Appeals from Order of Superior Court Entered January 18, 1985, at Nos. 82-85, Pittsburgh 1983, Affirming the Order of the Court of Common Pleas of Allegheny County, Civil Division, Entered December 20, 1982, at Nos. GD-76-27493, GD-77-00174, GD-77-12238 and GD-77-29790.
W. Thomas Laffey, Jr., Nernberg and Laffey, Pittsburgh, for appellants.
Richard Hosking, David R. Cohen, Kirkpatrick & Lockhart, Pittsburgh, for appellees.
Nix, C.j., and Larsen, Flaherty, McDermott, Hutchinson, Zappala and Papadakos, JJ.
The issue in this appeal is whether the appellants, who were two of four co-guarantors on a negotiable promissory note, were discharged from their obligations because the
creditor had released from the effect of its judgment lien certain property belonging to the other guarantors.*fn1
In the years 1965 and 1966 the Keystone Bank of Pittsburgh ("Keystone") made various business loans to The Flooring Specialists, Inc. ("Flooring Specialists"), a corporation wholly owned by a Philip E. McCosby and his wife. During that period Mr. McCosby was president of the corporation; and one Anthony A. DeRubeis, an appellant herein, was vice-president. The aforementioned loans were evidenced by three negotiable promissory notes executed respectively on December 28, 1965; January 7, 1966; and January 24, 1966.
On the face of each of the three notes appeared the name of "Flooring Specialists," as maker, followed by the signatures of "Philip E. McCosby, Pres." and "Anthony A. DeRubeis, V-Pres." All of the parties in this case agree that the signatures on the face of each note were made strictly in a corporate representative capacity. On the reverse side of each of the three notes there was a guaranty clause, by which each subscriber to the clause would undertake to "guarantee the payment" of the note at maturity. Each guaranty clause also included, inter alia, a cognovit provision, empowering Keystone to confess judgment against any or all of the signing guarantors.*fn2 The guaranty clause on each of the three notes was signed by Mr. McCosby, in his personal capacity, and his wife. Mr. DeRubeis and his wife also joined personally as signatories to each of the guarantees. Not long after Keystone had been given the third of the three notes, Anthony DeRubeis terminated his association with Flooring Specialists.
Sometime in 1967 the corporation defaulted on the notes, leaving an unpaid debt of approximately Twenty-Three Thousand Dollars ($23,000.00). Consequently, in September
of 1967, Keystone exercised its warrants of attorney and entered judgments by confession in the Court of Common Pleas of Allegheny County against the McCosbys and the DeRubeises, thereby obtaining a judgment lien against such real estate as each of those parties owned in the county.
In August, 1972, Keystone instituted proceedings to revive the judgment liens it had obtained against the guarantors. However, in November of that year, while the revival proceedings were still pending, the bank released from its lien of judgment certain realty owned by the McCosbys, to enable the couple to sell it. In return for the release the McCosbys paid the bank Five Thousand Dollars ($5,000.00) from the proceeds of the sale, as partial satisfaction of the judgment debt. The DeRubeises had not been given any advance notice of the bank's release of the McCosby property. On January 26, 1973, a judgment of revival was entered against all the guarantors, the proceedings having been uncontested by any party.*fn3
The matter lay dormant until December of 1976, when Keystone filed a praecipe for a writ of execution against the residence of Mr. and Mrs. DeRubeis. Having been served with notice that their home was to be exposed to sheriff's sale to satisfy Keystone's judgments against them, they petitioned the Court of Common Pleas for the issuance of a rule against Keystone to show cause why the judgments should not be opened and the sale stayed. The petition asserted that Keystone's act of releasing the judgment lien on the McCosby property had the legal effect of discharging the DeRubeises from their obligation on all of the promissory notes. ...