Conway v. Caswell, 121 Ga. 254 (Ga. 1904)

Simmons, C. J.

The parties were having constant dealings, so that it was uncertain what would be the balance due at the time of the debtor’s death. In 1875, therefore, G. W. Conway transferred his life policy to T. D. Caswell " as collateral . '. to the extent of such interest as he [Caswell] may have when said policy becomes a claim.” T. D. Caswell died in 1887. G. W. Conway-died in 1903. His heirs insist that the debt secured, having become' barred before the death of Conway, could not, under the Civil Code, §3433, be paid by his representative; that the debt did not exist, and therefore by the very terms of the transfer neither the estate nor transferee of Caswell had any “ interest ” “ when the policy became a claim.”

1. Treating the case as unaffected by the judgment rendered in 1890, and as controlled by the written transfer of March, 1875, the question presented is not essentially different from that involved in the many decisions holding that though the debt be barred the creditor may still avail himself of the security. In some States, and now probably by statute in England, it has been held that the mortgage or other form of security is a mere incident to the debt, so that when the latter is barred the principal claim ceases to exist, leaving nothing to which the incident can attach. But the general current of authority is to the contrary. The text-writers and most of the cases hold that in creating the debt and in giving the security the debtor made two contracts and contracted for two remedies: one on the debt, the other on the security; that the debt itself was not extinguished by the statute, which only barred the remedy thereon; that notwithstanding the operation of the statute of limitations the debt continued, not only as a moral obligation, but as a legal claim so far as to furnish a consideration sufficient to support a new promise; that the claim therefore remained in existence as a principal debt to which the security still attached as an incident; and hence that the remedy on the security might be made effective, even though the remedy on the main debt was barred. And as an additional reason it would seem that the rule might be properly sustained upon a consideration of the very essence of the contract of hypothecation. It is intended to secure payment. The security may therefore be held until the debt is paid, not simply until it is barred. See, on the subject generally, Ware v. Curry, 67 Ala. 285; Coleb. Col. Sec. (2d ed.) §101; 1 Wood on Lira.. 62; 13 Am. & Eng. Ene. L. (1st ed.) 705; 21 L. B. A. 550, and note. Nor is the rule limited to mortgages. It has been applied to deposits or pledges of personal property: Jones on PI. and Col. Sec. (2d ed.) § 582; to the vendor’s equitable lien: Harden v. Boyd, 113 U. S. 765; to a lien on a judgment: Higgins v. Scott, 2 Barn. & Adol. 413; to a wharfinger’s lien for general balance: Spears v. Hartley, 3 Esp. 81; to the lien of a corporation on the shareholder’s stock: Farmers Bank v. Iglehart, 6 Gill. 50; Reading Trust Co. v. Reading Iron Works, 137 Pa. 282; to pledges of stocks and negotiable bonds: Hancock v. Franklin Ins. Co., 114 Mass. 155; Hartranft’s case, 153 Pa. St. 530; Roots

v. Salt Co., 27 W. Va. 484; and to the case where a note was transferred as security: Shipp v. Davis, 78 Ga. 201 (5). Notwithstanding some conflict in the cases elsewhere, in this State the right of the creditor to retain possession, and to sue on the security, though the main debt be barred, is not onjy recognized in Elkins v. Edwards, 8 Ga. 325, Shipp v. Davis, 78 Ga. 201 (5), and Allen v. Glenn, 87 Ga. 415, but it is also expressly provided in the Civil Code, § 2735, that the creditor may avail himself of the mortgage or other security, even though the evidence of debt is barred. Of course the remedy on the mortgage, collateral, pawn, or other form of security must be brought in due time and in.due form. If the debt is barred and the creditor holds an absolute deed as security, he may maintain ejectment thereon, but can not obtain a money judgment. Duke v. Story, 116 Ga. 88. So, if the right of action on the main debt, and on the security have both been barred, the creditor is defeated. But in the present case the cause of action on the policy was not so barred; for the right to sue did not arise until the death of Conway in 1903. Any lawful holder of the policy as collateral was therefore authorized to maintain a suit against the-insurance company, and to retain the policy or the proceeds thereof against the assignor, Conway, and his representatives, until the debt secured, with interest and premiums, was satisfied.

2. The same result follows, in so far as the case is affected by the decree entered in 1890, whereby a judgment in personam was rendered against Conway, it being further decreed that, to the-extent of the principal and interest, and for premiums paid or to be paid, the estate of Caswell held a valid and legal title to the policy. The proceeding was like that under the Civil Code, §2770’, whereby, in addition to the foreclosure, a personal decree ' may be rendered against the mortgagor. Clay v. Banks, 71 Ga. 363 (4 a), 374. Such decrees, or those similar-thereto, may be resolved- into their component parts. The mere money decree or judgment in personam therein (Civil Code, §§4861, 3761) may become barred or dormant without affecting that part of the decree which is against specific property. For, as to the judgment in personam or the money decree merely, the lien arises by operation of law, and must be enforced within the time limited by statute. But the .very purpose of a specific decree is to estab

iish and permanently fix upon the particular property some incumbrance, burden, interest, estate, or right arising from a lien, contract, obligation, or trust which antedated the decree. This part of the decree and the rights thereunder are not within the operation of the dormancy statute. Wall v. Jones, 62 Ga. 728; Cain v. Farmer, 74 Ga. 38; Fowler v. Bank of Americus, 114 Ga, 417; Butler v. James, 33 Ga. 150. This is manifest when it is considered that the general object of such a decree is to establish the titles of one party to a particular property. To say that the decree became dormant and his right terminated at the end of seven years would be to make temporary that which had been definitely fixed. The same is true where specific property is charged with the payment of a given debt, as on the foreclosure of a mortgage. Butt v. Maddox, 7 Ga. 498. The rule is notably applicable in this case, because' the title of Caswell’s estate to the policy, while settled by this decree, was worthless unless the holder was entitled at the maturity of the policy to' collect the funds. Until the death of the assured the remedy could not be applied nor the collateral made effective.

Of course, in all cases where a mortgage has been foreclosed or a debt has been charged by decree on specific property, lapse of time may be considered, in connection with the situation of the parties and all the other circumstances, in determining whether the debt so charged has not been paid. Milledge v. Gardner, 33 Ga. 397.

3-5. The policy must therefore be treated as collateral and enforceable, even though the debt and the personal judgment into which it has been merged are both barred. Bank v. Guttschlick, 14 Pet. 19. The only remaining question, then, is whether in this case the representatives of Conway can recover the proceeds of the policy by attacking the transfer to Mrs. Caswell. It is manifest that the title to the policy, as collateral, is either in Warren, administrator, or in Mrs. Caswell as subtransferee. In no event could it revest in Conway, or in the plaintiffs in error as his representatives, until the payment of the debt for which it was pledged, and which now amounts to more than twice the face of the policy. Whether, therefore, the collateral belongs to the estate of Caswell or to his widow is wholly immaterial to the present plaintiffs in error. In interpleaders both claimants are in a posi

tion similar to that of plaintiffs in other possessory actions, where the recovery must be on the strength of their own title rather than on the weakness of their adversary’s title. Civil Code, §5004. But beyond this, the plaintiffs in error have failed to show wherein the title of Mrs. Caswell, as transferee, widow, and an heir at law of T. D. Caswell, is not superior to their title as heirs at law of G. W. Conway. The court properly decreed that under the pleadings and evidence the title was in the subtransferee regardless of the question as to whether the assignment in 1890 was for a consideration, or in consequence of the sale not having been had at public outcry. There was in fact a transfer to her. G. W. Conway consented thereto, and acquiesced therein for more than twelve years before his death, during which time Mrs. Caswell was in possession of the policy, paying the premiums thereon. Certainly as against the plaintiffs in error a decree in her favor was demanded by the evidence.