Court Opinion

ID: 3849686
Source: CourtListenerOpinion
Date Created: 2016-07-06 08:28:01.901909+00
Date Added: 2024-06-11T08:42:42.997552
License: Public Domain

I dissent from the majority. The question is whether the Deficiency Judgment Act of 1941, as applied to judgments in personam and sales of real estate thereon made prior to its enactment, is constitutional. In my opinion the Act materially changes the contract made by the parties and therefore violates Article I, section 17, of the Constitution of Pennsylvania. The decision of this Court to the contrary inFidelity-Philadelphia Trust Co. v. Allen, 343 Pa. 428, is so clearly erroneous, both in its result and in the reasoning upon which that result was based, that it should not be permitted to stand. Although courts are slow to interfere with decisions which have been accepted and acted upon as the correct interpretation of the law for a long period (In re Bickley'sEstate, 270 Pa. 101), it is not contrary to the maxim of staredecisis to overrule a decision which was plainly in error and which has existed only a short time: Com. ex rel. Margiotti v.Lawrence, 326 Pa. 526; Callender's Administrator v. KeystoneMutual Life Insurance Co., 23 Pa. 471. ". . . stare decisis is . . . not a mechanical formula of adherence to the latest decision, however recent and questionable, when such adherence involves collision with a prior doctrine more embracing in its scope, intrinsically sounder, and verified by experience":Helvering v. Hallock, 309 U.S. 106, 119.
The effect of the Deficiency Judgment Act upon the obligation of the original contract does not depend upon the method of execution adopted by the creditor to collect his claim. If the original contractual obligations *Page 21 
are not impaired when the sale is on a writ of levari facias
after scire facias proceedings, they are no more impaired when the sale is on a writ of fieri facias after judgment entered on the bond. In either case the creditor must accept, as the measure of satisfaction of his claim, the jury's or the court's valuation of the property rather than the price bid at the sale.
The fundamental question is whether or not this alters the debtor's obligation created by the mortgage contract. InBeaver County B.  L. v. Winowich, 323 Pa. 483, we held that it did alter it, saying, (p. 491): "From this summary of the Pennsylvania law which governed the bond and mortgage in the present case when those instruments were executed, it is obvious that defendants' obligation was changed materially by the Mortgage Deficiency Judgment Act. Instead of their covenant in the bond to pay 'the sum of twelve thousand three hundred dollars, lawful money of the United States of America' on or before July 1, 1941, plaintiff now was obliged to accept part payment of the debt in cash and part in real estate at a valuation appraised by a judge or jury, or, if such appraisement should fix the 'fair value' of the property at an amount equal to or greater than the indebtedness on the bond, plaintiff must be content with receiving only real estate and no 'lawful money' whatever. Of course, there is no assurance of a mortgagee being able to realize from the property the amount of a valuation placed upon it in accordance with the provisions of the act. The sale price is no longer conclusive between the parties as to the credit to be allowed on the debt, and the amount of the deficiency judgment to which the mortgagee was previously entitled is thus altered to a substantial and, it may be, drastic degree." We repudiated (p. 507) the argument that the statute merely provided for a new method of appraising the value of the debtor's property in place of the former method of a sheriff's sale, stating that the object of the sheriff's sale was not to fix the value of the property but to enable the *Page 22 
creditor to convert it into cash. We said (p. 507-8) that it was questionable whether as a practical matter a mortgagee ever was unjustly enriched after bidding in the property at a nominal sum,1 and that even if he were, that result could have been guarded against by the parties when they made their contract, or, as to future mortgages, by legislation. In a concurring opinion, Chief Justice KEPHART pointed out that if the price were grossly inadequate, injustice to the mortgagor could be avoided by a petition to have the sale set aside and a new one held. And we concluded, after citing opinions by MARSHALL, STORY, GIBSON, TANEY, SHARSWOOD, CARDOZO, and BRANDEIS,2 that "a statute which compels a mortgagee to accept real estate at an appraised valuation, in place of money, as a part liquidation of the mortgagor's obligation on the bond, must, as applied to pre-existing mortgages, be held to be unconstitutional" (p. 502). Our decision was in accord with the overwhelming weight of authority in the country, and contrary to the statement in the concurring opinion in the Allen case (343 Pa. at p. 431), we were not motivated merely by a desire to conform to the decisions of the Supreme Court of the United States. On the contrary, we had as a precedent in our own State the apposite language of Chief Justice SHARSWOOD in Palairet'sEstate, 67 Pa. 479, 493 (holding unconstitutional an Act of Assembly providing for the extinction of all existing irredeemable ground rents): "No one has ever supposed that an Act of Assembly *Page 23 
could authorize, in the case of a lawful existing contract, one of the parties to tender a collateral thing in satisfaction or extinguishment of it, whatever the value of that thing might be as compared with the damage sustained by the breach. Yet, in effect, that is just what is done by this act. The covenant is to pay an annual rent forever; a jury are authorized to say what principal sum shall be satisfaction and extinguishment of that covenant; a collateral thing not provided for in the contract, and which might as well be anything else than money." This was directly authoritative for the Winowich decision, as it is for the controversy now before us, because the effect of a Deficiency Judgment Act is to compel the creditor to accept a collateral thing — real estate — at a jury's valuation in partial or complete satisfaction of the contract, and this was not within the scope of the parties' agreement. Thus in deciding the Winowich case we were adhering to long-established Pennsylvania authority.
By the Allen case, on the contrary, the majority of this Court, in a per curiam opinion, surrendered, it seems to me without justification, the previous conviction of the Court, as last expressed in the Winowich case, which was solidly supported by sound legal principles and by decisions of practically all sister jurisdictions that had passed upon the question.3 This extreme *Page 24 
step was taken deliberately, and only because the United States Supreme Court, in Gelfert v. National City Bank, 313 U.S. 221, saw fit to reverse the trend of its former decisions in the interpretation in this respect of the contracts clause of the Federal Constitution. In attempting to justify the taking of such drastic action, this court said: "A majority . . . agrees that . . . the challenged statute [the Act of 1941] may be held not to conflict with the contract clause of the state constitution, reaching that conclusion on the ground that it isdesirable to preserve uniformity of construction of thecontract clauses of both state and federal constitutions:
compare Gelfert v. National City Bank, 313 U.S. 221." (Italics added.) Our sovereign right to interpret our own Constitution was thus surrendered to the Federal Court.
It is a well-settled principle of constitutional law, recognized and respected by the Supreme Court of the United States, that the highest state court is the final authority upon the construction of its own constitution, and that the federal tribunal has no jurisdiction whatsoever to review such a decision. "It is sufficient to say in reference to this contention that the decision of the Supreme Court of the State of Pennsylvania sustaining the statute is conclusive in this court, as to any question of conflict between it and the state constitution." Merchants' Bank v. Pennsylvania, 167 U.S. 461,462. And recently, in Wichita Co. v. City Bank, 306 U.S. 103,109, the present Chief Justice said: ". . . nothing requires the state courts to adopt the rule which the federal or other courts may believe to be the better one. . . ." To the same effect are Lehmann v. Board of Accountancy, 263 U.S. 394;Rothschild  Co. v. Steger Piano Co., 256 Ill. 196, 206;Opinion of the Justices to the Senate, 226 Mass. 613, 617. While to achieve consistency of construction of similar clauses in both state and federal constitutions a state court in interpreting its own constitution will generally adhere to the decision of the Supreme Court of the United States in construing a similar provision *Page 25 
in the Federal Constitution, no State should do so where such action would require a departure from previous state decisions, or where the state court is of the opinion that the weight of authority and better legal reasoning are decidedly in favor of the opposite holding: 21 C.J.S. Par. 205, p. 364. Until the decision in the Allen case, this Court had consistently held that the amount of the deficiency judgment could not be altered by later legislation: White's Estate, 322 Pa. 85, and BeaverCo. B.  L. v. Winowich, supra; Knox v. Noggle, 328 Pa. 302;Pa. Co., Etc., v. Scott, 329 Pa. 534; in these cases we held unconstitutional the Deficiency Judgment Acts of January 17, 1934, P. L. 243, July 1, 1935, P. L. 503, and July 2, 1937, P. L. 2751, respectively. The reasoning of the United States Supreme Court in the Gelfert case, which we followed in preference to our own decisions, is not persuasive. Mr. Justice DOUGLAS apparently realizing that the legislation did alter the parties' contract, attempted to justify it by the statement that (p. 231) " 'Not only are existing laws read into contracts in order to fix obligations between parties, but the reservation of essential attributes of sovereign power is also read into contracts as a postulate of legal order' ". This, I think, is unsound as a reason. It is nothing more than an assumption of the constitutionality of the act, because the power to pass an unconstitutional law is not one of the essential attributes of sovereign power. If an Act of Assembly can on such justification alter a mortgage contract, what solemn agreement of individuals is not exposed to legislative modifications? What legislation of any sort would be unconstitutional? Carried to its logical conclusion would this not justify a law prescribing punishment for acts which were not criminal at the time of their performance? The United States Supreme Court in the Gelfert case realized that its decision required the overruling of several of its previous cases, including those cited in the Winowich opinion. This it endeavored to justify on the ground that (p. 235) "We cannot permit the broad language which those early decisions employed *Page 26 
to force legislatures to be blind to the lessons which another century has taught". In thus upsetting the doctrine ofstare decisis (for they were not broad dicta, but the actual holdings of the early decisions which stood in the way) as applied to Constitutional questions, the United States Supreme Court has taken the view that the Constitution varies with the times. This is a complete negation of the underlying theory of constitutional government,4 and it should not be sanctioned as the future policy of this Court.
In my judgment, as long as the Allen case remains the law of this State, we are in duty bound in construing the Pennsylvania constitution or, as a logical sequence, a Pennsylvania statute, to follow blindly the decisions of the United States Supreme Court in its interpretation of identical or similar provisions in the Federal Constitution or statutes, regardless of the fact that in so doing we overrule our previous decisions and regardless of whether sound reasons or proper public policy may convince us that the opposite holding would be the better one. As long as the Allen case stands, a doubt is cast upon all our rules of construction which are now in conflict with those of the United States Supreme Court, and it may now well be asked whether our past decisions which embody principles contrary to those of the highest federal court are any longer law. If we follow the Allen case reasoning, we would be bound to overrule such cases should the questions decided in them be brought before us again.
Because our reasoning in the Winowich case was correct, because the reasoning of the United States Supreme Court in theGelfert case was fallacious, and because *Page 27 
the reason given for our decision in the Allen case was wrong and will lead to future uncertainty in many fields of the law, it is my opinion that we should return to the doctrine of theWinowich case. By so doing we will not do violence to the doctrine of stare decisis. Therefore, I would overrule theAllen case, reverse the court below in the instant case, and declare the Deficiency Judgment Act of 1941 unconstitutional as to any bond and mortgage executed prior to the passage of the act.
Mr. Chief Justice SCHAFFER and Mr Justice PARKER join in this dissent.
1 The realism of this approach becomes more apparent when the income is insufficient and the purchasing mortgagee must maintain the property, by paying taxes and carrying charges, until the hypothetical fair value of the experts can be obtained, if ever.
2 MARSHALL: Sturges v. Crowninshield, 4 Wheat. 122, 197; STORY:Green v. Biddle, 8 Wheat. 1, 84; and: Commentaries on the Constitution, Bk. 3 ch. 34, Par. 1379; GIBSON: Chadwick v.Moore, 8 W.  S. 49, 50; TANEY: Bronson v. Kinzie, 1 How. 311; SHARSWOOD: Palairet's Appeal, 67 Pa. 479; CARDOZO: WorthenCo. v. Kavanaugh, 295 U.S. 56; BRANDEIS: Louisville Bank v.Redford, 295 U.S. 555.
3 First Nat. Bank of Birmingham v. Jaffe, 239 Ala. 567,196 So. 103; Kresos v. White, 47 Ariz. 175, 54 P.2d 800; Adams v.Spillyards, 187 Ark. 641, 61 S.W.2d 686; Brown v. Ferdon,5 Cal. 2d 226, 54 P.2d 712; Atlantic Loan Co. v. Peterson,181 Ga. 266, 182 S.E. 15; Vanderbilt v. Brunton Piano Co., 111 N.J.L. 596,169 A. 177; Federal Land Bank of Cola. v. Garrison,185 S.C. 255, 193 S.E. 308; J. J. Langever v. H. H. Miller, 124 Tex. 80,  76 S.W.2d 1025; Hanauer v. Republic Building Co.,216 Wis. 49, 265 N.W. 136; National City Bank v. Gelfert, 284 N.Y. 13,  29 N.E.2d 449. The last-mentioned case was decided by the state court on the basis of the Federal Constitution, New York having no constitutional prohibition against legislative impairment of contracts (Demarest v. Mayor, 74 N.Y. 161). Were it not for this peculiar omission in the New York Constitution, the case would not have been subject to reversal by the United States Supreme Court in Gelfert v. National City Bank,313 U.S. 221.
4 "Constitutions do not change with the varying tides of public opinion and desire. The will of the people therein recorded is the same inflexible law until changed by their own deliberative action, and therefore the courts should never allow a change in public sentiment to influence them in giving a construction to a written Constitution not warranted by the intention of its founders," 11 Am. Jur. p. 659, citing Scott v. Sandford, 19 How. 393.