Mid-State Bank & Trust Co. v. Globalnet International, Inc.
557 Pa. 555, 1999 Pa. LEXIS 2181, 735 A.2d 79 (1999)
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Rule of Law:
A judgment lien created pursuant to a divorce court's equitable distribution order is subject to the same statutory requirements of recording and timely revival as any other judgment lien. A court's equitable powers cannot be used to grant priority to an unrevived, expired lien over a subsequent, properly recorded lien held by a creditor without notice.
Facts:
- In 1985, Pamela Blesh and David E. Johnson divorced.
- A 1986 Equitable Distribution Order required Johnson to pay Blesh for her interest in their business property, secured by a lien on that property.
- On January 27, 1987, Blesh recorded this lien as a judgment (the '1987 Judgment Lien'), which under Pennsylvania law would expire in five years if not revived.
- The 1987 Judgment Lien expired on January 27, 1992, as Blesh did not take action to revive it.
- By November 1993, Johnson had stopped making his court-ordered payments to Blesh.
- In 1994, Johnson obtained a loan from Mid-State Bank and Trust Co., using the same property as collateral.
- On August 24, 1994, Mid-State properly recorded its mortgage lien against the property.
- On September 14, 1994, after Mid-State had already recorded its mortgage, Blesh recorded the original 1986 Equitable Distribution Order.
Procedural Posture:
- Johnson defaulted on his loan from Mid-State Bank, which then confessed judgment against him on August 18, 1995, and scheduled a sheriff's sale.
- On September 27, 1995, Blesh filed to revive her 1987 Judgment Lien, which had expired in 1992.
- The trial court (Court of Common Pleas of Clinton County) initially granted Blesh's motion to stay the sale but later denied her petition to intervene and lifted the stay.
- Following the sheriff's sale, the trial court found Blesh's lien had priority and awarded her proceeds from the sale.
- Mid-State Bank, as appellant, appealed to the Superior Court.
- The Superior Court reversed the trial court, holding that Mid-State's properly recorded mortgage lien had priority over Blesh's expired and unrevived judgment lien.
- Blesh, as appellant, then appealed to the Supreme Court of Pennsylvania.
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Issue:
Does an expired and unrevived judgment lien, arising from a court's equitable distribution order, have priority over a subsequently recorded mortgage lien where the mortgagee had no constructive notice of the prior interest?
Opinions:
Majority - Newman, Justice.
No, an expired and unrevived judgment lien from an equitable distribution order does not have priority over a subsequent, properly recorded mortgage lien. A lien arising from a divorce is not exempt from the statutory rules of recording and revival that govern all other judgment liens. The doctrine of custodia legis, which protects property under the wardship of a court, does not apply for years after a divorce is final and property is distributed, as this would inequitably encumber the free alienation of property. Furthermore, Mid-State did not have constructive notice of Blesh's interest because her judgment lien had expired and was not visible as a valid lien in the judgment index. The mention of the divorce in the property deed was insufficient to provide notice under statute, as it lacked specific details like the court, date, and case number. The court concluded that equity follows the law (Aequitas sequitur legem), and it cannot override clear statutory mandates regarding lien priority to save a party who failed to comply with them.
Analysis:
This decision solidifies the principle that liens created in domestic relations cases are not a special class exempt from general property law statutes. It reinforces the integrity of the public recording system, ensuring that subsequent creditors and purchasers can rely on the information found in official indexes. The ruling serves as a crucial reminder to practitioners and parties in divorce proceedings that they must be diligent in complying with statutory requirements for recording and reviving liens to protect their security interests. By refusing to extend the custodia legis doctrine indefinitely post-divorce, the court prevents the long-term, uncertain encumbrance of real property.
