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LINCOLN BANK v. MARGARET KELLY (11/07/80)

filed: November 7, 1980.

LINCOLN BANK, APPELLANT,
v.
MARGARET KELLY



Nos. 2619 and 2620 Oct. Term, 1978, Appeal from Orders in the Court of Common Pleas of Philadelphia County, Trial Division, Civil Section, No. 3171 May Term, 1978 and No. 2155 June Term, 1978.

COUNSEL

Sheryl L. Auerbach, Philadelphia, for appellant.

Edward E. Russell, Philadelphia, for appellee (at No. 2619).

Austin M. Lee, Philadelphia, for appellee (at No. 2620).

Spaeth, Hester and Cavanaugh, JJ. Cavanaugh, J., files a concurring and dissenting opinion.

Author: Hester

[ 282 Pa. Super. Page 263]

Presently before the court is the appeal of appellant, Lincoln Bank, from two orders of the lower court dated October 19, 1978, wherein the lower court granted appellee's motions to open judgments entered by confession in the respective amounts of $71,915.49 and $57,745.72 and let appellee into defenses.

We affirm in part and reverse and reinstate in part.

A brief summary of the two transactions involved is necessary for a proper understanding of the issues presently before the court. At No. 3171 May Term of 1978, appellant filed a complaint in confession of judgment against appellee, Margaret M. Kelly, pursuant to the warrant of attorney to confess judgment contained in a Guaranty Agreement dated September 4, 1971 whereby appellee agreed that she would:

". . . guarantee as surety, absolutely and unconditionally the full and prompt payment to (the bank) of any and all obligations, liabilities and indebtedness of any kind of (Tri-Kell, Inc.) to (the bank), howsoever created or incurred and whether now existing or hereafter arising, due or to become due, primary or secondary, absolute or contingent, joint or several, direct or indirect, secured or unsecured . . ."

The appellant confessed judgment at No. 3171 May Term, 1978 in the amount of $71,915.49.

In response to appellant's complaint in confession of judgment, appellee, Margaret M. Kelly, caused to be filed a

[ 282 Pa. Super. Page 264]

    petition to open or strike judgment. In response thereto, appellant filed an answer and new matter to appellee's petition, and appellee filed a reply thereto. No further pleadings were filed. Moreover, no depositions were taken or admissions filed by either party.

Oral arguments were heard by the lower court which, thereafter, issued an order dated October 19, 1978, wherein the judgment which was entered at No. 3171 May Term, 1978 on May 15, 1978, was opened and appellee let into a defense.

A review of the averments of fact contained in appellant's May 15, 1978 complaint in confession of judgment, appellee's petition to open or strike, appellant's answer and new matter and appellee's reply thereto, reveal the following: Appellee, Margaret M. Kelly is the mother of John B. Kelly, Jr.; that at the time of appellee's execution of the September 4, 1971 Guaranty Agreement to guarantee the indebtedness of Tri-Kell, Inc., the said John B. Kelly, Jr. was the President of Tri-Kell, Inc. and also director of the appellant bank; that on September 16, 1971 (twelve days after the execution of said Guaranty Agreement), appellant bank made a $40,000.00 loan to Tri-Kell, Inc. and thereafter, on October 27, 1971, appellant bank made an additional $20,000.00 loan to Tri-Kell, Inc.; that the $60,000.00 loans to Tri-Kell, Inc. have never been repaid; that to secure the $60,000.00 loans (along with other personal indebtedness of its President, the said John B. Kelly, Jr. which will be discussed infra), Tri-Kell, Inc. executed a promissory note in favor of the appellant bank dated June 28, 1974 in the total amount of $115,000.00.

In addition to the aforementioned complaint in confession of judgment, appellant bank filed a second complaint in confession of judgment against the said Margaret M. Kelly on June 15, 1978 at No. 2155 June Term, 1978 in the total amount of $57,745.72, the principal sum of $50,000.00 being the difference between the purported total amount of $115,000.00 as evidenced by the promissory note dated June 28, 1974 and the principal sum previously confessed as a judgment at No. 3171 May Term, 1978.

[ 282 Pa. Super. Page 265]

Again, in response to appellant bank's complaint in confession of judgment, appellee filed a petition to open or strike; appellant filed an answer and new matter to said petition, and appellee filed a reply to new matter. No further responsive pleadings were filed and no depositions were taken.

Oral argument was thereafter heard at the conclusion of which the lower court issued its order similarly dated October 19, 1978 opening the judgment taken by confession and letting appellee Margaret M. Kelly into a defense at No. 2155 June Term, 1978.

The record does not evidence the consolidation of the two actions (to-wit: 3171 May Term, 1978 and 2155 June Term, 1978) although same were obviously consolidated for purposes of oral argument and disposition by the court.

The debts under which the No. 2155 June Term, 1978 confessed judgment was taken consisted of two personal loans from appellant bank to the said John B. Kelly, Jr. On November 21, 1969, appellant bank loaned the said John B. Kelly, Jr., $50,000.00. This loan was reduced to $45,000.00 by a payment of $5,000.00 on January 11, 1971. The original loan was then renewed by Mr. Kelly's promissory note dated August 12, 1970, which loan was subsequently renewed from time to time. On May 26, 1971, appellant bank made an additional loan to the said John B. Kelly, Jr. in the amount of $10,000.00, which loan was also renewed from time to time. Therefore, John B. Kelly, Jr.'s personal indebtedness to appellant bank was in the amount of $55,000.00, plus interest. The origination of these two loans took place prior to the execution of said Guaranty Agreement by appellee.

The personal loans of $55,000.00, as well as the corporate loans of $60,000.00 were thereafter consolidated into the $115,000.00 promissory note dated June 28, 1974 and executed in favor of the appellant bank as a corporate obligation of ...


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