Pennsylvania Co., Etc. v. Scott , 346 Pa. 13 ( 1942 )

In 1926 Eugene M. Burns executed and delivered to plaintiff a bond and mortgage secured on premises 451 North 53d Street, Philadelphia, in the principal sum of $3,000. In 1938, because of defaults in the payment of the principal and certain instalments of interest, plaintiff entered judgment on the bond by virtue of the warrant of attorney thereto attached, and damages were assessed in the amount of $3,385.11. The mortgaged premises were sold on a writ of fieri facias to plaintiff for $60, and the property was conveyed to plaintiff by sheriff's deed dated July 11, 1938. On August 7, 1941, plaintiff presented to defendant, the prothonotary of the Courts of Common Pleas of Philadelphia County, a præcipe for an alias writ of fieri facias to levy upon and sell personal property of Burns for the purpose of recovering the balance due on the judgment, but defendant refused to issue the writ on the ground that no petition had been filed to fix the fair market value of the premises sold in execution as required by the Deficiency Judgment Act of July 16, 1941, P. L. 400. Plaintiff thereupon petitioned the court for a writ of alternative mandamus directing defendant to issue the alias writ. The court dismissed the petition, and plaintiff now appeals.

The Act of 1941 provides (section 1): "Whenever any real property has heretofore been or is hereafter sold, directly or indirectly, to the plaintiff in execution proceedings and the price for which such property has been sold was or is not sufficient to satisfy the amount of the judgment, interest and costs, and the plaintiff seeks to collect the balance due on said judgment, interest and costs, the plaintiff or plaintiffs shall petition the court having jurisdiction to fix the fair market value of the real property sold as aforesaid." Section 7 of the act provides that such petition must be filed "not later than six months after the sale of any real property: Provided, however, That, if the sale occurred prior to the effective date of this act, the plaintiff shall file such petition within six months after the effective date of this act [July 16, 1941]. In the event no petition is filed within such period the debtor, obligor, guarantor and any other person liable, directly or indirectly, to the plaintiff or plaintiffs for the payment of the debt shall be released and discharged of such liability to the plaintiff or plaintiffs."

In Fidelity-Philadelphia Trust Co. v. Allen, 343 Pa. 428,22 A.2d 896, in the interest of conformity with federal law, this statute was upheld, the United States Supreme Court having decided, in Gelfert v. National City Bank, 313 U.S. 221, that such legislation does not impair the obligation of a mortgage bond. In the Allen case the mortgaged premises had been sold in foreclosure proceedings prior to the effective date of the act, but no judgment in personam had been entered and the retroactive application of the statute was not discussed. It was stated that "As the record does not involve the application of the Act to sales on judgments in personam made prior to its effective date, no opinion on that subject is expressed." The present case calls for determination of the question thus suggested.

It is elementary that the legislature may not, under the guise of an act affecting remedies, destroy or impair final judgments obtained before the passage of the act, and this principle prohibits not only a statutory re-opening of cases previously decided by the court but also legislation affecting the inherent attributes of judgments or annulling or substantially interfering with the right to issue execution and to collect the amount due thereon: Memphis v. United States,97 U.S. 293, 296; McCullough v. Virginia, 172 U.S. 102, 123, 124;Hodges v. Snyder, 261 U.S. 600, 603; Bechtol v. Cobaugh, 10 S. R. 121; McCabe v. Emerson, 18 Pa. 111; Ladner v.Siegel (No. 4), 298 Pa. 487, 498, 148 A. 699, 702; ChesterSchool District's Audit, 301 Pa. 203, 211, 151 A. 801, 804; 16 C.J.S. 689, 690, § 271a; 30 Am. Jur. 898, 899, § 146; 31 Am. Jur. 364, § 883. There are two reasons for this limitation of legislative power; one, that a judgment is property of which, under state and federal constitutional prohibitions, the judgment creditor cannot be deprived without due process of law;¹ the other, that under our system of the division of governmental powers the legislature cannot invade the province of the judiciary by interfering with judgments or decrees previously rendered.²

The problem, then, reduces itself to this: Plaintiff having, since 1938, a judgment against Burns in the amount of $3,385.11, is its right of property therein impaired by the subsequent Deficiency Judgment Act? Does the act interfere with or adversely affect the judgment? We have concluded that the answers to these questions must be in the negative. The right of plaintiff under its bond and mortgage was to receive the payment from Burns of $3,000, but the Supreme Court of the United States has decided that a statute is valid which provides that if, in execution proceedings, the mortgagee buys the mortgaged premises, he must credit the fair value thereof on the bonded indebtedness, and that the obligation of the contract is not impaired by his being thus made to accept real estate at an appraised valuation instead of receiving "lawful money of the United States of America" as stipulated in such a bond. From this point of view it would seem necessarily to follow that the Act of 1941, even when applied retroactively, does not destroy any property right of plaintiff in the judgment on the bond, because the act, recognizing plaintiff's right to recover the full amount of the judgment, merely provides for an inquiry in regard to a transaction which occurred subsequent to the judgment, to wit, the sheriff's sale, in order to ascertain what amount of payment plaintiff has received, such an inquiry being analogous to the trial of an issue of payment raised as a defense to a writ of execution. If plaintiff was not entitled under its bond to be paid wholly in cash, but could be made by legislative mandate to account for the value of real estate purchased by it in execution, it cannot be said to be deprived by the statute of any property right in its judgment by being limited to a recovery of the balance due thereon after giving credit for the payment received through the acquisition of the real estate; there does not inhere in the judgment on the bond any greater right in that respect than attached to the obligation on which it was entered. If we assume, as we must from the decision in the Gelfert case, that the judgment creditor will eventually be able to realize from the real estate purchased in execution the valuation placed thereon by the court, plaintiff's enforced compliance with the act would not prevent the judgment from being ultimately paid in full. We are accordingly of opinion that the retroactive application of the statute to a sale previously held does not thereby impair any property right in the judgment on which the sale was had or improperly interfere with judicial functions, since the act deals only with the valuation of a payment in property made on account of the judgment and not with the inherent attributes of the judgment itself.

In Pennsylvania Company for Insurances on Lives and GrantingAnnuities v. Scott, 329 Pa. 534, 198 A. 115, the Act of July 2, 1937, P. L. 2751, was held to be a violation of Article III, section 7, of the Constitution as being a special law changing the method of collecting debts or enforcing judgments. It was there pointed out that it was not a reasonable classification to limit the provisions of the act to executions against mortgaged premises in foreclosure proceedings and on judgments entered on mortgage bonds. The present statute avoids this criticism because it extends to all sales of real property in execution. Plaintiff insists that the act has not the scope thus stated because, notwithstanding the generality of the enacting clause (section 1), the title and several of the sections contain restrictive references to judgments entered for "debts", and it is contended that judgments in tort actions are thus excluded because an unliquidated claim for damages arising from a tort is not a "debt." It is true that, while every debt is an obligation, not every obligation is a debt (Moorehead's Estate, 289 Pa. 542, 553, 137 A. 802, 806), and that, ordinarily, the word "debt" is regarded as referring to a fixed amount due by virtue of a contract. However it is frequently given a broader connotation,³ and is used to denote any kind of just demand.⁴ Its precise meaning in a statute depends upon the apparent intention of the legislature in employing it, which intention is partly to be ascertained, according to the Statutory Construction Act of May 28, 1937, P. L. 1019, section 51, from the occasion and necessity for the law, the circumstances under which it was enacted, the mischief to be remedied, the object to be attained, and the consequences of a particular interpretation; also it is to be presumed (section 52) "that the Legislature does not intend to violate the Constitution of the United States or of this Commonwealth." Having in mind these rules, and especially that any ambiguity must be resolved in favor of the constitutionality of the act, we conclude that the statute covers all sales of real property in execution whether on judgments in contract or in tort. Nor is it a ground for objection that the act deals only with sales of real estate and not of personal property, because it is common knowledge that the evil which the statute was designed to remedy was one connected exclusively, or at least largely, with sheriffs' sales of real estate.

Decree affirmed at appellant's cost.

¹ See authorities above cited.

² DeChastellux v. Fairchild, 15 Pa. 18; Menges v. Dentler,33 Pa. 495; Commonwealth ex rel. Johnson v. Halloway, 42 Pa. 446,448; Baggs's Appeal, 43 Pa. 512; Richards v. Rote, 68 Pa. 248,256.

³ Contrast, for example, Adler v. Dickstein, 139 Pa. Super. 447,449-451, 12 A.2d 489, 490, 491, with HollidaysburgBorough v. Snyder, 258 Pa. 490, 494, 102 A. 168, 169.

⁴ The Statutory Construction Act of May 28, 1937, P. L. 1019, section 101, defines the word "debtor" (in the absence of any clear indication in the context to the contrary) as "one who owes to another the performance of an obligation." The Uniform Fraudulent Conveyance Act of May 21, 1921, P. L. 1045, section 1, defines "debt" as including "any legal liability, whether matured or unmatured, liquidated or unliquidated, absolute, fixed, or contingent."