text:
    Shamokin Valley and Pottsville Railroad Company et al. versus James Malone.
    1. McG. et al. made a contract with, the Philadelphia and Sunbury Railroad Company to do certain work on its main line, and by a verbal agreement extended it to the construction of a branch. M., plaintiff below, under them and with the consent of the company, did the work on this branch; after its completion the company made a mortgage to secure S500,000 of bonds, upon which proceedings wore commenced, and the railroad property and franchises sold by the sheriff to the bondholders, and a new company organized by them under the title of the Shamokin Valley and Pottsville Railroad Company. M. brought suit in covenant, in the name of McG. ei al., to his use, against the Philadelphia and Sunbury Railroad Company, now known as the Shamokin Valley and Pottsville Railroad Company, for the balance due him for the work, and served the superintendent of the Philadelphia and Sunbury company. J udgmont was entered in favor of plaintiff against the Philadelphia and Sunbury Railroad Company by default, and in favor of the Shamokin Valley and Pottsville Railroad Company, on a plea filed by it that it was not a party to the contract: Held, that while the suit should not have been brought in the name of McG. et al., but in that of M., and not in covenant, but in assumpsit on the parol agreement to build the branch, and the judgment by default against the first-named company and that in favor of the last-named company on its plea were wrong, yet the master in this suit in equity by M. against the last-named company had a right to use the record of the judgment in connection with the evidence to ascertain the amount of the claim of M.
    2. M., the contractor, having completed, in 1854, his work on the branch of the Philadelphia and Sunbury Railroad Company, and all the property and franchises of that company having been sold by the sheriff in 1857, it was held, that as the Act of March 24th 1773, entitled “ An act for the limitation of actions,” enacts that its provisions shall not extend to any corporation that may have suspended business, or made any transfer or assignment for the benefit of its creditors, or from any cause may have ceased from or suspended the ordinary business for which it was created, the Philadelphia and Sunbury Railroad Company having ceased, from the day of such sale, from its ordinary business, the Statute of Limitations stopped running against plaintiff from that day.
    3. The work having been done by the contractor, and the railroad company, without his knowledge or assent, having subsequently made a mortgage upon which proceedings wore begun and resulted in a sheriff’s sale, it was held, that, although the purchaser at this sale had no notice of his claim, the mortgage and the judicial sale under it were void, so far as regarded the paramount lien of his claim. Pox v. Seal, 22 Wall. 424, followed.
    4. The assets of an insolvent corporation are a fund for the payment of its debts, and a court of equity will enforce this trust in favor of creditors against the holders of such assets, and the Act of Assembly of April 4th 1862, authorizing a contractor to issue a writ of scire facias on his judgment and proceed as in other cases, does not give a remedy, where a judicial sale has extinguished the corporation and rendered it impossible for him to obtain a judgment against it.
    July 13th and 14th 1877.
    Before Agnew, C. J., Sharswood, Mercur, Gordon, Paxson, Woodward and Sterrett, JJ.
    Appeal from the Court of Common Pleas of Northumberland county: In Equity, No. 79, May Term 1877.
    The bill was filed in this case October 22d 1868, by James Malone against The Shamokin Valley and Pottsville Railroad Company and the Northern Central Railway Company.
    The hill avers that Richard McGrann, Sr., Michael Barry, Richard McGrann and John J. Dougherty, on the 19th day of August 1852, made a contract with the Philadelphia and Sunbury Railroad Company to do all the work necessary to relay the track of the railroad from Sunbury to Shamokin, and also all the work of the extension of the railroad from Shamokin to a contemplated connection with the Minehill Railroad near Mt. Carmel; that it was agreed by plaintiff below and said parties, with the consent of the railroad company, that he should do a large part of the work which they were to do and should receive payment for said work from the company, and that he did a large amount of work and the company paid him in part, but left unpaid and due to him a large balance; that he brought suit to August Term 1859, No. 137, in the names of Richard McGrann et al., to his use, against the said railroad company, and having declared on the contract above referred to he obtained a judgment against the company on the 1st of November 1861, for $8693.33; that the company, in pursuance of power granted by an act of legislature referred to, made, on the 5th day of August 1852, a mortgage to Shepherd Knapp of its railroad from its terminus at Sunbury to its intersection with the Minehill and Schuylkill Railroad, with its corporate franchises and appurtenances, together with certain tracts of land; that this mortgage was made to secure bonds amounting to $700,000; that subsequently the company made another mortgage of its railroad property and franchises, dated July 23d 1855, to Joseph R. Priestley, to secure bonds amounting to $500,000; that before the execution of this mortgage the company was indebted to plaintiff for work in the sum of $8693.33, and the same, is still due, and that the last-mentioned mortgage was made without his knowledge or assent; that Priestley issued on said mortgage a scire facias to November Term 1857, obtained a judgment against the company for $575,688.82, issued a levari facias by virtue of w'hich their railroad property and franchises were, November 2d 1857, sold to Edward S. Whelen for $1500-; that Whelen purchased for certain bondholders, who were promoters of the Shamokin Valley and Pottsville Railroad Company, incorporated by an Act of Assembly approved March 25th 1858, and that Whelen conveyed, April 9th 1858, the railroad property and franchises so purchased to said new company; that this company had notice of plaintiff’s claim of action against the Philadelphia and Sunbury Railroad Company, and have been requested to pay the same, but have refused to do so; that the Northern Central Railway Company, one of the defendants, on the 27th of Eebruary 1863, leased from the Shamokin Valley and Pottsville Railroad Company the said railroad property for the term of nine hundred a,nd ninety-nine years, upon the payment of a certain annual rental: that the Philadelphia and Sunbury Railroad Company has become dissolved and cannot be made a party to this suit. The prayer of the bill is, that the mortgage to Priestley, the proceedings thereon and the conveyance of Whelen to the Shamokin Valley and Pottsville Railroad Company, be declared fraudulent and void as against plaintiff; that a sequestrator be appointed, who, after paying the interest on the first mortgage of the company’s expenses, shall pay plaintiff’s claim with interest, or that the Northern Central Railway, the lessee, shall pay out of the rental the plaintiff’s claim.
    The answer of the Shamokin Valley Railroad Company admits the execution of the contract for the work to be done by McGrann et al., but avers that defendants have no knowledge of the sub-contract with the plaintiff; it avers also that an action in covenant was brought by McGrann et al., to use of plaintiff', against the Philadelphia and Sunbury, now known as the Shamokin Valloy and Pottsville Railroad Company ; that the last-named company filed a plea that the agreement was not the deed of said last-named company; that no other plea was filed in the suit; that August 9th 1861, after a jury had been sworn, it was withdrawn from the jury and a judgment by default entered against the Philadelphia and Sunbury Railroad Conpany, and on the special plea of the Shamokin Valley and Pottsville Railroad Company, in favor of that company; that damages were subsequently assessed against the Philadelphia and Sun-bury Railroad. It admits the execution of the mortgage by the Philadelphia and Sunbury Railroad Company to Knapp to secure $700,000 of bonds, and also that of the mortgage to Priestley to secure $500,000 of bonds, and avers that the latter was duly authorized by law, and that the railroad property and franchises described in it had been vested in the Pottsville and Danville Railroad Company, a company organized under an Act of Assembly, passed April 8th 1826, to incorporate that company; that said property was sold by the sheriff of Northumberland county, December 28th 1850, and the sale was confirmed, and the purchasers, by virtue of the authority conferred upon them by law, organized a new company under the name of the Philadelphia and Sunbury Railroad Company; that by virtue of a certain Act of Assembly the said company was authorized to borrow money, issue bonds and secure the same by mortgage; that defendants do not know whether the said company, before or at the time of the execution of the mortgage to Priestley, was indebted to plaintiff'. The proceedings of foreclosure under the mortgage and the purchase by Whelen are admitted, but it is averred that Whelen, at the time of the purchase, had no notice of plaintiff’s claim, and that he acted for the bondholders, and subsequently, on March 25th 1858, an Act of Assembly was passed reciting said purchase and constituting the purchasers a new corporation under the name of Shamokin Valley and Pottsvillo Railroad Company, to -which company Whelen, by deed dated April 9th. 1858, conveyed the railroad and property purchased by him. Notice of the suit in which the company filed its plea is admitted, but it is denied that fit is liable to pay plaintiff’s claim, as it purchased the said railroad and property in good faith and without notice of it; that February 27th 1863 a lease of the railroad and property was made to the Northern Central Railway Company for nine hundred and ninety-nine years; that no cause of action has accrued against the company defendant within six years, and the Statute of Limitations is pleaded; that Barry, to whom McGrann, Sr., and Dougherty, two of the contractors, had assigned their interest under the contract, and McGrann, Jr., settled with and received from the company $25,000 of stock in settlement of their claim, and they executed a release of all claims against the Philadelphia and Sunbury Railroad Company; that at the time of the sheriff’s sale to Whelen no work was being done by plaintiff; that at this time the last-named company was in exclusive possession of the railroad and property; that plai ntiff had not brought suit and gave no notice of . his claim, and Whelen purchased without any knowledge of the same.
    The Northern Central Railway Company filed an answer, in which it is stated that it had no knowledge of plaintiff’s claim, and on February 27th 1863 it entered into a lease of the railroad and property with the Sham okin Valley and Pottsville Railroad Company, and it is now in possession of and operating the railroad, &c.
    William M. Rockefeller, Esq., was appointed master. He reported that the Philadelphia and Sunbury Railroad Company executed, August 5th 1852, its mortgage to secure bonds to the amount of $700,000 to Shepherd Knapp; that it made, August 19th 1852, a contract with McGrann et al. for work on the main line of the road; that it subsequently concluded to build a branch, known as the above, and requested McGrann et al. to do this work at the same prices mentioned in the original contract; that McGrann et al. gave plaintiff the work of completing the branch; with the knowledge of the company he did this work ; that there-was due plaintiff for this work a balance, for which he obtained a judgment against the company; that the work was commenced in 1852 or 1853 and finished in 1854; that the 23d day of July 1855 the company made its mortgage to Priestley to secure $500,000 of bonds; that proceedings of foreclosure were commenced on this mortgage and the property, November 2d 1857, sold to Whelen, who conveyed to Sham okin Valley and Pottsville Railroad Company, a company organized by the purchasers, represented by Whelen; that this company settled with Barry and McGrann for a balance due them, but this did not include the amount due plaintiff; that plaintiff brought suit, July 11th 1859, in the name of McGrann et al. to his use, against the Philadelphia and Sunbury Railroad Company, known by the name of the Sham okin Valley and Pottsville Railroad Company; that there was no appearance by the first-named company and the last-named company appeared by counsel and filed a plea, which was lost. The action was in covenant, and the plea was: the covenants were not the deed of the last-named company ; that the case having been withdrawn from the jury, a judgment by default was entered against the Philadelphia and Sunbury Railroad Company and in favor of the Shamokin Valley and Potts-ville Railroad Company on its plea, the court being of opinion that this company was not a party to the agreement sued on; that a lease was made February 27th 1863 to the Northern Central Railway Company ; that plaintiff never consented to the second mortgage given by the Philadelphia and Sunbury Railroad Company to Priestley and knew' nothing about it; that Whelen had no notice of plaintiff’s claim when he purchased the railroad.
    The master found that the plaintiff had no legal claim against the defendants below and was not entitled to the relief prayed for. Exceptions were filed to this report, and were dismissed August 19th 1872, and the report confirmed by a decree fro forma. An appeal was taken to the Supreme Court and this decree confirming the report reversed; Justice Sharswood delivering the following opinion:—
    “It is very plain upon the record that this case was not in a condition for a final hearing and decree in the court below. The Northern Central Railway Company wore merely formal but necessary parties. They were made parties — appeared specially by their solicitor — and a rule was taken and served upon them to answer; but as to them no further proceedings appear. The bill was not taken pro confesso as against them.
    “ The Shamokin Valley and Pottsville Railroad Company put in their answer, a replication was filed, and the case went to an examiner and master for proofs and a report. To make a final decree now', adverse even to the Shamokin Yalley and Pottsville Railroad Company alone, would not end the cause.
    “ It must be subject to the rights and equities of the Northern Central Railway Company. They would still have a right by coming in with an answer, to contest the liability of the Shamokin Company, under whom, as the bill charges, they came in as lessees, and are at present in possession of the road, as well as set up any equities of their own. The plaintiff- below was entitled to a decree pro confesso as against them, but he did not move for it, and the court below would, in all probability, have required notice of such a motion before entering the decree. Under the state of the record, all that can be done is to reverse and remit the cause to the court below' for further proceedings.”
    The record having been remitted (the former master having been elected a judge of the Court of Common Pleas of Northumberland county), ¡S. H. Ease, Esq., was appointed master, who reported the facts substantially as found by the first master, and concluded that by reason of the resolution of the General Assembly of 1843, in regard to the lien of contractors, the mortgage of the Philadelphia and Sunbury Railroad Company to Priestley, to secure bonds to the amount of $500,000, was void as to the plaintiff, and there was due him $15,777.04, and that a decree be made that the same be paid, and if not paid, that the railroad and property of the Shamokin Valley and Pottsville Railroad Company be sold to satisfy the same.
    This report was confirmed by the court below, and a decree made:—
    “That the sum of $15,774.04, with interest thereon from June 5th 1875 and costs, should be paid by the Shamokin Valley and Pottsville Railroad Company, and in default of payment thereof that the said sum of $15,774.04, with interest thereon -from the 5th day of June 1875, and costs, should be paid by the Northern Central Railway Company out of the rents and moneys covenanted and agreed to be paid by the said company to the Shamokin Valley and Pottsville Railroad Company, under the terms of the lease of the Shamokin Valley and Pottsville Railroad Company to the said the Northern Central Railway Company, dated the 27th day of February 1863, on or before the first day of March next, and that the said Northern Central Railway Company be thereupon discharged as against the said Shamokin Valley and Pottsville Railroad Company for the said sum or so much thereof as should be paid by the Northern Central Railway Company. And further, that upon the 1st of March next, in default in the payment of the said sum of $15,774.04, with interest thereon and costs as aforesaid, by the said Northern Central Railway Company, within the time aforesaid, then the real estate, property and franchises of the Shamokin Valley and Pottsville Railroad Company acquired under the proceedings upon a certain mortgage of the Philadelphia and Sun-bury Railroad Company to Joseph R. Priestley, trustee, dated the 23d day of July 1855, viz., the railroad of the said company from its terminus at Sunbury to its intersection with the extension of the Mine Hill and Schuylkill Haven Railroad as aforesaid, with its corporate franchises and appurtenances, together with its locomotive-engines and cars, and also all those seven several tracts of land situate, lying and being on the waters of Shamokin creek, in the counties of Northumberland and Montour, in the state of Pennsylvania, should be sold to pay the same, and a writ of fieri facias should issue to sell the same.”
    Defendants below appealed, and assigned the following errors: That the court erred in confirming the report; in declining to decide that the mortgage of the Philadelphia and Sunbury Railroad Company to Priestley was a valid mortgage, and that Whelen’s title under it was free and discharged from all iiens of contractors; in refusing to decide that the sheriff’s sale to Wheleti divested the lien for work done by a contractor; in refusing to decide that the release of McGrann and Barry operated as a release of plaintiff; in refusing to decide that the judgment in plaintiff’s suit, to August Term 1859, No. 137, was a bar to the bill filed by 1dm; in overruling the plea of the Statute of Limitations; in making the decree, because plaintiff had his remedy at law; and in not dismissing the plaintiff’s bill.

      Wayne Mac Veagh, J. B. Packer and W. C. Packer, for appellants.
    — Under the resolution of January 21st 1843, a mortgage made by a. railroad is not absolutely void, but is simply voidable as against a contractor who has not assented to it. The statute of 13 Elizabeth against fraudulent deeds and conveyances, &c., declares “ that all such conveyances, &c., made with intent to delay, hinder or defraud creditors, shall be deemed and taken, as against such person as might be hindered, delayed or defrauded, to be clearly and utterly void, frustrate and of none effect.” A conveyance void as to creditors is good as against the grantor and those claiming under him: Hartley v. McAnulty, 4 Yeates 95; Church v. Church, Id. 280; Reichart v. Castator, 5 Binn. 109; Sherk v. Endress, 3 W. & S. 255; Buehler v. Gloninger, 2 Watts 226; Cook v. Grant, 16 S. & R. 211; Telford v. Adams, 6 Watts 429; Dannels v. Fitch, 8 Barr 495; Moser v. Mayberry, 7 Watts 14; Murphy v. Hubert, 4 Harris 50.
    The railroad and property having been sold under proceedings by a scire facias on the mortgage, the purchaser, takes a title free from all liens: Hartman v. Ogden, 4 P. F. Smith 120. A mortgage is a security for the payment of money: Rickert v. Madeira, 1 Rawle 328; Asay v. Hoover, 5 Barr 21; Ackla v. Ackla, 6 Id. 228. The mortgage to Priestley did not disturb plaintiff’s lien, and cannot be held to be void.
    If the legislature, by the resolution of 1843, intended to secure contractors the right to resort to the property of the incorporated company to enforce the duties imposed upon them by their contracts, as in the case of a covenant for the right of re-entry by a lessor to secure the arrears of a perpetual rent by applying the profits for that purpose, or to forfeit the estate upon failure to pay the rents, the lien or liability of that character would have been discharged by the sheriff’s sale: Wood’s Appeal, 6 Casey 274; Bantleon v. Smith, 2 Binn. 146; Dougherty’s Estate, 9 W. & S. 189; Spangler’s Appeal, 6 Casey 277; Ter-Hoven v. Kerns, 2 Barr 96; Pancoast’s Appeal, 8 W. & S. 381; Bank v. Fitzsimons, 3 Binn. 358.
    A judicial sale discharges the land from all liens except mortgages: Hellman v. Hellman, 4 Rawle 440; McLanahan v. Wyant, 1 P. & W. 112; Lobach’s Case, 6 Watts 167; Reed v. Reed, 1W. & S. 235; Commissioners of Spring Garden’s Appeal, 8 Id. 444; Swar’s Appeal, 1 Barr 92; Stiles v. Brock, Id. 218; McKenzey’s Appeal, 3 Id. 159; Mohler’s Appeal, 5 Id. 420; Lauman’s Appeal, 8 Id. 473; Mather v. McMichael, 1 Harris 302; Bantleon v. Smith, supra, reiterated by Pancoast’s Appeal, supra; Dougherty’s Estate, supra; Ter- Hoven v. Kerns, supra; Hiester v. Green, 12 Wright 96; Strauss’s Appeal, 13 Id. 353; Aulenbaugh v. Umbehauer, 8 Watts 48; Custer v. Detterer, 3 W. & S. 28.
    When land is subject to a legacy and is sold on execution, the vendee takes it discharged from the lien of legacy: Barnet v. Washebaugh, 16 S. & R. 410; Randolph’s Appeal, 5 Barr 425; McLanahan v. Wyant, supra. The contractors who had the lien, if any, were McGrann et al., and not the plaintiff, a sub-contractor : McBroom & Wood’s Appeal, 8 Wright 94. The Statute of Limitations bars plaintiff’s claim: Hamilton v. Hamilton, 6 Harris 20; Waterman v. Brown, 7 Casey 161; Conover v. Conover, 1 Saxton 403; Stackhouse v. Barston, 10 Vesey 453; 1 Daniel’s Ch. 663; Story Eq. Pl., § 716; Jones v. Turberville, 2 Ves., Jr. 11; Shipton v. Janney, 13 Pet. 381; Kerr on Frauds 304; Beckford v. Wade, 17 Vesey 87, 97; Badger v. Badger, 2 Wall. 94. The plaintiff has his remedy at law: Tillmes v. Marsh, 17 P. F. Smith 507; North Penna. Railroad Co. v. Snowden, 6 Wright 488; Schlecht’s Appeal, 10 P. F. Smith 172; Clark’s Appeal, 12 Id. 447.

      J. W. Comly and S. P. Wolverton, for appellee.
    — Under the resolution of 1843 the mortgage by Philadelphia and Sunbury Railroad Company to Priestley was void: Angell & Ames on Corporations 249, section 265; Jackson v. Summerville, 1 Harris 370; Kerr on Fraud and Mistake 51; Bump on Fraudulent Conveyances 475. The plaintiff could not have come upon the fund arising from the sheriff’s sale on this mortgage because null and void, and plaintiff’s claim was not divested by the sale: Fisher’s Appeal, 9 Casey. 294; Hoffman’s Appeal, 8 Wright 95.
    The mortgage to Priestley being void, all proceedings under it were also void. The purchasers were not- strangers, but were the bondholders, and notice was not necessary.
    The plaintiff’s claim was a lawful claim and the subsequent mortgage to Priestley and the proceedings under it cannot sweep it away: Fox v. Seal, 22 Wall. 424. Tyrone & Clearfield Railway Co. v. Jones, 29 P. F. Smith 60, follows and adopts Seal v. Fox, supra. As to the amount of plaintiff’s claim the judgment is conclusive: Davidson v. Thornton, 7 Barr 131; Huffsmith v. Levering, 3 Whart. 115; Hauer’s Appeal, 5 W. & S. 475; Tarbox v. Hays, 6 Watts 401; Hazelett v. Ford, 10 Id. 102.
   Mr. Justice Sharswood

delivered the opinion of the court, October 11th 1877.

It is very clear upon the evidence that the plaintiff, James Malone, was a contractor under the Philadelphia and Sunbury Railroad Company, and constructed for them a branch of their railroad on the same terms as McGrrann and others constructed by written articles the main road. There was no written contract for the branch. McGrrann and partners agreed to do the work, and then turned it over to Malone, who was recognised and dealt with by the company as the contractor. Subsequently to the completion of the contract, the Philadelphia and Sunbury Railroad Company executed a mortgage to Joseph R. Priestley, dated July 23d 1855, under which its franchises and property were sold, and were subsequently vested in the Shamokin Valley and Pottsville Railroad Company, who were incorporated by Act of Assembly of March 25th 1858. To August Term 1859 of the Court of Common Pleas of Northumberland county, Malone commenced an action of covenant in the name of McGrann and others, to his use, against “the Philadelphia and Sunbury Railroad Company, now known by the name and style of the Shamokin Valley and Pottsville Railroad Company.” The process is returned served on “A. R. Eiske, he being superintendent of the road.” The Philadelphia and Sunbury Company having at that time ceased to exist, and having no road to be superintended, we may assume that A. R. Eiske was the superintendent of the Shamokin Valley and Pottsville road. There was no appearance for the Philadelphia and Sunbury, but a special appearance for the Shamokin Valley and Pottsville. They filed a special plea, which is now lost. Nevertheless, the court entered judgment by default against the Philadelphia and Sunbury, and on the special plea in favor of the Shamokin Valley and Pottsville, being of the opinion that the latter company was not a party to the agreement and not a party to the suit. Upon an inquisition on the judgment, the plaintiff’s damages were assessed at $8693.33. This whole proceeding was a tissue of blunders. The suit should not have been in the name of McGrann and others, but of Malone. The defendants were sued as one corporation, known by different names. The declaration should not have been in covenant on the sealed contract with McGrann and others to build the main road, but in assumpsit on the parol agreement for the branch. No judgment by default should have been entered against an extinct corporation, as the Philadelphia and Sunbury Railroad Company was at the institution of the suit, upon which no service had been or could have been made. And the judgment in favor of the Shamokin Valley and Pottsville Railroad Company was also wrong, if the judge was right in holding as he did, and there seems to be very good reason for it, that that company were not parties to the suit. The only defendant was the Philadelphia and Sunbury Company, with an alias which was not true. How could there be a judgment in favor of a person not a party to the suit, carrying with it a necessarily correspondent right to recover costs against the plaintiff? We must concede therefore this judgment to have been a nullity. But it is alleged that laying it aside there was no evidence of the amount of the plaintiff’s claim or debt. Such appears to have been the opinion-of the learned judge below. But it appears to us, that there was sufficient evidence of this apart from the judgment. Malone testified : “ They (the Philadelphia and Sunbury Company) never denied but that the final estimate was due to me and they always acknowledged it. They offered to pay me in the stock of the company in full, but I never had agreed to take stock and I declined to take it. I brought a suit on the agreement in the name of Richard McGrann and others to my use, and recovered a judgment against the Philadelphia and Sunbury Railroad Company for doing the work. The work which I done under the said contract, and for which I recovered said judgment was not work at the basin. That was a separate work.” The testimony of Kline confirms this statement. Surely under this evidence, the master had a right to use the record of that proceeding to ascertain the amount of the claim. Had Malone stated that the amount of his claim for which |he recovered judgment was $8693.33, it would not have been more distinctly in evidence than by this reference. In truth, the whole case shows that the amount of the claim was not at that time a matter in dispute.

It is contended, however, that if this judgment was a nullity, then the plaintiff’s claim at the commencement of this proceeding in equity was barred by the Statute of Limitations. But in this contention the Seventh section of the Act of Assembly of April 25th 1850, Pamph. L. 570, has been overlooked. That section declares that “ the provisions of the Act of 27th of March 1713, entitled ‘an act for the limitation of actions,’ shall not hereafter extend to any suit against any corporation or body politic which may have suspended business or made any transfer or assignment in trusj for creditors, or who may have at the time or after the accruing of the cause of action in any manner ceased from or suspended the .ordinary business for which said corporation was created.” Malone finished his work on the contract in 1854, and his cause of action then accrued. On the 2d of November 1857, the Philadelphia and Sunbury road was sold by the sheriff to Edward S. Whelen — the corporation became extinct, and necessarily “ceased from the ordinary business for which it was created.” The Statute of Limitations then stopped running and the legal bar is not in the plaintiff’s way.

How then does the case stand ? The Philadelphia and Sunbury Railroad Company, on the 23d day of July 1855, was indebted to Malone for work doné under a contract for building a branch of their road. On that day they executed a mortgage to Joseph R. Priestley for the sum of $500,000, upon which a scire facias was issued, judgment entered, a levari facias issued, and a sale by the sheriff to Edward S. Whelen as trustee for bondholders who were subsequently incorporated as the Shamokin Valley and Pottsville Railroad Company. By the joint resolution of the Assembly of January 21st 1843, Pamph. L. 867, it was declared that from and after its passage “ it should not be lawful for any company incorporated by the laws of this Commonwealth and empowered to construct, make and manage any railroad, canal, or other public internal improvement, while the debts and liabilities or any part thereof, incurred by the said company to contractors, laborers and workmen employed in the construction or repair of said improvements remain unpaid, to execute a general or partial assignment, conveyance, mortgage or other transfer of the real or personal estate of the said company, so as to defeat, postpone, endanger or delay these said creditors, without the Avritten assent of the said creditors first had and obtained; and that any such assignment, conveyance, mortgage or transfer shall be deemed fraudulent, null and void against any such contractors, laborers and workmen, creditors as aforesaid.” In commenting upon this resolution in the case of Fox v. Seal and others in the Supreme Court of the United States, 22 Wallace 424, Mr. Justice Strong says: “ The language of the "resolution is too clear to admit of question, that the legislature intended to give to an unpaid contractor a priority of claim to the company’s property, over every right that could be acquired by a mortgagee or acquired under a mortgage, if the mortgage was made after the debt to the contractor was incurred. It was at least intended that the property, into whosesoever hands it might come, should remain subject to a paramount claim of the contractor so long as the debt due to him remained unpaid. That this was substantially giving to him a lien of indefinite duration seems quite plain.- It was not a ‘jus in re’ nor a ‘jus ad remj but it was a charge upon the property, a right to prevent any disposition of it by Avhich it could be AvithdraAvn from the creditor’s reach, and, therefore, in a very legitimate sense an equitable lien. The resolution in effect declared that while his claim against the company exists, a subsequent mortgage or transfer cannot be set up to defeat the contractor’s resort to the property and his superior right to have it applied to the payment of the debt duo him. It is true the mode of that resort is not prescribed. It can only bo by suit, judgment and execution, but Avhenever judgment and execution are obtained, the lien is made to precede the lien of any mortgage or the efl’oet of any conveyance; more accurately, it has the effect it would have were there no mortgage or conveyance in existence. The property may be levied upon and sold and the proceeds may be applied to the satisfaction of the debt due the contractor, without possible interference by the mortgagee, though the mortgage preceded the judgment in time. We cannot regard the resolution as no more than a partial re-enactment of the statute of 13 Elizabeth, invalidating mortgages and transfers only when there is an actual or constructive intent to hinder, delay or defraud creditors. If that was all the resolution intended it was unnecessary and unmeaning. But it declares null and void every mortgage the effect of which is to defeat, postpone, endanger or delay contractors, laborers and workmen. The mortgage may be good as against other creditors, but it is a nullity as to them.” If this reasoning be sound, and we consider it to be incontrovertible, then nothing but the written assent of the creditor first had and obtained according to the words of the resolution can render the mortgage available as against him. His knowledge and silence cannot estop him. The plea of a bona fide purchase without notice under the mortgage must be ineffectual. The. mortgage being void, the judicial sale under it is equally so, so far as regards the paramount lien of his debt. The purchaser is bound to inquire and know whether any such lien exists, and he purchases at his own peril.

It only remains to consider whether the plaintiff had a right under the circumstances to invoke the interposition of a court of equity. On general principles, if there is no special obstacle in his way, undoubtedly he could. Nothing is better settled than that the assets of an insolvent corporation are a fund for the payment of its debts. The holders of such property take it charged with a trust in favor of such creditors which a court of equity will enforce. A court, which never allows a trust to fail for want of a trustee, will see to the execution of that trust, although by the dissolution of the corporation the legal title to its property has been changed: Curran v. The State of Arkansas, 15 Howard 307. “ The withdrawal of the charter — that is, the right to use the corporate name for the purposes of suits before the ordinary tribunals — is such a substantial impediment to the prosecution of the rights of the parties interested, as would authorize equitable interposition in their behalf, within the doctrine of chancery precedents:” Per Campbell, J., in Bacon v. Robertson, 18 Howard 480. Authorities to the same point, both English and American, could easily be multiplied. The assets of the Philadelphia and Sunbury company in the possession of the defendants are still, so far as this plaintiff is concerned, the assets of that company under the resolution of 1843, as if no mortgage had' been executed and no judicial sale had taken place. They are charged, as we have seen, with his debt as a paramount and perpetual lien until it is paid. The extinction of the corporation is a substantial impediment to the prosecution of his claim by legal remedies before the ordinary tribunals.

It has been urged, however, that the Act of Assembly of Aj^ril 4th 1862 (Pamph. L. 235) has given the plaintiff a full and adequate remedy at law, and that his resort to equity is thereby precluded. That act provides that “ whenever any incorporated company, subject to the provisions of the above resolution (of 1843), shall divest themselves of their real or personal estate, contrary to the provisions of said resolution, it shall and may be lawful for any contractor, laborer or workman employed in the construction or repair of said company, having obtained judgment against the said company, to issue a scire facias upon said judgment, with notice to any person or to any incorporated company, claiming to hold or own said real or personal estate, to be served in the same manner as a summons upon the defendant, if it can be found in the county and upon the person or persons or incorporated company claiming to hold or own such real estate ; and upon the return of one nihil and service as aforesaid, on the person or persons or company claiming to hold or own as aforesaid, the case to proceed as in other cases of scire facias on judgment against terre tenants.” It is very plain that the plaintiff has no remedy under this act. The Philadelphia and Sunbury Company was an extinct corporation before he commenced any suit, and those proceedings, as we have seen, were a nullity. He can obtain no valid judgment upon which he can issue a scire facias, to enforce by legal process the collection of his debt.

It is true that in many respects the plaintiff’s bill is defective. It did not place his claim for equitable relief upon the proper grounds. The defects were clearly amendable: Wilhelm’s Appeal, 29 P. F. Smith 120. The defendants did not demur, but went to proofs; there have been two masters’ reports, and there has been great delay and expense. The proofs show that ho is entitled to the relief he prays. In such a case we ought not to send the record back for amendments to the bill, but should in this court consider that as done which ought to have been done. In Danzeisen’s Appeal, 23 P. F. Smith 65, the bill set up a trust either ex malejieio or by a parol declaration, which the proofs did not sustain and the bill was dismissed at Nisi Prius. On appeal, this court considered that the proofs did establish a mortgage, and without remitting the case to the Nisi Prius, made a decree accordingly.

Decree affirmed, and appeal dismissed at the costs of the appellants.


source: Caselaw Access Project

author: Chief Justice Agnew

license: Public Domain

text:
    Goodman versus Sanger.
    1. Presumptions of a grant or an abandonment of title may arise from lapse of time and non-claim, but these should not be submitted to the jury if repelled by evidence.
    2. The land in controversy was sold for taxes in 1816 by the treasurer and bought by and conveyed to the commissioners of Northumberland county; the title being absolute in the county, nothing but redemption by their permission could adeem the title of the county.
    3. Presumption of redemption by lapse of time and non-claim may be repelled by facts.

      June 14th 1877.
    Before Agneav, C. J., Sharswood, Mercur, Gordon, Paxson, Woodward and Sterrett, JJ.
    Error to the Court of Common Pleas of Columbia county: Of May Term 1877, No. 87.
    Ejectment by John H. Goodman against John Sanger, for a tract of land situate in Conyngham toAvnship in Columbia county, containing 400 acres. A Avarrant Avas issued January 10th 1794 to Johnston Besely for 400 acres in Northumberland county; a survey Avas made for this tract on the Catawissa creek, in that county, and on October. 16th of that year, a patent for the same Avas granted to Robert Morris. By virtue of an Act of Assembly the county of Columbia Avas, in September 1813, erected out of Northumberland county, and this land in controversy has since then been situate in Columbia county.
    By the act creating this last-named county, it was enacted that “all taxes or arrears of taxes laid or which have become due within the said county of Columbia before the passing of this act * * * shall be collected and recovered as if this act had not been passed.” The’ land in controversy was assessed in Northumberland county with taxes from 1796 to 1813, both inclusive. The .county taxes for the years from 1806 to 1813 inclusive and the road taxes for the years from 1805 to 1810 inclusive were not paid, and in 1816 the land was sold by the treasurer of Northumberland county, who, July 18th 1816, executed a deed for it to the commissioners of this county. This was after the erection of the county of Columbia. This land was subsequently assessed Avith taxes in Columbia county and sold by the treasurer of this county on June 11th 1838. It was‘redeemed by the commissioners of Northumberland county by the payment of the taxes, &c. The receipt for this payment was attached by a wafer to the deed that they had received from the treasurer of Northumberland county. Without exercising any other acts of ownership, the commissioners, in 1874, advertised and sold it to the plaintiff below for $10,000. His deed is dated July 1st 1874.. Defendant below was the tenant of D. B.' Eisher, Asa Packer, E. P. Wilber and Gideon Bast, who claimed under the warrant to Johnston Besely and the patent to Robert. Morris. No person was in possession until December 1871, when Eisher and his co-tenants commenced the erection of a house. They paid no taxes previous to June 10th 1868.
    The court below, Elwell, P. J., charged that there was no evidence that the taxes, in Northumberland county were paid; that the sale by the treasurer of that county to the commissioners Avas valid, and affirmed the following point:—
    “ That if the jury believe from the evidence, that the taxes were paid to the commissioners of Northumberland county after the sale of 1816, such payment would be a redemption from the sale, and in that case the plaintiff cannot recover.”

      And said: “If from tlie evidence the jury are satisfied that these taxes were paid after the sale, such payment would divest the title of Northumberland county acquired by the sale of 1816, whether a deed was endorsed upon the back of the treasurer’s deed to the commissioners of Northumberland county or not.”
    The court further charged :—
    “ I decline to charge that there is any legal presumption raised by the facts in the cause, that this land was redeemed from the sale of 1816. .But the undisputed facts that the commissioners of Northumberland county did no act of claim from the time of sale in 1816 to the sale made by them to the plaintiff in 1874 (except the redemption in 1840 from the sale of 1838), while the owners of the original title did the acts enumerated before on their part, together with all the evidence in the cause, may be taken into consideration by the jury, and if, from the evidence, they think the facts warrant them in so doing, they may presume, in favor of the purchasers of the original title, that the taxes were paid and the land redeemed. If, taking a natural and rational view of the whole subject, including the conduct of the parties, the payment of taxes, and every other circumstance, although there is no direct proof by witnesses, nor by papers executed, yet if the jury are satisfied, if their minds are convinced that the taxes were paid in redemption, they are at liberty so to find.”
    Verdict for defendant and judgment, and plaintiff below took this writ of error.

      Joshua W. Comly, J. Gr. Freeze, A. J. Dietrich and John W. Maynard, for plaintiff in error.
    — -There was error in the permission to read a certain entry in sale book of treasurer of Columbia county, because entirely irrelevant, and the mortgage of John Nicholson et al. to the United States Bank in May 1797 was irrelevant, as it wrns not important whether the bank was noted as the owner or not. The payment of taxes after the expiration of five years from the day of the sale was not a redemption from the sale. Under the Act of 1815 redemption of lands by the treasurer differs from those sold to the commissioners. In the first a legal tender of taxes, costs and percentage destroys the treasurer’s deed. In the latter, where the land is redeemed, the commissioners must make a deed. Mere payment of taxes will not operate as a redemption from sale.
    The title being in the commissioners, it could only be divested by deed: Hoffman v. Bell, 11 P. F. Smith 444. The then commissioners had the deed from the treasurer to their predecessors in office; there was no deed of redemption endorsed upon it; there was no entry of any redemption by any person on the minute books or other books in the office; there was nothing in the treasurer’s books to show that the taxes or redemption money were ever paid to him; in short, neither the commissioners, who sold in 1874, nor the purchaser, who then bought and paid his money,-had any notice that any redemption money had been paid. If it is said that the defendant was in possession before the sale of 1874, and that should have put the plaintiff on inquiry, we admit this so far as inquiry could have procured any information.
    A title to land, though unseated, cannot be lost by non-payment of taxes except by a treasurer’s sale under the Act of 1815: Hockenbury v. Snyder, 2 W. & S. 240; Kelsey v. Murray, 9 Watts 111; Sailor v. Hertzogg, 10 Barr 316; Hoffman v. Bell, supra; Naglee v. Albright, 4 Whart. 300; Sorber v. Willing, 10 Watts 142; Devor v. McClintock, 9 W. & S. 80; Woodburn v. Farmers’ and Mechanics’ Bank, 5 Id. 450.

      George F. Baer, S. P. Wolverton and C. R. Buckalew, for defendant in error.
    — Presumptions arising from lapse of time and non-claim should be submitted to the jury as a foundation of title by conveyances lost or destroyed: Carter v. Tinicum Fishing Co., 27 P. F. Smith 315; Kingston v. Lesley, 10 S. & R. 383; Foulk v. Brown, 2 Watts 214; Woodburn v. Farmers’ and Mechanics’ Bank, supra; Hastings v. Wagner, 7 W. & S. 218; Jackson v. Hudson, 3 Johns. 375; Orr v. Cunningham, 4 W. & S. 294.
    Presumption of conveyance arises from lapse of time: Fox v. Thompson, 7 Casey 172; Galloway v. Ogle, 2 Binn. 468; Warner v. Henby, 12 Wright 187; Strimpfler v. Roberts, 6 Harris 283; McBarron v. Gilbert, 6 Wright 280; Robinson v. Williams, 6 Watts 281; Brown v. Day, 28 P. F. Smith 140.
    The owner of the legal or equitable title may redeem: Dubois v. Hepburn, 10 Peters 23. The act allows redemption within five years: Steiner v. Coxe, 4 Barr 26; Coxe v. Walcott, 3 Casey 158; Diamond Coal Co. v. Fisher, 7 Harris 267; City of Philadelphia v. Miller, 13 Wright 440; Jenks v. Wright, 11 P. F. Smith 413.
   Chief Justice Agnew

delivered the opinion of the court, October 1st 1877.

In this case only one question may be considered, that is, whether there was sufficient evidence of a redemption of the land by the heirs of Philip Meyer, or by the Bank of the United States, from the tax .sale in 1816 to the commissioners of Northumberland county. That a presumption of a grant or an abandonment of title may arise from lapse of time and non-claim, when these point to the fact as a probable thing, is not disputable. The cases cited by the defendant in error prove this. Many precedents will be found collected and commented upon in Carter v. Tinicum Fishing Co., 27 P. F. Smith 315-16, and Brown v. Day, 28 Id. 139-40. •But time and non-claim, to become the foundation of such a presumption, must accord with the other facts in evidence, reasonably leading to this presumption. The presumption is not of law, but a natural inference to be drawn by a jury, of which there must be sufficient evidence, and ought not be submitted to them if really repelled by the other evidence. This is precisely the point before us. Do the facts in evidence accord with the presumption of a redemption to be drawn from the lapse of time and the alleged non-claim of the commissioners of Northumberland county ?

To clear the case of a confusion of ideas between abandonment of title and redemption from sale, and from the effect of a payment of subsequent taxes, some things must be first noticed. And first it must be remembered that after the lapse of five years from the tax sale, the title of the county became absolute, and nothing but a redemption by the permission of the commissioners could adeem the title of the county; and it must be remembered that the tract remained in a wild and unseated state until the year 1871 or perhaps 1872. The legal or presumptive possession was, therefore, in the county in the meantime. It is next to be noticed that if a redemption existed, it is obvious it must have been made before, the year 1840, that is, in the interval between the years 1816 and 1840, when the commissioners of Northumberland redeemed the land from the sale in Columbia county made in 1838. After 1840 a permissive redemption only could be made, and it is not pretended there is any evidence to justify this presumption. The utmost effect of the subsequent facts would be to help to sustain a redemption prior to 1840.

The next fact to be remarked is that there is no record or documentary evidence of a redemption of right or by permission, while under the sixth section of the Act 13th March 1815, the evidence ought to appear both in the treasurer’s and the commissioner’s office. The letters Pd. B. opposite to the entry of the county tax of fifty-two cents in the year 1805 clearly is no evidence of redemption. And first the entry is confined to the county tax of that year, and is not carried forward to the taxes following either by words or signs. Next the county tax, fifty-two cents, of 1805 was not included in the taxes set forth in the deed. Those make $4.19, just the sum of all the other taxes down to 1813, including the road tax of 1805. The road taxes in all were $1.88, from which, deducting the fifty-two cents, $1.38 are left, the precise sum mentioned in the deed; showing that the clerk or scrivener inadvertently deducted the fifty-two cents from the wrong sum. It is evident that these fifty-two cents were paid before sale, and were not included. This accords with another pertinent fact. The Bank of the United States held a mortgage from John Nicholson, the owner of the land, dated in March 1797, and paid the back taxes of nine years, viz., $5.33, which sum precedes the entry of fifty-two cents, and was marked in the same way, Pd. B., so that the entry Pd. B. opposite the fifty-two, in 1805, was without doubt paid by the bank, and probably at the same time, the road taxes of 1805 not being then returned, as was common. This is strengthened by still another fact. The mortgaged land was sold out by the state in the year 1807 upon her lien against John Nicholson, so that he had after that date no title to answer the mortgage to the bank. There is no reason, therefore, to suppose that the bank in 1816, or any time afterward, would redeem lands to which John Nicholson had no title to serve his mortgage. The court below held, and very properly, that there was no evidence to be submitted of payment of the taxes before the sale, and it is just as clear that there was none afterwards. As to the bank, we have seen it had nothing to redeem. • How then does the case stand as to Philip Meyer, the purchaser of the state of Nicholson’s title in, 1807? The law gave purchasers of Nicholson lands a long credit upon securing the payment by bond. Meyer gave his bond for the purchase-money, but died before it fell due and before the tax sale in June 1816, for on the 2d of January 1816 Yalentine Brobst (the surety probably) paid the money into the state treasury for the estate of Philip Meyer. It is evident, therefore, that unless the heirs of Philip Meyer were old enough to know the state of the land in July 1816, when the treasurer made his deed to the county commissioners of Northumberland, it is not probable they redeemed. The facts, however, repel any presumption of a redemption by them. Their deed was not obtained from the Commonwealth until the year 1836, and it was not until the year 1859 they began to sell the lands purchased by their father, this tract being but one of a number included in the purchase, and bought at thirteen and a half cents an acre. Strength is added to these by another fact. On the trial of this cause in 1876, Franklin P. Meyer, one of the heirs, as he is shown to be in the deeds, was called to prove who were the heirs of Philip Meyer. If he were the oldest child he would have been eighty-one years old to have béen in his majority in 1816. Besides the land had passed into the county of Columbia three years before, to wit, in 1813, rendering it still more improbable that the young heirs of Philip Meyer1 knew of a tax sale in Northumberland county in the year 1816. The power to make the sale had been reserved in the Act of 1813. In summing up these facts we can find nothing whatever to render a redemption probable; but rather the reverse and the negative is strengthened by these further facts. The commissioners of Northumberland, besides having no personal interest to quicken their diligence, were constantly changing; and like other officers of the county, being chosen from the body of the people, were not likely to have much knowledge of past county affairs. Before the end-of the five years allowed for redemption it is probable no member of the board knew of the title of the county, while the land being in Columbia county was no longer on the tax books of Northumberland, to remind the commissioners from year to year of the claim of the county. Nor was there anything in the condition of the land itself to remind them, it being tenantless and unseated until 1871 or 1872. When all those facts are summed up there appears to bo no room for a presumption that would attribute the lapse of time and inattention of the commissioners of Northumberland county to a redemption. On the contrary, they repel such a presumption, and tend to lead to the belief that this lapse of time and inattention were owing to a want of knowledge and to neglect, until discovery of the deed or some other circumstance called the fact to mind when the redemption of 1840 took place. It is a strong fact against redemption that the deed poll, which the sixth section of the Act of 1815 requires to be surrendered, remained in possession; and this fact is further strengthened by the redemption by Northumberland county in 1840.

If then no redemption took place before 1840, nothing has occurred since, sufficient to prove abandonment of title by Northumberland county or the acquisition of a now title by the former owners. There was no actual possession of the land and nothing therefore upon which the Statute of Limitations could take effect. The title of the county then being absolute, there was nothing inchoate or imperfect, which might be suffered to lapse from laches or inattention. In the case of an absolute title and its constructive possession, as a legal incident of unseated land, the non-payment of taxes by the owner creates no abandonment or forfeiture of title. Nothing less than a sale of the land for the unpaid taxes will extinguish his title. Nor will payment of taxes by another give him title without a possession to give effect to the statute, or other facts to create an estoppel. Non-payment of taxes by the owner and payment of them by an intruder in possession, may be evidence of an admitted ouster to the extent of the boundaries of the tract and thus to extend the pedis possessio to the Avoodland; but payment of taxes alone will not confer title where none exists. These principles are fully sustained by numerous cases, a few of which are referred to : Naglee v. Albright, 4 Whart. 300; Sorber v. Willing, 10 Watts 141; Sailor v. Hertzogg, 10 Barr 316; Mayor of Philadelphia v. Riddle, 1 Casey 263; Kelsey v. Murray, 9 Watts 111. The facts of Kelsey v. Murray are not reported, but it is obvious from the opinion the land aaus in the possession of tenants, and therefore it is no exception to the rule.

Judgment reversed and a venire facias de novo awarded.


text:
    Basehore et al. versus Rhodes et al. Basehore’s Appeal.
    A protested draft is not an “ obligation” within the meaning of the proviso of the Act of 16th of April 1850, which declares that the assignees of an insolvent hank “ shall receive in payment of debts due to said bank its own notes and obligations and the checks of its depositors at par.”
    June 18th 1877.
    Before Agnew, C. J., Sharswood, Mercur, Gordon, Paxson, Woodward and Sterrett, JJ.
    Appeal from the Court of Common Pleas of Franhlin county : Of May Term 1877, No. 141. In Equity.
    This bill was filed by Abraham S. and Emanuel Basehore, to restrain John P. Rhodes and Samuel S. Shryock, assignees of the Farmers’ and Mechanics’ Bank of Shippensburg, from proceeding by execution to collect two judgments obtained against complainants.
    In substance the bill averred that the bank was a corporation chartered under the General Banking Laws of the state; that Abraham S. Basehore made a note for $2500, payable to Emanuel Basehore, which was endorsed by the latter, and in the usual course of business became the property of said bank; that said bank having become insolvent, by an order of the Court of Common Pleas it made a general assignment to Rhodes and Shryock for the benefit of creditors, under the provisions of said banking laws; that said assignees found said note among the effects of said bank, and having brought suit thereon recovered judgments against'said complainants; that previous to the date of the assignment said bank had drawn a draft upon the Union Banking Company of Philadelphia for $2620.94, payable to the order of the cashier of the First National Bank of Shippensburg, which draft was protested for non-payment; that after the entering of the aforesaid judgments said draft was assigned to the complainants for a valuable consideration, and that, under the provisions of the. Act of 16th of April 1850, Purd. Dig. 144, pi. 101, Pamph. L. 600, complainants had tendered the same to said assignees in payment of said judgments, which they refused to accept.
    The bill then prayed for an injunction to restrain the defendants from proceeding in any manner to collect said judgments, and that they be compelled to receive said draft, at its par value, in payment of the same.
    The answer admitted the truth of the several averments of the bill, with the exception of that which alleged that the draft had been assigned for a valuable consideration.
    The court (Rowe, P. J.) refused the injunction and dismissed the bill, holding that said draft was not such an “ obligation” as was contemplated by the Act of 1850, and that the assignees were justified in refusing to receive it in payment of a debt due the bank.
    This ruling was, inter alia, assigned for error by the complainants, who took this appeal.

      Kennedy & Stewart, for appellants.
    — Used in its ordinary sense the word “ obligations” would certainly be understood to include this draft. The word has no technical meaning which necessarily prevails in statutory enactments. It is a general word and its precise meaning is to be determined by the connection in which it is used. It has never received a judicial interpretation that restricts it to any particular kind of engagement or contract. The Act of 1850 is but a rescript, in many of its provisions, of the Acts of May 4th 1841, and March 12th 1842, in which language is employed which shows that the word “obligations” means “ evidences of debt.” It cannot be supposed that the legislature intended by the change to restrict and limit the evidences of debt that are receivable by the assignee, for if such had been their purpose they would not have adopted a word which, in its ordinary and natural sense, embraces every possible evidence of debt, and which is without any special technical signification that would make it appropriate for the purpose.

      F. M. Kimmell and Brewer & Gehr, for appellees.
    — It has never been decided in Pennsylvania that a debt like the one offered by the appellants was embraced in the word “ obligations” as used in the Act of Assembly. But whenever any question has arisen about the duty and power of the assignees to receive the notes and obligations in the payment of debts, they have been treated and regarded as meaning one and the same thing: Philips v. Bank of Lewistown, 6 Harris 394. It was manifestly the purpose of the legislature to give a preference to the holders of notes over all others, and it is obvious therefore that it was not their intent that a protested draft should be received in payment. It can hardly be supposed that the legislature intended to establish one rule for the collection of the assets of an insolvent bank, and to furnish another and wholly different rule for the distribution of the fund. In the distribution, the common debts of the bank are put in the third class; but the interpretation set up on the other side would place them in the first class, and prefer them in the collection of assets of the bank.
   Chief Justice Agnew

delivered the opinion of the court, Juno 25th 1877.

The plaintiffs in this bill claim to pay a judgment in favor of the Farmers’ and Mechanics’ Bank upon a note in the hands of the assignees of that bank, with a protested draft drawn by the bank in favor of the First National Bank of Shippensburg upon the Union Banking Company of Philadelphia; and by the National Bank of Shippensburg sold to the plaintiffs after the judgment had been obtained by the assignees upon the note against the plaintiffs. This claim to pay the judgment with the draft is founded on the proviso in the 27th section of the General Banking Act of April 16th 1850 : Brightly 144, pi. 101. The proviso is in these words: “ Provided, however, that the said assignees shall receive in payment of debts due to said bank, its own notes and obligations and the checks of its depositors at par.”

Is the draft before mentioned an obligation within the meaning of this proviso ? This is the question presented. That it is not is clearly seen by a comparison of several sections of the Act of 1850. In the first place it is to be noticed that the 27th section containing this proviso is that which prescribes the proceeding taken to enforce the forfeiture of the charter of a bank, upon its refusal to pay its notes, obligations and certificates of deposit, in specie. The provisions as to this refusal to redeem in gold or silver coin, are found in the three preceding sections, the 24th, 25th and 26th. The debts thus refused to be redeemed in coin are described in the 25th section, viz.: “ Any bill, note or obligation issued by such banks,” and “ any moneys received in such bank on deposit.” The section then allows twelve per cent, interest, and requires the bill, obligation or certificate to be endorsed by the cashier, setting forth the demand of coin and the time it was made. The history of this provision in the legislation of the state shows that it is intended to compel specie payment of those bills and notes which constitute the circulation of the bank.

But we need hot resort to the history of such legislation, for the 14th clause of the 10th section of the Act of 1850 is the best interpreter of its meaning. Turning to that clause we find that it provides for two distinct kinds of bills or notes, which are to constitute its circulating obligations. This clause enacts that the “ bills obligatory and of credit, under the seal of such corporations, which shall be made to any person or persons,- shall be assignable by endorsement thereupon, under the hand or hands of such person or persons, and Of his, her or their assignee or assignees, so as absolutely to transfer and invest the property and legal title thereof in each and' every assignee or assignees successively, and enable such assignee or assignees to bring and maintain an action thereupon in his, her or their own name or names; and bills or notes which may be issued by order of any of the said corporations, signed by the president and countersigned by the cashier thereof, promising payment of money to any person or persons, his, her or their order, or to bearer, though not under seal of such corporation, shall be binding and obligatory upon the same in like manner and with like force and effect as upon any private person or persons if issued by him or them, in his, her or their private capacity or capacities, and shall be assignable and negotiable in like manner as if they were so issued by such private person or persons,” &c. These are the liabilities for which provision in subsequent sections is made for their redemption in coin. It is evident that drafts or orders drawn on others are not bills, obligations or notes such as are mentioned in the 14th clause of the 10th section. This is made more plain by a reference to the sections providing for specie payment. The 24th section requires redemption of the notes of the bank in coin, and declares a forfeiture of the charter as a consequence of a failure to do so on demand. The 25th describes the mode of making demand and prescribes the duty of the cashier to make endorsement of the time of demand, and declares the consequence as a liability to pay twelve per cent, interest. The language of this section is precisely descriptive of the bills and notes mentioned in the 14th clause of the 10th section, thus : and if any of the said banks shall at any time refuse or neglect to pay on demand in gold or silver any bill, note or obligation issued by such banks according to the contract, promise or undertaking therein expressed,” &c.

These provisions indicate clearly the reason for the proviso in the 27th section, that the assignees shall receive in payment of the debts due to the bank, its own notes, obligations and the checks of depositors at par. In the 25th section, deposits are also required to be paid in coin; and by the 39th section are placed in the second class, for distribution of the assets of the bank. When we reach the 39th section, the intention of the act becomes manifest. It declares, for the purpose of distribution, that the debts of the bank shall be divided into three classes: 1st, notes, which includes both kinds, bills or obligations under seal and notes not under seal; 2d, deposits ; 3d, all other debts except the stock of the bank. Thus, it becomes clear that the obligations and notes required by the 27th section to be received in payment at par, are those contained in the first class, it being the policy of the state to secure payment of the circulation of the bank and thus to protect her citizens against failure. This renders it certain that drafts, orders, contracts and other debts, not falling within the description of the bills obligatory and notes mentioned in 14th clause of the 10th section, must take their place in the 3d class, and consequently are not to be accepted by the assignees in payment of debts at par. If they were, the course of distribution intended by the legislature would fail entirely, for any one might purchase the drafts or orders of a broken bank at any discount and tender them in payment to the assignees. This is not the true interpretation of the law.

The decree of the Court of Common Pleas is affirmed, and the appellants are ordered to pay the costs, and the appeal is dismissed.


author: Mr. Justice Gordon

text:
    Halfpenny versus The Peoples’ Fire Insurance Co.
    Judgment entered on an assessment note, under tlie provisions of the charter of the Peoples’ Pire Insurance Company, is not a general judgment which may be enforced against any property of the insured, hut is restricted as a lien to the property insured.
    June 19th 1877.
    Before Agnew, C. J., Sharswood, Mercur, Gordon, Paxson, Woodward and Sterrett, JJ.
    Appeal from the decree of the Court of Common Pleas of Union county: Of May Term 1877, No. 113. In Equity.
    Bill in equity filed by Mark Halfpenny to restrain the Peoples’ Eire Insurance Company from the enforcement of a judgment entered in pursuance of the terms of a premium-note given by the complainant to effect an insurance in the defendant company on his frame woollen mill.
    The facts are stated in the opinion of this court, together with those which here follow.
    The lien was entered and filed December 24th 1873, by virtue of the following provision in the company’s charter:
    “ Sect. 6. And said company shall have a lien in the nature of a judgment, waiving the right of inquisition upon all of the said property of the insured, to the amount of his deposit note, or so much thereof as may be unpaid, which shall continue till the amount of such note, with interest and costs of execution, if any shall have been paid, or satisfied according to the provisions of this act: Provided, said company shall file in the office of the prothonotary of the county wherein such real estate shall he, a memorandum of the name of the individual insured, a description of the property, the amount of the deposit note unpaid, and the term for which the insurance shall continue; and the prothonotary with whom the same shall he filed is hereby required to enter the same, * * * and the same when so entered, shall be deemed and taken to he, in all respects, as a judgment upon confession, by virtue of a warrant of attorney, and execution may at any time be had thereof for so much as, by virtue of the provisions of this act may be due and demand-able ; hut the lien thereof shall commence with the filing of such memorandum in the office of the prothonotary: Provided, further, that such lien shall not be construed to take from such person insured, as aforesaid, the privileges of a freeholder. Act April 13th 1838, Pamph. L. 364-5.”
    In the eleventh paragraph of his hill the complainant alleged that “ No lien can be created, by virtue of sect. 6, aforesaid, except against property attached to and part of the freehold, that is to say, real estate. The property insured by this policy was personal property — the lien is on the property insured, which by the terms of the said section must be real estate; and even if the machinery and gearing were part of the real estate, it being machinery and gearing alone that were insured, there could be no lien entered and execution had against them alone, or against the real estate or buildings in which they were placed.”
    To this the defendant answered, “ That if a lien could not be had against anything hut real estate, yet there is nothing to prevent the defendants filing their lien and issuing an execution and levying upon the personal property of the defendant. The act providing for the filing of liens and the collection of assessments, does not provide a different and less speedy mode of collecting assessments from insurers of personal property, than from those insuring real estate. The mere fact that defendant has no realty, is no reason why a plaintiff cannot enter his judgment, and issue execution and make his money out of defendant’s personalty. Besides the limitation of the lien to the property insured by policy of insurance, would not prevent the collection of assessments from other property of the insured.”
    The master, to wfeom the case was referred, reported that in his opinion “ neither the destruction of the mill nor the alienation of the ground on which it stood discharged the plaintiff’s liability for his proportionable share of the losses occurring during the continuance of the policy, to wit, from July 9th 1864 to July 9th 1869: Foyce v. Leighton, 4 Foster (N. H.) 42; Bangs v. Scidmore, 24 Barb. (N. Y.) 29; Flanders on Ins. 24. But, while the plaintiff continues liable on his premium-note, and while the memorandum which constitutes a lion may be filed, even after the destruction of the buildings and the alienation of the ground, the property being real estate, and thereby determining the county in which lien is to be entered, yet the property having been alienated before the filing of the memorandum, and, by the express provisions of the act authorizing the lien, the lien only commencing with the filing of the memorandum, when so entered (while it could not ho a lien on that property, or any other), was to be deemed and taken to be in all respects, as a judgment entered upon confession by virtue of a warrant of attorney, and execution might at any time be had thereof, for so much as, by virtue of the provisions of the Act of 1888, may bo due and demand-able.”
    The exceptions filed to this report were dismissed and the report confirmed.
    From this decree this appeal was taken by the complainant, who alleged as error, inter alia, this construction of the section of the Act of Assembly giving the lien the force and effect of a judgment by confession.

      Linn & Dill, for appellant.
    — The lien is given “ upon all of the said property of the insured,” and it must be filed in the office of the prothonotary of the county where such real estate shall be. Whatever the liability of the defendant on his premium-note, the lien by their charters is to be upon the property itself and in the county where situated. The act could not contemplate the entry of lien after alienation.

      G. F. Miller & Sons, for appellee.
   Mr. Justice Gordon

delivered the opinion of the court, October 8th 1877.

Mark Halfpenny, the plaintiff in this bill, procured an insurance from' the Peoples’ Insurance Co., for a term of five years, commencing July 9th 1864, on his three-story frame woollen mill, situated in Hartley township, Union county. This insurance was on the mutual plan, and involved a premium-note of six hundred dollars. An assessment was made on this note, January 18th 1873, of twenty per centum, for the payment of losses happening during the life of the policy; and this not being paid, judgment was entered therefor,' under the provisions of the Acts of Assembly of 1838 and 1843 (both of these acts being parts of the company’s charter), in the Common Pleas of Union county, December 24th 1873. Execution was issued on this judgment to February Term 1874. It is this execution which the plaintiff seeks to enjoin. The property was burned on the 11th day of June 1866; the loss adjusted and the policy cancelled in July following. Subsequently, on or about the 1st of April 1868, the real estate upon which the insured property had been situated, was sold by Halfpenny, and the possession delivered to Matthew Norton.

It is not pretended that this judgment bound this property in the hands of Norton, for it was entirely too late for that. It is urged, however, that inasmuch as the sixth section of the Act of April 13th 1838 provides that “the same, when so entered, shall be deemed and taken to be, in all respects, as a judgment upon confession by virtue of a warrant of attorney,” a general judgment is thus created against the insured, upon which execution may issue against any property he may chance to own, whether real or personal. Were we to consider only this excerpt from the statute, we must necessarily adopt the conclusion above stated; but an investigation of the whole act leads us to a different opinion. In terms the lien is special — confined to the property insured. It is “ in the nature of a judgment, waiving the right of inquisition, upon all property so insured.” The memorandum must be filed in the office of the prothonotary of the county “ where such real estate shall be;” and it must be accompanied with a description of the insured property. If the intention w'as to create a general judgment against the insured, why this careful limitation to the property itself ? If it was to bind all property, why file a special description of that • insured, or why confine it to the county in which the premises are situated, or why this waiver of the right of inquisition, if the judgment might be satisfied by a levy on personal property ? These questions are unanswerable on the hypothesis of a general judgment. If, however, the lien is limited and specific, the execution can have no wider scope than the judgment itself — the fountain can rise no higher than its source. We may observe further, that as these statutes in no way abridge the powers of the company to collect its assessments by ordinary process, there is the less reason to extend those powers by implication or construction. It follows, from the above discussion, that the judgment against Halfpenny was inoperative and void, because, when entered, there was nothing upon which it could attach.

And now, October 8th 1877, it is ordered that the decree of the Court of Common Pleas, dismissing the plaintiffs bill as to judgment No. 61, December Term 1873, The People’s Fire Insurance Company of Pennsylvania v. Mark Halfpenny, be reversed and set aside, at the costs of the appellee, and further, that the said company be perpetually enjoined and restrained from the collection or enforcement of said judgment.


author: Mr. Justice Mercur

text:
    Guyer et al. versus Spotts.
    In an issue framed under the Sheriffs’ Interpleader Aot, to try the title to certain goods, the verdict and judgment we re for the defendants. On an appeal to the Supreme Court the plaintiff and his sureties entered into a recognisance “ to prosecute his writ of error with effect, or in default thereof to pay the costs and condemnation money, with the costs of the writ of error.”
    The judgment was affirmed, and in an action on the recognisance, Held (reversing the court below), that the sureties were liable for the proper costs only and not for the value of the goods.
    June 19th 1877.
    Before Agnew, C. J., Sharswood, Mercur, Gordon, Paxson, Woodward and Sterrett, JJ.
    Error to the Court of Common Pleas of Union county: Of May Term 1877, No. 231.
    Debt sur recognisance of bail in error by William Spotts, who survived David Henning, against Peter Guyer and Samuel S. Barber. The facts are fully stated in the opinion of this court.
    A special plea was filed by defendants, which alleged “that plaintiff had no cause of action, on the ground that Jacob Dundore, defendant in execution, was, on April 29th 1868, declared bankrupt and had since procured his discharge.”
    The following points were presented by defendants, both of which the court (Junkin, P. J.) refused:—
    1. That on the recognisance in evidence the defendants, in no event, can be made liable for more than costs.
    2. The words “condemnation money” in the alleged recognisance do not make the defendants liable for the property in dispute.

      The verdict was for the plaintiff for the value of the goods as assessed by the jury, and for the costs on the feigned issue and the writ of error, and judgment was entered thereon.
    Defendant took this writ, assigning for error, among others, the refusal of the foregoing points.

      G. F. Miller & Sons and William Van Gezer, for plaintiffs in error.

      Linn & Dill, for defendant in error.
   Mr. Justice Mercur

delivered the opinion of the court, October ■1st 1877.

This suit was on a recognisance entered into by the plaintiffs in error, on the purchase, by one Bogar, of a writ of error to a judgment against him, in favor of the defendant. That judgment was recovered in a feigned issue, framed under the Interpleader Act, to try the right of Bogar to certain goods and chattels, levied on by the defendant, as the property of Dundore. On the trial of the issue Bogar failed to establish his right to the property, and judgment was entered against him for costs. When Bogar took a writ of error to that judgment, the plaintiffs in error entered into this recognisance conditioned that he should “ prosecute his writ of error with effect or in default thereof will pay the costs and condemnation money, with the costs of this writ of error.” The judgment was affirmed.

What then became the liability of the sureties in the recognisance ? The legal effect of the judgment over the subject-matter therein, was not changed by the affirmance of the judgment. It was neither enlarged nor diminished. .The only question involved in the issue, was whether the right of property in the goods and chattels was in Bogar at the time of the levy thereupon. He affirmed that right. The defendants denied it. This was the only issue presented. It was the only one tried. Neither party claimed to recover a judgment for the value of the property, nor for any sum of money. The one sought to establish a right of ownership to the property, the other to defeat that claim of right. No other verdict in favor of either party could have been rendered in the issue, but a general one, determining the right of property. The verdict having been against Bogar, the effect of the judgment thereon was to permit the goods and chattels levied on, to be sold as the property of Dundore and to give the defendants the right to execution against Bogar for costs. This was the only judgment against Bogar. The rulings in that case are all that were reviewed on his writ of error. The only condemnation to which the affirmance of the judgment subjected him was the payment of costs.

In order to stay execution by reason of the pendency of a writ of error the Act of 13th June 1836, Purd. Dig. 605, pi. 16, inter alia, declares the recognisance given shall be with condition, if the judgment be affirmed, or the writ be discontinued or non-prossed, to pay the debt, damages and costs, as the case may be, adjudged or accruing upon such judgment and all other damages and costs that may be awarded upon such writ of error. The Act of 10th April 1849, Purd. Dig. 603, pi. 5, permits a writ of error to be taken in issues under the Interpleader Act “with the usual force and effect.” It is contended that under these acts, the effect of the affirmance of the judgment was to make the sureties in the recognisance liable for such portions of the goods and chattels levied on as could not be found, when the defendants again moved to collect their execution; that this was a portion of their damages for which the sureties are liable.

In this view we cannot concur. The design of the Act of 1836 is to obligate the sureties, for a writ of error, to pay and discharge the judgment only, in which the writ is taken, in case of a failure to reverse. The judgment may be for debt and costs, or for damages and costs, or for costs alone. The recognisance should be framed to suit it “as the case may be.” If the judgment be for costs only, the payment thereof limits the liability of the sureties. In the issue in question the affirmation of the judgment was general. No special damages and costs were awarded. The costs on the writ of error superadded to the costs in the court below constituted the whole condemnation money adjudged to be paid.

The sheriff was not justified in withdrawing from the possession of the goods and chattels levied on, unless a bond, with sufficient security for their forthcoming when legally required, had been given to the defendants, and as the giving of this bond should precede the forming of the issue, we will presume it to have been done. If so executed and delivered, the remedy of the defendants is upon that bond, if the goods were not forthcoming. If they waived the giving of the bond, they cannot impose the loss they may have thereby sustained, on the sureties for a writ of error to the judgment entered in the issue. It therefore follows that the learned judge erred in not affirming the first and second points submitted by the defendants below, and the third and fourth assignments are sustained.

This view of the case substantially disposes of the other assignments. Dundore’s discharge in bankruptcy could not discharge the plaintiffs from their liability as sureties for Bogar. There was no contract between them and Dundore to be affected.

Judgment reversed, and a venire facias de novo awarded.