Appeal from judgment of Court of Common Pleas of Montgomery County, No. 71-6490, in case of Easton National Bank & Trust Company v. Union National Bank and Trust Company of Souderton.
Edward J. Hardiman, with him Pearlstine, Salkin, Hardiman and Robinson, for appellant.
George C. Corson, Jr., and Wright, Manning & Sagendorph, submitted a brief for appellee.
Watkins, P. J., Jacobs, Hoffman, Cercone, Price, Van der Voort, and Spaeth, JJ. Opinion by Cercone, J.
[ 237 Pa. Super. Page 317]
The instant appeal arises from a judgment, after a jury trial, in favor of Easton National Bank (Easton) against Union National Bank (Union) in the amount of $212,007.45. This amount represents the principal and
[ 237 Pa. Super. Page 318]
interest on a $175,000 promissory note of First Subsidy Corporation (First Subsidy) which Union had agreed, but failed, to purchase from Easton. The facts are as follows:
Sometime in 1969, William Clarke, acting for First Subsidy, approached Frankford Trust Company (Frankford) with a plan which would enable First Subsidy to build a nursing home in Easton, Pennsylvania. In order to do so First Subsidy would need $1.2 million. Frankford was willing to provide this sum if the loan were guaranteed by the Federal Housing Administration (FHA). The FHA agreed to guarantee the loan, but required that First Subsidy also post an investment of $175,000. Not being willing and able to meet that requirement from its own assets, First Subsidy turned to other financial institutions for the $175,000. In August of 1970, it requested that Easton loan the necessary $175,000 to get the project off the ground, and Easton indicated that it might be willing to provide the money if it were adequately secured. Through its Vice President, Charles Beam, Easton contacted Union and questioned why, as the bank in which William Clarke was a substantial depositor and his mother a member of the board, they were not willing to advance the money. The reason was that Union's board had determined to limit its loans to the Souderton area where it was located, so that a large investment in Easton would contravene that policy. Mr. Charles Hoeflich, Union's President, did give William Clarke a strong credit reference and indicated that he might be able to get his board to approve some form of "guarantee" of the loan if Frankford would provide a letter of credit and remit $30,000, in each of six monthly installments from progress payments to be made during construction, to an escrow account for retiring the $175,000 debt. Hence, the financing would be circular and enable First Subsidy to undertake the project without investing any of its own cash.
[ 237 Pa. Super. Page 319]
Finally, in August of 1969, Mr. Beam of Easton received the following letter from Mr. Hoeflich of Union, hand delivered by William Clarke:
Effective as of September 1, 1970 and terminating not later than September 30, 1970, the Union National Bank and Trust Company of Souderton hereby agrees to purchase from you a loan on your books in the amount of $175,000 ...