Walker v. Oakley

• Citation: 32 A.2d 563,347 Pa. 405
• Parties: WALKER v. OAKLEY et al.
• Decision Date: 30 June 1943
• Court: Pennsylvania Supreme Court

347 Pa. 405
32 A.2d 563

WALKER
v.
OAKLEY et al.

Supreme Court of Pennsylvania.

May 24, 1943.
Rehearing Denied June 30, 1943.

Appeal No. 12, January term, 1943, from order of Court of Common Pleas, Lackawanna County, November term, 1934 No. 1738; Eagen, Judge.

Proceeding by Charles H. Walker against Earl S. Oakley and another, wherein after several writs of attachment-execution had been issued on a judgment note, defendants obtained a rule to open the judgment, and, from an order making the rule absolute, the plaintiff appeals.

Modified.

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

Milton J. Kolansky, of Scranton, for appellant.

D. H. Jenkins, of Scranton, for appellees.

HORACE STERN, Justice.

This is an appeal from an order of the court opening a judgment entered on a note.

Plaintiff sold to defendants an apartment dwelling house, taking back a purchasemoney mortgage in the sum of $14,250. The principal of the mortgage having been reduced to $13,000, defendants refinanced it with the Home Owners Loan Corporation, plaintiff notifying the latter that he would accept its bonds in the amount of $10,575 in full settlement of his claim. In a subsequent letter to the Corporation, however, after stating that it was agreeable to him ‘to accept a reduction of approximately $2,450 in the amount of the mortgage,’ he added, ‘Said reduction to be covered by a second mortgage on the above property.’ Before he received the bonds of the Corporation defendants agreed with him in writing that they would give him a second mortgage or judgment note in the sum of $3,436.90 to cover the amount of the reduction with interest, costs and ‘legal fees'. Such a note was executed and judgment entered thereon. After several writs of attachment-execution had been issued defendants obtained a rule to open the

32 A.2d 564

judgment. The court made the rule absolute, and plaintiff appeals.

The question is whether the note is void because in violation of the Home Owners' Loan Act of June 13, 1933, c. 64, 48 Stat. 128, 12 U.S.C.A. § 1461 et seq. There is nothing in the Act which specifically prohibits the owner from giving to the mortgagee a second lien representing the difference between the amount of the mortgage and the amount accepted from the Home Owners Loan Corporation. It is evident, however, that if such an agreement between the parties were to be permitted without some measure of control or supervision by the Corporation the purpose of the Act would be defeated. The object of the legislation is not to improve the security held by the mortgagee but to relieve the owner, in a period of economic depression, from the danger of having his home swept away in foreclosure proceedings; If he were to remain burdened by the same load of indebtedness as before, that danger would not be averted. Accordingly, acting under the authority of section 1463(k) of the statute, the Home Owners Loan Corporation has adopted from time to time rules and regulations which govern such collateral agreements between the parties, and provide...