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LEASING SERVICE CORPORATION v. JOHN W. BENSON (07/29/83)

filed: July 29, 1983.

LEASING SERVICE CORPORATION
v.
JOHN W. BENSON, JR., APPELLANT



No. 592 Philadelphia, 1980; No. 1041 Philadelphia, 1982; Appeals from Orders dated March 4, 1980 (Appeal No. 592 Philadelphia, 1980) and March 4, 1982 (Appeal No. 1041 Philadelphia, 1982) of the Court of Common Pleas, Civil Division, of Philadelphia County, 1979, March Term, No. 3774

COUNSEL

Dinah Bogart Engel, Philadelphia, for appellant.

Sheryl L. Auerbach, Philadelphia, for appellee.

Wieand, McEwen and Montgomery, JJ.

Author: Montgomery

[ 317 Pa. Super. Page 442]

The consolidated appeals covered by this Opinion arise from two separate orders by the lower court, in but one aspect of highly complex litigation, in several courts, which has resulted from an initially uncomplicated business transaction between the parties. While the issues presented by the instant appeals do not require extensive analysis for resolution, an understanding of the legal posture of the case demands a lengthy recitation of the tortuous litigation history which has evolved.

The record shows that on March 23, 1977 a corporation named Fairchild Incorporated (hereinafter "Fairchild") entered into a written lease agreement whereby it agreed to lease certain mining equipment to Appalachian Pocahontas Coal Co., Inc. (hereinafter "Appalachian"). The rights of Fairchild in this lease were assigned, on or about the same date, to Leasing Service Corporation (hereinafter "LSC"), the Appellee in the instant appeals. In a separate document dated March 25, 1977, John W. Benson, the Appellant herein, signed an unconditional guarantee agreement, under which Benson agreed to personally guarantee the obligations of Appalachian, of which he was a major shareholder.

[ 317 Pa. Super. Page 443]

In October, 1978, after Appalachian defaulted in its payments under the lease, LSC exercised its contractual right to accelerate all of the rental payments due under the lease. Simultaneously LSC made a demand upon the Appellant Benson to pay the full balance due and other charges. After Appalachian's default, LSC repossessed from it all or substantially all of the mining equipment which was the subject of the Lease. On or about March 13, 1979, Appalachian filed a Chapter XI Petition with the United States Bankruptcy Court in West Virginia. On March 16, 1979, LSC confessed judgment in the Court of Common Pleas of Philadelphia County against Benson individually for an amount exceeding $413,000.00, based upon rights granted in the guarantee agreement Benson had signed.*fn1 The judgment was confessed by the filing of a Complaint in Confession of Judgment; counsel for LSC appeared as counsel for Appellant, pursuant to authority granted in the guaranty agreement.

On March 29, 1979, Benson filed a Petition to Strike and/or Open Judgment by Confession. On July 18, 1979, the Honorable VITO F. CANUSO entered an Order denying the Petition to Strike, and granted the parties time to offer depositions with regard to the Petition to Open the Judgment. Subsequently, on March 4, 1980, Judge CANUSO entered an Order denying the Appellant's Petition to Open, and on March 18, 1980, Judge CANUSO filed an Opinion setting forth the reasons for his actions. The Order of the lower court in this matter was made the subject of the appeal in the instant case denoted as No. 592 Philadelphia, 1980.

Pursuant to a request for relief from automatic stay filed by LSC, the Bankruptcy Court authorized it to proceed with a sale of the equipment formerly leased to Appalachian. The sale was scheduled for and conducted on October 17, 1980. LSC was the only bidder at the sale and purchased

[ 317 Pa. Super. Page 444]

    all of the repossessed equipment for approximately $79,000.00. Later during October, 1980, LSC and Benson entered into an agreement which provided that Benson would make certain payments to Leasing Service, but without waiving any of his rights with respect to the judgment which had been entered by confession. Further, the parties agreed that the judgment could be transferred to New Jersey.

Thereafter, LSC filed a claim against Appalachian in the bankruptcy court for the deficiency which resulted from the sale of the equipment at a lower price than the amount of Appalachian's outstanding debt to LSC. After holding hearings concerning the matter, the bankruptcy court determined that LSC had acted in a commercially unreasonable manner in the sale and disposition of the equipment, and held that LSC was barred from recovering any deficiency from Appalachian as a result. In essence, the court found that LSC had not given sufficient notice, and in other ways had acted to make it difficult to sell the equipment in a reasonably competitive auction atmosphere. The result of the action of the bankruptcy court was to leave Appalachian free of any further indebtedness to LSC. The latter appealed that decision to the Federal District Court in West Virginia.

On June 30, 1981 Benson's counsel demanded in writing that LSC mark the judgment against him satisfied of record.*fn2 On July 24, 1981, LSC filed a petition with the Court of Common Pleas of Philadelphia County, seeking to have Benson's satisfaction demand declared a nullity. On August 13, 1981 Benson responded by filing an answer and several counterpetitions. Based upon the bankruptcy court's order that Appalachian did not bear responsibility for any further payments to LSC because of the improprieties in the equipment sales transaction, Benson contended that his liability to LSC as a guarantor was likewise extinguished. Thus, Benson's various pleadings sought in the alternative the opening of the judgment against him, an

[ 317 Pa. Super. Page 445]

    order that the judgment was satisfied, an order barring LSC from recovering additional amounts from him under the guarantee, and an order requiring LSC to refund the voluntary payments he had made after the auction sale. On March 4, 1982, after considering oral argument and the transcript of a deposition submitted by Benson, the Honorable LEONARD A. IVANOSKI granted LSC's petition to declare Benson's satisfaction demand a nullity. Judge IVANOSKI denied any relief on the counter-petitions filed by ...


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