O.C.G.A. § 18-2-2 (2019)

Annotations

JUDICIAL DECISIONS ANALYSIS GENERAL CONSIDERATION LIMITATION ON COMPULSORY ELECTION General Consideration

ris, 177 Ga. 53, 169 S.E. 349, 1933 Ga. LEXIS 111 (1933). When one creditor abandons claim against one fund. - When one creditor, in order to bring fund into court, abandons claim on other property, equity will not permit another creditor, who has claim on the money and also on the property relinquished, to take money, but will remand the creditor to the property, it being accessible to the creditor; especially so, when the creditor stood by, and took no part in a fight which resulted in a compromise verdict under which the fund was brought into court. Sims v. Albea, 72 Ga. 751, 1884 Ga. LEXIS 315 (1884). Impact on other lien holders and debtor considered. - When a creditor held a second priority security interest in real estate while a bank held a first priority security interest in promissory notes and the real estate, marshaling under O.C.G.A. § 18-2-2 was enforced by subrogation in favor of the creditor after consideration of the impact on other lienholders and on the Chapter 11 debtor. Customized Distib., LLC v. Coastal Bank & Trust Co. (In re Lee’s Famous Recipes, Inc.), No. 11-68463-BEM, No. 11-5482-BEM, 2013 Bankr. LEXIS 480 (Bankr. N.D. Ga. Jan. 24, 2013).

For illustration of application of statute, see Richardson v. Conn, 100 Ga. 39, 27 S.E. 978, 1896 Ga. LEXIS 530 (1896), overruled insofar as inconsistent with Love v. Goodson, 1920 Ga. LEXIS 19, 150 Ga. 46, 102 S.E. 429 (1920). Doctrine of two funds applies only when contending creditors have a common debtor. Carter v. Neal, 24 Ga. 346, 1858 Ga. LEXIS 210 (1858). Rule of this statute does not apply between debtor and creditor. Union Point Ginnery & Co. v. Harriman Nat’l Bank, 142 Ga. 727, 83 S.E. 657, 1914 Ga. LEXIS 524 (1914). Mortgagees cannot charge other mortgagees of equal rank with solvent collaterals unless those mortgagees have collected the collateral. Vance & Kirby v. Roberts, 86 Ga. 457, 12 S.E. 653, 1890 Ga. LEXIS 280 (1890). Limit on mortgage creditor’s rights as against transferee of tax execution. - In equity, mortgage creditor as against transferee of tax execution is not entitled to have satisfaction of mortgage debt with property the value of which exceeds indebtedness. Thompson v. Har-

upon an indemnifying bond from the debtor, which does not by its terms protect the creditor seeking to compel such election. Savannah Bank & Trust Co. v. Meldrim, 195 Ga. 765, 25 S.E.2d 567, 1943 Ga. LEXIS 560 (1943). Limit on scope of law in certain circumstances. - Equitable remedy of marshaling securities will not be so extended as to delay or inconvenience the creditor in collection of a debt secured by collateral notes by confining the creditor to particular collaterals at instance of one whose note is included among collaterals and who claims equitable set-off against the payee of the note. Hanesley v. National Park Bank, 147 Ga. 96, 92 S.E. 879, 1917 Ga. LEXIS 68 (1917). When two creditors, not two funds of one creditor, are involved. - When one creditor holds a claim against two persons, and another creditor holds a claim against one of those two, equity will not compel the former creditor to proceed against that one of joint debtors against whom the latter creditor has no claim, in order that the funds of the debtor may be applied exclusively to the payment of the debtor’s claim. Equity will never do this for the sake of the creditor who has a single claim, but will do it when it is equitable as between the two debtors that it should be done. Love v. Goodson, 150 Ga. 46, 102 S.E. 429, 1920 Ga. LEXIS 19 (1920). Applicability to detriment of third person with equity equivalent to that of invoking creditor. - This section was subject to limitation that such marshaling must not be applied to detriment of third person with an equity equal to or greater than that of creditor seeking to invoke the rule. Beneficiaries of homestead have such equity and interest in homestead estate as to be within protection of this limitation. Mulherin v. Porter, 1 Ga. App. 153, 58 S.E. 60, 1907 Ga. App. LEXIS 176 (1907). Doctrine of compulsory election style was inapplicable when sought to be applied to the detriment of a third person with an equity equal to or greater than that of the creditor seeking to invoke the rule. Northwest Atlanta Bank v. Manning, 193 Ga. 186, 17 S.E.2d 547, 1941 Ga. LEXIS 596 (1941).

Marshaling of assets. - Marshaling of all properties of five debtors was not warranted, in part, because the evidence did not support the argument that the five debtor entities were alter-egos of each other and should be treated as one for marshaling or other purposes. In re Bay Circle Props., No. Administered, 577 B.R. 587, 2017 Bankr. LEXIS 3870 (Bankr. N.D. Ga. 2017). Limitation on Compulsory Election Holder of mortgage, who purchased property in good faith. - Equity will not compel election by holder of mortgage, who purchased property in good faith, to protect the holder’s title. Georgia Chem. Works v. Cartledge, 77 Ga. 547, 1886 Ga. LEXIS 364 (1886). Mortgagees holding defeasible deed without power to sell judgment lien. - Fact that mortgagees sought to be postponed had defeasible deed to certain realty from the debtor, would not compel the mortgagees to relinquish the mortgagees’ lien upon money in hands of the sheriff to be distributed, and to proceed against the land, when the mortgagees had no judgment lien against the land, and it did not appear that the deed to them contained power authorizing them to sell the land for purpose of paying the debt. Vance & Kirby v. Roberts, 86 Ga. 457, 12 S.E. 653, 1890 Ga. LEXIS 280 (1890). When second fund located out of state. - Creditor having two securities, one within this state, and one beyond the state, will not, at instance of a competing creditor holding junior lien on former security, be driven out of state to exhaust the creditor’s security there before being allowed to proceed here. Denham v. Williams, 39 Ga. 312, 1869 Ga. LEXIS 211 (1869); Calloway v. People’s Bank, 54 Ga. 572, 1875 Ga. LEXIS 264 (1875). Limit on compulsory election. - Principles stated in former Code 1933, §§ 28-106 and 37-501 (see now O.C.G.A. §§ 18-2-2 and 23-1-24) did not mean that a creditor having priority against fund in court can be required to relinquish the creditor’s direct claim thereon, and proceed at the creditor’s own additional expense with delay in an independent suit