Court Opinion

ID: 6248639
Source: CourtListenerOpinion
Date Created: 2022-02-17 21:07:34.438808+00
Date Added: 2024-06-11T08:59:03.827392
License: Public Domain

Opinion by
Mr. Justice Mestrezat,
In the adjudication, the learned trial judge has found and stated at length the facts of the case and given sufficient reasons to sustain the decree which was entered by the court below. As said by him, the only question for determination is whether the mortgagee took subject to the ground rents or free and clear of them. We think that the rents were merged in the fee when Frank acquired his mortgage from Stover in *521880. The defendant denies the merger because, as it alleges, (a) there was an intermediate estate between the title to the land and the rents in one Albert Soley; and (b) Stover held the rents in trust for Mary C. Farren, subsequently Mrs. Mary C. Penrose, now deceased.
It is settled that a ground rent does not merge by the purchase of land out of which it issues by the owner of the rent where there is an intervening estate in, or charge on, the land held by a third party, a stranger to the title to the fee. The alleged intermediate estate in Soley was a mortgage created by a former owner of the title to the ground in favor of Stover. After the latter’s death the mortgage was found in his possession and on the back of it was written in bis handwriting, in pencil, the words : “ This mortgage is held for Albert Soley' — ■ Int. fr. Dec. 9 /76.” For the reasons stated by him, the learned trial judge held that the title to the mortgage was not shown to be out of Stover, the mortgagee, or in Soley, and that “ any interest of any person other than the said Lewis Stover, or any trust in favor of any person, then existing in said ground rents was a secret interest or trust, of which the said Philip Frank had no notice or knowledge of any sort or kind whatsoever when he took the $3,000 mortgage upon the said premises upon June 1, 1880, as aforesaid.” This language properly characterizes the title of Soley or any person other than Stover to the mortgage. Whatever may be the rights of Stover and Soley to the mortgage as between themselves, it is certain that it cannot avail the defendant as an intermediate charge or estate to defeat or impair the title of the plaintiff to the property in dispute. Neither he nor Frank, the mortgagee, through whose title he claims, had notice, actual or constructive, of the title to the Loughery mortgage being in a person other than Stover. A mortgagee is a purchaser, and, as said by Mr. Justice McCollum in Logan v. Eva, 144 Pa. 312, “it is well settled that a purchaser of land is unaffected by a secret trust or equity unknown to him, and that he may pass title thereto, untrammeled by the trust, to a person who has notice of it.” “ Secret liens or trusts,” says Kennedy, J., in Brown v. Simpson, 2 Watts, 233, “ are not to be encouraged upon any species of property whatever; but in no case can such a thing prevail as to real estate against an innocent purchaser of it for a full *53and valuable consideration without notice, unless our recording acts are to be overturned and set aside.”
The facts of the case negative the defendant’s theory that Stover regarded himself as holding the Loughery mortgage in trust for Soley, and show that the mortgage was apparently worthless. Two years after his interest in the mortgage is supposed to have passed to Soley, Stover entered judgment in his own name on the bond accompanying the mortgage and issued execution thereon, which was stayed by the court on the allegation that the mortgage and bond were given without consideration. Soley was not a party to or known in these proceedings.
We think that under the facts disclosed here, Stover was the owner of the mortgage, the estate intermediate between the ground rents and the title in fee to the land acquired by him, and that consequently it did not prevent the merger of the rents in the fee. '
Stover was the owner of the ground rents in 1874 and there was nothing of record to show that he did not own them in June, 1880, when Frank took from him the mortgage on which the property was sold and conveyed by the sheriff to the plaintiff. The first written evidence of Mary C. Farren’s interest in the rents is the agreement of June 1, 1881, a year after Stover had mortgaged the land to Frank. There is no allegation that Frank had any knowledge of the ownership of the rents other than what the record disclosed, which was that the title was in Stover. When Frank took the mortgage on the land from Stover in 1880, with full covenants and without excepting therefrom the ground rents, the record owner of both the land and the rents was Stover. This under all the authorities was an extinguishment of the rents, or a merger of them in the title to the land held by Stover. The two estates had united in Stover and his act in conveying the title in fee was a declaration of his intention to extinguish the rents, and, as to him, it was irrevocable: Ames v. Miller (Neb.), 91 N. W. Repr. 250. There was, therefore, a merger of the rents in the title to the ground, and of this a grantee of the rents was required to take notice so far as third persons without notice were affected. He could occupy no higher ground than Stover himself. The record showed that the titles to the two estates were in Stover at the same time and that he then conveyed without exception *54or reservation the title to the land in fee to Frank. This disclosed record notice that the ground rents had by the act of Stover, the owner thereof, been merged in the title to the land which he had conveyed to another, and therefore that the rents could not, in 1881, be conveyed by him to Miss Farren. She is presumed to know the law, and the facts appearing from the record, she is charged with notice of their legal effect. When, therefore, on June 1, 1881, she accepted Stover’s written declaration that he would hold the ground rents for the use of Miss Farren, she is presumed to have known that the rents were extinguished, or “ sunk or drowned,” in the title to the' land, and had passed with it beyond his control and ownership.
The fact that the sheriff sold the land subject to the ground rents did not prevent their subsequent merger, nor was it notice to Frank, the mortgagee, that they were subsisting encumbrances when he took his mortgage. The judgment on which the sale was made was a lien on Mrs. Loughery’s title to the land which was subject to the rents, and the sale made by the sheriff on the execution was necessarily subject to the rents, and Stover, the purchaser, took the fee thus encumbered. Prior to the time the fee was thus vested in him, there was no merger, but when it was vested in him by the sheriff’s sale, he being the owner of the rents, the two estates coalesced or united in him, and thereafter he could convey them to separate parties, or merge them and convey the fee, as he did, to one party. A judgment creditor would have a lien on the merged estates or fee, and a sale on execution would pass the whole title: Kreamer v. Fleming, 191 Pa. 534; s. c., 200 Pa. 414. In this case, the widow purchased from her children the fee in real estate, in which she had a dower interest. In speaking of the effect of the widow’s purchase on her dower estate, the present Chief Justice delivering the opinion in the case says : “ When she purchased the children’s estate she purchased the fee they had, and her own life interest merged in it. It might be that as between the parties no merger was intended, though it is not apparent what interest they had to support such intention, but as to third parties no such intent could control the legal effect and operation of their acts. A conveyance by appellant (the widow) without express reservation of dower would have carried a clear fee, and she could not have set up against it the in*55tention of the parties in the conveyance to her. So a levy and sale by a creditor on a judgment against her would have been of the fee. . . . There was no question of a discharge of dower or the sale of a life estate. The dotyer had merged, the sale was by a creditor on a judgment, and was of the fee vested in the judgment debtor.”
The learned judge was clearly right in holding that the trust in fee of Miss Farren in the ground rents was, as to the plaintiff, effective only from June 1, 1881, the date of the written declaration executed by Stover, and that the declaration was not competent evidence of the antecedent facts which it stated. It is indeed a singular proposition that two parties may, by a written agreement executed by them, make a statement of alleged facts therein contained evidence to defeat the title to real estate of a third party who had no knowledge of the agreement or its contents. The fallacy of the proposition is so apparent that it needs no discussion.
On June 1, 1880, when Stover conveyed the land in mortgage to Frank, the former was the record owner of the title to the land and to the ground rents, as well as the holder of the Loughery mortgage. There was therefore no intermediate estate or charge held by a third party between the rents and the fee, and there was nothing in the mortgage to indicate Stover’s intention to prevent a merger of the rents in the title to the land. It follows that the rents were extinguished, and that the fee in the land passed by the mortgage to Frank discharged of them, and is now held by the plaintiff by virtue of the sale made by the sheriff on a writ issued on the judgment obtained on the mortgage.
The decree is affirmed.
Mitchell, G. J., and Fell, J., dissent.