No. 84 Philadelphia, 1982, Appeal from Order of the Court of Common Pleas, Civil Division, of Lehigh County, No. 79-N-5404.
Charles W. Elliott and John P. Thomas, Allentown, submitted a brief on behalf of appellants.
William G. Malkames, Allentown, for appellee.
Brosky, Wieand and Cirillo, JJ.
[ 316 Pa. Super. Page 370]
On November 1, 1979, Bank of Pennsylvania caused a judgment to be entered against G/N Enterprises, Inc. for $193,779.83 pursuant to warrant of attorney contained in a bond accompanying a mortgage on real estate in the City of Allentown. G/N Enterprises, Inc., the original mortgagor, did not contest the judgment. However, Joseph Cagigas and Dennis J. Sweeney, who had been named in the complaint to confess judgment as terre-tenants of the mortgaged real estate,*fn1 filed a motion to open the judgment. Depositions were taken, the merits of the petition were argued, and the court denied relief. This appeal followed.
We conclude that appellants' request was properly denied and that the order of the trial court must be affirmed. In the first place, appellants were strangers to the judgment entered in personam against the obligor of the bond. Secondly, appellants failed to plead a meritorious defense to the judgment.
[ 316 Pa. Super. Page 371]
The holder of a bond and mortgage can proceed in rem or in personam to enforce his claim. 13 Std.Pa. Practice Revised 586. He may proceed by an action of mortgage foreclosure or by an action on the bond which the mortgage secures. Cooper v. Lucas, 152 Pa. Super. 655, 658, 33 A.2d 466, 467 (1943); Long v. Bowman, 118 Pa. Super. 367, 370, 179 A. 857, 858 (1935). In actions of mortgage foreclosure the procedure is governed primarily by the Rules of Civil Procedure. See: Pa.R.C.P. 1141-1150. An action of mortgage foreclosure is commenced by the filing of a complaint, Pa.R.C.P. 1143, which must name as defendants the mortgagor and also the real owner, or terre-tenant, of the property. Pa.R.C.P. 1144(a). A "real owner" or "terre-tenant" is one who claims an interest in the land subject to the lien of the mortgage. Commonwealth Trust Co. of Pittsburgh v. Harkins, 312 Pa. 402, 408-409, 167 A. 278, 280-281 (1933); U.S. Steel Homes Credit Corporation v. South Shore Development Corporation, 277 Pa. Super. 308, 312, 419 A.2d 785, 787-788 (1980). Thus, one who takes title from the mortgagor is a "real owner." Integrity Trust Co. v. St. Rita Building & Loan Assn., 112 Pa. Super. 343, 171 A. 283 (1934), aff'd, 317 Pa. 518, 177 A. 5 (1935); Provident Trust Co. v. Judicial Building & Loan Assn., 112 Pa. Super. 352, 171 A. 287 (1934). A subsequent owner must be named as a real owner in a mortgage foreclosure action, for the action is in rem and binds only the mortgaged property. Meco Realty Co. v. Burns, 414 Pa. 495, 200 A.2d 869 (1964); Signal Consumer Discount Co. v. Babuscio, 257 Pa. Super. 101, 106-107 & n. 6, 390 A.2d 266, 269 & n. 6 (1978); 13 Std.Pa. Practice Revised 627.
In a proceeding by confession of judgment on the bond, the object is to obtain judgment against the obligor of the bond. This is a proceeding in personam. The judgment, unlike a judgment in mortgage foreclosure, is general and is not restricted to the mortgaged premises. It constitutes a lien generally on real estate owned by the obligor at the time of the judgment. With respect to the mortgaged premises, the lien of the judgment relates back to the date
[ 316 Pa. Super. Page 372]
of the lien of the mortgage by which the bond is secured. First Federal Savings & Loan Association of Greene County v. Porter, 408 Pa. 236, 243, 183 A.2d 318, 323 (1962); West Arch Building & Loan Assn. v. Nichols, 303 Pa. 434, 439, 154 A. 703, 704 (1931); Cooper v. Lucas, supra; Moore v. Schell, 99 Pa. Super. 81, 85 (1930). "When the property which is subject to the mortgage [has been] transferred without payment of the mortgage, the property in the hands of the transferee continues to be security for the performance of the obligation, and for any default the mortgagee may seize and sell the property in the hands of the transferee." Mancine v. Concord-Liberty Savings and Loan Association, 299 Pa. Super. 260, 269, 445 A.2d 744, 748 (1982). Thus, a judgment entered on the bond creates a lien on the mortgaged premises even though such premises may have been conveyed before the judgment was entered and no matter who may be the owner at the time the judgment is entered. Keene Home v. Startzell, 235 Pa. 110, 83 A. 584 (1912).
The judgment confessed on the bond, being in personam against the obligor, does not bind strangers to the bond. It does not bind the person of one who has purchased the real estate subject to the mortgage. It follows that such a person has no right to attack the validity of the judgment entered in personam against the obligor. See: First Federal ...