Pennsylvania Co. for Insurances on Lives and Granting Annuities v. Wallace

• Decision Date: 22 March 1943
• Docket Number: 1
• Citation: 346 Pa. 532,31 A.2d 71
• Parties: Pennsylvania Company for Insurances on Lives and Granting Annuities, Appellant, v. Wallace et al
• Court: Pennsylvania Supreme Court

31 A.2d 71

346 Pa. 532

Pennsylvania Company for Insurances on Lives and Granting Annuities, Appellant, v. Wallace et al

No. 1

Supreme Court of Pennsylvania

March 22, 1943

January 28, 1943, Argued

Appeal, No. 1, May T., 1941, from judgment of C.P. Dauphin Co., Sept. T., 1938, No. 299, in case of The Pennsylvania Company for Insurances on Lives and Granting Annuities Trustee for Sundry Trusts, v. Brenton G. Wallace et al. Judgment affirmed.

Assumpsit. Before MAYS, J., specially presiding, without a jury.

Finding and judgment for defendant. Plaintiff appealed.

The judgment is affirmed.

Walter Biddle Saul, with him Frederick A. Van Denbergh, Jr., John Y Scott, Samuel E. Ewing, Jr., and Saul, Ewing, Remick &amp Harrison, for appellant.

George H. Hafer, with him Arthur H. Hull, Geo. Ross Hull, and Hull, Leiby & Metzger, for appellees.

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

OPINION

MR. CHIEF JUSTICE MAXEY:

This is an appeal from the judgment of the court below in an action of assumpsit tried by a judge without a jury. The action was to recover from the defendants a deficiency judgment upon a bond given to secure a mortgage on real estate. The trial judge found that the bond "did not impose an unlimited personal and individual liability, but was a special agreement . . . to look only to the trust property," and, therefore, "the plaintiff is not entitled to recover from the defendant Wallower ^[1] the deficiency as claimed." The Court below dismissed the plaintiff's exceptions to this finding and entered judgment in favor of the defendant-appellee, E. Z. Wallower. This appeal followed.

The trial judge made certain findings of fact, which are supported by credible testimony. They are conclusive on this appeal, since they have the same weight as the verdict of a jury in cases tried by a jury. ^[2] The evidence showed that on July 28, 1922, E. Z. Wallower, Brenton G. Wallace and Frederic G. Warner, trading as Wallace and Warner, Dorothy W. Wallace, Charles J. Hood and Henry V. Massey, Jr., as subscribers and as trustee executed a Declaration of Trust; which is usually characterized as a Massachusetts Trust; ^[3] and in substance is a common law or Business Trust. In the Declaration of Trust it was provided that the parties as trustee in their collective capacity should be designated as Lancaster Apartment Company of Philadelphia. The trust agreement further provided: "1. The trustees shall have no power to bind the certificate holders personally, and the subscribers and their assigns, and all persons and corporations extended credit to, contracted with, or having any claim against the trustees, shall look only to the fund and property of the trust for payment under such contract or claim, or for the payment of any debt, damage, judgment, or any money that may otherwise become due or payable to them from the trustees, so that neither the trustees nor the certificate holders, present or future, shall be personally liable therefor. "2. In every written order, contract or obligation, which the trustees shall give or enter into, it shall be the duty of the trustees to stipulate that neither the trustees nor the certificate holders shall be personally liable by reason of such contract, order or obligation."

On December 1, 1924, Charles J. Hood & Co., acting as broker, made a written application to the New York Life Insurance Company for a mortgage loan of $125,000, which application was on a printed form furnished by the New York Life Insurance Company, (hereinafter referred to as the Insurance Company). This application gave the "Name of the Borrower: The Lancaster Apartment Co. of Philadelphia," and in the blank for "Information regarding Borrower . . .:" it was set forth that "The Lancaster Apartment Company of Philadelphia is a company formed under Agreement and Declaration of Trust under the Massachusetts Trust Act and consists of the following trustees: --," (here follows the names of the trustees in the Declaration of Trust). At the time the making of the loan by the Insurance Company was under consideration, it also had before it a letter from the broker which described "The Lancaster Apartments" in detail and stated that the "Title to the property is held by the Lancaster Apartments Company of Philadelphia, a Company formed under Agreement and Declaration of Trust under the Massachusetts Trust Act and consists" of the trustees, naming them. The application and this letter came before Charles M. Swezey, a lawyer, employed by the Insurance Company for 17 years and associated with its general counsel, and at the time he testified he was still in its employ. The Insurance Company's "instructions" to its counsel "for mortgage loans by the Company" is "to proceed with the closing of the mortgage loan if the title and conditions are found satisfactory." The only evidence showing to whom this loan was authorized by the Insurance Company is found in Mr. Swezey's letter, written in the name of the General Counsel, to the Merion Title and Trust Company in which it is expressly stated that "This Company has authorized a loan, . . . to be secured by mortgage on property, 6355 Lancaster Avenue . . ., . . . with the Lancaster Apartment Company of Philadelphia as mortgagor." This letter was written after he received the application and broker's letter showing that the borrower was a Massachusetts Trust. The trial judge found as a fact, to which no exceptions were taken, that "The New York Life Insurance Company employed the Merion Title and Trust Co. of Philadelphia to search the title and insure the loan."

On January 8, 1925, "a letter" dated January 7, 1925, was received from the Merion Title and Trust Company, forwarding the executed bond and mortgage "for examination. A settlement certificate was forwarded as well . . ." Mr. Swezey examined them, sent them to the mortgage loan department for approval, which was done that day. On the same day, Mr. Swezey wrote the Merion Title and Trust Company returning the mortgage and stated that upon receipt of advice that the mortgage had been recorded, he would forward a check with which to close the loan. Upon receipt of the Merion Company's telegram that the mortgage had been recorded, Mr. Swezey drew a warrant for a check to be dated January 12, 1925, and forwarded the check to the Merion Company.

On January 10, 1925, two days before the loan was closed and the settlement was made, on January 12, 1925, Mr. Harry C. Bare, title officer and vice-president of the Merion Company, which was employed by the Insurance Company to search this title, "insisted that the declaration of trust should be recorded as it was part of the title" and "as a matter of protection to all parties," and it was recorded on the same day.

On the date of the settlement, January 12, 1925, a deed of confirmation, which referred to the recorded Declaration of Trust was executed and recorded, and the deed recited that it should inure to the benefit of the New York Life Insurance Company. On the same day, by deed of conveyance, the trustees for Lancaster Apartment Company of Philadelphia conveyed the mortgaged premises to the Corona Realty Company. This deed recited that the trustees were trustees "acting under Declaration of Trust dated July 28, 1922, and recorded at Philadelphia January 10, 1925."

On February 20, 1928, the bond and mortgage was then past due. The Insurance Company on that day assigned the bond and mortgage to the Philadelphia Company for Guaranteeing Mortgages (hereinafter referred to as the Philadelphia Company). The Philadelphia Company agreed with the Corona Realty Company, then owner of the mortgaged premises, to extend the time for the payment of the principal of the bond and mortgage for three years from January 7, 1928. On May 9, following, the Philadelphia Company assigned the bond and mortgage to The Pennsylvania Company for Insurances on Lives and Granting Annuities, Trustee, the plaintiff-appellant in this lawsuit. (We will hereinafter refer to this Company as the Pennsylvania Company.) On September 20, 1931, the bond and mortgage was again past due, and an agreement was again made with the then owner, the Corona Realty Company, to extend the time for the payment of the principal of the bond and mortgage for an additional period of three years from January 7, 1931.

Admittedly, "at the time of the assignment of the mortgage, after the trustees had conveyed the property to the new owner, the assignee made no request for a declaration of no setoff from the Lancaster Apartment Co. of Philadelphia, or from any of the defendants, accepting a declaration of set off from the then owner."

The bond and mortgage continued in default, and on April 15, 1937, the plaintiff instituted foreclosure proceedings on the mortgage, and in these proceedings a judgment was entered for the plaintiff in the sum of $163,323.33. A writ of levari facias was issued by virtue of this judgment, and pursuant thereto the mortgaged premises were sold at a public sale to the plaintiff for $115,000. The sum of $113,748.93 was paid by the sheriff to the plaintiff on account of the judgment. By stipulation of counsel it was agreed that the correct amount of its claim on the bond is $45,480.88, with interest on $29,653.92 from April 14, 1938.

Appellant's contention is this: First, that even though the form of the papers indicates the signatures to have been in a representative capacity, the signers are not relieved of personal liability even though duly authorized; second, that the facts fail to show that there was an agreement either express or implied between the New York Life Insurance Company and the signers of the bond to the effect that the signers should not be personally liable;...