Appeal of Hilton

[357] Opinion, Mr. Justice Sterrett : This contention between creditors of John H. Welsh arose upon distribution of the fund produced by sheriff’s sale of his leasehold interest in a lot held by him under lease for the term of nine hundred and ninety-nine years from November 1,1830, and on which he had erected a three story brick store house. One of the questions is whether such a leasehold estate is within the provisions of the act of' April.27, 1855, and subsequent legislation on same subject, and may thus become the subject of a valid leasehold mortgage. The purpose of the act, as stated in its title, is “ to amend certain defects in the law for the'more just and safe transmission and secure enjoyment of real and personal estate.” The eighth section declares it “ to be lawful for every lessee for term of years of any colliery or mining land, manufactory or other premises, to mortgage his or her lease or term in the demised premises, with all the buildings, fixtures and machinery thereon to the lessee belonging and thereunto appurtenant, with the same effect, as to the lessee’s interest and title, as in case of the mortgaging of a freehold interest and title, as to lien, notice, evidence and priority of payment: Provided, that the mortgage be in like manner acknowledged and placed on record in the proper county, together with the lease, and that such mortgage shall in no wise interfere with the landlord’s rights, priority or remedy for rents ; and such mortgage may be sued as in other cases.” The first section of the act of April 3,1868, provides that, “ in all cases of mortgages upon leasehold estates, the mortgagee shall have the same remedies for collection thereof which mortgagees of real estate have under the laws of this commonwealth for the collection of such mortgages.” This was followed by the act of May 13, 1876, declaring “that whenever a lease or term of years shall have heretofore been or shall hereafter be mortgaged under and by virtue of the provisions of the 8th section of the act of 1855, if the lease shall have been recorded in the deed books of the proper county before the execution of the mortgage, or shall be then recorded at the time of recording the mortgage, such recording shall be deemed a sufficient compliance with the requirements of said act with reference to recording such lease: Pro [358] vided always, that full and distinct reference be made in said mortgage to the book and page where the said lease is recorded.” Appellant contended in the court below, as he does here, that the words, “ other premises,” in the section first above quoted, were employed in. a restricted sense, intended to embrace only leasehold interests of same or like nature as colliery, mining or manufacturing leases. But, in view of the remedial purpose of the statute and the general expressions contained in the subsequent acts, the learned auditor and court below came to the conclusion that the words in question were used in the broader and more comprehensive sense of leaseholds generally, and therefore synonymous with the phrase “ other lands and tenements.” In this we think there was no error. The word “premises,” as applied to realty, means “lands and tenements,” and there appears to be no good reason why a more restricted meaning should be given to it in the act under consideration. Any other construction would exclude from the operation of the act, valuable leaseholds which were no doubt intended to be embraced, and thus fail to effectuate the general purposes expressed in the title of the act and recognized in subsequent legislation on same subject. Having thus decided that upon a fair construction of the law, the leasehold, from the sale of which the fund was realized, was not excluded from its operation, the auditor proceeded to consider the objection to the validity of the mortgage represented by appellant, viz: that it was not recorded with the lease, nor does it refer to the record thereof as required by the act, and is therefore not a lien on the leasehold. The lease was recorded with the'prior mortgage to Charles M. Reed, May 23, 1883, in mortgage book 3, page 182. Appellant’s mortgage dated May 25, 1883, was recorded the following day in mortgage book 2, page 661, but not with the lease. The body of the mortgage, however, contains this reference to the lease: “ Being the same land and leasehold conveyed to the said John H. Welsh by James S. Sterrett by deed dated March 8, 1877, and recorded iu deed book 58, page 232, by reference to which the origin of said leasehold and chain of title thereto will fully and at large appear.” The auditor, [359] considering this reference to the lease a sufficient compliance with the requirement of the act of 1876, awarded the residue of the fund to appellant; but, on exception to his ruling, the court held it was not, and recommitted the report with instructions to award the residue to W. W. Johnson, whose mortgage was recorded two months later, but contained a verbatim recital of the lease. The residue of the fund was accordingly decreed to Johnson the appellee; and this forms the subject of complaint in several of the specifications of error. It will be observed that the recital in appellant’s mortgage contains no reference to the recording of the lease. It is merely a reference to the deed of 1877, by which Welsh acquired title to the leasehold premises. The lease itself was not recorded in 1877, nor for more than six years thereafter. The act of'1876, as we have seen, declares, “ if the lease shall have been recorded in the deed books of the proper county before the execution of the mortgage, or shall then be recorded at the time of recording the mortgage, such recording shall be deemed a sufficient compliance with the act with reference to recording such lease: Provided ahvays, that full and distinct reference be made in said mortgage to the book and page where the said lease is recorded.” It is quite clear that the recital relied on by appellant utterly fails to meet the requirements of the act, and hence the court rightly held that appellant’s mortgage, although recorded prior to that of appellee, was not a lien on the leasehold premises. Leasehold mortgages are wholly dependent on the acts above quoted for their validity as liens, and unless there is at least a substantial compliance with their requirements, the mortgagee acquires no right as a lien creditor. The failure of appellant to either record the lease with his mortgage, or to cause full and distinct reference to be made therein to the book and page where the lease was then recorded, is fatal to his claim on the fund. The assignments of error are not sustained. Decree affirmed and appeal dismissed at the costs of appellant. Mr. Chief Justice Mercur dissents.