Germania Building Ass'n v. Neill

Mr. Justice Mercur delivered the opinion of the court, May 3d 1880. Yeigel held twenty-five shares of stock in the building association. He made three loans from the association: one of $2000, in 1875; one of $1000, in 1876 ; and one of $2000, in 1877. To secure the payment thereof, he gave a bond and executed a mortgage for each loan, all the mortgages being on the same lands. He also transfered as collateral security some stock : that is, ten shares on his first loan, five shares on his second, and ten shares on his third loan. While Yeigel and the association sustained-this relation towards each other, the defendant in error obtained a judgment against Yeigel, and issued this attachment-execution thereon against the association. At that time the amount paid in by Yeigel was $925, and the withdrawal value of the twenty-five shares was $1058.84. It is very clear when the attachment was served the association had a'right to hold all the stock, as well as the bonds and mortgages, to sectire the payment of the loans. Yeigel afterwards became six months in arrears in the payment of his interest and monthly dues; the association issued a scire facias on the third mortgage, and by virtue of proceedings thereon the premises were sold by the sheriff, subject to the two prior mortgages, and the association became the purchaser thereof. It realized by the sale the sum of $840.24, leaving still due and unpaid by Yeigel the sum of $4159.76. The question now is whether this sale and purchase, as made, had the effect of causing the fifteen shares of stock to revert to Yeigel. In other words, whether, by operation of law, all the bonds and. mortgages which the association held against Yeigel were so satisfied and extinguished that it had no right to retain the stock longer, and Yeigel was entitled to a re-assignment. [325] The learned judge, without filing any opinion, entered judgment on the case stated in favor of the attaching creditor. There is not entire harmony and consistency between different parts of the case stated. Thus in one part it is expressly stated that after the sum realized by the association from the sheriff’s sale, it left “still due and unpaid by the defendant (Veigel) on account of his said loans, the sum of $4159.76.” In another part it submits to the court whether by the sale and purchase the debts secured by the first and second mortgages had not “ thereby become paid, merged and extinguished.” While a sheriff’s sale on a mortgage divests its lien on the land covered thereby, and while a purchase at such sale by the holder of a prior mortgage may operate to extinguish the lien of his prior mortgage on the land sold, and may prevent any further proceedings on the mortgage, yet it does not necessarily operate as a payment or extinguishment of the debt or bond which the mortgage was given to secure ; its effect depends on the agreement and intention of the parties: Moore v. Harrisburg Bank, 8 Watts 138; Fleming v. Parry, 12 Harris 47. In the making of this loan the facts prove the parties thereto did not intend that the land mortgaged should be the only security. Further security was required and given. There was no agreement whereby the stock should revert to Veigel before the loan was actually paid. The manner of sale negatives all intention to give up any security hold by the association. It is further shown that after the sheriff’s sale, the sum remaining unpaid on the bond secured by the last mortgage, exceeds the value of the whole twenty-five shares of stock. The association claim to hold this stock, and that they have, in fact, applied it on the indebtedness thus due from Veigel. If the latter had brought suit to recover the value of this stock, while this last bond alone was outstanding against him, the association could have successfully defended. In view of the whole character of the transaction, and the admitted facts, we do not think the attaching creditor stands on any higher ground than Veigel occupied. Judgment reversed, and judgment entered in favor of the plaintiff in error, according to the case stated.