Hallman v. Hallman

• Citation: 124 Pa. 347,16 A. 871
• Decision Date: 25 February 1889
• Docket Number: 161
• Parties: J. T. HALLMAN v. R. T. HALLMAN
• Court: United States State Supreme Court of Pennsylvania

16 A. 871

124 Pa. 347

J. T. HALLMAN v. R. T. HALLMAN

No. 161

Supreme Court of Pennsylvania

February 25, 1889

Argued February 6, 1889

ERROR TO THE COURT OF COMMON PLEAS OF MONTGOMERY COUNTY.

No. 161 July Term 1888, Sup. Ct.; court below, No. 100 December Term 1887, C.P.

On June 2, 1884, a judgment was entered in favor of Reuben T. Hallman against James T. Hallman for $600, subsequently marked to the use, inter alia, of Henry Freyer. On December 1, 1887, a fieri facias was issued from the judgment and all the defendant's property, real and personal, was levied upon. The personal property was appraised at $6 and set aside to the debtor under the exemption law. On December 17th, a venditioni exponas issued, upon which the real estate was sold at $700. In the distribution of the proceeds of the sheriff's sale, a case stated was agreed upon and submitted, wherein Reuben T. Hallman, for use, etc., was plaintiff, and James T. Hallman, defendant, and which was as follows, to wit:

On February 23, 1888, the real estate of said defendant, James T. Hallman (all his personal property amounting to only $6 being appraised to him on account of his claim under the debtor's exemption act), was duly sold at sheriff's sale for $700.

Two judgments, unpaid and unsatisfied of record, were the only two liens against said premises at the time of the sheriff's sale, viz.:

No. 1 for about $70, the first lien, containing a waiver of exemption, held by Wm. F. Hallman, on which execution had not been issued.

No. 2 for $660, the second lien, without a waiver of exemption, held by the said Henry Freyer, execution plaintiff and sheriff's vendee.

James T. Hallman is the defendant in both judgments.

The defendant in the execution in due time and form of law, claimed out of the proceeds of the sale, against said execution, the balance of $294 under the $300 exemption act. The appraisers appointed under said act duly determined against a division of said real estate and valued the same at $975.

If the court be of opinion that said defendant's claim under said exemption law cannot prevail against said execution in the distribution of the proceeds of said sale, then judgment to be entered for the plaintiff; but if it can do so, then judgment to be entered for the defendant.

The costs to follow the judgment, and either party reserving the right to sue out a writ of error therein.

On June 4, 1888, after argument, the court, WEAND, J., filed the following opinion and decree:

The question raised by this record is, whether a waiver of exemption in a judgment which is the first lien on real estate, the proceeds of which is in court for distribution, enures to the benefit of a second judgment having no waiver, so that the defendant can get no part of the $300 claim, although the first lien is less than that amount. It is rather a singular fact that no decision of the Supreme Court of this state clearly decides this point so as to leave it free from difficulty.

The fund amounts to $700, and if we distribute it under the principles laid down in Shelly's App., 36 Pa. 373; Thomas's App., 69 Pa. 120; Pittman's App., 48 Pa. 315, and other kindred cases, we would first have to set apart $300 for the debtor, from which would have to be deducted the amount of the first judgment, $70, and give the defendant the difference, the balance of the above fund going to the second judgment. In this way the defendant gets his exemption, less the amount of the judgment in which he has waived it. In Jimison's App., 13 W.N. 25; s.c. 1 Chest. Co. R. 571, the per curiam opinion reads: "Had the sale been on execution by the sheriff, it is well settled the appellant (the debtor) could not have claimed $300 out of the proceeds, to the injury of the other lien creditors. Among creditors having existing liens on the same property, the law, not the will of the debtor, regulates the priority of liens. Having waived the right of his exemption in the one lien, the appellant cannot claim it out of the same land to the injury of the other lien." In that case, the waiver was contained in the first judgment, and the sale was made by an assignee for the benefit of creditors, on order of court.

This language is so general as to warrant a belief that the Supreme Court meant it to cover the point in controversy here and to carry into effect the words used by Chief Justice BLACK in Bowyer's App., 21 Pa. 210: "He must make his claim, if he makes it at all, in good faith, to carry out the very purpose of the law, and no other; all transfers and all waivers of his right, whether express or implied, enure to the benefit of his creditors in the proper order of their liens. Whatever he does not claim for himself or his family, he leaves in the general fund under the control of the court, to be distributed among those who are legally entitled to it; and such distribution is not to be regulated by any wish of his, no matter in what form he may choose to express it." Judge FUTHEY, a very respectable authority, adopted this view of the decision, when in the case of Taylor v. Webb, 2 Chest. Co. R. 16, he ruled, "that a waiver of exemption in a judgment which is a first lien enures to the benefit of subsequent lien creditors." Whilst the question is still not free from doubt, we incline to the belief that these two cases rule it in favor of the second lien creditor, to the exclusion of the defendant to receive any part of the funds.

And now June 4, 1888, judgment is directed to be entered for the plaintiff with costs.

An exception having been sealed for the defendant, he thereupon took this writ and assigned as error the order entering judgment upon the case stated in favor of the plaintiff, and in not entering judgment in favor of the defendant.

In accordance with the views herein expressed, the judgment is reversed, and now judgment is entered on the case stated for defendant, with costs, and the record remitted.

Mr. William F. Dannehower, for the plaintiff in error:

Under the application of the equitable doctrine of subrogation and, as the court below admits, under the rulings of this court in Shelly's App., 36 Pa. 373; Pittman's App., 48 Pa. 315, and subsequent cognate cases, the effect of the debtor's conjoint waiver and claim of exemption, is to divide the fund for distribution into two parts, one belonging to the debtor and the other to his judgment creditors generally. But in consequence of his waiver to the senior creditor, the debtor's exempt fund is liable to the claim of his waiver creditor, to which the latter must first resort for payment. And where the exempt fund is equal to or less than the claim of the waiver creditor, the debtor gets nothing: Pittman's App., supra; Jimison's App., 13 W.N. 25. When the exempt fund is greater than the claim of the waiver creditor, what becomes of the surplus?

1. When, subsequent to the first lien containing a waiver, there are other liens, in some of which there are express or implied waivers of exemption, and in others there are none, the surplus does not go to the debtor, but falls into the fund belonging to the creditors generally: Shelly's App., 36 Pa. 373; Bowyer's App., 21 Pa. 210. But where there is no waiver in the liens subsequent to the first judgment with a waiver, on one or all of which sale is made, and exemption was properly demanded and appraisement had, this court has never directly decided whether the surplus belongs to the debtor or to the subsequent creditor or creditors in the order of their priority. That is the case at bar.

2. The debtor in this case does not change the position in which the law places him. He does not disturb the law relating to priority of liens or the law prohibiting preferences in assignments. He makes his claim in due form and against the instrument of sale. He makes no concession to his execution creditor; nor does he place that creditor in a worse position than if no exemption had been waived. He has an equity as strong as the creditors'. To deprive the debtor of the surplus contended for is in effect saying: "You cannot, for the best reason in the world, waive your exemption in a judgment for $5, when you may have $305 worth of property, without striking down the beneficence held out by the exemption act, and stripping yourself and family of all in favor of subsequent creditors to whom you have waived nothing." The following cases sufficiently indicate the surplus of the fund should be distributed to the debtor: Shelly's App., 36 Pa. 373; Hill v. Johnston, 29 Pa. 362; G. & B. Sewing M. Co. v. Gruber, 2 Pears. 288; Thomas's App., 69 Pa. 120.

Mr. Louis M. Childs (with him Mr. Montgomery Evans), for the defendant in error:

The learned judge of the court below cites in his opinion the only cases which directly rule the case at bar: Jimison's App., 13 W.N. 25, and Taylor v. Webb, 2 Chest. Co. R. 16. All the considerations contained in the conclusion of the defendant's argument, respecting the execution, defendant's equities, and the beneficent purposes of the exemption laws, have doubtless been urged upon the court in previous cases, and we respectfully submit that the only conclusions which can be logically drawn from the adjudications upon this subject are those so broadly stated in the later cases, to wit: "That the debtor having waived the right of his exemption in one lien, he cannot claim it out of the same land to the injury of other liens," and that the court below committed no error.

Before PAXSON, C.J., STERRETT, GREEN, CLARK and MITCHELL, JJ.

OPINION

JUSTICE MITCHELL:

The precise point involved in the present case is, whether a waiver of the debtor's exemption under the act of 1849 in favor of a lien creditor whose claim is less than $300, enures to the benefit of...