Wallace's Estate , 59 Pa. 401 ( 1868 )

The opinion of the court was delivered, February 23d 1869, by

Williams, J.

The appellant was the collector of taxes in the First Ward, Pittsburg, from 1852 to 1858 inclusive, and, during this time, state, county and city taxes were annually assessed on the Bank Exchange property, owned by Thomas. Wallace, and included in the duplicates that came into his hands for collection. He settled his duplicates in regular course during the period for which he was collector. In 1859 Wallace confessed judgment in his favor as collateral security for the taxes then remaining unpaid, and died in the same or following year, largely indebted. In 1864 the Bank Exchange property, of which he died seised, was sold by his administrator under an order of the Orphans’ Court for the payment of debts, and the residue of the proceeds of sale, after satisfying certain judgments in favor of the purchaser that were first liens, came into the administrator’s hands, together with the proceeds of some personal property, for distribution.

On the hearing before the auditor appointed to distribute the funds, the appellant claimed that the proceeds of the sale of the real estate in the hands of the accountant should be applied in satisfaction of the unpaid taxes, or to the judgment taken as collateral security therefor, on the ground that by the Act of 5th of April 1844, extending the provisions of the Act of 3d of February 1824, relating to taxes on certain real estate in the city and county of Philadelphia to the county of Allegheny, these taxes were the first liens on the property and entitled to be first paid out of the proceeds of sale. It was admitted that, during the years in which the taxes were assessed and became payable, up to the date of the sale, there was sufficient personal property on the premises, if levied upon, to have satisfied the taxes. The auditor refused to apply the fund arising from the sale of the real estate to the payment of the taxes, and appropriated it in satisfaction of the judgment in favor of the appellee, which was prior in date to the judgment of the appellant as collateral security for the unpaid taxes.

The Orphans’ Court confirmed the report of the auditor, and directed the funds to be paid out in accordance with the distribution made by him.

The case comes before us on an appeal from this decree, and the appellant contends that the court erred in dismissing his exceptions to the auditor’s report, and in refusing to appropriate the proceeds of the sale of the real estate to the payment of the taxes. Were the taxes then a lien on the property at the time of the sale ? It is undoubtedly true, as the appellant contends, that under the provisions of the Act of 8d of February 1824, as enlarged and extended to the county of Allegheny by the Act of 5th of April 1844, the taxes in controversy became a lien on the real estate sold by the administrator, from the date of their assessment, and that they had priority to all other liens or encumbrances charged thereon after the passage of the latter act. Nor was it necessary to the existence and preservation of the lien, as the auditor seems to have decided, that the taxes should be registered in accordance with the provisions of the Act. These provisions are merely directory, and a failure to comply with them does not affect the validity or duration of the lien. This was the construction given to the act by this court in Parker’s Appeal, 8 W. & S. 449, and its correctness has never been questioned or doubted.

But if the taxes were a lien, for whose use or benefit was the lien given? Was it imposed for the benefit and security of the collector, or for the-advantage and security of the Commonwealth, city or county entitled to the taxes, and for whose use they were assessed ? There can he no doubt that the lien was intended to be given to the party entitled to the taxes, and as security for their payment. It is equally clear that the act was not intended to confer any new power or authority on the collector to enable him to collect the taxes, nor to provide him with additional means to enforce their payment. The power with which he was already clothed was ample and sufficient for this purpose. The whole object and design of the act was to give to the parties entitled to the taxes an additional security for their payment, and therefore the lien was made to have priority and to be unlimited in its duration, and only to be discharged by payment.

But actual payment of the taxes to the parties for whose use they were assessed, or to their authorized agents, will and must necessarily have the effect of discharging the lien. When, therefore, the appellant settled his duplicates and paid over the taxes to the proper officers or agents of the parties entitled to receive them, the lien was discharged. But though discharged at law, the lien of the taxes, if justice required it, might be kept afoot in equity for the benefit of a paying surety: Cottrell’s Appeal, 11 Harris 294.

As was said in Parker’s Appeal, equity may well consider the tenant or stranger whose goods have been distrained on and appropriated to the payment of the tax, in the light of a surety, and as such entitled to be substituted to the rights of the party to whom, the tax was coming. But the appellant cannot be regarded in the light of a surety. It was his duty to collect the taxes and pay them over without delay, and he had no authority to grant »indulgence, or to extend the time of their payment. Public policy and the law require that an officer intrusted with the collection of taxes necessary to the support and proper administration of the government should discharge his duties with promptness and fidelity, and if he has been remiss or delinquent in the performance of his trust, it may well be doubted if he is entitled to subrogation under any circumstances. But however this may be, it is clear that l^e is not entitled to it to’the prejudice of the rights of others.

Subrogation is founded on principles of equity and benevolence, and though it may be decreed where no contract or privity exists between the parties (Kyner v. Kyner, 6 Watts 221; Cottrell’s Appeal, 11 Harris 294; Hoover v. Epler, 2 P. F. Smith 524), it is not to be allowed except in a clear case, and where it works no injustice to the rights of others: Lloyd et al. v. Galbraith et al., 8 Casey 103.

The principle which governs in all cases of substitution is one of equity merely, and it is to be carried out in the exercise of a proper legal discretion, with a due regard to the rights of others, McGinnis’s Appeal, 4 Harris 448; and it is not to he used to overthrow the equity of another, and thus work injustice: Zeigler v. Long, 2 Watts 206.

It has accordingly been held that a mere volunteer who, without any legal or moral obligation, pays the debt of another is not entitled to subrogation to the prejudice of the intervening rights of others; Hoover v. Epler, 2 P. F. Smith 524; nor is one who becomes surety of a defendant in a judgment for stay of execution, and afterwards pays the judgment, entitled to a cession of the judgment so as to have priority to subsequent judgment-creditors: Armstrong’s Appeal, 5 W. & S. 352; Burns v. The Huntingdon Bank, 1 Penna. Rep. 395; Pott v. Nathans, 1 W. & S. 155.

Has the appellant any greater equity than that of a mere volunteer who pays the debt of another, or of one who becomes the surety of a judgment-debtor for stay of execution ? If not, why should he have subrogation at the expense of a judgment-creditor who may have been injured by his culpable supineness, if not actual misconduct ? It was his duty to have collected the taxes, and the means of enforcing payment were within his grasp. If it had not been for his gross delinquency he would not be seeking a preference over the appellee to which he is not entitled.

The Orphans’ Court was clearly right in dismissing his exceptions, and in decreeing that the fund be paid out in accordance with the distribution reported by the auditor.

The appeal is dismissed, and the decree of the Orphans’ Court is affirmed at the costs of the appellant.