The opinion of the court was delivered by: WILLSON
Defendants are William J. Brosnan and Francis H. Jacob, the purchasers of the property at the mortgage foreclosure sale, who had, prior to the sale, purchased the mortgage from Martha M. Berg, one of the original mortgagees, who was named defendant but has been dismissed. Other defendants are George H. A. Parkman and Gladys Marie Short Parkman, who were owners of the property during times when some of the tax liens were assessed and filed, and Mountain Engineering Company, a corporation, who also owned the property at various times during which tax liens were assessed and filed in the Office of the Prothonotary of Allegheny County.
The case was tried non-jury upon evidence which was largely stipulated; however, some testimony was taken. There is no material conflict in the evidence as to what has occurred. Findings of fact and conclusions of law will be found in this opinion as permitted by Rule 52 of the Federal Rules of Civil Procedure, 28 U.S.C.A.
The property in question consists of 175 acres more or less and is valuable. It was formerly owned by Martha M. Berg and her husband, J. D. Berg. On January 28, 1948, the Bergs conveyed the property to George H. A. Parkman, Jr. and his wife Gladys Marie Short Parkman, taking back a purchase money mortgage dated January 28, 1948, and recorded in Mortgage Book Volume 2924, page 48, for $ 45,000 and a mortgage bond in the penal sum of $ 90,000. The realty was then conveyed and reconveyed by the Parkmans to Mountain Engineering Company, a corporation, which they controlled, and back again on at least two occasions. These conveyances were all subject to the purchase money mortgage. During a period when the corporation owned the property, certain Federal Unemployment Tax Act and Federal Insurance Contributions Act tax deficiencies of Mountain Engineering Company, which were assessed by the Commissioner of Internal Revenue, became liens on the involved real estate. These liens were filed of record in the office of the Prothonotary of Allegheny County between April 12, 1949 and November 28, 1951.
In addition, the Commissioner of Internal Revenue assessed an income tax deficiency of $ 9,767.68 against George H. A. Parkman and Gladys Marie Short Parkman on July 6, 1955, at a time when they owned the property, this assessment being filed in the office of the Prothonotary of Allegheny County, Pennsylvania, on October 13, 1955.
It thus appears and is conceded that all the Government tax liens were filed of record in the office of the Prothonotary subsequent to the recording of the mortgage.
Default having occurred in the payment of the mortgage debt, on June 7, 1955, Martha M. Berg, the surviving mortgagee, caused a confession of judgment on the mortgage bond to be entered in the office of the Prothonotary of Allegheny County at D.S.B. 3089 July Term 1955. The debt recited in the judgment is the sum of $ 43,135 principal, plus interest from June 1, 1955.
Martha Berg's attorney caused a praecipe to issue by the Prothonotary, directing the sheriff to sell the property on a writ of fieri facias. The sale was duly advertised as required by state law and was originally set for July 5, 1955, but by various orders of the Common Pleas Court, the sale was postponed from July 5, 1955 to January 3, 1956, at which time the sale was held by the sheriff, who sold the property to defendants Brosnan and Jacob, who in the meantime, in December, 1955, had purchased the mortgage and bond from Martha M. Berg. At the sale the defendant purchasers paid the sheriff the sum of $ 6,203.23.
At this point the action of Martha M. Berg in invoking 28 U.S.C.A. § 2410 should be mentioned. On September 22, 1955, she filed a petition in the Court of Common Pleas of Allegheny County for a rule upon the United States and the Parkmans to show cause why they should not be made parties to the foreclosure proceedings. The rule was granted and served upon the United States and the Parkmans. No answer or response was filed by either the Parkmans or the United States within the sixty day period set forth in the rule. On December 20, 1955, the rule was made absolute by the state court. In the rule to show cause served upon the United States, the judgment creditor sought an adjudication of the state court that the Government tax liens would be divested by the sale on the writ of fierifacias facias issued on the judgment confessed on the mortgage bond. Such a judgment under Pennsylvania law makes the lien of a judgment confessed on a mortgage bond relate back to the entry of the recording of the mortgage. Boyer v. Webber, 22 Pa.Super. 35; DeWitt's Appeal, 76 Pa. 283.
As mentioned, the Government paid no attention to the state court proceedings until January 3, 1957, which the Government contends is one day less than one year from the date of the sale of the property and is the last day it could redeem the property according to its right of redemption secured to it under 28 U.S.C.A. § 2410. On that day, January 3, 1957, Robert X. Blair, revenue officer, attempted to effect a redemption of the property by making a tender. He testified that he had a Government check in the amount of $ 6,575.42, which represented the amount bid at the sheriff's sale plus interest, and that he contacted the defendant William Brosnan, stated his purpose, offered Mr. Brosnan the check and it was refused, because Mr. Brosnan considered the amount to be wholly inadequate. He, however, referred the revenue officer to his lawyer, William L. Jacob, Esq. No attempt was made to tender redemption money to the other co-owner, Francis H. Jacob, because the attorney, William L. Jacob, Esq., indicated that the sum offered would not be accepted.
It should be emphasized that the foregoing was the only effort made by the Government to redeem. During the one year interval both the purchasers at the sale resided in and had places of business in the greater metropolitan area of Pittsburgh and had telephones listed in their names at their homes and places of business.
On January 3, 1957, defendants Brosnan and Jacob contend that they had in the property $ 55,591.28, which was the amount of their mortgage debt reduced to judgment, plus interest, taxes and costs. They contend that that was the amount the Government should have tendered in redemption of the premises under Section 2410.
Discussion of Law and Conclusions
It the mortgagee has correctly and validly made the United States a party to the foreclosure action under 28 U.S.C.A. § 2410, and the sale was a judicial one, the foreclosure of the mortgage discharged and extinguished the unpaid taxes as liens on the property and transferred such liens to the fund created by such sale, if any. However, it is my opinion that the ...