Ramsey's Appeal

2 Watts 228

• Court: Supreme Court of Pennsylvania
• Decided: May 15, 1834
• Status: Published

Opinion

The opinion of the Court was delivered by

Gibson, C. J.

Specific objections are made to the-allowance or disallowance of particular liens, which are to be disposed of in their order; and first, of the lien held by the Bank of the United States, as an assignee of the moiety of a judgment obtained by the Pennsylvania Agricultural Bank. Judgments obtained against the latter bank for more than a moiety of the debt assigned, were held by the debtor, in his lifetime, and ought now, it is contended, to be set off without regard to the rights of the Bank of the United. States under the assignment, as it is supposed that an equitable transfer cannot stand in the way of the exercise of a legal right by the debtor. But there is a fallacy in supposing defalcation in a case like the present to be a legal right. Judgments are set against each other not by force of the statute, but by the inherent powers of the courts iramemorially exercised, being almost the only equitable jurisdiction originally appertaining to them as courts of law. An equitable right of seLting off judgments, therefore, is permitted only where it will infringe on no other right of equal grade ; consequently it is not to-affect an equitable assignee for value. As to the objection that the assignment was executed but by four of the trustees, it is sufficient that the bank, whose agents they were, has not contested the transaction, as it was bound to do in a reasonable time had it meant to disaffirm it. The necessity of an early signification of dissent from an act done without authority, was recognised by this court in Gordon v. Preston, at the last term for the Lancaster district. 1 Watts's Rep. 385.

Exception is taken to the disallowance of a judgment on an award of money to' the defendant, in an action in which the debtor was plaintiff. The reference was under the act of 1705, by the first section of which the jury are directed, when a set-off has been established for more than the plaintiff’s demand, to find a verdict for the defendant, “ and withal certify to the court how much they find the plaintiff to be indebted or in arrear to the defendant.” -The certificate thus made, is an appendage to the verdict, but no part of it, or of the premises on which the judgment is rendered ; for the judgment is not quod recuperet, but that the defendant go without day. On the contrary, it is expressly made a distinct and independent cause of action by scire facias; and though a debt of record, it is not necessarily a lien, as was shown in Allen v. Reesor, 16 Serg. & Rawle 10, being made so only by judgment on a scire facias. Such is the proceeding where a surplus is found for the defendant by a jury. By the third section of the same act, it is provided that the adjustment of. mutual accounts maybe referred by rule of court to arbitrators whose award shall have the effect of a verdict; “and the party to whom any sum of money is thereby awarded, shall have judgment or a scire facias as the case may require, as is hereinbefore directed concerning sums found and settled by a jury." That is, reddendo singula singulis, the plaintiff shall have judgment directly for money awarded to him, but the defendant shall have judgment for money awarded to him only inteimediately, on á scire facias founded on the award, as in the case of a scire facias founded on the certificate of a jury. Why the scire facias should have been introduced in either case, can be explained only on the principle of a repugnance felt at an early day for an incongruity so striking as the direct recovery of money by the defendant; but the legislature has prescribed it, and it is not for the courts to dispense with it. . Though judgment was signed on the award, it was not for the money awarded, but that the defendant should be discharged from the action ; and by this he was left to become an actor in turn as the prosecutor of a scire facias. It is too plain then, for further remark, that the part of the award which charged the plaintiff was not a lien.

Exception is taken also to the disallowance of the supposed lien of certain proceedings in escheat. By the second section of tire act of the 29th of Match 1823, an inquisition -filed in the proper office, and finding an escheat to have occurred, is declared to be a lien on the real estate of those in whose hands any part of the escheated estate is found to be. In the inquisition produced here, it is not found that the decedent died intestate, and without heirs or any known kindred; but. that is said to be no more than an irregularity which cannot be admitted collaterally to destroy the properties of the instrument, just as irregularities in a judgment cannot, be admitted collaterally to destroy the incident of its lien, while the judgment itself is suffered to stand. But a judgment itself may be treated as a nullity when it is deficient in an integral part; as may be collected from Helveté v. Rapp, 7 Serg. & Rawle 306, the record of which was barely saved from that consequence, by being found to contain the substance, though not the form, of all the essential parts of a judgment: and in The Philadelphia Bank v. Craft, 16 Serg. & Rawle 347, where a judgment confessed for a sum to be ascertained by the prothonotary, was held not to give a lien from the'date, we have the very case. That is not all. By the act on which the lien depends, a copy of the inquisition is to be filed in the prothoriotary’s office for purposes of lien, only when an escheat is found to have occurred; so that the omission of that indispensable fact is made fatal to the argument by the very words of the statute.

Exception is taken too, but not pressed, to the disallowance of certain mechanics’ liens, in perpetuation of which claims had not been filed within the six months, nor actions brought,—to state the facts, is to show that, the liens had expired.

But exception is confidently taken to the subrogation of the mortgagee, on whose sale (he fund is brought into court, to the rights and capacities of the judgment creditors who are prior to him, and whose liens bound not only the mortgaged premises, but other lands of the mortgagor, previously sold by his administrator under a decree of the orphan’s couit, the proceeds of which are in his bands, equally subject to the judgments. I do not concur with the counsel of the mortgagee that the administrator’s sale was ipso facto satisfaction of them pro tanto. No such effect is given to it by the statute which directs if, the lands-sold being but exempted from the debts of the decedent in the hands of the purchaser ; and it was held in the Bank of Pennsylvania v. Winger, 1 Rawle 295, that it is one thing to divest a lien, and another to discharge the debt. But if there is any rule or principle of equity plainly, positively and incontroverlibly established on the basis of reason and authority, it is that he who may at law control the application of two or more funds, shall not be suffered to use his legal advantages in a way to exclude the demand of a fellow creditor,' whose legal recourse is but to one of them. It is one of the most benign influences of equitable jurisdiction, that it adjusts the application of jarring liens according to their priority and value, in such a way as to produce a degree of satisfaction to all commensutate with their rights ; than which there can be no purer justice. Put it that to free his other lands from incumbrances the mortgagor had procured the prior judgment creditors so to apply their liens as to exclude the mortgagee from the benefit of his security altogether—wotdd not common honesty have called upon the courts to rescue their process from such abuse 1 The mortgagor would have felt himself insulted by (he imputation of such an arrangement. And who are they that attempt to effect the same thing by setting up their legal rights as matters not to be touched by the doctrine of subrogation ? They are the general creditors of,the mortgagor, who have succeeded t.o his rights by the operation of the intestate laws, and stand in his place as the residuary owners of his title. It is certain that the doctrine is one of mere benevolence, and that it is not to be extended to the infringement of legal rights ; as, for instance, by restricting a creditor to an inadequate fund, or in compelling him to take satisfaction in any way prejudicial to him. But what are the legal rights of the creditors? They are such as affect each other in the distribution of the assets, according to the priority of classes ; and they are consequently subordinate to equities which affected the debtor whom they collectively represent. The only error discernible in any part of the decree is, in the failure to apply the doctrine in its greatest breadth to the judgment of the Chambersburg Bank. Were the stock pledged to that bank of a legal, definite and current value, the principle of satisfaction by defalcation might have been adopted with propriety; or had the administrator consented to let it go in satisfaction at the par or any other stipulated value, all would have been well enough, as he would have been answerable to the general creditors for any loss that might have occurred by a devastavit. But the court could not deprive those creditors of the possible benefit of an advance on a sale. To do exact justice to all, it will be necessary to turn the stock into cash by an execution on the judgment, without, however, delaying the bank in the mean time. It is therefore ordered, that so much of the decree as relates to the satisfaction of that judgment be reversed ; that the judgment stand for the use of the mortgagee, who is subrogated to the rights and securities of the bank, with leave to proceed to execution of the stock pledged, crediting the proceeds on his mortgage ; that the bank be permitted to take its money out of court in the mean time; and that the residue of the decree be affirmed.

Decree accordingly.