Opinion
41679, 41680.
ARGUED JANUARY 10, 1966.
DECIDED JANUARY 20, 1966. REHEARING DENIED FEBRUARY 21, 1966.
Trover. Whitfield Superior Court. Before Judge Pope.
F. Kelly McCutchen, for appellant.
Walter H. Bolling, for appellee.
1. A general demurrer to an answer, or to particular paragraphs in an answer setting up affirmative defenses, may be filed at any time before verdict.
2. Though a defendant in a trover action may defend by showing title to be outstanding in a third party, this has no application in an action between the holder of a bill of sale to secure debt against the maker who alleges generally in his answer that title was outstanding in others to secure prior indebtedness, when it does not appear that any prior security instrument has been foreclosed and the maker continues in possession of the chattel.
3. An answer which sets out no legal defense and which does no more than deny allegations of the petition "as pleaded" is subject to general demurrer.
4. A creditor holding a bill of sale to secure debt on chattels may pursue them by way of trover, though the debtor may have discharged the debt in bankruptcy.
ARGUED JANUARY 10, 1966 — DECIDED JANUARY 20, 1966 — REHEARING DENIED FEBRUARY 21, 1966 — CERT. APPLIED FOR.
On September 3, 1963, Arvil Chastain executed to Consolidated Credit Corporation a note and bill of sale to secure debt for $186.60. The indebtedness was repayable in six monthly installments of $31.10 each, beginning October 3, and the instrument contained an acceleration clause by which the whole of the debt might be matured in the event of default in the payment of any installment, or in the event of grantor's bankruptcy. The installments were not paid and the balance was declared due on November 1. On November 13 Chastain filed his voluntary petition in bankruptcy, listing Consolidated Credit Corporation as one among his creditors holding security, and received his discharge February 7, 1964.
On December 9, 1963, Consolidated Credit Corporation filed a trover action against Chastain for the chattels listed in the bill of sale, attaching a copy of the bill of sale as an exhibit to the petition. It was alleged that the indebtedness secured was in default and that the defendant, Chastain, had refused to deliver up the property or to pay its value after demand therefor. The monthly hire was alleged to be $25.
Defendant demurred to the petition on the grounds that it did not appear whether plaintiff sought to proceed in contract or in tort, and that the petition failed to show the amount of principal, interest and other charges owing. These were overruled, and there is no exception.
He answered, admitting that the indebtedness was in default, denying all other allegations "as pleaded," and affirmatively pleaded that at the time of the execution of the bill of sale title to the chattels therein described was not in him but was outstanding in others to whom he had previously executed security instruments.
He also filed a plea in bankruptcy, attaching a copy of his schedule listing Consolidated Credit as a creditor and a copy of his discharge.
Plaintiff demurred generally to the answer and affirmative defenses set up therein and to the plea of bankruptcy on the grounds that these constituted no legal defense to the trover action. The demurrer to the plea was sustained, but the demurrer to the answer was overruled as to paragraph 1 and sustained as to paragraph 5.
Errors enumerated by appellant are that the court erred: (a) in sustaining the plea to the discharge in bankruptcy, (b) in sustaining the general demurrer to paragraph 5 of the answer and (c) overruling defendant's motion to dismiss the demurrers because filed late.
On cross appeal the appellee asserts that the court erred in overruling its demurrer to paragraph 1 of the defendant's answer.
1. First, we consider whether there was error in the denial of defendant's motion to dismiss or strike plaintiff's demurrers because filed after the time provided in Code Ann. § 81-301: "All demurrers of the plaintiff to the defendant's answer or other pleas shall be filed within 15 days after such defensive pleadings are filed." The time limit for filing refers to special demurrers, for at any time before verdict a party may move orally or in writing to strike (thus generally demur to) the petition or the answer. Niemeyer v. Dougan, 31 Ga. App. 99 (7) ( 119 S.E. 544); Bigelow-Sanford Carpet Co. v. Goodroe, 98 Ga. App. 394, 398 (2) ( 106 S.E.2d 45). It is no less a general demurrer because addressed to a single paragraph of the answer. Ayers v. Young, 210 Ga. 441, 442 ( 80 S.E.2d 801). The demurrers being general, the motion was properly denied.
2, 3. In paragraph 1 of the petition plaintiff alleged that the defendant, a resident of the county, was in possession of certain personalty, particularly describing it and the plaintiff "now claims title to this property which has a value of $186.60, see copy of loan note and bill of sale which is hereto attached, marked Exhibit A, and made a part of this petition."
In his answer defendant asserted that "paragraph one [of the petition] is denied as pleaded." This, standing alone, is evasive and constitutes no denial of the paragraph. Code § 81-308; Midland R. v. Webb, 20 Ga. App. 237 ( 92 S.E. 972). Cf. Crump v. Bank of Toccoa, 41 Ga. App. 505, 509 ( 153 S.E. 531). But in this connection, and "Further answering said paragraph the defendant states that title to this property was not held by him at the time of this transaction, but was outstanding to secure other prior indebtedness, all of which was well known to the plaintiff."
Is this sufficient as a denial of plaintiff's title, and is it sufficient as a plea that title to the property was outstanding in a third party? We do not think so. Certainly there is at least a negative pregnant in the reference to "this transaction" sufficient to amount to an admission that the defendant had conveyed title to the plaintiff by execution of the bill of sale, copy of which was attached. Cf. Holston Salt c. Co. v. Hargis, 73 Ga. 113 (a); Coile v. Finance Co. of America, 221 Ga. 584, 585 ( 146 S.E.2d 304); Blalock v. Georgia R. c. Co., 228 F 296 (142 CCA 588, AC 1917A 679). Nor do we think it sufficient as a plea that title was outstanding in a third party. Defendant simply alleges that at the time he executed the bill of sale to plaintiff the title "was outstanding to secure other prior indebtedness." Whether this may have been good as against a general demurrer if the issue depended upon whether plaintiff held title at that time is not necessary to decide; the issue is whether plaintiff held title, or had the right of possession, at the time suit was filed. For aught that appears in defendant's answer the "other prior indebtedness" may have been fully paid prior to the filing of this suit, in which event plaintiff's title would have become complete, as against the defendant. Code §§ 38-114, 29-111. Cf. Code Ann. §§ 109A-9-503, 109A-9-504. To be effective as a plea that title was outstanding in a third party the defendant should have alleged facts showing that it was outstanding at the time suit was filed. Hulsey v. Interstate Life c. Co., 207 Ga. 167 (2) ( 60 S.E.2d 353); Brunswick c. R. Co. v. Clem, 80 Ga. 534, 536 ( 7 S.E. 84).
It is true that "a defendant may always defend a trover action by showing that the plaintiff does not have title or right of possession" ( Propes v. Todd, 89 Ga. App. 308, 315 ( 79 S.E.2d 346)), and "[t]he plaintiff in trover must recover on the strength of his own title [if he seeks to recover on the basis of title]. An outstanding title in a third person may be shown by the defendant, and will defeat a recovery" ( Central Bank v. Georgia Grocery Co., 120 Ga. 883, 885 ( 48 S.E. 325), and see Bridges v. Shirling, 26 Ga. App. 279 (2) ( 105 S.E. 862); Harrison v. Morris, 108 Ga. App. 566 (1) ( 133 S.E.2d 899)), but this paragraph of the defendant's answer falls short in pleading that title to the described chattels was not in the plaintiff when suit was filed.
Plaintiff urges, as an additional reason why a general demurrer to the answer was good as against this paragraph, its right to proceed on the basis of a right of possession to the chattels, even if title had previously been conveyed to another as security for indebtedness. It is alleged that the defendant had defaulted in the payment of his indebtedness to plaintiff. "The owner of property who conveys by a bill of sale to secure a debt owing by him to a creditor is in the same legal situation as one who purchases property from a vendor who retains title until the purchase price is paid; in both situations the right of possession depends upon compliance with the terms of the contract. The interest of the creditor extends no further than his special property, which is the amount of the unpaid debt. Likewise, the interest of the debtor extends no further than his own special property or equity in the subject matter, which is a right of possession during his compliance with the provisions of the security instrument, and a right to a reconveyance of title upon the discharge of his obligations thereunder." Jones v. Brown, 108 Ga. App. 776, 781 ( 134 S.E.2d 440). For a full and complete review of the authorities dealing with the problem of when trover will lie, see Livingston v. Epsten-Roberts Co., 50 Ga. App. 25 ( 177 S.E. 79). The Uniform Commercial Code (effective January 1, 1964) makes provision as to the right of the holder of a security instrument to possession of the chattel upon default by the maker. Code Ann. § 109A-9-503. One who has the right of possession may recover the property from one who wrongfully deprives him of possession, although a third person may hold legal title by a bill of sale to secure debt. Livingston v. Epsten-Roberts Co., 50 Ga. App. 25, 28, supra.
Paragraph 2 of the answer, though neither admitting nor denying when the installments of his indebtedness became in default, does admit that "They are in default." This amounted to an admission of the allegation that they defaulted November 1, 1963.
Paragraph 3 of the petition alleged that the defendant refuses to deliver up the goods or to pay the value thereof after repeated demands upon him for delivery thereof and in answer the defendant denied the allegation "as pleaded." Does he deny that he has refused to deliver up the goods, or is he denying that demand was made? In paragraph 4 plaintiff alleged that it was entitled to monthly hire of $25, and defendant denied that allegation "as pleaded." Does he deny that the monthly hire is $25 or is he denying that plaintiff is entitled to the hire? Cf. Juchter v. Boehm, Bendheim Co., 63 Ga. 76, 77; Brunswick c. R. Co. v. Clem, 80 Ga. 534, 536, (supra); Crow v. McCallum, 215 Ga. 692, 694 ( 113 S.E.2d 203). These denials were evasive and insufficient. Midland R. v. Webb, 20 Ga. App. 237, supra; Thomas McCafferty v. Siesel, 2 Ga. App. 663 ( 58 S.E. 1131).
In paragraph 5 of his answer defendant alleged that "the security taken by this plaintiff did not give him any paramount title nor right of possession thereof . . . plaintiff's purported lien was and is inferior to other encumbrances outstanding, and plaintiff was on notice of the existing facts." It is insufficient, for reasons stated above, and for the additional reason that it does not purport to plead that title was outstanding in a third party — only referring to plaintiff's lien as being inferior to other encumbrances.
4. Plaintiff's demurrer to the defendant's plea in bankruptcy was properly sustained. Although the defendant may have received his discharge, his creditor is nevertheless entitled to pursue the property to which title is held under a bill of sale to secure debt. Citizens Bank v. Mullis, 161 Ga. 371 ( 131 S.E. 44); Lester v. Southern Security Co., 168 Ga. 307 ( 147 S.E. 529); Nash Loan Co. v. Yonge, 182 Ga. 672 ( 186 S.E. 811); Stephens v. Southern Discount Co., 105 Ga. App. 667 ( 125 S.E.2d 235). Compare Crystal Laundry c., Inc. v. Continental Finance c. Co., 97 Ga. App. 823 ( 104 S.E.2d 654), reversed in 214 Ga. 528 ( 105 S.E.2d 727).
Judgment affirmed on appeal; reversed on cross appeal. Bell, P. J., and Jordan, J., concur.