Case Name: PROVIDENT CREDIT CORPORATION, a Corporation, v. Charles Thomas YOUNG, Jr., Joan Young and Ethel B. Davis. Appeal of Ethel B. DAVIS
Court: Superior Court of Pennsylvania
Jurisdiction: Pennsylvania
Decision Date: 1982-05-14
Citations: 300 Pa. Super. 117
Docket Number: No. 1679
Parties: PROVIDENT CREDIT CORPORATION, a Corporation, v. Charles Thomas YOUNG, Jr., Joan Young and Ethel B. Davis. Appeal of Ethel B. DAVIS.
Judges: Before CERCONE, President Judge, and PRICE, SPAETH, HESTER, CAVANAUGH, WICKERSHAM and BROSKY, JJ.
Reporter: Pennsylvania Superior Court Reports
Volume: 300
Pages: 117–142

Head Matter:
446 A.2d 257
PROVIDENT CREDIT CORPORATION, a Corporation, v. Charles Thomas YOUNG, Jr., Joan Young and Ethel B. Davis. Appeal of Ethel B. DAVIS.
Superior Court of Pennsylvania.
Argued June 13, 1980.
Filed May 14, 1982.
Petition for Allowance of Appeal Denied Sept. 16, 1982.
Theodore Clattenburg, Jr., Philadelphia, for appellant.
Alan B. Liss, Philadelphia, for appellee.
Before CERCONE, President Judge, and PRICE, SPAETH, HESTER, CAVANAUGH, WICKERSHAM and BROSKY, JJ.

Opinion:
SPAETH, Judge:
This appeal is from an order denying a petition to open or strike a default judgment. Appellant does not argue that the lower court erred in refusing to strike the judgment, but she does argue that the court abused its discretion in refusing to open the judgment. We agree and therefore reverse.
-1-
In no sort of case is closer attention to the facts required than in a case arising on petition to open judgment. Here the facts may be found in appellant's deposition, which was the only testimony, the petition and answer, and the docket entries.
Appellant is an unemployed widow with a 10th grade education. On December 20, 1971, at her brother's request, she went to the Peter James Buick Agency in Ardmore so that she might serve as co-signer for an automobile her brother was interested in buying. Appellant drove separate ly in her own car because she was on her way to Washington to visit another brother, who was ill. She was in a hurry and did not have much time to spend at the agency. While her brother was out on the lot looking at automobiles, appellant was asked to sign some papers in blank. She was told that if her brother did not buy an automobile, the papers would be torn up. She understood that being a co-signer meant that if her brother did buy an automobile but then could not be found, she would be asked to find him, and that her availability to find her brother was why the person she was talking to was interested in the fact that she owned a house and did not move about the city.
Appellant signed the papers, in blank, and continued on her trip to Washington. She was not given copies of the papers she had signed, nor were they sent to her later. The papers included a motor vehicle installment sale contract, which named Peter James Buick as the seller and provided for assignment to appellee, and a judgment note and federal truth-in-lending disclosure statement, both of which named appellee as the lender, and neither of which gave any indication of having been executed in connection with the installment sale of an automobile.
Appellant's brother fell behind in his payments almost immediately. On August 1, 1972, he and his wife were served with a complaint in assumpsit, and on August 25, a default judgment was taken against them. The complaint also named appellant as a party defendant, and on September 7, it was served on appellant by being left with an adult person—a baby-sitter—who was in charge of her residence, and on October 3, 26 days later, a default judgment was taken against her. The complaint made no reference to the fact that the judgment note that appellant had signed had been given in connection with the installment sale of an automobile. Damages were assessed at $4,100.90—the unpaid balance of the note—plus a collection charge of $738— 18% of the amount due, as provided for in the note—for a total of $4,838.90.
Appellant testified that she never received the complaint. She explained that at the time it was served—as shown by the sheriff's return—she and her daughter, who lived with her, were at church. At some point the baby-sitter told appellant's daughter that a man had come with papers for Charles and Joan Young—appellant's brother and sister-in-law, whose names appear on the complaint ahead of appellant's—and that she had refused to take them. The first appellant knew of any proceeding against her was when she received in the mail a card requesting her to call appellee. When she called she was told that her brother had failed to make his payments, and that because she had signed for the autombile they could go after her without making any effort to find him, and her home was going to be taken from her.
Appellant went to see a lawyer, Allan Getson, who had evidently previously represented her in some matter, but he said that he could not represent her because he was representing her brother in another case. Appellant immediately went to see another lawyer with offices in the same building, Cassandra Maxwell Birnie. Birnie evidently made inquiries on appellant's behalf, determined the amount that would be necessary to bring her brother's payments up-to-date, advised her to try to get her brother to pay that amount, and looked into the status of an attachment by appellee of the proceeds of a personal injury action brought by appellant's brother. Birnie also told appellant that going to court to try to get the judgment against her opened would cost a great deal of money. Birnie did not refer appellant to Community Legal Services, nor explain that if she were found eligible for representation by Community Legal Services, she would be able to file a petition to open the judgment without incurring legal expenses that would be difficult or impossible for her to pay.
Twice during 1973 and once in 1974 appellant received notification that various amounts, totaling $2,140.98, had been paid to appellee on her brother's behalf. She believed that two of these payments resulted from actions taken in her interest by Birnie, and that the 1974 payment, which was $1,261.92, was "going to be paid over with the provision that the house would be returned back to me." N.T. 19. In both respects, appellant was mistaken. The payments had resulted from attachments filed by appellee, and by the time she received notice of the 1974 payment, her house had already been sold. Specifically, the sheriff had sold it on February 4,1974, on appellee's writ of execution, for $800 to the attorney on the writ. The assignee of the sale, one Carl Inker, received the sheriff's deed to appellant's house on September 10,1974, but even before receiving his deed Inker had filed a complaint in ejectment, which was served on appellant sometime in August 1974.
After being served with the complaint in ejectment appellant tried to consult Birnie. When she was unsuccessful, she consulted a Lieutenant Kirby at the Naval Base, who gave her the name of another lawyer. When he proved to be on vacation, appellant was referred to Richard Carl Smulker. Smulker agreed to represent her but said she would first need to obtain her file from Birnie, in the course of doing which she learned that Birnie had died. It is not clear just what Smulker did on appellant's behalf, but the record does include a letter from him to Inker's lawyer proposing a repurchase agreement under which appellant would pay $75 a month toward the repurchase of her home. Appellant testified that she had told Smulker that she could not afford to pay more than $50 a month. Smulker told her that any attempt to open the judgment would cost a great deal of money, and that if she did not have the money, there was nothing he could do for her. Although he knew that appellant was of limited means—indeed there is a reference to her lack of means in the letter he wrote Inker's lawyer—he did not suggest that she might be able to receive assistance from Community Legal Services in trying to get the judgment opened.
When it appeared that Smulker would be unable to help her further, appellant asked the Federal Housing Adminis tration whether it could help her. It was a representative of the F.H.A. who finally advised appellant to seek help from Community Legal Services. C.L.S. began work on appellant's case early in 1975, but before it got very far, appellant became marginally ineligible for its services because of an increase in her Social Security and Veterans Administration benefits. Her case was then referred to the Lawyers Reference Service, which tried unsuccessfully to refer the case to several lawyers in private practice. In August 1975 C.L.S. was specially reauthorized to represent appellant, and on September 8, 1975, the petition to open or strike the judgment was filed.
On October 15, 1975, appellant, in support of the petition, filed interrogatories directed to appellee. On February 26, 1976, appellee's motion for a protective order was granted. On July 5, 1977, appellant filed a second set of interrogatories, and on September 16, her deposition was taken. On November 16, appellee's motion for a protective order with respect to appellant's second set of interrogatories was granted. On May 16,1978, the lower court, without a hearing and with only appellant's deposition in the record, denied appellant's petition.
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A petition to open a judgment by default is addressed to the equity side of the court:
In determining whether a judgment by default should be opened, we must ascertain whether there are present any equitable considerations in the factual posture of the case which require that we grant to a defendant against whom the judgment has been entered an opportunity to have his "day in court" and to have the cause decided upon the merits. In so doing, we act as a court of conscience. Raymond J. Brusco Funeral Home v. Sicilia, 277 Pa.Superior Ct. 115, 123, 419 A.2d 688, 692 (1980), quoting Kraynick v. Hertz, 443 Pa. 105, 111, 277 A.2d 144, 147 (1971).
In an assumpsit case, in exercising its equitable powers the court must look to the promptness with which the petition to open was filed, the reason given for the default, and the merits of the defense asserted. Balk v. Ford Motor Company, 446 Pa. 137, 285 A.2d 128 (1971). Because the decision whether to open a judgment is an equitable one, it depends on the particular facts of each case; there are no bright line tests, Quatrochi v. Gaiters, 251 Pa. Superior Ct. 115, 380 A.2d 404 (1977), and the cases are not easy to reconcile. Duffy v. Gerst, 286 Pa. Superior Ct. 523, 429 A.2d 645 (1981). Although the lower court's decision will be upheld absent an abuse of discretion, both the Supreme Court and this court have not hesitated to find an abuse of discretion in a lower court's refusal to grant a petition to open a judgment when we have found that the equities clearly favored opening the judgment. E.g., Queen City Electrical Supply Company, Inc. v. Soltis Electric Company, 491 Pa. 354, 421 A.2d 174 (1980); Raymond J. Brusco Funeral Home v. Sicilia, supra; Brooks v. Surman Dental Labs, Inc., 262 Pa. Superior Ct. 369, 396 A.2d 799 (1979); Toplovich v. Spitman, 239 Pa. Superior Ct. 327, 361 A.2d 425 (1976).
In the opinion filed in response to appellant's appeal, the lower court found that appellant had not satisfactorily explained either the default or the delay in filing her petition to open. The court did not consider the merits of her defense to the action. We have concluded that the court's findings are inconsistent with the clear equities of the case, and that in refusing to grant appellant's petition to open, the court abused its discretion.
-a-
As we have noted, the judgment against appellant was entered only 26 days after service of the complaint. This court has repeatedly condemned snap judgments. E.g., Brooks v. Surman Denial Labs, Inc., supra; Silverman v. Polis, 230 Pa. Superior Ct. 366, 326 A.2d 452 (1974). The lower court, however, did not acknowledge that the judgment here was a snap judgment. Since this case arose, the rules of civil procedure have been amended to require that notice be given of the intent to take a judgment by default. Pa.RC.P. 237.1. See Explanatory Note—1979 to the Rule. While the amended rules did not apply to this case, they reflect our hostility to snap judgments.
The lower court said in its opinion that it had rejected appellant's explanation of her default for "two reasons.... There is a valid return of service . . . and [appellant's] own statement of facts indicates that she consulted a lawyer and instituted an action on the note in the fall of 1972." Slip op. at 1-2. But a valid return of service does not always show actual knowledge of the suit. Maurice Goldstein Co., Inc. v. Margolin, 248 Pa. Superior Ct. 162, 374 A.2d 1369 (1977). The lower court appears to have ignored both the fact that the sheriff's return did not indicate that the complaint was left with appellant personally and appellant's testimony that service was made on a baby-sitter and that the first notice she had that anything was happening was a card received from appellee shortly after the judgment was entered. It was only then that appellant consulted—and had any reason to consult—a lawyer.
-fa-
in support of its finding that appellant had not explained the delay in filing her petition to open, the lower court recited in its opinion that the petition had been filed on November 22, 1977. Slip op. at 1. In fact the petition was filed on September 8, 1975.
To be sure, even so the delay was considerable, specifically, two years and eleven months after the default judgment was entered. But there is no "magic formula" by which we can determine whether a given delay was so long as to preclude granting a petition to open. The determination will depend on the particular facts. Government Employees Financial Corp. v. Walker, 259 Pa. Superior Ct. 371, 393 A.2d 873 (1978). "[W]here equitable circumstances exist, a default judgment may be opened regardless of the time that may have elapsed between entry of the judgment and filing of the petition to open." Queen City Electric Supply Co., Inc. v. Soltis Electric Co., Inc., supra, 491 Pa. at 361, 421 A.2d at 177. In some cases a period of less than two months has been found to be too long. E.g., Schutte v. Valley Bargain City, Inc., 248 Pa. Superior Ct. 532, 375 A.2d 368 (1977) (forty-seven days); Carducci v. Albright Galleries, Inc., 244 Pa. Superior Ct. 48, 366 A.2d 577 (1976) (fifty-four days). In other cases a very much longer period has been found not to be too long. E.g., Queen City Electric Supply Co., Inc. v. Soltis Electric Co., Inc., supra (twenty months); Joseph Melnick Building and Loan Ass'n v. Melnick, 361 Pa. 328, 64 A.2d 773 (1949) (seventeen years); Bianco v. Pullo, 195 Pa. Superior Ct. 623, 171 A.2d 620 (1961) (four years).
We have required the promptest action when the responsible party is knowledgeable and the delay is unexplained. For example, in Schutte v. Valley Bargain City, Inc., supra, the responsible party was an insurance company that waited 19 days after learning of the judgment before retaining counsel, who then for some unexplained reason delayed another 28 days before filing the petition to open. Some of the longer delays have been permitted when it was shown that the judgment was void, Joseph Melnick Building Loan Ass'n, supra; had been obtained by fraud, Bianco v. Pullo, supra; or where the petitioner had taken all of the steps— including seeking legal counsel—that he reasonably believed were necessary to protect his interest, Raymond J. Brusco Funeral Home v. Sicilia, supra; Sprouse v. Kline-Styer-McCann, Post No. 7155 Veterans of Foreign Wars, 237 Pa. Superior Ct. 419, 352 A.2d 134 (1975).
Appellant argues that because of violations of the Motor Vehicle Sales Finance Act, Act of June 28, 1947, as amended, 69 P.S. § 601 et seq., the finance agreement for her brother's automobile was illegal as to her, and the judgment against her was therefore void and subject to being opened at any time. We say more about this aspect of her defense later in this opinion. Although some authority supports appellant's claim that a void judgment is subject to being opened without regard to the passage of time, Joseph Melnick Building and Loan Ass'n v. Melnick, supra, but see, Tice v. Nationwide Life Ins. Co., 284 Pa. Superior Ct. 220, 228-38, 425 A.2d 782, 787-92 (1981) (concurring opinion by SPAETH, J.), we do not need to decide whether the judgment against appellant is void in order to find that considering all of the circumstances, her petition to open was filed promptly enough.
The first notice appellant had of the judgment was the card she received in the mail from appellee. She did not ignore the card but rather called appellee as requested. On being told that her house was in danger she immediately consulted a lawyer. On being told that the lawyer could not represent her, she immediately consulted, and retained, another lawyer. Although appellant had the right to believe that her interests were being protected by this lawyer, Charles J. Webb, Co., Inc. v. Webber, 194 Pa. Superior Ct. 614, 169 A.2d 604 (1961), it appears that the lawyer measured her efforts on appellant's behalf by her estimate of what appellant could afford to pay. When appellant was served with the complaint in ejectment she again immediately sought legal help, only to end up with yet another lawyer who measured his services by his estimate of what she could afford to pay. When, during the period that she was temporarily ineligible for Community Legal Services representation, her case was referred to the Lawyer Reference Service, no other lawyer stepped forward with any offer of assistance.
Even when the party seeking to open a judgment has been a bank, which we may presume to be knowledgeable and unconstrained in its ability to retain the assistance of counsel, we have found that the equities were such that a delay of nearly two years was excusable, and that it was an abuse of discretion for the lower court to find otherwise. Queen City Electrical Supply Co., Inc. v. Soltis Electric Co., Inc., 258 Pa. Superior Ct. 305, 392 A.2d 806 (1978), aff'd, 491 Pa. 354, 421 A.2d 174 (1980). Here we find the equities in appellant's favor compelling.
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It remains to consider whether appellant pleaded a meritorious defense to the action. Because of its view of the case the lower court did not consider this issue. The record, however, is sufficient for us to decide it ourselves. Raymond J. Brusco Funeral Home v. Sicilia, supra.
The requirement of a meritorious defense is only that a defense must be pleaded that if proved at trial would justify relief. Alexander v. Jesray Construction Company, 237 Pa. Superior Ct. 99, 346 A.2d 566 (1975). Appellant's petition to open alleges six defenses, under various provisions of the Pennsylvania Motor Vehicle Sales Finance Act, 69 P.S. § 601 et seq., the Federal Truth-in-Lending Act, 15 U.S.C. § 1601 et seq., and the Federal Trade Commission Act, 15 U.S.C. § 45 et seq. These defenses include not only her having been induced to sign the papers in blank and never being given copies of them, but also failure to receive the notice of the right of rescission required by 15 U.S.C. § 1635 and failure to have disclosed to her all of the information required by 15 U.S.C. § 1638. Under both the Truth-in-Lending Act, 15 U.S.C. § 1614, and the Motor Vehicle Sales Finance Act, 69 P.S. § 615(F), appellee as assignee is equally liable with the automobile agency for violations of the Acts. This is no less true because of appellee's having sued only on the judgment note and not on the sales finance agreement itself. 69 P.S. § 615(G).
We have no difficulty deciding that appellant has pleaded defenses that if proved at trial would justify relief. Both the Truth-in-Lending Act and the Motor Vehicle Sales Finance Act are remedial Acts designed to protect persons in appellant's position. We have previously held that a contract that violates the Motor Vehicle Sales Finance Act is illegal, and that if the illegality is apparent on the face of the contract, a judgment based on the contract is void and subject to being stricken. Roxy Auto Company v. Moore, 180 Pa. Superior Ct. 603, 122 A.2d 87 (1965).
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Up to this point we have considered the case in terms of the tripartite test set forth in cases such as Balk v. Ford Motor Co., supra. Having decided that appellant has met that test, we could stop. Appellant has argued, however, that the tripartite test was intended only as an analytical framework to guide a court in the exercise of its equitable powers as a "court of conscience," and that it should not be applied as literally as its formulation suggests. It was to consider this argument that we granted appellant's application for reargument before the court en banc.
Without question, in many cases where we have found that one of the three requirements for opening a judgment was not met we have stopped without considering the arguments made with regard to the other two. E.g., Reyer v. Guinta, 292 Pa. Superior Ct. 182, 436 A.2d 1212 (1981). It is difficult, however, to reconcile this approach with the many other cases that emphasize the equitable nature of the decision whether to grant a petition to open, and the importance of balancing the prejudice to the two sides. E.g, Kraynick v. Hertz, supra; Raymond J. Brusco Funeral Home v. Sicilia, supra; Toplovich v. Spitman, supra.
In a recent case, which we have cited several times in this opinion, the Supreme Court said:
The sole remaining issue, then, is whether the petition to open was promptly filed. This is always an equitable determination which must be made in light of what is reasonable under the circumstances. Indeed, it is well established that where equitable circumstances exist, a default judgment may be opened regardless of the time that may have elapsed between entry of the judgment and filing of the petition to open.
Queen City Electrical Supply Co., Inc. v. Soltis Electric Co., Inc., supra, 491 Pa. at 361, 421 A.2d at 174 (citation omitted).
The question is, Can a court make an "equitable determination" of what is "reasonable under the circumstances" without considering all of the circumstances of the particular case? We think not.
Consider the present case, for example. Appellant argued vigorously to the lower court that violations of the Motor Vehicle Sales Finance Act made the contract on which the judgment was entered against her illegal. The lower court never considered this argument, for it applied the tripartite test in a rigid step-by-step way: having decided that default and delay were not excused, it never went on to consider the merits of appellant's defense. If, however, all of the circumstances are to be considered, the court should not have ignored appellant's defense. The merits of a defense may have some bearing on the question of whether a petition to open was promptly enough filed. The more plainly meritorious the defense, the more heavily the equities will incline in the petitioner's favor, which is to say, the more appropriate it may be to excuse some delay. Here, as we have discussed, appellant's defense appears compelling; she may, indeed, be able to show that the judgment against her was void.
We are not suggesting that the tripartite test is not important. The test will often provide a ready determination—a navigator's "quick fix"—of where the equities lie. For example, in a case where no attempt has been made to explain the default or delay, or where, in an assumpsit case, no defense has been pleaded, or only one clearly without merit, it is difficult to imagine that the equities would favor opening the judgment. But where some showing has been made with regard to each part of the test, a court should not blinder itself and examine each part as though it were a water-tight compartment, to be evaluated in isolation from other aspects of the case. Instead the court should consider each part in the light of all of the circumstances and equities of the case. Only in that way can a chancellor act as a court of conscience.
The correctness of this conclusion is confirmed, not only by general considerations of how a court of equity should proceed, but by settled practice when the default judgment has been entered in an action in trespass. In such a case it is only necessary that the petition to open be promptly filed and the default reasonably explained; it is not necessary to plead a meritorious defense. Balk v. Ford Motor Co., supra. However, "while a good defense would normally not be required in a trespass action, where present it can at least qualify as an equitable consideration favoring the opening of judgment." Id. 446 Pa. at 140 n. 3, 285 A.2d at 131 n. 3. This rule is repeated in many of our cases. E.g., Reyer v. Guinta, supra; Forest Hills Transfer & Storage Company, Inc. v. Beaver Valley Builders Supply, Inc., 271 Pa. Superior Ct. 566, 414 A.2d 628 (1979); Sprouse v. Kline-Styer-McCann, Post No. 7155 Veterans of Foreign Wars, supra. Thus, in a trespass case the court may properly consider how meritorious is the defense in deciding whether the petition to open was filed promptly enough, or the default reasonably explained. We see no basis for saying that in an assumpsit case the court may not do the same.
REVERSED.
CAVANAUGH, J., files a dissenting opinion in which PRICE and HESTER, JJ., join.
. Appellant has also appealed from the lower court's order granting appellee's motion for a protective order with respect to her second set of interrogatories, which were filed in support of her petition to open. Since we have concluded that the petition to open should have been granted, even without answers to the second set of interrogatories, we need not consider the propriety of the protective order. We note, however, that since the order was entered incident to the petition to open the judgment, it is inapplicable to any discovery in which appellant may wish to engage with respect to the merits of the underlying action.
. Appellant's late husband was a veteran of World War II and the Korean War.
. Meanwhile, on December 5, 1975, appellant had filed a petition to set aside the sheriffs sale of her home. Five days later, without a hearing, the petition was denied. As appellant explained in her deposition, she was so disgusted by this that she took the papers relating to her case and decided that she would go to church and pray about it. It was only after being encouraged to do so by a representative of the F.H.A. that she went back to C.L.S., approximately a year later. We will not hold this delay against appellant, however, because the delay that is important in considering a petition to open judgment is the delay before the petition is filed. Once the petition is filed, the respondent has the power to require the petitioner to proceed expeditiously. Pa.R.C.P. 209. Appellee here took no action under Rule 209.
. We find no support in the record for the lower court's statement that appellant "instituted an action on the note." Appellant did believe that payments credited to the judgment resulted from action taken by her first lawyer, and the petition to open reflected her belief by averring in paragraph 30 that "Mrs. Birnie filed an attachment against the brother's proceeds from the personal injury suit." However, as already mentioned, appellant's belief was mistaken, and the averment about the attachment was denied, correctly, in paragraph 30 of appellee's answer to the petition. See Brief for Appellant at 26-27.