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05/07/97 PERRY SQUARE REALTY v. TRAME

May 7, 1997

PERRY SQUARE REALTY, INC.
v.
TRAME, INC., ARMANDO P. SILVA AND CECILIA SILVA, APPEAL OF: ARMANDO SILVA; PERRY SQUARE REALTY, INC. V. TRAME, INC., ARMANDO P. SILVA AND CECILIA SILVA, APPEAL OF: CECILIA SILVA



Appeal from the Order date July 23, 1996, docketed August 12, 1996, Court of Common Pleas, Philadelphia County, Civil Division at No. 641 March Term, 1996. Before O'KEEFE, J.

Before: Cirillo, Johnson and Olszewski, JJ. Opinion BY Johnson, J.

The opinion of the court was delivered by: Johnson

OPINION BY JOHNSON, J.:

FILED MAY 07, 1997

In this appeal, we are asked to determine whether the guarantors under a commercial lease are entitled to liquidated damages pursuant to 42 Pa.C.S. § 8104(b) where judgment was confessed against them under a warrant of attorney contained in the lease. We conclude that the provisions of § 8104 were not triggered in this case, even though the judgment was confessed without proper authority, because the judgment creditor had not received satisfaction at the time the written request for satisfaction was made. Accordingly, we affirm the order that denied relief upon a petition to strike or mark satisfied a judgment by confession.

In May 1995, Trame, Inc. (Tenant) entered into a six-year commercial lease for property located in Center City, Philadelphia, to be utilized as a retail store. The original landlord, Tranel, Inc., transferred ownership of the property, along with all its right, title and interest in the leases and the rents for the subject property, to Perry Square Realty, Inc. (Landlord). Armando and Cecilia Silva (Guarantors) unconditionally guaranteed payment of Tenant's rent and performance of the terms of the lease. Beginning sometime in late 1995, Tenant failed to make the regular rent payments.

On March 6, 1996, Landlord filed a Complaint for Confession of Judgment against both the Tenant and the Guarantors for the sum of $391,291.75. The Complaint was based upon a warrant of attorney contained in the lease by which Tenant expressly agreed that, after a default, Landlord may cause judgment to be entered against Tenant and may proceed against Tenant for recovery of all sums due Landlord pursuant to the Rules of Civil Procedure governing Confession of Judgment for Money, Pa.R.C.P. 2950-61. The same day, Landlord filed a lien against both the Tenant and the Guarantors in the sum of $391,291.75.

On March 27, 1996, counsel for the Guarantors wrote to counsel for the Landlord, pointing out that the confession of judgment provision in the lease did not grant the Landlord any authority to confess judgment against anyone other than the Tenant. This letter contained a demand that the Landlord immediately enter a satisfaction of the judgment in the matter pursuant to 42 Pa.C.S. § 8104(a), asserting that Landlord had improperly obtained the judgment based on erroneous facts contained in the Complaint. The letter concluded by asserting that, if Landlord did not satisfy the judgment within thirty days, the Guarantors would file a claim for liquidated damages pursuant to 42 Pa.C.S. § 8104(b).

On April 10, 1996, the Tenant, the Guarantors, and the Landlord reached a settlement agreement that purported to resolve all disputes between the parties. When the judgment remained unsatisfied, however, the Guarantors, on June 17, 1996, filed identical Petition(s) to Strike or Mark Satisfied Judgment by Confession Under Pa.R.C.P. 2959 and For Liquidated Damages under 42 Pa.C.S. § 8104(b). On June 25, 1996, the Landlord filed the praecipe to mark the judgment satisfied, and the judgment against the Tenant and the Guarantors was marked settled, discontinued and ended with prejudice. Thereafter, Landlord filed timely answers to the petitions that had been separately filed by the individual Guarantors. Following a hearing, the trial court entered its orders on July 23, 1996 that (1) found the petitions to strike or mark satisfied the judgment of confession moot based upon the praecipe filed June 25, 1996 by Landlord, and (2) denied Guarantors' petitions for liquidated damages. The Guarantors now appeal from those orders.

We begin our analysis by determining the validity of the confession of judgment against the Guarantors. The lease between Landlord and Tenant runs twenty-four pages, including a seven-page addendum. Each page was initialed by the Tenant and the original landlord. The full signatures of the officers of the corporate landlord and tenant are affixed at page 17 of the lease. The individual Guarantors have signed the lease at page 17, beneath the corporate signatures of Tenant and Landlord. The Guarantors have neither affixed their signatures to, nor initialed, any page other than page 17. The warrant of attorney appears at page 10 of the lease, which contains the confirming initials of Tenant and the original landlord. On these facts, we conclude that the warrant of attorney to confess judgment appearing on page 10 was not enforceable against the Guarantors. Caplan v. Seidman, 203 Pa. Super. 170, 199 A.2d 483 (1964).

In Caplan v. Seidman, we reviewed an order that had stricken a confessed judgment against both the primary borrower, Seidman, and the two indemnitors, Caplan and Knob. The note and the warrant of attorney to confess judgment upon default were signed by Seidman. The indemnity agreement, signed by Caplan and Knob, appeared immediately under Seidman's signature. While we held that the confessed judgment was properly entered against the primary borrower, we affirmed the order striking judgment against Knob, the indemnitor, stating:

Regardless of whether the agreement signed by Knob and Benjamin Caplan was a contract of suretyship or of indemnity..., it clearly appears that the warrant of attorney to confess judgment was signed only by Seidman and there was accordingly no authorization to enter judgment against Knob. ... It is our view that the judgment was properly stricken as to Knob.

Id. at , 199 A.2d at 485; see also Solebury National Bank of New Hope v. Cairns, 252 Pa. Super. 45, 380 A.2d 1273 (1977) (holding that a confessed judgment was not enforceable against a corporate president who individually guaranteed payment of corporate note signed by him in his capacity as president and which authorized confession of judgment); Annotation, Enforceability of Warrant of Attorney to Confess Judgment Against Assignee, Guarantor, or Other Party Obligating Himself for Performance of Primary Contract, 5 ALR 3d 426, 428-32.

Our supreme court, in Frantz Tractor Co. v. Wyoming Valley Nursery, 384 Pa. 213, 120 A.2d 303 (1956), reviewed a series of Pennsylvania cases concerning warrants of ...


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