First Nat. Bank v. Sheafer

Opinion by

Mb. Justice Stebbett,

The single question arising upon the facts embodied in this case stated is whether the lien of appellees’ coal lease mortgage of September 14, 1885, for 132,773.86, was divested by the sheriff’s sale of said lease in July, 1890, on appellants’ and other executions.

If the lien of said mortgage was then divested, it is conceded that appellees are entitled to the surplus proceeds of sale, 11,212.73, remaining after payment of costs and the labor claims; but, if not, said surplus should be distributed to appellants and other executions in their order of priority. The learned judge of the common pleas, being of opinion that the mortgage was divested, awarded the fund in question to the appellees. In so doing it is alleged there was error.

The act of April 5,1853, authorizing mortgages of coal leases in Schuylkill county, provides that such mortgages shall “ be good and available in law, against all subsequent purchasers and subsequent execution creditors, upon the recording of the same.” By the supplement thereto of March 22, 1861, P. L. 185, the lien of all mortgages, executed and recorded in pursuanee of the original act, “ shall remain unaffected, notwithstanding a judicial sale hereafter of the property mortgaged under any execution, the lien whereof attaches only by virtue of said execution.”

The labor claims in this case were recognized as preferred debts and liens on the fund raised by the sheriff’s sale. As such, they were paid in full, but it does not follow that the lien of appellees’ mortgage was divested by the sale. There appears to be nothing in the legislation on the subject, since the act of 1861, supra, to warrant any such conclusion, especially under such a state of facts as is presented in this case. In construing the act of 1872, relating to the lien of labor claims, this court held that the lien attaches at the date of, and because of the sale or transfer, whether by execution or otherwise, and extends only to the specific works, mines, etc., in which the labor claimant was employed, and to such other property of the employer as is used in carrying on said business or in connection therewith : Hartman’s Ap., 107 Pa. 327. Within certain restrictions and limitations, the claim for wages is made a lien on the fund produced by the sale, and is thus preferred in the distribution thereof. It attaches immediately upon the sale, and not before, and, as a preferred lien upon the proceeds, is payable out of the same. There cannot, of course, be any preferred claim or lien unless there is a sale. When the contingency happens upon which it depends, the lien for wages springs into existence. The sale imparts to that class of claims the peculiar quality of a preferred lien on the proceeds; but it does not give to the lien the retroactive effect of divesting mortgage liens such as that represented by the appellees.

We are of opinion that, upon the facts presented in the case stated, the learned court erred in holding that the lien of appellees’ mortgage was divested, and in appropriating the surplus in question to it. It should have been awarded to the executions in their order of priority.

Judgment reversed and record remitted with instructions to distribute the fund in accordance with this opinion.

A petition for a reargument was filed by the counsel for appellees, May 25, 1892.

Per Curiam, May 30, 1892: Reargument refused.