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PROIE BROS. v. PROIE

March 1, 1971

PROIE BROTHERS, INC., a Pennsylvania corporation, and John Proie, Plaintiffs,
v.
Frank PROIE, Defendant


Marsh, Chief Judge.


The opinion of the court was delivered by: MARSH

MARSH, Chief Judge.

 On May 21, 1970, Frank Proie, the defendant in two judgments obtained in this court by the plaintiffs, Proie Brothers, Inc. and John Proie, filed a motion to set-off three judgments owned by Frank Proie against the judgments in favor of the plaintiffs. On November 6, 1970, the defendant filed an amendment adding a fourth judgment owned by him to his motion to set-off.

 A statement of the facts gleaned from the record and affidavits submitted is as follows:

 On October 18, 1968, a judgment in favor of Proie Brothers, Inc., in the amount of $41,633.84, was entered against Frank Proie at Civil Action No. 67-198, and on the same date in the same action a judgment in favor of John Proie in the amount of $21,683 was entered against Frank Proie. The judgments were affirmed per curiam, 414 F.2d 1365 (3d Cir.) on May 15, 1969. *fn1"

 In January, 1969, Gregory A. Harbaugh, Esquire, ascertained that there were numerous unsatisfied judgments of record in the Prothonotary's Office of Allegheny County, Pennsylvania, against plaintiffs. After the plaintiffs' judgments against defendant were affirmed on May 15, 1969, defendant asked the law firm of Houston, Cooper, Speer & German, with which Mr. Harbaugh is affiliated, to "defend" him in place of his former trial counsel. Mr. Harbaugh immediately entered into negotiations with the judgment creditors of the plaintiffs.

 On March 20, 1970, the judgment of Avis Truck Rental Service, a division of Avis Rent A Car System, a corporation vs. Proie Brothers, Inc., a corporation, entered in the same Court on May 16, 1966 at No. 1934 July Term, 1966-B, in the amount of $4,997.82, with interest from May 13, 1966, and costs, was purchased by Frank Proie for $650. On May 5, 1970, per writing filed, this judgment was assigned of record to Frank Proie. The assignment purports to have been executed on March 20, 1970.

 On March 24, 1970, the judgment of Graybar Electric Co., Inc., a corporation vs. Proie Brothers, Inc., a corporation, entered for want of an answer in the same court on October 10, 1966 at No. 4046 July Term, 1966-B in the amount of $1,044.39, was purchased for $468.10 by Frank G. Proie. On May 5, 1970, per writing filed, this judgment was assigned of record to Frank Proie. The assignment purports to have been executed on March 24, 1970.

 On October 24, 1970, the judgment of North Side Deposit Bank vs. John Proie, Ann J. Proie entered in the same court on July 27, 1966 at D.S.B. 1419 October Term, 1966, in the amount of $3,536.91, with interest from July 20, 1966, costs of suit and 10 percent attorney's commission, was purchased for $200 by Frank G. Proie. On October 26, 1970, per writing filed, this judgment was assigned of record to Frank G. Proie. The assignment purports to have been executed on October 24, 1970.

 There is no legal or equitable objection to the bona fide purchase of a judgment for the purpose of using it as a set-off. 7 Standard Pennsylvania Practice, § 26, p. 804; 49 C.J.S. Judgments § 568, p. 1046. None of the above judgments purchased by Frank Proie have been attacked as having been purchased in bad faith, -- all seem to have been validly assigned to him for valuable consideration. The plaintiffs have not raised any issue as to the power of the District Manager of Graybar to assign its judgment, nor as to the necessity of execution of the assignment of the Combustion judgment by the third Trustee. It does not appear that any proceedings have been instituted by the plaintiffs to open the confessed judgments.

 The plaintiffs request the court to deny the motion to set-off for the reason that, if granted, it would result in inequity to plaintiffs' creditors and their attorneys, and because the motion was not presented within a reasonable time. We disagree, except as to the equitable interest of plaintiffs' attorneys in the judgments, hereinafter discussed.

 We do not regard the motion as untimely filed. The law is well settled that a court in the exercise of its equitable jurisdiction may set-off judgments held by the judgment debtor against a judgment held by his judgment creditor. "Judgments are set against each other not by force of the statute, but by the inherent powers of the courts immemorially exercised, being almost the only equitable jurisdiction originally appertaining to them as courts of law." Ramsey's Appeal, 2 Watts 228, 230; Burns v. Thornburgh, 3 Watts 78; Freeman on Judgments, vol. 2, part V, p. 2379 et seq. (5th ed.). There is no prohibition against using for set-off purposes judgments assigned to the judgment debtor. Pierce, to Use of Snipes v. Kaseman, 326 Pa. 280, 192 A. 105; Knoller v. Everett Realty Co., 65 Pa. Super. 169. *fn3" Equitable set-off is a matter of discretion, but it cannot be arbitrarily denied. *fn4" If the court sees that injustice will be done, the set-off should be refused, but the fact that defendant purchased the judgments at less than the face of the judgment is not inequitable. 49 C.J.S. Judgments § 517, pp. 968-969.

 At oral argument plaintiffs' counsel suggested that executions upon judgments entered by confession were enjoined in Allegheny County, and therefore the two D.S.B. judgments against John Proie and Ann J. Proie, his wife, purchased by defendant, were not available for set-off. The court requested the parties to brief the matter. The plaintiffs' brief cited as authority an Order Modifying Temporary Restraining Order issued in this District by Judge Dumbauld on June 2, 1970, at Civil Action No. 70-503. This Order specifically restrains the Sheriffs of Allegheny County and Washington County, their deputies and all other persons acting with or under them from executing upon, levying upon or selling property upon confessed judgments against all individual natural persons who are Pennsylvania residents, and who may be subject to writs of execution issued upon confessed judgments, or who have judgments entered against them by confession. They argue that to allow defendant to set-off the two confessed judgments against John Proie, the individual plaintiff, "would be to permit him to do indirectly what he cannot do directly, i.e., satisfy an alleged obligation to him by setting off judgments which he is restrained from enforcing by execution." (Emphasis supplied.) He also cites Brookhart v. Janis, 384 U.S. 1, 6, 86 S. Ct. 1245, 16 L. Ed. 2d 314 (1966), a habeas corpus case, for the proposition that defendant has the ...


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