15 A.2d 711 | Pa. Super. Ct. | 1940
Argued May 7, 1940. This appeal raises the following legal question: Where the holder of a mortgage which conveyed the mortgaged real estate and all rights, privileges, hereditaments and appurtenances, belonging or appertaining thereto, as security for the payment of a judgment bond, (but which did not contain the usual clause conveying the rents, issues and profits of said real estate), notified the owner — the alienee of the mortgagor — after default, that it took possession of the mortgaged property, (but *587 did not actually enter and secure possession), and demanded of the tenant in possession of the building, under a lease madeafter the mortgage, that all rents accrued and accruing under said lease be paid to it, but the tenant refused to pay the same to the mortgage holder, will a court of equity, in a suit against the tenant, enjoin the latter from paying such rent to the owner and order it to be paid to the holder of the mortgage?
The court below decided the question in the negative. We agree with that decision and think it is in accord with the principles laid down in Bulger v. Wilderman Pleet,1
We will consider the matter under two general heads:
1 — The right of the mortgagee or holder of the mortgage, torequire the tenant to pay it the rent after notice, in the circumstances here present.
2 — The right to proceed in equity to compel such payment.
(1) In the first place, stress must be laid on the fact that the lease was not made until after the mortgage had been given. The rights of the parties in such a situation are very different from those where the lease precedes the mortgage. The failure of the learned counsel for the amicus curiae to recognize this distinction deprived us of much of the help we had expected from his kindly intervention. Many of the decisions greatly relied upon in his brief, and in the brief of appellant, related to cases in which the mortgage was given after the lease, e.g., Mossv. Gallimore, 1 Doug. 279, 99 Eng. Reprint 182, 18 Eng. Rul. Cases 403; Burden v. Thayer, *588
3 Metc. (44 Mass.) 76; King v. Housatonic R. Co.,
Where the lease precedes the mortgage and a tenant is in possession under it when the mortgage is given, and the term of the lease has not expired, the mortgage is taken subject to the lease, and the mortgagee cannot bring ejectment against the tenant for default of the mortgagor, or action in trespass; and in case of foreclosure2 of the mortgage for default, — whether by levari facias following judgment in scire facias proceedings on the mortgage (Act of 1705, 1 Sm. L. 57, pp. 59-61; 2 Stat. at Large, Ch. CLII, pp. 246-9) or by fieri facias, or fieri facias and vend. ex., on the judgment entered on the bond accompanying it (Keene Home v. Startzell,
The grafting of equitable principles upon, or their application to, the legal concept of a mortgage, as the conveyance of land assecurity for the payment of money or the performance of some collateral contract, has produced some anomalies or departures from logical consequences. But, in the words of Mr. Justice HOLMES4 "The life of the law has not been logic; it has been *590 experience." Perfectly symmetrical fruit has not always resulted from the graft.
The interest of a mortgagor in real estate, following the giving of a mortgage in this Commonwealth, is difficult to state in a few words. The term, `Equity of redemption,' is sometimes applied, but, as originally used, it is not strictly applicable in this State. When once the property has been sold under scire facias proceedings on the mortgage, or by execution on the bond, the mortgagor's interest is gone forever. Equitable principles were applied in our law before the real estate was sold in execution. Under our modern practice, the mortgagor, undoubtedly, remains the owner of everything not conveyed away by the mortgage. He retains the possession, if not in default, and can grant it by way of lease to a tenant, who covenants to pay him the rent. The lease, of course, is subject to the mortgage, and on foreclosure for default it is extinguished. Likewise, on default in the terms of the mortgage, the mortgagee is entitled to possession of the premises if he can enter peaceably; he can bring ejectment against the mortgagor if the latter is in possession, or against the tenant if he holds under a lease subsequent to the mortgage. If the mortgagor refuses to deliver up possession, the mortgagee must bring ejectment (Erny v. Sauer,
In order to acquire the right to demand payment of the rent to the mortgagee there must be an entry and taking of possession by the mortgagee. Lacking such entry and taking of possession he must proceed by ejectment or "foreclosure" as aforesaid.
If the mortgagor goes into bankruptcy (Bindseil v. LibertyTrust Co., 248 Fed. 112, C.C.A. 3d — WOOLLEY, *593
J.), or an attachment execution is levied upon the rents in the hands of the tenant, (Miners Savings Bank v. Thomas,
The foregoing views are in general accord with the recent text book authorities — having regard to the differences between the practice in this Commonwealth and in jurisdictions which proceed in equity for a strict foreclosure of the mortgagor's equity of redemption. See 2 Jones on Mortgages, sec. 982, (8th Ed. 1928); Wiltsie, Mortgage Foreclosure, Including Law of Mortgages, sec. 560 (5th Ed. 1939).
(2) Nor do we think that the mortgagee or his assignee, by bringing his suit in equity may compel the tenant to do what the appellant frankly admits it cannot require by an action at law. While this appellant in bringing its suit named the owner of the mortgaged property — the alienee of the mortgagor — as a defendant with the tenant, the bill was not served on her and no appearance was entered for her, so the suit is resolved into one against the tenant alone.
In the early days of the Commonwealth, whether as a colony or a state, no provision was made for courts of *594 equity; but our judges, with a wisdom far ahead of the times, administered equitable principles, which the settlers brought with them as a part of our common law, (McMunn v. Carothers, 4 Clark 354, 355 — LOWRIE, J., 8 Standard Pennsylvania Practice — Equity Practice, § 2, p. 14), under common law forms, as a substitute for formal bill and equity process. And as early as 1705, (Act of January 12, 1705-6, 1 Sm. L. 57, pp. 59-61; 2 Stat. at Large, ch. CLII, pp. 246-9), provision was made for enforcing the collection of a mortgage by scire facias and levari facias, which secured to the mortgagor before a sale, advantages comparable to those which a court of chancery gave him by creating the equity of redemption.
Until 1836 there were no separate courts of equity in this Commonwealth. The Act of June 16, 1836, P.L. 784, sec. 13, granted to the Supreme Court and the several courts of common pleas the jurisdiction and powers of a court of chancery so far as related to (1) the perpetuation of testimony; (2) the obtaining of evidence from places outside the state; (3) the care of the persons and estates of those who are non compos mentis; (4) the appointment of trustees, their control, removal and discharge, and the settlement of their accounts; (5) the supervision and control of all corporations, other than those of a municipal character, and unincorporated societies or associations, and partnerships; (6) the care of trust monies and property, etc., and (7) in such other cases as the said courts had theretofore possessed such jurisdiction and powers, under the constitution and laws of this Commonwealth. And it further provided that the Supreme Court when "sitting in bank", in the City of Philadelphia and the courts of common pleas for said city and county — since extended throughout the Commonwealth — should in addition have the power and jurisdiction of courts of chancery, so far as related to — (1) the supervision and *595
control of partnerships and corporations other than municipal corporations (see McDougall v. Huntingdon B.T.R. C. Co.,
No chancery jurisdiction was given the courts with respect to mortgages, their collection, enforcement, equity of redemption, and foreclosure, probably because the statutory remedy at law by scire facias, which had been administered with due regard to equitable principles had proved entirely satisfactory.
While the chancery jurisdiction of our courts of common pleas has been enlarged from time to time, they have not been made courts of general jurisdiction in equity, and their chancery powers and jurisdiction have not been extended to mortgages given by individuals. The matter is well summarized in 13 Standard Pennsylvania Practice, chap. 68 — Enforcement of Real Property Mortgages, § 4, Available Remedies, as follows: "Because of the fact that no courts of general equity jurisdiction have existed in Pennsylvania, the equitable remedy of foreclosure has not been available except in a limited degree and only to the extent provided by statute [See, infra §§ 198, 199, 200, 201]."
Equity jurisdiction with respect to corporate mortgages was conferred on the Supreme Court by the Act of April 11, 1862, P.L. 477; and on the courts of common pleas with respect to certain corporate mortgages by *596 the Act of March 23, 1877, P.L. 32, amended by Act of May 5, 1931, P.L. 84, No. 60; and the Act of May 5, 1876, P.L. 123, confers equity jurisdiction on the courts of common pleas to enforce rights under the mortgages of the property, etc., of a railroad, canal or navigation corporation. See also Acts of May 31, 1887, P.L. 278; June 20, 1911, P.L. 1092. But the special grant of chancery powers with respect to the enforcement and foreclosure of certain classes of corporate mortgages emphasizes the fact that the law making body has not seen fit to extend and apply them to mortgages given by individuals as well. The complications attending the enforcement and foreclosure of certain corporate mortgages, which are not usually present with respect to mortgages given by individuals, furnish the basis for the distinction.
It was held by our Supreme Court in Talbot's Appeal, 2 Walker 67, 2 Chester Co. 413, that the holder of a mortgage, who foreclosed and bought in the real estate at the sale, could not, by a bill in equity, require the alienee of the mortgagor, who had remained in possession of the property, to account to him for the rents and profits of the real estate during the period between the date when the condition of the mortgage was broken and the plaintiff recovered possession. That case involved real estate in the City of Washington, D.C., where, instead of a technical mortgage, a trust deed is used as security for a loan on real estate, but our Supreme Court held that it was a mortgage within the contemplation of our law, and said: "When the mortgagor is suffered to remain in possession, he remains there as owner, and is not accountable for the rents and profits. The appellee who acquired the whole title of the mortgagor occupies the same high grounds. . . . . . He was not a trespasser in entering on and occupying the premises prior to a sale and conveyance by the trustee. His possession is lawful." *597
The appellant admits that it cannot recover this rent from the defendant — which refuses to comply with appellant's demand that the rent be paid to it, although it had not been able to secure possession of the premises — by distraint or action at law. We are of opinion that no chancery jurisdiction has been conferred on the lower court to restrain the defendant from paying the rent to the landlord to whom it lawfully agreed to pay it, and to order its payment instead to the plaintiff mortgage holder.
The plaintiff's remedy is (1) by action in ejectment or (2) by scire facias proceedings on the mortgage or (3) by issuing execution on the judgment bond accompanying the mortgage.
Decree affirmed at the costs of the appellant.