Court Opinion

ID: 9752414
Source: CourtListenerOpinion
Date Created: 2023-08-28 18:05:36.000307+00
Date Added: 2024-06-11T09:45:27.008111
License: Public Domain

CAVANAUGH, Judge,
concurring and dissenting:
Although I agree with the Majority that the lower court did not abuse its discretion in opening the judgment confessed at No. 2155 June Term, 1978, I believe that the lower court also was justified in opening the judgment confessed at No. 3171 May Term, 1978. It is evident from the record that both judgments confessed by appellant were based on the $115,000 promissory note executed on June 28, 1974. In my opinion, the inclusion of John Kelly’s personal debts within this note renders the entire promissory note suspect and taints both confessed judgments. Consequently, I concur in part and respectfully dissent in part.
Appellant, Lincoln Bank, made loans totaling $55,000 to John B. Kelly, president of Tri-Kell, Inc., on November 21, 1969 and on May 26, 1976. On September 4, 1971, appellee, mother of Mr. Kelly, executed a Guarantee Agreement in which she guaranteed “as surety, absolutely and unconditionally the full and prompt payment to [appellant] of any *271and all obligations, liabilities and indebtedness of any kind of [Tri-Kell, Inc.] to [appellant], howsoever created or incurred and whether now existing or hereafter arising, due or to become due, primary or secondary, absolute or contingent, joint or several, direct or indirect, secured or unsecured . . . . ”
In reliance upon this agreement, appellant, on September 16,1971 and October 27,1971, made loans to Tri-Kell, Inc. in the total amount of $60,000. On June 28, 1974, Tri—Kell, Inc. executed and delivered a promissory note to appellant in the amount of $115,000. This note represented a consolidation of the $55,000 personal debt of John Kelly and the $60,000 corporate debt of Tri-Kell, Inc. Tri-Kell, Inc. defaulted on this note and appellant confessed two judgments, by amicable action, against appellee.
The first judgment, at No. 3171, May Term, 1978 was based on the $60,000 advanced to Tri-Kell, Inc. in 1971. Appellee filed a Petition to Open and/or Strike the judgment in which she alleged that appellant, without notice to her and in concert with her son, who at the time was also a Director of appellant bank, caused the personal loans of John Kelly to become a debt of Tri-Kell, Inc. in an attempt to bring John Kelly’s personal debts within the bounds of the Guaranty Agreement. Because the June 28, 1974 transaction was concealed from appellee, she argued that she was no longer bound by the Guaranty Agreement. Appellant filed an Answer and New Matter. Neither party took depositions or filed admissions.
Appellee filed a second confession judgment at No. 2155, June Term, 1978, the principal sum of which represented the remainder of the $115,000 note or the remaining $50,000 personal debt of John Kelly. Appellee filed a Petition to Open and/or Strike again alleging that the June 28, 1974 transaction was concealed from her and that the Guaranty Agreement is inapplicable to the $115,000 note. Appellant filed an Answer and New Matter. No depositions were taken and no admissions were filed.
*272Oral argument was held on both petitions and on October 19, 1978 the lower court, in separate orders, opened the two judgments. Appellant appealed both orders and the appeals were consolidated.
In nearly identical written opinions, the lower court concluded:
The Court believes that sufficient evidence has been alleged to mandate the opening of the Judgment. If the composition of Tri-Kill’s [sic] obligation was concealed from the defendant, it could negotiate the validity, of the suretyship device. There was no evidence ■ that Kelly agreed to guaranty the personal debts of her son, the validity of including it in the corporate obligation is suspect. Therefore, the Judgment must be opened. Appellant argues that the lower court erred in not accept-
ing as true the averments of fact in its Answer because appellee did not take depositions to support its allegations as required by Pa.R.C.P. No. 209.
It is apparent that the trial court did not follow the procedure established by Pa.R.C.P. No. 209. Appellee did not take depositions but permitted the case to be automatically listed for hearing on petition and answer according to the local procedure in Philadelphia County. Accordingly, the trial court should have heard the case as though appellee admitted for the purpose of argument “all averments of fact responsive to the petition and properly pleaded in the answer.” Cheltenham National Bank v. George B. Henne & Company, Inc., 237 Pa.Super. 311, 353 A.2d 59 (1975). See also: Arthurs Travel Center, Inc. v. Alten, 268 Pa.Super. 330, 408 A.2d 490 (1979); 1 Goodrich-Amram § 209:2.2. In the past, where the lower court improperly decides a petition without permitting the parties to comply with Rule 209, we have remanded so that the parties may utilize the procedure established by Rule 209. E. g. Shainline v. Alberti Builders, Inc., 266 Pa.Super. 129, 403 A.2d 577 (1979); Zinck v. Smashy’s Auto Salvage, Inc., 250 Pa.Super. 553, 378 A.2d 1287 (1977); Instapak Corporation v. S. Weisbrod Lamp and Shade Company, Inc., 248 Pa.Super. 176, 374 A.2d 1376 *273(1977); Maurice Goldstein Company, Inc. v. Margolin, 248 Pa.Super. 162, 374 A.2d 1369 (1977). Instantly, appellee does not argue that she was not given the opportunity to schedule depositions. In her brief to this court, she states that she did not feel that depositions were necessary because the pleadings and documents attached thereto sufficiently averred a meritorious defense. Moreover, even accepting as true appellant’s well-pleaded answers as admitted, appellee has averred a meritorious defense. A remand for further proceedings would serve no useful purpose. See: Arthurs Travel Center, Inc. v. Alten, supra, 268 Pa.Super. at 334, n. 1, 408 A.2d at 492, n. 1; America Corporation v. Cascerceri, 255 Pa.Super. 574, 580 n. 6 389 A.2d 126, 129 n. 6 (1978).
The pleadings and documents, viewed in this light, reveal that appellee, in signing the Guaranty Agreement, clearly intended only to guarantee the debts of Tri-Kell, Inc. No evidence exists to indicate that appellee intended to guarantee her son’s personal debts. Also, it is undisputed that the promissory note executed by appellant and Tri-Kell, Inc. on June 28, 1974 includes personal debts of John Kelly. Appellant avers that John Kelly consulted his mother concerning this transaction. Even accepting this as true, a factual issue remains as to whether appellee was informed of the nature of this transaction or whether appellee consented to the transformation of John Kelly’s personal debts into a TriKell, Inc. debt subject to the Guaranty Agreement.
Furthermore, because John Kelly informed his mother of the June 28, 1974 transaction, appellant is not necessarily relieved of its duty as creditor to disclose to appellee facts within its knowledge that materially alter appellee’s obligation under the Guaranty Agreement. It has been held that each time a creditor accepts the continuing offer of a surety on a continuing guaranty by extending further credit to the principal debtor, the creditor owes a duty to the surety to disclose facts known by the creditor if the creditor has reason to believe that those facts materially increase the risk beyond that which the surety intended to assume and that those facts are unknown to the surety. Sumitomo Bank of *274California v. Iwasaki, 70 Cal.2d 81, 73 Cal.Rptr. 564, 447 P.2d 956 (1968); Restatement Security § 124(2).
In my view, the inclusion of John Kelly’s personal debts within the corporate promissory note presents a jury question as to whether the entire note is outside the scope of the Guaranty Agreement. Also, a factual issue is raised concerning appellant’s participation and knowledge of the TriKell, Inc.’s assumption of John Kelly’s personal debts and its duty to appellee. If it is found that appellee’s obligation under the Guaranty Agreement has been altered without her knowledge and consent, appellee may be entitled to be discharged from liability under the $115,000 promissory note of Tri-Kell, Inc. See: Magazine Digest Publishing Company v. Shade, 330 Pa. 487, 199 A. 190 (1938). Since both judgments confessed by appellant are based on the $115,000 promissory note, the trial judge did not abuse its discretion in opening both judgments.1

. This result does not invalidate the underlying debts of Tri-Kell, Inc. totaling $60,000 nor precludes appellant from proceeding against appellee in another manner to collect these corporate debts.