No. 1794 October Term, 1977, Appeal from the Order entered May 12, 1977, by the Court of Common Pleas, Philadelphia County, Civil Division at No. 5910, January Term, 1977.
C. George Milner, Philadelphia, for appellant.
Herbert Braker, Philadelphia, for appellee.
Before: Watkins, President Judge, and Jacobs, Hoffman, Cercone, Price, Van der Voort, and Spaeth, JJ. Watkins, President Judge, and Jacobs, Hoffman, Cercone, Price, Van der Voort and Spaeth, JJ. Cercone, President Judge, concurs in the result. Jacobs and Watkins, former President Judges, and Hoffman, J., did not participate in the consideration or decision of this case.
[ 263 Pa. Super. Page 438]
The instant appeal is brought by appellant from an order of the lower court striking a confession of judgment entered against appellee. Appellant claims that the court erred in granting appellee's motion to strike. We agree and reverse the order of the court below.
The facts pertinent to this appeal are as follows. On July 1, 1976, appellant, J. F. Realty Co., and appellee, Robert Yerkes, entered into a lease contract whereby appellant agreed to lease to appellee the premises at 6595 Roosevelt Boulevard in Philadelphia. By means of a "rider" attached to the form lease, the parties agreed that appellee could assign the lease to any corporation in which he owned at least 51% of the stock. The lease also contained a standard "confession of judgment" clause authorizing appellant to confess judgment against appellee if appellee breached the rent covenant. Upon occupying the premises, Yerkes discovered that approximately one-half (1/2) of the total floor space of 40,000 square feet was unusable because of structural defects in the building. Appellee notified appellant of these defects, to no avail, and expended approximately $6,000 of his own funds in an effort to correct the defects.
On October 26, 1976, appellee Yerkes formed R. Y. S. Caterers, Incorporated, a corporation in which he owned 100% of the stock. On November 17, 1976, he assigned the lease on the Roosevelt Boulevard property to R. Y. S. Caterers, and notified appellant of the assignment on that date. Appellee had, however, ceased paying the rent on the
[ 263 Pa. Super. Page 439]
premises on November 1, 1976, and did not pay the monthly rental after that date. After various negotiations between the parties, appellant filed a complaint for confession of judgment against appellee on February 4, 1977, in the amount of $568,259.66, representing the rent for the unexpired term of the seven (7) year lease plus various charges. In the complaint, appellant alleged that appellee Yerkes had breached the rent covenant by failing to pay rent after November 1, 1977, and by failing to present proof of insurance coverage on the premises. Appellee subsequently filed a petition pursuant to Pa.R.C.P. No. 2959 to strike the confessed judgment,*fn1 alleging inter alia, that appellee was released from liability under the lease by virtue of his assignment of the lease to R. Y. S. Caterers, and that appellant was indebted to appellee on a counterclaim in the amount of $59,333.34. On or about March 25, 1977, appellant filed an answer denying the assertions in appellee's petition. On May 12, 1977, the court below entered an order striking the judgment previously entered on February 4, 1977.*fn2 As justification for its action, the court relied upon section (e) of Rule 2959 which states in part, "If evidence is produced which in a jury trial would require the issues to be submitted to the jury the court shall open the judgment." The court reasoned that issues existed as to whether appellee's assignment of the lease released him from liability, whether appellee had breached the rent covenant prior to the time he assigned the lease to R. Y. S. Caterers, Inc., and whether the assignment was fraudulent and unsupported by consideration. Appellant has appealed, alleging that the
[ 263 Pa. Super. Page 440]
court utilized an improper standard in granting appellee's motion to strike. We agree.
Initially, it should be noted that the standard employed in section (e) of Rule 2959 relates to a petition to open a judgment, while appellee's petition was one to strike the judgment. ...