Lead Opinion
This appeal arose from four separate, yet substantively similar, lawsuits filed by the county recorders in Delaware, Chester, Bucks and Berks Counties and their respective Counties (collectively, the Recorders). Pursuant to Pa.R.C.P. 213.1 (Coordination of Actions in Different Counties), the suits filed by the Delaware, Chester and Bucks County Recorders were coordinated in the Court of Common Pleas for Delaware County in April 2015, and the suit filed by the Berks County Recorder was coordinated into the Delaware County action in October of 2015.
All deeds, conveyances, contracts, and other instruments of writing wherein it shall be the intention of the parties executing the same to grant, bargain, sell, and convey any lands, tenements, or hereditaments situate in this Commonwealth, upon being acknowledged by the parties executing the same or proved in the manner provided by the laws of this Commonwealth, shall be recorded in the office for the recording of deeds in the county where such lands, tenements, and hereditaments are situate. Every such deed, conveyance, contract, or other instrument of writing which shall not be acknowledged or proved and recorded, as aforesaid, shall be adjudged fraudulent and void as to any subsequent bona fide purchaser or mortgagee or holder of any judgment, duly entered in the prothonotary's office of the county in which the lands, tenements, or hereditaments are situate, without actual or constructive notice unless such deed, conveyance, contract, or instrument of writing shall be recorded, as aforesaid, before the recording of the deed or conveyance or the entry of the judgment under which such subsequent purchaser, mortgagee, or judgment creditor shall claim. Nothing contained in this act shall be construed to repeal or modify any law providing for the lien of purchase money mortgages.
21 P.S. § 351.
A virtually identical challenge to the MERS® System was already proceeding in the United States District Court for the Eastern District, filed in 2011 by the Recorder of Deeds for Montgomery County, Pennsylvania, Nancy Becker (the Federal Action). The Federal Action was a putative class action complaint against MERSCORP seeking a declaratory judgment and permanent injunction establishing MERS members failed to record mortgage assignments in violation of Section 351. In 2012, the District Court held Section 351 creates a mandatory obligation on the рart of MERS and its members to record documents memorializing the transfer of promissory notes. Montgomery Cty. v. MERSCORP, Inc. ,
On August 3, 2015, the Third Circuit Court of Appeals reversed the District Court's decision and held Section 351 does not create a mandatory duty to record all land conveyances. Montgomery Cty. v. MERSCORP Inc. ,
A divided Commonwealth Court reversed.
In addition, the majority held Section 351 does not confer any authority upon the Recorders to enforce Section 351. Id. at 968, citing Montgomery Cty.,
We granted the Recorders' petition for allowance of appeal on the following issues:
(1) Whether the Commonwealth Court erred in ruling that [MERSCORP] may systematically evade Pennsylvania's land recording statutes, including 21 P.S. § 351, and not record many thousands of conveyances in the Offices of the Recorders of Deeds across the Commonwealth?
(2) Whether the Commonwealth Court erred in ruling that Recorders of Deeds and Counties do not possess standing or a right of action to pursue claims against Respondents that have deliberately engaged in a course of conduct that undermines the public land recording system and is without precedent in the long history of Pennsylvania's recording laws?
MERSCORP, Inc., v. Delaware County, Recorder of Deeds et. al ,
We turn first to the Recorders' argument Section 351 mandates the recording of all conveyances, including all mortgages and mortgage assignments. The Recorders emphasize the plain language of Section 351, which provides "all ... conveyances ... shall be recorded in the [appropriate county] office for the recording of deeds." Appellants' Brief at 19, citing 21 P.S. § 351 (emphasis added). The Recorders observe Pennsylvania adheres to the "title theory" of mortgages, which "deems a mortgage to be a conveyance." Id. at 21, citing Pines v. Farrell ,
Additionally, the Recorders rely on the history of recording statutes to support their argument the General Assembly's use of the word "shall" should be read to mandate recording in the Counties in every instance. The Recorders observe a system for local recording of land transfers was established in 1715, and once that local system was established, the General Assembly amended the law to mandate recording of deeds, conveyances, and mortgages in the country recorder's office within six months of execution. See Appellants' Brief at 22, citing Act of March 18, 1775, 1 Sm. L. 422 (App. 13) (the Enrollment Act). The Recorders also refer to the General Assembly's enactment of additional legislation in 1841 (Section 441) which required the recording of all deeds or conveyances which were executed before the 1775 mandate came into effect. Id. at 23, quoting 21 P.S. § 441 ("It shall be the duty of all persons who claim any lands ... in this commonwealth ... bearing date previously to the act of 18th March 1775 ... to have the same recorded, in the proper county, in the manner now provided by law ..."). The Recorders thus conclude the General Assembly has historically required the recording of all conveyances (which would include the mortgages and mortgage assignments at issue here) in the Counties,
The Recorders find further support for their position in Section 356 of Title 21, which provides an interest in real property "shall be recorded in the office for the recording of deeds in the county or counties wherein such real properly is situate." Id. at 24, quoting 21 P.S. § 356. The Recorders assert Section 351 and 356 are related and must be read in pari materia , leading to the inevitable conclusion that Section 351 provides a mandatory duty to record all conveyances, including the mortgages and assignments at issue here. The Recorders argue the Commonwealth Court's finding Section 351 to be "optional" and "discretionary" while Section 356 is mandatory, leads to an absurd result, and runs afoul of the rules of statutory construction. Id. at 25, citing 1 Pa.C.S. § 1922(1) ("the General Assembly does not intend a result that is absurd ..."). The Recorders further observe an examination of the recording statutes reveals many other statutes which are expressly permissive on their face, and distinguishes them from the mandatory language in Section 351.
In light of the above, the Recorders argue the Commonwealth Court disregarded both thе history of Pennsylvania's recording statutes and the public policy that mortgages and mortgage assignments be recorded in the public record. The Recorders assert that, in order to give effect to all the provisions in Section 351, the word "shall" cannot be read as merely permissive. The Recorders further allege the Commonwealth Court improperly conflated the question of whether unrecorded transfers of property are enforceable with the more pertinent question of whether Section 351 provides a mandatory recording requirement. The Recorders submit whether an unrecorded instrument may be enforced is irrelevant to the interpretation of Section 351, which explicitly requires recording.
MERSCORP also challenges the Recorders' interpretation of Section 351 that the phrase "shall be recorded" creates a mandatory duty as being taken out of context. According to MERSCORP, the plain text, history, and purpose of Section 351 all indicate the General Assembly never intended to require recоrding, and the phrase "shall be recorded" serves only to dictate the place where an instrument should be recorded if it is recorded, and also inform property owners of the steps to be taken to safeguard their interests. MERSCORP further notes Section 351 itself does not state that a failure to record is a violation of the statute. See Id. at 18-19, quoting Montgomery Cty.
MERSCORP submits the General Assembly is clear when indicating recording is mandatory, as demonstrated by Section 682 of Title 21, which plainly specifies: (1) the party who must record the lien release: the mortgagee; (2) the time frame for recording: 45 days after request and tender of the loan balance; and (3) the penalty for failure to record: for every offense, the mortgagee must pay to aggrieved parties any sum not exceeding the mortgage-money. Id. at 20. MERSCORP notes Section 351 does not contain any of the above elements. Rather, MERSCORP emphasizes, the sole consequence for failure to record is contained in Section 351 : a failure to record results only in the transfer or
MERSCORP also challenges the Recorders' reliance on Section 356 to support a mandatory duty to record, and distinguishes Section 356 as addressing agreements related to the rights and privileges pertaining to real property rather than mortgages or mortgage assignments.
MERSCORP also observes Section 351 once coexisted with 21 P.S. § 623 (repealed in 1998), which explicitly provided that recording mortgage assignments was optional. See 21 P.S. § 623 ("All assignments of mortgages ... duly executed and acknowledged in the manner provided by law for the acknowledgement of deeds, may be recorded in the office for the recording of deeds ....) (emphasis added). MERSCORP submits the General Assembly would not have enacted Section 351 in 1925 to mandate recording of mortgage transfers when Section 623 had been in effect since 1849, and specifically provided recording of assignments was optional. Appellees' Brief at 28. Finally, MERSCORP relies on long-standing Pennsylvania jurisprudence which acknowledges recording is not necessary to effect a valid conveyance of property interests. See Id. at 33, citing Fiore v. Fiore ,
This contextual approach is particularly instructive when the meaning of statutory terms is ambiguous. "Notwithstanding the general rule that 'shall' is mandatory, we are aware that the word 'shall' has also been interpreted to mean 'may' or as being merely directory as opposed to mandatory." Gardner v. W.C.A.B. (Genesis Health Ventures) ,
"Whether a particular statute is mandatory or directory does not depend upon its form, but upon the intention of the Legislature, to be ascertained from a consideration of the entire act, its nature, its object, and the consequences that would result from construing it one way or the other". Deibert v. Rhodes ,
A finding that "shall" is directory and not mandatory is further supported when considering the consequences of a different interpretation. See 1 Pa.C.S. § 1921(c)(6). Justice Donohue would hold a failure to record a conveyance is a violation of Pennsylvania law with undefined consequences. See Dissenting op. at 885-86. The express terms of Section 351, however provide the specific, limited, consequences of failure to record. Section 351 plainly provides "[e]very such deed, conveyance, contract, or other instrument of writing which shall not be acknowledged or proved and recorded, as aforesaid, shall be adjudged fraudulent and void as to any subsequent bona fide purchaser or mortgagee or holder of any judgment ... without actual or constructive notice ..." 21 P.S. § 351 (emphasis added). This emphasized language indicates a conveyance is rendered void only (1) with respect to a limited class of individuals - subsequent bona fide purchaser or mortgagee or holder of any judgment; and (2) under limited circumstances - when the subsequent bona fide purchaser does not have actual or constructive notice of the transfer. We may not ignore the General Assembly's choice to limit the consequence of invalidity to specific circumstances. See 1 Pa.C.S. 1921(a) (statutes must be interpreted to give effect to every word); see also Holland v. Marcy ,
Moreover, we have consistently held a "failure to record [documents demonstrating a conveyance is] not dispositive of whether [the documents] effectuated a valid conveyance." In re Estate of Plance ,
Furthermore, had the General Assembly intended to treat every unrecorded conveyance as if it never happened, it could have stated this clearly, and without defining a limited consequence for failure to record. Cf. Clow v. Woods ,
Our recent decision in Estate of Plance serves to illustrate this last point. In that case, a grantor prepared deeds to convey property to a trust, under which the grantor would be trustee and his son would be a beneficiary (the 2004 deeds). However, the grantor never recorded the 2004 deeds, despite several requests by his son and advice from counsel.
We also find compelling the Seventh Circuit's decision in Union Cty., Ill. v. MERSCORP , Inc. ,
Contrary to the Recorders' preferred reading, the words "shall be recorded" in
We now turn to the second question we accepted for review - whether the Recorders have the authority to pursue claims to enforce compliance with Section 351. The Recorders argue they may bring actions to enforce statutory provisions under their purview, and the Commonwealth Court erred in holding they do not. See Appellants' Brief at 40-41, quoting Com., Pennsylvania Game Comm'n v. Com., Dept. of Envtl. Res. ,
Even assuming the Recorders correctly argue they have authority to pursue actions against individuals or entities that do not comply with mandatory duties within their statutory purview, our holding that Section 351 does not provide a mandatory duty to record renders review of this issue unnecessary.
Jurisdiction relinquished.
Chief Justice Saylor and Justice Wecht join the opinion.
Justice Donohue files a dissenting opinion.
Justices Baer, Todd and Mundy did not participate in the consideration or decision in this case.
Notes
The Recorder for Delaware County, Thomas J. Judge, Sr. filed a complaint in the Delaware County Court of Common Pleas in October 2013. The complaint was removed to Federal Court, and then remanded back to the Delaware County Court of Common Pleas. Recorder Judge then filed an amended complaint in the Delaware County Court of Common Pleas on October 30, 2015. The Recorders for Chester County, Richard T. Loughery, and Bucks County, Joseph J. Szafran, filed complaints in their respective Courts of Common Pleas in October 2014. Lastly, the Recorder for Berks County, Frederick C. Sheeler, filed a complaint in the Berks County Court of Common Pleas on October 15, 2015.
The complaints included the following counts: (1) Quiet Title; (2) Negligent or Willful Violation of 21 P.S. § 351 ; (3) Unjust Enrichment; (4) Civil Conspiracy to Violate 21 P.S. § 351 ; (5) Aiding and Abetting; and (6) Declaratory Judgment and Permanent Injunction.
Judge Wojcik authored the majority opinion, which was joined by Judge Leavitt, Judge Hearthway and Judge Cosgrove. Judge Brobson authored a dissenting opinion joined by Judge McCullough and Judge Covey. Judge Cohn Jubelirer did not participate.
Judge Brobson's dissent was based on the appeal's procedural posture, arising from preliminary objections. His dissent noted preliminary objections may be sustained only "where it is clear and free from doubt that the pleader has not pleaded facts sufficient to establish his right to relief."
Appellants' Brief at 25-26, citing 21 P.S. § 383 ("deeds of county commissioners ... may be recorded in the office for recording deeds"); 21 P.S. § 384 (letters of attorney authorizing contracts to be made "may be placed of record in the recorder of deeds office"); 21 P.S. § 385 (patents granted by the Commonwealth "may be recorded in the office for recording deeds"); 21 P.S § 386 (releases for satisfaction "may ... be recorded in the office for recording of deeds"); 21 P.S. § 390 (deeds and patents granted by the Commonwealth "may be recorded in the office for recording of deeds"); 21 P.S. § 391 (releases and contracts by married women "may be recorded in the office for recording deeds"); 21 P.S. § 404 (any lease or sublease "may ... be recorded in the office for the recording of deeds"); 21 P.S. § 451 (affidavit which "may affect title to real estate ... may be recorded") (emphases added). The Recorders thus conclude the General Assembly created a recording scheme which requires core documents transferring lands - including mortgage assignments - to be recorded in the Counties in order to provide a complete chain of title. Id. at 27.
The Recorders also counter MERSCORP's reliance on Section 623, 21 P.S. § 623 (repealed), which once provided a mortgage assignment may be recorded, for the opposite proposition. The Recorders advise Section 623 was passed by the General Assembly only to clarify inconsistent caselaw and reinforce the rule that mortgage assignments fall within the scope of Pennsylvania's recording acts and could be recorded to provide constructive notice of the assignment. See Appellants' Reply Brief at 14.
Amicus Curiae Briefs were filed in support of the Recorders by: (1) Pennsylvania Legal Aid Network, Legal Aid of Southeastern Pennsylvania, MidPenn Legal Services, National Association of Consumer Advocates National Consumer Law Center and the Consumer Credit Counseling Service of Delaware Valley (collectively the "Public Interest Organizations"); (2) AFSCME Counsel 13 ("AFSCME"); and (3) County Commissioner's Association of Pennsylvania, Pennsylvania Recorder of Deeds Association, and the National Association of Independent Land Title Agencies (collectively the "County Commissioners"). The Amici all challenge the MERS® System as contrary to the underlying principles pivotal to Pennsylvania's recording system and seek reversal of the Commonwealth Court's decisiоn. See Public Interest Organizations Amicus Brief at 14-22 (MERS® System improperly circumvents public recordation system, is subject to fraud, and prevents homeowners from having access to chain of title); see also AFSCME's Amicus Brief at 4-12 (MERS® System disregards purpose behind Pennsylvania's recordation system to make purchase and sale of land easily obtainable, creates potential for fraud in ownership of real property and forfeits revenue due to Commonwealth in form of fees required to be paid as part of mortgage transfer); County Commissioners' Amicus Brief at 13-18 (MERS® System is caustic to Pennsylvania's recording system which serves public at large, as it creates unclear chains of title, hampering rights of property owners).
Section 356 applies to "agreements in writing relating to real property ... by the terms whereof the parties executing the same do grant, bargain, sell, or convey any rights or privileges of a permanent nature pertaining to such real property ..." 21 P.S. § 356. See, e.g. , Sabella v. Appalachian Dev. Corp. ,
Amicus Briefs in support of MERSCORP were filed by: (1) The Federal Home Loan Mortgage Corporation and the Federal National Mortgage Association ("Freddie Mac" and "Fannie Mae"); (2) Pennsylvania Land Title Association ("PLTA"); and (3) Pennsylvania Bankers Association ("Bankers"). The Amici in support of MERSCORP all submit similar arguments which catalogue the benefits of the MERS® System, and caution a reversal of the Commonwealth Court's decision will have far-reaching consequences to the secondary market for residential mortgages, which will ultimately harm residential homeowners. See Freddie Mac and Fannie Mae's Amicus Brief at 17-23 (MERS® System lessens errors in recording offices, is fraud-prеvention tool); see also PLTA's Amicus Brief at 3-5 (operation of MERS® System has significantly reduced errors in chain of title); see also Bankers' Amicus Brief at 2-3 (MERS® System brings efficiency and accuracy to increasingly complex mortgage-banking system, benefitting lenders and helping consumers). In addition, the PLTA notes that while it requires its members to record instruments for transactions they are insuring, the reason is not due to Section 351's requirements, but rather because recording is necessary to obtain bona fide purchaser/mortgage status for their insureds, thereby minimizing losses. PLTA further submits it is clear recording is not mandatory due to the myriad Pennsylvania cases that provide recording is not necessary to pass title to property. See PLTA's Amicus Brief at 7-12. The Bankers also aver under the MERS® system, the promissory note, which is personal property paid to the bearer of the note, is transferred between MERS members, while the mortgage remains assigned to MERSCORP. The Bankers assert there is not, and never has been, any requirement to publicly record a note's priority. See Bankers' Amicus Brief at 4. The Bankers further assert the plain language of Section 351 refers to recording conveyances of land, not notes, and thus the transfers that occur in the MERS® System are not required to be recorded under Section 351. Id. at 12
To support her position that recording is mandatory, Justice Donohue focuses only on the words "shall be recorded" while dismissing every other word in Section 351 as merely serving to clarify the Commonwealth is a race-notice jurisdiction. See Dissenting op. at 873-74. Respectfully, this overly technical reading of the statute renders superfluous the language expressly describing the consequence for failure to record - the transfer will be adjudged fraudulent and void - in violation of our interpretive rules. Moreover, Justice Donohue finds the only consequence the General Assembly decided to include in Section 351 is somehow incomplete or deficient, and would permit the Recorders to pursue additional, unarticulated remedies. See id. at 874 n.5, 885-86. In any event, our reading of Section 351 doеs not discourage the recording of conveyances. Indeed, we recognize the value of recording, but we find no basis to impose consequences for failure to record beyond what the General Assembly provided.
Justice Donohue and the Recorders rely on the statement in Appeal of Nice that "an unrecorded mortgage is a forbidden thing." Appellants' Brief at 31, 39; Dissenting op. at 885-86. However, a careful reading of the entire decision demonstrates that, although an unrecorded mortgage does not have the full force of a recorded mortgage to protect a mortgage-creditor, it nevertheless is not rendered void; instead, its priority is adversely affected. The Court specifically held "a debt secured by an unrecorded mortgage ... has no right to take precedence of the general debts, but must come in for its share as one of them." Appeal of Nice ,
Section 28 of the Illinois Conveyances Act provides in pertinent part as follows:
Deeds, mortgages, powers of attorney, and other instruments relating to or affecting the title to real estate in this state, shall be recorded in the county in which such real estate is situated; ... No deed, mortgage, assignment of mortgage, or other instrument relating to or affecting the title to real estate in this State may include a provision prohibiting the recording of that instrument ....
765 ILCS 5/28.
Justice Donohue rejects this analogy and presents an alternative. Dissenting op. at 873-74. However, much like her insistence that we read the words "shall be recorded" in a vacuum that disregards the other elements of Section 351, Justice Donohue's analogy ignores the other terms, conditions and consequences that would naturally exist in a car rental agreement in addition to the directive "[t]he vehicle shall be returned to the location where the rental occurred." Id. at 873. Obviously, returning a rented car is not "optional," but, more to the point, there would be additional terms in the rental agreement describing a deadline for return and the consequences for failure to comply, e.g. , the car will be reported stolen and reрorted to the authorities, and these terms clearly underscore that return is actually mandatory and expected. Section 351 provides the directive on how to record a transfer or conveyance of land - in the office of the recorder of deeds in the county where the lands are situate - and the limited consequence for failing to follow the directive - the conveyance can be adjudged fraudulent as to a subsequent bona fide purchaser without actual or constructive notice.
Nor are we persuaded that, had the General Assembly intended Section 351 recording to be permissive rather than mandatory, it would have used the phrase "may be recorded," as it did elsewhere in Title 21. Compare 21 P.S. § 356 (agreements concerning real property "shall be recorded") with 21 P.S. §§ 383, 384, 385, 386, 390, 391, 404, 451 (land encumbrances, documentary evidence of encumbrances, and releases of encumbrances, such as deeds and patents of county commissioners and the Commonwealth, letters evidencing conveyances, releases, and lease agreements "may be recorded"). Cf. Com. v. Garland ,
For similar reasons, we reject the notion that the use of the term "shall" in other sections of Title 21, specifically, Sections 356, 441, 444 and 621, means recording mortgage assignments is mandatory under Section 351. See Dissenting op. at 876-79. We are not called upon in this case to opine on whether Sections 356, 441, 444 or 621 contain mandatory or directive provisions, but we acknowledge those statutes describe the procedure for effecting a conveyance of property rights and the consequences for failing to follow that procedure - i.e. the purported conveyance may be rendered invalid. See, e.g. 21 P.S. § 356 (parties "shall" record agreement regarding conveyance of property for parties to effectuate a "grant, bargain, [sale], or convey[аnce of] any rights or privileges"); 21 P.S. § 441 (providing it is "duty" of persons claiming ownership of deeds or conveyances prior to March 18, 1775 to have same recorded within two years to claim subject land); see also, e.g. 21 P.S. § 444 (providing deeds and conveyances after passage of act to be recorded within 90 days, or be adjudged fraudulent); see also, e.g., 21 P.S. § 621 (requiring mortgages to be recorded within six months, or deed will not be "good or sufficient to convey or pass" interest). Nevertheless, our analysis reveals "shall" as used in Section 351 does not mandate recording, and this finding is supported rather than undermined by A. Scott Enterprises, Inc. v. City of Allentown ,
As we have stated in text, supra , Section 351 does not expressly authorize a right of action by county recorders. Moreover, our review reveals no support for a finding of implied authority, which may be recognized - at least in the context of litigation by private parties - only when: (1) the plaintiff is part of a class for whose "especial" benefit the statute was enacted; (2) there is an indication of legislative intent to creatе or deny a remedy; and (3) an implied cause of action is consistent with the underlying purpose of the legislative scheme. See Estate of Witthoeft v. Kiskaddon ,
The dissent's opposite view is unsupported by the terms of the statute. See Dissenting op. at 884-85. Beyond describing the ministerial duty of the Recorders to maintain those documents presented to them, Section 351 provides no parameters whatsoever for the implicit right of action the dissent would create. The statute presents no time frame for action, nor does it suggest what form the remedy might take. The dissent would thus provide unrestricted enforcement authority to the Recorders, whose statutory role is quite limited. See Woodward v. Bowers ,
When taken to its logical extreme, the dissenting position that the Recorders are endowed with an implied authority to enforce Section 351 might eliminate a grantor's ability to effectuate - or not - a proposed conveyance of property. Relying on the Recorders' duty "to receive all deeds presented for record ... and record the same," the dissent extrapolates they must have a corresponding "authority to institute judicial proceedings as required." Dissenting op. at 885. Consider, then, the grantor's decision in Estate of Plance not to record the 2004 deeds: under the dissent's broad grаnt of authority, the grantor's son might theoretically deputize a recorder to act as his agent and file a mandamus action to compel recording of those deeds. This admittedly extreme example plainly demonstrates why we should not imply enforcement authority where the General Assembly did not expressly provide it in Section 351. Even a declaratory judgment action - which Justice Donohue suggests as the appropriate vehicle for the Recorders' enforcement activities (Dissenting op. at 885-86) - would improperly expand the limited duty to maintain and record presented documents that was expressly assigned to the Recorders by statute.
Dissenting Opinion
In my view, the unambiguous language of 21 P.S. § 351
As the Majority recognizes, the first issue presented for our review is a matter of statutory interpretation. The statute in question states:
All deeds, conveyances, contracts, and other instruments of writing wherein it shall be the intention of the parties executing the same to grant, bargain, sell, and convey any lands, tenements, or hereditaments situate in this Commonwealth, upon being acknowledged by the parties executing the same or proved in the manner provided by the laws of this Commonwealth, shall be recorded in the office for the recording of deeds in the county where such lands, tenements, and hereditaments are situate. Every such deed, conveyanсe, contract, or other instrument of writing which shall not be acknowledged or proved and recorded, as aforesaid, shall be adjudged fraudulent and void as to any subsequent bona fide purchaser or mortgagee or holder of any judgment, duly entered in the prothonotary's office of the county in which the lands, tenements, or hereditaments are situate, without actual or constructive notice unless such deed, conveyance, contract, or instrument of writing shall be recorded, as aforesaid, before the recording of the deed or conveyance or the entry of the judgment under which such subsequent purchaser, mortgagee, or judgment creditor shall claim. Nothing contained in this act shall be construed to repeal or modify any law providing for the lien of purchase money mortgages.
The Majority holds that the statute implicitly states that recording is optional - that if one should choose to record a deed, conveyance, or other pertinent writing concerning real property, then the statute indicates the location in which the documents must be recorded.
This reasoning represents a pursuit of the "spirit" of the statute instead of appropriately relying on its plain meaning. 1 Pa.C.S. § 1921(b). It further ignores the clear mandate (at least in this jurisdiction) that courts are prohibited from adding language into the statute that the General Assembly omitted. Hanaway v. Parkesburg Grp., LP ,
Moreover, the analogy announced by the Seventh Circuit, and discussed by the Majority with approval, see Majority Op. at 868-69, is inapt to the circumstances presented here because one must presume that the alternative meaning is nonsensical, i.e., it cannot be intended that all defective products must be returned. In a vacuum, it may be that intention is unlikely, but it ignores the possibility that other terms of sale indeed require the return of a defective product - for example, a leaking gas tank. Even assuming that the Seventh Circuit and the Majority are correct that this alternative reading of the department store notice is nonsensicаl, that conclusion is clearly not required for the first sentence of section 351. As discussed at length below, it makes perfect sense to require that land conveyances must be recorded. Instead, a more closely analogous circumstance would be a car rental agreement, stating: "The vehicle shall be returned to the location where the rental occurred." This does not mean that returning the vehicle to the rental agency is optional. Returning the vehicle is unquestionably mandatory, and the contract further provides the location to which the return must be made. Likewise, the recording of deeds and conveyances is mandatory, and must occur in the county recorder's office. 21 P.S. § 351.
The Majority reaches its conclusion under the guise of interpreting section 351 as a whole - not reading any provision thereof in isolation. See Majority Op. at 865, 868-69; see, e.g., Commonwealth v. Smith , --- Pa. ----,
The Majority contends that section 351 does not require the recording of conveyances because this Court has, in certain isolated instances, interpreted "shall" to mean "may." Majority Op. at 865-66. It further posits that the second sentence only indicates the location for recordation (if the party chooses to record). Assuming, arguendo, that the Majority's interpretation of the language of section 351 is plausible, then the statute is ambiguous, as it also could be interpreted, as Appellants do, to mean that the stated interests in real property must be recorded. See Commonwealth v. Giulian ,
The Pennsylvania version of this law attempted to remedy the shortcomings of the English law, thus requiring that "Conveyances of Land ... shall be Enrolled or Registered in the publick Enrollment-Office of the said Province, within the space of two Moneths next after the making thereof, else to be void in Law." XX Pa. Stat. 321-22 (1682); see also Appeal of Luch ,
In 1715, the General Assembly established "The Office for recording of Deeds," and stated that land conveyances "may be recorded in the said office." Act of May 28, 1715, 1 Sm.L. 94, Ch. 208. Although the General Assembly used the word "may," it stated its intent therein that the law was to "be of the same force and effect here, for the giving possession and seisin,[
The General Assembly amended that act in 1775 to make clear that deeds and conveyances must be recorded:
[A]ll deeds and conveyances, which, from and after the publication hereof, shall be made and executed within this province, of or concerning any lands, tenements or hereditaments, in this province, or whereby the same may be any way affected in law or equity, ... shall be recorded in the recorder's office where such lands or hereditaments are lying and being , within six months after the execution of such deedsor conveyances; and that every such deed and conveyаnce, that shall at any time after the publication hereof be made and executed, and which shall not be proved and recorded as aforesaid, shall be adjudged fraudulent, and void against any subsequent purchaser or mortgagee for valuable consideration, unless such deed or conveyance be recorded as aforesaid, before the proving and recording of the deed or conveyance under which such subsequent purchaser or mortgagee shall claim.
Act of March 18, 1775, 1 Sm.L. 422 (emphasis added). The General Assembly included a preamble to the Act of March 18, 1775, wherein it explained that its reason for amending the recording statute was to "remedy" the "different and secret ways of conveying lands ... such as are ill disposed," and which "have it in their power to commit frauds, by means whereof divers persons may be injured in their purchases and mortgages by prior and secret conveyances, and fraudulent incumbrances."
The following year, the Office of the Recorder of Deeds was included as a mandatory county office in Pennsylvania's original Constitution, see Pa. Const. § 34 (1776), and it remains so today. Pa. Const. art IX, § 4. In 1841, the General Assembly made recording in the Office of the Recorder of Deeds mandatory for all deeds and conveyances that preceded the passage of the Act of March 18, 1775. Act of March 26, 1841, P.L. 106, § 1, 21 P.S. § 441 ("it shall be the duty of all persons who claim any lands or tenements in this Commonwealth under or by virtue of any deeds or conveyances bearing date previously to the act of 18th March, 1775, to which this is a supplement, to have the same recorded , in the proper county, in the manner now provided by law , within two years from the date thereof") (emphasis added).
The mandatory recording provision of the Act of 1775 was modified only slightly in 1883 (and never again since) to provide that recording must occur within ninety days after the execution of the deed or conveyance, lessening the timeframe from the previously allowed six months. See Act of May 19, 1893, P.L. 108, No. 61, § 1. The preamble that was included in the Act of 1775 remained included in the amended version of the statute. The substantive language of the statute (without the preamble) appears in Title 21 of Purdon's Statutes under section 444. See 21 P.S. § 444 ; see also infra , note 10.
The Generally Assembly added section 351 to Pennsylvania's roster of recording laws in 1925. Section 351 is in pari materia - it "relate[s] to the same persons or things or to the same class of persons or things" - to several other recording statutes appearing in Title 21, including sections 356,
Beginning with section 444, it contains substantially similar language to section 351, as both provide that deeds and conveyances "shall be recorded" in the recorder's office, and both also include a provision stating that any deed or conveyance not so recorded is void as to a subsequent bona fide purchaser or mortgagee for value who has so recorded. Compare 21 P.S. § 351with
As also recited above, section 441 states that for any deed or conveyance that predated the recording act of 1775 (current section 444 ), it was "the duty" of the person who claimed the interest in land "to have the same recorded ... in the manner now provided by law, within two years from the date thereof." 21 P.S. § 441. Similarly, section 621 provides simply that unrecorded deeds, mortgages, or defeasible deeds in the nature of a mortgage must be recorded within six months of the conveyance.
Section 356 likewise touches upon the same concern, addressing agreements in writing concerning real property. See 21 P.S. § 356. It includes, in part, identical language to section 351, providing:
All agreements in writing relating to real property situate in this Commonwealth by the terms whereof the partiesexecuting the same do grant, bargain, sell, or convey any rights or privileges of a permanent nature pertaining to such real property, or do release the grantee or vendee thereunder against damages which may be inflicted upon such real property at some future time, shall be acknowledged according to law by the parties thereto or proved in the manner provided by law, and shall be recorded in the office for the recording of deeds in the county or counties wherein such real property is situate .
21 P.S. § 356 (emphasis added). Like section 444, section 356 also includes a preamble, wherein the General Assembly explains that it is "an act requiring the recording of certain written agreements pertaining to real property, and prescribing the effect thereof as to subsequent purchasers, mortgagees, and judgment creditors to the parties thereto." Act of April 24, 1931, P.L. 48, No. 40 (emphasis added); see 1 Pa.C.S. § 1924.
Reading all these statutes together as one, as our General Assembly instructs that we must, it is clear that section 351 requires the recording of deeds and conveyances. 1 Pa.C.S. § 1932. Moreover, it would be absurd and unreasonable - in fact, impossible - for this Court to construe identical language in neighboring statutes that address the same subject and class of things to have different interpretations. 1 Pa.C.S. § 1922(1), (2) (stating that courts interpreting a statute must presume the General Assembly did not intend a statute to yield a result that is absurd, unreasonable or impossible to execute and that it "intends the entire statute to be effective and certain"). Sections 356, 441, 444 and 621 all make clear that the recording of deeds, mortgages and conveyances is mandatory; this same interpretation must therefore be applied to section 351.
That the General Assembly intended its directive that deeds and conveyances "shall be recorded" in the recorder's office to be mandatory becomes even clearer when we observe the numerous other provisions that address the recording of other documents wherein the General Assembly used the term "may" to connote that recording was a discretionary or optional act.
Appellees point to former 21 P.S. § 623 (now repealed), which previously stated that "assignments of mortgages and letters of attorney authorizing the satisfaction of mortgages duly executed and acknowledged, in the manner provided by law for the acknowledgment of deeds, may be recorded in the office for recording deeds[.]" Act of April 9, 1849, P.L. 524, No. 354, § 14 (emphasis added), repealed by Act of Jan. 29, 1998, P.L. 45, No. 12, § 1. Appellees take this as proof that the recording of mortgage assignments, which is the act specifically at issue in this case, is not required, as section 623 preceded section 351 by seventy-six years and then "coexisted" with it for seventy-three years. Appellees' Brief at 28. Thus, according to Appellees, section 351 cannot be interpreted to require the recording of mortgage assignments today.
I disagree, and find support for Appellants' argument that the enactment of section 623 was in response to this Court's holding in 1883 that a mortgage assignment was not included under the provisions of the Acts of 1717 and 1775. Specifically, in Craft v. Webster ,
Prior to the enactment of the 14th sect. of the Act of 9th April 1849, supra, the decisions were conflicting as to whether the assignment of a mortgage was within the recording acts. In Craft v. Webster , , and in Mott v. Clark , 9 Barr. 399, it was held not to be; but in Philips v. Bank of Lewistown , 6 Harris 394, it was held to be within the recording Act of 28th May 1715. The right to record this assignment was set at rest by the Act of 1849. 4 Rawle 242
Further, in repealing section 623, the General Assembly made a determination that the law was "supplemented or superseded by other acts or otherwise obsolete." H.B. 1763, Printer's No. 2226, Reg. Sess. (Pa. 1997). The law is clear that mortgage assignments are conveyances, and as discussed hereinabove, there are several statutes that specifically and expressly mandate the recording of conveyances. See Pines v. Farrell ,
Moreover, if, as the Majority concludes, recording mortgage assignments is optional, then recording deeds is optional, as both are covered under section 351. In addition to being in direct opposition to the stated intent of our General Assembly over the 350-year history of our recording statutes, the consequences of this interpretation are far reaching and potentially catastrophic. Recording of deeds is critical to preserve the chain of title for a property, gaps in which can negatively impact, for example, the marketability of the title for that property and adjacent properties; the ability of a subsequent owner to obtain a mortgage and title insurance; the determination of the precise boundary lines of the property; and tax sales of the property. See David E. Woolley & Lisa D. Herzog, MERS: The Unreported Effects of Lost Chain of Title on Real Property Owners , 8 Hastings Bus. L.J. 365, 389 & 396 (Summer 2012) ; Luffborough v. Parker ,
Furthermore, a property owner should be able to rely on public records to determine, at any given time, who simultaneously owns an interest in his or her property. Mortgagors should not be forced to embark on a veritable wild goose chase to discern who holds their mortgage and note, is entitled to payments, and/or is entitled to foreclose. Both the Majority and the Commonwealth Court cite to the three-judge panel opinion of the Superior Court in U.S. Bank N.A. v. Mallory ,
The Majority's citation to Mallory constitutes the first time this Court has ever done so. This Court was not asked to review Mallory and no decision of this Court has ever discussed, let alone blessed, the holding in Mallory . In my view, and for the reasons discussed here (among others), Mallory was decided incorrectly and the decision presents a perfect example of why mortgage assignments must be recorded. The facts of Mallory are particularly egregious, as the plaintiff in foreclosure had not even been assigned the mortgage when suit was filed. At the time US Bank filed the complaint in foreclosure, it was only "in the process of formalizing the assignment" from MERS.
The Majority finds further support for its decision in cases from this Court in which we held that an unrecorded deed is nonetheless valid, believing that this "enduring acknowledgment" refutes any claim that recording is mandatory. See Majority Op. at 866-67 (citing Matter of Pentrack's Estate ,
This concept is best illustrated in our early decision in Levinz v. Will ,
The original intent, then, of the makers of the law immediately under consideration, and their principal reason, seems to have been to prevent honest purchasors, or mortgages, of real estates, from being deceived by prior secret conveyances, or incumberances; and, therefore, they have directed that such conveyances, or incumberances, shall be recorded in six months, or that they should not be sufficient to pass any estate. Thus, by having recourse to the offices of the Recorders, any one may ascertain the previous liens upon the property, which he wishes to purchase, or to receive as a pledge; and this amounts to a constructive notice to all men, and supercedes the necessity of express personal notice. But the Legislature did not mean, nor have they, in fact, enacted, that express personal notice, where given, should have no effect: Neither could they entertain an idea of defeating fair and honest bargains, which do not injure other persons: And, if this unrecorded deed can be obligatory in no other manner, it may certainly operate as a covenant to stand seized to uses.
Id. at 435. While a person may hold a valid interest in unrecorded property, this does not change the longstanding requirement that interests in land must be recorded.
The purpose of the recording system is "to furnish a permanent record of all titles and muniments of real estate," McCaraher v. Commonwealth ,
The Majority erroneously imports into my interpretation of section 351 a conclusion that "a failure to record a conveyance means it never occurred." Majority Op. at 866 (stating that the General Assembly did not intend for an unrecorded conveyance to be treated "as if it never happened"). As my discussion above makes clear, this is an inaccurate restatement of my analysis. An unrecorded deed or mortgage does not simply disappear or cease to exist and is clearly enforceable under contract principles
Proponents of MERS view the recording laws as archaic, involving a "process ... derived from seventeenth century real property law [that] is not at all suited to late twentieth century mortgage finance transactions." Phyllis K. Slesinger & Daniel Mclaughlin, Mortgage Electronic Registration System ,
Whether considered a registration system, a recording system, or something else altogether, MERS is the only entity with a database of information concerning the chain of title for the properties in which its members hold an interest. This means that if MERS were to fail, the chain of title for properties in which its members had interests would be forever lost (assuming it was complete in the first place). Homeowners would not know who was entitled to receive payments on the loans, and foreclosures would occur in a manner reminiscent of the Wild West - whichever financial institution can get its hands on the mortgage and promissory note first gets to keep them.
As history teaches, private ventures can fail financially or otherwise collapse, no matter how big or well established. See Robert Pickel, Ten Years After: Identifying the Deadliest Sin of the Financial Crisis , Banking & Fin. Services Pol'y Rep. 1, 9 (2017). The fact that MERS registers and keeps track of mortgage assignments in its system shows that it agrees that there must be some registration and/or recordation of mortgages and assignments. As between an unregulated private institution that operates out of public view and without transparency and a constitutionally-mandated government office that keeps this information as a matter of public record for all to see, the General Assembly's choice of the latter should be enthusiastically reaffirmed.
Relying on the test for a private right of action announced in Estate of Witthoeft v. Kiskaddon ,
In Beam , the Department of Transportation sought an injunction against Beam's establishment of an unlicensed airport on his private property. Beam ,
[W]hen the legislature statutorily invests an agency with certain functions, duties and responsibilities, the agency has a legislatively conferred interest in such matters. From this it must follow that, unless the legislature has provided otherwise, such an agency has an implicit power to be a litigant in matters touching upon its concerns. In such circumstances the legislature has implicitly ordained that such an agency is a proper party litigant, i.e., that it has "standing."
Returning to the case at bar, the position of recorder of deeds is mandated by the Pennsylvania Constitution. Pa. Const. art. IX, § 4 ("County officers shall consist of ... recorders of deeds ...."). Recorders are elected officials who serve four-year terms.
Furthermore, as previously discussed at length, this Court has recognized that recording is intended to protect the public welfare. See Salter ,
Recorders' request for a declaratory judgment with injunctive relief is, in my
For the foregoing reasons, I would reverse the decision of the Commonwealth Court and remand the case for further proceedings. I therefore dissent from the Majority's contrary conclusion.
Act of May 12, 1925, P.L. 613, No. 327, as amended. As explained infra, the section number provided under Title 21 of the Purdon's Statutes are not the official section numbers of the law. See infra , note 10. Nonetheless, because many of the official Pamphlet Laws referred to in this Dissenting Opinion have similar section numbers, for the ease of the reader, I will refer to the various provisions discussed herein under their Title 21 section number.
As this Court has held, mortgage assignments are conveyances of real property in Pennsylvania. Pines v. Farrell ,
I fully agree with the Majority's statement that section 351 applies only to those conveyances wherein the parties intend "to grant, bargain, sell, and convey any lands, tenements, or hereditaments situated in this Commonwealth," as that is precisely what the first sentence of section 351 states. See Majority Op. at 867-68; 21 P.S. § 351. Clearly a party must intend to effectuate the conveyance in order for the recording requirement of section 351 to apply - without an intent to convey title to the grantee, the deed is not "legally operative." Estate of Plance ,
Act of April 27, 1927, P.L. 440, No. 284, § 1.
Contrary to the Majority's contention, this interpretation does not fail to give effect to every word of the statute. See Majority Op. at 866-67 & n.9. As stated hereinabove, the second sentence of the statute is instructive and provides a consequence of a party's failure to record. Pursuant to the plain language of section 351, the second sentence does not impose a limitation on the first sentence, which requires conveyances of real property to be recorded. This gives effect to both provisions of section 351 and all of the words contained therein. As discussed infra, this becomes increasingly clear based on the legislative history of Pennsylvania's recording statutes, the interpretation of similar statutes on the same subject, and the consequences of the Majority's interpretation.
To discern legislative intent when faced with an ambiguous statute, the factors to consider include, but are not limited to: "(1) The occasion and necessity for the statute; (2) The circumstances under which it was enacted; (3) The mischief to be remedied; (4) The object to be attained; (5) The former law, if any, including other statutes upon the same or similar subjects; (6) The consequences of a particular interpretation; (7) The contemporaneous legislative history; [and] (8) Legislative and administrative interpretations of such statute." 1 Pa.C.S. § 1921(c).
The term "seisin" refers to "livery of seisin," which was a ceremony whereby a grantor of land symbolically delivered possession of land to the grantee. History of the United States' system of conveyancing , 1 Patton and Palomar on Land Titles § 3 (3d ed.). This included the grantor giving a twig, handful of dirt, a piece of turf, or another symbol as a token of delivery, while using "proper and technical words to show his intent to transfer the land" for whatever length of time the land was to be conveyed (e.g., fee simple, fee tail, or life estate).
As discussed infra, this statute appears in 21 P.S. § 621, and remains good law.
Act of April 24, 1931, P.L. 48, No. 40, § 1.
I note that while the titles of statutes may be considered in construing their meaning, the title of 21 P.S. § 351, "Failure to record," is not in fact the title of that statute. The actual title of section 351, as it appears in the Pamphlet Law, is "Recording of Deeds, Regulation." Act of May 12, 1925, P.L. 613, No. 327. As our Commonwealth Court has correctly explained, the "P.S." in these citations stands for "Purdon's Statutes," which is a publication by West Publishing Company that organizes our Pamphlet Laws. In re Appeal of Tenet HealthSystems Buck Cnty. ,
See, e.g. :
• Act of April 5, 1849, P.L. 344, § 2, 21 P.S. § 383 ("All deeds of county commissioners, being duly acknowledged, may be recorded in the office for recording deeds in the county where the lands lie") (emphasis added);
• Act of Dec. 14, 1854, P.L. (1855), 724, § 1, 21 P.S. § 384 (letters of attorney authorizing various specified acts related to the conveyance of real estate "may be placed of record in the recorder of deeds office ") (emphasis added);
• Act of March 14, 1846, P.L. 124, § 1, 21 P.S. § 385 ("patents granted by the Commonwealth, and all deeds of sheriffs, coroners, marshals and treasurers; and all deeds made in pursuance of a decree of any court, being duly acknowledged, may be recorded in the office for recording deeds in the county where the lands lie) (emphasis added);
• Act of April 15, 1828, P.L. 490, § 1, 21 P.S. § 386 (release of legacies and to executors "may be recorded in the office for recording deeds") (emphasis added);
• Act of April 4, 1919, P.L. 49, § 1, 21 P.S. § 390 ("deeds and patents granted by the Commonwealth of Pennsylvania may be recorded in the office for recording deeds") (emphasis added);
• Act of May 25, 1897, P.L. 83, No. 63, § 1, 21 P.S. § 391 ("releases, contracts, letters of attorney and other instruments of writing ... may be recorded in the office for recording deeds" by a married woman alone) (emphasis added);
• Act of June 2, 1959, P.L. 454, § 1, 21 P.S. § 404 ("lease or sublease ... may but need not , unless otherwise required by law, be recorded in the office for recording of deeds") (emphasis added);
• Act of Nov. 5, 1981, P.L. 328, No. 118, § 1, 21 P.S. § 451 (affidavits that may affect title to real property in Pennsylvania "may be recorded ... in the Office of the Recorder of Deeds or Commissioner of Records") (emphasis added).
The Majority is correct that this is a partial quotation from of A. Scott Enterprises . This is because the remaining portion of the quote, which the Majority includes in its decision, is misleading without providing greater context. See Majority Op. at 869-70 n.13. The statute at issue in A. Scott Enterprises , section 3935 of the Procurement Code, is a prompt payment statute for government projects and provides that a court "may award" certain amounts in addition to damages. 62 Pa.C.S. § 3935 (emphasis added). The appellant sought to have the word "may" interpreted as mandatory, not discretionary. A. Scott Enterprises, Inc. ,
Appellees rely on Appeal of Pepper for the proposition that the recording has always been intеrpreted in Pennsylvania as being optional, not mandatory. Appellees' Brief at 15. Although in Appeal of Pepper this Court stated that from the language of the statutes it reviewed, "it appear[ed that] the recording of written instruments has not generally been mandatory," the statutes the Court relied upon for that proposition all used permissive language - "may be recorded" and "entitled to be recorded." See Appeal of Pepper ,
Act of June 19, 2018, P.L. 239, No. 38, as amended.
I again stress that the Majority's interpretation of section 351 affects not only the assignment of mortgages but, at the ultimate level, deeds conveying real property. As tenuous as the MERS registration system is, it is at least some attempt at order in chronicling these ownership interests. There is no such private register of deeds. If the General Assembly chooses to bless the MERS business model and to exempt assignment of mortgages from mandatory recording, it is free to do so as an expression of public policy. But it is not the role of this Court to disregard centuries of precedent and an entire statutory scheme in order to adjust the law to the preference of private actors.
The concepts of standing and right of action have been described as "allied but distinct." Commonwealth v. Beam ,
In Estate of Witthoeft , this Court adopted a three-prong test for determining whether there is an implied private right of action announced by the United States Supreme Court: (1) "Is the plaintiff one of the class for whose especial benefit the statute was enacted, that is, does the statute create a right in favor of the plaintiff?" (2) "Is there any indication of legislative intent, explicit or implicit, either to create such a remedy or to deny one?" (3) "Is it consistent with the underlying purposes of the legislative scheme to imply such a remedy for the plaintiff?" Estate of Witthoeft ,
Act of July 18, 1941, P.L. 421, No. 169, § 1.
Appellants also brought claims sounding in quiet title, unjust enrichment, civil conspiracy and aiding and abetting, and sought monetary damages based upon Appellees' failure to record mortgage assignments. See generally Chester County Complaint, 10/10/2014; Bucks County Complaint, 10/24/2014; Berks County Complaint, 10/15/2015; Delaware County Amended Complaint, 10/30/2015 (hereinafter referred to collectively as "Complaints"). As discussed hereinabove, an implied public right of action gives a government entity, acting in an official capacity, the right to seek judicial relief to obtain compliance with a statutory or constitutional provision. See Beam ,
Section 7532 provides:
Courts of record, within their respective jurisdictions, shall have power to declare rights, status, and other legal relations whether or not further relief is or could be claimed. No action or proceeding shall be open to objection on the ground that a declaratory judgment or decree is prayed for. The declaration may be either affirmative or negative in form and effect, and such declarations shall have the force and effect of a final judgment or decree.
42 Pa.C.S. § 7532.