Appeal from order of Court of Common Pleas of Bucks County, May T., 1970, Nos. 3114, 3115, and 3116, in case of Norman M. Canter v. Morton L. Canter and Sylvia F. Canter.
Sue N. Lang, with her Williams, Glantz & Schildt, for appellants.
Harry C. Liebman, Herman N. Silver, and Nathan Lavine, submitted a brief for appellee.
Watkins, P. J., Jacobs, Hoffman, Cercone, Price, Van der Voort, and Spaeth, JJ. Opinion by Cercone, J. Concurring and Dissenting Opinion by Spaeth, J. Watkins, P.j., joins in this opinion.
[ 238 Pa. Super. Page 348]
This appeal arises from the lower court's denial of appellants' petition to open three judgments based upon judgment notes executed in favor of their son, Norman, for $5,000 each. Although Norman was nominally the respondent to the petition to open, in fact his trustee in
[ 238 Pa. Super. Page 349]
bankruptcy was the substituted plaintiff on the judgments. The facts giving rise to this appeal, based upon the pleadings and the depositions of appellants, Morton and Sylvia Canter, are as follows:
In May or June of 1970, the business of Morton and Sylvia Canter, Canterbury Fabrics, Inc., was insolvent and apparently headed for bankruptcy. The Canters were also personally liable for some $34,000 to $44,000 of the business debts. At that time they backdated and executed simultaneously the three judgment notes in question in favor of their son, Norman. These notes bore no provision for attorney's collection fees, and the provisions for interest were stricken. Each note (dated October 15, 1965, November 2, 1966, and December 23, 1968, respectively) was formally witnessed by a different employee of Canterbury Fabrics. On July 14, 1970, appellants placed Canterbury Fabrics, Inc. in a Chapter 11 proceeding in bankruptcy. On August 3, 1970, the judgment notes were entered, by confession, with the Prothonotary of Bucks County by Sylvia Canter, who signed her son's name to the praecipes and affidavits of nonmilitary service. In September of 1970, Canterbury Fabrics, Inc. was adjudicated a bankrupt. The debts of the business for which the Canters were also liable have not been discharged, and the judgments based upon the notes from them to their son have remained on record.
In October of 1971, Norman Canter, the son, also filed a voluntary petition in personal bankruptcy; and, on May 9, 1973, a suggestion was entered in the instant actions noting the appointment of a trustee for the bankrupt estate of Norman Canter and notifying appellants of the trustee's appearance in the instant cases. On July 16, 1973, appellants filed their petition to open the judgments, almost three years after they were originally filed with the prothonotary. Although the trustee's answer alleged several grounds for denying the motion to open (including laches and "unclean hands"), the court below
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rested its decision upon the fact that appellants' petition and motions to open were not timely filed given the circumstances of this case.*fn1
It is apparently conceded by all that the $15,000, the amount of the three notes given to their son, upon which the judgments rest, was never received by Morton and Sylvia Canter, so that their propounded defense, "failure of consideration," is sound from that standpoint. However, the trustee contended before the lower court (apparently persuasively, from the tenor of the lower court's opinion) that the transaction involving the judgment notes was an attempt by the Canters to defraud the creditors of their business to whom they were also personally liable.
The Canters' incredible explanation was that the transaction was carried out at the behest of their son, who allegedly was acting on their behalf in negotiations with an anonymous lender. This anonymous person indicated a willingness to loan the Canters $15,000 (ostensibly interest free) if they complied with certain of his requests, which included the preparation, backdating and recording of the notes on behalf of their son. The Canters further claimed that the deal fell through when it was learned that their existing creditors would only agree to postpone the collection of their debts if they were indemnified by any new investor. Since, the Canters allege, the anonymous lender was not willing to make the loan on those conditions, the money was not forthcoming. Thereafter they allege that their son tore up the notes in his possession, and they believed nothing further remained to be done to absolve them of their obligation under the notes. Believing that, they failed to have the judgments removed from the record.
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In order to succeed in opening a judgment by confession, it is necessary to act promptly and allege a meritorious defense. Cheltenham Nat'l. Bank v. Snelling, 230 Pa. Superior Ct. 498, 504 (1974); Ritchey v. Mars, 227 Pa. Superior Ct. 33 (1974). Furthermore, petitions to open judgments lie within the equitable powers of the court. Wenger v. Ziegler, 424 Pa. 268 (1967); Kilgallen v. Kutna, 226 Pa. Superior Ct. 323 (1973); Bucks County Bank & Trust Co. v. De Groot, 226 Pa. Superior Ct. 419 (1973). Hence, the ...