Orient Building & Loan Association v. Freud

• Decision Date: 06 January 1930
• Docket Number: 241
• Citation: 298 Pa. 431,148 A. 841
• Parties: Orient Building & Loan Association, Appellant, v. Freud
• Court: Pennsylvania Supreme Court

148 A. 841

298 Pa. 431

Orient Building & Loan Association, Appellant, v. Freud

No. 241

Supreme Court of Pennsylvania

January 6, 1930

Argued November 27, 1929

Appeal, No. 241, Jan. T., 1929, by Orient Building & Loan Association, from order of C.P. No. 4, Phila. Co., Dec. T. 1928, No. 8175, making absolute rule to open judgment, in case of Orient Building and Loan Association v. Benedict Freud. Affirmed.

Rule to open judgment. Before FINLETTER, P.J., McCULLEN and BROWN JJ.

The opinion of the Supreme Court states the facts.

Rule absolute in opinion by FINLETTER, P.J. Plaintiff appealed.

Error assigned, inter alia, was order, quoting record.

The order of the court below is affirmed.

Harvey Gourley, for appellant. -- The case should be disposed of on petition and answer alone: State Camp v. Kelley, 267 Pa. 49; Bauer v. Hill, 267 Pa. 559.

The reservation in the deed protects plaintiff association in its right to hold defendant liable under the judgment entered: Dollar v. Burns, 87 Pa. 491, 496; Stanhope's Est., 184 Pa. 414.

The deed cannot be construed as a legal satisfaction of the mortgage: Moore's App., 88 Pa. 450; Merriman v. Moore, 90 Pa. 78; Taylor v. Mayer, 93 Pa. 42.

Nathaniel I. S. Goldman, for appellee. -- It is undisputed that plaintiff-mortgagee is now the legal and real owner in fee of the real estate secured by its mortgage, which accompanied defendant's bond in question. Its title is subject to the mortgage which accompanied the bond upon which it is now attempting to collect from defendant. It is also subject to a subsequent mortgage of $500 created by plaintiff's grantor: Bryar's App., 111 Pa. 81; Carpenter v. Koons, 20 Pa. 222; Cock v. Bailey, 146 Pa. 328; Dollar Savings Bank v. Burns, 87 Pa. 491; Greensburg Fuel Co. v. Irwin Natural Gas Co., 162 Pa. 78; Stanhope's Est., 184 Pa. 414; Mollenauer v. Smith, 51 Pa.Super. 517.

Before MOSCHZISKER, C.J., FRAZER, WALLING, SIMPSON, KEPHART, SADLER and SCHAFFER, JJ.

OPINION

MR. JUSTICE SIMPSON:

On December 13, 1923, defendant borrowed $2,800 from the building and loan association plaintiff, and gave to it therefor a bond for that amount, with warrant of attorney attached, and, as collateral to the loan, executed and delivered to defendant a building association mortgage, for a like amount, secured on one of defendant's properties, and also transferred to it fourteen shares of its building association stock. On May 1, 1924, defendant conveyed the property to Florence Schwartz, who on March 17, 1925, conveyed it to Charles Lindenhofen and Louisa, his wife, and they, in turn, conveyed it to plaintiff on December 31, 1928, since which last named date plaintiff has been the absolute owner of the property, the mortgage on it, and also the bond, warrant of attorney and fourteen shares of stock. Each of the realty conveyances was made subject to the building association mortgage, the one to plaintiff reciting also "it is understood that the said mortgage debt of $2,800 shall not be affected by this conveyance nor merged with the title hereby granted." It is doubtful, though not necessary to decide at this stage of the case, whether the words "mortgage debt" means anything more than the mortgage, since a mere debt could not, under any circumstances, be merged in the fee to realty. If this is their meaning, then their only effect is to keep the mortgage alive, not the debt secured by the bond and warrant, and plaintiff's right to recover would be limited to the mortgaged premises, which possibly would result equitably to all concerned.

On January 18, 1929, plaintiff, by virtue of the warrant of attorney, entered a judgment against defendant on the bond, and assessed the damages at $3,181.52, which was made up of the full amount of the mortgage, seven months interest thereon, an attorney's commission for collection and seven months alleged arrearages of dues, premiums and fines on the fourteen shares of stock. Defendant took a rule to open the judgment, which, after a hearing of both parties, was made absolute, because, as stated by the court, it had not been given sufficient information to enable it to determine whether or not defendant was personally liable to plaintiff, and, if he was, in what amount. This appeal by plaintiff was then taken, and, in considering it, we are called upon to determine only whether or not the court below abused its discretion in opening the judgment: Kelber v. Pittsburgh National Plow Co., 146 Pa. 485; Walter v. Fees, 155 Pa. 55; Warren Savings Bank & Trust Co. v. Foley, 294 Pa. 176. We have nothing before us to enable us to decide that it did.

The point upon which the court below needed and was not given information, was as to whether or not the amount due on the mortgage was part of the consideration of the respective purchases. Presumptively it was: Stanhope's Estate, 184 Pa. 414; Dobkin v. Landsberg, 273 Pa. 174, 180; Bryar's Appeal, 111 Pa. 81, 90; Cock v. Bailey, 146 Pa. 328. If it was, then, if plaintiff recovers from defendant, the latter may recover from his vendee, who in turn may recover from her vendees, and they from plaintiff, as their vendee, thus, by circuity, plaintiff being compelled to finally pay back any sum it recovers from defendant, together with the accrued costs in the various suits. In order to avoid this circuity, the court may treat as done that which should be done. We are not furnished with any more information than the court below had, and hence we might well affirm on this ground alone; premising, however, that the Act of June 12, 1878, P.L. 205, which limits the effect of the words "under and subject" when appearing in conveyances, does not affect a vendor's right of indemnity against his vendee, if obliged to pay an encumbrance which formed part of the purchase price, but only operates to prevent the owner of the encumbrance from recovering against the vendee because those words appear in the conveyance to the latter: May's Estate, 218 Pa. 64; Farmer's Loan & Trust Co., v. Penn Plate Glass Co., 186 U.S. 434.

Moreover even if the foregoing point is ultimately decided in favor of appellant, it has other difficulties to face. It has not printed for our use the bond, warrant of attorney or mortgage. We must assume therefore, that all these documents are in the usual building association form, and hence would show that defendant owned and, in consideration of the loan, had transferred to plaintiff fourteen shares of its building association stock, upon each of which one dollar per month was to be paid, in addition to accruing interest, premiums and fines; that these payments were to continue...