Meigs v. Bunting , 141 Pa. 233 ( 1891 )

OPINION,

Mu. Justice Mitchell:

A bond and mortgage are distinct and separate securities, though for the same debt. As against the rights of third parties, payment in fact of either extinguishes the debt, and therefore satisfies the other: Mitchell v. Coombs, 96 Pa. 430; Loverin v. Humboldt Co., 113 Pa. 6. And, even between the parties, the two securities are so far parts of the same transaction that the satisfaction of one is presumed to be payment of the debt and therefore to include the satisfaction of the other, and the burden of proof is on the creditor to show the contrary. But this result depends on the intention of the parties. The presumption therefore is rebuttable, and satisfaction of one security will not in fact be satisfaction of the other, unless the parties so intend, or the debt be actually paid: Fleming v. Parry, 24 Pa. 47; Seiple v. Seiple, 133 Pa. 470.

These being the rights and the presumption between the parties, we come now to the question in the present case, what is the presumption as applicable to a third party having an interest in the subject-matter, for instance as purchaser at a sheriff’s sale ? Is he bound to look into the actual facts of payment, or the intention of the parties, further than they have been made accessible to him on the record ? The clear result of our cases seems to be that he is not.

In Magaw v. Garrett, 25 Pa. 319, there was a judgment of the same date as a mortgage, and the record indicated that it was a subsisting lien at the time of sheriff’s sale. It was held that as to the purchaser the mortgage was discharged, though the judgment were in fact paid. “ The record, in the absence of notice to the contrary, is for him a safe guide.” Goepp v. Gartiser, 35 Pa. 130, was to the same effect. Coyne v. Souther, 61 Pa. 455, was the converse of the preceding cases. There a judgment prior to the mortgage was marked satisfied, on the record, and it was held that the mortgage was not discharged, though the judgment was not in fact paid; and evidence that the mortgagee had been notified, before the sale, of a rule to show cause why the entry of satisfaction on the senior judgment should not be stricken off was properly excluded, the mortgagee not being bound to pay any attention to such a notice. In Reading v. Hopson, 90 Pa. 494, there was no lien of record when the mortgage was made and recorded, but a mechanics’ claim was subsequently filed, which it was offered to be shown related back to the commencement of the building prior to the mortgage. It was held that the offer was properly refused, and the mortgage was not discharged. The date of the commencement of the building did not appear on the face of the lien, and it was held that it could not be proved by parol, Shakswood, C. J., saying that while this might be shown as between the mortgagee and the lien claimant, because the former was bound to take notice of the actual state of things on the ground, yet, as between the mortgagee and the purchaser, it was different. “ As the bidder at sheriff’s sale is not bound to look beyond the record in determining what he shall bid, and it cannot be shown as against him that a prior lien has been paid or is not subsisting, so neither can he take advantage of any fact dehors the record to discharge the land from the lien of the mortgage: ” Idem, 497. And in the latest review of the subject it is said-by our Brother Clark, in Saunders v. Gould, 134 Pa. 445: “ A purchaser is not bound to look beyond the record. The payment of a prior lien not satisfied of record will not protect a subsequent mortgage from being discharged by the sale.....He had a right.....to assume that the liens were as they appeared upon the record, and the judgment docket was the criterion.”

These cases establish the general rule that a purchaser at sheriff’s sale is entitled to rely upon the record evidence of the encumbrances on the property. There is no sufficient reason to make tbe ease of double securities for the same debt, as, e. g., a mortgage and a judgment on the accompanying bond, an exception. As already shown, satisfaction of one is only presumptive payment of the debt from which satisfaction of the other would follow. The parties have an unquestionable right to extinguish one security and keep the other alive. If they put or leave the record in such shape as to indicate that they have exercised that right, why may not the purchaser rely upon it as conclusive evidence, as in other casos ? If the parties had made a formal entry on the judgment docket that “ the mortgage accompanying the bond in this case has been satisfied, but the parties agree that the judgment is not to be affected thereby,” there could be no possible question of the validity of the judgment as a subsisting encumbrance. But parties, by leaving the 'judgment on the docket, do, in effect, make such a representation to those who inspect the record. If the bidder goes to the parties for information he may not get a truthful account, and in the present case would almost certainly have got a conflicting one, for it appears that the creditor was trying to collect the judgment by fieri facias, and the debtor was asserting to the court that it had been paid. But the bidder is not bound to take any such risk. As said by Sharswood, J., in Coyne v. Souther, supra: “ It is very important that bidders at sheriffs’ sales should feel well assured as to whether they are offering to buy a clear or an encumbered title.....In regard to the lien of judgments the judgment docket has been provided, which, as to purchasers and subsequent encumbrancers, is intended to afford them certain information: ” 61 Pa. 457. We are of opinion that cases like the present come within the general rule, and a purchaser, finding the mortgage satisfied, but the judgment still apparently in force, may rely upon the record as conclusive evidence that the parties have exercised their right to maintain the judgment as a subsisting encumbrance, and, therefore, that the sale will discharge the second mortgage.

In the present case, the record disclosed an apparent controversy between the plaintiff and defendant in the judgment, at the time of the sale. There had been a rule to open the judgment which had been discharged by tbe court, and subsequently reinstated by agreement of the parties, and it was still pending at the time of the sale. Even if the whole question were open, it would seem that the most that could be fairly held against the purchaser would be that, having bought with notice of the pendency of the rule, he took the chances of the court’s action upon it, and as the rule was subsequently withdrawn, the judgment stood unaffected, as if it had never been assailed. But the question is not open. It was held in Coyne v. Souther, supra, that notice of a rule to strike off satisfaction of a judgment did not change the legal effect of the satisfaction while it stood on the record, and that the purchaser was not bound to pay any attention to such notice. The purchaser here had notice by the record that there was a rule to open the judgment pending, but the rule, unacted on by the court, had no greater force than the affidavit of the defendant on which it was founded. It showed no more than a dispute between the parties, to which the purchaser was not bound to give any heed. He was entitled to rely on the legal effect of the judgment so long as it stood on the record, unmodified by any action of the court.

Judgment reversed, and judgment on the case stated for the terre-tenant Clark.