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BELL ET UX. v. BENEFICIAL CONSUMER DISCOUNT COMPANY (11/14/74)

decided: November 14, 1974.

BELL ET UX., APPELLANTS,
v.
BENEFICIAL CONSUMER DISCOUNT COMPANY



Appeal from order of Court of Common Pleas, Civil Division, of Allegheny County, April T., 1973, No. 1279, in case of Edward J. Bell and Marie J. Bell, his wife, on behalf of themselves and all others similarly situated, v. Beneficial Consumer Discount Company, a corporation.

COUNSEL

Gerald W. Weaver, with him James F. Israel, and Bagley, Weaver & Sydor, for appellants.

J. Tomlinson Fort, with him Robert L. Potter, and Reed, Smith, Shaw & McClay, for appellee.

Watkins, P. J., Jacobs, Hoffman, Cercone, Price, Van der Voort, and Spaeth, JJ. Dissenting Opinion by Spaeth, J. Hoffman, J., joins in this opinion.

Author: Per Curiam

[ 231 Pa. Super. Page 2]

Appeal quashed.

Disposition

Appeal quashed.

Dissenting Opinion by Spaeth, J., January 13, 1975:

The question presented by this appeal is whether an order dismissing a class action is interlocutory or final. The majority of the court has ordered the appeal quashed, and has denied a petition to reconsider its order, without explanatory opinion. I regret and respectfully dissent from this action. My reasons may be summarized as follows:

In certain cases, particularly consumer protection, securities, and civil rights cases, class actions are essential to the vindication of individual rights. In view of this fact, whether an order dismissing a class action is appealable is a question deserving appellate resolution. There is no such resolution in Pennsylvania (unless the unexplained order filed in the present case be so regarded). If the federal cases are consulted, I suggest that one will be persuaded at least to adopt the "death knell" doctrine; and if one looks further, and consults the most recent decisions of other State appellate courts, I suggest that one will conclude that the best rule is that any order dismissing a class action should be held final and therefore appealable. In the ensuing sections of this opinion, after a statement of the case, each of these reasons is considered in turn.

Statement of the Case

Appellants, Edward and Marie Bell, brought an action on their own behalf and as representatives of a class

[ 231 Pa. Super. Page 3]

    comprising present mortgagors and mortgagors who have borrowed money during the past twenty-one years from appellee, Beneficial Consumer Discount Company. The action is to collect the statutory fine provided for in the Act of May 28, 1715, 1 Sm. L. 94, § 10, as amended, July 31, 1968, P. L. 866, No. 259, § 1, 21 P.S. § 682. The Act requires a mortgagee who has received full payment to satisfy the mortgage of record in the appropriate Recorder of Deeds Office. The effect of satisfaction is to discharge the mortgagor from the debt and to bar all future actions on the debt. If the mortgagee neglects to make the required satisfaction for forty-five days after a request by the mortgagor and the mortgagor tenders reasonable charges, the mortgagee must forfeit and pay to the mortgagor a sum not in excess of the mortgage money.

Appellants have averred: that on December 17, 1971, they negotiated a loan in the amount of § 2,520 from Beneficial, secured by a mortgage that Beneficial filed without notice in the Recorder of Deeds Office of Allegheny County; that the mortgage debt was paid in full on April 24, 1972; but that the satisfaction was not recorded until December 27, 1972, which was a period well in excess of the mandatory forty-five days. In reply to interrogatories, Beneficial listed fifty-three mortgagors to whom it had made loans secured by mortgages, for which it had been fully reimbursed, but whose mortgages were not timely satisfied. Beneficial in turn filed preliminary objections claiming that the action was not properly a class action. Judge Silvestri sustained the objections without leave to amend. An appeal followed but on Beneficial's petition the appeal was quashed per curiam. Appellants filed a petition for reconsideration. On September 19, 1974, this petition was granted, Watkins, P. J., Price and Van der Voort, JJ., dissenting, but on November 14, 1974, after briefs and oral argument, the appeal was again quashed per curiam, with a

[ 231 Pa. Super. Page 4]

    notation that a dissenting opinion would follow. This opinion is that dissent.

The Importance of Class Actions

In deciding whether an order dismissing a class action is immediately appealable or whether review must await an appeal after adjudication on the merits of the individual action accompanying the class action, it is important that the purposes of the class action not be overlooked.

The historical purpose of class actions was to alleviate the burden on the court in cases where a claim was common to a large number of persons. Greenfield v. Villager Industries, Inc., 483 F. 2d 824, 831 (1973). See also 25 Vanderbilt L. Rev. 911, 913 (1972). The class action also makes possible the effective assertion of many claims that otherwise might not be litigated. In our modern economic system a single harmful act may result in damages to a great many people. There is therefore a need for representative action to vindicate claims that taken individually are too small to justify legal action, but that taken as a group are of significant size. Weeks v. Bareco Oil Co., 125 F. 2d 84, 90 (7th Cir. 1941). In consumer protection, securities, and civil rights cases, the class action is almost a necessity if problems of legal expense and the acquisition of competent counsel are to be overcome. See Note, Appealability of a Class Action Dismissed: The "Death Knell" Doctrine, 39 U. Chi. L. Rev. 403 (1972). Finally, the class action provides a needed supplement to the prosecutorial activities of government agencies. Since governmental manpower and facilities are not plentiful enough to ensure that all statutory violations will be detected, let alone tried, the private class action can serve as an added sanction and deterrent. See J. I. Case Co. v. Borak, 377 U.S. 426, 432 (1964); Kalven & Rosenfield,

[ 231 Pa. Super. Page 5]

The Contemporary Function of the Class Suit, 8 U. Chi. L. Rev. 684 (1941).

Reflection upon these several purposes makes it evident that the class action is an important social device. It is against this background that the present case must be decided.

The Absence of Appellate Authority

In general, the Superior Court has jurisdiction only over appeals from final orders, regardless of the nature of the controversy or the amount involved;*fn1 interlocutory orders are not appealable without special authorization.*fn2 In Commonwealth v. Rucco, 229 Pa. Superior Ct. 247, 249-250, 324 A.2d 388, 389 (1974), we said: "Our appellate jurisdiction extends to non-final orders only where: (a) an appeal from an interlocutory order is authorized by law: Appellate Court Jurisdiction Act, supra, 17 P.S. § 211.501(a); (b) a lower court has certified the issue involved in the interlocutory order as 'a controlling question of law as to which there is substantial ground for difference of opinion and that an immediate appeal from the order may materially advance the ultimate termination of the matter . . .': Id., § 501(b), 17 P.S. § 211.501(b); or, (c) the appellee has waived an objection to the jurisdiction of the court: [ Id. ], § 503(a), 17 P.S. § 211.503(a). Regarding the latter two instances of jurisdiction over appeals from interlocutory orders, we may, in our discretion refuse to exercise that jurisdiction."

The present appeal was not authorized by law, nor was it certified by the lower court, nor has appellee

[ 231 Pa. Super. Page 6]

    waived an objection to the jurisdiction of this court. It follows that if the lower court's order dismissing the class action is interlocutory, there can be no appeal. The question, therefore, is whether the order is interlocutory or final. There is no Pennsylvania appellate decision answering this question.

If the lower court had dismissed the class action and also the individual action, the order would clearly be final. The difficulty appears when, as in the present case, the court dismisses the class action but allows the individual action to continue. In McMonagle v. Allstate Insurance Company, 227 Pa. Superior Ct. 205, 324 A.2d 414 (1974), this court did not consider the issue of appealability of such an order but proceeded directly to the merits.*fn3 The Pennsylvania Supreme Court has held that the converse order, one permitting the class action despite preliminary objections, is interlocutory and not immediately appealable. Pincus v. Mutual Assurance Company, 457 Pa. 94, 321 A.2d 906 (1974); Piltzer v. Independence F. S. & L. Assn, 456 Pa. 402, 319 A.2d 677 (1974). The court reasoned that such a permissive order could await final adjudication on the merits since the defendant was not "put out of court" and could therefore always raise the issue on appeal.

This reasoning is not applicable to the opposite order, as in the present case, where instead of being permitted, the class action is put out of court. First, the named plaintiff's individual action may be for so small an amount that the potential costs of the action will prove prohibitive. Consequently, ...


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