to recover the balance claimed, and that the defendants' counterclaim should be dismissed.
Unquestionably, the broad language of the guarantee agreements would compel the entry of judgment in favor of the plaintiff, unless, through its handling of the judgment note, plaintiff breached its duty to the defendants and thereby discharged the defendants from their obligations. The defendants rely upon the common-law principle, codified in Article 9 of the Uniform Commercial Code, that it is the duty of a pledgee of collateral to use reasonable diligence to preserve the same; and that, where the collateral consists of claims against third parties, this includes the obligation of using reasonable diligence to preserve and collect the claims, or enable the pledgor to do so. Pa. Stat. Ann. 12A, § 9-207; ALI Restatement Security §§ 17 and 18.
There are several reasons for rejecting this argument. In the first place, construing all of the documents together, it seems reasonably clear that the parties intended the disclaimer set forth in the assignment (". . . without responsibility whatsoever on assignee's part for any omission or invalid accomplishment thereof, whether through assignee's failure, neglect or for any reason, and such omission or invalid accomplishment shall not relieve the undersigned of any responsibility to said assignee. . . .") to apply to the entire transaction, including the judgment note; and this kind of disclaimer is expressly authorized by section 9-207(1) of the Commercial Code ("In the case of an instrument or chattel paper reasonable care includes taking necessary steps to preserve rights against prior parties unless otherwise agreed.")
In the second place, the plaintiff never assumed any obligation to record the judgment note. The defendants requested plaintiff to do so, in the forwarding letter, but plaintiff never agreed to do so, nor did plaintiff ever advise or otherwise indicate to the defendants that it had done so or would do so.
Moreover, the defense argument assumes that the inability to satisfy the underlying debt out of the real property of the debtors was solely due to the fault of the plaintiff. But the evidence establishes that both sides were at fault. When the note was originally forwarded to the plaintiff, it would not have been possible, legally, to enter judgment upon it, since no default had yet occurred. Indeed, if the plaintiff had complied with the vague request to "record the judgment note in the appropriate county" the net result might very well have been to impair the collateral, since such an attempt might have exhausted the warrant of attorney. Cf., Scott Factors, Inc. v. Hartley, 425 Pa. 290, 228 A. 2d 887 (1967); American Heating Co. v. Persell, 182 Pa. Super. 606, 127 A. 2d 764 (1956); Commonwealth v. Massi, 225 Pa. 548, 74 A. 419 (1909); see also Lancaster Housing Authority v. Gardner, 434 Pa. 467, 255 A. 2d 539 (1969) (dissenting opinion). Be that as it may, it is quite clear that there could be no obligation to "record" the note until default occurred in March of 1963. As of that time, the defendants had no reason to believe that the note had been entered. The defendants' request to be advised when the note was recorded had never been complied with. It is clear that both parties thereafter were attempting to collect the debt, for their mutual benefit. Under the circumstances, the defendants were at least as negligent as the plaintiff in failing to take steps to verify the existence of the judgment lien.
And finally, there is no evidence in the record to support a finding as to what loss, if any, was sustained by the defendants by reason of the failure to enter judgment on the note in March of 1963. The record discloses that, in October of 1962, the debtors had an equity of about $25,000; and that the debtors conveyed their property in December of 1963. There is no evidence as to what the debtors' equity may have been in March of 1963, or at any time thereafter.
For all of these reasons, I have concluded that the plaintiff is entitled to recover, and that the defendants have not made out a case on their counterclaim.
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