Robert L. Stuart, for use Plaintiff.
Edwin K. Kline, for Defendant.

The record in the

Groman, P. J., April 2, 1923. above entitled case discloses the following state of facts: February 17, 1922, Praecipe for Sci Fa. Sur Recognizance filed, returnable second Monday of March, 1922, averring the execution, on October 7, 1921, of a recognizance by the Star Stores Inc., a New York Corporation, as principal, and Gabriel Karol, as surety, in the sum of $10,000, to dissolve the foreign attachment issued out of this court by the Finance Trust against the Star Stores, Inc., as of No. 181 October Term, 1921. The condition of the bond is as follows:

"Whereas, the Finance Trust has issued out of the Court of Common Pleas in and for the County of Lehigh a foreign attachment against the said Star Stores, Inc., as of No. 181 October Term, 1921, therefore the above principal and surety are bound conditioned for the payment of the debt or damages, interest and cost that may be recovered by the said Finance Trust in the aforesaid action of foreign attachment; and should the Star Stores, Inc., successfully defend the aforesaid foreign attachment, then in such case the same to be null and void, otherwise to be and remain in full force and effect."

Plaintiff herein further avers that on December 13, 1921, judgment was entered against the Star Stores, Inc. in the sum of $5072.52, and costs amounting to $30.69 which judgment remains unsatisfied. February 20, 1922, personal service of the Sci. Fa made on defendant by the sheriff. March 13, 1922, answer by defendant filed, wherein paragraph one admits the execution of the bond; paragraphs, 2, 3, 4, 5, 6 and 7 set forth defenses available in the original proceeding, now sought to be introduced as defenses in this suit; paragraphs 8, 9, 10, 11 and 12 allege bankruptcy of defendant corporation, and so adjudged prior to December 13, 1921, the date of the entry of the judgment against the Star Stores, Inc., and that judgment entered was null and void. Paragraph 13 claims set off as against the judgment in No. 181 October Term, 1921. Paragraph 14 alleges facts attacking the validity of the bonds entered for the dissolution of the attachment. Paragraph 15 attacks the valid

ity of the judgment entered in No. 181 October Term, 1921 for want of an affidavit of defense. May 29, 1922, rule issued to show cause why judgment should not be entered for want of a sufficient affidavit of defense.

Plaintiff seeks to recover on a bond given to dissolve the foreign attachmant instituted in this court by the Finance Trust versus Star Stores, Inc., to No. 181 October Term, 1921. The answer filed admits the execution of the bond.

Are the answers to the Sci. Fa. Sur Recognizance set forth in paragraphs 2, 3, 4, 5, 6 and 7 sufficient to prevent the entry of judgment? The defendant, in the answer, alleges matters of defenses in the foreign attachment, but it does not necessarily follow that such defenses are available in a suit on the bond given to dissolve the attachment. Defendant does not deny the execution of the bond, that no such record exists, nor alleges payment, or that the bond was executed by fraud, accident or mistake. In fact, the answer fails to disclose any of the foregoing defenses. The allegations set forth in the foregoing paragraphs of the answer are practically a collateral attack of the judgment entered by the Finance Trust versus Star Stores, Inc. That this cannot be done is held in Banning v. Roy, 47 Oregon, 119, 82 Pac. Rep. 708. The courts of New York hold that the validity of the records, among which are recognizances of bail, cannot, in pleading, be impeached or affected by any supposed defect or illegality in the transaction in which they are founded, nor can there be any allegation against the validity of the record: Green & Green v. Ovington & Bleecker, 16 Johns, (N. Y.) 55, (1819). To the same effect is Cardesa v. Humes, 5 S. & R. 65 (Pa. 1819); Hamres v. Bonnell, 23 N. J. L. 159, holds that a defense not answering the condition of the bond is not a proper defense, and that the discharge of the obligation can only be effective by payment or tender thereof; to the same effect are the following Pennsylvania cases: Wurtz v. Musselman, 5 Watts, 95 (1836); Jones v. Raiguel, 97 Pa. 437 (1881), decides that the improper taking of a judgment in a foreign attachment is no defense in a bond given to dissolve the attachment; an answer not denying the execution of the recognizance, or alleging fraud, accident or mistake therein, is insufficient, has been held in Cambria Auto

Co. v. Frischkorn, 54 Pa. Sup. Ct., 268 (1913).

The court, therefore, reaches the conclusion that the part of the answer herein above referred to, is insufficient unless the defenses alleged in paragraphs 8, 9, 10, 11 and 12 of the answer, setting forth the bankruptcy of the corporation, are sufficient to prevent the entry of judgment against the defendant. The defendant executed his bond as surety, the principal later on was declared a bankrupt. Can the defendant, the surety, take advantage of the bankruptcy of his principal as a defense in this proceeding? We think not. The bankrupt act of 1898, sub-section A of Section 16 specifically declares The Famility of a person who is a co-debtor with or guarantor, or in any manner surety for a bankrupt, shall not be altered by the discharge of such bankrupt." Wind Engine & P. Co. v. Iron Co., 227 Pa. 262, it seems to us controls several of the questions herein involved; in the opinion by Justice Moschzisker (now Chief Jusce), citing Hill v. Harding, 130 U. S. 699, where Mr. Jace Gray says: "Such attachments being recognized as valid by the bankrupt act a discharge in bankruptcy does not prevent the attaching creditors from taking judgment against the debtor in such limited form as may enable them to reap the benefit of their attachment. When the attachment remains in force, the creditors, notwithstanding the discharge, may have judgment against the bankrupt, to be levied only upon the property attached. When the attachment has been dissolved, in accordance with the statutes of the state, by the defendant's entering into a bond or recognizance, with sureties, conditioned to pay to the plaintiffs, within a certain number of days, after any judgment rendered against him on a final trial, the amount of that judgment the bond or recognizance takes the place of the attachment as a security for the debt of the attaching creditors; they cannot dispute the election, given to the debtor by statute, of substituting the new security for the old one; and the giving of the bond or recognizance, by dissolving the attachment, increases the estate to be distributed in bankruptcy. The judgment is not against the person or property of the bankrupt, and has no other effect than to enable the plaintiff to charge the sureties, in accordance with the express terms of their contract, and

*

with the spirit of that provision of the bankrupt act which declares that no discharge shall release, discharge or affect any person liable for the same debt for or with the bankrupt, either as partner, joint contractor, indorser, surety or otherwise." The Supreme Court of Pennsylvania then decides the question raised in this case in the following words: "The appellee has secured its discharge in bankruptcy, and its personal liability is gone; but that does not constitute any reason why a judgment against it should not be entered for the special purpose of fixing and enforcing the liability of the surety. The surety took the risk of the appellee's insolvency; a risk that the appellant was supposedly protected against by the very bond in question; so it would be most unfair to allow the substitution of the bond for the goods attached, and then to deny the formal relief necessary in order to enforce its terms against the surety. There is nothing in our law, or practice, or in the announced public policy of the state, to require such a ruling.

The case of Wind Engine & P. Co. v. Iron Co. was again followed by the U. S. Court in the case of, In re: J. L. Philips & Co., 224 Federal Rep. 628.

Paragraph 13 alleges payment of the sum of $3500.00 on account of the claim on which the judgment in the foreign attachment was entered. Such payment would have been a credit on the original claim in the foreign attachment, and being paid before judgment was therein entered, and no credit given, the court, in its discretion,, could have made a rule to open the judgment and allow the defendant to make a defense, absolute; but as to a defense in this proceeding, we are of the opinion that the defense raised falls within the rule invoked in disposing of paragraphs two to eight.

Paragraph 14 sets forth facts which might suggest the changing of bonds, but as the defendant herein, by the execution of his bond and the filing of it in the foreign attachment was a party to such changing, he is hardly in a position to take advantage of his own act in this proceeding.

Now, April 2, 1923, for reasons hereinbefore set forth, rule for judgment for want of a sufficient affidavit of defense made absolute. Judgment to be entered for the sum of $5072.52, with interest at the rate of six per

cent. from December 13, 1921, amounting to $396.50 added thereto, or a total sum of $5489.02, and costs of suit.

BUTTERWECK, TO USE, v. DIEFENDERFER. Mortgage-Standing of Assignee-Set-off by MortgagorDeed-Act of April 1, 1909, P. L. 916, Sec. 3.

An assignee of a mortgage takes it subject to the equities between the mortgagor and mortgagee.

In the absence of a declaration of no set-off, it is the duty of an assignee of a mortgage to make inquiry of the mortgagor as to its condition in the way of payment or equitable set-off, and, if he does not do so, he must take the risk of such neglect.

of

A purchaser gave a mortgage to the seller in part payment purchase money for premises. The mortgage was subsequently twice assigned, the interest thereon and part of the principal, however, being paid to the original mortgagee by the purchaser, who had no knowledge of the assignments. The original mortgagor paid part of this interest and principal to the assignee. The purchaser had a deed of "grant and convey," within the provisions of the Act of April 1, 1909, P. L. 916, Sec. 3. Later there appeared a mortgage, theretofore undisclosed, given by the seller.

Held, That the vendee had a right of set-off against said purchase money mortgage, even though in the hands of an assignee.

In the Court of Common Pleas of Lehigh County. No. 269 January Term, 1921. Harry A. Butterweck, to the use of Monroe Knauss, and now to the use of Emma Wilson, v. Ida Diefenderfer and Edwin B. Diefenderfer. Motions for New Trial and Judgment, n. o. v.

(See 9 Lehigh County L. J., 218.)

Fred E. Lewis, for Use Plaintiff
Butz & Rupp, for Defendants.

Groman, P. J. January 15, 1923. The record herein discloses the following facts: Harry A. Butterweck was the owner of a messuage, tenement and lot of ground designated as No. 1137% Liberty Street, Allentown, Pennsylvania, and on June 9th, 1916, executed and delivered a mortgage and accompanying bond to David S. Burke to secure the payment of the sum of $2500, with interest at the rate of six per cent. The mortgage was entered of record in the Office for the Recording of Deeds