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CONTINENTAL LEASING CORPORATION v. LEBO ET AL. (12/10/70)

decided: December 10, 1970.

CONTINENTAL LEASING CORPORATION, APPELLANT,
v.
LEBO ET AL., APPELLANTS



Appeals from judgment of Court of Common Pleas, Civil Division, of Allegheny County, July T., 1967, No. 2321, in case of Continental Leasing Corporation v. Leonard Lebo and Edward R. Cohen, t/a Universal Restaurant Equipment Company.

COUNSEL

Samuel M. Rosenzweig, with him Aaron Rosenzweig, and Rosenzweig & Rosenzweig, for plaintiff, appellant.

Herbert B. Lebovitz, with him Lebovitz & Lebovitz, for defendants, appellants.

Wright, P. J., Watkins, Montgomery, Jacobs, Hoffman, Spaulding, and Cercone, JJ. Opinion by Montgomery, J.

Author: Montgomery

[ 217 Pa. Super. Page 357]

This action in assumpsit is based on a written contract of guaranty entered into between the plaintiff, Continental Leasing Corporation (Continental), the appellant at No. 293, April Term, 1970, and the defendants, Leonard Lebo and Edward R. Cohen, individually and as co-partners, trading as Universal Restaurant Equipment Company (Universal), the appellants at No. 275, April Term, 1970, whereby Universal guaranteed the full and prompt performance by Bigelow Restaurant, Inc. (Bigelow), of its obligations under a written lease agreement which Bigelow had entered into with Continental for restaurant equipment which had been supplied by Universal to Bigelow but paid for by Continental. The original value of the equipment was $9,790, but the lease covering it was written for 60 months

[ 217 Pa. Super. Page 358]

    at $234.18 per month, including $9.01, the Pennsylvania four per cent sales tax, or a total of $14,050.80. After making an advance payment of $1,170.90 and thereafter nine monthly payments of rental, Bigelow was put into receivership, at which time there was an alleged balance of $10,870.53, in unpaid past and future rentals due under its lease with Continental. Subsequently, Continental, as a general creditor of Bigelow,*fn1 received from the receiver a dividend of $1,195.76, which it applied on the above balance, leaving a new balance of $9,674.77, which, together with attorney fees and interest, Continental now seeks to collect from Universal as the guarantor.

Although Universal alleged in its answer several reasons why certain actions taken by Continental had released and discharged it from the guaranty contract, only two of those reasons are related to the argument now before us on this appeal. Universal contends that the lease, payments under which were the subject of the guaranty, was a security agreement under § 9-301, Uniform Commercial Code -- Secured Transactions, April 6, 1953, P. L. § 3, as amended, 12A P.S. § 9-301, and that Continental failed to comply with that provision, in that it did not perfect the security interest by recording a financing statement as required by the Code, thereby losing the protective lien against the goods covered by the lease. Universal also contends that Continental materially altered, varied, and amended the contract of guaranty, thereby releasing and discharging Universal from liability thereunder.

Continental denied that the lease was a security instrument under the Uniform Commercial Code; and it also denied that it had made any changes in the contract.

[ 217 Pa. Super. Page 359]

The lower court, which heard this case without a jury, was not required to make specific findings of fact and to state its conclusions of law. However, in its memorandum opinion filed with its decision (verdict) it stated that it found there was a duty on the part of Continental to file a financing statement (citing Restatement of the Law of Security, § 132); that there was no waiver by Universal of this duty; that because of Continental's failure to file such financing statement, Universal suffered a loss to the extent of the value of the goods which could not be repossessed; and that the value of the goods so lost was $3,300, the price which they brought when sold by the receiver.

The final award of damages to Continental was $5,408.03, as follows:

46 payments at $225.17 ...


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