177 A. 581 | Pa. Super. Ct. | 1934
Argued October 18, 1934. On December 29, 1921, Edgar B. Hall, who was the owner of twenty shares of stock in Auto Building Loan Association, hereinafter called Auto Association, under two different books, or certificates, for ten shares each, maturing at different times, borrowed $4,000 from said building and loan association, giving his bond secured by a building and loan association mortgage on premises No. 129 North 63d Street, Philadelphia, as security, and as additional security assigned to the association, as collateral, his twenty shares of stock aforesaid. One certificate for ten shares matured of the value of $2,000, which was credited by the association on the principal of the mortgage. *107
On June 24, 1932, alleging a default in the payment of dues, interest and premiums for six months and more, Auto Association entered judgment on the bond against Edgar B. Hall, to No. 4239 June Term 1932 in the Court of Common Pleas No. 1 of Philadelphia County, and on July 1, 1932 the damages were assessed at $2,525.97. No appropriation was then made or has been made since by Auto Association of the value of the stock assigned to it as collateral security for the loan as aforesaid.
On April 6, 1927, Edgar B. Hall delivered to the St. Thomas Catholic Temperance Building and Loan Association his bond and warrant in the sum of $2,000, secured by a second mortgage on said premises No. 129 North 63d Street, and by an assignment of ten shares of stock in said St. Thomas Association as additional collateral security. This bond and mortgage and the accompanying collateral security were duly assigned to Power Building Loan Association, hereinafter called Power Association. On March 1, 1934 judgment was entered on this bond against Edgar B. Hall to No. 9800 December Term 1933 in the Court of Common Pleas No. 1, and damages thereafter assessed at $2,547.49. A fieri facias was issued on this judgment and the mortgaged premises were on April 2, 1934 sold by the sheriff to Power Association for $50, — subject to the first mortgage of Auto Association. The sheriff's deed was executed and acknowledged on April 9, 1934 and was recorded on April 20, 1934. The advertisement of said sheriff's sale announced that the premises would be sold "subject to mortgage of $2,360."
In the meantime, on March 29, 1934, Edith B. Derkin, who was the sister of Edgar B. Hall, and who had from time to time, since July, 1932, advanced him money to pay his building and loan dues, interest and premiums to Auto Association, as well as on other accounts, *108
sent to the secretary of Auto Association a written assignment, dated March 1, 1934, by Edgar B. Hall to her of his ten shares of stock in Auto Association, represented by book No. 757, 20th series — being the ten shares held by Auto Association as additional collateral security —, expressly recognizing that this assignment was subject to the prior assignment to Auto Association as collateral security for its bond and mortgage. The secretary of Auto Association, on April 3, 1934, returned this assignment in a letter to Mrs. Derkin's attorney, with the request that "the enclosed power be executed in its place." He desired an assignment which appointed himself, as secretary of the association, attorney to make the transfer, instead of a straight assignment as the first paper was. By a mistake, which he admitted, he named as the transferee, `Edith B. Hall,' which was Mrs. Derkin's maiden name, and in designating the stock to be assigned, he wrote `Book 757 for 10 shares of 20 series of stock of Good Investment Building Loan Association,' an association of which he was also secretary. His letter of April 3, 1934 is, however, proof positive that the association had notice of the assignment to Mrs. Derkin on March 29th. That the assignment did not comply with the provisions of the by-laws, as to being signed in the secretary's presence, is, in this appeal, of no moment. The secretary of Auto Association did not object to it on that ground; and in this contest between Mrs. Derkin and a third party, it must be recognized as valid. "The by-law relating to assignment and transfer of stock is a regulation among stockholders and is not applicable here": Citizen's National Bank v. Irvin B. L. Assn.,
The by-laws of Auto Association provide: "Shares on which loans have been made upon real estate security may be transferred subject to the rights of the association" (Art. IV, sec. 6).
This is really a contest between the appellant, Mrs. Derkin, and Power Association. The only interest of Auto Association, as expressed in its paper book filed in this court, is that it may receive the money due it on its bond and mortgage and be protected against any adverse claims by either of the other parties. It specifically "submits itself to whatever order the court sees fit to make and indicates its willingness to comply with such order, provided, that if it is to assign or satisfy the mortgage and/or judgment, it be paid $363, together with proper costs of assignment or satisfaction. The controversy in the present case is entirely between Edith B. Derkin and the Power Building Loan Association, and it is, therefore, suggested to the *111 court that costs incident to the case should not be assessed against the Auto Building Loan Association." As before stated, Auto Association has never appropriated the value of the stock formerly held by Edgar B. Hall and now owned by Mrs. Derkin to the payment of its bond and mortgage.
The principles which govern in the marshalling of assets or in subrogation are those of equity. "The doctrine of subrogation is of purely equitable origin; its application is always controlled for the promotion of justice; it will never be enforced, therefore, to defeat a superior or even an equal equity in another": Robeson's App.,
Strictly speaking, Power Association has little, if any, equity that merits consideration. It purchased Hall's real estate at sheriff's sale on an execution issued by itself, subject to Auto Association's first mortgage of $2,000 and interest, amounting at the time of sale to $2,360. It is well settled that it had no legal or equitable right to demand or require that the value of Hall's stock should be applied to the reduction of Auto Association's bond and mortgage. A host of decisions of the Supreme Court and of this court establish this statement of the law. It is not necessary to refer to all of them. The following will suffice: Link v. Germantown Bldg. Assn.,
The course contended for by this appellant preserves to all parties their respective rights as they existed when Power Association become the owner of the real estate subject to Auto Association's mortgage. (1) Auto Association would receive full payment of its loan as represented by its judgment and accompanying mortgage, free of costs, which is all it has a right to ask. (2) Mrs. Derkin would receive the value of her stock subject to the rights of the prior assignee, Auto Association, as above stated. (3) Power Association would hold the real estate subject to the mortgage lien with which it was encumbered when it purchased it and subject to which it became the owner of the property; it would not be obliged to pay one cent more for the real estate than it, in effect, agreed to pay when it purchased it at sheriff's sale and received the deed therefor. Had Edgar B. Hall conveyed the real estate to Power Association under and subject to the first mortgage it would have been obliged to repay to Hall any money which he was obliged to pay Auto Association on account of the principal of its first mortgage, notwithstanding the Act of June 12, 1878, P.L. 205; Green v. Allegheny Bldg. Assn.,
If the position taken by Power Association and approved by the court below should prevail, the rights and equities of the appellant, Mrs. Derkin, as they existed when the sheriff conveyed the real estate to Power Association, would be greatly reduced, while those of Power Association would be correspondingly increased. Between $1,600 and $1,700 of the value of Mrs. Derkin's stock would be used to pay a mortgage on real estate which had been conveyed to Power Association subject to its lien; and on the other hand Power Association would obtain the real estate for $1,600 to $1,700 less than it, in effect, agreed to pay; that is, it would be permitted to apply $1,600 to $1,700 of Mrs. Derkin's money for its benefit to the relief of the land owned by it, which land was the primary fund for the payment of the mortgage.
The learned president judge of the court below frankly admitted that his disposition of the rule seemed, "at first blush," to be in conflict with some of the cases cited above, to wit, Selikowitz v. Merchants B. L. Assn.,
But the main error of the court below was in overlooking the distinction between Robeson's Appeal and the present case on the facts. Robeson's Appeal had to do with liens on two different tracts of land, owned by a man named Graham. The Hale tract, which was bought in 1864 was subject to a purchase money mortgage followed by Woods' judgments and Robeson's mortgages. In 1875 Graham bought the Decatur tract and when Woods revived his judgments they became a first lien on the Decatur tract. Myers subsequently took a mortgage on the Decatur tract. Both tracts of land were sold at sheriff's sale at the same time on executions which discharged all liens. When Myers took his mortgage on the Decatur tract he could see from the record that Woods' judgments were liens on both tracts and should have known that Robeson, whose lien covered only the Hale tract, could require Woods, whose liens covered both tracts, to have recourse first to the Decatur tract, to the benefit of Robeson, rather than Myers. As the court said, speaking through Mr. Justice CLARK: "The appellants [Robesons] acquired against Graham, the mortgagor, the right to have his other lands, not included in the mortgage, applied first to the payment of the earlier judgments which were liens against them. This right it was not in the power of the mortgagor to defeat by confessing judgments to other creditors or by contracting subsequent debts." But this rule, which is applicable to liens on different tracts of real estate belonging to the same debtor — liens which need no act of appropriation by the creditor to make them effective — does not apply to building and loan association stock held as collateral security, as to which the law is settled that an appropriation must be made before it can be applied as payment on the loan. Besides, *118
personal property which is pledged as security for one loan cannot be held even by the pledgee as security for a later loan, without an agreement to that effect: Appeal of Penna. Co., 18 W.N.C. 469. See also Herr v. Lancaster Trust Co.,
The appellant here is not a meddler nor mere volunteer. The stock assigned by Hall to Mrs. Derkin may be said to be a `real surety' for the debt due to Auto Association. See Zusin v. Wharton Business Men's B. and L. Assn.,
One other position taken by the court below needs some discussion. The learned judge was of opinion that the assignment here sought was prohibited by section 9051 of the Building Loan Code of 1933 (Act of May 5, 1933, P.L. 457). We are of opinion that the section relied on refers to thevoluntary sale or transfer by a building and loan association, of a `share mortgage' on real estate owned by its shareholder; that the `owner of the real property' intended to be protected, is the shareholding owner, whose rights would be seriously affected by a transfer which might have the effect of converting it into a straight mortgage, or, at least, not permit him to pay off the mortgage by the matured value of shares paid in over a number of years. So far as Power Association is concerned the mortgage is no longer a `share mortgage.' But in any event the section cannot be invoked to prevent a court, having due regard to the equities of the case, from making an equitable order relative to the assignment of a judgment, which will do justice *120 and preserve the rights of the parties, merely because the bond, on which the judgment was obtained, is also secured by a mortgage on real estate.
The assignment of error is sustained. The order is reversed, and the record is remitted to the court below with directions to enter an order in accordance with this opinion, requiring Auto Building Loan Association, upon the receipt by it from Edith B. Derkin of such sum of money, as together with the value of the ten shares of stock of the 20th series, (Book 757) originally issued to Edgar B. Hall, but now owned by Edith B. Derkin, will fully pay and satisfy the loan or indebtedness of Edgar B. Hall to said association, together with all costs and assignment charges, to assign, transfer and set over to the said Edith B. Derkin the judgment to No. 4239 June Term 1932, Common Pleas No. 1 of Philadelphia County and the mortgage accompanying the bond, on which judgment was entered, to wit, mortgage for $4,000, reduced to $2,000, covering premises 129 North 63d Street, Philadelphia, dated December 29, 1921, recorded in Mortgage Book J.M.H. 2247, p. 267.
Costs on this appeal to be paid by intervening appellee, Power Building Loan Association.