What, then, were the rights of a mortgagee under the law of Pennsylvania prior to the passage of the Mortgage Deficiency Judgment Act? The theory in our state has always been that a mortgage is merely collateral for the payment of some primary obligation, usually a bond: Tubb's Appeal, 161 Pa. 252, 254; White's Estate, 322 Pa. 85, 89. As between the parties, both at law and in equity, it is a conveyance only so far as necessary to render the instrument effective as a security: Presbyterian Corporation v. Wallace, 3 Rawle 109, 130; Wilson v. Shoenberger's Executors, 31 Pa. 295; Harper v. Consolidated Rubber Co., 284 Pa. 444, 451; Bulger v. Wilderman Pleet, 101 Pa. Super. 168, 171; Artisti-Kote Co. v. Benefactor Building Loan Association, 64 Fed. Rep. 2d 407, 408. The obligee could proceed either in personam or in rem. If in personam he could resort to all the property of the debtor not protected by exemption laws, and for this purpose could issue one execution after another until the full amount of the debt was realized. If the obligee chose to proceed by foreclosure of the mortgage, the sum realized at the sale on execution was credited against the indebtedness, and the mortgagee could then pursue his debtor on the bond for the balance.
"A rule applicable to the administration of every trust is that any departure from the ordinary course is at the trustee's risk." In re Noble's Estate, 35 A. 859, 860 (Pa. 1896) (citing affirmed decision below of Orphans Court, Allegheny County); see also 7 Pa. Cons. Stat. Ann. sec. 6351(1) (1995) (fiduciaries include trustees); 20 Pa. Cons. Stat. Ann. sec. 7183 (1995) (trustees bound by reporting requirements of 20 Pa. Cons. Stat. Ann. sec 3532(c) (1995) for risk distributions); In re Free's Estate, 194 A. 492, 495 (Pa. 1937) (executor held to be in position of trustee); In re White's Estate, 185 A. 589, 591 (Pa. 1936) (administrator of estate). In a memorandum dated June 9, 1982, Richard recommended a formula for making annual gifts from decedent's own property and from the marital trust.
The present suit was commenced on September 27, 1944, hence was in time. This procedure was followed in Pennsylvania prior to the passage of the Deficiency Judgment Act, In re White's Estate, 322 Pa. 85, 185 A. 589; and has been followed since the passage of the Act, Fidelity-Philadelphia Trust Co. v. Allen, 343 Pa. 428, 22 A.2d 896. In the Allen case the plaintiff sold the property through scire facias sur mortgage prior to the passage of the Act.
1936) ("Foreclosure is the process of cutting off all rights of the mortgagor . . . .")). See also Naffah v. City Deposit Bank, 23 A.2d 340, 342 (Pa. 1941) (explaining that after foreclosure, the mortgagor no longer had an interest in the premises); In re White's Estate, 185 A. 589, 591 (Pa. 1936) (explaining that all of mortgagor's rights in the property were lost after the sheriff's sale). While a mortgagee is usually only insured to the extent of the mortgage debt, which is $37,410.57 here, it is also the case that a "mortgagor's rights to any insurance proceeds [are] cut off by foreclosure . . . ."
Prior to the Deficiency Judgment Act of 1941 the rule in Pennsylvania was that the price at which real estate was sold at a Sheriff's sale in execution proceedings was conclusive between the parties as to its value, and established the amount of the deficiency owed by the obligor. Lomison v. Faust, 1892, 145 Pa. 8, 23 A. 377; In re Ruetschlin's Estate, 1914, 245 Pa. 473, 478, 91 A. 857; In re White's Estate, 1936, 322 Pa. 85, 185 A. 589; In re Emlen's Estate, 1939, 333 Pa. 238, 247, 4 A.2d 143; Mollenauer v. Smith, 1912, 51 Pa.Super. 517. In a great majority of cases such real estate was bought in by the creditor without competitive bidding for a nominal sum sufficient only to cover costs, and as a result the creditor became the owner of the real estate while the debtor still remained liable for the full amount of the debt.
"A mortgage, as between the parties, is a conveyance so far as necessary to render the instrument effective as a security, but only to that extent." Eldredge v. Eldredge, 128 Pa.Super. 284 194 A. 306, 310 (1937) (citing Beaver County B. L. Ass'n. v. Winowich, 187 A. 481 and 921 (Pa. 1936); Harper v. Consolidated Rubber Co., 284 Pa. 444, 131 A. 356 (1925)); see also North American Properties, Ltd. v. Pocono Farms Lot Owners Ass'n., 489 F. Supp. 452, 457 (D.C. Pa. 1980) ("The theory in [Pennsylvania] has always been that a mortgage is merely collateral for the payment of some primary obligation. . . ."), affirmed, 633 F.2d 211 (3d Cir. 1980); In re White's Estate, 322 Pa. 85, 185 A. 589 (1936) (mortgage is treated only as security for payment of debt). "Pennsylvania subscribes to the lien theory of mortgages, i.e., a mortgage does not transfer title to the mortgagee; rather it constitutes a lien on the mortgagor's interest, thereby securing the mortgagee's loan."
"was but the officer of the Court of Common Pleas, and all he did was done under the order and sanction of that court; neither can he be punished for its errors, if, indeed, any such there were. . . . His business was to obey the orders of his legal superior, and, having done so, he is entitled to protection." Accord, In re Guardianship of Sorrels, 58 Ariz. 25, 40, 117 P.2d 96, 102 (1941); see Free's Estate, 327 Pa. 362, 194 A. 492 (1937); White's Estate, 322 Pa. 85, 185 A. 589 (1936); In re Estate of Borntraeger, 50 P.L.J. 336 (1903). No case in this Court has held a fiduciary individually liable when acting pursuant to a court decree.
To the same effect are Lehmann v. Board of Accountancy, 263 U.S. 394; Rothschild Co. v. Steger Piano Co., 256 Ill. 196, 206; Opinion of the Justices to the Senate, 226 Mass. 613, 617. While to achieve consistency of construction of similar clauses in both state and federal constitutions a state court in interpreting its own constitution will generally adhere to the decision of the Supreme Court of the United States in construing a similar provision in the Federal Constitution, no State should do so where such action would require a departure from previous state decisions, or where the state court is of the opinion that the weight of authority and better legal reasoning are decidedly in favor of the opposite holding: 21 C.J.S. Par. 205, p. 364. Until the decision in the Allen case, this Court had consistently held that the amount of the deficiency judgment could not be altered by later legislation: White's Estate, 322 Pa. 85, and Beaver Co. B. L. v. Winowich, supra; Knox v. Noggle, 328 Pa. 302; Pa. Co., Etc., v. Scott, 329 Pa. 534; in these cases we held unconstitutional the Deficiency Judgment Acts of January 17, 1934, P. L. 243, July 1, 1935, P. L. 503, and July 2, 1937, P. L. 2751, respectively. The reasoning of the United States Supreme Court in the Gelfert case, which we followed in preference to our own decisions, is not persuasive. Mr. Justice DOUGLAS apparently realizing that the legislation did alter the parties' contract, attempted to justify it by the statement that (p. 231) " 'Not only are existing laws read into contracts in order to fix obligations between parties, but the reservation of essential attributes of sovereign power is also read into contracts as a postulate of legal order' ".
There is, however, ample authority that in the absence of statute the price realized upon a sale which has been duly approved by the court affords the basis for the determination of the amount of the deficiency. Whites Estate, 322 Pa. 85, 89, 185 A. 589; Artisti-Kote Co. v. Benefactor Bldg. Loan Assn., 64 F.2d 407, 408; Jacksonville Loan Insurance Co. v. National Mercantile Co., 77 Fla. 825, 82 So. 292; Etter v. State Bank of Florida, 76 Fla. 203, 79 So. 724; Walton v. Washington County Hospital Assn., 178 Md. 446, 451, 13 A.2d 627; Marshall v. Davies, 78 N.Y. 414, 422; Frank v. Davis, 135 N.Y. 275, 279, 31 N.E. 1100; Snyder v. Blair, 33 N.J. Eq. 208, 209; 3 Jones, Mortgages (8th Ed.), 2206; 3 Wiltsie, Mortgage Foreclosure (5th Ed.), 975, 994; 37 Am. Jur. 243, 865; 42 C.J. 295, 1982. As the court said in Walton v. Washington County Hospital Assn., supra, at page 451: "It is also well established that since the confirmation of a foreclosure sale is the final determination by the court that the mortgaged property was sold at a fair price, the defense of inadequacy of price can not be raised in subsequent proceedings, and for the purpose of a deficiency decree the price obtained at the sale is conclusive on the question of the market
Unfortunately, defendants ignored the statute and never filed an account, so that plaintiff was precluded from presenting his claim at an audit and obtaining protective relief against the event which ultimately happened when he was obliged to pay the deficiency due on his bond. Fiduciaries who distribute funds in their hands without an accounting and an audit of their accounts do so at their own risk, and when they assume that risk they must be held responsible for payments made without the approval of the court which turn out to have been improper: White's Estate, 322 Pa. 85, 90, 185 A. 589, 591; Free's Estate, 327 Pa. 362, 368, 194 A. 492, 495; Estate of J. Morton Ivison, 101 Pa. Super. 326; Glass' Estate, 115 Pa. Super. 448, 452, 175 A. 736, 737. Defendants seek to excuse themselves for their failure to file an account and for stating that the company had no debts or liabilities by saying that they were ignorant of plaintiff's claim.