Exceptions by H. E. Stoudt, a creditor, to assignee's account. F. A. Marx for exceptants. Charles K. Derr for assignee. Opinion by Wagner, J., February 19, 1917.-On January 2, 1914, Lizzie Keine and Michael, her husband, by deed, made an assignment for the benefit of creditors to Calvin A. Unger. This deed of assignment contains this reservation: "Saving and excepting so much as, by the laws of this Commonwealth, is exempt from levy and sale on execution." On February 9, 1914, the assignee presented her petition reciting the assignment for the benefit of creditors, and asking the Court to appoint appraisers to appraise and set apart property to the value of $300. The Court thereupon appointed three appraisers, who, after due notice given, on February 14, 1914, appraised and set apart to the assignor the personal property to the value of $300 elected to be retained by the assignor. This appraisement, together with a schedule of the goods appraised and set apart by the appraisers and elected to be retained by the assignor, was filed in the Prothonotary's office on February 20, 1914. After the assignee filed his account, H. E. Stoudt, a credtor. filed exceptions to the account upon the ground that the assignee had not accounted in his account for the goods that had been appraised and set apart to Lizzie Keine, the assignor, on February 14, 1914, and that he was the owner and holder of two certain notes of which the assignor is the maker and wherein she had waived her right to exemption., Nothing was done by the exceptant to have aforesaid appraisement set aside. The reservation in this deed was notice to creditors of the claim of the assignor: Larkin's Estate, 132 Pa. 554. He, however, waited for one year and four months before taking any action in this matter, and then excepted to the assignee's account. It is only the property that the deed of assignment conveys to the assignee that can be made the subject of an exception to the assignee's account. When the assignor assigned her property to the assignee for the benefit of creditors, she excepted from said assignment $300 worth of property. Shortly after the assignment, the property thus reserved, was specifically designated and identified by the appraisement and schedule of the goods as made by the appraisers and selected by the assignor. It therefore never passed to the assignee. He is consequently not liable to account therefor. In Miller vs. Jackson, 34 Pa. Superior Ct. 31, where the general reservation, as in this case, of $300, was made and shortly thereafter appraised and set apart to the assignor, the Superior Court (p. 36), say: "The claim to this property, first made in the deed itself, perfected by the prompt application for appraisers and their official designation of what was covered by the claim, resulted in leaving the title of the assignor to that property undivested, as if the deed had never been made, or as if these particular items had been specially reserved from the operation of the deed." The exceptions are dismissed. KIEFFER'S EX'R vs. DRY et al. Real Estate Mortgages-Assignment of Mortgage-Sale-Purchase By Assignor at Sale Free of Liens-Resulting Trust. 1. The assignor of a first mortgage by way of collateral security for a debt owing by the assignor to the assignee can neither consent to the sale of the land free from the lien of the mortgage, nor, becoming the purchaser at such sale, hold the land discharged of the mortgage as against the assignee. 2. The assignment of a mortgage estops the assignor from doing anything which would impair the validity or availability of the mortgage as a security and first lien, and from acquiring, by purchase or otherwise, an interest in the mortgage which would in any degree tend to defeat the lien of the mortgage assigned by him. 3. In such a case the assignor becomes the holder of the land in trust to answer the purposes of the mortgage as assigned by him. 4. In equity every assignment of a chose in action is considered as a declaration of trust. In the Court of Common Pleas of Berks County. No. 59 February Term, 1916. Verdict for plaintiff for $1,66.95. Rules by defendant for new trial and for judgment non obstante veredicto. C. H. Ruhl for defendants and rules. William J. Young and Thomas K. Leidy, contra. Opinion by Endlich, P. J., February 24, 1917.-The facts in this case are undisputed. Conceiving them to entitle plaintiff to recover, the Court directed a verdict accordingly, and at defendants' instance entered these rules. On April 4, 1893, George L. Dry executed a bond and first mortgage for $2,800 on certain realty of his to Daniel H. Schweyer, guardian. On March 28, 1898, Daniel H. Schweyer, guardian, gave his promissory note to Peter Kieffer for $1,500, payable one year after date, and as collateral security for the same assigned the Dry bond and mortgage to Kieffer, the assignment not being recorded until December 31, 1915. In 1902, Dry, the mortgagor, made an assignment for benefit of creditors, and subsequently his assignees peti tioned this Court for authority to sell Dry's real estate, including that covered by the mortgage referred to, for payment of debts. Attached to the petition was the request of Daniel H. Schweyer, guardian, as first mortgage creditor, that the premises described in the petition be sold freed and cleared from the lien of the said mortgage. The Court accordingly ordered the same to be sold "freed and cleared from the liens of all encumbrances." The assignees sold the property described in this mortgage to Daniel H. Schweyer "for the sum of $2,875, including dower and interest arrears," which sale was confirmed nisi on October 6, 1902, and subsequently became absolute in course. A conveyance was executed to Schweyer by Dry's assignees. At the audit of their account. the mortgage and bond were presented by Schweyer, and there was distributed and decreed to him "on account of the mortgage $567.05," and on "bond and interest $116.20." The executor of Kieffer, Schweyer's assignee of the mortgage, now proceeds by scire facias upon the same for what remains due on the note, upon which, presented at the audit of the account of Schweyer's administrator, a payment of $106.26 is acknowledged. The defendants in this proceeding are the mortgagor and the administrator of the assignor and his heirs as owners and terre tenants. The defence is that the mortgage was discharged. It will be observed that there are no questions in this case of rights of debtors without notice of the assignment, (see Foster vs. Carson, 159 Pa. 477, 479,) or of purchasers of the property mortgaged in ignorance of it. It is conceded that if the property had been sold to such a one there could be no recovery against him. But the sale was to the assignor of the mortgage himself, who, of course, was aware of it, and his representatives and heirs stand in his shoes. The case is to be viewed, therefore, as one between the assignee and the assignor, and hence the essential question to be decided seems to be, can the assignor of a first mortgage by way of collateral security for a debt owing by the assignor to the assignee (a) consent to the sale of the land freed from the lien of the mortgage, and (b) becoming the purchaser at such sale, hold the land discharged of the mortgage as against the assignee? The industry and learning of counsel have found no adjudication directly controlling, nor does there seem to be any. Still, on the one hand, what in Evans vs. See, 23 Pa. 88, 91, is termed "natural justice," to be reckoned with as a factor in the decision of a case, would appear to forbid an affirmative answer, and on the other hand we are not without pertinent intimations leading to the contrary conclusion. Thus, as far back as M'Cullum vs. Coxe, 1 Dall. 139, it was ruled that a plaintiff cannot discontinue an action after assignment of the debt in suit by him to a third party. Buchanan vs. Taylor, Add. 154, holds that an assignor cannot do any act to lessen the security of the assignee. In Horstman vs. Gerker, 49 Pa. 282, 288-9, it is laid down that there is an implied covenant in the words of assignment, unless controlled, that the assignor will not receive the money on the instrument assigned, or, if he does, that he will pay it to the assignee. And in Gaullagher vs. Caldwell, 22 Pa. 300, 302, it is recognized that the assignee of a debt will be protected against collusion between the assignor and the debtor to defeat his rights. Similarly, 1 Pingrey, Mortgages, sec. 979, states, with the citation of a number of decisions, that the assignor cannot release a mortgage assigned by him without making himself liable for the amount secured by it. Surely it is not going too far to infer from these authorities the existence of a principle to the effect that the assignment of a mortgage estops the assignor from doing anything which would impair the validity or availability of the mortgage as a security and first lien, and from acquiring, by purchase or otherwise, an interest in the mortgaged premises which would in any degree tend to defeat the lien of the mortgage assigned by him. The application of this principle to the facts of the present case seems very obvious. True, the mortgage was assigned as collateral security only, and as such for a debt less than its face. But it is not of much practical moment whether we regard the assignor in such circumstances as parting with the entire title to the mortgage assigned, retaining only the right to the surplus over what is needed to satisfy the assignee, or (see Norton vs. Warner, 3 Edw. Ch. (N. Y.) 106; Brown vs. Title & Trust Co., 174 Pa. 443, 450, and cases there collated; Muirhead vs. Jirkpatrick, 21 Pa. 237, 241,) as keeping the general property in the mortgage, subject to the right of the assignee to be first paid out of it. In either view the assignment vests the assignee with an interest in the mortgage which precludes the assignor from dealing with the latter as wholly his own and in disregard of the rights of the other party. Schweyer therefore could not rightfully consent to the discharge of the mortgage by the sale of the land under Dry's assignment for benefit of creditors, at least not to the extent that it stood pledged to Kieffer; and that is all that is necessary for the decision of this case. Nor does it involve the annulment of any decree of the Court in Dry's assignment or the invalidation of the sale to Schweyer. Giving full force to all that was done, disturbing no order of the Court and divesting no title taken thereunder, it is enough to treat Schweyer, purchasing, as holding the land in trust to answer the purposes of the mortgage as assigned by him. Judge Gibson, in Bury vs. Hartman, 4 S. & R. 175, 178, in an opinion reaching a conclusion differing from that of the majority of the Court, but not in this particular conflicting with the same, refers to the well-known doctrine that in equity every assignment of a chose in action, (and that is all a mortgage is: see Horstman vs. Gerker, 49 Pa. 282, 287, and a multitude of other cases,) is considered. as a declaration of trust. In the first instance, of course, that trust relates to the mortgage assigned. But necessarily it relates also to the land covered by it coming into the hands of the assignor and claimed to be discharged of the mortgage by his act. It is but to enforce that trust in both aspects to permit a recovery on the mortgage by the assignee against the assignor after his release, or what is equivalent thereto, of the lien of the mortgage and his purchase of the property formally freed of the same. As to the method selected for the enforcement of such trust, to wit, a proceeding by scire facias upon the mortgage, treating it as, to the extent needful, a subsisting lien that, would appear to be simply a matter of form. It might perhaps be accomplished in another way; but in Pennsylvania equity is part of the law, and the result under any available form of remedy must be substantially the same. If the views expressed are correct, it follows that the disposition made of the case at the trial was the only one that could properly be made, and that there is no room for granting a new trial or entering judgment against the verdict. The rules to show cause are discharged. WERNER vs. CRAIG. Sales Warranty-Sale of Horse-Evidence Measure of DamagesQuestion for Jury. 1. In an action to recover damages for the breach of a warranty in the sale of a horse, the question whether or not there was a warranty was for the jury where the evidence disclosed a letter written by defendant to plaintiff expressing a willingness to warrant together with conversations between them referring to that letter as intended to be a warranty and piecing it out as such by word of mouth. 2. In such a case the measure of damages is the difference between the value of the horse, had it been as warranted, and the actual value of it at the time of the sale as it was. The price originally paid may be evidence of the value as warranted and the price obtained on a resale may indicate the actual value. 3. Although testimony is not directly contradicted, its credibility is nevertheless for the jury. In the Court of Common Pleas of Berks County. No. 64 September Term, 1915. |