Hinds v. Allen

Butler, J. It does not appear where the contract counted on was made, but the plaintiff was a resident of Pennsylvania, and the subject matter of the contract was located there, and it may be presumed that the contract was made there. The law of Pennsylvania in regard to mortgages is different from ours, and we think it apparent from the finding, and the course of the argument here, that the court below was misled in respect to it; and that if that law had been properly presented to it, the decision would have been different. The provision of the statute of that state relative to the record of mortgages is as follows: “All mortgages &c., made or to be made, &c., shall have priority according to the date of recording the same, without regard to the time of making or executing such deedsand “no mortgage or defeasible deed in the nature of a mortgage shall be a lien until such mortgage or defeasible deed shall have been recorded or left for record as aforesaid.” It is true, therefore, as found, that priority of record there gives priority of lien, and also that actual knowledge of the existence of a prior mortgage, unrecorded, will, in equity, postpone the mortgage first recorded. But a judgment in scire facias brought on the mortgage first recorded, and the sale of the property pursuant thereto, gives to the purchaser an unincumbered title, and the rights of all alienees or subsequent mortgagees who were made parties to the proceeding are barred forever. [194] In this case Boggs & Wilson, having the first mortgage of record, instituted proceedings to condemn and sell against the mortgagor and “terre-tenants,” made service upon the plaintiff as terre-tenant, obtained judgment and execution, and sold the property pursuant to the statute law of the state. It is of no consequence that the purchaser of the property took an assignment of the Boggs & Wilson judgment or claim the day before he purchased the property at the sheriff’s sale. The judgment was conclusive in favor of Boggs & Wilson as against the plaintiff when so assigned, and the statute made tlie sale conclusive in favor of the innocent purchaser. The claims of the defendant.in relation to the character of the proceedings, and the effect of the judgment and sale, by which the court below was probably influenced, are not correct. A terre-tenant in Pennsylvania is something more than a mere occupant or lessee of the land. Chief Justice Gibson, in the case of Dengler v. Kiehner, 13 Penn. S. R., 41, inquiring who and what a terre-tenant is in view of their statutes, says : “ Not every one who happens to be in possession of land. There can be no terre-tenant who is not a purchaser of the estate mediately or immediately from the debtor while it was bound by the judgment; and when he has taken a title thus bound, he must show that the lien of it has been discharged, whether by payment, release, or efflux of time.” This was said in a case where there existed a. judgment lien and had been a subsequent conveyance of the property. But the purchaser of an equity of redemption in possession is also a terre-tenant; Culp v. Fisher, 1 Watts, 494; and so upon the same principles is a subsequent mortgagee in possession. It is established by the decisions of Pennsylvania that under their statutes providing for a judgment and sale of mortgaged property, it is not necessary to describe terre-tenants particularly, or the nature of the interest which makes them terre-tenants. It is sufficient if the proceeding is instituted against the mortgagor specifically and against terre-tenants in general terms. If the proceedings are served upon them [195] they become parties. If served upon a sub-tenant of theirs in possession, and they have actual knowledge of the service, they must appear and defend, or be concluded. So if not served, they have a right as parties interested to appear and defend. And a service of a scire facias on a terre-tenant is sufficient notice that the plaintiff claims a prior lien. Dengler v. Kiehner, 18 Penn. S. R., 41 ; Gulp v. Fisher, 1 Watts, 494; Minder v. Saltmarsh, 6 id., 293, 296 ; Cowan v. Getty, id., 531; Chahoon v. Hollenback, 16 Serg. & Rawle, 432. In this case the proceedings were regular in form, sufficiently descriptive of the plaintiff as terre-tenant, were duly served upon him, he knew of no defense which could be made and had no reason to suppose that any existed, and did not appear. There can be no question but that the judgment on the scire facias was conclusive against him, and established as against him the priority of lien in favor of Boggs & Wilson, and that the purchaser of the laud acquired absolute and perfect title to it, and is conclusive of the ouster or eviction and breach of the warranty. But the defendant claims, notwithstanding this, that Boggs & Wilson when they took their mortgage had knowledge of the mortgage in question, and that consequently the mortgage to the defendant was prior in equity; that this defense might have been set up ; that if the plaintiff had given him notice of the proceedings or vouched Jiim in that he should have ascertained the facts and made or enabled the plaintiff to make a successful defense ; and that the plaintiff omitted such notice at his peril. But we think that this claim of the defendant ought not to prevail. It is true undoubtedly in this state, and probably in Pennsylvania, that a warrantor of land, who covenants to warrant and defend or that the grantee shall quietly enjoy, may be notified or vouched in to defend where suit involving the title is brought against the grantee, and that if he does not defend he will be concluded by the judgment and eviction ; and it is also true that if no notice is given to the warrantor by real covenant, or where there is an implied warranty of title of goods, he is not so concluded in an action on the warranty. [196] The same doctrine too has been holden in Massachusetts in the case cited from Metcalf, where the covenant was in a bond and not in the deed. But in that case the bond was executed at the same time with the deed, as part of the same transaction, and was conditioned to save the parish harmless, “ if any person or persons should establish their title to said pew against the obligor or his assignees.” A pew in Massachusetts is real estate, and the bond and condition were in effect a covenant real for the quiet enjoyment of the pew as real estate, governed by the same rules as to notice as it would have been as a covenant of warranty if it had been in the deed. All the other cases cited are cases of covenants real. ■ This is a very different case. It is that of an assignment of a debt, and as incident thereto of a mere mortgage lien. The covenant is not one of warranty, or real covenant running with the land, or of express or implied warranty of title, but a special and personal one, in relation to a particular fact affecting the quality or comparative value of property which is the subject of bargain and sale and not of a real covenant. The defendant, after transferring the debt, covenants with respect to the incident, the mortgage, that the mortgagor had title when the mortgage was executed, and that it was a first lien. The import of that, construed in the light of then existing facts known to and necessarily contemplated by the parties, is that it was tlje first lien of record. As the parties did not know of, or contemplate, any prior record of a mortgage, or any notice which would work in equity a postponement, it is perfectly apparent that the language was used to convey the idea that it was the first of record, and was so understood by the plaintiff and so intended by the defendant. The defendant then warranted, first, the clear title of the mortgagor when the mortgage was executed, and second, a clear record when it was recorded. As the latter warranty was unquestionably intended and understood by the parties to relate to the then specific condition of the record, and was false, it was broken when it was made, as clearly as a warranty ever can be of a specific ‘fact which is untrue. The bond [197] and. mortgage being assignable by the laws of Pennsylvania, if the plaintiff had offered them in the market he would have been met with the objection that it was a second mortgage, and he could not have sold them. As then it was comparatively worthless in his hands, and the fact warranted untrue, he was damnified on the instant, and entitled to his action on the warranty. Now if there be any law in Pennsylvania arising from the application of the rules governing covenants real or implied warranties of title, to such a special, personal, specific, warranty of the condition of a record as to a mere lien, which will sustain this point of the defense, it has not been brought to our -notice or discovered by us. Upon general principles the rules adopted in the cases cited are not applicable, and the defendant was not entitled to notice of the proceedings, or the plaintiff bound to defend against the scire facias and sale or submit to the peril of this defense. For these reasons a new trial is advised. In this opinion' the other judges concurred, except Mc-Curdy, J., who dissented.