Albright v. Lafayette, &C. Association

• Decision Date: 01 October 1883
• Citation: 102 Pa. 411
• Parties: Albright et al. <I>versus</I> Lafayette Building and Savings Association.
• Court: Pennsylvania Supreme Court

102 Pa. 411

Albright et al. versus Lafayette Building and Savings Association.

Supreme Court of Pennsylvania.

February 26, 1883.

October 1, 1883.

February 26th 1883.

Before MERCUR, C. J., GORDON, PAXSON, TRUNKEY, STERRETT, GREEN and CLARK, JJ.

ERROR to the Court of Common Pleas of Berks county: Of January Term 1883, No. 34.

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COPYRIGHT MATERIAL OMITTED

G. A. Endlich, for the plaintiffs in error.

Daniel & James N. Ermentrout, for the defendant in error.

Mr. Justice CLARK delivered the opinion of the court, October 1st 1883.

The first point involved in this controversy is, as to the admissibility of the evidence, offered by the plaintiffs in error, the purpose of which was to establish the Deininger mortgage, as a purchase money mortgage.

The Act of March 28th 1820, § 1, Purd. Dig. 478, pl. 103, which provides that mortgages are to have priority according to the date of their recording, and that no mortgage shall be a lien until the same shall have been recorded, contains a provision as follows: —

Provided, that no mortgage given for the purchase money of the land, so mortgaged, shall be affected by the passage of this act, if the same be recorded within sixty days, from the execution thereof.

It is alleged that the mortgage, from Samuel Albright and Elizabeth his wife, to E. Jonathan Deininger dated April 26th 1876, is a mortgage given for purchase money of the land mortgaged, and that a sale thereon, of the mortgaged premises, discharged the lien of the prior recorded mortgage, of Lafayette Building and Savings Association; this is the first question in the cause.

The first and second specifications of error are to the same effect, and are to the refusal of the court to admit the evidence of William P. Bard Esq. who was the attorney of James T. Reber, assignee of George J. Heilig, for creditors, and conducted the transaction between Reber, Deininger and the Albrights.

These offers were, to prove by Bard, "That the conveyance of the property and the giving of the mortgage, were, in point of fact, one and the same transaction; that the mortgage was given directly in consideration of the land; that a deed, or agreement, was actually drafted between the parties, to wit: Reber and Deininger, conveying the property to said Deininger, and a deed or agreement conveying the property from Deininger to the Albrights; that in order to save the expense of these multiplied conveyances, by consent of the parties, the conveyance was made directly from Reber to the Albrights, the latter executing their mortgage for the purchase money directly to Deininger; that the conveyance of the property to the Albrights, — the execution of the mortgage by them to Deininger, — the cancellation of Deininger's judgments against Heilig being subsisting liens upon the property conveyed, — and the recording of the mortgage of the Albrights to Deininger upon the same property, were one simultaneous, undivided transaction; that all the said parties were informed of, and had notice of, and agreed to the above arrangement; that no money passed from Deininger to the Albrights; that the mortgage to Deininger was, in fact, for purchase-money."

Purchase money results, of course, from the contract relation of vendor and vendee; except that relation exist there can be no mortgage for purchase money; such a security passes from the vendee to the vendor on the footing of the contract of sale. A purchase money mortgage too, is executed and delivered simultaneously with the conveyance of the land, and there is necessarily unity of time, contract and parties to the transaction; the execution and delivery of the deed and of the mortgages being contemporaneous, the law regards them as one transaction, in the same manner as a deed of defeasance forms, with the principal deed, to which it refers, but one contract, although it be by a distinct and separate instrument.

A purchaser of lands, finding a lien of record against his vendor, is bound to inquire into the incipiency of the vendor's title: Gutherie v. Watson, 24 Pitts. L. J. 57; and a judgment or mortgage creditor of a vendee, finding a lien in the name of a vendor against the vendee, entered or recorded within the period regulated by law, is bound to take notice of it; he is thereby put upon inquiry, as to the nature, character and consideration of the lien so found; no other notice is required; it is not even necessary that the lien should disclose upon its face the material fact that it is for purchase money, if, in point of fact, whether it be a mortgage or judgment, it was given for purchase money: Parke v. Neeley, 90 Penn. St. 52; Cohen's Appeal, 10 W. N. C. 544.

A purchase-money mortgage, however, may not always be in the name of the vendor, he may assign his right, and the security be taken in the name of the vendor, for use of the assignee, or indeed, it may, under the operation of an assignment, legal or equitable, be taken in the name of another. It can only, however, be in the name of another by the act or deed of the vendor as no other than the vendor, or those representing him, can have title to purchase money as such.

In Campbell's Appeal, 12 Casey 247, Weldon & Tomlinson advanced the money, to pay out the purchase, on a contract with the vendor himself, who made the deed and delivered it to the vendees, under the express agreement, that a mortgage and bond should be made, at the same time, to Weldon & Tomlinson for the purchase money, as such. The mortgage professed, upon its face, to be for the purchase money, and, although given to a third person, was held to be a purchase-money mortgage, and to have precedence of mechanics' liens, entered against the equitable estate.

LEWIS, C. J., in delivering the opinion of the court, says: — "The money was not advanced on the credit of the equitable estate at all, but distinctly upon the security of a mortgage upon the legal estate, for the purchase money, under a contract with the vendor himself."

A number of cases might be referred to, from which the general doctrine will appear, that the vendor may take the security in his own name, or in the name of another, under contract or by assignment from him. It will be quite sufficient here, however, to refer to the case of Cohen's Appeal, 10 W. N. C. 544, which is the latest adjudicated case bearing upon this point. In that case, a mortgage was given to secure a loan, made by the mortgagee to the cestuis que trustent of the mortgagor, who subsequently conveyed his interest in the mortgaged premises to his cestuis que trustent by deed reciting the mortgage, and conveying the title, expressly subject to the payment thereof. On the same day the cestuis que trustent confessed a judgment to the mortgagee, expressed to be for the amount of the mortgage, whereupon the mortgagee satisfied the mortgage and it was held that the judgment given to the mortgagee was to be deemed a purchase money incumbrance.

Mr. Justice GREEN, delivering the opinion of the court, says:—"But we think that the judgment of the bank must be considered as a purchase-money judgment in view of all the circumstances. It is true, it is not so stated on its face, but we do not understand that to be necessary, in any given case, where, in point of fact, the lien, whether it be judgment or mortgage, is given for purchase money. It is also true, that the bank was not the vendor of the property conveyed. But it was a lien creditor of the vendor, by a mortgage antedating the conveyance, and the payment of the lien was a part of the consideration of the conveyance, and so recited therein. If this judgment had been given by the grantees to Sturmer [the vendor], and by him assigned to the bank, it would undoubtedly have been a purchase money judgment. Why, then, should the fact that it is given directly to the bank prevent its being so regarded, when, in point of fact, the money which it secures does constitute a part of the purchase money of the property. By consent of the vendor, the vendees contract directly with the bank, to pay it this part of the consideration of the sale."

On the contrary, however, money borrowed by the vendee to pay for land, becomes the money of the borrower, and he may apply it as he pleases; it follows, that a mortgage given to secure its repayment would not be a purchase money mortgage, whether the money was so used, or used for any other purpose.

In Nottes's Appeal, 9 Wright 361, Hoover advanced to the vendee the money to pay out the purchase, and the bond he took for the money recited, that it was for purchase money of the land, but the legal title was not conveyed to Trost, the vendee, for the purpose of being mortgaged to Hoover; between the vendors and him, no treaty whatever occurred; they assigned and transferred nothing to him, there was no privity between them and him, and upon these grounds it was held, that the money due him was not purchase money within the meaning of the statute.

The cases of Hendrickson's Appeal, 24 Penn. St. 363, and Dungan v. American Life Ins. Co., 52 Penn. St. 253, are not in conflict with the principle of the cases cited; they were both determined on the fact, in each case, that the mortgages, although expressly stated therein to be for purchase money, in point of fact were not.

If therefore the testimony, embraced in the offers, had been received, its undoubted tendency was, to show that, as between the parties to the transaction, the Deininger mortgage was for purchase money of the land; but there was no evidence already adduced, nor was there any offer to show that the Lafayette Building and Savings Association were affected with any notice, of the real nature of the transaction. The effect of the recording acts is, to make priority between mortgages, generally, depend upon the time of recording, and that general rule must not yield to the merely exceptional case of a purchase-money mortgage, unless there is enough either in the...