Hacker v. Cozzens

Mr. Justice Paxson delivered the opinion of the court, March 1st 1880. This was an action of covenant to recover arrears of ground-rent.' An affidavit of defence was filed by the terre-tenant, who was the purchaser at sheriff’s sale of the premises out of which the ground-rent had been reserved, setting forth that said arrears had been discharged by the sheriff’s sale. The court below held the affidavit sufficient, and refused to enter judgment. At the time of the sheriff’s sale, the encumbrances upon the property stood in the following order: 1. Ground rent of $42.50, upon which this suit was brought; 2. Ground-rent of $47.50; and [465] 8. Mortgage of $1100. The property was sold upon the mortgage, and the proceeds, after paying costs and taxes, were paid by the sheriff on account of the mortgage. The simple question for our determination is whether the sale discharged the arrears of the first ground-rent. The question of the effect of a judicial sale upon liens-and encumbrances was so thoroughly discussed in the recent case of Dickinson v. Beyer, 6 Norris 274, that we may well be excused its repetition. It was held in that case that where land charged with a widow’s dower was sold upon a judgment which was immediately subsequent thereto in point of lien, the arrears of such dower were discharged by the sale. The charge itself remains, but the arrears being ascertainable with certainty in amount, are payable out of the fund, and therefore discharged. It is very clear that if the mortgage upon which the property in dispute was sold, had been the next lien in point of time to the first ground-rent, the arrears of such ground-rent would have been discharged. But there was a second ground-rent intervening between it and the mortgage. This was not only a fixed lien, which could not be disturbed except as to the arrears thereof, but it was also an estate, and of greater dignity than a mere lien or a mortgage. As a necessary result, the arrears of the prior ground-rent were not payable out of the proceeds. A judicial sale extinguishes liens, not estates: Catlin v. Robinson, 2 Watts 373 ; Irwin v. The Bank of the United States, 1 Barr 349; Schall’s Appeal, 4 Wright 170; Cadwallader on Ground-Rents, sect. 251. It is apparent that if the second ground-rent had been a mortgage, the arrears of the first ground-rent would not have been divested. This is settled by Devine’s Appeal, 6 Casey 348. The Act of 1830, by which mortgages are protected, was only declaratory of the law as it had long existed in regard to fixed liens, and its effect was to extend to mortgages the protection which such liens had before enjoyed. The cases of Dickinson v. Beyer, supra; Reed v. Reed, 1 W. & S. 235; Mohler’s Appeal, 5 Barr 418; Kline v. Bowman, 7 Harris 24; and Sherzer’s Executors v. Herr, Id. 34, decide that the arrears of a widow’s dower are payable out of the proceeds of a judicial sale, but in each of them the sale was upon a lien next in point of time to the dower. On the other hand, Wertz’s Appeal, 15 P. F. Smith 306, rules that when a mortgage is prior to all other liens, except a fixed charge on the land not itself divested by the sale, the lien of the mortgage is not divested by a sale under a subsequent lien, although there may be arrears due on the prior charge, whether accrued before or after the date of the mortgage; and that such arrears, being part of the fixed charge, are not to be paid from the proceeds of sale. We do not regard Lauman’s Appeal, 8 Barr 473, as in conflict with the foregoing views. In that case there were two widows, [466] each having a dower in the land sold at sheriff’s sale, and each was allowed her arrears of dower out of the proceeds, under the authority of Reed v. Reed and Mohler’s Appeal, supra. It appears to have been conceded that both widows were entitled to the arrears out of the proceeds of the sale, and the point now made was not discussed, and for anything that appears was not considered. I see no trace of any objection to the payment of the arrears due the first widow. It was said by Chief Justice Gibson, in Tower’s Appropriation, 9 W. & S. 103, that “ if a junior creditor is compelled to leave a particular encumbrance standing on the land, he is necessarily compelled to leave standing any other encumbrance which precedes it; and on a judgment subsequent to a fixed lien the sheriff consequently sells the estate subject to encumbrances which the proceeds might not satisfy, nor the sale dissolve. In other words, a judgment-creditor shall not turn the land into money, where he cannot do it as beneficially for a paramount encumbrance as that paramount encumbrance could do it for himself, and he, consequently can sell no more than the contingent or resulting interest.” If we apply this principle to the case in hand, it will be seen that if the arrears of the first ground-rent are discharged by the sale, the paramount encumbrance is left without protection. Eor if the arrears may be paid out of the proceeds, they must be so paid, as they are discharged. Hence, if the second ground-rent carved out of the land should happen to exceed its value, so that a sale under a junior encumbrance would produce no fund wherewith to pay the arrears of the first, yet they would nevertheless be discharged by the sale. It is also difficult to see how the second ground-rent-can stand as a charge if the arrears of the first are payable out of the proceeds of the sheriff’s sale. We are of opinion that the plaintiff below was entitled to judgment. The order of the court below discharging the rule for judgment for want of a sufficient affidavit of defence is reversed; and it is now ordered that the record be remitted to the said court, with directions to enter judgment against the defendant for such sum as to right and justice may belong, unless other legal or equitable cause be shown to the court below why such judgment should not be so entered.