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FIRST NATIONAL CONSUMER DISCOUNT COMPANY v. GERALD MCCROSSAN AND LINDA L. MCCROSSAN (06/26/84)

argued: June 26, 1984.

FIRST NATIONAL CONSUMER DISCOUNT COMPANY
v.
GERALD MCCROSSAN AND LINDA L. MCCROSSAN, HIS WIFE. APPEAL OF UNIVERSAL GUARDIAN CORPORATION. UNIVERSAL GUARDIAN CORPORATION, APPELLANT, V. GERALD MCCROSSAN AND LINDA L. MCCROSSAN, HIS WIFE. UNIVERSAL GUARDIAN CORPORATION, APPELLANT V. PAUL BRUTSCHE AND JANET BRUTSCHE, HIS WIFE



No. 00779 Philadelphia 1983, No. 00780 Philadelphia 1983, No. 00781 Philadelphia 1983, Appeal from the Judgment of the Court of Common Pleas, Civil Division, of Delaware County at Nos. 76-17329, 80-8075 and 80-2397.

COUNSEL

Howard M. Holmes, Philadelphia, for appellant.

Thomas L. Kelly, Media, for McCrossan.

James L. Shea, Upper Darby, for Brutsche, appellees.

Olszewski, Popovich and Cercone, JJ.

Author: Popovich

[ 336 Pa. Super. Page 542]

This case involves an appeal from the order of the Court of Common Pleas of Delaware County, later reduced to judgment, entered against the mortgagee/Universal Guardian Corporation in foreclosure actions against the mortgagors/McCrossans and Brutsches. We reverse.

[ 336 Pa. Super. Page 543]

The record reveals that on June 27, 1973, Gerald McCrossan and Paul Brutsche, t/d/b/a McCrossan's Pharmacy, Inc., obtained a loan (principal plus interest) in the amount of $72,480.00 from First National Consumer Discount Co., the predecessor to Universal Guardian Corp., which is presently known as Credico Financial, Inc. Payments were to be made in 120 consecutive monthly installments of $604.00, the first of which was payable August 20, 1973.

In an abundance of caution, the creditor secured home mortgages, a "Guaranty" and a judgment note from the debtors. Thereafter, the mortgages and a financing statement were duly filed with the prothonotary of Delaware County. A similar filing was made with the Secretary of the Commonwealth as to "[a]ll inventory, fixtures and equipment of the pharmacy and drug store." See 12A P.S. § 9-401 repealed; as amended at 13 Pa.C.S.A. § 9401.

On April 19, 1974, the pharmacy, needing operating capital, obtained another loan from First National for $13,890.00. At this point, $8,432.00 had been repaid on the initial loan. To secure the new advance, the creditor obtained a second mortgage on the McCrossans' residence. As with the first loan, a judgment note and a resolution of the board of directors authorizing the loan were also executed. However, this time these documents were signed by Gerald McCrossan as president and Linda McCrossan, who became a corporate officer in 1974, as secretary. Likewise, the "Guaranty" was signed only by the McCrossans in their corporate capacity.

It was not long before the $926.00 monthly payment on the second loan proved to be too much for the pharmacy, and it defaulted. In an effort to preserve the business, First National suggested that the pharmacy extend its payments and refinance the 1974 loan. To that end, a judgment note for $10,800.00 was signed on August 7, 1975, by the McCrossans in their corporate and individual capacities. A similarly dated "Agreement To Extend Mortgage Loan" was signed by the McCrossans, this time as individuals only. However, the document neglected to detail the

[ 336 Pa. Super. Page 544]

    prior loans of the McCrossans and the documents executed in securement thereof.

An additional item with the legend "First National Fund, Inc. -- Settlement Sheet" was signed by the McCrossans. It reflected the amount of the loan, the cash advance ($646.00), the balance due ...


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