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RCK v. HERBERT AND MARLENE KATZ (08/10/84)

filed: August 10, 1984.

RCK, INC., APPELLANT,
v.
HERBERT AND MARLENE KATZ



NO. 778 PHILADELPHIA, 1981, Appeal from the Order of January 29, 1981, in the Court of Common Pleas of Philadelphia County, Civil Action, Law, at No. 2971 November Term, 1976.

COUNSEL

M. Patricia Carroll, Philadelphia, for appellant.

Joseph V. Cardona, Philadelphia, for appellees.

Wieand, Beck and Hoffman, JJ. Wieand, J., concurred in the result.

Author: Beck

[ 331 Pa. Super. Page 165]

In this appeal we are asked to construe Section 407(a) of the Act of January 30, 1974 ("Act"), P.L. 13, as amended, 41 P.S. ยง 407(a), and determine how Section 407(a) affects a creditor's efforts to execute upon a confessed judgment.

[ 331 Pa. Super. Page 166]

Section 407(a) of the Act states that

[a]s to any residential real property, a plaintiff [creditor] shall not have the right to . . . execute . . . on a note . . . confessing judgment until plaintiff, utilizing such procedures as may be provided in the Pennsylvania Rules of Civil Procedures [Pa.R.C.P. Nos. 2981-86], files an appropriate action and proceeds to judgment . . . against defendant [debtor] as in any original action. The judgment by confession shall be changed as may be appropriate by a . . . decree entered by the court in the action. After the . . . original action has been prosecuted and a judgment obtained, that judgment shall merge with the confessed judgment and the confessed judgment shall be conformed as to amount and execution shall be had on the confessed judgment. The parties to the action shall have the same rights as parties to other original proceedings.

Thus, Section 407(a) insulates debtors' residential real property from rash foreclosure by requiring that before executing against such property, creditors obtain two judgments: first, a confessed judgment and second, a judgment in an original Section 407(a) action.

I. Confessed Judgment

On September 17, 1976, the Katzes contracted with RCK for the purchase of a restaurant business. To secure a portion of the purchase price, the Katzes signed a promissory note which contained a warrant of attorney authorizing confession of judgment against the Katzes.

On November 18, 1976, judgment by confession was entered on the promissory note, and the Katzes were properly notified of the entry of judgment (Pa.R.C.P. Nos. 236 and 2958(f)). Damages in the amount of $25,763 were assessed against the Katzes on February 2, 1978. Subsequently, on November 15, 1978, the Katzes ...


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