Reynolds v. Miller

Opinion by

Mr. Justice Green,

If the mechanics’ hens claims in this case had been entered of record before the mortgage was entered, as a matter of course the mortgage would not have been the first lien, and it would have been divested by the sale. It seems to be conceded in the several cases that have been before us, that if the liens had disclosed on their face, the date of the commencement of the building in question, they would in legal contemplation have been prior liens although not filed until after the mortgage was recorded, and the mortgage would have been discharged. If the mortgagee had received distinct notice of the commencement of the braiding before he took or entered his mortgage, it is difficult to understand why he would not be bound by such notice, just as much as he would have been bound by notice of a prior unrecorded mortgage by such a notice. As to the latter class of Kens the law is so thoroughly well settled by an unbroken line of decisions that it is not necessary to cite them. A mere reference to a few of them is sufficient: Britton’s Appeal, 45 Pa. 172; Lahr’s Appeal, 90 Pa. 507; Phillipsburg Sav. Bank’s Appeal, 10 W. N. C. 265.

Now in the present case it happens that the mortgage which was taken by Peter A. Miller, and which is claimed to be the first Ken, contains a distinct recital of the buildings on the land bound by the mortgage, including the factory building in question. The words of the mortgage are, “ The improvements on said land are as follows, to-wit; two’dwelling houses and one barn and one factory building, including all the machinery therein, engine and boiler attached thereto.” As there is no pretense that there was more than one factory building on the premises, the mortgagee had distinct notice of its existence prior to the date of his mortgage. If there were any question upon this subject it would have to be left to the jury to determine. So far then as the mortgagee is concerned he had distinct notice by his mortgage that the building had been, at least commenced, before he took his mortgage. He also had notice because of the visible erection of the building which was proceeding on the ground. In Reading v. Hopson, 90 Pa. 494, we said, Sharswood, C. J., “ It did not appear on the face of the claim when the building was commenced. The question then is, whether the purchaser at the sheriff’s sale can give parol evidence of this fact so as to show that the Ken of the mortgage was divested. As between the claimant and the mortgagee this undoubtedly might have been done for the reason, that if the fact were so, the mortgagee was bound to take notice of it. He is affected by the actual state of things on the ground. If when he takes his mortgage a building has been commenced, he knows, or ought to know, that the liens of mechanics and material men for work done, or materials furnished, subsequently, will relate back to the commencement of the building. But an entirely different case is presented when the question arises between the mortgagee and the purchaser at sheriff’s sale. As the bidder at sheriff’s sale is not bound to look beyond the record in determining what he shall bid, and it cannot be shown as against him that a prior lien has been paid or is not subsisting, so neither can he take advantage of any fact dehors the record to discharge the land from the lien of the mortgage. It is very important that all parties at a sheriff’s sale should have a plain simple rule to go by. . . . At the sheriff’s sale the same rule must apply equally to all the bidders, the mortgagee, as well as others, without regard to what their private information may be of facts dehors the record. This puts them all upon an equal footing, as the bidder is not bound to look beyond the record, neither has he any right to affect his relation to others by any such evidence.”

Upon the foregoing reasoning we held that the purchaser at the sheriff’s sale was not bound by the constructive knowledge of the mortgagee, and he could not show by parol testimony the fact of the commencement of the building before the mortgage was taken, in order to discharge the lien of the mortgage by proving a prior lien. Following this ruling we held the same doctrine in Wilson’s Appeal, 172 Pa. 354. But the whole force of the ruling is based upon the proposition that the prior commencement of the Building did not appear upon the record at the time of the sheriff’s sale, and therefore the bidder was not bound to regard the fact, and his title must be adjudged by the state of the record as he found it. In the present case however this reasoning is inapplicable. The face of the record did show affirmatively, and positively, that the building, or a building of the character described in the claims, was erected on the ground before the mortgage was given. And it is the record of the mortgage itself which contains this information. An intending bidder therefore upon examining the record before his bid was made would find precisely the facts which would, or might, discharge the lien of the mortgage by the sale. Having this knowledge apparent upon the record before the sale, he would have a right to presume that the law would apply, and if there were liens filed before the sale which antedated the mortgage, the hen of the mortgage would be discharged. Now the property was not sold by the assignee until the 9th of May, 1894, but the mechanics’ hens were filed as early as November, 1893, and shortly thereafter. So that there was ample time for the bidder, and ah other persons to examine the records, and learn the precise facts long before the sale. The hen claims were all spread upon the record and they disclosed the character of the building and ah the particulars of materials, machinery and labor furnished in and about the erection of the building. Some of the hens showed that materials and labor were furnished before the date of the mortgage. In these particulars the case differs from Reading v. Hopson and Wilson’s Appeal, and is brought within the operation of Hahn’s Appeal, 39 Pa. 409, when, the question being one of distribution, just as here, it was held that the hen of the mortgage was discharged though the claims of hen were not filed until after it was recorded. It also appears that no distribution was allowed upon the bond which was secured by the mortgage, which also was erroneous. We are of opinion that the decree of the learned court below should be reversed, and that the fund should be distributed in accordance with the first report of the auditor.

The decree of the court below is reversed at the cost of the appellees, and the record is remitted with direction to distribute the fund in accordance with the first report of the auditor.