Auto Building & Loan Association v. Hall

• Decision Date: 13 March 1935
• Docket Number: 394-1934
• Citation: 117 Pa.Super. 104,177 A. 581
• Parties: Auto Building and Loan Association v. Hall (Derkin, Appellant)
• Court: Pennsylvania Superior Court

177 A. 581

117 Pa.Super. 104

Auto Building and Loan Association v. Hall (Derkin, Appellant)

No. 394-1934

Superior Court of Pennsylvania

March 13, 1935

Argued October 18, 1934

Appeal by Edith B. Derkin from order of C. P., No. 1, Philadelphia County, June T., 1932, No. 4239, in the case of Auto Building and Loan Association v. Edgar B. Hall.

Petition and rule to show cause why judgment should not be marked to use of petitioner and assignment made of mortgage.

The facts are stated in the opinion of the Superior Court.

Rule discharged, in opinion by McDevitt, P. J. Petitioner appealed.

Error assigned was discharge of rule.

Order reversed and record remitted.

Herman Blumenthal, for appellant.

John Harper, and with him Joseph B. Quigley, for Auto Building and Loan Association.

C Laurence Cushmore, Jr., of White, Schnader, Maris & Clapp for Power Building and Loan Association.

Before Trexler, P. J., Keller, Cunningham, Baldrige, Stadtfeld and Parker, JJ.

OPINION

Keller, J.

On December 29, 1921, Edgar B. Hall, who was the owner of twenty shares of stock in Auto Building & Loan Association, hereinafter called Auto Association, under two different books, or certificates, for ten shares each, maturing at different times, borrowed $ 4,000 from said building and loan association, giving his bond secured by a building and loan association mortgage on premises No. 129 North 63d Street, Philadelphia, as security, and as additional security assigned to the association, as collateral, his twenty shares of stock aforesaid. One certificate for ten shares matured of the value of $ 2,000, which was credited by the association on the principal of the mortgage.

On June 24, 1932, alleging a default in the payment of dues, interest and premiums for six months and more, Auto Association entered judgment on the bond against Edgar B. Hall, to No. 4239 June Term 1932 in the Court of Common Pleas No. 1 of Philadelphia County, and on July 1, 1932 the damages were assessed at $ 2,525.97. No appropriation was then made or has been made since by Auto Association of the value of the stock assigned to it as collateral security for the loan as aforesaid.

On April 6, 1927, Edgar B. Hall delivered to the St. Thomas Catholic Temperance Building and Loan Association his bond and warrant in the sum of $ 2,000, secured by a second mortgage on said premises No. 129 North 63d Street, and by an assignment of ten shares of stock in said St. Thomas Association as additional collateral security. This bond and mortgage and the accompanying collateral security were duly assigned to Power Building & Loan Association, hereinafter called Power Association. On March 1, 1934 judgment was entered on this bond against Edgar B. Hall to No. 9800 December Term 1933 in the Court of Common Pleas No. 1, and damages thereafter assessed at $ 2,547.49. A fieri facias was issued on this judgment and the mortgaged premises were on April 2, 1934 sold by the sheriff to Power Association for $ 50, -- subject to the first mortgage of Auto Association. The sheriff's deed was executed and acknowledged on April 9, 1934 and was recorded on April 20, 1934. The advertisement of said sheriff's sale announced that the premises would be sold "subject to mortgage of $ 2,360."

In the meantime, on March 29, 1934, Edith B. Derkin, who was the sister of Edgar B. Hall, and who had from time to time, since July, 1932, advanced him money to pay his building and loan dues, interest and premiums to Auto Association, as well as on other accounts, sent to the secretary of Auto Association a written assignment, dated March 1, 1934, by Edgar B. Hall to her of his ten shares of stock in Auto Association, represented by book No. 757, 20th series -- being the ten shares held by Auto Association as additional collateral security --, expressly recognizing that this assignment was subject to the prior assignment to Auto Association as collateral security for its bond and mortgage. The secretary of Auto Association, on April 3, 1934, returned this assignment in a letter to Mrs. Derkin's attorney, with the request that "the enclosed power be executed in its place." He desired an assignment which appointed himself, as secretary of the association, attorney to make the transfer, instead of a straight assignment as the first paper was. By a mistake, which he admitted, he named as the transferee, 'Edith B. Hall,' which was Mrs. Derkin's maiden name, and in designating the stock to be assigned, he wrote 'Book 757 for 10 shares of 20 series of stock of Good Investment Building & Loan Association,' an association of which he was also secretary. His letter of April 3, 1934 is, however, proof positive that the association had notice of the assignment to Mrs. Derkin on March 29th. That the assignment did not comply with the provisions of the by-laws, as to being signed in the secretary's presence, is, in this appeal, of no moment. The secretary of Auto Association did not object to it on that ground; and in this contest between Mrs. Derkin and a third party, it must be recognized as valid. "The by-law relating to assignment and transfer of stock is a regulation among stockholders and is not applicable here": Citizen's National Bank v. Irwin B. & L. Assn., 316 Pa. 536, 175 A. 399. See also, Brauner v. Corgan, 316 Pa. 196, 173 A. 397. The second assignment, as prepared by the secretary of Auto Association, was, however, signed by Edgar B. Hall and received by the association on April 5, 1934. On April 17, 1933 Mrs. Derkin paid Auto Association $ 336, which represented the arrearages due on its mortgage loan, including dues, interest and premiums. This was done by applying $ 336 out of $ 450, which Auto Association owed her on other stock, which had matured. Between April 5, 1934 and the next meeting of Auto Association, April 16, 1934, Mrs. Derkin, through her attorney requested Auto Association to assign to her the said judgment and the mortgage accompanying it, which it held on said premises No. 129 North 63rd Street, and tendered Auto Association her check for the sum of $ 363, being the difference between the amount owing on the loan and the value of the stock as reported by officers of said association. The association refused to do so, but raised no question as to the sufficiency of the tender. Whereupon, on April 26, 1934, Mrs. Derkin filed her petition in court, on which a rule was granted on Auto Association, to show cause why Auto Association, the plaintiff in said judgment, should not have the judgment marked to the use of Edith B. Derkin and assignment made to her of the collateral security, to wit, the mortgage as aforesaid, on deposit of the sum of $ 363 with the prothonotary of the court. Power Association was permitted to intervene and both it and Auto Association filed answers. A hearing was had and testimony taken. The lower court, on May 12, 1934, discharged the rule, but found as a fact that Mrs. Derkin gave consideration for the assignment of the stock by Hall, and that there was no evidence of fraud in connection with the assignment. On May 3, 1934, while the rule was still pending and before the hearing had been held, Power Association issued an attachment execution on its judgment to 9800 December Term, 1933, (Common Pleas No. 1), and summoned Auto Association as garnishee. The learned president judge of the court below, in his opinion, refers to this attachment. It amounts to nothing, for it is subject to the prior assignment in favor of Mrs. Derkin. This is ruled by Phillips' Est. (No. 4), 205 Pa. 525, 531, 55 A. 216, where it was held that the assignee of a chose in action, even though he has given no notice of his assignment to the holder of the fund, has priority over an attachment issued and served (Baldwin's App., 86 Pa. 483) subsequent to such assignment. Still more so is this the case where, as here, the assignee gave notice of the assignment to the holder of the fund before the issuance and service of the attachment. "As to [the assignor] the prior assignments, with or without notice to the accountants, were valid, and so they were against his attaching creditors, whose rights rose no higher than his: Pellman v. Hart, 1 Pa. 263; Noble v. Thompson Oil Co., 79 Pa. 354; Hemphill v. Yerkes, 132 Pa. 545, 19 A. 342" (Phillips' Est., supra, p. 531). Mrs. Derkin has appealed.

The by-laws of Auto Association provide: "Shares on which loans have been made upon real estate security may be transferred subject to the rights of the association" (Art. IV, sec. 6).

This is really a contest between the appellant, Mrs. Derkin, and Power Association. The only interest of Auto Association, as expressed in its paper book filed in this court, is that it may receive the money due it on its bond and mortgage and be protected against any adverse claims by either of the other parties. It specifically "submits itself to whatever order the court sees fit to make and indicates its willingness to comply with such order, provided, that if it is to assign or satisfy the mortgage and/or judgment, it be paid $ 363, together with proper costs of assignment or satisfaction. The controversy in the present case is entirely between Edith B. Derkin and the Power Building & Loan Association, and it is, therefore, suggested to the court that costs incident to the case should not be assessed against the Auto Building & Loan Association." As before stated, Auto Association has never appropriated the value of the stock formerly held by Edgar B. Hall and now owned by Mrs. Derkin to the payment of its bond and mortgage.

The principles which govern in the marshalling of assets or in subrogation are those of equity. "The doctrine of subrogation is of purely equitable origin; its application is always controlled...