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WIRTZ v. PHILLIPS

May 25, 1965

W. Willard WIRTZ, Secretary of Labor, United States Department of Labor, Plaintiff,
v.
Retha PHILLIPS, individually and doing business under the name and style of Phillips Coal and Coke Company, Defendant



The opinion of the court was delivered by: ROSENBERG

 This is here for final determination on the issue of whether or not the plaintiff, W. Willard Wirtz, Secretary of Labor, United States Department of Labor, held a lien against certain property in Fayette County, Pennsylvania, on December 4, 1963. On that date the plaintiff had issued a writ of execution for the sale of such property presently held by Harry A. Montgomery and Bertha M. Montgomery, his wife, two of the present petitioners.

 The plaintiff's direction to the United States Marshal was "to levy upon the property of the defendant and to sell her interest in that property * * *". In accordance with the direction contained in the writ of execution against the pertinent real estate, the United States Marshal proceeded with the process.

 The petitioners filed a motion for a temporary restraining order and stay of sale by writ of execution. At a hearing on the motion, counsel for the parties agreed that the hearing be final and that the issue be determined on the basis of a stipulation submitted by them. Counsel have presented their separate briefs.

 The particular real estate with which we are here concerned was acquired originally by Lindsey Phillips by recorded deed on June 30, 1942. On December 3, 1954, Lindsey Phillips was joined in a deed with his wife, Retha Phillips, in the conveyance and recording of the particular property to themselves as tenants by the entireties. On January 24, 1961, the plaintiff procured a judgment in the sum of $3,354.65 at Civil Action No. 60-794 in the United States District Court for the Western District of Pennsylvania, against Retha Phillips, individually, and dong business under the name and style of Phillips Coal and Coke Company. On March 3, 1961, a certified copy of the judgment was transmitted to and filed in the office of the Prothonotary of Fayette County, Pennsylvania.

 On March 27, 1962, Lindsey Phillips procured a divorce from Retha Phillips by decree of the Court of Common Pleas of Fayette County at No. 402 September Term, 1960. On May 22, 1962, there was recorded in the office of the Recorder of Deeds of Fayette County, a deed dated October 5, 1960, *fn1" conveying the pertinent real estate from Lindsey Phillips and Retha Phillips, tenants of an estate by the entireties to Lindsey Phillips. Thereafter, on July 28, 1962, there was recorded a deed to the pertinent real estate from Lindsey Phillips, "a single man", to Joseph Lieber and Olga Lieber, his wife and Edwin A. Richter and Thelma G. Richter, his wife. Then followed the recording of a deed dated April 2, 1963 to the pertinent property from Joseph Lieber and Olga Lieber, his wife and Edwin A. Richter and Thelma G. Richter, his wife to Harold A. Montgomery and Bertha M. Montgomery, his wife. The successive holders of title here enumerated after Lindsey Phillips are the petitioners.

 On March 20, 1964, the United States Marshal proceeded with the Writ of Execution against the pertinent property and the present motion followed.

 The question for determination here then is, as of the date of the execution of the plaintiff's judgment, was that judgment a lien against the real estate or any part of it? *fn2"

 The question arises here because of a Pennsylvania statute, Act No. 412, approved the 17th day of May 1949, P.L. 1394. *fn3"

 The plaintiff contends that the real estate was held by Lindsey Phillips and Retha Phillips on March 3, 1961, when the judgment was liened in the Prothonotary's office of Fayette County; that at such time because the two spouses held the property as an estate by the entireties, that the plaintiff's lien was inchoate against the wife; that on March 27, 1962, Lindsey procured the decree of divorce from Retha and the estate by the entireties became automatically converted into an estate in common; that Retha automatically became the owner of a one-half undivided interest in the property as an estate in common, by virtue of the provision contained in § 1 of the Act of 1949; and that as such an owner she had an alienable and therefore lienable interest in the real property.

 The petitioners disagree with the plaintiff's contention and argue that Retha at the time the certificate of judgment was filed on March 3, 1961, in Fayette County where the pertinent property is situate, had no lienable interest or title in the real estate because the estate by the entireties was never converted into an estate in common. This was so, the petitioners contend, because the provision contained in § 1 of the Act, upon which the plaintiff relies for the conversion of the Phillips's estate by the entireties into an estate in common, remained inert and inoperative as to this particular property failing fulfillment of the condition precedent contained in the proviso clause of § 3 of the Act. In other words, in order to have worked the conversion, as a preliminary requisite, the Phillips's divorce decree would have had to have been recorded in the recorder's office of Fayette County, and this was not done. There was accordingly no conversion of that property from an estate by the entireties to one in common.

 This proviso clause reads as follows:

 
"* * * That no decree of divorce as aforesaid shall be effective to change the existing law relating to liens upon property held by tenants by the entireties except a decree of divorce that is valid in the Commonwealth, and not until the said decree of divorce or a certified copy thereof, shall be recorded in the office of the recorder of deeds of the county where the property is situate, which decree shall be indexed in the grantor's index against each of the said tenants by the entireties."

 As the parties now present the issue here, the determinable questions upon which the final decision rests may be stated: (1) Does the provision contained in § 1 of the Act of 1949 automatically convert, upon the granting of a decree of divorce, an estate by the entireties to an estate in common? or (2) Is the proviso contained in § 3 of that Act a double barreled device which must be triggered before the edict in § 1 becomes operational to change, after the granting of a decree in divorce, estates by the entireties to estates in common?

 The plaintiff says that the answer to question one is "yes" because the proviso is surplus verbiage. I shall discuss this later. The petitioners assert that the answer to the second question is "yes" because a State court has already said so. I shall discuss this also a little later.

 The Applicable Law

 Both of the parties disagree on whether the law applicable is Federal or State law. However, we have no problem here. Congress provided in the Act of June 25, 1948, c. 646, 62 Stat. 958, 28 U.S.C. § 1962 *fn4" that judgments rendered in a district court be made a matter of record in the state or county office, if the state required it. In compliance with this Act, the State of Pennsylvania legislated such a requirement by its Act of May 17, 1929, P.L. 1805, § 1, 17 P.S. § 1932. *fn5" The procurement of the original judgment and the execution thereon as they relate to federal functioning of an administrative body in a federal court is without question governed by federal law. But when on March 3, 1961, the plaintiff filed a certified copy of the Federal judgment in the office of the Prothonotary of Fayette County, Pennsylvania, he not only committed himself to the provisions of § 1 of the Act of 1929, but also submitted to all State laws as they relate to liens on property in Pennsylvania and for the particular county in which the lien was filed. As far as execution process was concerned, it was done by virtue of federal law. So far as the lien on the property within the County of Fayette, Pennsylvania, was concerned, it was done and governed by virtue of the law of liening of the State of Pennsylvania.

 The petitioners argue that a federal court must be bound by this determination by virtue of Erie Railroad Company v. Tompkins, 304 U.S. 64, 58 S. Ct. 817, 82 L. Ed. 1188 (1938). The Erie case dealt with the application of law in diversity action. Where, as here, jurisdiction is not based upon diversity of citizenship, the Erie case does not apply. National Bank of Eastern Arkansas v. General Mills, Inc., C.A. 8, 1960, 283 F.2d 574. Jurisdiction in this court is based upon the provisions contained in the Act of Congress of June 25, 1948, c. 646, 62 Stat. 933, 28 U.S.C. § 1345. *fn6"

 Where the United States or any of its agencies are plaintiffs the ordinary requirements of diversity of citizenship and amount in controversy are not jurisdictional requirements. Erickson v. United States, 264 U.S. 246, 44 S. Ct. 310, 68 L. Ed. 661 (1924); United States Fidelity & Guaranty Company v. United States, 27 S. Ct. 381, 204 U.S. 349, 51 L. Ed. 516 (1907); United States v. Sayward, 160 U.S. 493, 16 S. Ct. 371, 40 L. Ed. 508 (1895). Neither is a court, vested with jurisdiction where the United States or any of its agencies are plaintiffs, compelled to apply state law. Reconstruction Finance Corp. v. United Distillers Products Corp., C.A. 2, 1956, 229 F.2d 665. However, it is not to be presumed that where the United States is a plaintiff, that rules of law will be arbitrarily invoked where none exist. Since the plaintiff, as an agency of the United States, submitted the liening of the judgment to a state authority, we are guided by the provisions of Congress in its Act of June 25, 1948, c. 646, 62 Stat. 944. *fn7" Judicial decisions are laws of the states within this section. Cohen v. Beneficial Industrial Loan Corp., C.A. 3, 1949, 170 F.2d 44, affirmed 69 S. Ct. 1221, 337 U.S. 541, 93 L. Ed. 1528.

 However, where the only decisions on an issue are those of courts of common pleas, which are not binding on other courts of the state, they are not binding upon federal courts under this section. Eckman v. Baker, C.A. 3, 1955, 224 F.2d 954. This applies even in diversity cases where federal courts sit in effect as state courts, and so are not bound to follow common pleas court decisions. Brown v. Moore, 247 F.2d 711, 69 A.L.R.2d 288, cert. den. 355 U.S. 882, 78 S. Ct. 148, 2 L. Ed. 2d 112.

 While I have examined and thoroughly considered the Montgomery County case, and with due respect to the Judge who made the decision there, I am not convinced that that decision sets out either a basis or a valid reason to support it. Particularly is this so after I have made my own extensive research in an effort to give to the Act of 1949 the meaning advanced by the petitioners.

 I am, first, struck by the fact that the Act of 1949 re-enacts Act No. 451 approved the 10th day of May 1927, P.L. 884. *fn8" I also note that in § 3 of the Act of 1927, there is contained practically the same proviso clause. However, unlike the Act of 1949, § 1 of the Act of 1927 does not convert an estate by the entireties into an estate in common, nor does it even make reference to estates in common. If then the petitioners' contention is to hold true, so far as the proviso clause is concerned as it is contained in § 3 of the Act of 1949, why then does the proviso, practically unchanged, appear in the third section of the Act of 1927?

 The Act of 1927

 Logically then, I should look for an answer to that question in the 1927 Act. In reality, I shall examine two other Acts because they precede the Act of 1927 relating to the same subject-matter of estates by the entireties. They are the Act of May 24, 1923, P.L. 446 and the Act of May 13, 1925, P.L. 649. However, while these two prior Acts are links in the historical progress of the subject-matter, they do not relate directly to the specific issue which is now here for determination.

 The Act of 1923 was the first Pennsylvania legislation which exposed the common law binds of estates by the entireties to vulnerability. By this Act, an estate by the entireties was made available, through a common pleas court process, as a source for providing funds for the support of a wife and children, where the tenant husband neglected to support the tenant wife or their children; and upon any divorce, thereafter, the wife was also made entitled to receive not only support money, but in addition reimbursement of such share as would be the proportionate part of the original purchase money furnished by her.

 But it was the Act of 1925 which was indeed the original model upon which both the Act of 1927 and the Act of 1949 were patterned and developed. It contained almost everything that the Act of 1927 contained, except that in its § 3, it had no provisions for the lien holders of record nor the proviso clause which we are now considering. In its last section it saved from repeal the 1923 Act to which I have just referred. The Act of 1927 was the first Pennsylvania legislation to strike a blow for the dissolution of estates by the entireties after dissolution occurred of the state of marriage of their tenants by man-made processes.

 While I shall in the main now discuss the provisions contained in the Act of 1927, because it, I am convinced, contains the answer which we now seek, I shall, nevertheless, do so with full awareness of these prior Acts of 1923 and 1925.

 Since the subject-matter of these Acts, then, relates to estates by the entireties and provides deviation from the controlling principles as they were applied under the common law *fn9" it is well here to refer to Blackstone's discussion on the subject. *fn10"

 In Book 2, page 182, Blackstone said:

 
"And therefore, if an estate in fee be given to a man and his wife, they are neither properly joint-tenants nor tenants in common: for husband and wife being considered as one person in law, they cannot take the estate by moieties, but both are seised of the entirety, per tout, et non per my: the consequence of which is, that neither the husband nor the wife can dispose of any part without the assent of the other, but the whole must remain to the survivor." *fn11"

 Pennsylvania was a common law state and supported the common law principles as they related to estates by the entireties. Madden v. Gosztonyi Savings & Trust Co., 331 Pa. 476, 200 A. 624, 117 A.L.R. 904 (1938).

 In 1927, the Pennsylvania Legislature broke *fn12" with these common law traditions. For divorced persons it provided by its Act of 1927, not the abolition of estates by the entireties, but rather, a remedy for supplying the methods by which a defeasance of title could be processed through the courts. In other words, the Legislature now gave a divorced spouse, in property acquired after the date of the Act, the right to proceed for the partitioning of the whole title to the real estate. *

 In § 1 and § 2 of the Act the Legislature gave either one of the spouses, after divorce, the right to proceed in a court of common pleas of the county in which the property was situated for the partitioning of the property by the court's appointment of a trustee to make sale thereof. So that a proceedings in the court of common pleas, as authorized by the Act, made possible a conversion of the real estate into personalty (being the proceeds from the sale of the real estate) and as such capable of distribution.

 In § 3 of the Act, the Legislature fixed a one-half value of the property for each of the divorced spouses, but only for the purpose of the partition proceeding of the whole property where a partition proceeding was initiated. In this section it provided further for the distribution by the court-appointed trustee of the partition proceeds, first, of the payment of expenses and, second, payment "of the amount of any lien entered of record jointly against both of the respective tenants by entireties * * *". And in the same sentence in this section, the Legislature further broke with the common law tradition and provided, third, that "the amount of any liens entered of record against either of such tenants by entireties, together with interest due and costs taxed ...


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