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BUDGET CHARGE ACCOUNTS v. MULLANEY. (09/11/58)

September 11, 1958

BUDGET CHARGE ACCOUNTS, INC., APPELLANT,
v.
MULLANEY.



Appeal, No. 36, Oct. T., 1958, from order of Court of Common Pleas of Delaware County, June T., 1956, No. 519, in case of Budget Charge Accounts, Inc. v. Patrick Mullaney et ux. Order affirmed.

COUNSEL

H. Schwartz, with him Gerber & Galfind, for appellant.

Clement J. McGovern, for appellees.

Before Rhodes, P.j., Gunther, Wright, Woodside, Ervin, and Watkins, JJ. (hirt, J., absent).

Author: Watkins

[ 187 Pa. Super. Page 192]

OPINION BY WATKINS, J.

This appeal is from an order of the court below opening a judgment which was entered by confession on a note dated February 17, 1956, signatures on which note were secured by allegedly false representations made by an agent for the payee of said note, Rowland Agency, Inc. The payee endorsed the note to Associated Acceptance Corporation, a Philadelphia firm, which then endorsed the note to Budget Charge Accounts, Inc., a New York firm, the appellant here, on February 20, 1956. Appellant entered judgment on the note on June 29, 1956 after appellee refused to make monthly payments and advised appellant of their defense. After petition, answer, interrogatories and hearing, the judgment was ordered opened August 21, 1957.

By stipulation, the disposition of this case will control eight other similar actions.

A proceeding on petition to open a judgment is largely equitable in nature; the defense offered may be either legal or equitable: Wise's Appeal, 99 Pa. 193 (1881).An application to open a judgment entered upon a warrant of attorney is an equitable proceeding governed by equitable principles and is addressed to the sound discretion of the court below. On appeal, the question is whether the court below kept within the bounds of its discretionary power, for the order of the court below in such circumstances will be reversed only for a clear or manifest abuse of discretion: Singer v. Ritter, 167 Pa. Superior Ct. 154, 74 A.2d 520 (1950); Oppenheimer v. Shapiro, 163 Pa. Superior Ct. 185, 60 A.2d 337 (1948); Ehnes v. Mang, 170 Pa. Superior Ct. 155, 84 A.2d 518 (1951); Tressler v. Emerick, 278 Pa. 128, 122 A. 229 (1923).

The defense in this case is fraud in the inception. The action being based on a negotiable instrument, the defense is as to the original payee. The testimony discloses

[ 187 Pa. Super. Page 193]

    that the appellees' defense was that the signatures to the note were obtained by false representations of the payee; that these representations were that they had won a free clothes dryer and were to be paid the sum of $20 each for interviews they obtained for the payee with prospective purchasers; that the signatures were obtained by these representations and that they had no knowledge that they were signing a judgment note; that the note was signed on February 14, 1956; that the dryer was delivered several days later and connected in March, 1956 and that it was defective; that they learned by television that the payee had been exposed as a fraudulent company; that they tried to reach the payee by letters and by personal visits but found the office closed; that their first knowledge that a claim was being made on a note was the receipt of the monthly payment book from the appellant; and that they never made any payments and wrote to the appellant stating that they had been defrauded and asked that the dryer be removed.

The fraud whereby the original note was obtained was not denied at the hearing. The appellant seeks to circumvent this defense by proving that it is a holder in due course. The defense appearing to be meritorious, as to the payee, the burden of showing it was a holder in due course, is then on the one claiming to be ...


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