Court Opinion

ID: 6271570
Source: CourtListenerOpinion
Date Created: 2022-02-18 15:47:17.846106+00
Date Added: 2024-06-11T08:59:55.342512
License: Public Domain

Opinion by
Smith, J.,
George Smith and wife having made an assignment for the benefit of creditors, the assignee, under an order of the Adams county common pleas, made public sale of the assigned real estate. The controversy here is with respect to the proceeds of two parcels, thus described in the assignee’s petition: “ Tract No. 1. — A farm situate on the dividing line between the counties of Adams and York, about 69 acres of which, with all the buildings and improvements, are situate in Latimore township, Adams county, and about 67 acres of said farm are situate in Franklin township, York county, aggregating in the whole farm about 136 acres. Tract No. 2. — Improved land situate in Franklin township, York county, containing about 21 acres.” The assignee returned that he had sold these as one tract for $6,557, and his return was confirmed by the court.
At the date of the assignment there were judgments against the assignor in both counties. The question is whether they shall share in the proceeds of sale in proportion to the quantity of land on which they were respectively liens, or in proportion to its value.
Before the auditor, it appeared that upon the sale tract No. 2 was first put up separately without eliciting any bid, and that the two tracts were then put up and sold together. The bidding was by the acre, and the land was struck down on a bid of $41.50 an acre. By a subsequent survey the acreage was found somewhat larger than had been supposed, and for the excess the purchaser paid $45.39. It further appeared that tract No. 1 had been used as one farm for upward of thirty years, and that No. 2 was not contiguous to it, but had been cultivated by the assignor during his ownership of both tracts. It was admitted, and found as a fact by the auditor, that apart from the buildings the portions of tract No. 1 in each county were of equal value —$28.50 an acre; and the testimony abundantly sustains his finding that tract No. 2 was worth but $23.50 an acre. The auditor apportioned the fund to the judgments in the two counties in proportion to the value of the land in each county. The court below directed distribution in proportion to the acreage.
*74In choosing between these methods, it will be proper to consider the results to which each will lead. Where all portions of a tract are of equal value, it is immaterial which method is adopted, since they will produce like results. But where there is a disparity of values between different portions, equality of quantity is not equality of value. In such case, certainly partition among heirs in proportion to acreage would not be thought of. Nor, if the value of the tract equaled the owner’s indebtedness, would such a division of it among creditors operate justly. In the present case, distribution on this basis of the portion of the fund held to represent the land in Adams county falls short by $230.97 of paying the Martin judgment, and leaves nothing for the Jacobs judgment, while it gives this money to the Houck and Weaver judgments, — both posterior in Adams county to the Martin and Jacobs judgments, — and to the Hafer judgment, entered only in York. Had the land in Adams alone been sold, the Martin and Jacobs judgments would unquestionably have been entitled to the proceeds as against the Houck, Weaver and Hafer judgments, and with its value as shown before the auditor would have been paid by the sale. By selling with it a tract in York, of inferior value, and making distribution in proportion to acreage, its proceeds are taken from them and given to two judgments posterior in lien and a third that was nota lien. Had the debtor owned no land in York, the two prior judgments would have been paid by a sale of the land in Adams. Ordinarily, the creditor’s security is enhanced by an addition to the debtor’s property, but under such a rule of distribution it may be impaired or destroyed.
Distribution on the basis of acreage, when the disparity of both quantities and values is great, may produce a result of still greater injustice. Given twenty acres in Adams with improvements making it worth $5,000, eighty acres in York worth but $1,000, and a judgment of $5,000 in each county, we have $6,000 to divide between the judgments at the ratio of one to four; giving the judgment in Adams but $1,200 while the judgment in York takes $4,800, — of which $3,800 is derived from the land in Adams on which it was not a lien. A later entry of the York judgment in Adams would make it also a lien there, but posterior to that of the Adams judgment. In their relation to the Martin and Jacobs judgments, this example represents, first, the *75position of the Hafer judgment, and next the position of the Houck and Weaver judgments. The difference is only one of relative magnitude.
If such a rule is to prevail when the lands are in different counties, there is no good reason why it should not be observed, under analogous conditions, when they are in the same county. In such case, let the eighty acres, in the example given, be the portion first acquired by the debtor; the judgment that bound it would not be a lien on the twenty acres acquired later, or, if revived, would be a posterior lien. By a sale of both as one tract, and distribution on the basis of acreage, the same- result would be reached.
The act of June 13, 1840, sec. 12, P. L. 689, provides that on a sheriff’s sale of land in adjoining counties, subject to liens in both, the court “ shall ascertain and determine, in such manner as they think proper, what proportion of the proceeds of such sale shall be applied in satisfaction of such previous liens.” The act of February 17, 1876, sec. 1, P. L. 4, authorizing sales by assignees, gives no specific direction respecting the sale of a tract lying in two counties, but provides that “the proceeds shall be appropriated to liens according to their priority.” No further rule for distribution has been given by the legislature. The Supreme Court, discussing the question in Gibble’s Estate, 134 Pa. 366, say: “We lay down no general rule for distribution.” Assuredly, it cannot have been within the legislative intent, or the view of the Supreme Court, that the security of a judgment should be impaired by the debtor’s ownership of land not subject to its lien, that judgments should be paid from the proceeds of land on which they were not liens to the exclusion of those that were, nor that judgments should be postponed to others posterior in lien; results which appear in the present case in a distribution based on the arbitrary assumption, disproved by all the evidence, that the tract sold was of uniform value throughout, and that the land in each county was justly represented by a sum proportioned to its area.
It does not seem material that in the present case the land was bid for by the acre. The price per acre was apparently employed as a convenient unit of value, like the price per foot front in the sale of town lots. The bidders knew they were not bidding on a single acre, nor on such number of acres as they *76might elect to take under their bids, but on all the land exposed to sale, to be taken and paid for in bulk at the rate bid per acre, be the quantity more or less. The area proved greater than was supposed, and the purchaser paid for the excess at the rate fixed by his bid. The assignee returned the sale as a sale in gross, for $6,557. All this proves nothing as to uniformity in value of the several portions included in the tract sold.
It should not be overlooked that the appellants had no control over the method of sale. They were forbidden by the order of court to employ execution process, which they could have controlled, an inquest on which might have given them the right to sell the land in Adams separately. They were denied tins opportunity of appropriating that land to their liens, and it does not appear that they assented in any maimer to the action of the assignee or the method of bidding which was adopted.
In its essence, the question is whether, with respect to land, contribution and distribution shall be made on the basis of value or of quantity. In some of its aspects, this question has been decisively or substantially settled. On a partial breach of warranty, compensation is based on the value of the land affected by the breach, as compared with the whole, and not on the relative quantity: Lea v. Dean, 3 Wh. 316; Beaupland v. McKeen, 28 Pa. 124. On a public sale by the owner, in the manner shown here, and a conveyance with general warranty, it will hardly be questioned that damages for a breach of warranty as to part of the land would be based on its relative value and not on its relative quantity. And “ two purchasers at a sheriff’s sale, subject to a mortgage which is a common incumbrance on the land of both, must pay the mortgage in proportion to the value of their respective lots: ” Carpenter v. Koons, 20 Pa. 222; Fisher v. Clyde, 1 W. & S. 544. Had the two tracts in this case been sold separately, or the portions of tract No. 1 lying in different counties sold separately, subject to a common incumbrance, liability for its payment would be in proportion to the value and not to the area of the several parcels: Jones’s Estate, 169 Pa. 392.
The only direct adjudication in this state on the aspect of the question presented here is in Oberholtzer’s Appeals, 124 Pa. 583, and 134 Pa. 366. There the tract contained one hundred and eighty-four acres in Lebanon and thirty-two acres in Lancas*77ter county, the land in Lancaster being more valuable than the same quantity in Lebanon. About three fourths of the price was applied on a mortgage of the whole tract, and the residue on incumbrances in the two counties in proportion to the acreage in each. The Supreme Court (124 Pa. 583) said: “We see no error in this mode of division; ” but reversed the decree on other grounds. On a second appeal, the court, stating the reasons for affirming the distribution (134 Pa. 366) said: “ Nearly 17,000 of the sum was applied to the mortgage, without any calculation of relative values, and it would be clearly inequitable to permit such a calculation now. ... We lay down no general rule for distribution. We only say that a basis of valuation which has, by common consent, been adopted in the payment of common incumbrances, must, in fairness to all parties, be adhered to when the distribution of a balance of the fund comes to be made. The Lebanon land has been allowed to pay its share of the mortgage as if of equal value by the acre with that in Lancaster. It must draw its share of the surplus on the same pro rata basis.”
In Jones’s Estate, 169 Pa. 392, the question arose on a petition for the apportionment of a charge on land which had been sold by tire sheriff in two parcels at different prices per acre. The court below directed contribution in proportion to values as shown by thei sheriff’s sale. This was affirmed, the Supreme Court saying: “ As the rule announced, though somewhat obiter, in Carpenter v. Koons, has stood unchallenged for forty years, we do not think it well to depart from it, unless in exceptional cases like Gibble’s Estate, where the acts of the parties have made a different rule necessary to an equitable result.”
Under all the authorities, contribution and distribution in proportion to values would seem the normal rule, to be departed from only in exceptional cases, as where the parties have themselves so far departed from it that the departure must be continued to secure an equitable result. Aside from such cases, in holding that equality is equity the courts have uniformly had in view equality of values. Contribution on the basis of values adjusts the common burden in proportion to the means of bearing it. Distribution on the same basis gives to incumbrances the fund actually produced by the land on which they are respectively liens. In the present case, no reason appears for *78departing from this rule; on the contrary, a departure is shown to be attended with results highly inequitable.
The decree of distribution is therefore reversed, and it is ordered that the record be remitted and distribution made in accordance with the auditor’s first report.
Rice, P. J., and Willard, J., dissent from the opinion of the majority so far as the same reverses the action of the court below in distributing the proceeds of tbe sale of lot No. 1.
Note. — See appendix for comparative schedules of distribution.