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filed: May 29, 1981.


No. 104 Pittsburgh, 1980, Appeal from the Order of the Court of Common Pleas of Allegheny County, Civil Division, at GD79-12893.


Joseph A. Jaffe, Pittsburgh, for appellant.

James A. Prostko, Pittsburgh, for appellee.

Price, Cavanaugh and Hoffman, JJ.

Author: Hoffman

[ 287 Pa. Super. Page 443]

Appellant contends that the lower court erred in concluding that the underlying contract was illegal and unenforceable. We agree and, accordingly, reverse the order of the lower court.

On November 9, 1979, appellant, National Recovery Systems, filed an amended complaint in assumpsit, which alleged the following. On four occasions between March 12, 1977 and May 16, 1977, Caesar's Palace, a Las Vegas, Nevada, casino, made personal loans to appellee, James V. Frebraro in the aggregate amount of $12,500.00. In exchange for the loans, appellee executed several drafts totaling that amount. On September 17, 1978, Caesar's Palace assigned its interest in the loans to appellant. Despite repeated demands, appellee refused to repay the loans. Appellee subsequently filed a preliminary objection in the nature of a demurrer, asserting that the loans were illegal and unenforceable. Following oral argument, the lower court sustained the demurrer and dismissed appellant's complaint with prejudice. This appeal followed.

Appellant contends initially that the lower court erred in entertaining appellee's demurrer because illegality is an affirmative defense which can only be raised as new matter pursuant to Pa.R.Civ.P. 1030 unless the illegality

[ 287 Pa. Super. Page 444]

    appears on the face of the compliant. Thus, appellant argues, because illegality does not appear on the face of its amended complaint, appellee could not raise the issue by demurrer. See generally 2 Goodrich-Amram 2d ยง 1017(b):11 (1976). Although we agree with appellant's statement of the law, we nevertheless conclude that the lower court properly entertained the preliminary objection because appellant waived the procedural defect by failing to file a preliminary objection to appellee's preliminary objection. See Pa.R.Civ.P. 1032. A comparable situation was presented in Duquesne Slag Products Co. v. Lench, 490 Pa. 102, 415 A.2d 53 (1980). There, the defendant had raised the affirmative defense of res judicata in preliminary objections instead of in new matter as required by rule 1030. Because the plaintiff failed to file a preliminary objection attacking that defect, the lower court disposed of the defendant's preliminary objection on its merits. On appeal, our Supreme Court affirmed, ruling that the plaintiff had "waived its claim that res judicata was raised in an improper manner." Id., 490 Pa. at 104, 415 A.2d at 54. Accord, Freach v. Commonwealth, 471 Pa. 558, 564-64 n.6, 370 A.2d 1163, 1166 n.6 (1977) (immunity from suit); Rufo v. Bastian Blessing Co., 417 Pa. 107, 114, 207 A.2d 823, 826 (1965) (statute of limitations). Consequently, the lower court properly addressed the merits of the demurrer.

The scope of our review of an order sustaining a demurrer is well settled.

The standards for sustaining preliminary objections in the nature of a demurrer are quite strict. A demurrer admits every well-pleaded material fact set forth in the pleadings to which it is addressed as well as all inferences reasonably deducible therefrom, but not conclusions of law . . . . In order to sustain the demurrer, it is essential that the plaintiff's compliant indicate on its face that his claim cannot be sustained, and the law will not permit recovery . . . . If there is any doubt, this should be resolved in favor of overruling the demurrer.

[ 287 Pa. Super. Page 445]

    of its demurrer and an alleged admission by appellant at oral argument on the demurrer.*fn1 Consequently, the lower court's finding that the loans were made for the purpose of gambling was premature. Thus deprived of its initial premise, the argument that the loans are illegal and unenforceable is, at this time, without merit. Accordingly, we hold that the lower court erred in sustaining appellee's demurrer.*fn2

Order reversed and case remanded for proceedings consistent with this opinion.

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