McLean & Jackson's Appeal , 103 Pa. 255 ( 1883 )

Mr. Justice Paxson

delivered the opinion of the court,

It is settled by a line of authorities that the assignees of the fractional parts of a debt secured by a mortgage, take pro rata upon distribution, in case the mortgaged premises does not sell for enough to pay the debt in full: Donley v. Hays, 17 S. & R. 400; Mohler’s Appeal, 5 Barr 418; Perry’s Appeal, 10 Harris 43; Hancock’s Appeal, 10 Casey 155. The learned judge of the court below was of opinion that the facts of this case did not bring it within the ruling of the authorities above cited and decreed distribution accordingly. Subsequently Moore’s Appeal, 11 Norris 309, was called to his attention, and under the impression that the latter case was a step in advance of the former ones, he reversed his previous ruling and decreed distribution pro rata.

The prior ruling was based upon the fact that the assignments were of definite sums and not of fractional parts of the mortgage, while in his later ruling the learned judge held that under Moore’s Appeal the form of the assignment is not material, unless it appear in the contract of assignment that the parties intended a different rule of distribution.

Wo do not regard Moore’s Appeal as an advance beyond the earlier cases or as inculcating any new doctrine. In that case a judgment amounting to $7,64Í.73 was assigned to seventeen different parties. The first sixteen assignments were of definite sums ; the seventeenth and last assignment was in these words : “ February 9th 1878 for a valuable consideration, I hereby assign the balance of this judgment unassigned, to Stella C. Moore being-the amount due and unpaid after the above foregoing assignments.” This last assignment if not.for a definite sum was for a sum capable of being reduced to a eértainty, and its legal effect was precisely the same as if the amount had been ascertained and inserted therein. It is impossible to see any essential difference between fractional parts and definite sums in such assignments, and for this reason we do not think Moore’s Appeal an advance upon prior decisions. It is a mere matter of form. The assignment of a specified sum is substantially the assignment of a fractional part. It is difficult to draw a distinction between the assignment of the fourth part of a mortgage of $4,000 and the assignment of $1,000 thereof. They amount to precisely, the same thing and there’ is no more reason in the one case than in the other to imply a contract that the first assignee shall.have priority over subsequent assignees. All that the cases decide is ■ that in the absence of any agreement by which the first assignee shall have priority, the law will not make any distinction but will distiibute the fund pro rata, where it is insufficient to pay all. Uo case has decided that where priority was intended and stipulated for by the parties, and subsequent assignees had notice thereof, that such preference will not be enforced. In fact the right to give such preference was recognized in some of the cases cited. In Donley v. Hayes, the earliest of this line'of cases, it was said by the court: “ Indeed nothing appears in this case to show that in point of fact the subject of priority of payment was in contemplation of any of the parties, aud no contract to that purpose can be implied except what the law implies.” In Hancock’s Appeal the assignment of one of four bonds secured by a mortgage was accompanied by a guarantee of payment, but this court held that a guarantee was a mei’e personal contract at large and not a pledge- of a particular fund, and as the assignment contained no contract for priority none existed. But we need not stop to argue that a man may assign a part of a debt secured by a mortgage or judgment in such manner as to give his assignee priority of payment over himself, or any subsequent assignee with notice of such agreement. It is a necessary incident of the power to contract and to dispose of property.

The question for our consideration is, whether it appears upon the face of appellants’ assignment that a preference was given and intended % At the time the assignment was executed by Edward Barney to Decker & Ayres, the mortgage which is the subject of contention, was the only asset undistributed belonging to the estate of Milan Ba'rney, deceased. There were also at that time unpaid claims against the estate, which, with expenses and other matters, so reduced the fund realized from the mortgage that the respective assignees thereof could not' be paid in full. Edward Barney, the assignor, wás one of the heirs, and entitled to one-eighth interest therein. On the 26th of April 1877, he assigned to A. H. Decker and L. L. Ayres “ out of the one-eighth part of the said bond and mortgage and the moneys due me thereon the sum of $2,650, together with interest thereon from the date hereof, hereby authorizing and directing the administrator of the estate of Milan Barney, deceased, to assign or pay over unto the said L. L. Ayres and A. II. Deekex-, their executors, administrators or assigns, out of my share of said mortgage the said sum with interest thereon as aforesaid.” This assignment was duly recorded. On the 19th of May 1877, Decker & Ayres assigned their interest in said mortgage to McLean & Jackson, the appellants. This assignment was also recorded. On the 20th of May 1877, Edward Barney assigned the balance of his interest in the mortgage to Conyngham & Paine, who subsequently assigned the same to the appellees. The said assignment recites the fact of the prior assignment to Decker & Ayres and proceeds as follows : “ Now know all men to whom these presents may come, That I, Ed ward Barney, one of the heirs of Milan Barney, the above mortgagee, do hereby assign, transfer and set over unto Conyngham & Paine, all my right, title and interest as such heir, in the bond and mortgage above recited, and the moneys arising herefrom (the estate in the same hereby granted, being all my right, title and interest in the one-eighth part of said sum secured by the said .bond and mortgage, less the part and amount theretofore assigned by me to Decker & Ayres, as above recited), and do hereby authorize and order Milan Barney, the administrator of the said Milan Barney, deceased, to pay over to said Conyngham & Paine, the balance of all money arising from said bond and mortgage, les3 the amount heretofore assigned as aforesaid.”

It will thus be seen that this transaction, though in form an assignment of the one-eighth part of a mortgage debt, is in substance an assignment of the interest of the assignor in the estate of a deceased person. ¥e need not consider the bearing of this fact upon the case. Conceding it to be an assignment of a mortgage debt and nothing else, it does not come within the rule indicated in the cases commencing with Donley v. Hays and ending with Moore’s Appeal. It is manifest that Edward Barney could not claim anything out of the mortgage until Decker & Ayres had been paid in full. Such is the fair legal construction of the assignment. He assigns $2,650, and directs the administrators of the estate to pay the same with interest thereon. Such payment would have been good against Barney, no matter what loss there might have been on the mortgage, and it is good against his subsequent assignees, because they'have no.higher right. The first assignment is recited in the second assignment, hence there is no question of notice. In addition, the second assignment is expressly subject to the first; it is of the “ balance, of all moneys arising from said bond and mortgage, less the amount heretofore assigned as aforesaid.”

The case in hand is plainly distinguishable from those cited. The facts ai’e essentially different. It is apparent from the face of the papers that appellants’ assignment was intended to have priority and be paid in full. This works no harm to the appellees. They .took subject to appellants’ assignment and with notice thereof.

The decree is reversed at the cost of the appellees, and it is ordered that distribution be made in accordance with this opinion.