Appeal from Order of Superior Court of Pennsylvania, Dated July 17, 1986, Philadelphia, 1985, No. 1531, Reversing the Order of the Court of Common Pleas, Philadelphia, August Term, 1984, No. 1633. 358 Pa. Super. 623, 514 A.2d 197 (1986)
Curtis P. Cheyney, III, Philadelphia, for Edwin Seave.
Joseph M. Gindhart, Philadelphia, for Mid-Penn.
Eric Frank, Alan M. White, Philadelphia, for appellee.
Zappala, Justice. Nix, C.j., and Papadakos, J., file concurring opinions. Larsen, J., files a dissenting opinion.
OPINION ANNOUNCING THE JUDGMENT OF THE COURT
The issue presented in this appeal is whether the notice provisions of the Loan Interest and Protection Law (Act 6), 41 P.S. § 101 et seq., and the Homeowner's Emergency Assistance Act (Act 91), 35 P.S. § 1680.401c et seq., are applicable to legal actions to collect on a consumer loan secured both by the debtor's personalty and a mortgage when recovery is limited to execution on the personalty. Act 6 relates to the foreclosure of residential mortgages, and Act 91 deals with state-funded emergency assistance to homeowners who are facing foreclosure on their mortgages. We hold that the notice provisions established by Act 6 and Act 91 governing mortgage foreclosure actions are inapplicable to those legal actions and reverse the per curiam order of the Superior Court.
Appellees Bertha Bennett and Alton Porter initiated a class action in equity in the Philadelphia County Court of Common Pleas against the Appellants, Mid-Penn Consumer Discount Co. and its president Edwin Seave, seeking monetary
damages and injunctive relief for alleged violations of Act 6 and Act 91 in connection with legal proceedings brought by the Appellants to recover funds which had been loaned to the Appellees. The trial court subsequently entered an order denying the Appellees' motion for a preliminary injunction and granting the Appellants' motion for judgment on the pleadings. In a per curiam order, the Superior Court reversed the trial court and remanded the matter for further proceedings.
The equity complaint sought to define the class as "all persons who will enter or who have entered with Mid-Penn into 'residential mortgage' obligations within the meaning of Act 6 of 1974, 41 P.S. §§ 101 et seq. or 'mortgage' obligations within the meaning of Act 91 of 1983, as amended." Appellee Bertha Bennett, one of the named representatives of the purported class, borrowed money from Mid-Penn on September 2, 1983.*fn1 The installment loan transaction, which refinanced an outstanding debt owed to Mid-Penn and provided the Appellee with additional funds, was evidenced by a document stating that the loan was secured by a note and a mortgage. The document indicated that a security interest was being given in the Appellee's household goods and in her residential property. By the terms of the document, the appellee agreed to pay the sum of $3264.00 to Mid-Penn in 48 monthly installments of $68.00. This obligation was secured as well by a mortgage reflecting that amount, also stating the Appellee's obligation to repay the sum in monthly installments commencing on October 5, 1983. The mortgage was executed on September 2, 1983 also.
On May 7, 1984, Mid-Penn sent a "Notice of Intention To Sue On Note And Accelerate Loan Balance" to Bertha Bennett. The notice stated, in relevant part:
THIS IS A NOTICE OF DEFAULT AND OF OUR INTENT TO SUE ON YOUR NOTE. PLEASE READ ALL OF THIS NOTICE.
1. This company is the holder of a Note signed by you in connection with your loan with us.
2. As of the date of this notice, THE NOTE IS IN DEFAULT because of nonpayment of the following monthly payments:
3. YOU MAY CURE THIS DEFAULT WITHIN THIRTY (30) DAYS OF THE DATE OF THIS LETTER, BY PAYING TO US THE ABOVE TOTAL AMOUNT DUE, PLUS ANY ADDITIONAL MONTHLY PAYMENT WHICH MAY FALL DUE DURING THIS PERIOD. Such payment must be made either by cash, cashier's check or money order, and made at our office.
4. If you do not cure the default within THIRTY (30) DAYS WE INTEND TO EXERCISE OUR RIGHT TO ACCELERATE THE LOAN BALANCE. This means that whatever is owing on the original amount borrowed will be considered due immediately and you may lose the chance to pay off the original loan in monthly installments.
5. If full payment of the amount of default is not made WITHIN THIRTY (30) DAYS, WE ALSO INTEND TO INSTRUCT OUR ATTORNEYS TO START A LAWSUIT.
6. If we refer your case to our attorneys, but you cure the default before they begin legal proceedings against you, you will still have to pay the reasonable attorney's fees, actually incurred, up to $50.00. However, if legal proceedings are started against you, you will have to
pay the reasonable attorney's fees even if they are over $50.00. Any attorney's fees will be added to whatever you owe us, which may also include our reasonable costs. IF YOU CURE THE DEFAULT WITHIN THE THIRTY DAY PERIOD, YOU WILL NOT BE REQUIRED TO PAY ATTORNEY'S FEES.
7. If you have not cured the default, and legal proceedings result in a Judgment, WE MAY FILE A WRIT OF EXECUTION ON YOUR PERSONAL PROPERTY, and if your account still remains in default WE MAY INSTITUTE A SHERIFF SALE OF YOUR PERSONAL PROPERTY.
8. Any payment received from you which is less than the amount necessary to CURE THE DEFAULT as required by this notice, will be credited to your account, but your account will remain in default and will not be reinstated until the account is current including reimbursement of all legal costs and fees incurred as set forth above.
9. If we institute legal proceedings as stated in paragraphs four (4), five (5), six (6), and seven (7) above, we will do so in order to recover sums due us from you, SOLELY FROM THE SHERIFF SALE OF YOUR PERSONAL PROPERTY.
Mid-Penn subsequently brought an assumpsit action to collect the unpaid balance due on Bennett's loan, plus interest and the costs of suit. The complaint alleged that Mid-Penn was seeking to recover the amount due from all assets owned by the debtor other than the residential property.
Appellee Alton Porter, the other named representative of the purported class, borrowed $3,003.99 from Mid-Penn on February 12, 1982.*fn2 A promissory note was signed by the
Appellee in connection with the loan and a mortgage was executed on the residential property owned by the Appellee for the total amount of the loan, which included principal and interest. The loan document again indicated that the debt was secured by a mortgage and note. The Appellee's property securing the debt was further described as household contents and by reference to his residential property.
On July 16, 1984, Mid-Penn sent its notice of intention to sue on the note due to Porter's default by failing to make the $108.00 monthly payments for the two preceding months. The form of the notice was identical to that sent to Appellee Bennett. It does not appear from the record that any legal proceedings were initiated against Porter to collect the outstanding balance due on the loan.
The class action complaint filed by the Appellees alleged that Mid-Penn had improperly failed to comply with the notice requirements of Act 6 and Act 91. The complaint further alleged that Mid-Penn's practice of sending its form notice to debtors who have defaulted on their loan obligations was deceptive and a violation of the Unfair Trade Practices and Consumer Protection Law, 73 P.S. § 201-3. Mid-Penn denied that the notice provisions of Act 6 and Act 91 are applicable to legal proceedings to collect on a promissory note executed in connection with a consumer loan when recovery is limited to personal property only. Mid-Penn later sought judgment on the pleadings in its favor.
Following an evidentiary hearing on the Appellees' motion for a preliminary injunction, the requested injunction was denied and Mid-Penn's motion for judgment on the pleadings was granted. The trial court specifically found that Mid-Penn had not provided the Appellees with the notices required under Act 6 and Act 91, but concluded that such notices are unnecessary when the legal proceedings undertaken to collect the unpaid balances on personal consumer loans are assumpsit actions on the note and do not involve mortgage foreclosure.
In its memorandum opinion accompanying the order, the Superior Court stated that Mid-Penn would be precluded from instituting action against any assets of the debtors without ...