Opinion
October 4, 1938.
December 5, 1938.
Equity — Pleadings — Admissions — Hearing upon bill and answer.
1. When a case is submitted to the court on the pleadings, all the averments of the bill not denied in the answer must be taken as true; all the averments of the bill denied in the answer must be considered as nonexisting; all allegations in the answer not denied or explained in the replication must be accepted. [548]
Executions — Mortgages — Sheriff's sale — Setting aside — Time — Procedure — Inadequacy of price — Title claim — Ejectment — Fraud affecting purchaser — Equity.
2. The proper procedure to set aside a sheriff's sale for inadequacy of price or irregularity is by petition and rule to show cause before acknowledgment of the deed; after the acknowledgment of the deed, it is too late to raise these questions. [549]
3. Where title is claimed by another, ejectment is a proper remedy to determine that question. [549]
4. Where there is fraud and collusion affecting the purchaser, equity can redress the wrong. [549]
Mortgages — Recording — Description — Sufficiency — Lien — Extension of time of payment.
5. In a proceeding in equity between a prior and a subsequent mortgagee of the same property, it was held that the mortgage recorded by the prior mortgagee was sufficient to give notice to the subsequent encumbrancer, where it appeared that, although a one-story frame building referred to in the first mortgage description had been supplanted at the time of the second mortgage by a brick two and one-half story building, and the letter of the "block" of which the lot was a part was left blank, the subsequent mortgagee had used the identical language in describing the property and the premises were minutely described by metes and bounds with a fixed monument as a starting point and streets and adjoiners were given. [549-50]
6. The lien of a mortgage continues until the mortgage debt is paid. [550]
7. The extension of time of payment of a mortgage debt, in the absence of fraud, does not impair its priority or standing as a lien. [550]
Argued October 4, 1938.
Before KEPHART, C. J., SCHAFFER, MAXEY, DREW, LINN, STERN and BARNES, JJ.
Appeal, No. 5, Jan. T., 1938, from decree of C. P. Blair Co., No. 1286, Equity Docket I, in case of Ireland McK. Beckman, Secretary of Banking, Receiver of Railroad Men's Building Loan Association, v. The Altoona Trust Company. Decree affirmed.
Bill in equity.
Decree entered dismissing bill, opinion by PATTERSON, P. J.
The facts are in part as follows:
On March 18, 1926, Emil L. Grannas, a general contractor, executed to the Altoona Trust Company a collateral mortgage, recorded March 19th, in the sum of $12,500 to secure the payment of future loans made to the mortgagor during the period of one year from date. The mortgage covered eight properties including the one here involved. On the date of the mortgage Grannas borrowed $5,000 and on March 20th an additional $7,500. The notes given referred to the mortgage as security. On January 9, 1929, Grannas borrowed $5,800 from the Railroad Men's Building Loan Association, giving as security a mortgage on the property in dispute covered by the Trust Company's mortgage. The lot was fully described in the Trust Company's mortgage by metes and bounds with adjoiners, having a fixed, definite starting point from which courses and distances could be taken. The last part contained the following identification: "being lot Number Twelve and One-Half (12 1/2) in Block . . ., on Plan of Lots recorded in Plot Book Volume 3, page 123, having thereon erected a One (1) story frame store room building." The Building and Loan Association mortgage gave the same description and used the above quoted language except for the omission of reference to the one-story frame building. At the time of appellant's loan, this had been removed, and a brick two and one-half story building had taken its place. On September 4, 1930, the Trust Company extended the maturity date of its mortgage to August 31, 1935, but after October 1, 1931, Grannas defaulted in interest payments. Judgment was entered March 12, 1932, on the bond accompanying the mortgage. Grannas was adjudged bankrupt March 29, 1932. He then defaulted on the Association's mortgage, another fi. fa. was issued, and the property involved was advertised by the Association for sale. However, appellee sold the same property at sheriff's sale on January 6, 1933, becoming the purchaser for $42; the deed therefor was duly acknowledged in open court and delivered. The Association later sold this property at sheriff's sale June 16, 1933, becoming purchaser thereof. The Association, claiming title to the land, brought a bill in equity in the Court of Common Pleas of Blair County to set aside the sale, cancel the deed, and obtain other relief. The Trust Company, under the court's order, filed an itemized statement of the indebtedness due it by Grannas, and the Association requested the court to decide the case on the issues presented by the pleadings. The bill was dismissed.
Plaintiff appealed.
Error assigned, among others, was decree dismissing bill.
Edward H. Flick, with him Charles J. Margiotti, Attorney General, Herbert P. Sundheim, Special Attorney General, and Leo C. Mullen, for appellant.
Robert P. Hare and Thos. C. Hare, for appellee, were not heard.
This is an appeal from the final decree of the Common Pleas of Blair County sitting in equity. The case was heard upon bill, answer and replication, preliminary objections having been overruled. When a case is submitted to the court on the pleadings, all the averments of the bill not denied in the answer must be taken as true. All the averments of the bill denied in the answer must be considered as nonexisting; all allegations in the answer not denied or explained in the replication must be accepted. See Brooks et al. v. Coyle et al., 319 Pa. 80; Queen-Favorite B. L. Assn. v. Burstein et al., 310 Pa. 219; Stone v. New Schiller B. L. Assn. et al., 293 Pa. 161.
It is difficult to follow all of appellant's contentions as they relate to equitable jurisdiction, but from the questions involved it appears appellant seeks to cancel the deed to appellee, and in effect confirm appellant's title obtained through foreclosure.
The proceeding was started after the acknowledgment of the sheriff's deed in open court, and delivery to appellee. The proper procedure to set aside a sheriff's sale for inadequacy of price or irregularity is by petition and rule to show cause before acknowledgment of the deed: Knox v. Noggle, 328 Pa. 302, 304-5. After the acknowledgment of the deed it is too late to raise these questions. If title is claimed by another, ejectment is the proper remedy to determine that question. Where there is fraud and collusion affecting the purchaser, equity can redress the wrong, but there is no such averment in this bill. See Evans v. Maury, 112 Pa. 300, 313-14; Media Title Trust Co. v. Kelly, 185 Pa. 131, 134.
The court below concluded that appellee's mortgage fully described and identified the property involved, and held that the "two descriptions are for the same property," reciting the above quoted provision. If the omission of the "block" letter was misleading, as appellant contends, appellant used the identical language in describing the property. As to the fact that a brick house supplanted the frame house, the premises were minutely described by metes and bounds with a fixed monument as a starting point, and streets and adjoiners were given. Appellant, in searching the record, could not have been mistaken as to the existence of appellee's mortgage. A mistake based on neglect cannot nullify the effect of the recording statutes, in equity or at law. The purpose of the recording statutes, inter alia, is to notify future encumbrancers, and one intending to be such is bound to search the record. The person recording an instrument is protected by these acts.
Appellant's contention that appellee is unjustly enriched is answered by the pleadings; they not only refute any possibility of a mistake, but show no enrichment of appellee as a result of appellant's advances to Grannas. Under these circumstances, appellant cannot complain of any benefit to appellee in the new building. Since this was erected prior to appellant's loan, appellant is in no position to deprive appellee of any part of that benefit.
Contrary to appellant's contention as to the amounts due, the court below found that appellee's mortgage for future advances covered indebtedness within its scope created prior to appellant's mortgage. This was a correct view. Appellant urges that the extension of the time of payment of appellee's mortgage, made after appellant's mortgage was given, gave the junior mortgage a prior lien. The lien of a mortgage continues until the mortgage debt is paid: Tryon v. Munson, 77 Pa. 250, 264; Sweeney v. Arrowsmith, 43 Pa. Super. 268, 272; and see Willock's Est., 58 Pa. Super. 159. The universal rule is that the extension of the time of payment of a mortgage debt, in the absence of fraud, does not impair its priority or standing as a lien: Jones on Mortgages (8th ed. 1928), sections 438 and 1202; 41 C. J. 582; and see cases there cited.
Decree affirmed at appellant's cost.