Pennsylvania Co. for Insurances on Lives and Granting Annuities v. Broad Street Hospital

• Decision Date: 27 May 1946
• Docket Number: 3859
• Citation: 47 A.2d 281,354 Pa. 123
• Parties: Pennsylvania Company for Insurances on Lives and Granting Annuities, to use, Appellant, v. Broad Street Hospital
• Court: Pennsylvania Supreme Court

47 A.2d 281

354 Pa. 123

Pennsylvania Company for Insurances on Lives and Granting Annuities, to use, Appellant, v. Broad Street Hospital

No. 3859

Supreme Court of Pennsylvania

May 27, 1946

Argued April 10, 1946

Appeal, No. 85, Jan. T., 1946, from order of C.P. No. 6 Phila. Co., Sept. T., 1945, No. 2687, in case of the Pennsylvania Company for Insurances on Lives and Granting Annuities, to use of the Jefferson Medical College of Philadelphia, v. Broad Street Hospital, formerly known as the Woman's Southern Homeopathic Hospital of Philadelphia. Order reversed.

Petition and rule to set aside sheriff's sale.

Rule made absolute, before BOK, P.J., FLOOD and LEVINTHAL, JJ. opinion by BOK, P.J. Use plaintiff appealed.

Order reversed; record remitted with instructions to discharge the rule; costs to be paid by appellee.

J Warren Brock , with him George B. Clothier, Leon J. Obermayer and Edmonds, Obermayer and Rebmann , for appellant.

Jacob S. Richman, with him Vito F. Canuso, Philip Richman , and Richman & Richman , for appellee.

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

OPINION

MR. JUSTICE LINN

The point for decision is whether a mortgagor's right or redemption must be exercised before the sheriff's hammer falls, or whether the right may be exercised after such sale but before acknowledgment and delivery of the sheriff's deed following the sale. The point has not heretofore been expressly passed on by this court. The court below held that the right to redeem could be exercised after the sale but before the acknowledgment and delivery of the sheriff's deed. The correct decision is of considerable importance in the conduct of such sales and the effect to be given to them. It happens that the Court of Common Pleas of Berks County recently reached the opposite conclusion: Federal Farm Mortgage Corporation v. Howard , 47 D. & C. 64, and denied redemption after the property had been knocked down to the sheriff's vendee. It is elementary that "all judicial sales must be open to free and fair competition" (Slingluff v. Eckel , 24 Pa. 472, 474) and that courts will reject any procedure easily adapted to frustrate free and fair judicial sales.

The defendant, Broad Street Hospital, made two mortgages to the Pennsylvania Company for Insurances on Lives and Granting Annuities, the first one dated May 2, 1927, and the second one, dated January 10, 1938, and defaulted on both. On November 5, 1945, judgment for $73,946.67 ^[1] was entered on the bond accompanying the second mortgage. On November 8, 1945, Pennsylvania Company issued a writ of fieri facias, returnable on the first Monday of December, 1945. On November 27, 1945, after the writ was issued but before the return day, the suit was marked to the use of the appellant, The Jefferson Medical College of Philadelphia. On December 3, 1945, at the sheriff's sale on the fi. fa., the mortgaged property was sold to the appellant for $124,500. On December 11, 1945, on defendant's motion, the court granted a rule to show cause why the sheriff's sale to appellant should not be set aside on the ground that after the sale, defendant had tendered the amount of the judgment with interest and costs. Appellant answered responsively but the court made the rule absolute. ^[2] This appeal then followed.

The reason given by the learned court for setting aside the sale was that the "owner of mortgaged real estate has the right to redeem in until the acknowledgment and delivery of the Sheriff's deed, and that he is not finally foreclosed by the Sheriff's hammer alone." The court stated that there were no "equities" "sufficient to warrant setting aside the Sheriff's sale," no gross inadequacy of price, "no misleading or fraud, and there are no technical defects."

The fact, then, is that the record disclosed no defect that would justify the order appealed from. If there is no defect in the record, we must sustain the appeal and reverse the order unless the right to redeem remained after the sale of defendant's equity.

The appellant contends that the mortgagor's right to redeem ended when the property was knocked down to appellant; that the only right then left in the mortgagor was to have possession during the period between the sale and the delivery of the deed: compare Hardenburg v. Beecher , 104 Pa. 20.

The mortgagor's equity of redemption is the title remaining in him subject to the mortgage, and the right of redemption is the right to require the holder of the mortgage to receive payment of the matured debt and to satisfy the lien. We have no statutes regulating the exercise of this right of redemption. No statute authorizes redemption after the sale. The court was therefore without power to make the order allowing redemption after the sale. In Parker v. Dacres , 130 U.S. 43, HARLAN, J., said, at p. 47, "In the view we take of this case it is unnecessary to express an opinion whether the provision relating to sales under execution, properly interpreted, gave a right of redemption after sale under a decree of foreclosure. If it did not, the decree below must be affirmed, for a right to redeem, after sale, does not exist unless given by statute. Counsel for the plaintiff speaks of a common-law right of redemption after sale that attaches in the absence of any statutory provision on the subject. We are not aware of any such right existing at common law, or in the system of equity as administered in the courts of England previous to the organization of our government..."

Our statutes authorize the taking of land in execution and provide that the purchaser at sheriff's sale shall take the land (as provided in the Act of 1705, 1 Sm. L. 57, section 6, 21 P.S. 791) "for such estate or estates as they were sold or delivered, clearly discharged and freed from all equity and benefit of redemption..." or (as provided in section 66, Act of June 16, 1836, P.L. 755, 12 P.S. 2447) the land "shall be quietly and peaceably held and enjoyed by the person to whom the same shall be sold or delivered, and by the heirs, successors or assignees of such persons, as fully and amply, and for such estate and estates... as he or they for whose debt or duty the same shall be sold or delivered might, could, or ought to do at or before the taking thereof in execution."

The sheriff's sale was conducted in the usual way. The accepted view of a sale by auction is stated by Williston, Contracts, sec. 29, vol. 1, p. 68. "The auctioneer may more accurately be said to invite offers than himself to be an offeror, and the law has adopted this doctrine. Since the bargain is incomplete until the hammer falls, a bidder may therefore retract his bid until that time. The same point is involved in decisions turning on the right of the auctioneer to withdraw an article offered for sale; and for the same reason, until the hammer falls, the auctioneer may withdraw, unless it has been advertised or announced that the sale shall be without reserve..." See Restatement, Contracts, section 27, vol. 1; Stover v. Rice , 3 Whart. 21., Fisher v. Seltzer , 23 Pa. 308; Stroup v. Raymond , 183 Pa. 279, 38 A. 626; Acker v. Snyder , 250 Pa. 57, 95 A. 325. When the sheriff accepted the bid, the purchaser acquired a right to a deed on complying with the terms of sale and assumed the obligation of complying with those terms: Dickson v. McCartney , 226 Pa. 552, 75 A. 735. The appellant purchaser's position was, in substance, that of a purchaser by articles of agreement; the purchaser had acquired an equitable interest which would become a complete title on complying with the terms of the sale: compare Stover v. Rice , 3 Whart. 21; Slater's Appeal , 28 Pa. 169.

For many years is has been the general understanding in this Commonwealth that the sheriff's sale takes place when the hammer falls. Recently in St. Louis B. & L. Ass'n v. Hamilton , 319 Pa. 220, 179 A. 604 (1935), in considering the time when a sale takes place, Mr. Justice SCHAFFER said: "Certainly in common parlance the word 'sale' when used in connection with a sheriff's vendue means the time when he knocked down the property to the bidding purchaser."

As the learned court below declined to rule that the sale took place when the hammer fell (and, in view of the opposite conclusion reached by the Court of Common Pleas of Berks County, referred to above) we may consider the cases at some length.

Young's Appeal , 2 P. & W. 380 (1831) appears to be the earliest reported case in which this court considered the subject. Property had been knocked down to Yound but before a deed was delivered the court set aside the sale on the sole ground that the debtor had tendered payment after the sale but before delivery of a deed. Young appealed. In support of its ruling, the court below said: "The purchaser undoubtedly has his rights. The sale, in this case, was fairly made; but on the return-day... and before the deed is acknowledged, the debtor comes into court, offers to pay the debt, and asks to retain his lands. The creditors do not object; the purchaser alone says he has acquired a right to the land. There does not appear to be any peculiar hardship in the case of the purchaser who pays his money and is disappointed in getting his deed, by reason of the sale being set aside by the court. The sale is not complete until the deed is acknowledged in court. Until the acknowledgment of the deed the debtor is not divested of his estate, and it seems to me that if the debtor pays the debt before the purchaser has acquired a legal right to the land, the equity of the debtor to retain is stronger than that of the purchaser, who insists upon the forfeiture." On appeal, this was disapproved. ROSS, J., in specifying the error of the court below, stated: "The opinion...