Appeal from the District Court of the United States for the Western District of Pennsylvania; Nelson McVicar, Judge.
Before THOMPSON and BIGGS, Circuit Judges, and MARIS, District Judge.*fn*
This is an appeal by the plaintiff from a decree of the District Court for the Western District of Pennsylvania dismissing its bill praying for an injunction and for a decree of subrogation. The case arises out of the following situation.
Robert S. Byers, hereinafter referred to as the "decedent," died intestate June 26, 1914, the owner of a tract of 98 acres and 64 perches of land in Franklin Township, Fayette County, Pennsylvania. He left to survive him a widow, Caroline Byers, and twelve children, one of whom has since died unmarried and intestate.
By deed dated August 22, 1918, the defendant's children, together with his widow, conveyed the real estate to one of their number Thomas Benjamin Byers, hereinafter referred to as "Byers," for the consideration of $7,000, all of which was then paid except $2,333.34. This sum, which was one-third of the purchase price and represented the widow's dower interest in the property, was by the deed charged upon the land in the following language:
"Reserving, however, the widow's dower interest in the sum of $2333.34, which said sum is to remain and be a charge upon said land for and during the lifetime of the said Caroline Byers, widow of said Robert S. Byers, deceased, the interest thereon to be paid annually to the said widow for the during her natural life, and the principal thereof, to-wit, the sum of $2333.34, after death to be distributed to and among those legally entitled thereto."
In order to finance this conveyance Byers borrowed $4,200 from George Work and gave him a bond and mortgage in that amount dated September 30, 1918, covering the tract of land in question. In order to make this mortgage a first lien the widow and children of the decedent executed a paper which was delivered to Work, which postponed the lien of the dower charge to the lien of Work's mortgage. The decedent's widow, Caroline Byers, died October 24, 1925.
On March 13, 1927, Byers and his wife made an application to the Ohio-Pennsylvania Joint Stock Land Bank of Cleveland for a loan of $5,500. The bank granted the loan in the reduced amount of $4,500 and Byers and his wife gave it a judgment note and mortgage in that sum, the mortgage being secured upon the tract of land above mentioned and being properly recorded. The amount of the loan, less expenses, was paid by the bank to Byers, who in turn paid off the balance of $3,256 due on the Work mortgage. He agreed at the time to apply the balance, after payment of other expenses, on account of the dower charge. He also orally agreed to procure a quitclaim deed or postponement of the lien of the dower charge in favor of the bank as mortgagee.
About two years after procuring this loan from the bank Byers, having failed to procure a quitclaim deed from his father's heirs releasing the dower interest, at the instance of the bank attempted to procure a postponement of the dower charge in favor of the bank as mortgagee. He did procure the signature of six of the heirs to such a postponement paper. Four of them, however, signed under the express promise that the paper was not to be valid unless signed by all. The signatures of the remaining heirs could not be obtained. Subsequently Byers' attorney, at his request, mailed to the bank the paper thus signed by six of them. This was done without any authority from them.
In June, 1931, the Ohio-Pennsylvania Joint Stock Land Bank of Cleveland assigned the Byers' mortgage to the Union Joint Stock Land Bank of Detroit. Thereafter an action was commenced by scire facias in the Court of Common Pleas of Fayette County, Pennsylvania, by the heirs of the decedent against Byers to recover the amount of the dower charge and on February 8, 1932, judgment was entered in the action in favor of the heirs in the sum of $2,333.34 with interest. On February 15, 1932, the Union Joint Stock Land Bank of Detroit caused judgment to be entered against Byers and his wife on the judgment note accompanying the mortgage held by it.
On April 5, 1932, Byers filed a voluntary petition in bankruptcy in the court below and was duly adjudicated a bankrupt. In the bankruptcy proceedings the heirs, other than Byers himself, filed a claim on account of the judgment held by them on the dower charge. The trustee in bankruptcy of Byers with leave of court offered the real estate above mentioned at public sale "clear and divested and discharged of liens and encumbrances excepting that the land shall be sold subject to a dower charge of $2333.34 in favor of Caroline Byers, widow, now deceased, and to her legal heirs." At the sale the real estate was sold and thereafter conveyed by the trustee to the Union Joint Stock Land Bank of Detroit, the plaintiff below. The deed to the bank contained the following reservation:
"Also subject to a dower charge of $2,333.34 as reserved in a deed from Caroline Byers et al to Thomas Benjamin Byers, recorded in the Recorder's Office of Fayette County, Pennsylvania, in Deed Book Vol. 374, page 340."
On April 10, 1935, the heirs of the decedent, other than Byers, caused a writ of levari facias to sell the real estate to be issued on the judgment procured by them in 1932 upon the dower charge. Whereupon on May 29, 1935, the Union Joint Stock Land Bank of Detroit filed its bill in equity in the court below against the heirs of the decedent and the sheriff of Fayette County praying for an injunction to restrain the sale and that it be subrogated to the rights of George Work under his prior mortgage. A preliminary injunction was ...