45 Pa. 172 | Pa. | 1863
Tbe opinion of the court was delivered,
by
The appellant is the holder of a mortgage upon the real estate, the proceeds of the sale of which are now in court for distribution. The mortgage was given on the 29th of September 1852, and was for original purchase-money. It was not recorded until September 5th 1858. After it had been given, Thomas H. Wentz recovered a judgment against the mortgagor, which was signed on the 17th day of September 1856; another judgment was recovered against the mortgagor on the 17th of February 1857, by Bean & Wentz, of which firm Thomas H. Wentz is a member. A third judgment was recovered on the 22d of December 1857, against the same defendant, by Wells Tomlinson. There are still other judgments o-n the record, but they have no interest, in any possible event, in the questions now presented for decision. They need not, therefore, be particularly mentioned. The real estate bound by the mortgage and judgments was sold on the 5th of November 1860, by virtue of an execution issued upon the judgment of Bean & Wentz, and the question now litigated is whether the mortgage of Mrs. Britton has priority over the judgments in the distribution of the fund raised by the sheriff’s sale. It is an established fact that Thomas H. Wentz had actual knowledge of the mortgage to Mrs. Britton, not only when the judgments were entered, but before the debts were contracted for which the judgments were given. Does such knowledge supply the want of an earlier record of the mortgage ? It is conceded that distribution must be made among lien-creditors. At the time when the sheriff’s sale was made, both the mortgagee and the judgment-creditors had liens, but, as among themselves, which must be preferred ?
In the distribution of the proceeds of sheriff’s sales, the court from which the execution issued is empowered to determine disputes “according to law and equity:” Act of 16th June 1836, § 86, P. L. 777. We are therefore to consider not merely the legal rights, but the equities of the litigants. Regarding it as a mere lien, the mortgage of Mrs. Britton would be postponed to the judgments of Wentz and Bean & Wentz, for it was not recorded until after their liens had attached, but it is also to be considered whether there are not equities between the parties that should make a difference, and whether the mortgage is to be treated as only a lien.
Through the whole history of recording acts, they have been regarded, both in this state and in England, where they originated, as designed to furnish protection against those frauds which, without them, would easily be perpetrated by secret conveyances. They are, in effect, statutes of frauds, and they have
So our Act of 1715 enacted that no deed or mortgage, or defeasible deed in the nature of mortgages, thereafter to be made, should be good or sufficient to convey any freehold of inheritance, or to grant any estate therein for life or years, unless such deed be acknowledged or proved, and recorded within six months after the date thereof, where such lands lie, as thereinbefore directed for other deeds. Such was, in substance, the eighth section, early held applicable only to mortgages. Notwithstanding its letter, it was from the first construed, as the British statutes had been, to apply only to such unrecorded mortgages as are unknown to a subsequent purchaser. In other words, it was held to be for the benefit of those only who, without it, would be defrauded by a mortgage of which they had no notice. Thus in Levintz v. Will, 1 Dall. 430, where the contest was between the holder of an unrecorded mortgage and the mortgagor, the instrument was held valid, and the judgment was supported by the consideration that the intent of- the act was to prevent honest purchasers or mortgagees of real estate from being deceived by prior secret conveyances or encumbrances. Chief Justice McKean said: “ The legislature did not mean, nor have they in fact enacted, that express personal notice, when given, should have no effect. Neither could they entertain an idea of defeating fair and honest bargains which do not injure other persons.” In Stroud v. Lockhart, 4 Dall. 153, an unrecorded mortgage was held to be good against a subsequent purchaser from the mortgagor, with knowledge of the existence of the mortgage. The same doctrine was maintained in Jaques v. Weeks, 7 Watts 261, when Judge Kennedy said that he was not aware of even a dictum that would militate against it until, 1821; then Semple v. Burd, 7 S. & R. 286, was decided, wherein it was ruled that an unrecorded mortgage is not a lien as against subsequent judgment-creditors. No question was raised as to what would be the effect of an unrecorded mortgage against a judgment-creditor who knew at the time he gave credit and took his judgment, of the existence of the prior mortgage. It was not pretended that the judgment-creditor had any notice. It was therefore a case strictly at law. There was nothing to raise any equity in the mortgagor against the latter encumbrancers. It was contended that the Act of 1715- interfered with the lien of the mortgage only as against purchasers, but two members of the court held (Judge Gibson not sitting), that judgment-creditors were within its protection. The fundamental reason given was, that under the act no estate passed by the mortgage unless it was recorded. The contrary was, however, ruled in Levintz v. Will, as well as in Stroud v. Lockhart, and perhaps also in Parker v. Wood, 1 Dall. 437.
There is no ansAver to this unless it is found in the peculiar provisions of the Act of Assembly of March 28th 1820. That act declared that all mortgages, except those given for purchase-money, shall, have priority, according to the date of recording the same, and that no mortgages except those for purchase-money, shall be a lien until it shall have been recorded, or left for record. Unlike the Act of 1715, it does not declare the unrecorded mortgage void. It attempts only to limit the commencement of its lien. Under the Act of 1715, the lien related back to the date of the mortgage, if it was recorded within six months thereafter. Under the modern statute it begins only with the record. Now, if a mortgage is a mere lien, then, because the statute declares that this shall not exist till the instrument is recorded, judgments previously entered have priority. But if it be also a partial sale, then, unless the statute forbids it, and excludes the rule that notice of absolute sales unrecorded puts them on the footing of recorded sales as to all who have the notice, why is it not good against a subsequent creditor with notice ? That mortgages are sales, and that they must be therefore Avithin this doctrine, is shoAvn by many cases. Mortgagees are purchasers as between each other; i. e., a subsequent mortgage recorded is postponed to a prior mortgage unrecorded, of which the second mortgagee had notice: 7 W. & S. 339. They are purchasers as against subsequent purchasers absolutely with notice. They are purchasers under powers to sell. They are Avithin the recording acts as to assignments of the same security to different parties. They are in form defeasible sales, and in substance grants of specific security, or interests in land for the purpose of security. Ejectment may be maintained by a mortgagee, or he may hold possession on the footing of ownership, and with all its incidents. And though it is often decided to be
This is not forbidden by the Act of 1820. That touches only the lien, not the estate. Like its predecessor of 1715, it is a statute of frauds, and upon it has been engrafted the doctrine that only purchasers for value, or creditors, can intervene. As to the former, it is not denied that they must be without notice, or their claim to the property would be fraudulent. A general creditor, without bargain or value given, can be in no better position. It follows that the court erred in postponing the mortgage of the appellant to the claim of the judgment-creditors, who had notice of the mortgage, before the debts were contracted for which they obtained their judgments.
We are clearly of opinion that the proof of acknowledgment of the mortgage was sufficient to warrant its being put upon the record as it was. It need hardly be said that the only contest here is between the appellant and Bean, and Bean & Wentz.
The decree of the District Court is reversed, and the report of the auditor is confirmed.