O.C.G.A. § 9-5-6 (2019)

Annotations

JUDICIAL DECISIONS Creditors without lien cannot enjoin their debtors from disposing of property, nor obtain injunction or other extraordinary relief in equity. Cubbedge & Hazelhurst v. Adams, 42 Ga. 124, 1871 Ga. LEXIS 19 (1871); S. Mayer & Co. v. Wood, March & Co., 56 Ga. 427, 1876 Ga. LEXIS 310 (1876); Kimbrell v. Walters, 86 Ga. 99, 12 S.E. 305, 1890 Ga. LEXIS 190 (1890); Smith v. Manning, 155 Ga. 209, 116 S.E. 813, 1923 Ga. LEXIS 40 (1923); Tanner Grocery Co. v. Stewart, 157 Ga. 412, 121 S.E. 416, 1924 Ga. LEXIS 63 (1924); Hermann v. Mobley, 172 Ga. 380, 158 S.E. 38, 1931 Ga. LEXIS 99 (1931); Newton v. Newton, 178 Ga. 192, 172 S.E. 462, 1934 Ga. LEXIS 6 (1934). Rights of creditors. - Equity will not enjoin a defendant from the free disposal of the defendant’s property on the application of a creditor who sets up no lien

upon or title to the property, and who presents no other equity than the creditor’s simple fear that when the creditor reduces the creditor’s claim to judgment, the creditor will not be able to find property on which to levy it. Dortic v. Dugas, 52 Ga. 231, 1874 Ga. LEXIS 265 (1874); Fullerton Cotton Mills, Inc. v. Butler, 208 Ga. 521, 67 S.E.2d 722, 1951 Ga. LEXIS 425 (1951). A general creditor cannot enjoin the receiver of a court from paying over to the creditor’s debtor the fund held by the debtor until such creditor can obtain a judgment. Spence v. Solomons Co., 129 Ga. 31, 58 S.E. 463, 1907 Ga. LEXIS 297 (1907). Creditors who have not reduced their demands to judgment, and who have no lien otherwise, cannot, as a general rule, enjoin their debtors from selling or dispos-

ing of their property. Keeter v. Bank of Ellijay, 190 Ga. 525, 9 S.E.2d 761, 1940 Ga. LEXIS 506 (1940). Although creditor may in one action proceed for judgment on a debt and to set aside a fraudulent conveyance made by a debtor, still, under this section, creditors who have not reduced their demands to judgment, and who have no lien otherwise, cannot, as a general rule, enjoin their debtors from selling or disposing of their property. Lawrence v. Lawrence, 196 Ga. 204, 26 S.E.2d 283, 1943 Ga. LEXIS 320 (1943) (see O.C.G.A. § 9-5-6). As a general rule, creditors without a lien may not enjoin their debtors from disposing of property or obtain other extraordinary relief in equity, such as the appointment of a receiver. Irwin v. Willis, 202 Ga. 463, 43 S.E.2d 691, 1947 Ga. LEXIS 479 (1947). Where defendant, acting as agent for a community action program, negotiated for the purchase of five buses from plaintiff, the program paid defendant $111,176, defendant paid $10,000 to plaintiff before delivery of the buses, and, at delivery, gave plaintiff a check for $94,322 which was dishonored by the drawee bank, and before trial the trial court ordered defendant to pay the sum of $94,322 into the court registry and found the defendant in contempt of court for failing to pay the funds pursuant to the court’s order, the trial court’s order of payment of a debt was contrary to principles of equity, as the evidence presented did not fall within the bounds of an exception to O.C.G.A. § 95-6. Prosser v. Hancock Bus Sales, Inc., 256 Ga. 399, 349 S.E.2d 460, 1986 Ga. LEXIS 890 (1986). Creditor by note not reduced to judgment has no lien. Virginia-Carolina Chem. Co. v. Provident Sav. Life Assurance Soc’y, 126 Ga. 50, 54 S.E. 929, 1906 Ga. LEXIS 311 (1906). Creditor holding judgment lien is not prevented from enjoining debtor from disposing of property. Grossman v. Glass, 239 Ga. 319, 236 S.E.2d 657, 1977 Ga. LEXIS 897 (1977). Creditors holding “no return” executions not entitled to injunction. - Creditors holding “no return” executions, which might have been levied but were

not, were not entitled to injunction and appointment of receiver. Dodge v. Pyrolusite Manganese Co., 69 Ga. 665, 1882 Ga. LEXIS 289 (1882); Scott v. Jones, 74 Ga. 762, 1885 Ga. LEXIS 394 (1885); Barnesville Mfg. Co. v. Schofield’s Sons Co., 118 Ga. 664, 45 S.E. 455, 1903 Ga. LEXIS 654 (1903); McKenzie v. Thomas, 118 Ga. 728, 45 S.E. 610, 1903 Ga. LEXIS 668 (1903); Spence v. Solomons Co., 129 Ga. 31, 58 S.E. 463, 1907 Ga. LEXIS 297 (1907); Atlanta & C. Ry. v. Carolina Portland Cement Co., 140 Ga. 650, 79 S.E. 555, 1913 Ga. LEXIS 211 (1913); Wilson v. Ward, 149 Ga. 325, 100 S.E. 205, 1919 Ga. LEXIS 234 (1919); Ayers v. Claridy, 149 Ga. 498, 101 S.E. 292, 1919 Ga. LEXIS 289 (1919); Mackie Constr. Co. v. Smith, 150 Ga. 97, 103 S.E. 414, 1920 Ga. LEXIS 54 (1920); Battle v. Royster Guano Co., 153 Ga. 122, 111 S.E. 656, 1922 Ga. LEXIS 31 (1922). Laborer’s lien is sufficient to support injunction. Orton v. Madden, 75 Ga. 83, 1885 Ga. LEXIS 73 (1885). Where creditor has lien on only part of property, injunction can only be had against property subject thereto. Dennard v. Farmers’ Merchants Bank, 149 Ga. 590, 101 S.E. 672, 1919 Ga. LEXIS 335 (1919). There are exceptions to general rule. - While, as a general rule, creditors without lien cannot enjoin debtors from disposing of property, there are exceptions where the circumstances render the rule inapplicable. Goodroe v. C.L.C. Thomas Whse., 185 Ga. 399, 195 S.E. 199, 1938 Ga. LEXIS 443 (1938). Former Civil Code 1910, § 5479 (see O.C.G.A. § 9-8-3) (appointment of receiver to protect assets of debtor), was exception to rule of former Civil Code 1910, § 5495 (see O.C.G.A. § 95-6) which stated that creditors without liens generally cannot enjoin their debtors from disposing of property. Isaac Silver & Bros. Co. v. Kalmon, 175 Ga. 244, 165 S.E. 434, 1932 Ga. LEXIS 227 (1932). Exception where property fraudulently obtained or transferred. - An exception to the general rule is where insolvent debtor is fraudulently transferring the debtor’s property to one in complicity with the debtor, who is disposing of

the property, or where property is obtained by fraudulent representations. Sands v. Marburg, 36 Ga. 534, 1867 Ga. LEXIS 85 (1867); Albany & Renssellaer Iron & Steel Co. v. Southern Agric. Works, 76 Ga. 135, 1886 Ga. LEXIS 2 (1886); Lawrence v. Lawrence, 196 Ga. 204, 26 S.E.2d 283, 1943 Ga. LEXIS 320 (1943); Peoples Loan Co. v. Allen, 199 Ga. 537, 34 S.E.2d 811, 1945 Ga. LEXIS 342 (1945); Mitchell v. Hayden, Stone, Inc., 225 Ga. 711, 171 S.E.2d 280, 1969 Ga. LEXIS 623 (1969). Where goods purchased are being assigned to person with notice who is disposing of them, equity will interfere. Cohen & Co. v. Morris & Co., 70 Ga. 313, 1883 Ga. LEXIS 329 (1883). A case for equitable interference is made on part of the seller, notwithstanding there is no lien or judgment where one purchases property on account by fraudulent representations, gives mortgage on it to third person, and the goods are being sold under it. Wolfe v. Claflin, 81 Ga. 64, 6 S.E. 599, 1888 Ga. LEXIS 63 (1888). Trial court’s order directing that funds be transferred into the registry of the court to ensure that the funds would be available should certain parties prevail in a lawsuit violated O.C.G.A. § 95-6. Patel v. Alpha Inv. Properties, Inc., 265 Ga. 597, 458 S.E.2d 476, 1995 Ga. LEXIS 501 (1995). An employer whose employee had opened a competing business and taken the employer’s trade secrets and confidential information had an adequate and complete remedy at law because it could recover money damages from the employee if the employee removed funds from the employee’s competing business that rightfully belonged to the employer. Therefore, under O.C.G.A. §§ 9-5-6 and 23-1-4, a trial court erred in requiring the employee to deposit the business’s funds into the registry of the court. Coleman v. Retina Consultants, P.C., 286 Ga. 317, 687 S.E.2d 457, 2009 Ga. LEXIS 700 (2009). In rem proceeding against realty of nonresident debtor attempting to hinder creditor. - A court of equity will seize real estate located in this state, owned by a nonresident thereof, at the instance of a resident creditor of such

debtor, and will cancel deeds by such debtor to a nonresident made to hinder, delay, and defraud the creditor, and will sell the property and apply the proceeds to the payment of debts of the nonresident debtor due to the resident creditor, although the creditor has no lien on such real estate or present interest therein. Reid v. Gordon, 173 Ga. 168, 159 S.E. 708, 1931 Ga. LEXIS 289 (1931). Cancellation of fraudulent conveyances. - Petition brought against a judgment debtor and other defendants, alleging that they entered into a conspiracy in bad faith to hinder, delay, or defraud the petitioner in the collection of the petitioner’s two judgments, and that in pursuance of such conspiracy various properties of the judgment debtor were secreted and fraudulent conveyances were made, and seeking to set aside such fraudulent conveyances and the appointment of a receiver and other relief, stated a cause of action against the four defendants. Peoples Loan Co. v. Allen, 199 Ga. 537, 34 S.E.2d 811, 1945 Ga. LEXIS 342 (1945). Petition charging that defendant husband was seeking to place his property where it could not be reached by his wife (his judgment creditor) presented a situation where upon proof a court could grant prayers for setting aside alleged fraudulent conveyance and transfer to out-ofstate resident, as well as alleged fraudulent claims of lien for attorneys’ fees, and for appointment of a receiver to take charge of defendant’s assets and, under the direction of the court, sell enough to pay the petitioner the amount now due under her two judgments. Peoples Loan Co. v. Allen, 199 Ga. 537, 34 S.E.2d 811, 1945 Ga. LEXIS 342 (1945). Conveyance to spouse to defraud creditors will not be restrained at instance of general creditors, although the court should retain jurisdiction and investigate in the final hearing the whole case, and decide upon all the equities arising thereon. Turnipseed v. Kentucky Wagon Co., 97 Ga. 258, 23 S.E. 84, 1895 Ga. LEXIS 356 (1895); Logue & Co. v. Gardner, 152 Ga. 356, 110 S.E. 25, 1921 Ga. LEXIS 90 (1921); Lowry Co. v. Kilpatrick, 157 Ga. 91, 120 S.E. 772, 1923 Ga. LEXIS 369 (1923). Creditors of dissolved corporation. - Where a corporation is dissolved, and

there are creditors having claims which they are entitled to have satisfied out of the assets of the corporation, a creditor of the corporation may invoke the aid of a court of equity to aid the creditor to enforce the creditor’s claim so that the creditor may collect what is due the creditor or that proportion of the amount due the creditor in view of the comparative amount of the assets of the corporation and the claims of creditors. Elliot v. Macauley, 177 Ga. 96, 169 S.E. 358, 1933 Ga. LEXIS 123 (1933). Receiver properly denied. - Lender’s contention that, if the lender was not a shareholder in the restaurant business at issue, then the lender was a creditor of the business, did not furnish any additional basis for the appointment of a receiver, where the lender had made no showing of insolvency, waste, mismanagement, or other danger of loss or injury. Patel v. Patel, 280 Ga. 292, 627 S.E.2d 21, 2006 Ga. LEXIS 150 (2006). Lien on school district draft on taxes collected. - Where creditor with lien title or interest in property had a right to equitable relief where bank loaned money to school district for current expenses and in return school district gave a draft on taxes collected, to be paid out of district taxes, for this was an equitable assignment. Baggerly v. Bainbridge State Bank, 160 Ga. 556, 128 S.E. 766, 1925 Ga. LEXIS 208 (1925). General creditor cannot enjoin mortgage on ground that it was given on after-acquired property. Peyton v. Lamar, 42 Ga. 131, 1871 Ga. LEXIS 20 (1871). General rule not applicable where claim based on contract of settlement. - Principle that creditors without a lien may not as a general rule obtain

injunction or other extraordinary relief in equity was inapplicable to action for specific performance, injunction, and receivership where, plaintiff did not sue as a creditor, but alleged that all accounts between the parties had been settled, and that by virtue of a contract of settlement the plaintiff was entitled to a certain parity check upon its issue and delivery to the defendant. Reid v. McRae, 190 Ga. 323, 9 S.E.2d 176, 1940 Ga. LEXIS 457 (1940). Guarantee who took no security for guarantor’s undertaking could not have receiver appointed before the breach for there is only possibility of breach. Guilmartin v. Middle Ga. & A. Ry., 101 Ga. 565, 29 S.E. 189, 1897 Ga. LEXIS 269 (1897). Insured creditor cannot enjoin debtor from transferring or encumbering property because of breach of promise to give a specific security for the loan of money. Authur v. Bank of Ball Ground, 146 Ga. 719, 92 S.E. 205, 1917 Ga. LEXIS 469 (1917). Homestead waiver note. - Where a creditor has a homestead waiver note not reduced to judgment, and the debtor goes into bankruptcy where homestead is set aside, the creditor may obtain judgment in equity and have a receiver appointed, since bankruptcy prevents action at law. Bell v. Dawson Grocery Co., 120 Ga. 628, 48 S.E. 150, 1904 Ga. LEXIS 659 (1904). Revivor of dormant judgment. - Where creditors are lienholders by virtue of a judgment of the superior court reviving a dormant judgment, such lien dates from the date of the judgment of revival. This being so, the case predicated on the judgment reviving the dormant judgment does not fall within the general rule as stated in this section. Carter v. Martin, 165 Ga. 890, 142 S.E. 277, 1928 Ga. LEXIS 85 (1928) (see O.C.G.A. § 9-5-6).

RESEARCH REFERENCES Am. Jur. 2d. 21 Am. Jur. 2d, Creditors’ Bills, § 4 et seq. 42 Am. Jur. 2d, Injunctions, § 24.

C.J.S. 43A C.J.S., Injunctions, § 120 et seq.