Gibson v. Lyon/Opinion of the Court

Before proceeding to consider this case, as presented by the findings of fact, it is necessary to dispose of an assignment of error based on a ruling of the circuit court during the progress of the trial. It appears from a bill of exceptions that 'the plaintiff offered to prove that a tender of the money, under decree of the supreme court of Pennsylvania, in suit No. 60, January term, 1868, was made about the end of May, 1869, by Charles H. Muirhead; that the assignment was returned from Lyon and Taylor executed in blank; that said C. H. Muirhead required that an assignment of said mortgage, with the blanks filled in, should be signed by said Lyon and Taylor; that A. V. Parsons, Esq., representing the parties, Lyon and Taylor, agreed to procure the assignment so completed, but that such an assignment was not made, and the parties, Lyon and Taylor, absolutely refused to make the assignment and receive the money. Counsel, on being asked, say that the money was ready, but was not actually shown Lyon and Taylor, or their attorney, and aver that an actual tender was not necessary under the refusal of Lyon and Taylor to take the money and make the assignment.'

It will be observed that the tender referred to in this offer was not made by the party obliged to pay the debt or entitled to do so, for the purpose of removing the incumbrance of the mortgage upon the property, nor in payment of the mortgage debt, and in satisfaction of the mortgage and the judgment rendered thereon, but was an offer made by a stranger to pay the amount due on account thereof, accompanied with a demand to execute an assignment to a named third party of the debt and securities, compliance with which was a condition of the offer of payment. If accepted, the effect would have been to transfer the debt and mortgage and judgment rendered thereon to an assignee, and not to extinguish it. This the plaintiffs were under no legal obligation to do, neither by contract nor by the terms of the decree referred to, inasmuch as the time within which such payment might be made for that purpose was limited by the decree to May 10, 1869. After that they were expressly left at liberty by the decree itself to proceed, at law, upon the mortgage and judgment previously rendered thereon.

This question being removed from the controversy, it is urged by counsel for defendants in error, that the judgment of the supreme court of Pennsylvania in the ejectment in favor of the defendants against the immediate grantors of the present plaintiff below, referred to in the eighth finding of fact, if not entitled to the force of an estoppel as res adjudicata, is, at least, an authoritative decision of the highest court of the state upon the law of the case, which, as it involves only questions of title to real estate within its territory dependent on its local jurisprudence, ought to furnish the obligatory rule of decision for the courts of the United States.

The former judgment in ejectment is not a bar to the present action, according to the law of Pennsylvania, where the subject is regulated by statute. 1 Brightly's Purd. Dig. Laws Pa. 535. By the act of April 13, 1807, two successive verdicts and judgments in favor of the same party will defeat a third ejectment; but where there is verdict against verdict, and judgment thereon, a verdict and judgment in a third ejectment is conclusive. Britton v. Thornton, 112 U.S. 526; S.C.. 5 Sup. Ct. Rep. 291.

As a precedent, the decision of the supreme court of the state, though single, is entitled to peculiar respect, because all the questions decided arise upon the local law of the state; but it cannot have conclusive force in the courts of the United States, unless it has become a rule of property. Burgess v. Seligman, 107 U.S. 20; S.C.. 2 Sup. Ct. Rep. 10; Carroll co. v. Smith, 111 U.S. 556; S.C.. 4 Sup. Ct. Rep. 539. The plaintiff in error, being a citizen of New Jersey, had a constitutional right, by virtue of that fact, to invoke the jurisdiction of the courts of the United States, and is entitled to their judgment upon his rights under the laws of Pennsylvania. The title of the plaintiff is derived from Sarah A. Jermon. Her title was yested in her by the deed from Rice mentioned in the third finding of fact, and that of Rice was acquired by the conveyance described in the second finding, and the proceedings in the orphan's court of Philadelphia from which it resulted. Each of these conveyances contains a recital that it is made under and subject to the payment of the mortgage under which the defendants claim.

It is contended, on behalf of the plaintiff in error, that he is not estopped by these recitals to deny the existence of the mortgage, and to assert that, in point of law, it was extinguished by the sale ordered by the orphans' court, such sales being required by law to be clear and discharged of all liens in the hands of the purchaser, and that consequently he is at liberty to insist that the subsequent sale, made under the mortgage as a subsisting and valid lien, was void.

It is true that the statute of Pennsylvania, by which the sale ordered by the orphans' court was authorized, (Act of April 18, 1853, 2 Brightly's Purd. Dig. Laws Pa. 1242, pl. 2, § 5,) provides that 'by every such public sale the premises sold shall be discharged from liens;' and it is also true that the sale prayed for in this instance was of the premises, 'clear and discharged of all liens in the hands of the purchaser,' and that the sale to Rice, approved and confirmed by the court, was for the sum of $10,500, the full price and consideration of the purchase; yet, it is equally true, as appears from the recitals in the deed to Rice, which was duly acknowledged before the orphans' court, that of the consideration, as finally agreed upon between the parties, there was actually paid in cash only $5,500, the remainder being represented by the existing mortgage to the Reliance Mutual Insurance Company, under and subject to which the conveyance was made, approved, and accepted. The proceedings and judgment of the orphans' court must be taken as a whole, and to include the execution, acknowledgment, and delivery of the deed. The sanction of the court to the fact and form of the conveyance was a judicial act, necessary to perfect the proceeding, for, without the deed, the sale would not have been consummated, and no title would have been divested and passed. Foster v. Gray, 22 Pa. St. 15; Brown's Appeal, 68 Pa. St. 53. If the whole proceeding be void, because the court confirmed a sale upon terms not authorized by law, the plaintiff below had no title on which to base a recovery, and the defendants below were mortgagees in possession within the protection of the decision in Brobst v. Brock, 10 Wall. 519; if it be erroneous merely, and therefore only voidable, it is good and stands until reversed, and cannot be questioned collaterally. If it be contended that the sale is good, but had the necessary legal effect of discharging the pre-existing mortgage, it cannot be denied that the mortgage debt was unpaid, and the mortgage security continued, in the face of the recital of the conveyance, under which the plaintiff in error claims his title. If that recital does not create a personal liability for the payment of the debt, enforceable against the purchaser in an action of covenant, it is, nevertheless, a condition upon which his title vested and depends. He certainly cannot be permitted to claim both under and against the same deed; to insist upon its efficacy to confer a benefit and repudiate a burden with which it has qualified it; to affirm a part and reject a part. The whole title of the plaintiff in error rests upon that conveyance, and the continued existence of the mortgage as an incumbrance forms part of it. The deed comes into the case as evidence on behalf of the plaintiff, as the necessary support of any title whatever, and when he proves it for that purpose, he proves the existing mortgage of the defendant by the same act. The defendant's title, in other words, is part of the plaintiff's title, and by the very document relied on to establish the latter, the former is shown to be its superior, for it declares the title of the plaintiff to be subject to that of the defendant. It is a plain case of an estoppel. This view is supported by the decisions of the supreme court of Pennsylvania, in which the objections to it presented in argument here, have been fully met. Stackpole v. Glassford, 16 Serg. & R. 163; Zeigler's Appeal, 35 Pa. St. 173; Crooks v. Douglass, 56 Pa. St. 51; Ashmead v. McCarthur, 67 Pa. St. 326.

In Crooks v. Douglass, ubi supra, it was said to be 'just a case, when, if the price of the estate belonging to the mortgagee is still in the purchaser's hands, he is in equity estopped from denying that the sale was made subject to the mortgage;' and, 'having bought the estate with the understanding that he bids so much less for it, and should hold that much in his hands to be applied to the excepted mortgage, it does not lie in his mouth, at least, to say he takes the land discharged of it, under the operation of the general rule that a judicial sale discharges all incumbrances except those expressly secured by statute.' In that case the circumstances of the sale rested in parol, proof being admitted of what took place, while here they constitute recitals in the very deed which furnishes to the plaintiff in error the foundation of his title. It follows, therefore, that the defendant in error had a lawful right to proceed upon his mortgage; that the judgment thereon was valid; and that the execution sale in pursuance thereof, so far, at least, as lot No. 1 is concerned, was effectual, when confirmed and executed by the sheriff's deed, to pass the legal title, and to cut off and destroy that of the plaintiff in error.

But other objections are made to the validity of the proceedings under the execution in reference to that part of the premises described as lot No. 2. The levari facias issued upon the judgment upon the mortgage directed the sale of the mortgaged premises for the satisfaction of the debt, describing them as divided into three lots. Lot No. 1 was purchased by the defendants, the owners of the mortgage, and plaintiffs in the action, for the sum of $10,000, and lot 2, at the same sale, was also purchased by them for the sum of $2,000. The sheriff's return showed that he took from the purchasers their receipt as plaintiffs in the writ for the amount of the debt and interest, and that he had the balance of the purchase money, as commanded.

It is now contended, on behalf of the plaintiff in error, that the sale of lot No. 1, being for more than was due to the defendants herein on the mortgage debt, satisfied the judgment and exhausted the authority to proceed further under the writ, and that the sale of lot No. 2 to the plaintiffs in the execution was therefore void for want of power in the sheriff to make it. Under the laws of Pennsylvania, the proceeding upon a mortgage was by scire facias, in which, judgment having heen rendered for the amount of the debt, interest, and costs, the mortgaged premises are directed to be seized and sold on execution by a levari facias for the satisfaction thereof. 1 Brightly's Purd. Dig. Laws Pa. 483, pl. 122.

In case there shall be a surplus of the proceeds of the execution sales after satisfaction of the judgment, the sheriff is bound to pay the same to the debtor or defendant. Id. 484, pl. 123. And in all cases, where there shall be disputes concerning the distribution of the money arising from sales on execution, the court from which the execution shall have issued is invested with power, upon notice to parties interested, to hear and determine the same according to law and equity. Id. 656, pl. 107. The sheriff makes return of the sale, with the proceeds, to the court whence it issued, and gives to the purchaser a deed for the premises so sold, but not until it has been formally acknowledged in court, as required by law. Id. 658, pl. 119. This acknowledgment is a public, judicial act, made in open court, and only after notice to all parties in interest. Id. 658, pl. 122. To this proceeding the judgment debtor is a party, and at the hearing may make any objection to the confirmation of the sale. The action of the court has all the effect of a judicial decree. Foster v. Gray, 22 Pa. St. 1, 15.

It was said in Shields v. Miltenberger, 14 Pa. St. 78: 'Most of the cases recognize the deliberative and judicial character of an acknowledgment taken in open court, founded upon the conceded right of all parties having an interest in the question to appear and dispute the propriety or regularity of the official sale; and all of them, from Murphy v. M'Cleary, 3 Yeates, 405, to Dale v. Medcalf, 9 Pa. St. 108, distinguish between those objections that touch the foundation of the proceeding, by impeaching the authority of the officer or establishing the existence of fraud, and those which simply suggest irregularities in the process of sale. The absence of authority, or the presence of fraud, utterly frustrates the operation of the sale as a means of transmission of title, and avoids it from the beginning. Either may, therefore, be insisted on, even after a formal acknowledgment of the conveyance; but mere irregularities, whether of omission or commission, which do not render the officer powerless, or taint the transaction with turpitude, may be cured by the tacit acquiescence of those who ought to speak in time.'

The correctness of this rule, that the acknowledgment of the sheriff's deed in consummation and confirmation of the sale cures all defects, except want of power to sell in the officer, or fraud in making it, being conceded, it is still contended that, in the present case, the power of the sheriff to proceed with the sale of lot No. 2 ceased after he had made enough by the sale of lot No. 1 to pay the judgment debt, with interest and costs; and that consequently the sale of the letter was void for want of authority to sell.

But the sheriff acted strictly within the command of his writ. That was to seize and sell the mortgaged premises. If he proceeded to sell more than was sufficient to pay the debt, it was at most but a mere irregularity, even if it could be so considered. He had no judicial authority to determine questions that might arise upon the sale, or questions of distribution. The sale of lot No. 1 might, so far as he or any one could know, be set aside, and the proceeds of lot No. 2 might prove to be necessary to satisfy the execution. His duty was merely ministerial, and so long as he pursued only the literal precept of the writ, he cannot be said to have acted without authority, and be converted thereby into a wrong-doer. For aught that he might know, and for aught that we can tell from the present record, the whole proceeds of the sale of both lots may have been necessary to pay other liens upon the property, entitled to satisfaction on distribution. The presumption certainly is, in accordance with the maxim, omnia proesumuntur rite et solemniter esse acta, that the surplus was either so applied, in which case, no more property was sold than was necessary; or, it was paid, as the law directs, to Mrs. Jermon, its owner, and, in that event, she certainly is not in a situation to complain of the invalidity of a sale, the fruits and proceeds of which she received, and has ever since continued to claim and hold as her property. She was a party to the proceeding, and had the opportunity then to present to the court the very objection now made to the validity of the sale, that more property had been sold than was in fact necessary to answer the exigency of the writ and satisfy the demands entitled to the proceeds. That was a question peculiarly for that court to determine, and that was the appropriate time for its determination. It was either then made or waived, and, in either view, the action and judgment of the court in directing the acknowledgment and delivery of the deed was conclusive. We conclude, therefore, that the objections to the title acquired by the sale of these two lots cannot be maintained.

A different question arises upon the title to lot No. 3. Although part of the mortgaged premises, it was not included in the sheriff's sale under the judgment and execution for the mortgage debt. It was sold in virtue of the judgment and proceedings described in the seventh finding of fact, being an action by one Arnold against Jermon and his wife to charge the wife's property. It is objected that this judgment, and consequently all proceedings under it, including the sale on execution to the defendants, are void, because the declaration, one count of which was for materials furnished to the premises sold at the request of the wife, does not sufficiently allege a contract binding upon her as a married woman, and because the judgment was confessed, and not rendered upon a verdict or finding of the facts.

These questions, as to this very proceeding, were fully considered, and, as we think, satisfactorily decided by the supreme court of Pennsylvania in the case of Swayne v. Lyon, 67 Pa. St. 436. That was an action by Lyon, the purchaser at this sale of the property in question, against the defendant, who had entered into a contract for its purchase, to compel a specific performance of that agreement. The defense which prevailed was that the title was not marketable. The court held that, although the title might be good, yet, if the purchaser would be exposed to litigation to support it, he ought not be compelled to take it. SHARSWOOD, J., delivering the opinion of the court, said: 'Unless, then, in this case, Mes. Jermon, or those claiming under her, would be absolutely concluded by the judgment under which the sheriff's sale took place, which constitutes the foundation of the vendor's title, from controverting her liability for the debt for which that judgment was confessed, in an action of ejectment to be hereafter brought for the property, the purchaser will be exposed to the annoyance and peril of such litigation.' The first and second counts of the declaration, it is then stated, set out a contract by Mrs. Jermon, or by her husband at her instance and request, for materials furnished, and work and labor done, in and about the improvement, and for the benefit of her real estate; and as a married woman is liable on such a contract, it is further said that it may logically follow that a judgment rendered against her for it, whether by default, confession, or verdict, will have all the leading characteristics of a judgment against a person sui juris. The case, therefore, was made to turn upon the question whether Mrs. Jermon, or those claiming under her, in an action of ejectment to be brought against the vendee, could be permitted to show that the debt for which the judgment was confessed was not contracted by herself, or her husband at her instance, for the improvement of her separate estate. This question was answered in the affirmative on the ground that evidence to that effect would not contradict the record. This was apparent, for the reason that the third count, which was the common count for goods sold and delivered on the joint promise of herself and husband, showed no good cause of action against her; and in a collateral proceeding she would be at liberty to prove that the recovery was upon this count, and not upon the first or second, which would be consistent with the record. It was accordingly held that this judgment might be avoided by Mrs. Jermon in a collateral proceeding, but only by proof that the actual recovery was upon a contract, void as to her, that is, under the third count. In that event it would not be supported by her confession, and, on the other hand, it was not invalidated thereby, so far as it rested upon the counts which set forth a good cause of action against her. This judgment was followed by the decision of the same court in the case of Jermon v. Lyon, 81 Pa. St. 107, where, speaking of the title to this lot, it said: 'As to the premises number three, it may be conceded that the judgment against Mrs. Jermon was erroneous and might have been reversed upon a writ of error, but this would not destroy the sheriff's sale made under the judgment, while standing in full force and unreversed. This judgment was obtained by W. A. Arnold, with whom Lyon and Taylor had no connection.' The opinion in Swayne v. Lyon, ubi supra, is cited with approval also in Quinn's Appeal, 86 Pa. St. 447, 453.

We have examined with care all the decisions of the supreme court of Pennsylvania cited by counsel for the plaintiff in error, and do not find any that are inconsistent with its judgments upon the title here in question, in Swayne v. Lyon and Jermon v. Lyon, to which we have referred.

We find no error in the judgment of the circuit court, and it is accordingly affirmed.