Opinion
October 5, 1936.
November 23, 1936.
Husband and wife — Guaranty, suretyship, or endorsement by wife — Payment of debts of husband — Mortgage or pledge of property — Agreement that existing mortgage be held as security — Act of June 8, 1893, P. L. 344 — Proceeding on mortgage before proceeding on note.
1. Under the Act of June 8, 1893, P. L. 344, a wife is not prevented from paying the debts of her husband or mortgaging or pledging her separate estate to secure their payment. [172]
2. That which the Act prohibits is the making of contracts of guaranty, suretyship, or endorsement by a married woman, as accommodation for her husband. [173]
3. The liability following suretyship, guaranty, or endorsement, is general and personal, and, unlike that of pledge or mortgage, is not limited to specific property. [173]
4. Where a wife agreed in writing, endorsed upon a joint note given by herself and her husband, that a mortgage upon her land, originally created by her husband but later assumed by her, should be held by the creditor-mortgagee to secure payment of present or future indebtedness of either spouse, the creditor may foreclose upon the mortgage, and sell the premises for the debts of the husband. Such agreement was not one of guaranty, suretyship, or endorsement within the meaning of the Act of 1893, but merely operated to continue the existing lien of the mortgage as a pledge for such obligations, and subjected the wife to no personal liability therefor. [172-3]
5. It is not necessary for the holder of a note to proceed on the note before enforcing payment of a mortgage given by a third person to secure payment of the note. [173]
Before KEPHART, C. J., SCHAFFER, MAXEY, DREW, LINN, STERN and BARNES, JJ.
Appeal, No. 16, March T., 1935, by defendant, from decree of C. P. Cambria Co., Sept. T., 1931, No. 464, in case of The Hastings Bank of Hastings, Pennsylvania v. Ben Covitch. Decree affirmed.
Petition and rule to open judgment entered upon bond accompanying mortgage.
The opinion of the Supreme Court states the facts.
Rule discharged, opinion by McKENRICK, J. Petitioner appealed.
Error assigned was order discharging rule.
Harold Kaminsky, with him Leonard Sobol, for appellant.
F. J. Hartmann, for appellee, was not heard.
Argued October 5, 1936.
The only question involved in the present appeal is whether or not an agreement entered into by appellant's wife constituted an obligation of guaranty, suretyship or endorsement within the provision of the Act of 1893 protecting married women from liability in undertaking such obligations as accommodation parties for their husbands.
While the Act prohibits a wife from making these contracts, it does not prevent her from paying the debts of her husband or pledging her property to secure their payment: Herr v. Reinoehl, 209 Pa. 483; Dusenberry v. Mutual Life Ins. Co. of New York, 188 Pa. 454; Kulp v. Brant, 162 Pa. 222. It was well settled before the Act of 1893, and since, that she could mortgage or pledge her separate real estate for the same purpose: Citizen's Association v. Heiser, 150 Pa. 514; Hagenbuch v. Phillips, 112 Pa. 284; Oppenheimer v. Wright, 106 Pa. 569; Lytle's Appeal, 36 Pa. 131. The Act of 1893 did not in any way restrict her right in this regard: Pennsylvania Trust Co. v. Kline, 192 Pa. 1; Siebert v. Valley Nat. Bank of Lebanon, 186 Pa. 233; Kuhn v. Ogilvie, 178 Pa. 303.
The reason for distinguishing this right to pledge or mortgage her property from the right to act as a surety, guarantor or endorser for the payment of a husband's obligations is obvious. If the wife has the power to sell or mortgage her property and apply the money to the satisfaction of his debts, there is no reason why she may not subject it to a mere contingent liability for the same purpose. The liability following suretyship, guaranty, or endorsement, however, is general and personal, and is not limited to specific property. See Frankford Trust Co. v. Wszolek, 320 Pa. 437; Yeany, to use, v. Shannon, 256 Pa. 135; New Philadelphia L. Assn. v. Druian, 101 Pa. Super. 62. The statute was clearly intended to prevent a married woman from incurring the risk of a general judgment as accommodation for her husband: Herr v. Reinoehl, supra. Such a situation does not here exist. The agreement entered into by Mrs. Covitch, while in form a joint promissory note, was clearly intended to operate as an extension of her existing mortgage to include present and future debts of her husband, and to continue the lien of the mortgage for their payment. The agreement in suit is not a formal mortgage, but it nevertheless constituted a pledge of her real estate to secure the debts of her husband. The bank held the original mortgage as collateral security for the payment of the debts, its lien continued, and her equity of redemption was pledged thereunder. She could have properly executed a new mortgage to accomplish the same purpose but it was not necessary. Nor was it necessary for appellee to proceed against the husband on the note upon which this agreement was endorsed before enforcing collection on the mortgage and bond pledged by the wife as collateral. See Lishy v. O'Brien, 4 Watts 141.
The cases relied on by appellant are not in point as they illustrate attempts to fix personal liability on the wife by a contract prohibited by the Act. See Bartholomew v. Allentown National Bank, 260 Pa. 509; Dusenberry v. Mutual Life Ins. Co. of New York, supra.
Decree affirmed at appellant's cost.