White v. First Nat. Bank of Emporium

• Decision Date: 15 January 1938
• Docket Number: No. 4034.,4034.
• Citation: 24 F. Supp. 290
• Parties: WHITE v. FIRST NAT. BANK OF EMPORIUM, PA.
• Court: U.S. District Court — Western District of Pennsylvania

24 F. Supp. 290

WHITE v. FIRST NAT. BANK OF EMPORIUM, PA.

No. 4034.

District Court, M. D. Pennsylvania.

January 15, 1938.

Rydesky & Gresimer, of Emporium, Pa., for petitioner.

T. G. Gregory, of Saint Marys, Pa., for defendant.

JOHNSON, District Judge.

This is an action by the trustee of a mortgage to recover the amount of taxes assessed upon the mortgaged premises during the period of ownership of the property by the First National Bank of Emporium, and paid out of the proceeds of a foreclosure sale.

The property in question was subject to a mortgage in the amount of $110,000. The property was purchased by the First National Bank of Emporium at a treasurer's sale on October 12, 1931, and the deed therefor was delivered and recorded on December 22, 1931. On August 6, 1934, the property was put up for sale by the Treasurer of Cameron County for payment of taxes. It appears that no bid for the property was made and the property was bid in by the Commissioners of Cameron County, and a deed therefor was delivered on January 21, 1935. During the years 1932, 1933, 1934, 1935 and 1936, taxes in the amount of $4,474.51 were assessed and levied against the property, but were not paid. Subsequently, on October 16, 1936, the property was sold at foreclosure sale to John E. Rydesky for the sum of $17,000. It appears that all the taxes were paid out of the proceeds of the foreclosure sale, thus reducing the sum which otherwise would have gone towards payment of the mortgage debt.

The trustee of the mortgage, by this action, is seeking to collect the amount of the taxes from The First National Bank of Emporium, now in receivership, the alleged owner of the property during the period when the taxes in question were assessed. The defendant has filed an affidavit of defense raising questions of law.

The first question raised is whether a cause of action exists. The defendant contends that there is no personal liability on the part of the owner of property to pay taxes; that the tax collecting authorities can look only to the property for payment of taxes and therefor there is no right against the owner to which the plaintiff can be subrogated. The defendant further contends that all the authorities allowing a recovery are Philadelphia cases decided under a statute applicable only to Philadelphia.

The decided cases, although most of them arose in Philadelphia, as the defendant points out, hold that the owner of property is personally liable for taxes, and that a mortgagee may maintain an action against the grantee of the mortgagor for the amount of taxes upon the land during the grantee's ownership, and paid out of the proceeds of a sheriff's sale under foreclosure proceedings, when the effect of such distribution of the fund is to reduce the sum which otherwise would be distributable to the mortgagee. Theobald v. Sylvester, 27 Pa.Super. 362; Hogg v. Longstreth, 97 Pa. 255; King v. Mt. Vernon Bldg. Ass'n, 106 Pa. 165; Republic Bldg. & Loan Ass'n v. Webb, 12 Pa.Super. 545; Fleisher v. Blackburn, 15 Pa.Super. 289; Rawle v. Renshaw, 15 Pa.Super. 488; Fidelity Ins. Trust & Safe Deposit Co. v. Phoenix Bldg. & Loan Ass'n, 17 Pa.Super. 270; Landreth v. McCaffrey, 17 Pa.Super. 272, 276; Wood v. U. S. Nat. Bldg. & Loan Ass'n, 105 Pa. Super. 184, 160 A. 244; Pennsylvania Co. v. Bergson, 307 Pa. 44, 159 A. 32; DeHaven v. Roscon Building & Loan Ass'n, 107 Pa.Super. 459, 164 A. 69; Metropolitan Life Ins. Co. v. Commercial Nat. Bank, 115 Pa. Super. 224, 175 A. 295.

The rule does not appear to be applicable only to Philadelphia. In Pennsylvania Co. v. Bergson, supra, the Supreme Court of Pennsylvania said, at page 49, 159 A. at page 33: "Many of our cases speak of personal liability for taxes without referring to any statute. It is clear from the principles in these cases and the legislative declarations that the owner of land is and should be personally liable for taxes assessed while he is the owner of the property." The cases of Caldwell v. Moore, 11 Pa. 58; Com. v. Mahon, 12 Pa.Super. 616; Patterson v. Blackmore, 9 Watts, Pa., 104; Densmore v. Haggerty, 59 Pa. 189; and Biddle v. Noble, 68 Pa. 279, not arising in Philadelphia, were cited by the Supreme Court in support of the aforesaid rule and also in support of the rule that where one who has been compelled to pay taxes for which another is personally and legally liable the law implies an assumpsit on the part of the latter to the former. See also: Pittsburgh v. O'Reilly, 7 Pa.Dist.R. 758; Becker et ux. v. Roth, 27 Pa.Dist. & Co. R. 580.

In Com. v. Mahon, supra, the owner of seated lands in Franklin county failed to pay taxes assessed and levied upon such lands during his ownership. The sureties of the tax collector were compelled to pay the taxes and the Superior Court held that they could recover the amount of taxes from the owner by an action at law. The court there said:

"In such a case the action cannot be sustained, in the absence of a contract between the parties, unless the owner was legally and personally responsible for payment of the taxes: Neill v. Lacy, 110 Pa. 294 1 A. 325 * * * and it has been held under the various systems which have prevailed at different times, that the owner of seated lands is personally liable. * * * The foundation of the present general system of assessment and collection of taxes on seated lands is the Act of April 15, 1834, P.L. 509, which made it unlawful for collectors to bring suit for the recovery of any tax. There was no necessity for bringing any suit at law, for the act made the owner personally liable for the tax and provided a remedy for the enforcement of that liability. * * *

"The party compelled to pay is subrogated to the right of the county or municipality to receive the tax, but it is manifest that the remedies, to enforce personal liability for taxes, possessed by public authorities might be unsuitable and inappropriate to be used by an individual. The use of a tax warrant by a private person would not be convenient for him, and might involve hardship and oppression for the debtor; besides when the collector has once collected the taxes under his warrant, neither the public authorities nor a private individual have any right to require him to collect a second time. In Caldwell v. Moore supra, the remedy of the county and township was limited to the tax warrant, yet it was held...