60 A.2d 820 | Pa. Super. Ct. | 1948
Argued April 14, 1948. Plaintiffs appealed from a decree sustaining preliminary objections to their bill in equity, upon which the court below ruled that "a court of equity has no jurisdiction and that the plaintiffs have a full, adequate and complete remedy at law."
Succinctly stated, the bill averred these facts: In 1928 David A. Hammond conveyed property to plaintiffs, husband and wife, subject to a mortgage given by *253 Hammond to the Keystone-Westmoreland Building and Loan Association, and plaintiffs gave their mortgage to Hammond for part of the purchase price. Later in 1928 plaintiffs conveyed to defendants, husband and wife, subject to the two mortgages which the grantees assumed and agreed to pay. In 1932 an execution was issued by the building association (whether upon a judgment on the bond or the mortgage does not appear), and at the sheriff's sale the property was purchased by, and conveyed to, the execution-plaintiff. The sale divested the lien of the second, the Hammond, mortgage. In 1933 the building association conveyed the property to one of the defendants, C. Edgar McDonald. Meanwhile the Hammond mortgage had been acquired by the Secretary of Banking, as receiver of the Bloomfield Trust Company of Pittsburgh, who in 1944 entered judgment against plaintiffs upon the accompanying bond.
The averment around which most of our discussion will revolve is: "The plaintiffs aver that the defendants, . . . defaulted in the payments due under said mortgage and acquiesced in said sheriff's sale fraudulently for the purpose of divesting said property of the lien of said second mortgage, and reacquiring title to the same free of said second mortgage, and for the purpose of avoiding liability which they had assumed by said deed. . . . Plaintiffs further aver that they were without knowledge either of said sheriff's sale or of the reconveyance of said property to the said C. Edgar McDonald until about two weeks prior to the filing of this bill. [January 6, 1946]"
Plaintiffs sought, and secured, a preliminary injunction restraining defendants from selling or encumbering the property, and seek a final decree subjecting it to the liens of the Hammond mortgage and the judgment of the Secretary of Banking.
Where a grantee accepts a deed containing an assumption of existing mortgages and agrees to pay them *254
he becomes personally liable for them, and his liability may be enforced in an action of assumpsit. Mercer's Est.,
Where, however, the grantor does not seek money damages, but presses for reinstatement of the lien of the mortgage which has been divested through the fraud or collusion of the grantee, he may sue in equity. Kennedy v. Borie,
The principles which rule the instant case are illustrated by two authorities we have cited. In the Kennedy case, supra, upon a demurrer to a bill, the Supreme Court ruled, in effect, that where one takes title to land subject to two mortgages, he cannot, at a subsequent sale under the first mortgage, buy in the property and hold it divested of the lien of the second mortgage. In that case the defendants bought at the sheriff's sale while here the building association bought. The difference, however, will not defeat plaintiffs' claim if the building association, even though it did not commit fraud, or join in it, nevertheless, pursuant to an arrangement with defendants, bought the property for them and subsequently conveyed it to one of them in furtherance of the agreement. Equity will not be thwarted by a wash sale.
In the Bowen case, supra, the holder of a third mortgage alleged that the foreclosure sale by which her mortgage was divested was a fraudulent and collusive arrangement between the holder of a prior encumbrance and the owner of the property having as its *256 objective the discharge of her mortgage. There, too, the owner, or its nominee representing the same financial interests, subsequently acquired title to property from the purchaser at the sheriff's sale. The chancellor "found that the foreclosure . . . and the conveyance . . . were made in good faith and were without fraud or collusion." The Supreme Court held that the evidence sustained the chancellor's conclusions, and affirmed the dismissal of the bill. But it cannot be doubted that had there been "positive proof of a combination to destroy the second lien" (p. 390), the plaintiff would have secured relief by having the lien of her mortgage reinstated. Mr. Justice BARNES stated the basis for relief at p. 389: "Here . . . the crucial question is. . . whether the Fuller executors [holders of the mortgage upon which the execution was issued] and the Boyd interests were in collusion to divest the liens of junior encumbrances." (Emphasis supplied.)
The case is not ruled by Rauch v. Dech,
Equity has jurisdiction of this controversy; the law cannot restore the mortgage as a lien and therefore does not afford an adequate remedy; and the decree must be reversed.
Appellees' argument adverted to the defective averments of the bill but they had not assigned this as a ground in the preliminary objections. Nevertheless, we think we should settle the contention. Plaintiffs charge that defendants "acquiesced in said sheriff's sale fraudulently . . ." Mere acquiescence in a sheriff's sale is not illegal or fraudulent. However, acquiescence founded upon a substantial expectation that after the execution the building association would convey to defendants does have significance, and when acquiescence proceeds from an agreement with the building association to convey divested of the Hammond mortgage it might be fraudulent. But an averment "acquiesced . . . fraudulently" is only an averment of a conclusion. Plaintiffs must aver the facts which constitute the fraud or collusion. Kittleberger and Evans v. Home Builders Co.,
In framing their bill, plaintiffs relied upon the Kennedy andBowen cases, but they misread them. It is true that in theKennedy case the bill charged *258 concealment only, and the Supreme Court refused to sustain the demurrer. But this may be attributed to the reluctance of the courts to turn a litigant out of court upon objections to a faulty averment of fraud. (See Custis v. Serrill, supra, p. 272). For the Court, in the Kennedy case, pointedly stated the only ground upon which a decree could be based, where it said (p. 365) that evidence was admissible "in support of the charge of acombination between Martin and the other defendants to destroythe lien of the plaintiff's mortgage." (Emphasis supplied.) It is from that source that Mr. Justice BARNES drew his interpretation of the Kennedy case in his opinion in the Bowen case. The Kennedy and Bowen cases differ in their facts and the legal expressions employed in them, and to that extent the Bowen case must be held to have modified the earlier case. At this stage of the proceeding, it would seem that the latter applies to the factual situation presented by the instant case. Our order will afford appellants an opportunity to amend their bill.
Pendency of other cases on the law side of the court below between the same parties involving the same assumption and promise, another point argued here but not raised by the preliminary objections, will not be considered on this appeal, except to form the basis of a caveat. If it should appear that the identical question has been raised in both forums, plaintiffs might be put to their election, even though equity and the law have concurrent jurisdiction. Findlay Hay v. Keim,
The decree is reversed, and the record is remitted to the court below for further proceedings not inconsistent *259 with this opinion; appellants may file an amended bill within 20 days after the record has been returned, subject to provisions of Equity Rule 49; costs to abide the final disposition of the cause.