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WESTERN PENNSYLVANIA NATIONAL BANK v. PEOPLES UNION BANK AND TRUST COMPANY (07/02/70)

decided: July 2, 1970.

WESTERN PENNSYLVANIA NATIONAL BANK, APPELLANT,
v.
PEOPLES UNION BANK AND TRUST COMPANY



Appeal from decree of Court of Common Pleas, Civil Division, of Allegheny County, April T., 1969, No. 930, in case of Western Pennsylvania National Bank v. Peoples Union Bank and Trust Company.

COUNSEL

Robert G. Sable, with him Baskin, Boreman, Sachs, Gondelman & Craig, for appellant.

Lawrence N. Ravick, with him James E. Lomeo, for appellee.

Jones, Cohen, Eagen, O'Brien, Roberts and Pomeroy, JJ. Opinion by Mr. Justice Roberts. Mr. Chief Justice Bell took no part in the consideration or decision of this case. Concurring Opinion by Mr. Justice Pomeroy. Mr. Justice Jones joins in this concurring opinion.

Author: Roberts

[ 439 Pa. Page 305]

Stephen and Elizabeth Orlando and a group of people interested in the financial health of the Little Miss Canning Company entered into an agreement with the Western Pennsylvania National Bank in 1966 in which WPNB agreed to lend the corporation substantial sums

[ 439 Pa. Page 306]

    of money if the principals involved would agree to be personally liable on the loans. The Orlandos gave WPNB their judgment note to this effect.

A year later, in January of 1967, the Orlandos and several others borrowed $75,000 from the Peoples Union Bank and Trust Company, and each borrower gave Peoples a personal judgment note in that amount. Additionally, the Orlandos orally agreed with Peoples that a 1954 mortgage on their house, which Peoples then was holding and which had an unpaid balance of $2,457, would serve as "side collateral" for their portion of the $75,000 loan. The 1954 mortgage made no provision for future advances and the $2,457 balance of the original loan was paid off a month later, on February 8, 1967.

On October 4, 1967, WPNB entered a $1,610,000 judgment against the Orlandos on their 1967 note. On November 20, 1968, Peoples filed and took judgment on their $75,000 note. And on December 20, 1968, Peoples filed and took judgment on the 1954 mortgage bond.

Peoples quickly moved to sell the Orlandos' home pursuant to an execution issued on the 1954 mortgage bond and WPNB instituted an action in equity seeking to enjoin Peoples' sale of the house.

The trial court decided that a mortgage need not specifically state that it covers future advances in order to do so, that the parties to a mortgage which is silent as to future advances can orally agree that it does cover future advances, that such advances relate back to the date they were made and have priority over all subsequent liens, and that Peoples therefore enjoyed a prior lien on the Orlandos' home. There is no authority on point.

The only question on this appeal is whether a mortgagee whose mortgage contains no provision with respect to future advances ...


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