Frankford Trust Co. v. Stainless Steel Services, Inc.

475 A.2d 147, 327 Pa. Super. 159, 38 U.C.C. Rep. Serv. (West) 668, 1984 Pa. Super. LEXIS 4595
CourtSupreme Court of Pennsylvania
DecidedApril 27, 1984
Docket1556
StatusPublished
Cited by8 cases

This text of 475 A.2d 147 (Frankford Trust Co. v. Stainless Steel Services, Inc.) is published on Counsel Stack Legal Research, covering Supreme Court of Pennsylvania primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Frankford Trust Co. v. Stainless Steel Services, Inc., 475 A.2d 147, 327 Pa. Super. 159, 38 U.C.C. Rep. Serv. (West) 668, 1984 Pa. Super. LEXIS 4595 (Pa. 1984).

Opinion

*162 CIRILLO, Judge:

On September 1, 1981, appellant, Frankford Trust Company (hereinafter referred to as “Frankford”) entered a confession of judgment against appellees, Stainless Steel Services, Inc., Philadelphia Iron Works Corp., Albert D. Stewart, Jr., Albert D. Stewart, III, and Martha E. Stewart (hereinafter collectively referred to as “Stainless”) in the amount of $70,706.25. Shortly after receiving notification of the entry of judgment, Stainless filed a petition to open or strike judgment with the Court of Common Pleas, Philadelphia County. After subsequent responsive pleadings were filed, Stainless, by praecipe, set the matter down for argument. On May 6,1982, the Honorable Herbert R. Cain, Jr., granted Stainless’s petition and opened the confessed judgment. This appeal followed.

On appeal, Frankford contends that the trial court abused its discretion in opening the judgment. After a review of the record, we conclude that the trial court acted properly.

On or about August 27, 1980, Stainless entered into a lease agreement with Commercial Leasing Company (hereinafter referred to as “Commercial”) for the leasing of certain heavy duty polishing equipment. Under the terms of the agreement, Stainless agreed to make monthly rental payments to Commercial, and further authorized Commercial to obtain a confession of judgment in the event of default. Although the lease was plain and unconditional on its face, Stainless alleges that Commercial had orally agreed to condition the agreement upon the equipment’s satisfactory operation in Stainless’s factory. According to Stainless, the equipment did not perform satisfactorily and, as a result, Commercial agreed to the return of the equipment and Stainless’s release from further obligation. The agreement to allow for the return of the equipment allegedly occurred in October. The record indicates that the equipment was in fact crated and shipped back to the manufacturer on or about December 22, 1980. Stainless did not make any rental payments thereafter.

*163 While these developments transpired, Commercial had already assigned the lease to Frankford back on August 28, 1980. The record shows that Commercial notified Stainless by letter dated November 26, 1980 that the lease had been “assigned for processing” and that all future rental payments were to be made to Frankford. When Stainless returned the equipment to the manufacturer and thereafter failed to pay rent, Frankford, as assignee of the lease, entered a confessed judgment against Stainless. Frankford appeals from the opening of that judgment.

In order to open a confessed judgment, the judgment debtor must act promptly, allege a meritorious defense, and present sufficient evidence of the defense to require submission of the issues to a jury. First National Bank of Fryburg v. Kriebel, 311 Pa.Super. 428, 457 A.2d 961 (1983); Society Hill Towers Owners Ass’n. v. Matthew, 306 Pa.Super. 13, 451 A.2d 1366 (1982); Price v. Geller, 292 Pa.Super. 455, 437 A.2d 763 (1981). Instantly, there is no question raised as to whether Stainless acted promptly in pursuing this matter. Our review focuses on whether a meritorious defense exists and whether Stainless has presented sufficient evidence in support of such defense.

Among the defenses to the entry of judgment asserted by Stainless is the argument that the original parties had agreed to abrogate the lease agreement and to release Stainless from its duties thereunder. Such discharge of contractual obligation, if agreed to by both Stainless and Commercial before notice of assignment, would establish a binding and meritorious defense against Frank-ford’s claim as assignee. Under the Pennsylvania Uniform Commercial Code and as a settled principle of contract law an “assignor [Commercial] retains his power to discharge or modify the duty of the obligor [Stainless] ... [until] the obligor receives notification that the right has been assigned and that performance is to be rendered to the assignee [Frankford].” Restatement of Contracts, (Second) *164 § 838. 13 Pa.C.S. § 9318; 1 See also, Provident Trust Co. v. Metropolitan Casualty Ins. Co., 152 F.2d 875 (3rd Cir. 1945); First National Bank of Bangor v. Bangor Trust Co., 297 Pa. 115, 146 A. 595 (1929); Burger v. Freedom Twp., 126 Pa.Super. 128, 190 A. 387 (1937); 4 Corbin on Contracts, § 890; 3 Williston on Contracts, § 433 (3rd Ed. 1970).

The important question, therefore, is whether Stainless produced sufficient evidence of its asserted defense to warrant the opening of judgment. Is there sufficient evidence that the lease agreement was abrogated and Stainless excused from its duty to pay rent? Is there sufficient evidence that such discharge of contractual obligation, if any, occurred before Stainless was notified that Commercial had assigned the lease to Frankford?

With regard to proof of the asserted defense, our rules provide that the “court shall dispose of [the motion to open judgment] on petition and answer, and on any testimony, depositions, admissions and other evidence.” Pa.R.C.P. 2959(e). “The judgment should be opened where the evidence produced would be sufficient to prevent a directed verdict against” the moving party at trial. Corson v. Corson’s, Inc., 290 Pa.Super. 528, 533, 434 A.2d 1269, 1272 (1981) (quoting Greenwood v. Kadoich, 239 Pa.Super. 372, 375, 357 A.2d 604, 606 (1976). Thus, “in weighing the sufficiency of [the] evidence, the facts must be viewed in the light most favorable to the petitioner and the Court must accept as true all evidence and proper inferences therefrom supporting petitioner’s defense, and must reject the adverse allegations of the opposition.” Greenwood v. Kadoich, supra, 239 Pa.Superior Ct. at 376, 357 A.2d at 606.

Although no depositions were taken, Stainless did present the trial court with certain documentary evidence. This evidence viewed in a light most favorable to Stainless as the *165 moving party supports the inference that the lease agreement was rescinded or revoked by the original parties prior to the time Stainless received notification that the lease had been assigned. The record suggests that Stainless did not receive notice of the assignment to Frankford until, at the earliest, November 26, 1980. According to Stainless, however, Commercial agreed in October to release Stainless from its contractual obligations if Stainless returned the equipment to the manufacturer. 2 As indicated by several correspondences and bills of lading proffered by Stainless, we know that the equipment was returned on December 22, 1980.

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475 A.2d 147, 327 Pa. Super. 159, 38 U.C.C. Rep. Serv. (West) 668, 1984 Pa. Super. LEXIS 4595, Counsel Stack Legal Research, https://law.counselstack.com/opinion/frankford-trust-co-v-stainless-steel-services-inc-pa-1984.