In Oransky et ux. v. Stepanavich, 304 Pa. 84, 155 A. 290, 77 A.L.R. 983, title to real estate was held by tenants by the entireties.Summary of this case from Wharen v. Funk
April 21, 1931.
May 1, 1931.
Lien — Purchase-money lien — Loan — Mortgage — Judgment — Recording — Minor — Affirmance of transaction — Stay of execution.
1. It is not necessary that a lien should disclose on its face that it is for purchase money, if, in point of fact, whether it be a mortgage or judgment, it was given for purchase money. 
2. Ordinarily, one who has no other connection with the purchase of real estate than to lend the money needed to buy it, acquires no other or higher right against the property purchased with the borrowed money than has any other creditor. 
3. But if a judgment note or mortgage is given to obtain a portion of the purchase money of real estate, it is a purchase-money obligation, even though the money is received from and the note or mortgage given to another than the vendor, if it is in fact one transaction, so arranged by common consent and for the mutual convenience of all the parties. 
4. There is no essential difference between the arrangement stated in the preceding syllabus, and one in which the note or mortgage is made to the vendor and by him assigned to the lender. [87, 89]
5. As against all but intervening creditors and purchasers, it is a matter of no moment that a purchase-money judgment or mortgage was not entered of record at once, or that a sheriff's sale was made on a renewal judgment or mortgage, so long as the renewal obligation was a security for the same debt as the original one. 
6. An infant who has given to the lender a purchase-money mortgage or judgment for land bought by him or her, can, on reaching majority, either affirm or disaffirm the transaction in its entirety, but he or she cannot elect to retain the property free and clear of its liability for the purchase-money obligation. 
7. Where an infant has given a purchase-money judgment which she seeks to have opened because of her minority, the court to which the application is made should not open or strike off the judgment generally, but should enter a perpetual stay of execution, so far as the infant is concerned, except as against the property purchased with the proceeds of the judgment note. 
Estates by entireties — Judgment — Execution — Minor.
8. Ordinarily, the title obtained at an execution sale on a judgment against one of two tenants by the entireties, will not avail to defeat the possession of either tenant so long as both are alive. 
9. Where one of two tenants by the entireties was a minor at the time of the purchase of real estate, and contributed nothing thereto, except the money received on a purchase-money obligation executed by her and her cotenant, and, on reaching majority, she elects not to be bound by that obligation, and has the judgment entered against her thereon stricken from the record, she, in legal effect, as between her and the owner of that obligation, repudiates all interest in the property, and an execution sale of it on a judgment entered on that obligation, will be valid and will pass a full and complete title to the purchaser, even though, because of her action, the cotenant is the only defendant named in the writ. 
Trusts and trustees — Resulting trust — Purchase money of real estate — Presumption.
10. A resulting trust in real estate presumptively arises in favor of one whose money paid all the purchase price, even though the title be taken in the name of another. 
Argued April 21, 1931.
Before FRAZER, C. J., WALLING, SIMPSON, KEPHART, SCHAFFER and MAXEY, JJ.
Appeal, No. 160, Jan. T., 1931, by defendant, from judgment of C. P. Schuylkill Co., Nov. T., 1929, No. 22, on verdict for plaintiffs, in case of Gordon Oransky et al. v. Peter Stepanavich. Reversed.
Ejectment for property in Coaldale. Before KOCH, P. J.
The opinion of the Supreme Court states the facts.
Verdict and judgment for plaintiffs. Defendant appealed.
Error assigned, inter alia, was refusal of judgment for defendant n. o. v., quoting record.
A.D. Knittle, with him G. H. Gerber, for appellant. — The court erred in holding that judgment note had to be from vendor to vendee: Ins. Co. v. Ellis, 192 Pa. 321; Jeanes v. Hizer, 186 Pa. 523; Albright v. Lafayette B. Assn., 102 Pa. 411.
The court erred in holding that it was not a purchase-money judgment because Peter Stepanavich signed the judgment note as surety: Nelson v. Bonnhorst, 29 Pa. 352.
The purchase-money character of the note was not lost by renewals: Bank of Commerce App., 44 Pa. 423; Overholt v. Bank, 82 Pa. 490.
Where an infant executes a purchase-money mortgage to secure the purchase money for land conveyed to him by deed, he cannot, after he comes of age, affirm the deed, and at the same time disaffirm the mortgage: Kennedy v. Baker, 159 Pa. 146; Brunner v. Ringe, 57 Pa. Super. 237.
Bernard J. Duffy, for appellee. — Defendant could not do what the bank could not do, and his rights were of no higher standing than that of the bank: Milano v. Title Trust Co., 96 Pa. Super. 310.
As to the right of a minor to repudiate a contract we cite the following authorities: Kay v. Haupt, 10 Sch. L. R. 98; Penrose v. Curren, 3 Rawle 352; Ruchizky v. DeHaven, 97 Pa. 202; Spangler v. Haupt, 53 Pa. Super. 545.
As to estates by entireties, and the interest of the parties therein and how same can be divested, we cite the following authorities: Comito's Est., 13 Pa. D. C. 304; Beihl v. Martin, 236 Pa. 519; McCurdy v. Canning, 64 Pa. 39; Bramberry's Est., 156 Pa. 628; Gasner v. Pierce, 286 Pa. 529; Hetzel v. Lincoln, 216 Pa. 60; Meyer's Est., 232 Pa. 89; Roan v. Bingaman, 12 Pa. D. C. 673; O'Malley v. O'Malley, 272 Pa. 528.
Defendant appeals from the judgment entered on an instructed verdict for plaintiffs in an action of ejectment. The judgment must be reversed.
The plaintiffs, who are husband and wife, desired to buy from defendant a property he owned in Coaldale, Pennsylvania, to be used by them as a home, but the husband had only $600 and the wife nothing, and the purchase price thereof was $6,100 cash. Neither on their personal credit, nor on it and the property, could they raise that sum, so defendant, the owner, went with them to the First National Bank of Coaldale, to see what arrangement could be made to obtain the additional $5,500. The bank was willing to make the loan upon a judgment note secured on the property, provided defendant would join with them in the obligation. He agreed to do so, and the three signed a judgment note for $5,500 in favor of the bank, the husband paid his $600 to defendant, the bank handed him the $5,500, the judgment note was delivered to the bank, the deed from defendant and his wife was executed in favor of and delivered to plaintiffs, and they thus became tenants by the entireties of the property. The transaction was an entire one, in no essential respect different from what it would have been had the purchase-money note been made by plaintiffs to defendant, and by him assigned to the bank as collateral security for its loan to plaintiffs: Cohen's App., 10 W. N.C. 544, 547; Campbell Pharo's App., 36 Pa. 247, and Jeanes v. Hizer, 186 Pa. 523.
Payments were made on the note from time to time, and it was renewed in several different forms, but always plaintiffs and the property remained primarily liable for the debt, and defendant was only a surety. Subsequently the two plaintiffs separated and ceased making payments on the note, whereupon the bank issued execution against the property. The female plaintiff thereupon filed a petition alleging that she was an infant when she executed the note, and prayed that the judgment be opened and she be let into a defense. Answers were filed, which did not dispute the fact of her minority at the time of the purchase, and, as she had in the meantime arrived at full age, the court below made an order requiring her to "file of record in this case a paper within five days affirming or disaffirming her obligation on the note upon which the judgment in this case was entered. Failing so to do, the present rule shall ipso facto become discharged, but, if she files such a paper within five days and therein disaffirms her contract, her name shall be immediately stricken from the record as a defendant and the rule shall become discharged." This order said to her in effect: If you file a paper saying you meant what you said in your petition to open the judgment, we will then do even more than you have asked, no matter who is hurt thereby. Of course she filed the required paper. The order which should have been made, was one granting a perpetual stay of execution on the judgment, so far as she was concerned, except as against the property purchased through the proceeds of the loan. Possibly this would have been the form of the order had the court been requested to so enter it. No appeal was taken from the one which was made, however, and we must, therefore, consider it as proper. Fortunately, although it produced all the later difficulties to be ironed out on this appeal, it does not affect our final conclusion in the case.
The bank, being naturally desirous to keep out of litigation as much as possible, then called upon defendant to pay it in full, as he had guaranteed he would. He did so, and took an assignment of the judgment, thus putting the matter in exactly the shape it would have been in at the beginning, had plaintiffs and defendant been the only ones in any way connected with it. Subsequently defendant levied on and sold the property at sheriff's sale and became the purchaser thereof. Having in some way come into possession of it, and finding that the female plaintiff disputed his title thereto, he took a rule upon plaintiffs, as provided by the Act of March 8, 1889, P. L. 10, as amended by the Act of May 25, 1893, P. L. 131, and further amended (without reference to the earlier amendment) by the Act of April 16, 1903, P. L. 212, to bring their action of ejectment within six months or be debarred. Within that time the present suit was brought.
At the trial, binding instructions were given for plaintiffs, and this decision was sustained by the court in banc, in overruling defendant's motion for judgment non obstante veredicto. The trial judge held that the title acquired by a sheriff's sale on a judgment against the husband alone, would not affect the wife's right of possession as a tenant by the entirety, so long as both tenants were alive, as, at least presumptively, they then were. This decision is correct (Gasner v. Pierce, 286 Pa. 529), but it also is not conclusive here. The court in banc held that if the purchase price had been secured by a mortgage, issued contemporaneously with the deed to plaintiffs, they could not retain the property and deny liability for the purchase price, because "the two are but one transaction"; but where, as here, there are three parties to it, the third being the lender of the money which was needed to pay the purchase price, this rule does not apply, and hence a minor can retain the property and repudiate her obligation given for its purchase. Under the facts of this case, we cannot sustain that conclusion.
It is doubtless true that, if the purchase money is borrowed from a third party who has no other connection with the matter, he acquires no higher or greater right against a property purchased with the borrowed money than has any other creditor. It is otherwise however where, as here, there is "but one transaction," whether the loan was secured by a purchase-money mortgage, or by a judgment note. This is no longer an open question. Nottes's App., 45 Pa. 361, relied on by the court below, is not antagonistic. There we said, at page 362: "Liens for purchase money may be mortgage, judgment, or by executory articles of bargain and sale; but they are always created in favor of vendors, and exist for their protection and benefit, or that of their assignees, or other legal representatives." True, in that case we held that Hoover, whose money had paid part of the purchase price, was not entitled to be protected for that reason alone, because (page 364) "there was no communication between the vendor and Hoover for a security for purchase money _____ Between the vendors and him no treaty whatever occurred." As pointing out the distinction between that situation and one like the present, we there referred to an unreported case of Stone v. Rattew, and said (page 364) that in it "The transaction was such as to relieve this point of all doubt. Shaffer was the vendor of Stone, and Stone was vendor of Rattew, and it is of no consequence that the deed was made directly from Shaffer to Rattew, since it was so made by the common consent of all parties, for their mutual convenience, and became the consideration for Rattew's judgment as effectually as if it had been a formal conveyance by Stone to him." In Albright v. Lafayette Building Savings Assn., 102 Pa. 411, 417, we said all that is required, if the security is not taken in the name of the vendor, is that it be taken "in the name of another by the act or deed of the vendor." To the same effect is Jeanes v. Hitzer, supra. Finally, on this point, in Com. Title Ins. Trust Co. v. Ellis, 192 Pa. 321, 327, we said: "The delivery of the deed to the mortgagor and of the mortgage to the mortgagee were concurrent and simultaneous acts, and the money for which the mortgage was given was in actual fact a part of the purchase money paid for the property, at the very time of the delivery of the deed. In both of the cases, Cohen's App., 10 W. N.C. 544, and Albright v. The Assn., 102 Pa. 411, this court held that it was not necessary that the lien should disclose on its face that it is for purchase money if in point of fact, whether it be a mortgage or judgment, it was given for purchase money."
It is clear, therefore, that the present judgment was a purchase-money obligation, firmly fastened upon the title of the vendees, and this leaves open but three other questions: 1. What was the effect of striking off the judgment against the wife, instead of limiting its lien as should have been done? 2. Does the fact that the judgment was not entered of record until several years after the deed to plaintiff was delivered and recorded, in any way affect the transaction? and, 3. Does the fact that the sale was made on a judgment entered on a renewal note, and not on one given at the time of the conveyance, affect the title acquired under it?
As to the first of these points, it must be remembered that the minor, on reaching majority, had the right to affirm or disaffirm the transaction in its entirety, but did not have the right to affirm one part and disaffirm the other. In the present case, she deliberately determined to disaffirm the contract, so far as it was expressed in the note, and this action ended her title as tenant by the entirety, since no other part of the consideration was paid by her. In Kennedy v. Baker, 159 Pa. 146, we decided, as expressed in the syllabus: "Where an infant executes a purchase-money mortgage to secure the purchase money for land conveyed to him by deed, he cannot after he comes of age affirm the deed and at the same time disaffirm the mortgage." As we have already pointed out, there is no distinction in these matters between a purchase-money mortgage and a purchase-money judgment. Hence, as the wife in this case, when she became of age, elected to disaffirm her liability on the purchase-money judgment, by that act she also disaffirmed, as between herself and the owner of that judgment, any and all title to the property, and all that remained was a title in her husband, who had himself paid all the purchase money except the amount received on the judgment note; and who, by her act, became alone liable on the judgment. Perhaps it can be said also that, — as he, by her repudiation of all liability on the judgment, became the one who alone paid the purchase price, — a resulting trust arose in his favor as the sole owner of the property: Galbraith v. Galbraith, 290 Pa. 225; Lukens v. Wharton Avenue Baptist Church, 296 Pa. 1.
As between plaintiffs and defendant, the fact that the judgment was not entered of record until several years after the deed to plaintiffs was recorded, is also a matter of no moment. If there had been rights of other creditors or purchasers to be considered, another and possibly a serious question would have arisen.
Nor does the fact that the sale was had on the judgment entered on a renewal note, compel us to answer the third of the above questions against defendant, there being no claims of other creditors or purchasers. The renewals but continued the status which began when the first note was given, and did not create a new status; so long as the notes "are securities for the same debt," the rights of the parties remain unchanged: Appeal of the Bank of Commerce, 44 Pa. 423, 430.
The judgment of the court below is reversed and judgment is here entered for defendant non obstante veredicto.