No. 1556 Philadelphia 1982, APPEAL FROM THE ORDER OF MAY 6, 1982 IN THE COURT OF COMMON PLEAS OF PHILADELPHIA COUNTY, CIVIL NO. 5472 AUGUST TERM, 1981
John S. Bevan, Paoli, for appellant.
Steven H. Berkowitz, Philadelphia, for appellees.
Cavanaugh, McEwen and Cirillo, JJ.
[ 327 Pa. Super. Page 162]
On September 1, 1981, appellant, Frankford Trust Company (hereinafter referred to as "Frankford") entered a confession of judgment against appellees, Stainless Steel Services, Inc., Philadelphia Iron Works Corp., Albert D. Stewart, Jr., Albert D. Stewart, III, and Martha E. Stewart (hereinafter collectively referred to as "Stainless") in the amount of $70,706.25. Shortly after receiving notification of the entry of judgment, Stainless filed a petition to open or strike judgment with the Court of Common Pleas, Philadelphia County. After subsequent responsive pleadings were filed, Stainless, by praecipe, set the matter down for argument. On May 6, 1982, the Honorable Herbert R. Cain, Jr., granted Stainless's petition and opened the confessed judgment. This appeal followed.
On appeal, Frankford contends that the trial court abused its discretion in opening the judgment. After a review of the record, we conclude that the trial court acted properly.
On or about August 27, 1980, Stainless entered into a lease agreement with Commercial Leasing Company (hereinafter referred to as "Commercial") for the leasing of certain heavy duty polishing equipment. Under the terms of the agreement, Stainless agreed to make monthly rental payments to Commercial, and further authorized Commercial to obtain a confession of judgment in the event of default. Although the lease was plain and unconditional on its face, Stainless alleges that Commercial had orally agreed to condition the agreement upon the equipment's satisfactory operation in Stainless's factory. According to Stainless, the equipment did not perform satisfactorily and, as a result, Commercial agreed to the return of the equipment and Stainless's release from further obligation. The agreement to allow for the return of the equipment allegedly occurred in October. The record indicates that the equipment was in fact crated and shipped back to the manufacturer on or about December 22, 1980. Stainless did not make any rental payments thereafter.
[ 327 Pa. Super. Page 163]
While these developments transpired, Commercial had already assigned the lease to Frankford back on August 28, 1980. The record shows that Commercial notified Stainless by letter dated November 26, 1980 that the lease had been "assigned for processing" and that all future rental payments were to be made to Frankford. When Stainless returned the equipment to the manufacturer and thereafter failed to pay rent, Frankford, as assignee of the lease, entered a confessed judgment against Stainless. Frankford appeals from the opening of that judgment.
In order to open a confessed judgment, the judgment debtor must act promptly, allege a meritorious defense, and present sufficient evidence of the defense to require submission of the issues to a jury. First National Bank of Fryburg v. Kriebel, 311 Pa. Super. 428, 457 A.2d 961 (1983); Society Hill Towers Owners Ass'n. v. Matthew, 306 Pa. Super. 13, 451 A.2d 1366 (1982); Price v. Geller, 292 Pa. Super. 455, 437 A.2d 763 (1981). Instantly, there is no question raised as to whether Stainless acted promptly in pursuing this matter. Our review focuses on whether a meritorious defense exists and whether Stainless has presented sufficient evidence in support of such defense.
Among the defenses to the entry of judgment asserted by Stainless is the argument that the original parties had agreed to abrogate the lease agreement and to release Stainless from its duties thereunder. Such discharge of contractual obligation, if agreed to by both Stainless and Commercial before notice of assignment, would establish a binding and meritorious defense against Frankford's claim as assignee. Under the Pennsylvania Uniform Commercial Code and as a settled principle of contract law an "assignor [Commercial] retains his power to discharge or modify the duty of the obligor [Stainless] . . . [until] the obligor ...