI tine oS kp aise a's cca bad ea 23
3 Dulin vs. McCaw, 39 W. Va.,721.................. 14
‘ Edenfield vs. Bank of Millen, 7 Ga. App., 645....... 14
| Ford vs. Nesmith, 117 Ga., 211................... 21
a Freeman vs. Alderson, 119 U.S.,185.............. 14
P Gassert vs. Strong, 98 P.. 497.................... 14
Chowne Tames, BOVE 6 ooo ok occ dace 8
P Guarantee Bk. & Tr. Co. vs. American National Bank,

2 WWE MC MEM Ey oreo ok a hiweni ct even cu. 22
; Gillespie vs. Hunt, 145 Ga., 490................... 14
: Groesbeck vs. Seeley, 18 Mich.. 329................ 2]

a

Gunter vs. Smith, 113 Ga., 18..................... 9-12
Harris vs. Powers, 129 Ga., 82................... 9-12
Johnson vs. Griffin Banking Co., 55 Ga., 691........ 7
Jones vs. Smith, 120 Ga., 642..................... 18
Lackey vs. Bostwick, 54 aes ne Ge eae 7
Lawton vs. Steele, 152 U.S., 138.................. 22
Loftis vs. Alexander, 137 Ga., 65................. 17-18
Loftis vs. Alexander, 139 Ga., 346................. 13
Marshall vs. Charland, 106 Ga., 42................ 16
Martin vs. White, 100 Pa., 293.................... 21
Mattlage vs. Mulherrin, 106 Ria MR & ac wood 14-15-16-19
Merchants Bank vs. Haiman, 62 Me Mo cece 18
Morris vs. Murphy, 95 Ga., 307................... 16
McLellan vs. Graham, 106 Ga., 211............... 20
Ochoa va. Hernandez y Morales, 230 U. S. (57 L. Ed.,

sop crt, ae EO TEE EET ELITE ND Ee 23
Parrott vs. Baker, 82 Ga., 364.................... 8
Parsons vs. Russell, 11 Mich. 113................. 21
People vs. Weiner, 110 N. E., 870................. 22
Pennoyer vs. Neff, 96 U.S., 714.................. 17-18
Phinizy vs. Clarke, 62 Ga., 628................... 8
Polhill vs. Brown, 84 Ga., 388.................... 9-12
Reese vs. Watertown, 19 Wall, 107................ 18
Riverside Cotton Mills vs. Menefee, 237 U. S., 189... 19
Rucker vs. Womack, 55 Ga., 399.................. 16
NUTS os xia ee ahs cb Pi ee es 23
Sears vs. Bagwell, 69 Ga., 429.................... 20
Sloss vs. Mutual B. & L. Association, 97 Ga., 401.... 9
Smith vs. Board of Medical Examiners, 140 Iowa, 66 3
Standefer vs. Wilson, 92 Tex., 232................ 9
State vs. Guilbert, 47 N. E., 551.................. 17
State vs. Holtcamp, 151 S. W., 157................ 11
Stewart vs. Palmer, 74 N. Y., 183................. 18
Stroupper vs. McCauley, 45 Ga., 74............... 14
Sturges vs Crowninshield, 4 Wheat, 122............ 10
Walker vs. Equitable Mortgage Co., 112 Ga., 645.... 18
Webster vs. Reed, 11 Howard, 459................ 15-18

Wells vs. Savannah, 87 Ga., 399................... 12

» &

(a.) Because she was not a party to same.

It is a fundamental principle of due process of law that
the rights of a person may not be affected by judicial pro-
ceedings to which he is not a party. 12 Corpus Juris, 1227;
Carsten vs. Pilsbury, 158 P., 218; Archuleta vs. Archuleta,
123 P., 821; State vs. Guilbert, 47 N. E, 551.

Plaintiff in error was not a necessary party to the pro-
ceeding brought under section 6037 in the present case.
Brooks vs. Lowry National Bank, 141 Ga., 293. She was
not even a proper party to that proceeding. Loftis vs.
Alexander, 137 Ga., 65.

(b). Because she did not have proper Notice of
Same.

DEAT Se BERNIE SR TR EL eT

Notice to one whose rights are to be affected by judicial
proceedings, is an essential element of due process of law.
Coe vs. Armour Fertilizer Works, 237 U. S., 413; Pennoyer
vs. Neff, 95 U. S., 714; Windsor vs. McVeigh, 93 U. S., 274.

PRA gH OI

ery

And the statute authorizing the proceeding must affirm-
atively require notice, or it will be unconstitutional. Coe vs.
Armour Fertilizer Works, cited above; Stewart vs. Palmer,
74 N. Y., 183.

is So

Newt

The statute in question did not require, either expressly
or impliedly ,any notice to plaintiff in error of the proceed-
ing through which her property was to be divested. Loftis
vs. Alexander, 137 Ga., 65; Brooks vs Lowry Nationa!
Bank, 141 Ga.; 293; and the present case.

The levy after judgment is not sufficient to meet the re-
quirements of due process of law as to notice. See Pen-
noyer vs. Neff, 95 U. S., 714, in which it is held that notice
to a person whose rights are to be affected by judicial pro-
ceedings, is essential to give jurisdiction, and that a levy

17

me

upon his property after judgment is not the required no-
tice. See also, Webster vs. Reed, 11 Howard, 459.

(c) Because she had no Opportunity to be Heard
in the Course of Same.

To deprive a person of his property by or through ju-
dicial proceedings in the course of which he is afforded no
opportunity to be heard, constitutes a denial of due pro-
cess of law. Windsor vs. McVeigh, 93 U. S., 274; Coe vs.
Armour Fertilizer Works, 237 U. S., 413.

And the statute authorizing the proceeding must, to be
constitutional, provide for such hearing. Stewart vs. Pal-
mer, 74 N. Y., 183; Coe vs. Armour and Company, above
cited.

A hearing cannot be dispensed with on the assumption
that the party to be affected has no defense to offer, or
that if a hearing were allowed, the same result would be
reached. Coe vs. Armour Fertilizer Works, supra., Reese
vs. Watertown, 19 Wall, 107-123.

Plaintiff in error was not, by the provisions of section
6037, afforded any opportunity for a hearing in the fore-
closure proceedings through which she was deprived of her
property. Not being a party to the proceedings, nor al-
lowed to intervene therein, (Loftis vs. Alexander, 137 Ga.,
65) she could not defend as a party. And for the same rea-
son, motion in arrest of judgment, or to set aside the jadg-
ment, was not open to her. Code, section 5957: Merchants
Bank vs. Haiman, 62 Ga., 624-628; Jones vs. Smith, 120
Ga., 642. And for the same reason, an affidavit of ille
gality or motion to quash the execution on the ground that
she had not had her day in court, was not available. Code,
section 5305 Walker vs. Equitable Mortgage Company, 112
Ga., 645; Artope vs. Barker, 72 Ga., 186; City of Atlanta
vs. Seaboard Air Line Ry. Co., 137 Ga., 805.

18

a

8. Levy and Sale Prescribed by Section 6037 does
not of itself Constitute a Proper Summary Pro-
ceeding to Deprive Plaintiff in Error of her
Equity.

As has already been set out, the levy prescribed by sec-
tion 6037 has been held to be based upon the judgment in
the foreclosure suit required. Mattlage vs. Mulherrin, 106
Ga., 834. Plaintiff in error could not, therefore, be re-
quired to wait until her property was seized for sale, to
make her defense. Riverside Cotton Mills vs. Menefee, 347 237
U. S., 189.

Had the Supreme Court of Georgia and of the United
States not held as above set out, the levy and sale pre-
scribed by section 6037 could not be considered a summary
proceeding by which the rights of plaintiff in error were
divested.

In the case of Coe vs. Armour Fertilizer Works, 237 U.
S., 413, the question whether a levy and sale under a writ
of execution, can constitute a valid summary proceeding, is
presented and decided in the negative. The Court holds, in
that case, that the writ of execution cannot, of itself, be
treated as equivalent to a writ of attachment, establishing
a lien on the property levied upon, but going no further
until the owner has had an opportunity to show cause why
that property should not be subjected to the payment of the
execution. ‘“‘Not only is such a purpose wholly unexpressed
in the writ itself, buf such is not its normal function or
effect; no day in court is named, and there is no provision
for notice or monition by service, publication, mailing or
otherwise.” And there is no distinction between the effect
of the execution in that case, and an execution which is-
sues upon a judgment rendered under the provisions of
section 6037. See also, Windsor vs. McVeigh, 93 U. S., 274.
23 L. Ed., 914 (see page 916).

19

It is true that there are instances of summary proceed-
ings wherein, upon a seizure of his property under specially
provided process, the owner is required to make his defense
to the claim asserted against him before his property is dis-
posed of under such process, or forfeit his right to a hear-
ing. And it is also true that section 5157 et seq., of the Code
of Georgia, provide generally that whenever an execution
or other process is levied upon property, persons other than
the defendant in execution may interpose claims, and thus
present to the court the issue whether such property is sub-
ject to levy under such execution.

But the Supreme Court of Georgia has held that the claims
laws of this State are permissive and cumulative only, that
the true owner of property is not bound to interpose a claim
when his property is levied upon, and that a mere failure
to do so does not bar the true owner from subsequently
asserting his right to the property. Bodega vs. Perkerson,
60 Ga., 516; Sears vs. Bagwell, 69 Ga., 429; McLennan vs.
Graham, 106 Ga., 211. And it is submitted that such an
optional mode of defense, granted as a matter of favor or
privilege, is not a substantial substitute for the due process
of law which the United States Constitution, 14th Amend-
ment, requires. Coe vs. Armour Fertilizer Works, 237 U.
S.. 413.

If the levy and sale prescribed by section 6037 could be
treated as a summary proceeding, and the right to claim as
furnishing an opportunity for a hearing in said proceeding,
the remedy afforded by a statutory claim in Georgia, still
does not provide such a hearing as is required as an ele-
ment of due process of law. “Where a security deed is
given to secure a note, and after judgment is obtained on
the note, the land re-conveyed, and execution levied thereon,
a claim is filed by a third person, proof of possession of the
land by the grantor in the security deed at the time of the

20

execution of such deed is sufficient to make a prima facie
case against the claimant, in favor of the plaintiff in fi fa.”
Ford vs. Nesmith, 117 Ga., 211. The judgment, the rendi-
tion of which claimant had no opportunity to contest, is
presumed to have properly and correctly adjudicated every
other fact necessary to uphold the levy; and it is incum-
bent upon the claimant to defeat the taking, rather than
upon the plaintiff in execution to justify it. Ford vs. Ne-
smith, 117 Ga., supra. To afford plaintiff in error, and
others similarly situated, no other opportunity to be heard,
and require her to resort to such a proceeding on pain of
losing her rights, would be to convert an estate in possession
into a mere cause or right of action. Martin vs. White.
100 P., 293. The right of a person to prosecute a claim
to prevent the unlawful sale of his property, cannot be sub-
stituted for the hearing required by the constitution as a
condition precedent to the taking of such property, for “a
person who has the legal right, and is actually or construc-
tively in possession, can never be required to take active
steps against opposing claims.” Groesbeck vs. Seeley, 13
Mich., 329-342.

Section 5158 of the Code provides that in order to prose-
cute a statutory claim, the claimant must give bond upon
which, it is provided in section 5169, he is subject to a
judgment for such damages—not less than ten per cent.—
as the jury may assess against him on the trial of the claim
case.

Moreover, if the levy and sale provided by section 6037
had been held, or could be held, to operate as a summary
proceeding, it would be unconstitutional as set out in Par-
sons vs. Russell, 11 Mich. 113, which holds that a statute
which provides for the seizure and sale of property on a
Mere assertion of a debt or demand against it, without any
proof or affidavit to substantiate the claim, is unconstitu-
tional.

21

Bos OR he Rs Lt sa asd SS 9 PS han hiiaiea an “on ~~

9. Such Taking as is Authorized by Section 6037,
cannot be Justified as an Exercise of Police Power.

Although the Georgia Supreme Court did not in this case
base its decision upon police power, plaintiff in error offers
to show that if such had so based its decision the statute
could not thereby be justified.

To justify an interference with private rights, under the
police power, it must appear not only that such interference
has for its object the public good, as held in Lawton vs.
Steele, 152 U. S., 183, but also that the means employed
tend to the accomplishment of that object. 12 Corpus Juris,
930; People vs. Weiner, 110 N. E., 870.

No good flows to the public from the provisions of section
6037. On the contrary, great and manifest evil flows from
them. They constitute an open invitation to the perpetra.
tion of frauds upon true owners of property, in that they
enable a creditor to collude with a former owner in ef-
fecting a stealthy foreclosure Note the fact that it was
the husband of the defendant in foreclosure who purchased
the property at foreclosure sale in the present case. Para-
graphs 14 and 36 of Plaintiff’s amended petition, pages 9
and 12, respectively, of the Transcript of Record.

A judgment may be secured in a section of the state dis-
tant from the county in which the land lies, and in which
the true owner resides, and the effect of such judgment is
not only to authorize a sale of the property to satisfy an
alleged obligation, but to increase the burden of that obli-
gation by the addition of a per centage of principal and in-
terest as attorney’s fees. Guarantee Bank & Trust Company
vs. American National Bank, 15 Ga. App., 778. And all the
while, the owner of the property may be in search of an
illusive security deed holder. Such action is possible in the
face of the fact that under section 4252 of the Code, an

22

agreement to pay attorney’s fees in addition to principal
and interest, is unenforcible except in a suit brought on the
instrument containing such agreement, after notice to the
debtor; see said section; the right to recover attorney’s

fees at all being based upon the necessity of entering suit
ofter such notice.

But, it is respectfully submitted, the extent to which a
state may go in curtailing the rights of its citizens gener-
ally, is not involved in the present case. The right to notice
of, and an opportunity to be heard in, a judicial proceed-
ing through which rights are to be divested or affected, al-
though such proceeding be authorized pursuant to the
police power, cannot be taken away. 12 Corpus J uris, 1229;
Smith vs. Board of Medical Examiners, 140 Iowa, 66.

“Whatever else may be uncertain about the definition of
the term ‘due process of law’, all authorities agree that it
inhibits the taking of one man’s property and giving it to
another, contrary to the settled usages and modes of pro-
cedure, and without notice or an opportunity for a hearing.”

Ochoa vs. Hernandez y Morales, 230 U. S., 57 L. Ed., 1429-
1436.)

It has been shown that section 6037 as construed by the
Supreme Court of Georgia, operates to take from a person
occupying the status of plaintiff in error, his property and
give it to the purchaser at the sale held pursuant to said
section, contrary to the settled usages and modes of pro-
cedure, and without notice or an opportunity for a hearing.
And a statute which attempts to work such a change of own-
ership is a glaring violation of the constitution, and cannot
be defended as an exercise of the police power. 6 A Ta
436; Burdick vs. People, 36 N. E., 948.

Respectfully submitted,
HOOPER ALEXANDER,
PAUL DONEHOO,
N. T. ANDERSON, JR.
Attorneys for Petitioner, Dorothy Scott.
23

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_ — Senraueia sairdenmalcleinabeiantlsthiatie 9 i
Carrington vs. Citizens Bank of Waynesboro, 144 Ga.,
|S RERESs ae mae inl 15
Clarke vs. Graham, 6 Wheaton, 577.0000. 12
Clark vs. Kansas City, 176 U. S., 114 cccccceeseee 7 §
Crawford vs. Pritchard, 81 Ga., 14 ian
Evans vs. Kahr, 60 Kan., 719... 15 «OF
Georgia Code SBB06 cece ccccsscsssnesneeesesemees-G-11-12-16
Georgia Code §3307 10 F
Georgia Code §3309 3 j
Georgia Code §4198 spiiainsibas 1
Georgia Code §6037 8-9-10-11-12-16-19-20-23 4
Georgia Laws of 1871-2, pp. 44-45 12 |
Georgia Laws of 1872, p. 47 12
Georgia Laws of 1884-5, p. 57 12
Georgia Laws of 1894, pp. 100-101 12
Giles vs. Little, 184 U. S., 645 +. 39

Grantley vs. Ewing, 3 Howard, 707... 21

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INDEX TO AUTHORITIES CITED—Continued

Page of
Brief
Henry vs. McAllister, 93 Ga., 667 a 24
Hinesley vs. Stewart, 139 Ga., 7.. ; 17
Hollins vs. Brierfield Coal & Iron Co., 150 U. S., 371,
© See teh Sat SN ae eG Oc .
Hooker vs. Burr, 194 U. S., 415... ESRD ROLE a,
Howard vs. Gresham, 27 Ga., 347... cegighddumaniciudion <a
Howard vs. Railway Company, 101 U. S., 837... me
ee 6. Tae, 10 ., 6 8
Lampasas vs. Bell, 180 U. S., 276.0... cccccccccscsccsssssessneensee 7
Loftis vs. Alexander, 1389 Ga., 346.0000 2
Louisiana vs. Jumel, 107 U. S., 750.000 ec 21
Louisiana, ex rel. Nelso vs. St. Martin’s Parish, 111 U
Ty Ne a ee ae ae 21
Louisiana, ex rel. Ranger vs. New Orleans, 102 U. S
CRS ae nak ieee,
Louisiana, vs. Pittsburg, 105 U. S., 302.00. 21
Ludeling vs. Chaffee, 143 U. S., 301.000 7
Maddox vs. Arthur, 122 Ga., 671. oa 24
Martin vs. Ward, 60 Ark., 210.......... 15
Marye vs. Parsons, 114 U. S., 325........... aod 7

Mills vs. Green, 159 U. S., 651...
Morice vs. Bishop of Durham, 10 Ves., 537.0000. = 9
Morsell vs. First National Bank, 91 U. S., 361.0000. 16
Mutual Loan & Bonding Co., vs. Haas, 100 Ga., 111...19-22
McAlpin vs. Bailey, 76 Ga., 687. cece 24
McCracken vs. Howard, 2 How., 608, 612................... 22
Osborne vs. Rice, 107 Ga., 281, 285 : 17-18

ce |

INDEX TO AUTHORITIES CITED—Continued

Page of
Brief
Pace vs. Canterbury, 14 Ves., 370. 9
Palmer vs. Young, 96 Ga., 246... i
Planters Bank vs. Sharp, 6 How., 301 21
Pritchard vs. Norton, 106 U. S., 182... ............... 22
Roberts vs. Atlanta Cemetery Ass’n., 146 Ga., 390,
aa es 16-17
Seibert vs. Lewis, 122 U. S., 284.0000. 21
Scoville vs. Calhoun, Ordinary, 76 Ga., 263.0000. 5
Shumate, Admr., vs. McLendon, 120 Ga., 396... 9-18
Singer Mfg. Co., vs. Wright, 141 U. S., 696.000 7
Stanbach vs. Thornton, 106 Ga., 81, 83.0000 19
Stoddard vs. Forbes, 16 Iowa, 296................ Se cangaseneienanauiiien 15
Suttles vs. Sewell, 105 Gar, UBB ciecccccccsssseccsccssssssnseeeee 14-16

pe i; NL, SO I Rs ee
pas OE OG. 2 Ge, Oe ne «68
po See ae ee 6
Tyler vs. Judges of Registration, 179 U. S., 405.0000. 7
United States, ex rel. Butz vs. Muscatine, 8 Wal., 575 19-21

Vestel vs. Edwards, 143 Ga., 368, 372 ; 5
Washington Exchange Bank vs. Holland, 121 Ga., 305 18
Weiner vs. Heintz, 17 Ill., 259... easton debsietaanaudanbiecieass 15
White vs. City of Atlanta, 134 Ga., 532.000 6
Williams vs. Hood, 98 U. S., 72 6
Williams vs. Terrell, 54 Ga., 462 17-18
Willis vs. McIntosh, Ga., Dec., 162 15
Woodwall vs. Jewell, 140 U. S., 247, 251 9

ERELLE EAL LONI HT NASI OIE TOMAS mph signees
“7

IN THE

SUPREME COURT OF THE
UNITED STATES

DOROTHY SCOTT,
Plaintiff in Error

v8.
NO. 253

J. A. PAISLEY, MRS. FANNIE / ocTOBER TERM 1995.
PAISLEY, CLAUD BRACK.

ETT, AND J. I. LOWRY,

Sheriff,

Defendants in Error

WRIT OF ERROR TO REVIEW A JUDGMENT OF THE
SUPREME COURT OF GEORGIA (158 GA. 876)

PRELIMINARY PROPOSITIONS

Without regard to the constitutional validity of the Stat-
ute raised by the bill of the plaintiff in error, her suit was
properly dismissed in the Court of original jurisdiction on
general demurrer, for want of equity,

FIRST: Because the action being a suit in equity, it
was not maintainable for the reason that the plaintiff had
an adequate remedy at law, and was guilty of inexcusable
laches in asserting her alleged rights.

SECOND: Because plaintiff was not in position to at-
tack the constitutionality of the Statute called in question,
for the reason that her suit failed to show that she had

1

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ever made any offer to redeem the property, the right to
redeem which she prayed, or any reason why such offer of
redemption had not been made, nor did she in her suit make
any tender of redemption or allege a readiness, willingness
or ability to redeem.

FOURTH: Because, the plaintiff in error not having
come into actual collision with the Statute in question, her
suit in the Court of original jurisdiction, was the anticipa-
tory raising of an abstract question of the constitutional
validity of a law, and was a moot case in the Court of origi- ,
nal jurisdiction, and is a moot question upon her writ of
error in this Court, and her writ of error should be here
dismissed.

ARGUMENT AND AUTHORITIES ON THE FOREGOING
PROPOSITIONS

The suit of plaintiff in error shows that the real estate
in question was conveyed to her subject to the loan for the
satisfaction of which the property was sold and conveyed
by the Sheriff to the predecessor in title of the defendant
Brackett, and that she held the property from the 2nd day
of October, 1919, the date of the conveyance to her, until
the 13th day of February, 1923, the date of the filing of
her suit (R. 8, par. 4, 5). It further appears that the
property was sold by the Sheriff under execution for the
loan, which she had assumed, on the first Tuesday in June,
1920.

Under the laws of Georgia, the plaintiff in error at all
times from the time of the conveyance of the property to
her and until the sale by the Sheriff, had the right to re-
deem the property.

In the case of Loftis vs. Alexander, 139 Ga., 346, the Su-
preme Court of Georgia, holds, that—“In this State a deed
to secure a debt is not the same as a mortgage. Such a deed

nee

»

Pte 8 +

conveys title; a mortgage is only a lien. But a deed of that
character is in several particulars similar to a common law
mortgage; and one of them is as to the right of one who
buys the property from the maker of the deed and obtains
an equitable interest therein to protect his purchase by pay-
ing off the secured loan, especially where as part of the
contract of purchase, he agrees to make such payment.”

It is obvious, therefore, that any time prior to the first
Tuesday in June, 1920, under the law, as it existed in the
State of Georgia, the plaintiff in error could have tendered
the amount of the loan with interest and costs accrued and
demanded a reconveyance of the property to her, or a satis-
faction on the record of the loan deed, which under the law
of Georgia would have amounted to a reconveyance (Code
of Georgia, (1910) §3309. Printed in the margin) .*

Applying the rule that equity aids only the vigilant and
not those who slumber on their rights, plaintiff in error had
no standing in equity in the Court of original jurisdiction.
From the 2nd day of October, 1919, when the property in
question was conveyed to the plaintiff in error, by war-
ranty deed, subject to the outstanding loan (R. 8, par. 5),
by the very terms of the conveyance to her she had notice
of the loan; that the interest was payable semi-annually
and that said loan matured on the 9th day of January, 1920
(R. 7, par. 8). After securing a conveyance to herself of
the property, she went to sleep and slept on until after the

*GEORGIA CODE OF 1910 §3309.

In all cases where property is conveyed to secure a debt,
the surrender and cancellation of such deed in the same
manner that mortgages are now canceled, on payment of
such debt to any person legally authorized to receive the
same, shall operate to reconvey the title to said property to
the grantor, his heirs, executors, administrators, or assigns,
and such cancellation may be entered of record by the Clerk
of the Superior Court in the same manner that cancellations
of mortgages are now entered.

SHR y Kg: 7

PIE BL BPG LE MRA PR NOB RIE AP ON EI RN ME A

maturity of the note and until after suit was entered on
the note to the May Term, 1920, of the City Court of At-
lanta (R. 8, par. 8). She slumbered through the default
entered in the suit upon the note; through the rendition of
a verdict and judgment and the issue of an execution, the
levy of an execution, the filing and record in the office of
the Clerk of the Superior Court of Fulton County, Georgia,
of a quitclaim deed for the purpose of levy and sale; through
a levy; through all the time that the property was being ad-
vertised by the Sheriff for sale, and on past the sale which
was had on the first Tuesday in June, 1920, (R. 8, par. 8,
9, 10, 11, 12, 13) (R. 14), and continued to slumber on for
a period of three years after the sale, finally waking up on
the 13th day of February, 1923, without performing any
act for the redemption of the property, and then merely
submitting to the Court, in her suit, an abstract question
whether or not she had any right of redemption in the
property.

It is equally apparent that after the sale by the Sheriff,
if the plaintiff in error desired to redeem and to test the
validity of the Statute under which the Sheriff’s deed had
been made, she could have tendered the amount deemed by
her necessary to redeem to the holder of the title under the
Sheriff’s Deed. If the tender had been accepted, no resort
to the courts, either in law or in equity, would have been
mecessary. If the tender had been refused she could then
have made a continuing tender, demanded possession of the
premises, upon refusal of possession she could have sued in
ejectment for the land, and upon resistance upon the title
derived from the Sheriff she could have then raised the
question of the validity of the Statute under which the
Sheriff’s deed was made as a practical question, and not as
an abstract proposition, as the same was made in her suit
in equity.

Hence, the plaintiff was not only guilty of laches in as-
serting the right claimed by her but had an adequate rem-

4

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edy at law, and her suit was, consequently dismissed upon
general demurrer for want of equity in her petition.

Furthermore, when the suit of the plaintiff in error pre-
sented the question of the constitutional validity of the Stat-
utes involved, the court of original jurisdiction was con-
fronted with the decisions of the Supreme Court of Georgia,
binding as authority upon it, as to whether the petitioner
stood in such relation to the Statutes as to be able by her bill
to call in question the constitutional validity of such Stat-
utes. Plaintiff’s suit failing to show that she had ever made
any offer to redeem the property, the right to redeem which
she prayed, or any reason why such offer of redemption had
not been made, nor, in her suit, any tender of redemption,
or any allegation of a readiness, willingness or ability to re-
deem, said suit was properly dismissed on demurrer for
want of equity.

In the case of Vestel vs. Edwards, 143 Ga., 368, 372, the
plaintiff attacked a Statute of the State of Georgia as repug-
nant to the due process of law clause of the State of Georgia
and of the United States, and as denying the equal protec-
tion of the laws, on account of certain alleged duties and
powers conferred upon the State Tax Commissioner, but it
appearing from the record that the Tax Commissioner had
not exercised the duties imposed upon him so far as the
same related to the case at bar, the court held that any dis-
cussion or decision of the act relatively to the plaintiff would
be moot, adding—“Until that official has exercised the au-
thority conferred upon him by the act to the detriment of
the plaintiff, the latter cannot attack the act with respect to
the authority thus conferred.”

In the case of Scoville vs. Calhoun, Ordinary, 76 Ga. 263,
it was held—“When a law operates upon the private prop-
erty of an individual, and it is seized, destroyed or confis-
cated, or the individual is indicted for a violation of such
law, he may assail the portion thereof affecting his private
property or personal liberty as unconstitutional, and the

5

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WEL A? Bb The CIS Chae EN Aa

courts will make such adjudication as will maintain the in-
tegrity of the law as a whole, if possible, and at the same
time, protect the citizen against any illegal portions of the
law, if there be such.” (Italics mine.) This case is cited
upon the proposition that the law must actually impinge
upon the rights of the person attacking it, before its con-
stitutionality will be passed upon by the Courts.

In the case of Tolbert vs. Long, 134 Ga., 292, it was held
that where a statute claimed to be unconstitutional was to
become operative only after ratified by a popular election,
an attack on it would not be sustained prior to the holding
of the election, and in the case of White vs. The City of At-
lanta, 134 Ga., 532, it was held that it was not necessary to
pass upon the constitutionality of a Statute until some per-
son affected by the Statute should seek appropriate relief
in regard thereto.

The decisions of this court are in accord with the decis-
ions of the Supreme Court of Georgia, that before a person
can have relief at the hands of the courts against an un-
constitutional law he must have actually suffered, or be ac-
tually threatened with an injury to his person or property
by the operation of the law, or that the law prevents him
from the exercise of some right which he has attempted to
exercise.

In the case of Turpin vs. Lemon, 187 U.S. 51, it is held
that “A plaintiff is bound to show that he has personally
suffered an injury by the application of a law before he can
institute a bill for relief to test its constitutionality.”

In the case of Williams vs. Hood, 98 U. S., 72, it is held
that “Where a bill shows no equity in the complainant and
contains no averment that he has been injured by certain
statutes of a State, this court will not pass upon an abstract
question the object of which is plainly to obtain a decision
touching their constitutionality, but will dismiss the bill
without prejudice.”

Baa ea ie

The same principle was applied in the following cases:

Tyler vs. Judges of Court of Registration, 179 U. S.
405;

Clark vs. Kansas City, 176 U. S. 114;
Lampasas vs. Bell, 180 U. S. 276;
Ludeling vs. Chaffee, 143 U. S. 301;
Giles vs. Little, 134 U. S. 645;

Hooker vs. Burr, 194 U.S. 415.

It is the duty of the court to give decisions in actual con-
troversies, and not to give opinion upon moot questions or
abstract propositions of law.

American Book Co. vs. Kansas, 193 U. S. 49;
Mills vs. Green, 159 U. S. 651;

Marye vs. Parsons, 114, U. S. 325.

Nor will the Court sustain a writ of error, where it ap-
pears that the plaintiff may have a right which he intends
to assert but which he has not yet asserted.

Singer Mfg. Company vs. Wright, 141 U. S. 696.

A fair interpretation of the suit of the plaintiff in error
is that it invokes a decision of the Court upon an abstract
question as to the existence of a right which she has never
attempted to exercise and which she is not bound to exer-
cise, and which she might never exercise, if the Court should
hold that she has such a right. The question is, therefore,
moot, and her writ of error should be dismissed.

7

NATURE OF THE SECURITY DEED PROVIDED FOR
UNDER §3306 AND THE REMEDY PROVIDED
FOR UNDER §6037 OF THE CODE OF GEOR-
GIA, (Printed in the margin) .*

The deed to secure a debt provided for under §3306 of
the Code of Georgia is analogous to and, in legal principle,
identical with a trust deed with a power of sale under
$6037. The making of a conveyance under §3306 invests
the lender with the legal title to the property to be held in
trust by the lender as security for the loan secured by the
deed, and in trust to reconvey the legal title to the bor-
rower, or to such person as the borrower may have con-
veyed the property to subject to the outstanding loan deed,
upon payment of the loan. The equitable title to the prop-
erty conveyed, for the want of a better term, usually de-
nominated the “equity of redemption,” with the right to
occupy the property and enjoy its rents, issues and profits
pending default by the borrower and the sale of the con-
veyed property remains in the borrower.

*GEORGIA CODE OF 1910 §3306.

Whenever any person in this State conveys any real prop-
erty by deed to secure any debt to any person loaning or ad-
vancing said vendor any money or to secure any other debt,
and shall take a bond for titles back to said vendor upon the
payment of such debt or debts, or shall in like manner con-
vey any personal property by bill of sale and take an obliga-
tion binding the person to whom said property is conveyed
to reconvey said property upon the payment of said debt or
debts, such conveyance of real or personal property shall
pass the title of said property to the vendee till the debt or
debts which said conveyance was made to secure shall be
fully paid, and shall be held by the Courts of this State to be
an absolute conveyance, with the right reserved by the ven-
dor to have said property reconveyed to him upon the pay-
ment of the debt or debts intended to be secured agreeably
to the terms of the contract, and not a mortgage.

8

Ce ee ee ie

—

OOP CLEOPR J

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—_— — :

A security deed under §3306 of the Code of Georgia, is
not a mortgage, but is an absolute conveyance of the legal
title.

Code of Georgia, §3306;

Burkhalter vs. Planters Loan & Savings Bank, 100 Ga.,
428;

Jewell vs. Walker, 109 Ga., 241;
Shumate, Executor, vs. McLendon, et al 120 Ga., 396;
Woodall vs. Jewell, 140 U. S. 247, 251.

While such a deed is not any where specifically called a
trust deed, it is such by its very nature. The author of
Perry on Trusts, (Fifth Edition, §150), says, upon the au-
thority of Morice versus Bishop of Durham, 10 Ves. 537,
and Pace vs. Canterbury, 14 Ves. 370, that—“A very com-
mon case of a resulting trust is where the owner of both

*GEORGIA CODE OF 1910 §6037.

In cases where a contract to purchase has been made, or
bond for title made, or the purchase money has been partly
paid, or in cases where a deed to secure a debt has been
executed, and the purchase money or secured debt has been
reduced to judgment by the payee, assignee, or holder of
said debt, the holder of the legal title, or, if dead, his execu-
tor or administrator, shall, without order of any court, make
and execute to said defendant in Fi. Fa., or, if he be dead,
to his executor or administrator, a quitclaim conveyance to
such real or personal property, and file and have the same
recorded in the clerk’s office; and thereupon the same may
be levied upon and sold as other property of said defendant,
and the proceeds shall be applied to the payment of such
judgment; or if there be conflicting claims, then the same
shall be applied as determined in proceedings had for that
purpose.

SERS RC ee |

EEE FRET LE MEL PSP DAE RPTL DIE AY cS BT HEELS VINNY IEA WRG PE AAO HN hE Rte ES

the legal and equitable estate conveys the legal title only,
without conveying the equitable interest.”

The remedy provided in §6037 is substantially a mere
power of sale under a trust deed to be exercised by the
holder of the loan deed in accordance with Statutory con-
ditions of extreme caution thrown around the exercise of
the power; that is, before the secured creditor can exercise
his power of sale, he must first file a suit upon the note given
for the loan in some Court of competent jurisdiction hav-
ing jurisdiction over the person of the original grantor un-
der the loan deed and, by competent proof, establish the
validity of the original conveyance, the amount of the in-
debtedness owing at the time of the filing of such suit and
the existence of a default on the part of the debtor, and
claim a special lien upon the land under the original secur-
ity deed. Having obtained such judgment the holder of the
legal title under the security deed, is then authorized to
proceed to sell the property for the satisfaction of the debt,
but he is required first to file and have recorded a deed to the
original grantor against whom judgment has been obtained
for the purpose of levy and sale. This deed so recorded is

*GEORGIA CODE OF 1910 §3307.

Every such deed shall be recorded in the county where the
Jand conveyed lies; every such bill of sale, in the county
where the maker resided at the time of its execution, if a
resident in this State. If a non-resident, then in the county
where the personalty conveyed is. Such deeds or bills of
sale not recorded remain valid against the persons execut-
ing them, but are postponed to all liens created or obtained,
or purchases made, prior to the actual record of the deed or
bill of sale. If, however, the younger lien is created by
contract, and the party receiving it has notice of the prior
unrecorded deed or bill of: sale, or if the purchaser has the
like notice, then the title conveyed by the older deed or bill
of sale shall be held good against them.

10

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; constructive notice to the world of the intention of the _
3 judgment creditor to have the property sold.* ;

Having re-invested the original grantor with the legal
title for the purpose of levy and sale the judgment creditor
is then permitted to have a levy made by the Sheriff of the
County where the land lies and a sale of the property made
for satisfaction of the secured debt. Instead of being al-
lowed to advertise and conduct this sale in some irregular
manner as is usually the case under the stipulations of an
ordinary trust deed, this sale can only be made after adver-
tisement by the Sheriff in the public gazette in which all
judicial sales by the Sheriff are advertised and the sale is
made at the time and place of holding the Sheriff’s sale and

such sale under such power destroys the so-called equity of
redemption of the borrower.

THE MAIN PROPOSITION

RSF PINE Ry ay

The Statute contained in §3306 and §6037 of the Code of
Georgia are not repugnant to the due process clause of the
Constitution of the United States, nor did they deny to the
plaintiff the equal protection of the laws, although the so-
called “equity of redemption” claimed by the plaintiff in
error was completely extinguished by the Sheriff’s Sale.

GENERAL STATUTE FOR RECORDING DEEDS.

*GEORGIA CODE OF 1910 §4198.

Every deed conveying lands shall be recorded in the office
of the Clerk of the Superior Court of the County where the
land lies. The record may be made at any time, but such

deed loses its priority over a subsequent recorded deed from
‘ the same vendor, taken without notice of the existence of
t the first.

1l

a

ARGUMENT AND AUTHORITIES ON ABOVE
PROPOSITION

The law under which the loan deed in question in this
case was made and the remedy provided for the holder of
the secured debt upon default of the borrower, were in force
in their present form when the loan deed was executed and
plaintiff in error bought the land subject to all the rights
and remedies provided in the then existing law.

USE Ras ES

Section 3306 of the Code of Georgia, is a codification of
an Act of the General Assembly of Georgia, passed at the
Session of 1871-2, and approved on December 12th, 1872
(Georgia Laws 1871-2 pp. 44, 45), as amended by an Act j
approved August 27th, 1872, (Georgia Laws of 1872, p. 47),
and as further amended by an Act approved on October
16th, 1885 (Georgia Laws of 1884-85, p. 57). Section 6037
of the Georgia Code, is a codification of an Act approved

4
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£ December 17, 1894 (Georgia Laws of 1894, pp. 100, 101). .
4 As those portions of these acts now in force and material to

this case are contained in Code Sections 3306 and 6037, it is ,
not deemed necessary to reprint them herein. i

It was held by the Court in Clarke vs. Graham, 6 Whea- r
ton, 577, that—“A title to lands can only be acquired or lost
according to the laws of the State in which they are situ-
ated,” and in Brine vs. Insurance Company, 96 U. S., 627,
that—“The laws of the State in which land is situated con.
trol exclusively its descent, alienation, and transfer, and
the effect and construction of instruments intended to con- p
vey it. All such laws in existence when a contract in re- :
gard to real estate is made, including the contract or mort-
gage, enter into and become part of such contract.”

Under the rule stated in the case last cited the provisions
of §3306 and §6037 of the Code of Georgia were a part of
the original contract in the security deed given for the loan
as if they had been written into it in haec verbis.

PEP ee err IS He

ee

12

Biivione: MRAM.

——— neg CRI SE gl PGT

While the security deed and the remedy provided for its
enforcement under the Sections of the Code involved in this
case are peculiar to the State of Georgia, (Shumate, Admr.,
vs. McLendon, et al 120 Ga., 396), the only feature of the
law here attacked is the effect of a sale under the suit with-
out making a junior vendee of the land a party to the so
called “foreclosure suit,” as such failure may affect the right
of redemption of the junior vendee.

4
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The conveyance of property under §3306 and §6037 of
the Georgia Code to secure a debt conveys the legal estate to
the lender and allows the equitable estate to remain in the
borrower as an estate upon condition, the condition being
that, the borrower will pay the debt according to the terms @
of the note and the security deed given therefor. After the
making of such security deed the borrower holds the equit-
able estate subject to this condition, which is in the nature
of a covenant running with his estate. When he sells to a
junior vendee he can not sell any larger estate than is vested
inhim. Hence, the conveyance of the equitable estate is the
conveyance of an estate upon condition.

All such sales are subject to the outstanding loan deed,
and in this case was expressly so made. Upon condition i
broken, that is, upon default of the borrower, or of the per- @
son who has assumed payment of the secured debt, a de-
feasance of the equitable estate vesting the title to the equit- —
able estate back into the original borrower occurs so that, —
after judgment upon the debt, when a deed is made to the
original grantor in the security deed conveying the legal
estate to him for the purpose of levy and sale, both the legal
estate and the equitable estate are merged in the original
grantor in the security deed, against whom judgment has
been rendered, so that the levy of the execution issued upon
the judgment for the secured debt falls upon both the legal
and equitable estate. Upon default in payment by the orig-
inal maker of the security deed, or by the junior vendee,
and upon judgment obtained against the original maker of
the security deed, the equitable estate immedaitely reverts

13

[pee nerrmererces

PORT
pm * - LA GILAD MS EOE aR RE NTE AAR Eg PMB . .
‘

by operation of law in the judgment debtor as an escrow
deed for the purpose of levy and sale. The right of tender-
ing the debt and having the property conveyed to him per-
sists until the sale, although the estate held by him has
passed from him and lies in escrow for the benefit of the
remedy pursued by the judgment creditor under the terms
of the security deed.

NO RIGHT OF REDEMPTION AFTER SALE

In Georgia there is no right of redemption after judicial
sale in any case, except in cases of sales for taxes under
executions therefor. In Georgia, a mortgagor, even, in an
ordinary mortgage can not redeem after a sale has been
made under a foreclosure judgment. Suttles vs. Sewell, 105
Ga., p. 133, “When a creditor who had taken a deed from
his debtor to secure a debt, pursued the Statute, sued his
claim to judgment, filed a deed reconveying to his debtor
the land in question, had his execution levied thereon and
the property was sold at judicial sale to him; after he ob-
tained the sheriff’s deed his title, legal and equitable, be-
come complete and indefeasible.” Crawford, et al vs.
Pritchard, et al 81 Ga., p. 14.

In the case of Bell Mining Company vs. Butte Bank, 156,
U. S., 470, the Court held,—“That the power of sale in the
indent” -e, whether we call it a deed of trust or a mortgage,
does not change its character as an instrument for the se-
curity of the indebtedness designated, but it is an additional
authority to the grantee or mortgagee, and if he does not
choose to foreclose the mortgage by the ordinary methods
provided by law, he can proceed under the power added to
the sale of the property, to obtain payment of the indebted-
ness.

“The insertion of a power of sale does not affect the mort-
gagor’s right to redeem so long as the power remains un-
executed, and the mortgage is not, as it may be, foreclosed

14

in the ordinary manner, but when a sale is made of the
interest of the mortgagor his right is wholly divested, em-
pracing his equity of redemption.”

In the case of Carrington vs. Citizens Bank of Waynes-
boro, 144 Ga., page 52, it was held,—“After the property
had been sold at the second sale and purchased by the gran-
tee in the security deed, under permission contained in the
deed to become a purchaser at the sale, the bidder at the
first sale had no right, on tender of his bid several days
thereafter, to demand its acceptance, and a conveyance of
the land to him by the purchaser at the second sale, who was
the grantee in the security deed.

“A sale under power in a security deed divests the title
of the grantor, and he has no legal right several days there-
after, on tender of the amount of the debt secured by the
deed to the grantee, who is the purchaser at the sale, to
demand a conveyance of the land or a cancellation of the
security deed.”

“Where a sale of land is made under a power contained in
a security deed, and by permission of the grantor contained
in the deed the grantee purchases the land at such sale, the
grantor can not defeat the purchaser’s right to have the sale
fully consummated, by tender of the amount of his indebt-
edness to the grantee before the actual execution of the deed
pursuant to the terms of the sale.”

The author of Jones on Mortgages (Sixth Edition at p. 6,
§1047, states that—“The right of redemption is barred by a
foreclosure properly made, except when a further right is
given by Statute,” upon authority of the following cases,
to-wit :

Weiner vs. Heintz, 17th Ill., 259;
Willis vs. McIntosh, Ga., Dec., 162;
Stoddard vs. Forbes, 16 Ia., 296;
Evans vs. Kahr, 60th Kan., 719;
Martin vs. Ward, 60th Ark., 510.

15

It will be seen upon the authority of Suttles vs. Sewell,
supra, that no statutory right of redemption, after judicial
sale under a mortgage foreclosure, exists in Georgia.

Then if the right of redemption is to be determined ac-
cording to the law of Georgia relating to ordinary mortgage
foreclosures, such right of redemption does not exist, and
if the point is to be determined upon the theory that the
security deed was a trust deed with a power of sale, and
that the proceeding bringing the property to sale was an
exercise of a power, then the right of redemption is de-
stroyed under the law as decided by this Court in the case
of Bell Mining Co. vs. Butte Bank, supra, and the cases of
Bank of Gutschlick, 14 Peters, 19, 29, and Morsel vs. First
Nationai Bank, 91 U. S., 357, 361.

SECTIONS 3306 AND 6037 OF THE GEORGIA CODE
DO NOT DENY TO A JUNIOR VENDEE DUE PROCESS
OF LAW, OR DEPRIVE HIM OF EQUAL PROTECTION
OF THE LAW, NOTWITHSTANDING THEIR FAILURE
TO MAKE HIM A PARTY TO A FORECLOSURE SALE.

Although a junior vendee is not a necessary party to a
foreclosure under the Sections above named this does not
deprive him of due process of law, because the judgr ent is
not conclusive against him and he can assert any rights
which he may have in the Courts of Georgia.

“The statutory foreclosure of a mortgage on realty does
not contemplate that a third person may defend, and a jun-
jor encumbrancer or subsequent purchaser is not a neces-
sary party to a foreclosure suit.”

Roberts vs. Atl. Cemetery Ass’n., 146 Ga., 490, 496;

Brooks vs. Lowry Natl. Bank, 141 Ga., 493.

16

But “the foreclosure of the mortgage to which the sub-
sequent purchaser is not a party, does not affect the right
of such purchaser.”

Howard vs. Gresham, 27 Ga., 347;
Williams vs. Terrell, 54 Ga., 462;
Osborne vs. Rice, 107 Ga., 281, 285;
Swift vs. Deerick, 106 Ga., 35;
Hinesley vs. Stewart, 139 Ga., 7.

The rule of law obtaining in Georgia in such cases is thus
stated in the case of Osborne vs. Rice, supra, “A purchaser
prior to statutory foreclosure who is not a party, is not
bound by the judgment, and may when the Fi Fa is levied
go behind the judgment and set up that the mortgage could
not be legally enforced against him.” The rule applied by
the Courts of Georgia is in exact accord with the ruie ap-
plied by the Supreme Court of the United States. Howard
vs. Railway Co., 101 U. S., 837; Brewster vs. Wakefield, 22
Howard, 118, 129.

While the judgment rendered in a case of a “foreclosure”
at which proceeding a junior vendee of the land is not a
party is not conclusive on such vendee, it is valid as between
the holder of the mortgage and the mortgagor, and a pur-
chaser at the foreclosure sale acquires the legal estate of
the mortgagor, and where no illegality exists in the fore-
closure proceedings, the sheriff’s deed is superior to the
deed executed by the mortgagor after the date of the mort-

gage.

Roberts vs. Atlanta Cemetery Assn., et al, 146 Ga., 490,
496.

While the foreclosure of the mortgage in which a sub-
sequent purchaser is not a party does not affect the right of
such purchaser, his remedy is not the right to redeem after

17

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the sale by tender of the debt secured by the mortgage or
security deed in the absence of some valid attack upon the
judgment of foreclosure in which some illegality must be
shown in the proceedings by which the judgment of fore.
closure was rendered. In other words, the person attacking
the judgment must set up some reason which he could have
urged at the trial under which the judgment was rendered
legally sufficient to have prevented the rendition of such
judgment if he had been a party to the proceedings.

If such legally defensive facts existed and he was not a
party to the foreclosure proceedings, he can, upon the ten-
der of the mortgage debt and the filing of a bill to cancel
the mortgage, or in the case of an attempted eviction under
the Sheriff’s deed, if he was in possession, or in support of
an action to recover the land, or in any other proceeding
affecting his interest in the land, show that the mortgage
was barred by the Statutes of Limitation at the time of the
foreclosure suit was filed, (Williams & Company vs. Terrell,
54 Ga., 462), or he may go behind the judgment rendered
in favor of the plaintiff and show that the debt for the pur-
chase price had been discharged before the suit was begun
(Washington Exchange Bank vs. Holland, 121 Ga., 305-7),
or he may show that the original mortgage or security deed
was void for uncertainty (Osborne vs. Rice, 107 Ga., p.
281).

It will be seen from these citations that while the law of
Georgia cuts off the equity of redemption as relating to a
junior purchaser of property transferred by security deed,
it preserves all of his rights to show that the judgment of
foreclosure was not valid, but before redeeming, he must
attack the judgment and show it to have been invalid.

A junior vendee under a security deed who was not a
party to the foreclosure proceedings, desiring to set up
rights under his junior conveyance as against the judgment
rendered in the foreclosure suit, is in the position of a party
attempting to open a default, and who must set up, in his

18

4 arre

re MONA e AT ce an ek as

motion, matters which would have been good if they had
been pleaded before judgment was rendered, and tender
payment of the secured debt. Stanbach vs. Thornton, 106
Ga., 81, 83; Palmer vs. Young, 96 Ga., 246; Mutual Loan
Co. vs. Haas, 100 Ga., 111.

The contention of the plaintiff in error narrows itself
down to the proposition that although she had no defense
to the foreclosure which she could have pleaded had she
been a party to the foreclosure proceeding, and has none
now if the case were reopened and she were made a party,
still her right of redemption persists for the mere naked
reason that she has never been a party to any judicial pro-
ceeding of foreclosure. This position is untenable—(a) Be.
cause, there was no privity of contract between her and
the holder of the security deed; (b) Because, she bought
subject to a contract which provided a method of foreclos-
ure without making a junior vendee a party; (c) Because,
under the loan deed and under her purchase of the prop-
erty subject thereto, the burden was upon her to prevent
default and keep informed as to any proceeding to fore-
close, which she could neglect to do only at her peril; (d)
Because, the Statutory method of foreclosure provided that
before the property could be levied upon for the satisfac-
tion of the loan, the holder of the security deed was required
to file in the office of the Clerk of the Superior Court,—
the Registrar of Deeds under the law of Georgia,—a quit-
claim deed for levy and sale, the record of which was con-
structive notice to junior vendees and to all the world of
the seizure of the legal and equitable title for a sale to be
had which would bar the right of redemption.

While the purchaser of what plaintiff in error denomi-
nates the equity in redemption is not technically bound
by the suit, judgment and proceedings to sell because he
was not a party, he bought knowing that the law did not
require, or make provisions for his being made a party,
(Georgia Code §6037) ; that the method of foreclosure was
within the competency of ihe State of Georgia to enact; that

19

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the Section of the Code under which the security deed was
made expressly provided a method of foreclosure only by
a suit against the original mortgagor, and in his present
suit he sets up no facts which he could have pleaded in de-
fense of a foreclosure if he had been a party.

A junior vendee having bought after the execution of a
security deed under Georgia Code, $3306 and subject to it,
and to the remedy provided in $6037, is in the position of
a person who has acquired an interest in a mortgagee’s
property after the commencement of suit to foreclose and is
represented by mortgagor. Hollins vs. Brierfield Coal &
Tron Co., 150 U.S. 371, 286;

Whether the junior vendee is bound by the judgment or
not, he can not redeem without showing that the Statute
was not observed in the proceeding to se'l and merely be-
cause he was not a party. His case is exactly like that of
a purchaser of land from one against whom there is an or-
dinary common law judgment. Such purchaser would not be
bound or estopped by the judgment, but if he could not
show a failure to comply with the law in the obtaining of
the judgment, the sheriff's sale under the judgment, would
pass a good title to the purchaser at the sheriff’s sale and
the Sheriff’s Deed would be superior to the deed of the
purchaser of the land who purchased it subject to the out-
standing common law judgment.

The whole argument on this branch of the case resolves
itself to the simple proposition that a proceeding between
A and B cannot be a denial of due process of law as to C
when the judgment in the proceeding does not conclude the
rights of C and where the Courts are open to C to have his
rights adjudicated whenever it may be necessary to the as-
sertion or preservation of his right.

ARGUMENT AND AUTHORITIES IN REPLY TO BRIEF
FOR PLAINTIFF IN ERROR

The Remedy provided under $6037 of the Georgia Code
Is a Substantive Right Under a Deed Given under the Geor-
gia Statute.

- 20

The general rule that the right to a particular remedy is
not a vested right is subject to the exception of those cases
in which the remedy is part of the right itself.

This exception is the controlling principle upon which
State laws so affecting the remedy which existed when a
contract was made, which by a change of the remedy con-
tracted for, impair or lessen the value of the contract, are held
to be void as laws impairing the obligations of the contract.
Planters Bank vs. Sharp, 6 How. 301; Seibert vs. Lewis,
122 U. S., 284. The obligation of a contract is impaired
whenever legislation lessens the efficiency of the means
which, at the time of making a contract, the law provided
for its enforcement as by postponing or retarding such
enforcement. Louisiana ex rel. Ranger vs. New Orleans,
102 U. S., 203; Louisiana vs. Pittsburg, 105 U. S., 301;
Louisiana vs. Jumel, 107 U. S., 750. As a State can not en-
act a law acting directly upon the terms of a contract, so
it can not pass a law professing only to regulate the remedy
when in fact it impairs the obligation of the contract.
Grantly vs. Ewing, 3 How., 707.

If a State Statute impairs a means provided by law for
the enforcement of a contract, at the time of its making,
it is unconstitutional and void. Louisiana ex rel. Nelso vs.
St. Martin’s Parish, 111 U. S., 716. The remedy provided
by a State law when the contract is executed can not be im-
paired by subsequent decisions of Courts any more than by
subsequent Statutes. United States ex rel. Butz vs. Musca-
tine, Wallace, 575.

It follows necessarily that if a remedy is so much a part
of the contract as that neither the legislative power by sub-
sequent enactments, nor the judicial power by construction,
can affect the remedy without impairing the obligation of
the contract that such a remedy is a substantive part of the
contract. The remedy provided for the holder of a debt
secured by a security deed under the Georgia Statute in
question is such a substantive portion of the original con-
tract of security.

21

In Pritchard vs. Norton, 106 U. S., on page 182, this
Court held that “The principal that what is apparently
mere matter of remedy in some circumstances, in others,
where it touches the substance of the controversy, becomes
matter of right, is familiar in our Constitutional jurispru-
dence in the application of that provision of the Constitu-
tion which prohibits the passing by a State of any law im-
pairing the obligation of contracts. For it has been uni-
formly held that “any law which in its operation amounts
to a denial or obstruction of the rights accruing by a con-
tract, though professing to act only on the remedy, is di-
rectly obnoxious to the prohibition of the Constitution.”
Citing: McCracken vs. Howard, 2nd, Howard, 608, 612.

“Hence it is that a vested right of action is property in the
same sense in which tangible things are property, and is
equally protected against interference. Whether it springs
from contract or from the principles of common law, it is
not competent for the legislature to take it away.”

A familiar example of such void laws are laws either ex-
tending or shortening the time for the redemption of lands
sold under executions or mortgage foreclosures.

Barnitz vs. Beverly, 163 U. S., 118.

In the case of Mutual Loan & Bonding Company vs. Haas,
et al, 100 Ga., p. 111, it was held that—“Where a debtor ex-
ecuted to a creditor a mortgage upon realty to secure a debt
and therein gave to the creditor a power of sale to be exer-
cised on default of payment, the sale to be had at public out-
cry before the Court House door, and after advertisement,
such power became a part of the security, and being con-
ferred for the purpose of effectuating the same, was not
revocable, either by the mortgagor or by the rendition of a
judgment against him in favor of another creditor. Where
on default of payment the mortgagee exercised the power by
selling the land this was equivalent to a sale under fore-
closure of the mortgage by a court of competent jurisdic-
tion, and a bona fide purchaser at the sale obtained title

22

free from the lien of judgments junior to the mortgage
though rendered before the exercise of the power.”

No better example of a vested substantial right created
by contract can be imagined than the right contracted for
in the case that upon default of the borrower the lender
shall find the entire estate, legal and equitable, in the hands
of the original borrower capable of being subjected to the
satisfaction of the debt and sold under the power given
under §6037 of the Georgia Code without subjecting the
borrower to the additional expense of searching for junior
vendees to whom the property may have been transferred
without notice to him, possibly on the very eve of foreclos-
ure, and who may be beyond the jurisdiction of the Court
having venue to entertain a suit against the borrower,
which junior vendees may in turn have transferred to oth-
ers, and thus set the lender upon an interminable, and per-
haps impossible, pursuit of elusive vendees.

THE TERM “EQUITY OF REDEMPTION” A MISNOMER
APPLIED TO A SECURITY DEED GIVEN
UNDER THE GEORGIA STATUTES

The term “Equity of Redemption” arose out of the prac-
tice of the Courts of Equity under the common law where
the law allowed no right of redemption and equity created
a right of redemption. The right being one created by
equity, it was properly denominated an “equity” of redemp-
tion and for the existence and nature of the rights the prac-
tice of the Courts of equity are to be looked to. In the case
of a security deed made under the Georgia Statutes, the
right to redeem is not an equitable right of redemption, but
is a “legal right of redemption,” and, in determining the
exik iature and extent of the right the creative stat-

ue is to be looked to. Hence, the decisions cited by
counsel for plaintiff in error in his brief on the subject of
the “equity of redemption” are of little relevancy.

28

PRIORITY OF JUDGMENT ON SECURED DEBT OVER
A TRANSFER OF SO CALLED EQUITY OF
REDEMPTION

Upon the rendition of a judgment upon a debt secured
by a security deed such judgment is a general, that is a per-
sonal judgment, against the defendant from the date of its
rendition, and upon the filing of a reconveyance for levy
and sale such judgment becomes a special lien upon the
land conveyed as security and takes precedence of an older
judgment rendered after the conveyance to secure the debt
was made.

McAlpin vs. Bailey, 76 Ga., 687,
Henry vs. McAllister, 93 Ga., 667,
Maddox vs. Arthur, 122 Ga., 671.

It is in accordance with long established legal principles
that a judgment may take effect as of a date prior to its
actual rendition. At common law, all judgments rendered
at a term of court took effect as of the first day of the term
and any one who purchased from the defendant in execu-
tion after the term of court opened, but before the judgment
was rendered, took subject to the lien of the judgment. The
Georgia Statute has simply adopted this common law prin-
ciple and has provided that a judgment on a note secured
by a loan deed shall take effect, not from the date of its
rendition, but from the date the loan deed was recorded.
This principle of law protects every one who may under-
take to deal with the borrower after the loan deed has been
recorded. The record puts him on express notice that should
judgment be rendered it will date back to the date of the
recording of the security conveyance. Such a judgment is
in no sense a lien against the transferee of the so called
equity of redemption. It does not bind any of his rights
but it does bind the property of the original borrower as
of the date the loan deed was recorded. This right of hav-

24

SOS HONE REIN sete ea PBL CAPITA AA RSA? ERENCE TY NEI N56 NS AEN NS ODES

ing the lien of his judgment date back is an essential part
of the lender’s security in the same way that a power of
sale is a part of the security.

It is not the judgment that divests the statutory right of
redemption, that right is not extinguished until the sale is
actually consummated and it is extinguished not by the
judgment, but by the sale. A sale upon a judgment of this
character necessarily cuts out the right of redemption of a
junior vendee. Until default in the security debt and until
the holder of the security debt has obtained his ‘udgment,
and thus obtained a special lien dat ng back to tre date of
the record of his security deed he olds the tit e pledged
to him as security immune from judgn:ents render d against
the debtor after the execution of his security deed and
against vendees of the borrower acquiring title to the equit-
able estate after the record of the security deed. After the
holder of the security deed has had his special lien so dat-
ing back to the record of his security deed, established as
a judgment of the court he can then safely transfer the
legal title to the maker of the security deed for the purpose
of levy and sale, because his prior special lien judgment is
superior to intervening judgments or transfers of the title,
and when the sale is made it destroys all rights under judg-
ments or transfers made after the record of the security
deed in the same way a sale under an older common law
judgment destroys the lien of subsequent judgments or
transfers.

Even after the sale the right of a junior vendee is not
necessarily extinguished because if the property at the sale
brings more than the amount of the judgment under which
the sale is made, the excess is payable to such junior ven-
dee. In other words, the Statute does not undertake to di-
vest the rights of the junior vendee, but merely to trans-
fer him to the fund produced by the Sheriff’s sale. The
prior lien on the fund being in the holder of the judgment
under the security deed, and if any excess remains the same

25

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is applicable to junior judgments or junior vendees. The
principle involved is that of a sale under a senior lien divest-
ing a junior lien or transfer.

CONCLUSION

The method of conveying property as security for a debt,
provided in §3306 of the Code has been the settled public
policy of Georgia for more than fifty years. The method of
foreclosure has existed for more than a generation. It con.
stitutes a basic law concerning the tenure and alienation of
lands in the State of Georgia, which the State had a right
to adopt, and for the protection of junior vendees and all
other persons interested in lands conveyed and sold under
these Sections of the Code the practice in Georgia gives
ample opportunity to every person having a right in such
lands to have his right adjudicated in the Courts of Georgia.
There is, therefore, no denial of due process of law, or any
failure to afford an equal protection of the laws.

Respectfully submitted,

WALTER McELREATH,
Attorney for Defendants in Error.

26

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Source: Frix Law Library, https://www.frixlaw.com/law-library/documents/brief%3Amicro_IA40386006_0522%3A2. Public record. Not legal advice.