Court Opinion

ID: 9752413
Source: CourtListenerOpinion
Date Created: 2023-08-28 18:05:35.996374+00
Date Added: 2024-06-11T09:45:27.005937
License: Public Domain

HESTER, Judge:
Presently before the court is the appeal of appellant, Lincoln Bank, from two orders of the lower court dated October 19, 1978, wherein the lower court granted appellee’s motions to open judgments entered by confession in the respective amounts of $71,915.49 and $57,745.72 and let appellee into defenses.
We affirm in part and reverse and reinstate in part.
A brief summary of the two transactions involved is necessary for a proper understanding of the issues presently before the court. At No. 3171 May Term of 1978, appellant filed a complaint in confession of judgment against appellee, Margaret M. Kelly, pursuant to the warrant of attorney to confess judgment contained in a Guaranty Agreement dated September 4, 1971 whereby appellee agreed that she would:
“. . . guarantee as surety, absolutely and unconditionally the full and prompt payment to (the bank) of any and all obligations, liabilities and indebtedness of any kind of (Tri-Kell, Inc.) to (the bank), 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 ...”
The appellant confessed judgment at No. 3171 May Term, 1978 in the amount of $71,915.49.
In response to appellant’s complaint in confession of judgment, appellee, Margaret M. Kelly, caused to be filed a *264petition to open or strike judgment. In response thereto, appellant filed an answer and new matter to appellee’s petition, and appellee filed a reply thereto. No further pleadings were filed. Moreover, no depositions were taken or admissions filed by either party.
Oral arguments were heard by the lower court which, thereafter, issued an order dated October 19, 1978, wherein the judgment which was entered at No. 3171 May Term, 1978 on May 15, 1978, was opened and appellee let into a defense.
A review of the averments of fact contained in appellant’s May 15, 1978 complaint in confession of judgment, appellee’s petition to open or strike, appellant’s answer and new matter and appellee’s reply thereto, reveal the following: Appellee, Margaret M. Kelly is the mother of John B. Kelly, Jr.; that at the time of appellee’s execution of the September 4, 1971 Guaranty Agreement to guarantee the indebtedness of Tri-Kell, Inc., the said John B. Kelly, Jr. was the President of Tri-Kell, Inc. and also director of the appellant bank; that on September 16, 1971 (twelve days after the execution of said Guaranty Agreement), appellant bank made a $40,-000.00 loan to Tri-Kell, Inc. and thereafter, on October 27, 1971, appellant bank made an additional $20,000.00 loan to Tri-Kell, Inc.; that the $60,000.00 loans to Tri-Kell, Inc. have never been repaid; that to secure the $60,000.00 loans (along with other personal indebtedness of its President, the said John B. Kelly, Jr. which will be discussed infra), TriKell, Inc. executed a promissory note in favor of the appellant bank dated June 28, 1974 in the total amount of $115,000.00.
In addition to the aforementioned complaint in confession of judgment, appellant bank filed a second complaint in confession of judgment against the said Margaret M. Kelly on June 15, 1978 at No. 2155 June Term, 1978 in the total amount of $57,745.72, the principal sum of $50,000.00 being the difference between the purported total amount of $115,-000.00 as evidenced by the promissory note dated June 28, 1974 and the principal sum previously confessed as a judgment at No. 3171 May Term, 1978.
*265Again, in response to appellant bank’s complaint in confession of judgment, appellee filed a petition to open or strike; appellant filed an answer and new matter to said petition, and appellee filed a reply to new matter. No further responsive pleadings were filed and no depositions were taken.
Oral argument was thereafter heard at the conclusion of which the lower court issued its order similarly dated October 19, 1978 opening the judgment taken by confession and letting appellee Margaret M. Kelly into a defense at No. 2155 June Term, 1978.
The record does not evidence the consolidation of the two actions (to-wit: 3171 May Term, 1978 and 2155 June Term, 1978) although same were obviously consolidated for purposes of oral argument and disposition by the court.
The debts under which the No. 2155 June Term, 1978 confessed judgment was taken consisted of two personal loans from appellant bank to the said John B. Kelly, Jr. On November 21, 1969, appellant bank loaned the said John B. Kelly, Jr., $50,000.00. This loan was reduced to $45,000.00 by a payment of $5,000.00 on January 11, 1971. The original loan was then renewed by Mr. Kelly’s promissory note dated August 12, 1970, which loan was subsequently renewed from time to time. On May 26, 1971, appellant bank made an additional loan to the said John B. Kelly, Jr. in the amount of $10,000.00, which loan was also renewed from time to time. Therefore, John B. Kelly, Jr.’s personal indebtedness to appellant bank was in the amount of $55,000.00, plus interest. The origination of these two loans took place prior to the execution of said Guaranty Agreement by appellee.
The personal loans of $55,000.00, as well as the corporate loans of $60,000.00 were thereafter consolidated into the $115,000.00 promissory note dated June 28, 1974 and executed in favor of the appellant bank as a corporate obligation of Tri-Kell, Inc. by its corporate President, John B. Kelly, Jr.
*266Subsequent to the 1974 consolidation of corporate and personal debts as reflected in said $115,000.00 promissory note and based upon the previously executed September 4, 1971 Guaranty Agreement by appellee, Margaret M. Kelly, wherein the said Margaret M. Kelly guaranteed the debts of Tri-Kell, Inc. in favor of appellant bank; appellant bank confessed judgment at No. 2155 June Term, 1978 against Margaret M. Kelly in the principal sum of $50,000.00.
In her petition to open or strike and in her reply to appellant’s new matter, the said Margaret M. Kelly alleged that appellant bank without notice to her and in concert with her son, John B. Kelly, Jr., who at the time was both President of Tri-Kell, Inc. and a Director of appellant bank, caused a previously existing, non-guaranteed personal obligation of her son to become a corporate Tri-Kell, Inc. obligation in an effort to bring said pre-existing personal debt within the broad parameters of the September 4, 1971 Guaranty Agreement, all of which was done in an effort to prejudice the rights of appellee Margaret M. Kelly and without her authority to so do.
Moreover, the said Margaret M. Kelly specifically denies that it was her intention to guarantee the personal obligations of her son, John B. Kelly, Jr.
It is interesting to note at this juncture that nowhere in the pleadings does appellee Margaret M. Kelly, deny the execution of the Guaranty Agreement of September 4, 1971 or that said Guaranty Agreement was intended to guarantee the corporate debts of Tri-Kell, Inc.
Pa.R.C.P. § 2959 provides:
Rule 2959. Striking Off or Opening Judgment; Pleadings; Procedure
(a) Relief from a judgment by confession shall be sought by petition. All grounds for relief, whether to strike off the judgment or to open it, must be asserted in a single petition. The petition may be filed in the county in which the judgment was originally entered, in any county to which the judgment has been transferred or in *267any other county in which the sheriff has received a writ of execution directed to him to enforce the judgment.
(b) If the petition states prima facie grounds for relief the court shall issue a rule to show cause and may grant a stay of proceedings. After being served with a copy of the petition the plaintiff shall file an answer on or before the return day of the rule. The return day of the rule shall be fixed by the court by local rule or special order.
(c) A party waives all defenses and objections which he does not include in his petition or answer.
(d) The petition and the rule to show cause shall be served as provided in Rule 233, and the answer as provided in Rule 1027.
(e) The court shall dispose of the rule on petition and answer, and on any testimony, depositions, admissions and other evidence. The court for cause shown may stay proceedings on the petition insofar as it seeks to open the judgment pending disposition of the application to strike off the judgment. If evidence is produced which in a jury trial would require the issues to be submitted to the jury the court shall open the judgment.
(f) The lien of the judgment or of any levy or attachment shall be preserved while the proceedings to strike off or open the judgment are pending.
Added June 27, 1969, effective Jan. 1, 1970; amended Oct. 4, 1973, effective Dec. 1, 1973; amended Nov. 14, 1978, effective Dec. 2, 1978; amended Dec. 14, 1979, effective Feb. 1, 1980, and shall apply to all proceedings to enter judgment by confession commended on or after the effective date. (Emphasis added)
Our scope of review on appeal from either the opening of or the denial of opening a judgment taken by confession has been clearly delineated over numerous years. We reiterate as we have done on numerous occasions, our scope of review on appeals from the lower court’s grant or denial of a petition to open judgment, is very narrow. A petition to open judgment is first an appeal to the equitable and discretionary powers of the lower court and as such, the *268exercise of the lower court’s discretion in either opening or refusing to open a judgment taken by confession, will not be disturbed on appeal unless the lower court has committed a manifest abuse of discretion or an error of law. M. H. Davis Estate Oil v. Sure Way Oil, 266 Pa.Super. 64, 403 A.2d 95 (1979); Fidelity Bank v. Act of America, Inc., 258 Pa.Super. 261, 392 A.2d 784 (1978); Christie v. Open Pantry Marts, 237 Pa.Super. 243, 352 A.2d 165 (1975).
It is well settled that “(o)ne who petitions to open a confessed judgment must act promptly and aver a meritorious defense”, Wenger v. Ziegler, 424 Pa. 268, 272, 226 A.2d 653, 655 (1967). There is no question that the appellee in these matters acted promptly, thus the sole issue is whether the appellant set forth a meritorious defense.
The standard to be applied by a court in determining whether a moving party has properly averred a meritorious defense so as to require that a confessed judgment be opened and the moving party let into a defense is succinctly set forth at Pa.R.C.P. 2959(e), effective December 1, 1973, which provides in relevant part:
“. . . If evidence is produced which in a jury trial would require the issues to be submitted to a jury the court shall open the judgment.” (Emphasis added).
In testing the sufficiency of the evidence, the facts as alleged must be viewed by the court in the exercise of its discretion in the light most favorable to the moving party and further, the lower court must accept as true all evidence and reasonable and proper inferences flowing therefrom. Greenwood v. Kadoich, 239 Pa.Super. 372, 357 A.2d 604 (1976); M. H. Davis Estate Oil v. Sure Way Oil, supra. As Judge Van der Voort of our court in M. H. Davis Estate Oil v. Sure Way Oil, supra, declared:
“. . . the test in evaluating the petitioners’ evidence is not whether the evidence will probably win a verdict from the jury, but only whether, there is sufficient evidence to allow the disputed issue to go to the jury.”
*269With the aforementioned-matter as a guide, we turn to the order of the lower court dated October 19, 1978 wherein the judgment taken by confession at 3171 May Term, 1978 was opened and appellee let into a defense.
Analyzing the record which is presently before the court, absent depositions and admissions, we conclude that there is no evidence in support of the lower court’s action in opening said judgment and letting appellee into a defense. See Cheltenham National Bank v. George B. Henne & Co., Inc., 237 Pa.Super. 311, 353 A.2d 59 (1975). The record does not provide us with any evidence which in a jury trial it requires the issues to be submitted to the jury. See Pa.R. C.P. 2959(e).
On the contrary, the Guaranty Agreement which provides that appellee Margaret M. Kelly shall guarantee the indebtedness of Tri-Kell, Inc. is unambiguous, clear and free from doubt.
Additionally, a reasonable inference can be drawn that but for the execution of the Guaranty Agreement on September 4,1971, appellant bank would not have made the two loans on September 16, 1971 and October 27, 1971 in the total amount of $60,000.00 to Tri-Kell, Inc.
Accordingly, we reverse the order of the lower court dated October 19, 1978 at No. 3171 May Term, 1978 and reinstate the judgment taken by confession at said number and term.
Turning next to the order of the lower court dated October 19, 1978 wherein the judgment taken by confession on June 15, 1978 at 2155 June Term, 1978 was opened and appellee Margaret M. Kelly let into a defense, we are convinced that the allegations contained in appellee’s petition and reply to new matter are sufficient to require submission to a jury. Contained therein, appellee has alleged action on the part of the appellant bank and her son, John B. Kelly, Jr., which smacks of conspiracy. Appellee in an attempt to include under the umbrella of the September 4,1971 Guaranty Agreement the pre-existing personal debts of John B. Kelly, Jr., coupled with the fact that at the time *270of the actions involved Mr. Kelly was both a Director of the appellant bank and President of Tri-Kell, Inc., leads us to conclude that the lower court acted providently in the exercise of its discretion by opening this judgment taken by confession and letting appellee into a defense.
Accordingly, we affirm the action of the lower court in opening the judgment and letting appellee into a defense with respect to the judgment taken by confession on June 15, 1978.
The order of the court below opening the judgment entered at No. 2155 June Term, 1978, in the court below, in the amount of $57,745.72 is affirmed.
The order of the court below opening the judgment entered at No. 3171 May Term, 1978, in the court below, in the amount of $71,915.49 is reversed and said judgment is reinstated for the reasons set forth in the foregoing Opinion.
CAVANAUGH, J., files a concurring and dissenting opinion.