Greensburg Fuel Co. v. Irwin Natural Gas Co.

Opinion by Mr. Justice McCollum, The fund for distribution was realized by a sheriff’s sale on a special fieri facias under the act of April 7,1870, of “ all the property, franchises and rights of the Irwin Natural Gas Company, excepting lands held in fee,” and it is agreed by the parties claiming this fund that the lien of the mortgage given by said company to the Southwest Natural Gas Company on the 21st of August, 1889, for #35,000, was not affected by the sale. At the sale the mortgagee became the purchaser, for the sum of #7,150, of the property and franchises sold, and it now claims that it is entitled to share pro rata with the other creditors of the Irwin Company in the distribution of the proceeds. This claim was successfully resisted before tbe auditor, and in the court below, by the stockholders and unsecured creditors of the Irwin Company, on the ground that the Southwest Company purchased the property subject to its mortgage. No question is made respecting the validity or regularity of the sale. It may therefore be considered as agreed by the parties interested in the distribution that the Southwest Company has, by virtue of its purchase, all the property and franchises of the Irwin Company, excepting its lands.held in fee. B ut the Southwest Company contends that the property covered by its mortgage is within the exception mentioned in the levy, and was not sold on the special fi. fa. In other words its contention is that the mortgaged property is “land held in fee ” which cannot be sold under the act of April 7, 1870, but is subject to levy and sale under the 72d section of the act of June 16,1836. The question thus raised naturally leads us to a consideration of — 84 — the scope and meaning of the act of 1870. Prior to its passage the franchises of a public corporation and its real and personal property appropriated to corporate objects and necessary to the exercise of its corporate functions were exempt from levy and sale on execution. The remedy of its creditors against such property was by sequestration. But property, real or personal, not devoted or essential to the purposes of the corporation, might be levied on and sold pursuant to the provision of the 72d section of the act of 1836. The act of 1870 provided for the levy and sale, on execution, of the real, personal and mixed property (excepting lands held in fee), franchises and rights of the corporation, subject to any mortgage or mortgages legally existing thereon. It was expressly declared to be “ in addition to the provisions of the 72d section of the act of June 16,1836, relating to executions, and in lieu of the provisions or proceedings by sequestration under said act.” It was obviously intended to furnish a method of disposing of such corporate property as before that time was exempt from levy and sale on execution. Previous thereto lands which were a component part of the corporate plant and necessary to the enjoyment of the corporate franchises were so exempt, whether the corporation acquired title to it by purchase or by its delegated right of eminent domain; but land not dedicated to corporate purposes or essential to corporate functions was liable to be levied upon and sold in the same manner and with the same effect as the land of other debtors. Laird which before the act of 1870 could be sold on execution under the act of 1836 is to be sold in the same manner and with the same effect now as then. Land which could not then be sold on execution under the act of 1836 may now be sold on the special fi. fa. under the act of 1870. We think therefore that the exception in the act of 1870 is limited to the land which the corporation holds in fee and which, is not dedicated to corporate purposes, or essential to the exercise of the corporate franchises. It was the purpose of the act in question to allow the creditors of the corporation to sell its franchises and property dedicated and essential to the purposes for which it was chartered, and not to disintegrate such property and thus defeat such purposes, and prevent the performance of the duties which the corporation owes to the public. The property covered by the Southwest — 85 — Company’s mortgage was not “land held in fee” within the meaning of the exception referred to. It was inseparably connected with and essential to the performance of the mortgagor’s public duties under its charter. It consisted of the mortgagor’s right to take natural gas from seven acres and eighty-three perches of land, and of its rights of way and appliances required in obtaining the gas and transporting the same to the consumers. It was the property which the mortgagor acquired from the mortgagee by deed of even date with the mortgage. Independent of the reasons already given for our conclusion that it was not “land held in fee ” within the meaning of the act under which it was sold, there are other considerations which confirm this view. These arise from the nature and quality of the property mortgaged. A right to take gas from the land, or water from the spring of another, for private use or consumption, is not land held in fee, and the appliances and privileges necessary to the enjoyment of the right are not: Westmoreland Natural Gas Co. v. De Witt, 130 Pa. 249. The property levied on in this case was sold subject to any mortgage or mortgages legally existing thereon, and the only mortgage upon it was held by the Southwest Company. It was so sold on writs evidently controlled by the mortgagee and purchaser at the sheriff’s sale. A mortgage, the lien of which is not discharged by a sheriff’s sale, cannot share in the proceeds of the sale. In such case all that the purchaser takes by the sale is the equity of redemption, and his bid is for such sum as he is willing to pay for the property above the amount of the mortgage debt. If the purchaser is the mortgagee his mortgage is in equity satisfied; his claim is paid in the purchase of the property sold subject to it: Commonwealth v. Wilson, 34 Pa. 63; Cross v. Stahlman, 43 Pa. 129; Carpenter v. Koons, 20 Pa. 222; Bryar’s Appeal, 111 Pa. 504; Dollar Savings Bank v. Burns, 87 Pa. 491, and Cock v. Bailey, 146 Pa. 328. The Southwest Company chose to make the sale subject to its own mortgage. It might have sold the property on its own writ issued on a judgment obtained on a note secured by the mortgage, and in that case the purchaser would have taken it clear of all liens. But for its own purposes it sold the property subject to the mortgage, and having taken possession of it by — 86 — virtue of its purchase, its claim that it was not sold on the special fi. fa. is in conflict with its action in the premises, and without substantial merit. In issuing a special fi. fa. on its own judgment there was a plain concession by it that the property included in its mortgage was not subject to levy and sale under the 72d section of the act of 1836. There is no evidence in the case which places the claim of Mellon & Sons upon higher ground in reference to the fund than the claim of the Southwest Company, or which affords any basis for determining what portion of the fund, if any, was realized by the sale of property not included in the mortgage. In accordance with the foregoing views the specifications of error are overruled, the decree is affirmed .and the appeal dismissed at the costs of the appellants.