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FIRST PENNSYLVANIA BANK v. LANCASTER COUNTY TAX CLAIM BUREAU AND DELLA BECKER (12/30/83)

decided: December 30, 1983.

FIRST PENNSYLVANIA BANK, N.A., APPELLANT,
v.
LANCASTER COUNTY TAX CLAIM BUREAU AND DELLA BECKER, APPELLEES



No. 461 January Term, 1979, Appeal from the Order of July 18, 1979 of the Commonwealth Court Affirming the Final Decree of the Court of Common Pleas of Lancaster County, 44 Pa. Commonwealth Ct. 301, Roberts, C.j., and Nix, Larsen, Flaherty, McDermott, Hutchinson and Zappala, JJ. Zappala, J., files a concurring opinion in which Nix, Larsen and McDermott, JJ., join. Roberts, C.j., concurs in the result.

Author: Hutchinson

[ 504 Pa. Page 180]

OPINION ANNOUNCING THE JUDGMENT OF THE COURT

On May 19, 1982 our Court filed an order dismissing this appeal by allowance as improvidently granted. Appellant then appealed to the United States Supreme Court, U.S. , 103 S.Ct. 3528, 77 L.Ed.2d 1381 (1983), which vacated our order, 498 Pa. 122, 445 A.2d 97, and remanded the

[ 504 Pa. Page 181]

    record to us for further consideration in light of its subsequent decision in Mennonite Board of Missions v. Adams, 462 U.S. 791, 103 S.Ct. 2706, 77 L.Ed.2d 180 (1983).

The case was and is before us on appeal from an order of Commonwealth Court, 44 Pa. Commonwealth Ct. 301, 404 A.2d 709 which affirmed a final decree of the Court of Common Pleas of Lancaster County. An en banc Common Pleas Court affirmed an adjudication and decree nisi entered by a Common Pleas judge sitting in equity. The Chancellor had dismissed a complaint in which appellant-mortgagee sought to set aside a tax sale made pursuant to the Real Estate Tax Sale Law, to cancel the Tax Claim Bureau deed to appellee, the purchaser at the tax sale, and to reinstate and confirm a first mortgage which was discharged by the tax sale.

The first question presented on remand is whether the notice provision contained in Pennsylvania's Real Estate Tax Sale Law, Act of July 7, 1947, P.L. 1368, No. 142, as amended, 72 P.S. § 5860.101 et seq., which does not require either personal service or notice by mail to a record mortgagee of an impending tax sale, violates the due process rights conferred on such a mortgagee under the Pennsylvania and United States Constitutions. The notice provision in the Pennsylvania statute is plainly unconstitutional under the standard set forth by the United States Supreme Court in Mennonite Board. The second question, first raised by appellee in this Court on her application to quash this appeal, involves an interpretation of our Deficiency Judgment Act. Specifically we must decide whether a mortgagee who holds mortgages on several separate parcels in different counties as security for a single loan triggers the provisions of that Act by its purchase of one of the parcels at the execution sale following his first successful foreclosure action. We hold that the Deficiency Judgment Act does not apply to the facts of this case.*fn1 Therefore, we

[ 504 Pa. Page 182]

    reverse Commonwealth Court and remand the record to Common Pleas.

In 1972 Bernard DiSabatino purchased a parcel of unimproved land in Millersville Borough, Lancaster County. In 1973 appellant and DiSabatino Construction Company entered into an agreement in which appellant Bank agreed to lend the Company $850,000.00 to repay existing obligations and for working capital. In addition, the agreement provided that the appellant, in its discretion, could advance an additional $250,000.00 to the borrower. At the same time, Bernard DiSabatino executed and delivered to the appellant a promissory note in the amount of $1,100,000.00 secured by five mortgages. The mortgages were on properties owned by Bernard DiSabatino located in four Pennsylvania counties and included the Lancaster County real estate. The amount of each mortgage was $1,100,000.00. The mortgage on the Lancaster County property, a first mortgage, was given by John DiSabatino and Bernard DiSabatino and was recorded on April 25, 1973. That mortgage has been in default since April 26, 1974.

At the time appellant recorded its mortgage, Bernard DiSabatino owed 1972 real estate taxes on the property, which had become a lien by their return to the county. Accordingly, appellant's mortgage lien on the property was junior to the tax lien and therefore dischargeable by tax sale. See 72 P.S. § 5860.609.*fn2

[ 504 Pa. Page 183]

DiSabatino owned two properties in Lancaster County. He was sole shareholder of Lynnebrook Apartments, Inc. which owned a tract of land contiguous to the property subject to the mortgage held by the appellant. Frank O'Donnell, Esquire, represented both DiSabatino and St. Paul Title Insurance Company at the closing of the mortgage executed in connection with appellant's loan to DiSabatino. Before the mortgage settlement, DiSabatino personally gave O'Donnell bills for real estate taxes owed on the Lynnebrook Apartments tract. O'Donnell paid these bills under the mistaken belief that he was paying back taxes on the adjoining property which is the subject of the instant lawsuit. The receipts for these tax payments showed the map number for Lynnebrook Apartments, Inc., not for the contiguous parcel. O'Donnell never inquired as to the title designation referred to on the receipts. Moreover, in all his correspondence with the Lancaster County Tax Claim Bureau, O'Donnell merely stated that the enclosed tax payments were made on behalf of Bernard DiSabatino without identifying the property by description and map number.

As a result of the continuing tax delinquency with respect to the property on which appellant held a mortgage, the Tax Claim Bureau scheduled a sale of the property for October 19, 1974. Published notice of the impending sale appeared in two Lancaster newspapers, once a week for three consecutive weeks. In addition, notice ...


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