McCleery v. Stoup

Opinion by

I-Iead, J.,

The paper-book of the appellant furnishes no satisfactory evidence that any action was ever begun in the court below. We find no abstract of the proceedings or copy of the docket entries as required by our rules. The only indication that such an action was actually brought is that the proceeding is assigned a particular number of a certain term of the said court. This may warrant us in assuming that the- decree complained of is, in reality, the judgment of a court of law in an action therein pending, but it would certainly be more satisfactory to be furnished with proper record evidence of this important fact.

That a judgment entered against a vendor who has sold land by articles of agreement, but who still retains the legal title, becomes a lien against any estate remaining in the vendor evidenced by that title, is a proposition that cannot, we think, be disputed. The case of Kinports v. Boynton, 120 Pa. 306, cited and relied on by the learned court below, is but one of many kindred cases so holding, but, being clearly to the point, further citations are unnecessary. We do not think, however, that by merely establishing this broad proposition the plaintiffs demonstrate the correctness of the judgment now under consideration. Such a vendor may hold the legal title to the land for many different purposes. If the purchase money has all been paid by the vendee, prior to the entry of any judgment against the vendor, then the latter holds the legal title simply in trust for the former. He has no estate in the land and there remains in him nothing to which the lien of a judgment could attach. If, however, at the time of the entry of the judgment, the whole or any part of the purchase money remains unpaid and owing to the vendor, then the legal title represents an estate in him, the quantity and value of which are measured by the purchase money unpaid, to which the lien of. the judgment will attach. Upon the extinction of that estate by the conveyance to the vendee of the legal title, the lien of the judgment will be transferred to the purchase money, and upon any distribution of such money the judgment creditor will take precedence over junior-lien or unsecured creditors of the vendor. From a consideration of these principles we think it must be clear that if the vendor, either in the agreement of sale itself, or at any time thereafter but prior to the entry of the judgment, in good faith and for a lawful consideration to him moving, should assign and transfer to another, or to one in trust for a number of others, all of the unpaid purchase money, then again the legal title remaining in the vendor would be stripped of every incident and element of value to him and there would be nothing upon which the lien of a judgment against him could fasten. He would then hold but the naked legal title in trust for his vendee if the terms of sale were complied with, or for those who had succeeded to his own rights in the purchase money if it became necessary for them to use it to enforce those rights.

Thus it appears that the important question for our consideration is not, did the judgment of the plaintiffs, at the time of its entry, become a lien upon any estate in-the land remaining in the vendor or any ownership in the purchase money, the equivalent of such estate?- because this is conceded ; but is, did the vendor, at the moment the judgment was entered, retain, in his own right and for his own use, any estate in the land or ownership in the purchase money, to which the lien of the judgment could attach ?

In disposing of this question we are not embarrassed with any complications that might arise were there any allegation of fraud in the transaction. There is no claim that the sale price was less than a fair and full consideration for the property or that there was any design on the part of either vendor or vendee to in any way hinder or delay the creditors of the former. On the contrary, the whole of the purchase money was, by the express direction of the vendor, to be applied in payment or settlement of his debts, they being correctly classified into secured and unsecured, according to their legal status at that moment.

“ An assignment of a chose in action or óf a fund need not be by any particular form of words or particular form of instrument. . . . Any binding appropriation of it to a particular use, by any writing whatever, is consequently an assignment, or what is the same, a transfer of the ownership; and that it may be effected by a letter of attorney to collect and distribute, so as to be good against an attachment by particular creditors, was ruled by this court in the United States v. Vaughan, 3 Binn. 394, etc.: ” Watson v. Bagaley, 12 Pa. 164.

“None of the acts of assembly relating to assignments for the benefit of creditors have required that they should be drawn in any specific form. Such instruments were well known and in common use when the act of March 24, 1818, was passed. And neither before nor after its passage was any particular collocation of words held necessary to give to a writing the effect of an assignment. Since 1818 property transferred to one person to he employed, paid over or converted for the benefit of others, has been regarded as property held in trust within the operation of the statutes : ” Wallace v. Wainwright, 87 Pa. 263.

Did it appear as a fact in this case that the disposition of the purchase money made by the vendor was on account of “ insolvency ” or his inability to pay his debts,” it would seem that every essential element of an assignment for the benefit of creditors was present in the writing executed and delivered' on April 26, 1905, which was regularly recorded within the time prescribed by the statute for the recording of such instruments. Had this cause been tried before a jury they might have been warranted in inferring such insolvency or inability from the other facts which do appear. But, dealing as we are with a case stated, such inferences may not be made by the court. We have no right to assume or infer the existence of any fact not stated and agreed on by the parties: Diehl v. Ihrie, 3 Whart. 143; City of Chester v. Traction Co., 4 Pa. Superior Ct. 575.

But whilst we might hesitate for the reason indicated to pronounce the paper under consideration an assignment for the benefit of creditors within the meairing of the statutes, we can see no good reason to doubt that it amounted to a special assignment of the purchase money due the vendor, to the vendee, to be by him applied to the use and benefit of the persons and firms named therein.

The vendor was entirely competent to make such an assignment. Having provided for the payment in full of all the debts which were liens on his title, he could dispose of the balance of the purchase money as he chose. To transfer it to creditors who were in no position to seize it was not only in no way illegal, but was a praiseworthy discharge of a moral obligation. This obligation was a good consideration to the assignor. If, then, we have competent parties for assignor and assignee, and a written agreement between them; if we have a good consideration moving to the former inducing its execution ; if we find the instrument after execution was delivered to, received and placed on record by the other party; if we find the subject-matter of that agreement to be property that will pass by assignment; if the paper contain a clear and distinct direction from a vendor to a vendee to appropriate and apply purchase money to the use and benefit of persons other than the vendor, to wit: his creditors; and if the law be that “ any binding appropriation of it (purchase money) to a particular use, by any writing whatever, is an assignment ” — upon what theory can we reach any other conclusion than that the paper, now under consideration, amounted to an assignment ?

Can it be said, however, that even if the paper amounts to an assignment it is executory only and revocable at the will of the assignor, thus leaving it in his power to reinvest himself with the full ownership of the fund ?

As already stated there was a good consideration to support his act in transferring this money to a trustee for the use of the persons named who were creditors. In Watson v. Bagaley, 12 Pa. 164, Chief Justice Gibson, after stating the question raised as to the power of the maker or assignor to revoke the paper held to amount to an assignment, says : “ The solution of it is that a letter of attorney is not revocable after it has been executed; and here the money was collected and ready for distribution according to the term of the trust. The services of the trustees, in the execution of it, was a consideration for an agreement which would have prevented the donor of the power from retracting it had he been disposed to do so. The consideration of trouble was certainly as potential as the trifling pecuniary one inserted in formal assignments.”

In the present case we not only have the trustee accepting the trust, with the money in his hands ready for distribution according to its terms, but the agreement contains an express assumption by him of all the debts that were liens, amounting to about $1,200, thus adding his personal liability to the security previously held by the lien creditors. We also know from the record that the trustee has already in part executed the trust by paying to the present plaintiffs the share due to them under the terms of the assignment. True, the mere acceptance of this money does not estop them pursuing any other remedies which, as creditors, they may have because they stipulated it should not do so. But it would estop the assignor, on whose rights they must stand, from revoking his assignment if he otherwise had the right to do so. We cannot think, under the conditions shown by the record to have existed when the judgment was entered, the defendant therein could have revoked or repudiated his agreément and maintained an action against the trustee to recover, for his own use and benefit, the unpaid purchase money or any part of it. If he could not it is difficult to see how the present plaintiffs, whose rights rise no higher than those of their judgment debtor, have acquired any right to a larger share in the fund than was given to them by the terms of the assignment made by the vendor.

If in reality there be, as contended, any uncertainty in the language of the instrument as to the identity of the beneficiaries thereunder or the exact amount to be received by each, or the conditions, if any, upon which they are to receive it, these are questions that primarily interest the trustee. We can only assume at this time, as the plaintiffs must, that the trust will he fairly and properly executed according to its terms. If indeed, when so executed, there remains in the hands of the trustee any portion of the fund which the vendor, were it not for the judgment of the plaintiffs, could rightfully claim and recover, then, as to that portion of the fund, the lien of the judgment would attach and the plaintiffs would secure it. For the reasons indicated we are of opinion the court below was wrong in entering judgment for the plaintiffs.

Judgment reversed and judgment on the case stated is now entered in favor of the defendant; the costs of this appeal to be paid by the appellees.