Peele v. Greene , 1 Law Times (N.S.) 141 ( 1879 )

The Court

(HaNdley, J.)

This is an application for an injunction to restrain Potter, one of the defendants, from selling certain lands and from assigning and transferring the judgment upon which such sale is about to be made, unless a release of the lien thereof be executed. The plaintiff also ' prays that if the court be of the opinion that the acceptance, by the plaintiff, of the conveyance mentioned in-this bill of complaint, did not constitute a merger, that a decree, establishing the mortgage and postponing the lien ot the judgment assigned to Potter be made. Also, that if the court be of the opinion that as a matter of law the acceptance of the deed in question constitutes such a mer' ger, that a decree be entered restraining the said Potter from in any man nor setting up and availing himself of the said judgment, as against the plaintiff, or upon the said land, until the payment in full of all indebtedness secured by said mortgage, with interest and costs. It was conceded by counsel for plaintiff’, on the argument of-these exceptions, that the facts in this case were eorreet.ly iound, but that the master erred in the law.

There can be no doubt but that the deed to Peele was not intended tor any other purpose than as additional security to the mortgage. Hence there was no merger, because the moment the debt in question is paid, Peele is in duty bound to mark the mortgage satisfied, and to reconvey the premises to the original grantor.

On the day the transfer of the property in question was made, one defendant executed his judgment note to the other defendant, and this note was entered on the same day the mortgage in question was executed.

That a fraud was intended upon the plaintiff by these two defendants there can be no more doubt , than that the transaction of which the plaintiff complains took place. How then is Potter affected by this fraud?

The master says, as a purchaser for value and without actual notice, Potter is entitled at least to the ' amount actually paid by him, to protection against all the world except the defendant. The equities to which his purchase is subject are those residing in the defendant only, and not m third parties. The whole question is fully reviewed and the authorities cited and discussed in Wetherill’s Appeal, 3 Grant, 283. Judge Strong asks in this case, “Is then the assignee of a chose in action affected by secret equities existing against his assignor, not in the debtor, but in third persons, of which he had no notice when he purchased ? This is a question,” adds the Judge, “not free from difficulty, and not fully settled by authority. It is not easy to see how an assignee can take an interest superior to that which the assignor had to give. An outstanding equity against the owner of a chose in action is an ownership of part of the title to it, or a deduction from its value; if this ownership or a right of deduction be in 1 he debtor, all the cases agree that an assignment of the chose passes it to the transferee, with all its defects upon it. Is not an equity in a third person as much a defect, in title as if it existed in the obligor? Yet it has not been so treated.” In the case of Murray vs. Lylburn, 2 Johns Ch. Reps., 441, Chancellor Kent held that it is a general and well settled principle that the assignee of a chose in action takes it subject to the same equities it was subject to in the hands of the assignor. But this rule is generally understood to mean the equity residing in some third person against the assignor. We have no doubt but that, a fraud, as we have before said, has been practiced on the plaintiff in this case, but the: evidence fails to show it. The doctrine distinctly announced- in Hendrickson’s Appeal, 12 Harris, 363, protects Putter,the assignor of the judgment, at least to the extent of the amount paid for the same, with interest Irom the date of the assignment. We have examined the whole evidence in this case with care, and also the several cases cited in the elaborate brief of counsel' for the plaintiff, but to no avail; so far as this transaction is involved between Peele and Potter.

. The case of Claason’s Appeal, 10 Harris, 359, was decided on an entirely different state of facts, from the facts in the present case.

Exceptions overruled and report of master confirmed.

NOTES OF RECENT DECISIONS IN THE SUPREME COURT OF PENNSYLVANIA.

The Act of 1836 did not take away the jurisdiction of the Court of Common Pleas over testamentary trusts where that jurisdiction had once vested.

In 1826 a testator devised certain property in trust to executors named in the will. - The Court of Common Pleas, during a period of more- than forty years, upon petitions of the parties in interest, appointed trustees in place of those discharged. One of the trustees, who was also administrator d. b. n. c. t. a., invested the funds in a mortgage made to him as administrator. The last trustee appointed by the Common Pleas, and confirmed by the Orphans’ Court collected the principal of the mortgage, and'having paid the interest for several years to the cestuis que trustenr, absconded, failing to account for the principal:

Held (affirming the judgment of the C mrt below), that under the circumstances of the case the trustee was duly authorized to receive the mortgage, and that the defendant ought not to be compelled to pay a second time.

Per Curiam,

ifince the Act of 1836 it is the safest course in all cases of testamentary trusts to invoke thqaid of the Orphans’ Court. — Anderson, admr. vs. Henzey.