Court Opinion

ID: 6263163
Source: CourtListenerOpinion
Date Created: 2022-02-17 22:28:17.115304+00
Date Added: 2024-06-11T08:59:45.135440
License: Public Domain

ZAPPALA, Justice,
dissenting.
I dissent from the majority opinion announced today which requires that all judgment creditors be given personal notice prior to a tax sale. The effect of the majority opinion is to equate secured and unsecured creditors, an unwarranted result.
A “judgment creditor” by definition is “one who has obtained a judgment against his debtor, under which he can enforce execution.” Black’s Law Dictionary, Fifth Edition, 1979. Once such a judgment is obtained, it may be indexed in the Prothonotary’s Office in the county in which *341the debtor’s property is situated, thus giving the judgment creditor a general lien on all of the debtor’s real property. 42 Pa.C.S. § 4303. Although a judgment creditor maintains a general lien on all the real property of the debtor, he is not a secured creditor but rather an unsecured creditor. The unsecured judgment creditor may then attempt to collect the debt through enforcement procedures. See Pa. R. Civ.P. 3101 et seq.
In contrast, a secured creditor bargains for and obtains security from the debtor for the debt. This security may attach to all real and personal property of the debtor or to any particular item of real or personal property. In any event, the debtor creates a “valuable property interest” in favor of the secured creditor. It is this distinction between secured and unsecured creditors that mandates different treatment in our judicial system. Once properly perfected, a secured interest can only be eliminated upon personal notice, and an opportunity to protect such interest. The protection of this valuable property interest served as the basis for the United States Supreme Court’s decision in Mennonite Board of Missions v. Adams, 462 U.S. 791, 103 S. Ct. 2706, 77 L.Ed.2d 180 (1983), wherein the Court held that a mortgagee was entitled to receive actual notice of a tax sale. Subsequently, we followed the Mennonite decision in First Pennsylvania Bank, N.A. v. Lancaster Tax Claim, 504 Pa. 179, 470 A.2d 938 (1983). Now, the majority extends the rationale of Mennonite and First Pennsylvania Bank to a situation in which a judgment creditor maintains a general lien, arguing that this general lien is equivalent to a “valuable property interest” of a secured lien. With this conclusion I cannot agree.
By concluding Mennonite compels its holding today, the majority disregards the fact that the issue presented to the U.S. Supreme Court in that case was “... whether notice by publication and posting provides a mortgagee of real property with adequate notice of a proceeding to sell the *342mortgaged property for nonpayment of taxes.” Mennonite, 103 S.Ct. at 2708. Without reference to the issue raised in Mennonite, the majority glibly assumes that the U.S. Supreme Court’s reasoning is equally applicable to the facts of the instant case. This analytical error leads the majority to interpret the expansive language contained in Mennonite as eliminating any distinction between a mortgagee’s property interest and that of a judgment creditor. In light of our Court’s unprecedented and unwarranted extension of the analysis in Mennonite, it is clear that the grave concern expressed by Justice O’Connor in her dissenting opinion that the holding would be misconstrued was justified.
In support of its position, the majority relies upon Mullane v. Central Hanover Bank and Trust Co., 339 U.S. 306, 70 S.Ct. 652, 94 L.Ed. 865 (1950); Commonwealth v. Meyer, 169 Pa.Super. 40, 82 A.2d 298 (1951); and Pennsylvania Company v. Scott, 346 Pa. 13, 29 A.2d 328 (1942). In Mullane v. Central Hanover Bank and Trust Co., supra, the United States Supreme Court was faced with the issue of the sufficiency of notice given to beneficiaries of a common trust fund of the scheduled judicial settlement of the accounting. The effect of this proceeding was to terminate any questions of mismanagement of the common fund, including negligent or illegal impairment of monetary interests or diminution of the trust fund through the payment of fees and expenses. Thus the Court found an actual deprivation of property. Having determined that a beneficiary’s property interest may be substantially impaired by the judicial proceeding, the due process clause of the 14th Amendment mandated that personal notice of the hearing was required to any known beneficiary.
The majority relies upon Pennsylvania Company v. Scott, supra, to buttress its position that “a judgment is property and that a judgment creditor’s interest cannot be deprived without due process of law”. At 335. While Pennsylvania Company holds that a judgment cannot be *343deprived without due process of law, the context in which it appears is quite distinct from the present appeal. In Pennsylvania Company, the plaintiff argued that the legislature attempted to obviate perfected judgments through the use of its lawmaking powers, and as a result was diminishing its property. The judgment was the legal obligation incurred by the judgment debtor. Thus, Pennsylvania Company is in complete accord with my analysis that an underlying obligation cannot be impaired without due process of law. Contrary to what the majority holds today, an underlying obligation is quite different from a lien. The majority’s attempts to equate an underlying debt with a lien are misplaced.
Finally, the majority cites Commonwealth v. Meyer, supra, for the proposition that a judgment lien represents security for the underlying debt. At 335. In Meyer, the defendant tendered a judgment note containing a confession of judgment clause as restitution to his victim in return for a reduced sentence. The defendant then failed to satisfy the note, and based upon the court’s determination that the defendant misrepresented his penitent state of mind, revoked probation and incarcerated the defendant. The defendant then appealed his sentence. While Judge Hirt does state that “a judgment until made productive by payment is but security for the acknowledged debt” (citation omitted), 169 Pa.Super. at 44, 82 A.2d at 301, nowhere does the Meyer decision equate a judgment with a secured lien. Relying upon Meyer to support the majority’s conclusion that a general lien is a secured interest creating a valuable property interest extends Meyer far beyond its intended purpose.
Contrary to what the majority holds today, instances arise under the law in which personal notice is not required prior to diminishing a general lien. For example, under our Decedents, Estates and Fiduciaries Code, the Act of June 30, 1972, P.L. 508 No. 164 § 2, 20 Pa.C.S.A. § 101 et seq., *344publication is sufficient notice to extinguish a general lien on all the decedent’s property involved in probate administration. 20 Pa.C.S. § 3162. An executor or administrator is under no duty to search the court records and personally advise any and all judgment creditors of distribution. This has been upheld even when the executor has actual knowledge of a creditor. In re Doster’s Estate, 346 Pa. 455, 31 A.2d 142 (1943). Not only is a judgment creditor’s lien extinguished, but the underlying debt is extinguished as well. Yet, personal notice is not required.
Furthermore, a general lien not revived may be extinguished. Unlike a secured lien, a judgment lien must be revived every five years or lose its priority and possibly its status as a lien. 42 Pa.C.S. § 5526. Yet the law is quite clear that although a lien may be extinguished by its failure to be revived, a judgment neither satisfied nor discharged remains in full force and effect. Hinds v. Scott, 11 Pa. 19, 1 Jones 19 (1849).
Consequently, it is clear that we have always treated secured creditors, such as mortgagees, and judgment creditors differently. No reason has been advanced to afford a judgment creditor protection which he has neither sought nor bargained for. The majority concludes that failing to give judgment creditors personal notice could impair the judgment creditor’s judgment because he would have “no real opportunity to redeem the property, bid at the tax sale or assert any defects to the sale.” At 338. The majority fails to comprehend that it is not the judgment or underlying debt that will be extinguished, only the lien. The judgment creditor still has the right to proceed on the debt and, if necessary, index another lien upon different property-
Accordingly, I would not require actual personal notice be given to an unsecured judgment creditor.
McDERMOTT, J., joins in this dissenting opinion.