Souder's Appeal , 1868 Pa. LEXIS 142 ( 1868 )

The opinion of the court was delivered, by

Agnew, J.

As this case stood when referred to the auditor, the question was one of distribution between lien-creditors. The sheriff was ruled to bring the proceeds of sale into court, and on the same day several lien-creditors moved for leave to take their claims out of the fund, and thereupon the auditor was appointed to make distribution. But the result before the auditor showed that the fund was applicable to the judgment standing in the name of Henry L. Powell, and that this judgment was claimed by different persons, to wit, by Lancaster, as the alleged cestui que trust of a portion of the judgment, and by Souder (the appellant) as the assignee of Henry L. Powell of the whole of it. It is clear that jurisdiction had fully vested in the auditor to make distribution according to the provisions of the Act of 1836, which gives a right to demand an issue for the trial of facts. The only question before us on this part of the case is, whether the auditor’s authority ceased with his finding that the fund was distributable to the judgment of Henry L. Powell, or whether, having acquired jurisdiction, it extended to the determination of the rights of the claimants of this judgment. The right of Souder to demand an issue depends on the determination of this question. For if the decision of Lancaster’s right to the money as cestui que trust of the Powell judgment does not belong to the question of distribution, but was one to be tried by the court after the auditor had awarded the fund to the judgment, it did not fall within the provision of the Act of 1836, and Souder could not demand an issue as a matter of right. It would then be purely discretionary with the court. When money is paid into court upon a-judgment, and is claimed by different persons as owners of the judgment, the question is one of mete ownership, and may be determined by the court itself, or submitted to a jury at its own discretion. But if the ownership of the encumbrance arises legitimately in a proceeding to make distribution, there seems to be no good reason why it should not be determined in the proceeding itself, as one of the incidents of distribution, necessary to point out to the court or its officer making payment of the fund the proper person to receive it — thereby avoiding both prolongation and circuity of litigation. When a court of equity once obtains rightful jurisdiction of a subject, it will comprehend within its grasp and decide all incidental matters necessary to enable it to make a full and final determination of the whole controversy, and thus to terminate litigation while it facilitates the remedy:. McGowin v. Remington, 2 Jones 56. It is on this principle the Common Pleas proceeds to determine many incidental matters necessary to be ascertained, in order to make distribution, under the authority given in the 86th section of the Act of 16th June 1836, to determine disputes concerning' the distribution of money arising from sales upon execution according to law and, equity. It has therefore been held, that an auditor appointed to make distribution, can settle an account between partners, to determine their respective interests in the subject of sale, in order to effect distribution according to the equities of claimants in different rights : Kelly’s Appeal, 4 Harris 59; Vandyke’s Appeal, 5 Id. 271; Cooper’s Appeal, 2 Casey 262. So parties for whom a judgment was held in trust, were allowed to take the proceeds of sale against the agreement of their trustee, that the judgment should be postponed to a mortgage entered on the same day, upon the ground of equity alone arising from the laches of the mortgagee to make known to them his priority, whereby they had been induced to rest upon the judgment, as a security for their claims: Claason’s Appeal, 10 Harris 359. In Vierheller’s Appeal, 12 Harris 105, a plaintiff in a judgment was postponed to a junior lien-creditor, on the ground that he was surety for the payment of the debt of the latter: Worrall’s Appeal, 5 Wright 524, is similar. See also Himes v. Barnitz, 8 Watts 39, and Erb’s Appeal, 2 Penna. R. 296. In Betz v. Heebner, 1 Penna. R. 280, where' nine several bonds were secured by one and the same mortgage, the court determined in a question of distribution between the holders of the several bonds by assignment of the mortgagee, awarding to each a pro raid share of the proceeds on the principle of Donley v. Hays, 17 S. & R. 400. The same principle was applied in a case •of distribution between a widow and her assignee, of a judgment obtained for arrearages of interest charge'd upon real estate: Mohler’s Appeal, 5 Barr 418. See also Bryson v. Myers, 1 W. & S. 420. It is the duty of an auditor making distribution, to report the claims and persons to whom the money is to be paid, .that the court may, when the report comes' in, decree distribution accordingly, and order its officer to pay out the fund. When a dispute springs up in the course of a distribution proceeding, between claimants of the same encumbrance, there is the same necessity to determine it, in order to report the party entitled to receive the fund to be appropriated to it, as there is to determine between the claims of different lien-creditors. It is most convenient and just as necessary to prevent subsequent litigation and circuity of proceeding, and is a proper subject of equity. We are of opinion, then, that the dispute between Lancaster and Souder, as to the ownership of the fund applicable to the Powell judgment, fell within the scope of the .auditor’s authority in making distribution of the proceeds of sale. It was therefore a question belonging to the distribution regulated by the Act of 16th June 1886, and either party was entitled to demand an issue to try any fact necessary to determine his right to the fund.

An issue was demanded in writing by Souder, on the coming-in of the auditor’s report, to try the fact, whether the judgment-bond was given to and accepted by Powell, on the condition of his paying the notes of the obligors held by Lancaster; and no objection appears to have been made to its form or effect. The court below denied the issue solely on the ground that the demand for an issue came too late. In this we think there was error.

An issue under the Act of 1836, and its prototype of 1827, is demandable of right, as numerous authorities declare: Bichel v. Bank, 5 Watts 140; Trimble’s Appeal, 6 Id. 133; Reigart’s Appeal, 7 W. & S. 267; Overholt’s Appeal, 2 Jones 225; Benson’s Appeal, 12 Wright 159. In Trimble’s Appeal the demand was held to be in time when made after the evidence was in, the arguments closed, and when the court was about to pronounce its decision. The same was held in Reigart’s Appeal. In Ross’s Estate, 9 Barr 17, a lien-creditor was held not to be excluded from a fund by his neglect to present his claim to the auditor; justice could be done before final judgment and decree. Where the request does not come in proper form, or where it embraces questions of law instead of fact, or it is manifest that the matter to be tried cannot affect the decision, the demand may be refused: Robinson & Minis’s Appeal, 12 Casey 81; Dickerson & Haven’s Appeal, 7 Barr 255; Benson’s Appeal, 12 Wright 159; Dougherty’s Estate, 9 W. & S. 192. But the demand here was for the trial of a specific fact, essential to the determination of the right to the money, and falls within none of the exceptions; and it does not appear that there was any rule of the court below regulating the practice in such a case. Bradford’s Appeal, 5 Casey 513, cited by the learned judge, was a case in the Orphans’ Court, in which an issue is not of right, but lies in discretion. The issue ought to have been granted therefore by the court below, and the right to it derives force from the fact that it is very doubtful whether the trust for Lancaster was clearly proved.

We do not think that Souder was estopped from having an appeal, by his taking out of court the undisputed part of his claim to the judgment. That part was not claimed by Lancaster. It is only when a party sets up a claim inconsistent with the finding of the report, that a taking under the report operates to estop him from asserting the adverse claim.

The decree of the court below is therefore reversed, a procedendo awarded, and the record ordered to be remitted fo.r proceedings in accordance with the principles contained in this opinion.