Potter v. Langstrath , 151 Pa. 216 ( 1892 )

Opinion by

Mb. Justice McCollum,

The property described in the agreement of November 20, 1888, was valued by the parties thereto at ten thousand dollars. This sufficiently appears in their stipulation that it should not be sold for less than that sum “ during the period of eight months from the first day of April, 1889.” Their obvious purpose was to prevent a sacrifice of the property by a sale on the incumbrances against it, and to afford Langstrath an opportunity to dispose of it advantageously. The agreement was in form a sale, subject to certain restrictions and stipulations which carefully defined the rights and obligations of the parties, and may be summarized as follows: Langstrath agreed to sell and convey the property to Keenan for six thousand dollars to be applied in discharge of encumbrances entered and to be entered against it, and Keenan agreed to pay that sum in the manner stated. Langstrath was to have the exclusive right to sell the property at any time prior to April 1, 1889, on paying to Keenan one thousand dollars and his expenditures in pursuance of the agreement, in which ease Keenan was to transfer the property to the purchaser. On a sale of the property by either party after that time Keenan was to receive from the proceeds the amount paid by him in discharge of the encumbrances and the balance was to be divided between them “ share and share alike.”

On the 21st of November, 1888, a deed was made to Keenan expressly subject to the terms and conditions of the agreement and the encumbrances mentioned therein. This deed did not release either party from his obligations under the agreement nor deprive him of any right conferred by its provisions. So far as the parties to the agreement were concerned their rights and duties under it remained as before.

Keenan failed to comply with his covenant to pay six thousand dollars in discharge of encumbrances, and only paid a trifle more than one sixth of that sum. In consequence of his default the property was sold on one of the encumbrances provided for in the agreement, and the proceeds of the sale were brought into court for distribution. It was claimed by Langstrath and the appellant, first, that the agreement and conveyance constituted a mortgage to secure Keenan for advances of money to be made by him in payment of the encumbrances on the property, and, second, if not a mortgage, a trust for the purposes specified in the agreement. The learned judge of the court below overruled their first claim and sustained their second, and in these rulings we fail to discover any error. It was his opinion however that one half of the fund remaining after paying the encumbrances entered before the agreement was made should be awarded to the appellant, and the other half thereof to Keenan’s heirs, although the amount of such encumbrances was considerably less than the sum Keenan agreed to pay on account of “ encumbrances entered and to be entered ” against the property; and a decree was made in accordance therewith. This we think was error resulting from a misconception of the agreement. The undertaking of Keenan to pay six thousand dollars in the manner already stated was clear and unconditional, and it was not impaired by the provision in relation to a division of the proceeds of a sale after paying thereout the encumbrances. These were estimated at the sum which Keenan was bound to pay, and this sum was the measure of his liability to Langstrath. It was known to the parties at the time of their agreement that the encumbrances on the property then, existing were not equal to this sum, yet they bargained for the payment of it. If they intended that Keenan’s liability should be measured by such encumbrances they could easily have said so, and they certainly would not have provided for the payment by him of other claims. We think therefore the equitable and true construction of the agreement is that the parties intended a division of the proceeds of sale in excess of the sum Keenan was to pay, and that the agreement in this particular was founded on the assumption of his compliance with his covenants. If Keenan had paid encumbrances to the amount of six thousand dollars and then sold the property he would have the right to receive from the proceeds of the sale the amount so paid, and one half the balance. This is what performance of his agreement would have given him. It is an unsound construction of that agreement which rewards him for his default, and enables him or his heirs to divide with the appellant a portion of the sum applicable to Langstrath’s debts. It is clear that to give effect to the manifest intention of the parties there can be no division of the proceeds of the sale until the amount Keenan was to pay is deducted therefrom. The judgments on which the claim of the appellant to share in the fund is founded are the only encumbrances entered after the agreement was made, and the difference between the amount of the prior liens and the sum Keenan was to pay, together with one half the balance of the proceeds of the sale is applicable to them.

As the costs of audit are a result of Keenan’s default, it seems to us that an order for their payment out of the other half of that balance would not be inequitable, but as this question was not raised in the court below, or here, we do not feel at liberty to change the decree in this respect.

It was error to allow interest on the judgments after the day of sale : Siter’s Appeal, 26 Pa. 178.

The specifications of error which complain of rulings by the auditor, not excepted to in the court below, will not be considered, nor the specifications which are in violation of rule 22 of this court. The specifications which are in conformity with established practice and complain of rulings in conflict with this opinion are sustained and all other specifications are dismissed.

' Decree reversed and record remitted to the court below with direction to enter a decree in accordance with this opinion, the cost of this appeal to be paid by the appellee.