Gladowski v. Felczak

• Decision Date: 19 April 1943
• Docket Number: 45
• Citation: 346 Pa. 660,31 A.2d 718
• Parties: Gladowski et al. v. Felczak et al., Appellants
• Court: Pennsylvania Supreme Court

31 A.2d 718

346 Pa. 660

Gladowski et al. v. Felczak et al., Appellants

No. 45

Supreme Court of Pennsylvania

April 19, 1943

March 24, 1943, Argued

Appeal, No. 45, March T., 1943, from decree of C.P. Allegheny Co., Oct. T., 1940, No. 898, in case of Joseph Gladowski et al. v. Julius Felczak et al., President, Secretary and Treasurer, respectively, of the Polish Falcons Nest No. 290. Decree, as modified, affirmed.

Bill in equity. Before THOMPSON, J.

Decree entered in favor of plaintiffs. Defendants appealed.

As thus modified, the decree is affirmed. Costs to be paid by defendants.

Alexander J. Bielski, with him Walter J. Laska, for appellants.

Edward J. I. Gannon, of Hazlett, Gannon, Walter & McVicar, for appellees.

Before MAXEY, C.J.; DREW, LINN, STERN, PATTERSON, PARKER and STEARNE, JJ.

OPINION

MR. JUSTICE HORACE STERN:

This case involves the application of the doctrines of "unjust enrichment" and "restitution" -- modern terms of legal nomenclature which have come largely to supplant the former designation of "quasi-contracts."

The earlier events in the controversy out of which the present action arises are recited in the opinion of the Court in Polish Falcons of America v. American Citizens Club for Poles of Natrona, 338 Pa. 218, 13 A.2d 27. Polish Falcons, Nest No. 290 of Natrona, an unincorporated subordinate lodge of Polish Falcons of America, was the owner of a valuable clubhouse in Natrona. The greater part of the building was occupied by the American Citizens Club, the Nest and the Club having largely a common membership. On August 13, 1936, the Nest conveyed the property to the Club through the agency of trustees appointed for that purpose. In August 1937, Polish Falcons of America, together with one or more of the members of the Nest (which had meanwhile undergone a reorganization) brought a bill in equity to have the deed cancelled, the principal ground urged for the granting of this relief being that the constitution of the parent body provided that its consent was a prerequisite to the transfer or sale of the property of a subordinate lodge, and such consent had not been given to this conveyance. The court decreed that the deed was illegal and void, and made an order for reconveyance of the property. Accordingly the Club deeded the building back to the Nest on June 3, 1940.

At the time of the conveyance to the Club in August, 1936, the building had been seriously damaged, indeed almost demolished, by the great flood of March 17, 1936, and the Nest was wholly without funds for its repair. Moreover, there was a judgment lien against it of $3,000 held by the First National Bank of Natrona, and the taxes were in arrears. After the Club obtained title it borrowed $6,000 from plaintiffs, Joseph and Sophia Gladowski, and on November 30, 1936, executed to them its bond in that amount secured by a mortgage on the property. It used this money partly to pay the bank the sum of $3,044.50 in satisfaction of its judgment, and partly, together with funds of its own, to pay the sum of $3,475 to a contractor whom it had engaged to make the repairs necessary to restore the building. During the four years it held color of title it paid to plaintiffs $2,000 in reduction of their mortgage.

Plaintiffs filed the present bill in equity to have the mortgage declared a lien upon the property. The court below entered such a decree to the extent of $4,000, being the balance due on the mortgage, together with interest thereon from March 1, 1940.

As the deed from the Nest to the Club was judicially determined to be illegal and void the mortgage executed by the Club is necessarily also invalid. While plaintiffs are not concluded by the decision in the proceedings between the Nest and the Club, since they were not parties to that litigation and it was begun after their mortgage was executed (Stonecipher v. Keane, 268 Pa. 540, 546, 112 A. 233, 235; Puharic v. Novy, 317 Pa. 199, 204, 176 A. 233, 235), the essential facts are not in dispute and there is nothing in the present record which would warrant any conclusion other than that there reached. But, although the mortgage itself is invalid because of the invalidity of the title of the Club which executed it, plaintiffs are not beyond the pale of equitable relief.

The crucial fact is that the mortgage money was used wholly for the benefit of the property which has now been restored to the ownership and possession of the Nest. As already stated, when the latter conveyed the property to the Club the building, due to the ravages of the flood, was totally unfit for occupancy, and it was saddled with a judgment lien which the Nest had no means to satisfy. If the Nest were to be allowed, without any equitable obligation on its part, to hold the property freed of that judgment and with its clubhouse restored by the repairs made upon it, and plaintiffs were to be denied the right to recover the money loaned by them in good faith and used, in the manner indicated, for the ultimate benefit of the Nest, every proper conception of morals and fair dealing would be violated. It is not as if the mortgage money had been...