Landau v. Western Pennsylvania Nat. Bank
| Decision Date | 12 October 1971 |
| Citation | 445 Pa. 217,282 A.2d 335 |
| Parties | Walter R. LANDAU et al., Appellants, v. WESTERN PENNSYLVANIA NATIONAL BANK, a National Banking Corporation, and Kroger Company, a Corporation. WESTERN PENNSYLVANIA NATIONAL BANK v. Robert J. CARROLL and Dan R. Jennings, Appellants. |
| Court | Pennsylvania Supreme Court |
Thomas H. Welsh, Metz, Cook, Hanna & Kelly, Pittsburgh, for Walter R. Landau and others.
Myron B. Markel, Markel, Markel, Levenson & Schafer, Pittsburgh, for Robert J. Carroll and another.
Robert G. Sable, Baskin, Boreman, Sachs, Gondelman & Craig, Robert N. Hackett, Pittsburgh, for appellee.
Before BELL, C.J., and JONES, EAGEN, O'BRIEN, ROBERTS, POMEROY and BARBIERI, JJ.
On July 24, 1970, the Western Pennsylvania National Bank instituted mortgage foreclosure proceedings against Robert Carroll and Dan Jennings. Shortly thereafter, Western Pennsylvania and the Kroger Company, lessee of the mortgaged premises, entered into a subordination and attornment agreement whereby the former agreed to subordinate its prior mortgage to the latter's lease. On August 13, 1970, Walter Landau, Thomas Landau, Calvin Landau, Sr. and Calvin Landau, Jr., holders of a junior lien upon the mortgaged property by virtue of a recorded judgment note, filed a complaint in equity seeking to set aside the subordination and attornment agreement on the theory that it unlawfully prejudiced their rights as junior lienors.
The mortgage foreclosure suit and related equity action were consolidated for trial in the Court of Common Pleas of Allegheny County, and Western Pennsylvania moved for summary judgment in each case pursuant to Pa.R.C.P. 1035, 12 P.S. Appendix. The motion was granted by the court en banc, and this consolidated appeal followed. For reasons which follow, we affirm the summary judgments of the court en banc.
The pleadings establish the following facts:
On July 18, 1966, the Bally Castle Corporation conveyed certain property in Ross Township, Allegheny County, to appellants Carroll and Jennings, who planned to erect and maintain a building containing a supermarket and offices. The deed was executed by Jennings in his capacity as corporate secretary of Bally Castle. On July 19, Carroll and Jennings mortgaged the same property to appellee Western Pennsylvania National Bank to secure a $540,000 loan. At the same time, one Robert Jarvis subordinated his prior mortgage upon a portion of the premises to the Western Pennsylvania mortgage. Both the Western Pennsylvania mortgage and the Jarvis subordination were duly recorded on July 20, 1966.
On August 5 and 9, 1966, Bally Castle leased the major portion of the property in question to the Kroger Company. These leases were also signed by Jennings as secretary of Bally Castle, and each contained a provision that the lessor would deliver to the lessee appropriate agreements subordinating to the lease any mortgage on the demised premises recorded prior to the leases. The Kroger leases were recorded on August 11, 1966, and August 16, 1966, respectively, and Kroger has at all times since been tenant in possession of the supermarket.
On November 22, 1967, more than one year after the execution of the Kroger leases, Jennings, Carroll, Carroll's wife, the Eyrecourt Corporation and Bally Castle executed a judgment note to the Landau Brothers Building Company in the face amount of $194,789.85. Landau Brothers Building Company subsequently assigned the note to appellants Walter Landau, Thomas Landau, Calvin Landau, Sr. and Calvin Landau, Jr., as co-tenants trading and doing business as the Whitehall Terrace Company. The judgment note as so assigned was recorded on December 11, 1967.
Carroll and Jennings defaulted under the terms of the Western Pennsylvania mortgage in 1967, and the instant controversy was thus precipitated.
To summarize, the relevant documents appear of record in the following chronology:
Document Date Recorded
----------------------------------- -----------------
Deed--Bally Castle Corp. to
Carroll and Jennings July 20,1966
Mortgage--Carroll and Jennings
to Western Pennsylvania National
Bank July 20, 1966
Subordination--Jarvis mortgage
to Western Pennsylvania National
Bank mortgage July 20, 1966
Lease--Bally Castle Corp. to
Kroger August 11, 1966
Lease--Bally Castle Corp. to
Kroger August 16, 1966
Judgment Note--Carroll and
Jennings to Landau Brothers
Building Company December 6, 1967
Assignment of Judgment Note--
Landau Brothers Building Company
to the Landaus, t/b/d/a
Whitehall Terrace Company December 11, 1967
Mortgage Foreclosure Action--
Western Pennsylvania National
Bank vs. Carroll and Jennings July 24, 1970
Subordination--Western Pennsylvania
National Bank to Kroger lease August 4, 1970
Equity Action--Landaus vs
Western Pennsylvania National
Bank and Kroger August 13, 1970
Its mortgage being first in time, Western Pennsylvania was not legally bound by the provision in the Kroger lease that any prior mortgages be subordinated to the lease. Had it so elected, Western Pennsylvania could have abrogated the lease by foreclosure on the mortgage, and the property would have been sold at sheriff's sale unencumbered by the lease. Fogarty v. Mount Carmel Transit Co., 367 Pa. 447, 451, 80 A.2d 727, 729 (1951); see also Trickett, The Law of Landlord and Tenant in Pennsylvania § 470 (Stern ed. 1969); 5 Tiffany, Real Property § 1422 (3rd ed. 1939). Western Pennsylvania chose otherwise, however, and by virtue of its subordination and attornment agreement with Kroger, any sheriff's sale purchaser would take the property subject to the lease. Harp Building and Loan Association v. Davis, 56 Pa.Super. 282 (1914).
The foregoing legal principles are crucial to the respective positions of the parties in this appeal. The Landaus as junior lienors and Carroll and Jennings as mortgagors contend that the rent presently paid by Kroger under the terms of its existing lease does not reflect the fair market value of the leasehold and that the subordination and attornment agreement thus substantially reduces the value of the property at a sheriff's sale to the financial detriment of the mortgagors and the holders of junior liens. It is further contended that the subordination was part of a fraud and conspiracy designed to chill bidding at the sheriff's sale. Western Pennsylvania for its part denies any fraud or conspiracy and asserts that its decision to subordinate its mortgage to the Kroger lease was designed not to reduce the value of the property but, on the contrary, to enhance and protect its own security interest.
Although the instant case presents a somewhat novel fact situation and our research has failed to disclose any cases directly in point, we believe that appellants' claims are clearly devoid of merit.
In assessing the contentions of the mortgagor-appellants, it is to be noted initially that the subordination and attornment agreement was in itself an entirely legal act. As stated in Harp Building & Loan Association v. Davis, 56 Pa.Super. 282 (1914):
'The authority to release part of mortgaged premises from the lien of the mortgage is recognized by statute, and the release of premises or part of premises from the lien of a judgment is a common practice. No conceivable principle of public policy forbids the extension of this right to a leasehold term in the property. As Chief Justice GIBSON said, in Berger v. Hiester, 6 Wharton, 210: 'It is a maxim that anyone may renounce the benefit of a privilege provided for himself."
There are of course certain well defined duties owing from a mortgagee to his mortgagor. A mortgagee in possession must account for rents and profits, Winthrop v. Arthur W. Binns, Inc., 160 Pa.Super. 214, 50 A.2d 718 (1914), must maintain the mortgaged premises in good condition to prevent its deterioration, Sansotta v. City of Pittsburgh, 330 Pa. 199, 199 A. 164 (1938), and is liable for waste, Elliott v. Moffett, 365 Pa. 247, 74 A.2d 164 (1950). However, none of these duties or any analogous duty was breached by Western Pennsylvania's subordination of its mortgage to the Kroger lease.
As set out above, the lease agreement with Kroger was executed by the Bally Castle Corporation as lessor, and the record does not reveal whether or not Bally Castle and Carroll and Jennings are legally synonymous. It is certain, however, that Jennings personally signed the lease as secretary of Bally Castle, and Kroger has been at all relevant times tenant in possession. Furthermore, in their answer to Western Pennsylvania's mortgage foreclosure complaint, Carroll and Jennings virtually admitted their status as Kroger's landlord, alleging:
These facts taken together clearly demonstrate that Carroll and Jennings (a) are Kroger's actual landlord or (b) have at least ratified the lease by knowingly recognizing kroger's tenancy on the mortgaged premises.
That being the case, we agree with the court en banc that Carroll and Jennings...
To continue reading
Request your trial
-
Wagner v. Holtzapple
...or agreed with intent to do an unlawful act or to do an otherwise lawful act by unlawful means. See Landau v. Western Pennsylvania National Bank,445 Pa. 217, 282 A.2d 335 (1971); Fife v. Great Atlantic and Pacific Tea Co.,356 Pa. 265, 52 A.2d 24 (1947); Bausbach v. Reiff,244 Pa. 559, 91 A. ......
-
Larsen v. Philadelphia Newspapers, Inc.
...229 Pa.Super. 333, 324 A.2d 498 (1974) ] where facts are set forth indicating joint activities. Compare Landau v. Western Pennsylvania National Bank, 445 Pa. 217, 282 A.2d 335 (1971). Although appellant has clearly pled parallel conduct by appellees [superintendents], such conduct alone is ......
-
Pierce v. Allegheny County Bd. of Elections
...an unlawful purpose; (2) an overt act done in pursuance of the common purpose; and (3) actual legal damages. Landau v. Western Penn. Nat'l Bank, 445 Pa. 217, 282 A.2d 335 (1971). Furthermore, plaintiffs are required to allege and prove malice — that is, an unlawful intent to injure absent j......
-
Bennett v. Bank of Am. Nat'l Assoc. (In re Bennett)
...to do an unlawful or criminal act or to do a lawful act by unlawful means or for an unlawful purpose.” Landau v. Western Pennsylvania Natal Bank, 445 Pa. 217, 224, 282 A.2d 335 (Pa.1971). “Proof of malice, i.e., an intent to injure, is essential in proof of a conspiracy.” Thompson Coal Co. ......