Appeal of Miller ( 1888 )

Opinion,

Mr. Justice Green:

We think this case is governed by our ruling in the case of Thomas’s App., 69 Pa. 120. We there held that “ Where the lien of the first creditor is superior to that of the second but inferior to that of the third, and the lien of the second is superior to the third, the first creditor will take the fund because of his superiority to the second, by reason of the superiority of the second over the third.” In practical effect this rule has been applied in other cases both before and since Thomas’s Appeal. Thus in Bowyer’s App., 21 Pa. 210, we said, Black, C. J.: “ All transfers and all waivers of his (the debtors) right whether express or implied, enure to the benefit of his creditors in the proper order of their liens. Whatever he does not claim for himself or Ms family, he leaves in the general fund under the control of the court, to be distributed among those who are legally entitled to it; and such distribution is not to be regulated by any wish of Ms, no matter in what form he may choose to express it.” It is true this was said in a case in which the debtor had expressly waived his exemption in favor of a junior judgment creditor, but subsequent cases and additional reasoning have, we think, justified the application of the doctrine to cases of implied waiver as well as to those which were expressed. One reason for this was well stated by Agnew, J., in Thomas’s Appeal, supra, thus: “The principle of Bowyer’s Appeal, reaffirmed in Shelly’s App., 36 Pa. 380, overruling Johnston’s App., 25 Pa. 116, is, that among creditors having existing liens upon the same property, the law regulates their priority and not the will of the debtor. Hence, if in consequence of his waiver he is not able to take the fund out of court, but the $300 must remain in custody for distribution among the creditors, they among themselves must be governed by their priority as fixed by law.”

In Shelly’s Appeal the whole subject was thoroughly discussed by judge George W. Woodward who said: “The doctrine of this ease (Bowyer’s Appeal), was recognized by judge Armstrong in Hill v. Johnston, 29 Pa. 363, a case that did not turn upon a voluntary waiver, but upon an unsuccessful demand made by a debtor against his mortgagee ; but Bowyer’s Appeal was followed and made the ground of judge Thompson’s ruling in Garrett’s App., 32 Pa. 152. It accords well also, as we have seen, with the opinion of judge Strong in Bowman v. Smiley, 31 Pa. 225, and McAfoose’s Appeal, 32 Pa. 276, already cited. What stands opposed to it? Nothing so far as 1 remember except judge Lewis’s opinion in Johnston’s App., 25 Pa. 117. That is in conflict with the ruling in Bowyer’s Appeal; and was the case which the court below followed in making the decree now under review. It is not strange that some conflict of opinion should occur on a bench so changeable as ours in respect to the operation of a new and extraordinary statute; but experience and observation tend to confirm us in the soundness of the views advanced in Bowyer’s Appeal. . . . Our position is taken ; we have recognized in all the cases the capacity of the debtor to make the waiver, and have held it a binding contract betwixt him and the creditor in whose favor it was made; but we are admonished to go no further by way of enabling debtors to defeat the operation of statutes. If, by waiving his rights in favor of the last creditor on record, ho may make him the first, he defeats not only the beneficent purposes of the exemption law, but all those statutes which recognize priority of lien and forbid assignments to preferred creditors.”

Hill v. Johnston was the case of a mortgage,-but it was not a case of conflicting executions. The claim was made by the debtor to the surplus after paying the mortgage and it was allowed. Although there were other judgments there were no other executions and as the claim of exemption would have been good against the judgments had executions issued upon them, and they were subsequent in date to the mortgage, no harm was done to them by allowing the debtor to take his claim out of the surplus. The very serious difficulty of advancing an inferior lien to the position of the superior, by means of a waiver whether express or implied, did not arise at all. Bower’s App., 68 Pa. 126, in which the foregoing cases seem to have' been disregarded is so reported that we cannot determine whether it raised any question other than the right of the debtor to take the surplus after the mortgage was paid. Upon the language of the Per Curiam opinion affirming the distribution of the court below,, it appears that was the only question. But however that may be we laid down a different rule in Thomas’s Appeal, supra, and followed it in the still later case of Huffort’s App., 10 W. N. 528, in which there was only the implied waiver arising from a mortgage, but the fund was distributed by the court below to the liens in the order of their priority and we affirmed the distribution. The manifest evils which would necessarily arise if the rule of distribution contended for by the appellee should be allowed, are so grave that we are altogether unwilling to adopt such a doctrine. We therefore follow the current of the authorities and what seems to us the better reasoning of Bow-yer’s Appeal, Shelly’s Appeal, Thomas’s Appeal and Huffort’s Appeal and award the fund to the liens in the order of their priority.

The decree of the court below is reversed with direction to distribute the fund in accordance with this opinion, at the cost of the appellee.