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G.A.G. CORP. v. AURITT (11/16/73)

decided: November 16, 1973.

G.A.G. CORP., APPELLANT,
v.
AURITT



Appeals from order and judgment of Court of Common Pleas of Montgomery County, Nos. 72-0655 and 72-7529, in case of G.A.G. Corp., a Pennsylvania Corp. v. Herbert and Esther Auritt and R. Wheatcroft.

COUNSEL

Norman C. Henss, with him Horace A. Davenport, for appellant.

Alfred O. Breinig, Jr., with him Maurice M. Green, for appellees.

Wright, P. J., Watkins, Jacobs, Hoffman, Spaulding, Cercone, and Spaeth, JJ. Opinion by Jacobs, J. Concurring and Dissenting Opinion by Spaeth, J. Cercone, J., joins in this concurring and dissenting opinion.

Author: Jacobs

[ 226 Pa. Super. Page 120]

In this case a party in the position of a mortgagee appeals from an order of the lower court permitting another party to take possession of the mortgaged premises and from a summary judgment holding the mortgage lien discharged. The facts are as follows:

On September 25, 1964, Herbert and Esther Auritt mortgaged certain realty which they owned in Montgomery County, the mortgagees being Mr. Auritt's parents and the principal sum of the mortgage being $15,000. The mortgage was shortly thereafter recorded. Two judgments, apparently not related to the mortgage, were subsequently entered against Herbert and Esther Auritt. By agreements between the mortgagors, mortgagees, and judgment creditors, the aforesaid mortgage was subordinated to the two judgment liens. As reproduced in the printed record, the subordination provisions in the two agreements provide that the subordination would "have the same force and effect as though the . . . [judgments] had been entered of record prior to the time of the execution, delivery and recording of the [m]ortgage . . ."*fn1

[ 226 Pa. Super. Page 121]

On September 9, 1968, the premises in question were sold at a tax sale, which was subsequently held valid by the Commonwealth Court.*fn2 The sale resulted from the nonpayment of certain local property taxes in 1966 and 1967 and was conducted pursuant to the Real Estate Tax Sale Law, Act of July 7, 1947, P. L. 1368, and amendments thereto, 72 P.S. § 5860.101 et seq. Section 609 of that law provides that a sale of the type held "shall discharge the lien of every obligation, claim, lien or estate with which said property may have or shall become charged, or for which it may become liable, except no such sale shall discharge the lien of any ground rent or mortgage which shall have been recorded before such taxes became liens, and which is or shall be prior

[ 226 Pa. Super. Page 122]

    to all other liens, except other mortgages and ground rents." Id., art. VI, 72 P.S. § 5860.609.

Following the tax sale and a determination of its validity, two lawsuits developed. On January 19, 1972, the purchaser at the sale, R. Wheatcroft, sued Herbert and Esther Auritt in ejectment for possession of the property and for mesne profits. On July 6, 1972, an assignee of the mortgagees, G.A.G. Corporation, sued the mortgagors, Herbert and Esther Auritt, and the tax sale purchaser, R. Wheatcroft, in a mortgage foreclosure action; the assignee had previously asserted possession of the premises, following an alleged default in the mortgage, and entered into an agreement with the mortgagors in which they contracted to remain on the property on a rental-type basis.*fn3 Both suits are involved on appeal.

In the ejectment action, the lower court granted judgment as to possession in favor of R. Wheatcroft, the plaintiff and tax sale purchaser, on August 17, 1972, and judgment was entered shortly thereafter, on August 29, 1972. In response to a petition of the assignee over a month later, however, the court temporarily stayed any eviction of Herbert and Esther Auritt by the purchaser. In the mortgage foreclosure action, the court granted summary judgment in favor of the defendant and tax sale purchaser, R. Wheatcroft, and declared the mortgage lien discharged, on December 1, 1972. In the same order, the court removed the stay on eviction.

[ 226 Pa. Super. Page 123]

The opinion by Judge Lowe accompanying the order of December 1 reveals that the court's decision was based upon a holding that the lien of the assignee's mortgage, by virtue of its contractual subordination, had been divested by the tax sale in question. From the allowance of eviction on behalf of the tax sale purchaser, and from the summary judgment in favor of said purchaser, the assignee has appealed. We affirm.

Issues requiring determination on appeal are: whether the present appeals are within the jurisdiction of, and should be transferred to, the Commonwealth Court; in the ejectment action, whether the present appeal should be quashed and whether the lower court's ruling on the merits was correct; and, in the mortgage foreclosure action, whether the mortgage lien in question survived the tax sale and whether the appellant is entitled to rely upon its survival. Hereinafter R. Wheatcroft is referred to as appellee and G.A.G. Corporation is referred to as appellant.

Jurisdiction

Appellee contends that the instant appeals should be transferred to the Commonwealth Court, pursuant to § 503 of the Appellate Court Jurisdiction Act of 1970, Act of July 31, 1970, P. L. 673, art. V, 17 P.S. § 211.503 (1973-74 Supp.). That section provides for the intrastate transfer to the proper court of an appeal brought in a Pennsylvania court lacking jurisdiction.*fn4

It is argued that the present appeals are from cases in which the application and interpretation of an act of the General Assembly regulating the affairs of a political subdivision are drawn in question -- the act referred to being § 609 of the Real Estate Tax Sale Law,

[ 226 Pa. Super. Page 124]

Act of July 7, 1947, P. L. 1368, art. VI, 72 P.S. § 5860.609 (discharge and preservation of liens in applicable tax sale). The point is made that appeals from final common pleas court orders in such actions are within the exclusive jurisdiction of the Commonwealth Court, under the Appellate Court Jurisdiction Act of 1970, Act of July 31, 1970, P. L. 673, art. IV, § 402(4) (i), 17 P.S. § 211.402(4) (i) (1973-74 Supp.).*fn5

We are unable to agree, however, with the premise that a provision effecting the discharge and preservation of liens in a tax sale is one "regulating the affairs of political subdivisions."*fn6 "In construing a statute, or one of its sections, the terms are to be taken and understood according to their ordinary and usual significance, that is, what is generally understood as applied to the purpose or object to be accomplished by the statute." Lehigh & Wilkes-Barre Coal Co. v. Riley, 297 Pa. ...


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