virtue of its mortgages. The Pennsylvvania rule is succinctly stated in Bulger v. Wilderman and Pleet, 101 Pa.Super. 168, 171, 173, 174.
Said the court in that case (101 Pa.Super. at page 171): "* * * Generally stated, the rule in Pennsylvania is that although in form a conveyance of title, a mortgage is in reality only a security for the payment of money, or performance of other collateral contract: Wilson v. Shoenberger's Ex'rs, 31 Pa. 295; McIntyre v. Velte, 153 Pa. 350 [25 A. 739]."
Again, 101 Pa.Super. on pages 173 and 174: "* * * The correct principle was stated by Chief Justice Gibson in Presbyterian Corporation v. Wallace, 3 Rawle [Pa.] 109, as follows: 'In form, a mortgage is certainly a conveyance; but it is unquestionably treated at law here, in the way it is treated in equity elsewhere, as a bare incumbrance, and the accessory of a debt. As between the parties it is a conveyance, so far as is necessary to enforce it as a security: As regards third persons, the mortgagor is the owner, even of the legal estate. This distinction, which, if attended to, will be found to reconcile the apparently jarring dicta of the judges, is as firmly established by the practice and decisions of the courts in Pennsylvania, as any other in the law.' This constitutes the gist of Mr. Lloyd's conclusion in his article in the University of Pennsylvania Law Review, supra, which was approved by Chief Justice Moschzisker in Harper v. Consolidated Rubber Co., 284 Pa. 444, 451 [131 A. 356], as follows: 'Professor William H. Llyod, in a recently published article (73 U. of P. Law Rev. 43) discusses all of the leading Pennsylvania cases on the subject in hand, and states the conclusion that, while many of our decisions are difficult, if not impossible, to be reconciled (a view which seems to be supported by a reading of the cases), ot title to the mortgaged premises may be accounted in the mortgagee "as between the parties" to the transaction represented by the mortgage "so far as it is necessary to render the instrument effective as a security," but " as to all other persons (with some special exceptions) the mortgagor is regarded as the owner, and the mortgage as a mere encumbrance and accessory to the debt," which summarizes the predominant effect of our decisions.' " (Emphasis supplied.)
See also the admirable discussion of the Pennsylvania rule by Judge Finletter in Miles v. Kolsky & Co., 13 Pa. Dist. & Co. R. 579.
Since, then, there was no agency relationship between Eagle and the defendant, and since there was no agency relationship between Murphy or Industrial Plants Corporation and the defendant, the plaintiffs' claim against the defendant must fall.
The plaintiffs' contention as to ratification is academic, in view of the failure to establish any agency relationship between Eagle and the defendant, or any agency relationship between Murphy or Industrial Plants Corporation and the defendant.
Incidentally, the record discloses that there was never at any time any representation that Eagle was acting as the agent of the defendant, or that it was authorized to act as the agent of the defendant; nor was there any evidence that Murphy or Industrial Plants Corporation represented themselves to the plaintiffs as the defendant's agent or sub-agent.
The element of ratification does not exist in this case. Ratification can only bind the principal and, as previously found, the defendant was not the principal in this case.
It must be kept in mind that the basis of the plaintiffs' suit is breach of contract, and obviously, if there has been no contract as far as the defendant is concerned, there can be no damages by reason of an alleged breach. It is true that the defendant received a payment from the mortgagor with a letter of explanation that $3,600 thereof was realized from the proceeds of the sale of the equipment involved in the present controversy. This suit, however, is not based on the theory of a quasi contract and, even though I should be constrained to apply the equitable principles of such a theory, the plaintiffs in this case have not offered to restore the defendant to status quo by returning the portion of the equipment removed, nor have they explained their reason for not doing so. Additionally, the plaintiffs have failed to show the defendant was unjustly enriched and that the plaintiffs suffered a corresponding detriment. An offer of restoration is a condition precedent to any action for restitution. See Restatement of the Law of Restitution, Quasi Contracts and Constructive Trusts, Section 65.
In view of my conclusions, it is unnecessary to discuss the contention of the defendant that the property sold was real property, and that under the Pennsylvania statute of frauds a contract for the release of such property from the lien of mortgage must be in writing, signed by the party sought to be charged or by his agent duly authorized in writing.
I therefore make the following
Conclusions of Law
1. Edward M.-P. Murphy and Industrial Plants Corporation were not authorized to bind the defendant to the transaction between plaintiffs and Industrial Plants Corporation.
2. The conditions specified in the resolution adopted by the defendant's Board of Directors were at no time complied with.
3. Edward M.-P. Murphy and Industrial Plants Corporation were not agents of the defendant and did not profess to be acting for defendant.
4. The contract entered into between Industrial Plants Corporation and plaintiffs was not binding upon the defendant.
5. There is no privity of contract between plaintiffs and defendant.
6. Plaintiffs have failed to sustain the burden of proving any contract or any contractual relationship with the defendant.
7. Defendant had the legal right to retain the proceeds of the check for $6,300 transmitted to it by C.K. Eagle & Company, Inc., and credit the indebtedness of said company therewith.
8. Defendant at no time consented to, or authorized any person to consent to, or contemplated that severance from the freehold of the property mentioned in the contract between Industrial Plants Corporation and the plaintiffs.
9. Plaintiffs are not a party to any enforceable contract for the sale of the property mentioned in the contract between Industrial Plants Corporation and plaintiffs, or for the release of said property from the lien of its mortgages.
10. The contract between Industrial Plants Corporation and plaintiffs was promptly repudiated by defendant.
11. The repudiation by defendant was not waived.
12. The retention by defendant of the proceeds of the check by C.K. Eagle & Company, Inc., and the application thereof to the credit of the existing defaulted indebtedness of said Company to defendant, does not constitute, as a matter of law, a ratification of the contract between Industrial Plants Corporation and plaintiffs.
13. There is no evidence of a written ratification by defendant of the contract between Industrial Plants Corporation and plaintiffs.
14. Plaintiffs have failed to sustain the burden of establishing that damages had been sustained by them as a result of any improper conduct of the defendant.
15. Plaintiffs' complaint is dismissed and judgment is directed in favor of the defendant.
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