Bank of America v. Copley Qu-Wayne Associates

656 A.2d 121, 440 Pa. Super. 459, 1995 Pa. Super. LEXIS 281
CourtSuperior Court of Pennsylvania
DecidedFebruary 17, 1995
StatusPublished
Cited by4 cases

This text of 656 A.2d 121 (Bank of America v. Copley Qu-Wayne Associates) is published on Counsel Stack Legal Research, covering Superior Court of Pennsylvania primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Bank of America v. Copley Qu-Wayne Associates, 656 A.2d 121, 440 Pa. Super. 459, 1995 Pa. Super. LEXIS 281 (Pa. Ct. App. 1995).

Opinion

TAMILIA, Judge:

Raymond Alexander appeals from the March 28, 1994 Order denying his petition to open and/or strike the $1,680,175.52 judgment entered against him as a 1% partner of defendant Brighton Court Associates (Brighton). Appellant argues this judgment was based upon an unauthorized exercise of authority by Brighton’s managing partner, Daniel Banks (Banks).

Appellant (1%), along with Daniel and Jacquelyn Banks (67%), Robert and Beryl Elwood (11%), Dale Criswell (4%) and Edward Hollín (17%) are partners in Brighton. Their respective interests in the partnership are as indicated above. Banks is also general partner in defendant Copley Qu-Wayne Associates, a Pennsylvania limited partnership (Copley). On June 9, 1989, Banks, in his capacities as managing general partner of Brighton and sole general partner of Copley, executed a promissory note for 1.5 million dollars. In relation to the loan, Banks and his wife executed a guaranty and suretyship agreement which contained, among other provisions, a clause authorizing a judgment by confession in the event of default. The makers thereafter defaulted on the loan and, on October 4, 1993, judgment by confession was entered against appellant and the other [122]*122general partners of Brighton. Appellant’s petition to open and/or strike was denied March 28, 1994, the trial court reasoning, in part, Banks’ authority to execute the note was adequately reflected in the record via the partnership agreement and Banks’ power of attorney. For the reasons which follow we disagree with the trial court and vacate the judgment entered against Raymond Alexander.1

A motion to strike judgment will not be granted unless the fatal defect claimed appears on the face of the record. Dollar Bank v. Northwood Cheese Co., 431 Pa.Super. 541, 637 A.2d 309 (1994). A judgment by confession will be opened only when the petitioner acts promptly, alleges a meritorious defense and presents sufficient evidence of that defense so as to require submission of the issue to a jury. Id.

The pivotal issue before us is whether Banks had the authority, apparent or actual, to obligate Brighton to a 1.5 million dollar loan containing a confession of judgment clause. This very issue, not previously addressed by this Court,2 was recently reviewed by the United States Court of Appeals from the Third Circuit, Eastern District, Pennsylvania. In Resolution Trust Corp. v. Forest Grove Inc., Ronald & Delores Isenhart, 33 F.3d 284 (3rd Cir.1994), a confessed judgment was entered by Resolution Trust against the defendants for repayment of a $1,815,000 loan. The commitment letter for the loan had been executed on October 15,1986 by Mr. Isenhart, on behalf of Forest Grove, in his capacity as one of three Forest Grove officers. On November 12,1986, Mrs. Isenhart executed a general power of attorney appointing Mr. Isenhart as her attorney-in-fact. The power of attorney, while giving her husband wide latitude with regard to the management of Forest Grove (mobile home park), did not expressly authorize him to enter into an agreement containing a confession of judgment clause. On this same day, Mr. Isenhart signed a surety agreement in compliance with the lender’s commitment letter condition that Forest Grove officers and their spouses would guarantee repayment of the loan. In his capacity as her attorney-in-fact, Mr. Isenhart signed on behalf of Mrs. Isenhart. The surety agreement contained, in addition to other provisions, the confession of judgment clause upon which judgment was entered. Simultaneously with the execution of the power of attorney and surety agreement, Mr. Isenhart, on behalf of Forest Grove, signed a bond and warrant document which also contained a confession of judgment clause. This documentation was not signed by any of the officers or their spouses as individuals.

Faced with these facts, the court found, inter alia, the power of attorney granted by Mrs. Isenhart to Mr. Isenhart did not give him the power to grant to appellee a warrant of attorney to confess judgment against Mrs. Isenhart. Therefore, the Court of Appeals found the District Court erred when it refused to open/strike the confessed judgment as against Mrs. Isenhart. The court’s Order denying Forest Grove’s and Mr. Isenhart’s motion to open/strike the confessed judgment entered against them was, however, affirmed.

Appellant herein finds himself in precisely the same position as Mrs. Isenhart. The limited power of attorney executed by Alexander did not expressly grant to Banks the authority to enter an agreement containing a warrant of attorney to confess 'judgment clause. The Isenhart Court relied on the Restatement (Second) of Agency, a Beaver County case, and an Ohio Supreme Court case, in support of its opinion an agent cannot execute a warrant of attorney to confess judgment in the absence of the express authority to do so:

The Restatement (Second) of Agency states:
It is inferred that one having authority to borrow has authority to do what is reasonably necessary in obtaining the money_ It does not, however, in-[123]*123elude authority to give security or to give a judgment note.

Restatement (Second) of Agency § 75 cmt. b (1958). It is also the general rule that:

An agent may execute a warrant of attorney to confess judgment against his principal where he is expressly authorized to do so....
In the absence of express authority, the power of an agent to execute a warrant of attorney to confess judgment against his principal has generally not been inferred.... This rule that an agent ordinarily is without power to execute a warrant of attorney to confess judgment unless such authority is expressly conferred has been held applicable even where an agent was granted the power to borrow money for his principal or to execute notes, mortgages, bonds, or other securities to secure debts of his principal....

C.P. Jhong, Annotation, Agent’s Authority to Execute Warrant of Attorney to Confess Judgment Against Principal, 92 A.L.R.2d 952, 953-54 (1968) (footnotes omitted).

In Armen v. Frederick, 59 Pa.D. & C. 115 (Beaver Co.1947), a husband granted his wife a power of attorney. This power of attorney authorized her:

to do and perform all matters and things, transact all business, make, execute and acknowledge all contracts, orders, deeds, writings, assurances and instruments which may be requisite or proper to effectuate any matter or thing appertaining or belonging to me, and especially granting to her the power to apply for and renew my restaurant liquor license....

Id. at 116. The wife signed a note to borrow money on behalf of her husband who was stationed overseas in the military. It contained a confession of judgment clause. In considering the effect of the power of attorney, the trial court stated “[pjermission to another to authorize confession of judgment must be expressed in unequivocal language.” Id. at 125. The court concluded that the power of attorney did not include this type of authorization, and therefore struck the confessed judgment. Id.

Similarly, in Peoples Banking Co. v. Brumfield Hay & Grain Co., [172 Ohio St.

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Cite This Page — Counsel Stack

Bluebook (online)
656 A.2d 121, 440 Pa. Super. 459, 1995 Pa. Super. LEXIS 281, Counsel Stack Legal Research, https://law.counselstack.com/opinion/bank-of-america-v-copley-qu-wayne-associates-pasuperct-1995.