J-A24038-15

                                     2015 PA Super 265


THERESE A. INFANTE,                           :    IN THE SUPERIOR COURT OF
                                              :          PENNSYLVANIA
                          Appellant           :
                                              :
                     v.                       :
                                              :
BANK OF AMERICA, N.A. SUCCESSOR               :
BY MERGER TO BAC HOME LOANS                   :
SERVICING, LP FKA COUNTRYWIDE                 :
HOME LOANS SERVICING, LP,                     :
                                              :
                          Appellee            :    No. 154 EDA 2015


           Appeal from the Judgment Entered February 5, 2015,
             in the Court of Common Pleas of Monroe County,
                 Civil Division at No(s): No. 2209 CV 2012

BEFORE: PANELLA, WECHT, and STRASSBURGER,* JJ.

OPINION BY STRASSBURGER, J.:                         FILED December 18, 2015

     In this action for declaratory judgment, Therese A. Infante (Therese)

appeals from the judgment entered on February 5, 2015, which, inter alia,

granted equitable relief to Appellee, Bank of America, N.A (BOA).        After

review, we affirm.

     The trial court made the following findings of fact.

  1. Matthew Infante (Matthew), a single man, purchased a lot
     comprised of 1.121 acres at 837 Molasses Valley Road on
     December 23, 2003 for $35,000.00.

  2. Matthew obtained a construction loan in the original principal
     amount of $157,500.00 from Countrywide Home Loans, Inc.
     (Countrywide). He gave a mortgage on January 16, 2004 to
     Countrywide to secure that loan. The mortgage was recorded on




* Retired Senior Judge assigned to the Superior Court.
J-A24038-15


     January 20, 2004 in the Recorder of Deeds Office (Recorder’s
     Office) in Record Book volume 2179, page 7715.

  3. Matthew and Therese Infante (Therese) were married on
     February 13, 2004.

  4. Matthew transferred title to the property to himself and Therese
     as tenants by the entireties on February 24, 2004. The deed is
     recorded in Record Book volume 2182, page 7201 in the
     Recorder’s Office.

  5. The lnfantes constructed two houses on the property and took
     possession on July 16, 2004.

  6. One of the two houses is a colonial-style home and the other is a
     Cape Cod style home. They are connected by a shared laundry
     room. The lnfantes occupied the colonial-style home, and their
     daughter’s family currently resides in the other.

  7. Matthew handled the lnfantes’ financial affairs.

  8. On January 7, 2008, Matthew obtained a loan from Countrywide
     in the amount of $200,200.00. The loan was secured by a
     mortgage (the [2008] Mortgage) that was recorded in the
     Recorder’s Office in Record Book volume 2325 page 4786. The
     loan proceeds were used in part to satisfy the existing mortgage
     with Countrywide, which had a balance at that time of
     $152,503.93. The loan was also used to pay off [Matthew’s]
     credit card debts with Chase ($9,309), WFF National Bank
     ($2,433), Chase ($8,941), and Sovereign Bank ($16,882). It
     also satisfied a loan secured by his Kia Sorrento automobile.

  9. Therese had no credit cards in her name in January, 2008.

  10. Although Countrywide intended to obtain a first mortgage on
     the Infante property to secure the new loan, Countrywide only
     required Matthew to sign the note and the [2008 M]ortgage.

  11. Service Link, a title agency, handled the title work and
     conducted the settlement of the loan.

  12. Matthew signed a Countrywide loan application in which he
     acknowledged and agreed that the “loan requested pursuant to



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     this application … will be secured by a mortgage or deed of trust
     on the property described in this application.”

  13. Countrywide issued settlement instructions to Service Link,
     requiring that “all persons on title” sign the mortgage and that
     the [2008 M]ortgage constitute a valid, “first position” mortgage
     against the property.

  14. Matthew completed and signed a “Borrower Agreement and
     Certification” at Countrywide’s behest at the time of closing. That
     document disclosed to Countrywide the following information:

           1. List all Property Owners who are applicants for
           this loan: Matthew V. Infante (handwritten)

           2. List all other      owners:    Therese   A.   Infante
           (handwritten)

           3. I/We hold the property as: Husband and [W]ife
           (handwritten checkmark)
                  ... Note: If holding title as a married person(s),
           civil union partner(s) or domestic partner(s) please
           indicate whether you have divorced, separated or
           have been widowed since the date you acquired the
           Property as indicated above. __ Yes x_ No (No was
           handchecked)

  15. The [2008 M]ortgage names Matthew V. Infante as “Borrower.”
     Next to his name on the Mortgage, “A SINGLE INDIVIDUAL” is
     crossed out, and “a married man” is handwritten in its place.

  16. The mortgagee of the [2008] Mortgage loan was Mortgage
     Electronic Registration Systems, Inc. (MERS) as nominee for
     Countrywide.

  17. MERS assigned the [2008 M]ortgage to … (BOA) on September
     13, 2011. The assignment is recorded in the Recorder’s Office at
     Record Book volume 2391, page 5316.

  18. Therese began assisting her husband in paying bills in 2009
     after he became ill. From that year until May 8, 2011, Therese
     paid the monthly mortgage payment to [(BOA)].




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J-A24038-15


   19. Therese was not aware that Matthew had refinanced the
      Mortgage in 2008.

   20. Matthew died on May 8, 2011.

   21. Therese was made aware of the [2008 Mortgage] in [Matthew’s]
      name alone by her attorney after her husband’s death.

   22. Therese stopped paying the [2008] Mortgage after May 9, 2011.

Trial Court Opinion, 9/24/2014, at 1-4 (citations omitted).

      On March 15, 2012, Therese filed a complaint for declaratory judgment

asserting that the 2008 Mortgage was not a valid lien against the property.

BOA   filed   an   answer   with   new   matter   and   counterclaims.   In   its

counterclaims, BOA sought relief based on reformation of mortgage,

declaratory relief, equitable subrogation, unjust enrichment, and equitable

lien. Therese filed a responsive pleading.

      The case proceeded to a non-jury trial on September 3, 2014.            On

September 24, 2014, the trial court issued its verdict, which found in favor

of Therese as to the reformation of mortgage, and in favor of BOA’s request

as to the issue of equitable subrogation, and placed an equitable lien against

the property in the amount of the 2004 Mortgage, $152,503.93, plus

interest from June 1, 2011.

      Following oral argument, Therese’s timely-filed post-trial motions were

denied on December 9, 2014. Judgment was entered on February 5, 2015.

This timely appeal followed. Both Therese and the trial court complied with

Pa.R.A.P. 1925.



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J-A24038-15


      On appeal, Therese argues that the trial court erred in granting BOA’s

request for equitable subrogation. Specifically, she contends that, in

reaching its result, the trial court (1) ignored more recent precedential cases

issued by this Court and (2) improperly distinguished prior Supreme Court

holdings. Therese’s Brief at 6.

      Our standard and scope of review for these questions are well-

established.

            Our review in a non-jury case such as this is limited to a
      determination of whether the findings of the trial court are
      supported by competent evidence and whether the trial court
      committed error in the application of law. Findings of the trial
      judge in a non-jury case must be given the same weight and
      effect on appeal as a verdict of a jury and will not be disturbed
      on appeal absent error of law or abuse of discretion. When this
      Court reviews the findings of the trial judge, the evidence is
      viewed in the light most favorable to the victorious party below
      and all evidence and proper inferences favorable to that party
      must be taken as true and all unfavorable inferences rejected.

            The [trial] court’s findings are especially binding on appeal,
      where they are based upon the credibility of the witnesses,
      unless it appears that the court abused its discretion or that the
      court’s findings lack evidentiary support or that the court
      capriciously disbelieved the evidence. Conclusions of law,
      however, are not binding on an appellate court, whose duty it is
      to determine whether there was a proper application of law to
      fact by the lower court. With regard to such matters, our scope
      of review is plenary as it is with any review of questions of law.

Shaffer v. O’Toole, 964 A.2d 420, 422-23 (Pa. Super. 2009) (internal

quotation marks and citations omitted).




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J-A24038-15


      In both of her issues, Therese contends that the trial court erred in

finding that BOA was entitled to equitable subrogation. Therese’s Brief at 9-

18. This Court has explained as follows.

            While the priority of a lien is generally determined by the
      date it was recorded, the doctrine of equitable subrogation is an
      exception to this “first in time” rule. …[E]quitable subrogation is
      an equitable remedy designed to avoid a person’s receiving an
      unearned windfall at the expense of another. Put more simply,
      equitable subrogation allows a person who pays off an
      encumbrance to assume the same priority position as the holder
      of the previous encumbrance.

             [Pennsylvania has] recognized the doctrine of equitable
      subrogation. Like many other jurisdictions, we require four
      criteria to be met for equitable subrogation to apply. These four
      requirements are:

            (1) the claimant paid the creditor to protect his own
            interests;

            (2) the claimant did not act as a volunteer;

            (3) the claimant was not primarily liable for the debt;
            and

            (4) allowing subrogation will not cause injustice to
            the rights of others.

1313466 Ontario, Inc. v. Carr, 954 A.2d 1, 4 (Pa. Super. 2008) (citations

and quotations omitted).

      With respect to the second prong of the test, this Court has noted that

“[o]ne who is under no legal obligation or liability to pay a debt and who has

no interest in, or relation to, the property is a stranger or volunteer with

reference to the subject of subrogation.” First Commonwealth Bank v.

Heller, 863 A.2d 1153, 1159 (Pa. Super. 2004) (citation omitted).


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J-A24038-15


      Citing this Court’s decisions in Carr, Heller, and Home Owners’

Loan Corp. v. Crouse, 30 A.2d 330, 332 (Pa. Super. 1943), Therese

contends that BOA failed to satisfy the aforementioned requirements and, as

such, the trial court erred in granting equitable subrogation.

In Crouse,

      this Court reviewed the claim of a creditor to whom the
      homeowners had applied for a loan to pay various earlier liens
      on the property. The creditor extended the loan, the proceeds of
      which were duly applied to those liens. The creditor was
      unaware, however, of an intervening judgment which had been
      entered against the homeowners, even though the judgment
      appeared in public records. The creditor requested that the
      intervening lien holder subordinate its lien to that of the creditor.
      The intervening lien holder refused. The creditor filed a
      complaint alleging the intervening lien holder was unjustly
      enriched at its own expense and requested that the creditor be
      subrogated to the priorities of those lien holders whose liens the
      creditor had paid.

Heller, 863 A.2d at 1158-1159.

      This Court denied a claim for equitable subrogation on the basis that

“Home Owners’ Loan Corporation was a stranger to the homeowner and that

it was under no legal obligation or compulsion to pay the homeowner’s

debts. The corporation was an entirely voluntary agent with no interest in

the property and at liberty to make its own bargain-agree [sic] or refuse to

make its loan as it saw fit.” Crouse, 30 A.2d at 332. Moreover, the Court

determined that Home Owners’ negligence prevented it from discovering the

intervening judgment. Id.




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J-A24038-15


      In Heller, there existed three mortgage liens against the property at

the time First Commonwealth Bank extended a mortgage loan to Heller, and

at the time of closing. First Commonwealth Bank paid off the first two liens,

but, because its title company failed to discover the third mortgage held by

Central bank, it did not pay off the third.     The trial court denied First

Commonwealth Bank’s request for equitable relief on the basis that the Bank

“had not demonstrated the existence of the prerequisites necessary for

invoking the remedy of equitable subrogation.” Heller, 863 A.2d at 1155-

56. On appeal, this Court recognized Crouse as binding precedent and

affirmed the trial court’s determination that First Commonwealth’s “‘problem’

… was the result of its own negligence in failing to discover [Central] Bank’s

mortgage, to which [First Commonwealth’s] mortgage could only be

secondary.” Id. at 1155.

      Most recently, in Carr, we held that U.S. Bank was not entitled to

equitable subrogation. In that case, as in Crouse and Heller, the title

search had failed to reveal another mortgage lien on the property. Applying

Crouse, we held that U.S. Bank’s negligence in failing to discover the

mortgage held by 1313466 Ontario, Inc. barred relief.

      Therese argues that Crouse, Heller, and Carr require this Court to

grant her relief.   In contrast, BOA argues that two Supreme Court cases,

Haverford Loan & Bldg. Ass’n of Philadelphia v. Dougherty, 37 A. 179




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J-A24038-15


(Pa. 1897) and Gladowski v. Fefczak, 31 A.2d 718 (Pa. 1943), control.

The trial court summarized those holdings as follows.

            In Haverford, the borrower, Thomas Dougherty, believed
     that he held title to a property under his late wife’s will. He
     obtained a mortgage for $2,200.00 from Haverford []. The loan
     was to be secured by a first lien position against the property. At
     settlement, the loan proceeds were used in part to satisfy the
     existing first mortgage held by the Fire Association. After closing,
     Haverford learned that Dougherty was only a one-fifth tenant in
     common. The will had devised the property to Dougherty and his
     four children. Haverford sought equitable subrogation to the first
     mortgage rights of the Fire Association, whose lien it had
     satisfied. The [C]ourt allowed the subrogation, holding that:

           Where money has been loaned upon a defective
           mortgage for the purpose of discharging a prior valid
           incumbrance, {sic} and has actually been so applied,
           the mortgagee may be subrogated to the rights of
           the prior incumbrancer whom he has thus satisfied,
           there being no intervening incumbrances. Sheld.
           Subr. § 8.

     [Haverford, 37 A. at 181].

           A later decision of the Pennsylvania Supreme Court
     allowed equitable subrogation under similar circumstances. In
     Gladowski, Polish Falcons, Nest No. 290 of Natrona, an
     unincorporated, subordinate lodge of the Polish Falcons of
     America, was the owner of a valuable clubhouse in Natrona that
     had suffered flood damage. The property was subject to a
     $3,000.00 mortgage. Nest No. 290 conveyed the property to the
     American Citizen Club, which then obtained a $6,000.00
     mortgage. The proceeds from this mortgage paid off the $3,000
     mortgage and were otherwise used to make repairs to the
     property. After the mortgage funds were disbursed, the deed
     from the Polish Falcons to the American Citizen Club was
     declared invalid because the local chapter did not have the
     necessary approval of the national organization to sell the
     property.

          The new mortgagee did not have a valid first mortgage,
     because the deed to the American Citizen Club had been


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J-A24038-15


     declared by a court to be invalid. The mortgagee brought an
     action seeking to impose its mortgage as an equitable lien. Our
     supreme court allowed the lien, citing the Restatement of
     Restitution:

           Where a person lends money to another who
           contracts to use the money for the discharge of a
           lien upon property which the other represents as
           belonging to him and where the money so lent is
           used for the discharge of such lien, the lender is
           entitled to have the lien reinstated for his benefit if,
           unknown to him, the property was not owned by the
           other.

     [Gladowski, 31 A.2d at 720] citing Restatement of the Law of
     Restitution, § 43(c).

                                       ***

          [In finding that Haverford was entitled to equitable
     subrogation, t]he [Supreme Court] stated []:

                  In the present case the appellant was not a
           volunteer, but paid the first mortgage on the express
           direction of the debtor, and with the intention of both
           parties that the appellant should be secured by the
           land. A person who has lent money to a debtor for
           the purpose of discharging a debt may be
           subrogated by the debtor to the creditor’s rights;
           and if the party who has agreed to advance the
           money for the purpose employs it himself in paying
           the debt and discharging the incumbrance on land
           given for its security, he is not to be regarded as a
           volunteer. He is not, after such an agreement with
           the debtor, a stranger in relation to the debt, but
           may, in equity, be entitled to the benefit of the
           security which he has satisfied with the expectation
           of receiving a new mortgage or lien upon the land for
           the money paid. When the holder of a junior
           mortgage discharges the lien of a senior
           incumbrance upon the property, he thereby becomes
           entitled to all the benefits of the security represented
           by the lien so discharged. When on the foreclosure of
           a second mortgage it appears that the loan by the


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J-A24038-15


           second mortgagee was made on an agreement with
           the mortgagor that it should be applied to extinguish
           the first mortgage, and that part of the loan was
           actually so applied, the second mortgagee is entitled
           to a decree subrogating him to the rights of the first
           mortgagee on payment of the balance due on the
           mortgage. Where money has been loaned upon a
           defective mortgage for the purpose of discharging a
           prior valid incumbrance, and has actually been so
           applied, the mortgagee may be subrogated to the
           rights of the prior incumbrancer whom he has thus
           satisfied, there being no intervening incumbrances.

     [Haverford, 37 A. at 181 (citations omitted)].

           Almost-fifty years later, in the Gladowski case the
     Supreme Court again allowed equitable subrogation where a
     mortgage was obtained on a defective title. Here the court cited
     the Restatement of Restitution in support of its ruling:

                 And in § 162 it is stated: ‘Where property of
           one person is used in discharging an obligation owed
           by another or a lien upon the property of another,
           under such circumstances that the other would be
           unjustly enriched by the retention of the benefit thus
           conferred, the former is entitled to be subrogated to
           the position of the obligee or lienholder.’ That the
           law in most jurisdictions is in accord with these
           statements is shown by the long list of authorities in
           support of them cited in Ingram v. Jones, 10 Cir.,
           47 F.2d 135, 140. That they have been accepted and
           followed by the appellate courts of our own State is
           established by cases in which they have been
           applied: [Haverford, supra.]; Smith v. Smith, Jr.,
           101 Pa. Super. 545 [(1930)]; see also General
           Casmir Pulaski Building & Loan Association v.
           Provident Trust Co., [12 A.2d 336 (Pa. 1940)].

     [Gladowski, 31 A.2d at 720].

Trial Court Opinion, 9/24/2014, at 6-8, 10-11 (footnote omitted).




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      We agree with the trial court and BOA that the instant case is in line

with the factual scenarios addressed by our Supreme Court in Haverford

and Gladowski, and that the three Superior Court cases relied upon by

Therese are readily distinguishable. As the trial court points out, this Court’s

decisions in Crouse, Heller, and Carr deny relief to mortgagees that pay off

an existing mortgage, but mistakenly did not obtain a first lien position due

to the presence of an undiscovered intervening creditor.       Such is not the

case herein. Rather, BOA is seeking reimbursement for the amount of the

2004 mortgage its successor paid off in 2008, and to which Therese was

subject at the time she took title in 2004. We agree with the trial court that,

under Haverford and Gladowski, BOA has a valid claim for equitable

subrogation because Countrywide did not act as a “volunteer,” and because

Therese would be unjustly enriched if she were permitted to retain the

property without bearing responsibility for the amount of the 2004

mortgage. Moreover, based on the above, we hold that BOA is entitled to an

equitable lien against the property. See General Casmir Pulaski Bldg. &

Loan Ass'n v. Provident Trust Co. of Philadelphia, 12 A.2d 336, 338

(Pa. 1940) (“Under the law of unjust enrichment, the [purchaser] should be

required to reimburse [the lender] for the money lent to buy the property as

far as equitably proper to do so.”)

      Judgment affirmed. Jurisdiction relinquished.




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J-A24038-15

Judgment Entered.




Joseph D. Seletyn, Esq.
Prothonotary

Date: 12/18/2015




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