Appeal from the judgment entered March 1, 1985 in the Court of Common Pleas of Chester County, Civil Division, at No. 61 of 1981.
Paul Shalita, Philadelphia, for appellant.
Alan Gershenson, Philadelphia, for appellee.
Wieand, Beck and Johnson, JJ.
[ 356 Pa. Super. Page 504]
Phoenixville Recycling Corporation (Recycling) purchased the scrap metal business of appellant, Louis Etter and the Estate of Sidney Goldberg, t/a Goldberg Brothers Company (Goldberg) for $550,000. The purchase was financed in part by a $450,000 loan from Industrial Valley Bank and Trust Company (IVB) to Recycling secured by (i) a mortgage on the land being purchased from Goldberg, (ii) a security interest in the machinery and equipment purchased from Goldberg, and (iii) a suretyship contract wherein The Pollock Corporation (Pollock) agreed to be Recycling's surety for twenty-five percent (25%) of the outstanding loan. Pollock had a business relationship with Recycling.
At the time of purchase, Recycling paid Goldberg $400,000 and as security for payment of the additional $150,000 due on the purchase price, Recycling gave Goldberg a second mortgage on the land bought from Goldberg and a security interest in the machinery and equipment bought from Goldberg. IVB was thus Recycling's senior creditor with a lien position and security interest prior to that of Goldberg, Recycling's junior creditor.
In 1980, Recycling defaulted in its IVB loan repayment, and IVB then sought payment from Pollock as Recycling's surety of 25% of the 1980 loan balance. At the time of Recycling's default, the loan balance was $442,573.26. Therefore, Pollock was obligated under the suretyship
[ 356 Pa. Super. Page 505]
agreement to pay approximately $110,000, i.e. one-fourth of the balance due at the time of Recycling's default. In 1981, Pollock paid $160,000 to IVB and received from IVB: 1) a release from the suretyship contract; 2) an assignment of the right to receive repayment of Recycling's debt; and 2) the security instruments held by IVB relative to the debt.
Thereafter Pollock as assignee of IVB's interests directed that the machinery and equipment which Recycling had purchased from Goldberg be seized and offered at a public sale. Pollock was the sole bidder at the sale and obtained the machinery and equipment for $10,000. Subsequently, Pollock commenced a mortgage foreclosure action against the land Recycling had bought from Goldberg. Before the date on which the land was to be sold at a sheriff's sale pursuant to the mortgage foreclosure proceedings, Goldberg filed a complaint in equity which requested, inter alia, that the trial court enter an order stating that Pollock had "received from [Recycling] sufficient value in payment of all obligations due Pollock, and that accordingly, the judgment and mortgage lien . . . against the . . . Recycling . . . property should be declared to be junior and subordinate to the existing liens in favor of [Goldberg]." Goldberg's Amended Complaint in Equity at 6.
After Pollock had filed an answer to the complaint and the parties had engaged in various forms of discovery, the parties*fn1 filed motions for summary judgment. Goldberg's motion for summary judgment was denied, and Pollock's motion for summary judgment was granted in part. This appeal from the ...