Estate of Dahlem ( 1896 )

Opinion by

Mr. Justice Mitchell,

The real estate was sold by order of the orphans’ court for the payment of the debts of the decedent, but the validity of appellant’s mortgage as a lien being disputed, the administrator, the purchaser and the mortgagee, with the sanction of the court, came to an agreement by virtue of which the purchaser paid the amount into court, the mortgagee satisfied his mortgage of record so as to clear the purchaser’s title, and presented his claim here as if on scire facias in the common pleas. The fund therefore is a special fund representing the land as subject to the lien of this mortgage. Its special and restricted character in this respect is material to some aspects of the case, especially in regard to the claim for taxes.

The case so far as this appellant is concerned turns on the effect of the agreement of April 16, 1894, between Dahlem, Long and Corey, and the action of the parties under it. Dahlem had assigned his property to Long for the benefit of creditors, and the latter were dissatisfied with the assignee’s management.

Whether steps to have him removed were actually taken or only contemplated is not material. The intent of the agreement was to supersede the assignment by providing for the payment of what was termed by the parties “ the floating indebtedness of the assignor.” The agreement accordingly provided that Corey should raise the necessary money, settle with the creditors, get their consent to a reconveyance and disburse the money to them. This agreement was carried out. The assignee was discharged and the estate reconveyed to Dahlem, who executed the mortgage nowin question to Yost and on the same day, June l, gave a direction in writing to Yost to pay the money to Corey to be used by him under the agreement. Corey on the same day receipted to Yost in full for the whole sum, and . on June 2 and 3, the latter by Corey’s direction paid out to the creditors all of the fund except what was due to Corey himself under the agreement. On the following day, June 4, Dahlem died, and some time later Yost paid the rest of the money to Corey. Other creditors however having appeared (whether subsequent or merely overlooked by Dahlem at the time of making the agreement is not clear) the question arose whether the mortgage was a lien for its full amount, or only for the sum actually paid to creditors before Dahlem’s death. The learned court below took the latter view, holding that the mortgage was in effect only for future advances. It therefore awarded the appellant only so much of the fund as was paid during Dahlem’s life, and turned appellant and Corey over to their claims, whatever they might be, against the general assets of the estate.

The correctness of this result depends on the nature of Corey’s claim to the money. Under the agreement he was, as already said, to secure the assent of the creditors to this mode of settlement, and to see that it was carried out by disbursing the money himself. But in addition to this the debt of his firm which he represented was to be paid in full, and he was to have for compensation whatever discounts the other creditors allowed on their claims. In carrying out the arrangement he purchased the claim of Boyd & Son who otherwise would not have consented to the reconveyance. Corey thus before the death of Dahlem had fully performed his part of the agreement, and Dahlem had received the full consideration coming to him by the recon-. veyance of his estate. He could not have revoked his consent expressly nor could his death have that effect by implication. As to him and his rights, the transaction was complete in his lifetime. As Corey was authorized to receive the whole of the money from Yost, a payment in fact by the latter to him would have been beyond question. What was done was in effect the same as a payment to Corey. They agreed upon the disposition of the money and carried it out by paying the creditors all that was coming to them and leaving in Yost’s hands the balance that was due to Corey. As already said if this balance had been paid to Corey in Dahlem’s lifetime it would have been a valid advance of the money by Yost, and Corey could have retained it as his own against Dahlem by virtue of the agreement. Corey’s allowing it to remain temporarily in Yost’s hands did not alter his rights. If thereafter Yost had become unable to pay the money on Corey’s demand the latter could not have recovered against Dahlem on his original claim or for his compensation under the agreement. As to Dahlem those claims had been paid and Corey was turned over to the money in Yost’s hands. He had receipted in full for it, it had become his money, and whether he demanded it at one time or another could make no difference to Dahlem who had no further claim to it. As to him it had come to its proper hands under the agreement, and the transaction being thus executed during his life his death gave his creditors no stronger claims than he had himself.

"We do not think the circumstances made tins mortgage one for future advances only, but if they did the case should rather be put in the class of Moroney’s Appeal, 24 Pa. 372, and Taylor v. Cornelius, 60 Pa. 187, where the mortgagee having bound himself to make the advances was entitled to a lien from the date of the mortgage and not merely from the date of the actual advances. Here Yost had been notified in writing by the mortgagor to pay the money to Corey, had taken Corey’s receipt in full, paid out part of the money at Corey’s direction, and held the balance on his order. As already shown Corey was not a mere agent of Dahlem whose authority could be revoked or was terminated ipso facto by Dahlem’s death. On the contrary he was entitled to hold the money as his own under the agreement, and Yost’s taking his receipt in full and holding the balance for him, put Yost in contractual relation of responsibility to Corey and not to Dahlem for the balance. He was therefore bound to carry out his arrangement with Corey notwithstanding the death of Dahlem.

The allowance of the taxes out of the fund was also erroneous. As the learned court below awarded only a part of the fund to the appellant, the taxes were probably allowed out of the balance, without adverting to the special circumstances of the case. The fund was not in court for general distribution, but was paid in by agreement for the special purpose of standing in place of the land as regards the lien of the mortgage. Whatever the appellant would have been entitled to recover on a scire facias against the land, he is entitled to have out of this fund.

The decree is reversed, and distribution directed to be made to appellant Yost for his claim in full. Costs to be paid by the appellee, the Mercantile Trust Company, but without prejudice to its claim for allowance out of the estate on final settlement of its accounts.