Quality Lumber & Millwork Co., Appellant, v. Andrus.
Supreme Court of Pennsylvania
May 27, 1964
414 Pa. 411
Order vacated. Costs on Cunfer.
CONCURRING OPINION BY MR. JUSTICE ROBERTS:
I join in the result reached by the Court and agree that there is available to plaintiff-appellant an adequate remedy at law and that there is, on this record, no basis for equitable relief. However, the broad language of the opinion seems to indicate that in no instance does equity have jurisdiction where property is taken by eminent domain, a principle with which I cannot concur. See 30 C.J.S., Eminent Domain §§396, 401; 11 McQuillin, Municipal Corporations §32.129 (3rd ed. 1950).
Mr. Justice MUSMANNO joins in this opinion.
Robert S. Glass, for appellant.
Earl F. Glock, for appellee.
OPINION BY MR. JUSTICE JONES, May 27, 1964:
This appeal presents an important issue: whether the deed of the personal representative of a decedent, who died intestate, conveyed title to the decedent‘s realty to bona fide grantees free and clear of the lien of a prior mortgage against such realty, the mortgage
Marie Sedlemeyer (decedent), died, intestate, on April 4, 1956, leaving as her sole heir, Marie Andrus, her daughter. Decedent owned certain improved realty in Johnstown wherein, with Mr. and Mrs. Andrus, she resided and wherein Andruses continued to reside after decedent‘s death. This realty, at the time of decedent‘s death, was lien free.
Several weeks after decedent‘s death, Mrs. Andrus qualified as personal representative of decedent‘s estate of which the realty was the sole asset. Approximately eight months later—December 15, 1956—Mrs. Andrus, in the capacity of decedent‘s heir, joined by her husband, executed a bond and mortgage—the latter in the amount of $52002—in favor of Quality Lumber & Millwork Co. (Quality), a partnership. This mortgage, ostensibly secured by decedent‘s realty, was recorded on January 7, 1957. At the time this mortgage was executed, Mrs. Andrus was still acting as personal representative of the estate, but she did not execute this mortgage in that capacity.
On April 25, 1957, Mrs. Andrus secured from the Orphans’ Court of Cambria County a discharge and release of the surety bond, posted by her at the time she secured letters of administration, averring that the realty remained unsold, that all estate debts, including inheritance tax, had been paid, that she was the sole heir and that she knew of no unfinished estate business.
Two years after the sale to Zupancics, Quality, the Andruses’ mortgage being then in default, issued execution upon the bond which accompanied the mortgage. Zupancics then petitioned the Court of Common Pleas of Cambria County to stay and set aside the execution upon the ground that Quality‘s mortgage lien was invalid. Upon answer and certain stipulated facts, the court dismissed Zupancics’ petition, holding that Quality‘s mortgage was a valid encumbrance. The Superior Court unanimously reversed (201 Pa. Superior Ct. 189, 191 A. 2d 685), and we granted allocatur.
Resolution of the question raised on this appeal involves a construction of several sections of the Fiduciaries Act of 1949.
Section 104 of the Act (
Our next inquiry is to ascertain the powers of the personal representative to which an heir‘s legal title to realty is subjected under Section 104.6 Section 541 of the Act (
Considering the application of §547 to the instant factual situation, Quality has a claim, evidenced by a bond and a mortgage, based upon a loan of money made by it to Mrs. Andrus, the sole heir of the decedent. Quality now seeks repayment of that loan by way of recourse to the realty of the decedent. The only theory upon which Quality can look to the realty of the decedent—decedent having been a stranger to the trans-
That Quality‘s claim is evidenced by a bond and mortgage—the latter being recorded and a judgment entered on the former—does not alter the situation. Quality‘s claim is still within the divestiture provisions of the statute. Even though the mortgage be construed as a conveyance of an interest in the realty (Tryon v. Munson, 77 Pa. 250), the divestiture provisions of §547 apply to both liens and estates of realty if the “claims
Section 547 operates to divest Quality‘s claim and Zupancics received from Mrs. Andrus, as personal representative, a full title to the realty free and clear of Quality‘s mortgage.
Section 615 of the Act (
We have given full consideration to the other contentions of Quality, such as the impact on the instant situation of the
The situation depicted on this record arose from the grossly improper conduct of Mrs. Andrus who is not a party of record. The parties of record—Quality and Zupancics—, insofar as the record reveals, acted in good faith in the several transactions. What recourse Quality may have against Mrs. Andrus or what the orphans’ court may or can do as to Mrs. Andrus are not matters before us. We deal here solely with the impact of the Fiduciaries Act of 1949 upon the Andrus-Quality transaction and the Andrus-Zupancic transaction. That statute—drafted for legislative approval by persons long experienced in the administration of decedents’ estates—was intended to create stability of procedure for the disposition of decedents’ realty and personalty and certainty in the marketability of title. Its aim was not simply the protection of the heirs and devisees of a decedent but also the protection of those who dealt with such heirs or devisees and decedents’ personal representatives. The terms of the statute must be strictly
We agree with that which the Superior Court stated (p. 195): “It would therefore seem evident that Quality was negligent in granting credit to the heir in her individual capacity while letters of administration were in existence. ... It should be noted that [Zupancics] could not properly have taken a deed from Mrs. Andrus in her individual capacity and have acquired full ownership to the property. Until a distribution had been made, the only proper source of the full title of the decedent was the administratrix. Any one checking the title was justified in searching against [decedent] alone, since record notice of any transfer out of her name would be shown only by some act of the personal representative or by an adjudication or decree properly indexed. ... Before accepting title from the administratrix, [Zupancics], took the normal precautions which the [Act] required. It was not necessary for [Zupancics] to check the judgment and grantor indices with regard to intervening action by the heirs. While there was only one heir in the instant case (who was also the administratrix), an exception would require that searches be made against all heirs regardless of number. This would largely nullify the advantages gained by the [Act] in the marketability of a decedent‘s real estate.”
In conclusion, we re-echo a warning, recently given,9 that those who purchase from or who grant credit to an heir or devisee, in the absence of the joinder in the transaction of the decedent‘s personal representative or a court decree awarding the interest of the decedent to such heir or devisee, assume the risk of later acts of
Order affirmed. Each party to pay own costs.
DISSENTING OPINION BY MR. JUSTICE ROBERTS:
I am unable to share the view of the majority that the Fiduciaries Act of 1949 mandates that a mortgage of intestate realty, executed by a sole heir in possession, accepted in good faith and duly recorded, is completely divested by a conveyance executed by a personal representative more than three years later.
I disagree also with the majority‘s pronouncement that, under the instant circumstances, a purchaser four years after the death of the record owner was required only to search the title of decedent and that it was unnecessary to make such examination against the sole heir who had been in continuous possession of the premises.
For generations, prior to and since the early common law, the legal title to a decedent‘s realty passed to heirs. It was only by statute very many years later that land became devisable by will. The clear and historical distinction between the administration of a decedent‘s real and personal property has long been recognized and firmly established in this Commonwealth and remained without material change until the Fiduciaries Act of 1949. Prior to that Act, real property was not an asset under supervision of the personal representative, unless such control was granted either by will or by order of court.
The Fiduciaries Act of 1949 preserved and reaffirmed the basic and traditional differences in the passage of decedent‘s real and personal property. That Act, by providing that “legal title to all real estate of a decedent shall pass at his death to his heirs or devisees, subject, however, to all the powers granted to
Section 501 withholds from the personal representative the right to “take possession of, administer and maintain real estate occupied by an heir or a devisee” unless directed to do so by the court. Similarly, §541 explicitly denies to the personal representative the right to sell real property specifically devised.
Thus, it seems clear that the statutorily designated changes in the administration of real estate did not go as far as some advocated or as the result reached by the majority seems to indicate. It is obvious, too, that all distinctions between the administration of real and personal property were not eliminated and that the assimilation of realty and personalty under the Act have not been mandated.
If it be deemed expedient or desirable to attach to the deed of a personal representative the kind and degree of marketability and finality which the majority advances, that result should be accomplished and announced by the legislature, not by court decision.1
The majority places great reliance on the last sentence of §501, “Nothing in this section shall affect the personal representative‘s power to sell real estate occupied by an heir or a devisee.” The majority, however, fails to read that sentence in the context of the preceding language of the section, particularly the fol-
The comment to §501 is revealing and helpful. The drafters advise that the section “is based on the premise that the personal representative except as stated [e.g., where the heir is in possession] should have the duty as well as the right to control real estate until it is sold or distributed by decree or until control is relinquished to the heir or devisee because it is not needed for administration. The theory of the drafters has been that the legal and equitable title to real estate passes to heirs or devisees as heretofore, but that real estate should be administered as personal property, with a few minor exceptions when the nature of real estate requires a different treatment. During administration the personal representative will have the same powers over real estate as he has over personal property except as the Act makes express provisions to the contrary.
“It is not contemplated that rents shall be collected by the personal representative from real estate occupied by an heir or devisee unless needed for payment of claims.” (Emphasis supplied.)
The comment is explicit and persuasive that despite the enlarged duties of the personal representative, the Act does not operate to disturb unnecessarily the possession of heirs or devisees as it existed at decedent‘s
The majority fears that such a limitation on the power to sell realty “would lead to a determination of the validity of a sale effected by, or a lien created by, an ‘heir’ on the basis of whether there was a need for administration of the estate or whether the administration of the estate had been completed as a practical matter, an ad hoc method of determination which would be chaotic in its results.”
The concerns of the majority, in this respect, appear baseless for a number of readily apparent reasons. First, title examinations of real estate have always been, are now, and very likely will continue to be ad hoc determinations. Second, even under the majority‘s view of the nature of title which passes by deed of a personal representative (to realty in possession of an heir or devisee and not required to satisfy claims), long established practice and the realities of such transfers require the purchaser to exercise many precautions. Among others, he must verify the authority of the personal representative, and ascertain whether the title of decedent is good, whether the property is subject to a lien or charge, whether it was specifically devised, whether debts and death taxes have been paid, whether the will prohibits sale, whether the personal representative has given bond, whether additional bond is required. For the title search to include the heir would entail little additional effort.
Finally, the majority overlooks the persuasive fact that approximately three out of four estates, including the instant one, are relatively small and do not warrant or require the expenditure for a formal and complete administration. In this simple estate, four years after decedent‘s death, administration was not yet formally
The factually undisputed record, created by stipulation, establishes that as of April 20, 1957, all debts, including inheritance taxes, had been paid, that the sole heir-administratrix was aware of no unfinished business, and that the surety on her bond was discharged and released. Substantially the same facts were repeated of record almost three years later in the petition of the personal representative requesting that she be excused from filing additional security in connection with the proposed sale of the realty.
As already noted, the purchaser accepted the deed of the personal representative executed four years after decedent‘s death to premises continuously occupied by the sole heir. It is significant that the sale which the personal representative consummated was not “under order of the orphans’ court” under §543 and did not “have the effect of a judicial sale.”
Certainly, there was sufficient notice under the described circumstances to alert the purchaser that more was required to protect his purchase than her deed unless he preferred to rely, as he apparently chose to do, on the grantor‘s warranty contained in the deed. Had the purchaser searched the indices against the sole heir as ordinary prudence and this record suggest, that simple examination would have readily disclosed that she, as administratrix, was seeking to deal with the
The majority attributes to the mortgagee negligence in advancing funds on the mortgage. If negligence be a properly applicable standard, it is submitted that the purchaser who made payment three years after the mortgage and under the circumstances here described is certainly not free of fault.
At decedent‘s death, legal and equitable title vested in the heir. Her interest was capable of being transferred and passed to the mortgagee. The mortgagee‘s lien, however, was subject to certain specified risks, e.g., the necessity of a sale to pay decedent‘s debts or death taxes or the probate of a will devising the property. None of these hazards which might have adversely affected or divested the lien interest in the property came about. The lien was valid when it was created, and, as each of the possible hazards passed, the mortgage lien became more firmly established and less subject to divestment.
It seems, therefore, most unfair and unnecessary to conclude, as does the majority, that the lien of a validly created mortgage is divested not by a risk or hazard to which the mortgage was subject at the time it was created or by the need of the estate, but by an entirely unrelated circumstance—a transaction between the personal representative and a subsequent purchaser. The majority divests a properly acquired mortgage lien simply because a later purchaser failed to adequately protect himself from conduct of the personal representative having nothing whatever to do with the administration of decedent‘s estate. Had the purchaser searched the title of the heir, this controversy would have been avoided. His cause of action is against his grantor,
To me, the statutory language is clear and directs that the powers granted the personal representative to deal with real estate in possession of the heir are limited and are to be exercised only when required for the proper administration of decedent‘s estate.
I dissent.
Mr. Chief Justice BELL and Mr. Justice MUSMANNO join in this dissenting opinion.