Krause's Appeal

A lease of lands to A., his executors anil administrators, for the term of twelve months, and so from year to year as long as both parties please, with a covenant not to assign without the special license under seal of the lessor, and a proviso, that if the lessor should determine the lease, the lessee should be reimbursed all reasonable expenses in building, fencing, and improvement upon the premises, the value of the improvements to be ascertained in a certain way ; does not vest any title to the freehold ill the lessee, so as to subject his interest to the lien of a judgment.

This was an appeal from a decree of the Court of Common Pleas of Northampton County, in the matter of the accounts of the assignees of William Smick. The facts upon which the controversy arose, were as follows:— On the 30 th of April, 1803, Christian Benzien, (the secular head of the Moravian Society,) by his attorney, Jacob Van Vleck, executed an indenture of lease to John Jacob Smick, (father of William Smick,) of a certain messuage and lot of ground, situate in the town of Nazareth, in the county of Northampton, being the lot marked No. 27 in the plan of the said town, &c. “ To have and to hold the demised premises unto the said John Jacob Smick, his executors and administrators, for and during, and until the full end and term of twelve months, from the day of the date thereof, from thence next ensuing, and so from year to year as long as both the said parlies shall please: Yielding and paying unto the said Benzien, or to his attorney, heirs or assigns, the yearly, rent of 16 shillings and 6 pence currency, or two dollars and twenty eight cents, United States money.” This lease contained the following covenants: 1. That the lessee, his executors or administrators, should not nor would let, set, bargain, sell or assign, the said leased premises, or any part thereof, without the special license and consent of the lessor, his attorney, heirs or assigns, first had and obtained, under his or their hands and seals. 2. That if the said lessee, his executors or administrators, should without such special license or consent, let, bargain, sell or assign, the said leased premises, then and in such case the said lease, and every covenant therein contained on the lessor’s part, to become absolutely void and of none effect; and then it should be lawful for the lessor, his attorney, heirs or assigns, into and upon the premises, and all and singular the buildings and improvements thereon, with the appurtenances, wholly to re-enter, and the same to have again, repossess and enjoy, as of his former estate, and to oust and evict the lessee, his assignee or assigns. Provided that upon the re-entry of the lessor, his attorney, heirs or assigns, or when he or they should think fit to determine the lease, then, and in either of the said cases, the lessee, his executors or administrators, should be reimbursed' and repaid all his and their reasonable expenses and disbursements in building, fencing and improvement in and upon the said premises, that is to say, one-third part thereof from and immediately after the expiration or sooner determination of the lease, and the 'residue in three equal yearly payments, to commence and be reckoned from the day of the determination aforesaid. 3. In case of any controversy respecting the value of the improvements, the same should be referred to three judicious and indifferent men of the neighbourhood and town of Nazareth, whereof each party should choose one, and the two persons • so chosen should choose a third ; and the award of the three persons so chosen, or a majority of them, should be conclusive and binding on all the persons and parties concerned, so as such award should'be in writing, under the hands and seals of the referees or a majority of them, and ready to be delivered to the parties within the space of ten days next after the delivery of the account of disbursements, and so as the sum to be reimbursed should not exceed the sum of £185. On the 4th of October, 1804, John Jacob Smick died without having paid for the buildings which were erected on the premises at the time he came in possession, for which he was to pay £220. His widow retained the possession pf the premises, and assumed the payment of the said £220, by the consent and permission of the society; and by the year 1808, she had paid the said sum of £220 to the society. No lease or leases were ever entered into between the said Widow, Joanna Smick, and the'society, or its agent. Previously to the death of the said Joanna, which took place in 1832, William Smick, her son, erected by her permission, a shop, a barn, and sundry outhouses upon the premises. On the 5th of August, 1831, judgment was entered in the Court of Common Pleas of Northampton County, by John Krause v. William Smick, on a bond dated 30th of May, 1831, in the penalty of $1600, conditioned for the payment of $800 on the 30th of May, 1832, with interest. On the 10th of January, 1833, William Smick executed a mortgage to John S. Hainan, of “ all that messuage, tenement arid lot of ground, situated in the town of Nazareth, aforesaid; 'containing in front on the public road, seventy feet, and in depth one hundred and eighty feet; bounded by the Nazareth tavern, lands of Joseph Sweishoupt and others, and designated No. 27, in the plan of said town.” This mortgage was given to secure the payment of $1089 82, with interest from the date, and was recorded on the same day. On the 4th of February, 1833, William Smick executed an assignment to John G. Kummer, John S. Haman and C. D. Busse, in trust for the benefit of his creditors, transferring to said trustees the premises above mentioned, his stock in trade, tools, household furniture, notes, bonds, debts, goods and effects, and all other his property, real, personal or mixed, in trust to sell the property assigned with all convenient speed, and with the proceeds of such assigned property, to pay and discharge all liens upon the said property, according to their legal priority, and to divide and apportion the balance among all his other creditors, &c. The assignees gave the requisite security; and the assignment was duly recorded on the 4th of March following. On the 9th of February, 1833, an execution was issued on the judgment of Krause v. Smick, which was levied upon the messuage and lot of ground described in the lease to John Jacob Smick, and in the mortgage by William Smick to Haman. Joanna Smick left three children, who made a division of her property among themselves, after her death. The house and other buildings were taken by William Smick at a valuation, who executed the mortgage to Haman, (a son-in-law of Joanna Smick,) to secure payment of his proportion of the valuation, in right of his wife, and also of a debt due to him personally. On the 26th of August, 1834, the assignees of William Smick presented their accounts, which were referred to an auditor, who reported that there was a balance in their hands for distribution of $2883 44. John Krause excepted to the report, on the ground that a preference was not given to his judgment over the other debts of Smick. After argument, the Court ordered that the amount due upon the mortgage be paid to the mortgagee, and that the balance be distributed pro rata. The opinion of the' Court upon this question, which was delivered by Banks, President, was to the following effect. “ The confirmation of this report was objected to, because the judgment of John Krause was not given a preference over the other debts of the said William Smick. It has been contended that this judgment was a lien on the piece of land mentioned in the report. It has been argued as if William Smick, at the time the judgment was entered, had all the right that was granted to Jacob Smick, by virtue of the indenture of the 30th of April, 1803. The report does not show this to be exactly the fact. Inasmuch, however, as the counsel have so considered it, the court will assume the fact to be so. The question is, what interest was granted by said indenture— was it merely a leasehold estate, or was it more 1 By the terms of the indenture, Smick was to hold the premises for one year for a certain rent, and so on from year to year, as long as both parties should please. The tenant covenanted that he would not sell his lease without the consent of his landlord first obtained. The landlord reserved the right to enter at any time and determine the estate. The tenant might at any time quit the premises without any breach of covenant. If the landlord did enter and determine the estate, the improvements made upon the land were to be appraised and paid for by the landlord. These are the prominent provisions of the indenture. - Was this more than a leasehold estate I It is well settled in Pennsylvania, that a judgment is a lien on every kind of equitable interest in land. It binds every kind of right to the land, whether legal or equitable, which is vested in the debtor at the time of the judgment. The right must be to the land as a vested interest in it, such as a pre-emption to it, as in the case of Cnrkhuffv. Anderson, (5 Binney. 4,) or an equity, by contract, such as in the case of Ely v. Beaumont, (5 Serg. dp Rawle, 127.) Upon a critical examination of all the cases in Pennsylvania, it will be found that all inceptive titles in land, accompanied with an estate, property or real interest in the land itself, whether it be legal or equitable, have been considered as subject to the lien of a judgment. This we take to be the rule which has been long and well settled. By this indenture Smick had -no interest in the land. His estate was but leasehold, and could in no event, by its terms, become a fee. Therefore thé judgment was not a lien upon it, nor did the said judgment-creditor gain any preference by virtue of his levy on the land, under the circumstances of the case.” John Krause appealed from the decree of the Common Pleas to this Court, and assigned the following reasons: “ 1. That the court erred in treating the Moravian estates as mere leasehold interests, and not subject to the lien of a judgment. 2. In not decreeing to John Krause the amount of his judgment, in preference to other creditors. ' 3. In awarding to John S. Haman a preference for his mortgage debt.”