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TRENTON TRUST COMPANY v. KLAUSMAN (09/15/72)

decided: September 15, 1972.

TRENTON TRUST COMPANY, APPELLANT,
v.
KLAUSMAN



Appeals from orders of Court of Common Pleas, Trial Division, of Philadelphia, Dec. T., 1970, No. 2494, and Court of Common Pleas of Montgomery County, No. 70-16504, in cases of Trenton Trust Company v. Michael B. Klausman and Mark Klausman.

COUNSEL

Gilbert Newman, with him Blank, Rome, Klaus & Comisky, for appellant.

Henry Y. Goldman, with him Gold, Bowman & Korman, for appellees.

Wright, P. J., Watkins, Jacobs, Hoffman, Spaulding, Cercone, and Packel, JJ. Opinion by Packel, J. Dissenting Opinion by Cercone, J. Wright, P. J., and Watkins, J., join in this dissenting opinion.

Author: PACKEL

[ 222 Pa. Super. Page 401]

This controversy involves the liability of the appellees, Mark and Michael Klausman, on a note executed by their corporation, The Shoe Rack, Inc., payable to the bank appellant.*fn1 The instrument was endorsed as follows:

[ 222 Pa. Super. Page 402]

"Mark Klausman, Sec.

Lionel Klausman, Vice Pres.

Michael Klausman, Pres.

The Shoe Rack

Mark Klausman, Sec."

The appellant's complaints asserted that the appellees endorsed in their personal capacities. The appellees by preliminary objections contended they endorsed the note in their representative capacities as officers of The Shoe Rack and that therefore the appellant failed to state a cause of action. The preliminary objections were sustained and the complaints dismissed.

This is not a case of determining whether officers or their corporation should be held liable. The corporation is undoubtedly liable but the question is whether the officers did or did not add their personal liability. The narrow issue presented to our Court is whether it was so clear as a matter of law that the endorsements were given in a representative capacity that the appellant was correctly precluded from introducing evidence to the contrary.

In analyzing the capacity in which endorsements are affixed, it is necessary to consider not only each word and signature within the four corners of the instrument, but also the position, style and arrangement of the whole writing. Why would the appellees have endorsed in a representative capacity after having already signed as makers of the note for their corporation? Just as Judge Watkins observed in Elkay Mfg. Co. v. Chasco Supply Co., 219 Pa. Superior Ct. 530, 535, 281 A.2d 765, 767 (1971), that it was "illogical and unlikely to have the [corporate] customer act as his own guarantor," so it is in this case, equally unclear why officers would endorse a note in their official capacity after issuing the same instrument for their corporate principal. Was appellee Mark Klausman endorsing

[ 222 Pa. Super. Page 403]

    in a representative capacity not only when he placed his signature immediately beneath the corporate name towards the bottom of the reverse side of the note, but also when he had earlier placed his signature nearly four inches above the business name near the top of the note? Conversely, it can properly be asked why are the official titles after the signatures if there was an intention that there be personal liability. Because answers to these questions do not readily spring from the face of the instrument, this is a classic case of ambiguity.

Prior to the adoption of the Uniform Commercial Code, it was well established that when there is ambiguity whether a signature was affixed in an individual or representative capacity "and [especially where] the litigation is between the original parties to the instrument, parol evidence is admissible to show the facts and circumstances attending its execution," in order to resolve that question, Dormont Sav. & Tr. Co. v. Kommer, 338 Pa. 548, 553, 13 A.2d 525, 527 (1940). This is not a specialized rule of negotiable instruments law but an early recognized principle of general applicability in commercial litigation, Smith v. Philadelphia Nat'l. Bank, 1 Walk. 318 (1877) (though ...


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