Assigned Estate of Wilhelm

182 Pa. 281 | Pa. | 1897

Opinion by

Mr. Justice Fell,

The facts which are important in considering the question raised are briefly these: In 1893, J. S. Wilhelm made an assignment of all his property for the benefit of his creditors to the Commonwealth Guarantee Trust and Safe Deposit Company. The trust company at the time of the assignment held his promissory note payable on demand for $15,000, and as collateral security for its payment it held certain stocks and a judgment for $15,000, which was the first lien on his real estate. The company sold the stock collateral and realized from its sale June 5, 1895, the sum of $1,662.08 which was applicable to the debt secured by the note. As assignee it sold the real estate by direction of the court discharged of the lien of judgments. The sale was confirmed September 5, 1895, and the amount realized was more than sufficient to pay in full its judgment of $15,000 with interest, and the balance went in part payment of the judgments of the appellants, who were subsequent lien creditors. The company made no application of the amount received from the sale of the stocks or of the amount realized by the sale of the real estate, and before the auditor it claimed and was awarded interest in full on its note to the date of distribution, March 17, 1897.

The appellants, who are subsequent lien creditors, concede the right of the company to receive full payment of its note, but they claim that the amount realized from the sale of the stock collateral should have been credited on the note on the day of its receipt, and that the amount applicable to the payment of the collateral judgment should have been credited on the note on the day of the confirmation of the sale of the real estate, thus reducing the amount of the original claim on those dates and stopping the running of interest.

The company sold the stock held as collateral, not as assignee, but as pledgee. Its power under the terms of the pledge was to sell and to apply the proceeds to the payment of the note. This power it exercised, and it was bound to apply the proceeds at once. It could not, after converting the stock into money, hold the money as collateral and allow interest to run on the note. The power to sell was that it might pay the note, and when it sold and received the money its claim to that extent was extinguished. The real estate was sold discharged of liens by tbe assignee, not under its general powers as assignee, but by virtue of an order of court granted in pursuance of the provisions of tbe act of February 17, 1876, for tbe interest of all parties, and it received and held tbe proceeds in trust: First, for tbe lien creditors in tbe order of the priority of tbeir liens; and secondly, as to any balance after the payment of liens, for the general creditors. Tbe creditors whose liens were discharged were required to look to tbe fund, and interest on their claims ceased on tbe date of tbe confirmation of tbe sale: Carver’s Appeal, 89 Pa. 276; Bank’s Appeal, 96 Pa. 347. But they were entitled to tbeir money on tbe confirmation of tbe sale and tbe payment to tbe assignee: Bank’s Appeal, supra. Tbe whole fund realized from the sale did not pass to tbe assignee to await tbe audit and tbe order of distribution among all the creditors. That part of it .apportionable to liens which bad been discharged was demandable by tbe creditors entitled to it. This has been tbe uniform ruling as to sales under tbe act. In the opinion in Tomlinson’s Appeal, 90 Pa. 224, it is said : “ Tbe payment of so much of tbe purchase money as will be sufficient to satisfy tbe liens divested by tbe sale should be required at tbe time of tbe confirmation of tbe sale or soon thereafter.” And in Burkholder’s Appeal, 94 Pa. 522, it was held that where time bad been given for the payment of tbe instalments of purchase money tbe interest thereon should be divided pro rata among tbe ben creditors. The later act of June 10, 1881, requires tbe assignor to accept tbe receipt of a lien creditor who may become a purchaser for tbe amount which tbe record shows him entitled to receive. Tbe money apportionable to the collateral judgment held by tbe trust company was received by it in 1895. It was payable to it as a lien creditor at once. There was no denial of tbe validity of its judgments or dispute as to tbe priority of its lien. It received tbe money for its own use, and as a trustee for all of tbe creditors it was required in their interest to apply it to tbe discharge of its debt at once. Tbe assignments of error relating to this subject are sustained. In tbe computation of interest on tbe claim of tbe Commonwealth Guarantee Trust and Safe Deposit Company tbe amount received by it from tbe sale of stock held as collateral, and so much of tbe amount received from tbe sale of the real estate as was apportionable to its collateral judgment should have been credited as of the dates of their receipt, and it is now directed that this be done. The order of the court is reversed, and it is directed that distribution be made in accordance with this opinion.