Opinion
January 6, 1939.
January 26, 1939.
Insolvency — Distribution of assets of estate — Proof of claims — Secured creditors — Collateral of third person — Extension agreement — Building and loan association — Receivership.
Where it appeared that a building and loan association, which held a second mortgage on premises subject to a first mortgage held by claimant, entered into an agreement with claimant by which the maturity date of the bond and first mortgage was extended and the association assumed payment; that after default, foreclosure followed and claimant purchased the property for a nominal sum; and that thereafter possession of the association was taken by the secretary of banking as receiver; it was held on appeal that the claim against the association, less the nominal bid, was properly allowed in full, without deduction for the value of the premises.
Argued January 6, 1939.
Before KEPHART, C. J., SCHAFFER, DREW, LINN, STERN and BARNES, JJ.
Appeal, No. 425, Jan. T., 1938, from judgment of C. P. No. 5, Phila. Co., Dec. T., 1935, No. 1034, in the matter of First Friday Building and Loan Association, Irland McK. Beckman, Secretary of Banking, Receiver. Judgment affirmed.
Audit of account of Secretary of Banking in possession of building and loan association. Before LAMBERTON, J.
The opinion of the Supreme Court states the facts.
Adjudication filed sustaining claim in full against association. Exceptions by Secretary of Banking to adjudication dismissed and final decree entered. Secretary of Banking appealed.
Error assigned, among others, was dismissal of exceptions.
Sylvan H. Hirsch, with him Herbert P. Sundheim, Special Deputy Attorneys General, and Guy K. Bard, Attorney General, for appellant.
Ralph S. Croskey, for appellee.
At the audit of the account of appellant, who, since December 5, 1935, was in charge of First Friday Building and Loan Association, The New York Life Insurance Company presented a claim on a bond and mortgage given by Anna Atkinson in 1925 maturing in three years. The building association held a second mortgage on the same premises "but at no time had any other interest therein." March 6, 1931, claimant and the building association made an agreement extending the maturity date of the bond and mortgage to February 5, 1934, etc. After default, foreclosure followed and on October 7, 1935, claimant purchased the property for $75. This, it will be noted, was before the receiver took charge. The claim with interest to December 5, 1935, when the receiver took possession, amounted to $4,570.60. It was agreed that the premises purchased at the sheriff's sale were worth $3,900. The receiver contended that claimant must credit the value. The court allowed the claim in its full amount.
"4. The parties of the second part hereby agree, assume and covenant to make prompt payment of the interest and balance of the principal of said Bond so secured, when and as the same shall respectively fall due, together with all taxes and water rents assessed, and to maintain the fire insurance as in said Bond and Mortgage provided.
"5. All the terms, conditions, stipulations, and provisions contained in the said Bond and the accompanying Warrant of Attorney and of the said Mortgage not inconsistent herewith are to remain in full force and effect."
For the reasons stated in disposing of the appeals in Emlen's Estate, 333 Pa. 238, the judgment is affirmed, costs to be paid out of the fund for distribution.