Milligan's Appeal

104 Pa. 503 | Pa. | 1883

Mr. Justice Paxson

delivered the opinion of the court, January 7th 1884.

It was decided in Nailer v. Stanley, 10 S. & R. 450, that, where mortgaged land was. sold in pieces and at different times, the several pieces were liable for the mortgage debt in the inverse order of their alienation. This principle was fully-recognized in the later case of Cowden’s Appeal, 1 Barr 267, and has been uniformly followed since. It is now settled law. In Carpenter v. Koons, 8 Harris 222, it was held, the principle did not apply to two or more purchasers at a sheriff’s sale, who had bought subject to a common incumbrance. In such instances equality is equity.

In tiffs case, John A. Carothers purchased about fourteen acres of land of Mrs. Margaret Chalfant, and gave to her a purchase-money mortgage covering the whole, for $14,040. He then.divided the property into lots for the purpose of sale, which we will designate by classes, as 1, 2 and 3. Afterwards, he mortgaged class 1 to¥m. A. Shaw, the plaintiff below ; then he *lnortgaged class 2 to Bobert E. Stewart, one of the defendants below; lastly, he conveyed class 3 to Bobert Milligan in fee, and by divers subsequent conveyances, the title thoi’eto became vested in Mary E. Milligan, another of the defendants below, and one of the appellants.

During all this time, the paramount mortgage to Mrs. Chalfant covered all the lots.

Stewart, one of said mortgagees, foreclosed liis mortgage, and bought the lots embraced therein, at the sheriff’s sale.

Subsequently, Carothers was adjudged a bankrupt in the United States Uistrict Court, and his title became vested in his assignee. The latter sold the lots in class 1, in pursuance of authority derived from the court in bankruptcy, free and divested from all liens, and realized therefor the sum of $7,700. The register in bankruptcy distributed the proceeds to the Chalfant mortgage, disregarding Mr. Shaw’s claim to have the proceeds applied to his mortgage, which, as before stated, covered this class of lots. As the’Chalfant mortgage was the .first lion, this distribution could not have been avoided. The result was, however, that Shaw found his security swept away for the benefit of the subsequent incumbrancers and purchasers of other portions of the property. He therefore filed this bill in the court below for the purpose of being substituted to the rights of the Chalfant mortgage upon classes 2 and 3. The court below so decreed, which was the occasion of this appeal.

It was contended for the appellants that the case came within the ruliug referred to in Carpenter v. Noons ; that the parties stood in the relation of purchasers at a sheriff’s sale, where equality is the rule, and that at most it was a question of contribution, and not of subrogation.

We are unable to see the force of this position. When Shaw took his mortgage on class 1, he had an equity to compel Carothers to pay the paramount mortgage out of the remaining portions of the property not embraced in his (Shaw’s) mortgage. This is too clear to need elaboration. It was not the case of a purchase subject to the Chalfant mortgage, with a portion of the purchase money withheld to meet it. No such element exists in the case. It is true, Shaw’s mortgage was in point of fact subject to the paramount mortgage, but he held no funds of Carothers to meet it. On the contrary, he had the clear equity, as before stated, to compel the latter to pay it out of the remaining property. This equity Carothers could not defeat by subsequently conveying or mortgaging classes 2 and 3. Such grantees or mortgagees-had record notice of Shaw’s equitjn

I see no significance in the fact that Stewart became the purchaser at a judicial sale under his own mortgage. It did not change his position in any essential degree. He has the rights as purchaser at such sale which he previously held under the mortgage — nothing more.

Without any action on the part of Mrs. Chalfant or any of the parties, the land bound by Shaw’s mortgage has thus been taken to pay the paramount mortgage, which, as between the parties, Milligan’s land first, and Stewart’s land secondly was liable for. We do not think the cases of Lloyd v. Galbraith, 8 Casey 103; and Couser’s Appeal, 11 W. N. C. 220, are in conflict with this view. As was correctly said by the learned judge below: “ These cases differ from the present one in this, that the parties seeking to be subrogated to the rights of creditors who had liens on two tracts of land, did not acquire their liens until after the common debtor had aliened that part of the laud sought to be reached. This is an essential difference.”

Bor do we see any force in the objection that because the Chalfant mortgage has been paid by process of law there can be no subrogation. Actual payment discharges a judgment at law ; but in equity, it may still subsist if the justice of the case requires it. And an equitable right to such judgment may exist without any actual assignment of it: Fleming v. Beaver, 2 Rawle 128; Morris v. Oakford, 9 Barr 498; McCormick’s Admin. v. Irwin, 11 Casey 111.

It was further contended for the appellants that the right of Shaw to have lots 2 and 3 sold in relief of his mortgage, can only be enforced in accordance with the provisions of the Act of 22d April 1856, P. L. 534. This Act did not give the equity or the right to substitution. It provides merely the mode of enforcing such right in certain cases. The object of the Act, as was said in Arna’s Appeal, 15 P. F. S. 72, was “ to secure the legal rights of the plaintiff in a judgment as well as the equities of the terre-tenants under a common incumbrance.” Hence, where the plaintiff in a judgment which binds several parcels of real estate, is about to proceed to collect his money, and there are equities between the terre-tenants, it is made lawful by the Act for any one who is entitled to contribution or subrogation, in case of payment, to apply to the court for a rule upon the plantiff to show cause why he should not levy upon and make sale of the property in such way as to satisfy the equities between the parties; and if the plaintiff shall refuse to accept the debt and assign the judgment, the court may control the execution so as to subserve such rights and equities. As was said in Phelps’s Appeal, 2 Out. 546: “ The legislature has seen fit to enact, in order to secure the rights of the judgment creditor, and to prevent any delay or embarrassment to him, that he shall have the option offered to him of accepting his debt and assigning his judgment before he can be controlled in the order in which the different tracts of land subject to his lien shall be sold under his execution.” We can readily understand how a judgment creditor whose process is about to be interfered with by terre-tenants, may say, you must proceed under the Act of 1856, and pay my judgment before you can control the process for its collection. We have not such ease before us, and we are unable to see how the Act of 1856 could be applied ; it seems intended for cases in which no sale of the property has taken place. This is manifest from the provisions for the control of the process. I do not say that no case could arise where the Act might not be invoked after sale, but it would be more than doubtful if it could be regarded as an exclusive remedy in such case. We are satisfied it is not so here.

The decree is affirmed, and the appeal dismissed at the costs of the appellants.