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ALKER v. PHILADELPHIA NATIONAL BANK (01/12/53)

THE SUPREME COURT OF PENNSYLVANIA


January 12, 1953

ALKER, APPELLANT,
v.
THE PHILADELPHIA NATIONAL BANK

Appeal, No. 153, Jan. T., 1952, from judgment of Court of Common Pleas No. 5 of Philadelphia County, June T., 1939, No. 4767, in case of Harry J. Alker, Jr., Exr., Will of William Freihofer, deceased, v. The Philadelphia National Bank. Judgment of non pros affirmed.

COUNSEL

Lemuel B. Schofield, with him Edwin Hall, 2nd, and Harry J. Alker, Jr., for appellant.

Arthur Littleton, with him John R. McConnell and Morgan, Lewis & Bockius, for appellee.

Before Stern, C.j., Jones, Bell, Chidsey and Musmanno, JJ.

[ 372 Pa. Page 327]

The facts are stated in the opinion of SMITH, P.J., of the court below, as follows:

This matter comes before us on a rule to show cause why a judgment of non-pros should not be entered for the defendant. The action was originally instituted in a complaint in assumpsit filed by Harry J. Alker, Jr., and Stanley H. Freihofer, survivors of the four executors under the will of William Freihofer, deceased, against the Philadelphia National Bank. The summons in assumpsit was issued August 17, 1939 and was served the same day upon the defendant. Nothing was done by the parties thereafter until December 16,

[ 372 Pa. Page 3281944]

, when the plaintiff filed a suggestion of the death of Stanley H. Freihofer, who had died on July 30, 1941, leaving the said Harry J. Alker, Esquire, the sole surviving executor of the estate. On December 21, 1944, the plaintiff filed a statement of claim on the defendant with notice thereon to file an affidavit of defense and requesting a jury trial.

On January 8, 1945, pursuant to a motion of the defendant, this Court by order of FENERTY, J., issued a rule upon the plaintiff to show cause why a judgment of non-pros should not be entered in favor of defendant. This rule was made returnable January 12, 1945. Argument on this rule was continued until January 29, 1945. On that day the plaintiff, Harry J. Alker, Jr., filed his answer to the petition of the defendant. In the answer, some of the averments contained in the petition were denied so that it was necessary to take depositions. The depositions were taken as follows: February 11, 1947, depositions of Edward W. Mann by defendant; June 19, 1947, depositions of Evan Randolph taken by defendant; July 9, 1947, depositions of Harry J. Alker, Jr., by plaintiff; July 26, 1950, depositions of Arthur Littleton by defendant in rebuttal of the testimony of Harry J. Alker Jr. The matter was then argued orally by counsel on October 5, 1951, before the court en banc consisting of FRANK SMITH, P.J., and EUGENE V. ALESSANDRONI, J. The question here involved is whether a judgment of non-pros should be entered where a statement of claim was filed on December 21, 1944, alleging the cause of action which arose in August, 1933. The determination of this question is addressed to the discretion of the Court. We have considered the pleadings and depositions in order to determine if the plaintiff proceeded with due and reasonable diligence necessary for the disposition of his claim and also whether the defendant's right has

[ 372 Pa. Page 329]

    been prejudiced by the long delay of eleven years and four months after the cause of action arose and before the plaintiff filed his statement of claim.

The plaintiff, as the sole surviving executor of the will of William Freihofer, deceased, claims to recover from the Philadelphia National Bank, defendant, a sum of $502,531 with interest from August 24, 1933. The cause of action is based upon an alleged improper sale by the defendant of collateral, securities, Building and Loan Association stock, and a guaranty, which were in the possession of the defendant as collateral for a loan originally made to William Freihofer in the sum of $910,000. The notes signed by Mr. Freihofer were demand and time notes. Demand for the payment of the said notes was made upon the executors of the estate of William Freihofer on August 14, 1933, payment to be made on or before August 18, 1933. On August 18, 1933, the defendant in writing notified the executors of the said estate that it had an offer to sell the collateral, the Building and Loan Association notes, and the guaranty in a single package for a lump sum equivalent to the amount due and owing to the Bank on the said notes of William Freihofer, or those notes of William Freihofer which had been renewed by the executors. The plaintiffs in their complaint aver that they asked for an extension of time so that they might either pay the notes or negotiate a new loan in order to repay the defendant. Plaintiffs aver that notwithstanding this request, defendant on August 24, 1933, sold all of the said collateral, the Building and Loan Association notes and the guaranty in a single package for the sum of $1,284,962.44. In the bill of complaint the plaintiffs aver that the market value at the time of sale of the said securities, exclusive of anything else was in the sum of $1,366,812.20, and that the defendant was thereby indebted to the

[ 372 Pa. Page 330]

    plaintiff by the sum of $502,531 for which it made claim.

It would appear that any reasonable person would decide that the plaintiff had not acted with due diligence under the circumstances. With the knowledge that the securities held as collateral were either Building and Loan Association stocks or loan securities such as Horn & Hardart Baking Company, Northwestern Trust Company, North City Trust Company, and William Freihofer Baking Company, we find it difficult to see why the value of these securities could not have been easily ascertained and why the statement of claim could not have been easily prepared by the plaintiff, who is a seasoned lawyer, instead of waiting over eleven years after the alleged cause of action came into being. It clearly is the duty of a plaintiff "to proceed with his cause within a reasonable time. He is the actor and must act, or fail of his action.": Waring Brothers & Co. v. P.R.R., 176 Pa. 172, 178. In McGrann v. Allen, 291 Pa. 574, it was held: "... laches does not depend on the statute of limitations, but whether due diligence has been shown"; and if not, whether the delay has been prejudicial to the adverse party. In Ulakovic v. Met. L. Ins. Co., 339 Pa. 571, 574, Mr. Justice MAXEY held:

"In Potter Title & Trust Co., Admr., v. Frank et al., 298 Pa. 137, 148 A. 50, this court affirmed the action of a court of common pleas in entering a non pros where suit was not brought for over five and onehalf years after the cause of action arose, where an additional fourteen months elapsed before a statement of claim was filed; where nearly ten years more elapsed before any step was taken to bring the case to trial, and where the most important witness had died in the meantime. In that case this court said: 'As a general rule, where the plaintiff suffers a pending suit to remain

[ 372 Pa. Page 331]

    without action on his part for over six years, it might, unless there was compelling reason therefor, be treated as abandoned and a non pros properly entered.' In Prettyman v. Irwin, 273 Pa. 522, 117 A. 195, we held in effect that an action will ordinarily be adjudged abandoned where plaintiff permits it to sleep for a longer period than is allowed for the commencement of the suit, unless the laches is satisfactorily explained. In Munley v. Sugar Notch Boro., 215 Pa. 228, 64 A. 377, we held that a plaintiff's delay of over eight years in bringing his pending case to trial was an abandonment and entitled the defendant to have the case non prossed.

"It has always been the policy of the law to expedite litigation and not to encourage long delays. From this fact arose the various statutes of limitations, and the reasons why the law is unfavorable to delayed litigation are self-evident. If any person has a right which he wishes enforced, he should enforce it promptly. The person against whom the right is to be enforced might be greatly prejudiced by plaintiff's delay. Witnesses disappear or remove to distant parts and the entire aspect of the parties on both sides may change with the lapse of time."

The complaint shows that William B. Sloan, one of the executors of the Freihofer Estate, on August 26, 1933, wrote to the defendant bank inquiring how the purchase price had been allocated among the securities as sold. The defendant in writing answered the said William B. Sloan to the effect that no allocation had been made since all of the securities had been sold as a package. With this knowledge, the plaintiff did nothing until August 17, 1939, when he filed his summons in assumpsit. He thus permitted six years to pass before he took any action. Then again he delayed action until December 21, 1944, when he filed a

[ 372 Pa. Page 332]

    statement of claim five and one-third years after the filing of the summons, or over eleven years and four months after he had notice upon which he could have based a cause of action. It seems to us that by that time any reasonable person could have naturally believed that the plaintiff had either decided that he had no cause of action or had abandoned it. True, the defendant could have forced the issue, but it was not bound to do so. As was said in Ins. Co. v. Clinger, 10 Pa. Superior Ct. 92: "Why should they voluntarily incur the trouble and risk of extensive litigation?" In Weil et al. v. Power B. & L. Assn., 142 Pa. Superior Ct. 257, 261, the lower court in an opinion affirmed per curiam by the Superior Court said: "'Laches does not depend on the statute of limitations, but on whether due diligence has been shown and, if not, whether the delay has been prejudicial to the adverse party: McGrann v. Allen et al., 291 Pa. 574. See also Townsend v. Vanderwerker, 160 U.S. 171. Nevertheless, as a general rule, where the plaintiff suffers a pending suit to remain without action on his part for over six years, it might, unless there was compelling reason therefor, be treated as abandoned and a non pros properly entered. This conclusion finds support in recent decisions. In Prettman v. Irwin, 273 Pa. 522, 526, we hold, in effect, that an action will ordinarily be adjudged abandoned where plaintiff permits it to sleep for a longer period than is allowed for the commencement of the suit, unless the laches is satisfactorily explained.'"

While there is no fixed rule of the length of delay that will prevent the defendant from proceeding, the facts in each particular case must be considered, yet the lapse of time over a number of years must be explained in a reasonable manner, especially when the rights of the defendant have been prejudiced by the

[ 372 Pa. Page 333]

    delay. The facts show that William Freihofer died on June 26, 1932, leaving a last will and testament in which he named four executors of his estate. At that time he was indebted to the defendant bank on demand or time notes, supported by collateral, in the sum of $910,000. On August 14, 1933, the defendant bank called this loan and demanded payment as of August 18, 1933. The plaintiff then requested an extension of time. The bank agreed to this extension but fixed August 24, 1933, as the day of payment. When no offer came from the plaintiff at the end of that day, the bank sold all of the collateral in order to pay the obligations of the Freihofer Estate. The plaintiff Harry J. Alker, Jr., then one of the two surviving executors, filed the summons in assumpsit on August 17, 1939, Stanley Freihofer, the other surviving executor, died on July 30, 1941. Harry J. Alker, Jr., as the sole surviving executor, on December 21, 1944, then filed the statement of claim. The defendant, for the first time, was informed of the nature of the cause of action.

We have considered depositions taken by the various parties. The depositions of Edward H. Mann are to the effect that in 1933 he was the Assistant Cashier of the Philadelphia National Bank, in supervision of the loan and discount department, keeping a record of the loans in that department and having the physical possession of the collateral. He testified that Joseph Wayne, President of the defendant bank, was in immediate charge of the William Freihofer loan and it was from him that he received his instructions in the matter of this loan. He testified that he had no conversations with Mr. Freihofer and saw him only at times in the office of Mr. Wayne; that he knew about the demand or time notes and that on August 14, 1933, he wrote to the executors of the Freihofer Estate

[ 372 Pa. Page 334]

    calling the loan while acting under instructions from Mr. Evan Randolph, who informed him that Mr. Wayne had directed that the loan be called. He testified that the executors of the estate made no better offer than the one that was made by the bank and that the securities were then sold. He testified that on August 24, 1933, he wrote to the said executors of the Freihofer Estate informing them that the bank has sold the securities to the Food Industries for $1,284,962.44 and listed the collaterals and stated that they had applied the proceeds to the various loans. He testified that after that he had heard nothing from the executors of the estate until the statement of claim had been filed in 1944.

The depositions of Evan Randolph, taken in 1947, are to the effect that in 1933 he was a vice president of the Philadelphia National Bank and that Joseph Wayne was its president; that Joseph Wayne managed the conferences concerning the Freihofer loan with William Freihofer, and at his death, with the executors of the Freihofer Estate; that Mr. Wayne had charge of the Freihofer loan and that before he left on his vacation on August 1, 1933, Joseph Wayne, the president, advised Evan Randolph, the vice president, that he was dissatisfied with the Freihofer loan and "to try to get it paid off even if I have to sell it at a discount." Mr. Randolph testified in his depositions that he then had some conversations with Mr. Sloan, representing the Freihofer Estate, and had advised him that the Philadelphia National Bank wanted the demand notes and the time notes paid, and by letter dated August 14, 1933, advised the executors of the Freihofer Estate that the bank demanded payment of $542,247.50 for the collateral stocks, etc., and $310,000.00 for the Building and Loan Association notes by the close of the business day Friday, August

[ 372 Pa. Page 33518]

, 1933. Mr. Randolph testified that Mr. Sloan came in on August 18, 1933, and requested more time for payment, and Mr. Randolph agreed to give him until August 23, 1933, in which to get a better bid for the collateral over in the City of New York. He testified that Mr. Sloan came back and said that he had not been able to get the bid and that the bank should go ahead with the sale. Mr. Randolph testified that on the following day, to wit, August 24, 1933, the bank did go ahead with the sale and sold the collateral in a parcel. Mr. Randolph made it clear that this loan was handled exclusively by the president, Joseph Wayne, and that the latter told him that the "Freihofer loan had been dragging along and to see if you can get rid of it. I am willing to take a loss." It will be noted that not only is Joseph Wayne, the gentleman who had charge of this loan, deceased but Mr. Sloan is also deceased. According to the depositions of Mr. Randolph, Mr. Sloan informed him that he could get no better offer for the collateral and for the bank to sell it. Mr. Randolph furthermore testified in his depositions that he asked a Mr. Dietrich, representing Food Industries, for a bid on this collateral and the notes and that he advised Mr. Sloan of this offer. Mr. Sloan afterwards did not ask for any further extension and did not say that the Estate had any better offer and that the bank had better sell the securities. Mr. Randolph testified that Mr. Alker had come along on two or three occasions but had said nothing in any of the conferences. He said that Mr. Alker had made no protest at all until the sale of the securities had been accomplished. It must be conceded that various important and essential matters had been spoken by men who are now deceased.

The depositions of Harry J. Alker, Jr., were then taken and then counter depositions of Arthur Littleton,

[ 372 Pa. Page 336]

Esquire. In reading the depositions of the plaintiff it was clear that a great many of the persons mentioned by him were dead. William Freihofer died June 26, 1932; William J. Freihofer, one of the executors of the estate, died February 17, 1938; Stanley Freihofer, one of the executors, died July 10, 1941; William B. Solan, one of the executors, died June 10, 1938; William P. Gest, president of the Fidelity Trust Company, died January 12, 1939; J. Willison Smith, president of the Land Title and Trust Company, died March 10, 1942; Waring Wilson, an associate of the plaintiff, died in the Spring of 1939; Joseph Wayne, president of the Philadelphia National Bank, died May 26, 1942; and Evan Randolph, who is now in retirement, is of the age of seventy-one years. Thus all of those who had any part in these transactions are dead, excepting the plaintiff, Harry J. Alker, Jr., Evan Randolph, and Edward H. Mann, then the Assistant Cashier of the bank in charge of loans and collateral certificates, who acted under the direct instruction of Joseph Wayne, Jr., or Evan Randolph, who also was acting under instruction of Joseph Wayne in the matter of the Freihofer loan. It must therefore be apparent that the defendant after the lapse of so many years and the death of so many material witnesses would be prejudiced in being compelled to try the case at this time.

The reasons presented by Mr. Alker in his depositions virtually are that the press of business and his illness precluded him from attending to and bringing this suit. The first reason does not seem to us to be sufficient. While we take notice of the fact that Mr. Alker is a busy lawyer, nevertheless this is no reason why he should prefer to take action in other litigations and neglect this one for such a long period of time. Mr. Alker in his depositions said that he was ill for four years from the Fall of 1941 to the middle of 1944,

[ 372 Pa. Page 337]

    and that for four months he was a nominal patient in a hospital. A reading of the depositions in this matter shows that while Mr. Alker was ill for four years he was not incapacitated and that he was engaged in a very active practice of law during that time. The evidence shows that during the four months he was in the hospital that he was only a nominal patient, leaving there at intervals of three or four times a week to go to his office, and that he was always in touch with the affairs of his office while he was in the hospital. He makes no satisfactory explanation as to his inability to proceed with this case between 1933 and the time he states he was ill. He fails to show how or why he was prevented from employing competent counsel to study this claim so that it might have been prepared and served upon the defendant before December of 1944. He must have been aware, with his knowledge as an experienced lawyer, that if the defendant had been informed by a complaint in assumpsit of the nature and character of the plaintiff's claim, he could have preserved by depositions the testimony of the then available witnesses and prepared a defense to the plaintiff's claim. But the plaintiff had slept upon his rights to the prejudice of the defendant.

We are not satisfied with the excuse presented by the plaintiff in his depositions. These depositions are replete with alleged statements made by or to men now dead, as well as a great many statements that would most likely be classed as immaterial and irrelevant or as hearsay. The depositions of the plaintiff's witnesses on this rule fail to measure up to the degree of proof which is necessary in a question of this character.

After judgment of non pros was entered plaintiff filed a petition to amend the complaint which the court below refused. Plaintiff appealed.

Disposition

The Judgment of Non Pros is affirmed on the Opinion of President Judge FRANK SMITH.

19530112

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