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SCOTT FACTORS v. HARTLEY (04/18/67)

decided: April 18, 1967.

SCOTT FACTORS, INC.
v.
HARTLEY, APPELLANT



Appeal from order of Court of Common Pleas of Lehigh County, Sept. T., 1965, No. 1396, in case of Scott Factors, Inc. v. Donald Hartley, trading as Hartley's.

COUNSEL

Alan M. Black, with him Efron and Black, for appellant.

David G. Senger, with him Jack I. Kaufman, for appellee.

Bell, C. J., Musmanno, Jones, Cohen, Eagen, O'Brien and Roberts, JJ. Opinion by Mr. Justice Jones.

Author: Jones

[ 425 Pa. Page 291]

This appeal lies from an order of the Court of Common Pleas of Lehigh County refusing to strike off a judgment entered by confession.

On August 24, 1961, Scott Factors, Inc. (Factors), and Donald Hartley (Hartley) entered into a written factoring agreement providing for the purchase by the former and the sale by the latter of certain accounts receivable and a method for the payment for such accounts receivable. In that agreement was the following provision: "27. Should [Hartley] default in any of the terms, herein, [Hartley] hereby empowers any attorney of any court of record, at option of Factors, to appear for [Hartley] and confess judgment in the sum of $50,000.00 and assess damages for the then outstanding balance due Factors, together with costs of suit and attorney's commission of fifteen percent (15%), without declaration of claim or averment of default having been filed, and this agreement or a copy hereof shall be sufficient warrant therefor."

On November 27, 1961, a representative of Factors who was not an "attorney of any court of record" entered

[ 425 Pa. Page 292]

    a judgment by confession against Hartley under the warrant of authority authorizing a confession of judgment contained in the factoring agreement. (No. 999 September Term, 1961). This judgment was entered for $50,000.00 plus interest and attorney's commission (15%). Hartley then petitioned the Court of Common Pleas of Lehigh County to strike off this judgment for two reasons: (a) an "attorney of a court of record" did not appear and confess judgment as required under the warrant of authority contained in the agreement and (b) the prothonotary lacked authority to enter such judgment. On November 27, 1965, the court struck off the judgment.

Factors, acting through an attorney of a court of record, on December 2, 1965, entered another judgment by confession against Hartley (No. 1396 September Term, 1965). In entering this judgment Factors again relied on the warrant of attorney contained in the factoring agreement and the judgment was entered on a copy of such warrant. Hartley then moved to strike off this new judgment for two reasons: (a) that the warrant of attorney contained in the factoring agreement had been exhausted by the entry of the first judgment; (b) the judgment was entered upon a copy, rather than the original, of the warrant of attorney. The court declined to strike off the new judgment and from its order this appeal was taken.

The issue is narrow: did the entry of the first judgment constitute such an exercise of the warrant of attorney so as to exhaust the warrant and preclude its use to enter a second judgment?

In Pennsylvania, we have long recognized and permitted the entry of a judgment by confession upon the authority of a warrant of attorney contained in an agreement between the parties. However, fully cognizant of the possibilities of abuse which might ...


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