Court Opinion

ID: 9693318
Source: CourtListenerOpinion
Date Created: 2023-08-25 16:36:49.125892+00
Date Added: 2024-06-11T12:04:41.207734
License: Public Domain

TAMILIA, Judge,
dissenting:
I respectfully dissent. I would affirm the trial court’s Order of September 16, 1996, which granted the exceptions of appeUee, Pamela K. Blesh, to the Sheriff’s Schedule of Proposed Distribution. The real property in question was the subject of a specific Order of equitable distribution and was, therefore, held in custodia legis, or under the wardship of the court, pending compHance with that Order. Moreover, appeHant, Mid-State Bank and Trust Company, had constructive notice of the equitable distribution Order, such that appeHee was entitled to priority in the distribution of the proceeds of the sheriffs sale.
*1195The facts of this case can be briefly summarized as follows. On March 19, 1986, the divorce court entered an equitable distribution Order, which awarded the marital real estate and flour mill business to appellee’s former husband and required husband to pay appellee the sum of $385,381.09 plus interest, in equal monthly installments over a fifteen-year period. To secure the payments to appellee, the court imposed a lien against the real estate distributed to husband. On January 27, 1987, the conveyance of the marital real estate was recorded with the Clinton County Recorder of Deeds, and the lien was reduced to judgment and entered in the Clinton County Judgment Index. After the judgment expired, appellee’s former husband used the real property as collateral for a $1.5 million loan from Mid-State bank. When he defaulted on the loan, the property was sold at sheriffs sale. Appellee thereafter filed exceptions to the Sheriffs Schedule of Proposed Distribution, which were granted by the trial court.
In reversing the trial court, the majority fails to consider the doctrine of in custodia legis. Although the trial court did not address this doctrine, it is well settled that if the result is correct, this Court may affirm the trial court’s decision on any ground. Schimp v. Allaman, 442 Pa.Super. 365, 659 A.2d 1032 (1995). In Klebach v. Mellon Bank, N.A., 388 Pa.Super. 203, 565 A.2d 448 (1989), the court stated: “The longstanding rule in this Commonwealth is that property subject to an order of court is in custodia legis, or under the wardship of the court, pending compliance with the order.” Id. at 211, 565 A.2d at 451. Since the property in this action was the subject of a specific equitable distribution Order, it remained in cus-todia legis pending husband’s compliance with the divorce court’s Order. As a result, appellee’s claims stemming from the equitable distribution Order should take precedence in the distribution of the proceeds from the sheriffs sale. The validity of this doctrine to some extent has been incorporated into the Divorce Code, 23 Pa.C.S. § 3323, Decree of court, as follows:
(f) Equity power and jurisdiction of the court.—In all matrimonial causes, the court shall have fiill equity power and jurisdiction and may issue injunctions or other orders which are necessary to protect the interests of the parties or to effectuate the purposes of this part and may grant such other relief or remedy as equity and justice require against either party or against any third person over whom the court has jurisdiction and who is involved in or concerned with the disposition of the cause.
(Emphasis added.) Moreover, section 3505, Disposition of property to defeat obligations, protects a party from fraudulent disposition or encumbrance of property prior to a decree of equitable distribution. It would appear that if a decree has been entered and there is a continuing obligation under the decree to effectuate equitable distribution, any encumbrance of this property subject to the distribution decree, over which the court has continuing jurisdiction, can also be divested.
The soundness of applying the doctrine of in custodia legis is amply demonstrated by the record in this case. The divorce court’s equitable distribution Order of March 19, 1986, required appellee’s former husband to pay her the sum of $385,381.09 plus interest; however, despite appellee’s repeated efforts to secure payment, over $304,000 remained unpaid as of March of 1995. Such a result defeats the scheme of equitable distribution and allows appellee’s former husband to openly flout the divorce court’s Order. A court must be able “to carry out the equitable distribution order and give the parties the benefits they were entitled to under the equitable distribution order.” Lowenschuss v. Lowenschuss, 453 Pa.Super. 340, 342, 683 A.2d 1214, 1216 (1996).
The undisputed purpose of equitable distribution is to “[ejffectuate economic justice between parties who are divorced or separated ... and insure a fair and just determination and settlement of their property rights.” 23 Pa.C.S. § 3102, Legislative findings and intent, (a)(6). Although the doctrine of in custodia legis has to-date only been applied to property pending the outcome of equitable distribution proceedings, the equitable distribution Order of March 19,1986, necessitated *1196continuing court involvement by specifying equal monthly payments over an extended period of time. The authority to do so which was implicit in the Order of distribution can be found in 23 Pa.C.S. § 3104, Bases of jurisdiction:
(a) Jurisdiction.—The courts shall have original jurisdiction in cases of divorce and for the annulment of void or voidable marriages and shall determine, in conjunction with any decree granting a divorce or annulment, the following matters, if raised in the pleadings, and issues appropriate decrees or orders with reference thereto, and may retain continuing jurisdiction thereof
(1) The determination and disposition of property rights and interests between spouses....
(Emphasis added.)
This Court previously has applied the doctrine of in custodia legis to marital property, which creditors executed against, long after the parties filed for divorce. Keystone Sav. Ass’n v. Kitsock, 429 Pa.Super. 561, 633 A.2d 165 (1993). Moreover, Pennsylvania courts have allowed modification of final Orders of equitable distribution, “in order to effectuate the court’s intention in distributing the marital property.” Lowenschuss, supra at 342, 683 A.2d at 1216. As a result, it is entirely proper for this Court to apply the doctrine of in custodia legis to property that is the subject of a final Order of equitable distribution with which the parties have not complied.
Appellant claims that if a final decree of equitable distribution can create a perpetual lien entitled to continuing priority, there will be “serious repercussions.” (Appellant’s Brief, p. 14.) However, I fail to see any difficulties caused by such a lien, when appellant had constructive notice of the Order of equitable distribution. With regard to constructive notice, the Pennsylvania Supreme Court 90 years ago stated the following:
The general rule is that where a purchaser holds under a conveyance, and is obliged to make out his title through that deed, or through a series of prior deeds, he is charged with constructive notice of every matter connected with or affecting his title, which appears by description of parties, by recital, by reference, or otherwise, on the face of any deed, or upon any public record, which forms an essential link in the chain of instruments through which he takes title or liens which affect the same.
Volk v. Eaton, 219 Pa. 649, 69 A. 91 (1908) (emphasis added). Furthermore, “[bjecause constructive notice is not limited to instruments of record, a subsequent purchaser may be bound by constructive notice of a prior unrecorded agreement.” Long John Silver’s, Inc. v. Fiore, 255 Pa.Super. 183, 190, 386 A.2d 569, 573 (1978). A subsequent purchaser has a duty to inquire “of persons in possession or others who the purchaser reasonably believes know such facts.” Id. (emphasis added).
In this case, the deed to the marital real estate was recorded properly and explicitly referenced the unrecorded court Order of equitable distribution, as well as the appel-lee’s divorce on May 24,1985. Appellant had record notice of the existence of the Order of equitable distribution and, therefore, had a duty to inquire as to its contents. “[Ejviden-tiary incompleteness should not be confused with a lack of notice of the existence of the claim itself.” Powell on Real Property, 14:82.02[l][d][ii], at 82-50 (1996) (Matthew Bender & Co., Inc.). Since reasonable inquiry would have revealed the validity of appel-lee’s lien, appellant must be charged with constructive notice of appellee’s claims.
Through appellee’s filing in the Clinton County Judgment Index, appellant had additional constructive notice of the lien. The majority states: “Given the five year revival rule, logic dictates that a prudent search of the Clinton County judgment index on August 24,1994 would require one to look back no further than August 24,1989.” (Majority Opinion, p. 1192 n. 2.) Contrary to the majority’s Opinion, however, logic dictates no such result. As appellee correctly points out, “There are many reasons ... for a diligent title searcher to search the judgment index for more than the five (5) year time period suggested by the appellant.” (Appellee’s Brief at 23-24.) These reasons include federal tax liens, which are valid until paid, and *1197municipal claims, which have a life span of twenty (20) years. Since a reasonably diligent title search would have revealed the existence of appellee’s unsatisfied judgment, appellant must be deemed to have had constructive notice of appellee’s lien.
Because the real property in question was the subject of a specific court Order of equitable distribution and because appellant had constructive notice of that Order, I would affirm the Order of the trial court.