Bailey v. Allegheny National Bank , 1884 Pa. LEXIS 23 ( 1883 )

Mr. Justice Steeeett

delivered the opinion of the court, January 7th 1884.

The question presented by this record is whether the Allegheny National Bank, as purchaser at the sheriff’s sale hereinafter mentioned, acquired title to the land in controversy. If it did, there was no error in entering judgment on the verdict in its favor.

The facts upon which the question arises are substantially these: In 1872, John Adams devised his homestead farm to his wile, for life, and directed that after her decease it should be sold by his executors and the proceeds divided among, his seven children, one of whom was the wife of William II. Mackey. In June 1875, after the decease of testator’s widow, his children, with the respective husbands and wives of those who were then married, signed an agreement, duly acknowledged and recorded, by which they elected to take the land instead of the proceeds thereof; and, afterwards by proceedings in partition, commenced in 1876, the farm was divided into several purparts, two of which, charged with owelty, were allotted in severalty to Mrs. Mackey. The title to these two purparts is the subject of controversy in this suit.

In 1873, several months after the decease of her father, Mrs. Mackey and her husband mortgaged to the Freehold Bank a lot which she owned in her fathers lifetime, and also her “ right, title, interest and claim .... in and to ” the farm above mentioned as security for a loan of $700. After the parties in interest formally elected to take land in lieu of money, hut before proceedings in partition were instituted, Mrs. Mackey and her husband made a mortgage of all her “ right, title, interest and claim of in and to ” the same farm to Robert W. Mackey, to secure the payment of $2,000. These mortgages were duly foreclosed and on each of the judgments, thus obtained, a levari facias was issued. On the writ in favor of the Freehold Bank the property was sold, September 10th 1880, and duly conveyed to the Allegheny National Bank, plaintiff below; and on the following day the same property was sold on the Robert W. Mackey writ and subsequently conveyed to the plaintiff in error. In the meantime judgment had been obtained on the recognizance for owelty, and on that the property was again sold, in December 1880, and purchased by plaintiff in error.

It thus appears that the title, on which the Allegheny National Bank recovered in the court below, is based oil the first mentioned mortgage and the sale thereon. The contention of tlie plaintiff in error is that the mortgage was invalid and no title passed by the sale, for the reasons, 1st. That the description of the interest, alleged to have been mortgaged, is too vague and uncertain; 2d. That at the time the mortgage was executed, Mrs. Mackey had no interest in the land, and consequently the mortgage never became a lieu thereon ; 3d. That, under the provisions of her father’s will, she had no power to alien or encumber the interest subsequently acquired by the joint election.

There is no merit in the first reason. The description, as given in the mortgage, is “All the right, title, interest and claim of Annie E. Mackey, in and to the farm of John Adams, deceased, in Wilkins townsh'p, Allegheny county, Pennsylvania.” This is quite sufficient to identify the property intended to be covered by the mortgage, and nothing more was required.

The second proposition involves a graver question. If the mortgage never became a lien on the land, it necessarily follows that the title of Mrs. Mackey was not divested by the first sheriff's sale; but, if it ever attached to and became a lien on her undivided interest in the farm, that lien, by virtue of the proceedings in partition, was shifted from her undivided interest in the entire tract, and concentrated on the purports allotted to her in severalty, subject, however, to the owelty which was clearly the first lien thereon. The question of priority, as between the two mortgages, growing out of the fact that one was given before the joint election to take the land aud the other afterwards, and perhaps without actual or constructive notice of the first, is not involved in this case. Conceding, for. the sake of argument, that the owelty was the only lien ahead' of the second mortgage, and that the latter was prior, as a lien,, to the first mortgage, still the result would be the same because, if the land was bound by the first mortgage, the judicial sale on it, with notice to everybody, divested all the liens and passed a good title to the purchaser. The real' question, therefore, is whether the Freehold Bank mortgage attached to aud became a lieu on Mrs. Mackey-’s subsequently, acquired interest in the farm. If it did there can be no question as to the effect of the foreclosure^ and sale to the bank.

It cannot be doubted, that, in equity, the testamentary direction to sell arid distribute the proceeds was an out and out conversion of the real estate into personalty. There was, of course, no actual conversion of the land into money ; but, for the purpose of effectuating the intention of the testator, equity Considered what he ordered to be done as actually accomplished. As the result of this principle of constructive conversion, testator’s children, prior to their election to take the laud, had no. interest therein that could be hound by the lien of a judgment. They could, of course, assign or dispose of their respective interests, absolutely or conditionally, and thus invest their respective assignees with all the rights they themselves had under the will; but neither of them, without the assent of the others, could so assign, transfer or encumber bis or her interest as to interfere with the right of each to insist on a sale and distribution of the proceeds. In short, their interest under the will, before they elected to take the land, was personal property, — a right to receive their respective shares of the proceeds when the land was actually converted into money : but, in one respect at least, it differed from an ordinary chose in action. Coupled with, and springing from their interest, as legatees of the proceeds of the land directed to be sold, they had an inherent right to elect to take the land instead of the money ; and, having by their joint agreement of June 1st 1875, exercised that right, that which was theretofore regarded, in equity', as personal property, was thereby constructively re-converted into real estate, and thenceforth, until the partition was effected, they were tenants in common of the land. By mortgaging to the Freehold Bank, “ all her right, title,” etc., Mrs. Mackey and her husband actually treated it as an interest in the land; and, so far as it was in their power to do so, they exercised their right of election. It was at least a provisional election, contingent only upon the others agreeing to unite with them therein ; and, as soon as the joint agreement .of June 1st 1875 was executed, the provisional election became absolute and enured to the benefit of the mortgagee. As between the parties to the mortgage, any other result would he grossly unjust and inequitable. While they may have been mistaken as to the nature of Mrs. Mackey’s interest under the will, it was undoubtedly their intention'to pledge it, whatever it might be, as security for the loan ; and henee, as between themselves, the mortgage was, at least, an equitable assignment of that interest. If the land had been actually converted into money under the provisions of the will, the bank undoubtedly would have bean entitled to participate in the distribution. This principio is, in effect, decided in Horner’s Appeal, 6 P. F. Smith 405 ; where, as here, a testator, after devising land to his wife, for life, directed it to bo sold at her death, and the proceeds divided among his children. One of the sons having died in the widow’s lifetime, his interest in the land was sold by his administrator under an order of the Orphans’ Court for the payment of his debts. In holding that the deceased son’s interest passed to the purchaser, it is said that notwithstanding the administrator mistook the interest of his intestate, and called it real estate, his deed is an “ equitable assignment at least, if indeed it is not an actual assignment at law, of the personal interest of the intestate in the proceeds of the testator’s realty when it should be converted ; and this the more so, when we consider that, in fact, there was no conversion, the real estate jmt standing as the existing source from which the interest in the proceeds was to spring, and was viewed as personalty only through the medium of equity.” Assuming then that the bank thus became the equitable assignee of Mrs. Mackey’s interest, and bearing in mind that the constructive change of that interest from personalty into realty, was effected by the exercise of an inherent right of the legatees to do so, it surely cannot be successfully contended that the bank thereby lost the benefit of its security. On the contrary, the only conclusion that harmonizes with the principles of equity is that, as between the parties to the mortgage, the equitable reconversion c ured to the benefit of the bank, and hence, the land was bound by the mortgage. By the exercise of an undoubted right on the part of the legatees to take the land as land, the necessity for a sale under the provisions of the will was superseded, and the character of Mrs. Mackey’s interest was changed : that which, in equity and for a special purpose, was before considered personalty, became an undivided interest in the realty ; but the mortgage, which, as between the parties, was an equitable assignment of the interest springing out of the realty, still adhered to and bound it in its newly assumed form of land. The change in her interest was one of form rather than substance : before the election it was technically considered personalty, for a special purpose, after that it was treated as realty. The right acquired to it in the one form still adhered to it in the other; and, when that right was enforced by a judicial sale of the land, of which everybody had notice, it ripened into title in the purchaser.

■ As to the remaining proposition that, under the will of her father, Mrs. Mackey had no power to alien or incumber her interest in the estate, we think there was no error in so construing the will as to give her and her husband the right to dispose of her interest either when it was regarded in equity as personalty or after it assumed the character of real estate. '

For the reasons above suggested, as well as others given by the learned presidént of the Common Pleas, he was right in concluding that as soon as the agreement of June 1st 1875 was executed, Mrs. Mackey’s undivided interest in the land was bound by the Freehold Bank mortgage ; and that the foreclosure and sale upon that judgment divested her interest and passed title to the Allegheny FT ational Bank. It follows, therefore, that there was no error in entering judgment on the verdict in favor of the bank..

Judgment affirmed.