The opinion of the court was delivered by: SHERIDAN
These are motions by the United States of America to amend a judgment it entered against defendant, Mary Stuart, and by defendant to vacate and set aside the judgment.
On January 24, 1959, Stuart Lumber Company, Inc. obtained a loan of $150,000 from the First National Bank of Carbondale, Carbondale, Pennsylvania, and the Small Business Administration (SBA), an agency of the United States. As additional collateral security, Joseph A. Stuart and Mary Stuart, his wife, executed a guaranty agreement and a confession of judgment. In March 1962, the loan being in default, the bank assigned all instruments held by it to the SBA. On July 16, 1962, judgment of $94,120.27 was entered in favor of the United States and against the corporate debtor.
The United States foreclosed and corporate real estate was sold by the marshal to the SBA for a net fair value of $70,435.87, leaving a balance owing of $23,684.40.
On July 16, 1962, the United States entered the confession of judgment against Mary Stuart.
At the time judgment was entered, there was nothing in the record to indicate that the United States had any interest or rights in the guaranty or in the accompanying confession of judgment.
Defendant filed a motion under Rule 60(b)(4) of the Federal Rules of Civil Procedure to vacate and set aside the judgment as void for the following reasons: (1) the judgment had been entered by the United States, a stranger to the guaranty contract and the accompanying confession of judgment; (2) the warrant of attorney contained no authority to confess judgment against Mary Stuart in the courts of the United States; (3) the warrant of attorney contained no authority to enter judgment against Mary Stuart alone, the only authority being to confess judgment jointly against Joseph A. Stuart and Mary Stuart; (4) the court lacked jurisdiction of the subject matter of the action and of the person of the defendant, Mary Stuart, at the time of the entry of the judgment by confession. The United States filed a motion under Rule 60(a) to amend the judgment on the ground that the warrant of attorney to confess judgment had, in fact, been assigned to the SBA by the First National Bank of Carbondale on March 1, 1962, but that the assignment, together with a statement of facts concerning the assignment, were "inadvertently omitted at the time the said judgment was entered."
THE MOTION TO AMEND: Rule 60(a) provides in pertinent part:
"Rule 60. Relief From Judgment Or Order.
(a) Clerical Mistakes. Clerical mistakes in judgments, orders or other parts of the record and errors therein arising from oversight or omission may be corrected by the court at any time of its own initiative or on the motion of any party * * *."
The United States urges that the failure to file the assignment is an omission or oversight in the record which falls within the purview of the rule. The defendant answers that "the United States seeks to amend the judgment by adding to it vital jurisdictional facts to show that at the time the judgment was entered some three years ago, the United States did, in fact, have ownership rights in the instruments pursuant to which judgment was entered"; that Rule 60(a) "was intended to cover clerical or minor details, not going to the substance of the judgment before the court." Neither party has cited authority which permitted an assignee to amend to plead an assignment after the entry of judgment.
"Record" in Rule 60(a) "refers not only to process, pleadings, verdicts, orders and judgments, but also to evidentiary documents, testimony taken, findings of fact and conclusions of law, etc. - or, in other words, to all things of which there is a record in the action." 6 Moore, Federal Practice para. 60.06 (2d ed.). Errors in the record arising from oversight or omission must be distinguished from errors of a more serious or substantial nature which are governed by Rule 60(b). Id., paras. 60.06, 60.06.
The cases, however, are not in harmony as to what constitutes substantial errors of oversight and omission. At various times the courts have treated errors of law as oversights which both may and may not be corrected under Rule 60(a). Id., 60.06; First Nat'l Bank In Greenwich v. National Airlines, Inc., S.D.N.Y. 1958, 167 F. Supp. 167. Even "oversights" which depended for their correction on the intention of a tribunal other than correcting court have been treated as oversights which may be corrected under Rule 60(a). 6 Moore, Federal Practice para. 60.06. Such oversights, however, clearly have been of a substantial nature. James Blackstone Mem. Assoc. v. Gulf, Mobile & Ohio R.R. Co., D.Conn.1961, 28 F.R.D. 385. In County of Imperial, etc. v. United States, 9 Cir. 1965, 348 F.2d 904, the parties stipulated to all the facts and the court decreed that plaintiff's tax liens had been extinguished by defendant's acquisition of title in the foreclosure proceedings. The court held it was error to amend the judgment to add a second parcel of real estate. In United States ex rel. Tillery v. Cavell, 3 Cir. 1961, 294 F.2d 12, through inadvertence appellant did not introduce into evidence the transcript of state court proceedings involving the same cause of action. The court held that the district court lost jurisdiction after the appeal was filed and that the admission of the transcript by the district court was not a permissible correction of a mistake as contemplated by Rule 60(a).
In these cases basic unfairness would have resulted if the correction had been allowed. Where the intention of another tribunal is involved, the correcting court does not know whether the other tribunal did, in fact, proceed deliberately or by oversight and to permit the correction could introduce an element into the judgment by which a party should not be bound. The addition of the second parcel of land, which apparently had not been part of the stipulation, to the judgment would have extinguished liens on land not covered by the stipulation and the court properly held the amendment was substantial. The admission of the transcript denied the opposing party the right to controvert this evidence at the trial and to have all evidence considered as a whole at the time of the court's decision.
Basic unfairness will not result if the bank's assignment to the SBA is permitted to be filed. The guaranty was on SBA Form 148A. Defendant knew when the loan was made that the SBA had a vital and substantial interest. Judgment was timely entered by the United States, and constituted clear notice to the defendant, who does not deny the indebtedness, that she would be held liable. There is no suggestion that defendant changed her position or suffered any prejudice because the assignment was not filed; on the other hand, the United States would suffer substantial harm if defendant was able to take advantage of this defense. Moreover, defendant was served with the petition to fix the fair value of the real estate, filed March 11, 1963, in which the United States alleged that defendant and the corporation were liable on the judgment entered against the corporate debtor. The deficiency was established by the order of December 30, 1963, which fixed the fair value, yet defendant made no complaint until she filed her motion in June 1965, almost three years after the judgment was entered and 18 months after the deficiency was established. Equitable considerations such as these are not without significance in determining the motions of the plaintiff and the defendant. Rome S & S Station v. Finch, 1933, 111 Pa.Super. 226, 228, 169 A. 476.
"A judgment by confession must be self-sustaining of record and the warrant of attorney fully complied with. Admittedly, the Dime Bank and Trust Company of Pittston, Pa., is a stranger to the note upon which the confession was entered. The Miners Savings Bank of Pittston now tries to overcome this by seeking to amend, but has failed to establish by depositions that the properly in the note had been transferred or assigned to it prior to its entry."
In Plains State Bank v. Bernardi, 1934, 29 Luz.Leg.Reg. 223, a decision of the Luzerne County, Pa. Court of Common Pleas, the court permitted the equitable owner of a non-negotiable note, pursuant to which judgment by confession had been entered, to amend the judgment by substituting for the Plains State Bank the name of Paul Sindaco, nominal plaintiff, to the use of the Plains State Bank. The bank, by a previous assignment, was owner of the note. Gordon, the State Secretary of ...