Union Trust Co. v. Cleveland Allotment Co.

This cause comes into this court on error from the common pleas court of Cuyahoga county, Ohio, and in the lower court the plaintiff in error was plaintiff and the defendants in error were the defendants.

The issue presented to this court relates to the distribution of funds arising out of foreclosure proceedings instituted in the court of common pleas of Cuyahoga county, Ohio, by the plaintiff in error, the Union Trust Company, against the Cleveland Allotment Company, one of the defendants in error. The journal entry in the foreclosure case, dated June 6, 1928, provided for payment of costs and taxes and an amount due the Union Trust Company of $17,548.08, with interest at 8 per cent. from June 6, 1928, and there was found due in said proceeding the sum of $2,862 to one Robert B. Sill, with interest at 8 per cent. from June 6, 1928, said parties to share in proportion to their claims in any amount available for distribution under the foreclosure proceeding.

The mortgaged property was sold at sheriff's sale on October 26, 1928, to the Ohio State Mortgage Company for $18,000, and the sheriff paid therefrom taxes, costs, and fees, in the total amount of $2,215.93, and paid the balance of $15,784.07 to the Union Trust Company.

On motion of the Union Trust Company the receiver was ordered to pay by the court the sum of $1,200 on or about January 6, 1929, from funds then in his hands, and upon motion of the Union Trust Company to apply this sum of $1,200 on its deficiency judgment the said amount on January 14, 1929, was ordered paid by the clerk to the Union Trust Company.

The claim made by the defendant in error with respect to the application of the sum of $1,200 is that there has been an overpayment to the Union Trust Company, which should be returned and applied to the claims of the Ohio State Mortgage Company and Robert B. Sill, as shown by the decree hereinbefore mentioned, and upon discovery of this overpayment a motion was filed in behalf of defendant in error Robert B. Sill, praying for an order requiring the Union Trust Company to repay the sum of $528.26, or whatever like sum the court should find to be due, to Robert B. Sill and the Ohio State Mortgage Company, in accordance with the foreclosure decree, and by reason of the erroneous distribution of the said sum of $1,200. This motion was granted in the court below on March 6, 1929, and to this ruling of the court below these proceedings are prosecuted.

The position taken by defendant in error is that the Union Trust Company was entitled to interest on its lien only up to the date of the sheriff's sale. This seems to be the uniform rule except in those states where the courts, as a matter of local practice, have fixed a different time limit. It has been held that, "where property is sold at sheriff's sale, interest on liens is allowed to the date of the sale only." 33 Corpus Juris, 239.

"Where land incumbered by judgments is sold by the sheriff, and the money paid into court for distribution, it is error to allow interest on the judgments after the sale." Potter v. Langstrath,151 Pa., 216, 25 A. 76, 77.

It has been held that, where the question is raised as to the length of time for which interest should be allowed to lienholders, where the premises subject to the liens were sold at judicial sale, the interest is allowed on liens to the date of the sale only. The courts have gone so far as to say that the time at which interest on liens must cease is on the date of the sale, as the property is then sold, and taken from the defendant.

We have carefully examined the cases cited by plaintiff in error in its brief, but we fail to find wherein its point at issue prevails in the instant case.

While the authorities are not unanimous on this question we have been unable to discover any decision contrary to the general rule laid down as hereinbefore cited in 33 Corpus Juris, 239. The court below in granting the motion of the defendant in error allowed interest to the Union Trust Company up to the expiration of thirty days after the date of sale, which carried the interest to November 26, 1928. This ruling of the court below is predicated upon the local rule of the court of common pleas in and for Cuyahoga county, Ohio, which reads as follows: "Within thirty days from the date of the sale, the purchaser shall pay the entire purchase price to the sheriff and receive his deed."

The contention made by the Union Trust Company that interest on the principal should be paid up to the date of delivery of the sheriff's deed appears upon analysis to be unfair, especially when it is considered that under such rule a prior lienholder, who becomes a purchaser at sheriff's sale, could so far delay taking up his deed from the sheriff's office as to cause the interest thereby accruing in his favor to eat deeply into the equity of a junior lienholder, to the latter's serious prejudice. So that, for the protection of all lienholders, and to obviate an inequitable distribution of funds which might otherwise result, it becomes necessary that a definite time limit be fixed beyond which interest shall not be paid out of the proceeds of a foreclosure sale.

Therefore, taking this view of the instant case, we find and hold that the ruling of the court below in granting the aforesaid motion was proper and correct, and the finding and judgment of the court below will therefore be, and the same hereby is, affirmed.

Judgment affirmed.

SHERICK, J., concurs.

LEMERT, P.J., and SHERICK, J., of the Fifth Appellate District, sitting by designation in the Eighth Appellate District.