Morris Eckels Co. v. Fulton Natl. Bank

Full title: MORRIS ECKELS CO. v. FULTON NATIONAL BANK et al

Court: Supreme Court of Georgia

Date published: Jul 9, 1951

65 S.E.2d 815 (Ga. 1951)

65 S.E.2d 815

Opinion

17516.

ARGUED JUNE 12, 13, 1951.

DECIDED JULY 9, 1951.

Equitable petition. Before Judge Pharr. Fulton Superior Court. April 17, 1951.

I. A. Blanch, for plaintiff.

Smith, Kilpatrick, Cody, Rogers McClatchey, Powell, Goldstein, Frazer Murphy, J. Winston Huff, and Elliott Goldstein, for defendants.

While the law does not require a description of chattels in a mortgage that will identify the property without the aid of parol evidence, yet, to impart constructive notice to third parties, a recorded mortgage is insufficient where the description is too general to identify the exact chattels without the aid of extrinsic evidence, and the court here properly sustained the general demurrers of the defendants, who are bona fide purchasers for value.

No. 17516. ARGUED JUNE 12, 13, 1951 — DECIDED JULY 9, 1951.

This is an equitable petition based on a prayer for equitable foreclosure and a money judgment against the defendants in the event the sale of the unattached chattels does not satisfy the debt. The petition alleges: On April 17, 1947, and on July 17, 1947, Fur Service Inc. gave the plaintiff two chattel mortgages on certain personal property to secure a debt, and these mortgages were duly recorded. On November 12, 1948, Fur Service Inc. executed to Fulton National Bank a loan deed, which was subject to a prior loan deed of Reconstruction Finance Corporation executed June 22, 1946, and prior to the chattel mortgages of the plaintiff. The second loan deed was duly recorded and covered all or some of the chattels covered by the chattel mortgages. On January 3, 1950, there was a foreclosure of the second loan deed, and, on information and belief, it is alleged that in the sale of the real estate the bank sold the chattels covered by the plaintiff's mortgages. The property was bid in by the defendants Isaacson and Rinzler, who transferred their bid to Southern Fur Service Corporation, another defendant, which purchased the property, and which is now alleged to be in possession of the realty and the chattels. Paragraph 19 of the petition as amended alleges on information and belief that the chattels have been attached to the realty at 169 Courtland Street, but have not lost their identity and can be detached without material injury to the realty. Paragraph 38 as amended then alleges that Southern Fur Service Corporation claims that the chattels are attached to the realty and refuses to recognize the plaintiff's interest therein; but the plaintiff denies the truth thereof and claims that its liens on the chattels have not been lost or subordinated to the rights of the defendants. By amendment the plaintiff added paragraph 38-a, which stated that, if the chattels have lost their identity and have become an inseparable part of the real estate as defendants contend, this was caused by the defendant Fur Service Inc., without the consent or knowledge of the plaintiff, and it would be unjust and inequitable to deprive the plaintiff of its property to the enrichment of the defendants. The petition as amended further alleges that, if the chattels have become an inseparable part of the realty, the value of the same has been enhanced and the plaintiff should be compensated to the extent of his mortgage up to the value of the chattels. There are other allegations, some of which are that there was no adequate remedy at law, that the chattel mortgages should be foreclosed in equity, that the defendants should be restrained and enjoined from changing or altering the status of the chattels, and that equity should assume jurisdiction to avoid a multiplicity of suits. General demurrers filed by Fulton National Bank, Southern Fur Service Corporation, and Louis Isaacson were sustained and the petition dismissed as to these defendants. The exception here is to that judgment.

DUCKWORTH, Chief Justice.

A mortgage must specify the property upon which it is to take effect. Code, § 67-102. And the words "to specify" have been described in Stewart v. Jaques, 77 Ga. 365 ( 3 S.E. 283) as meaning "to point out, to particularize, to designate by words one thing from another." While the law does not require such a description as will identify the property without the aid of parol evidence, yet the words of such description — although sufficient to create a lien — may be insufficient, through the recording of the mortgage, to impart notice to third parties. Stewart v. Jaques, supra; Nussbaum v. Waterman, 9 Ga. App. 56, 59 ( 70 S.E. 259); Reynolds v. Tifton Guano Co., 20 Ga. App. 49, 50 ( 92 S.E. 389); Cairo Banking Co. v. Citizens Bank, 63 Ga. App. 692 ( 11 S.E. 806). Here, it is not our intention to pass upon the sufficiency of the mortgages as liens, but merely to determine, as a matter of law, whether or not the description therein, without the aid of parol evidence, was sufficient to give notice to the defendants, there being no allegations in the petition as to actual notice. As the description of property depends upon its nature, it must be sufficient to distinguish the property from other goods of the same sort; and, if the description is altogether general, such that the mortgaged property can not be separated from the general mass of similar articles, the requirement of the law is not met. See Thomas Furniture Co. v. T. C. Furniture Co., 120 Ga. 879 ( 48 S.E. 333); Stewart v. Jaques, supra; Crine v. Tifts, 65 Ga. 644; Bennett v. Green, 156 Ga. 572 ( 119 S.E. 620); Milner Banking Co. v. Adair McCarty Bros., 18 Ga. App. 575 ( 90 S.E. 170). The mortgages created a lien for the benefit of the plaintiff and apparently covered various pieces of fur-storage equipment, the description of which designates each individual article in general terms, which somewhat describes the use of the article and, in some cases, lists a descriptive name which may be that of the manufacturer, but it does not distinguish the items from others of like nature, nor does it give the location of the chattels or any other information by which they could be properly identified. Therefore, the recorded mortgages here were insufficient to impart notice to the defendants, since the description of the chattels was too general to specify the exact chattels and no information was given as to their location. It follows that the defendants here were bona fide purchasers for value without notice of the mortgages, and the court did not err in sustaining their general demurrers to the petition and in dismissing the same as to them. Code, § 37-111.

But counsel for the plaintiff in error, in the supplemental brief, insists that in paragraph 38-b of the amended petition there were allegations of actual notice. However, in reading this paragraph it appears that it is based on the mere conclusions of the pleader and, in effect, no allegation is made of actual notice. Further, the pleadings therein are in the alternative, and this court has held in numerous decisions that, on demurrer, such pleadings will be given that construction which is most unfavorable to the pleader. Baggett v. Edwards, 126 Ga. 463 ( 55 S.E. 250); Fraser v. Smith, 136 Ga. 18 (2) ( 70 S.E. 792); Central of Ga. v. Tapley, 145 Ga. 792 (3) ( 89 S.E. 841); Doyal v. Russell, 183 Ga. 518 ( 189 S.E. 32). Here the alternative expression, "they have known . . or by the exercise of reasonable care ought to have known by examining the mortgages and the premises," is obviously no more than the opinion of the pleader that an examination of the mortgages and premises would have informed the defendants of the plaintiff's liens. It can not be shown by examining the mortgages and the premises that the plaintiff in error had a lien on the property sold to the defendants, for, as ruled above, extrinsic evidence would be necessary. It follows from the above that there is no positive allegation of actual notice which could be attributed to the defendants.

Judgment affirmed. All the Justices concur.