National Central Bank v. Abramson

Opinion by Cercone, J., This is an appeal by the appellant bank from the lower court’s striking from the record a judgment confessed on a note executed by appellee Benjamin Abram-son in the amount of $50,000 “plus interest”. Abramson had petitioned the court below to strike the judgment from the record or in the alternative to open it so as to permit a defense. *91 Judgment bad been confessed by tbe appellant bank for tbe face value of tbe note plus interest in tbe amount of $8,218.23, which represented interest at 9%% and 9%. It was tbe inclusion of this interest which tbe lower court found fatal to tbe bank’s confession of judgment, tbe lower court reasoning “there was no authority on tbe face of tbe note for tbe inclusion of interest”, and “that a judgment that included a grossly excessive amount of interest based upon instruments dehors tbe note” constituted an improper use of tbe warrant of attorney contained in tbe note. It is our opinion, however, that neither tbe facts nor tbe law support this reasoning of tbe lower court. The judgment note on its face very clearly provides for tbe payment of tbe face amount “plus interest”. There was no contradiction in tbe evidence of tbe fact that the parties knew and agreed that tbe interest was to be in tbe amount of 1% above tbe prime rate charged by tbe bank. Nor does tbe law support tbe lower court’s conclusion. Tbe lower court was attempting to apply tbe restrictions on the Prothonotary’s authority to enter a judgment under the Act of February 24, 1806, P. L. 334, 4 Sm. L. 270, §28, as amended, 12 P.S. §739, which statute has no applicability to a confession of judgment by complaint, tbe method of confession employed in this case. Tbe distinction between tbe authority of tbe Prothonotary to enter a judgment under tbe 1806 Act and bis ministerial act in entering judgment upon complaint was clearly noted and carefully reasoned in tbe case of Noonan, Inc. v. Hoff, 350 Pa. 295 (1944), wherein Justice Horace Stern (later Chief Justice), in speaking for tbe majority of tbe Court, stated that when there is a confession of judgment upon complaint tbe Prothonotary in entering tbe judgment is not acting in pursuance of the duty imposed upon him by the Act 9f 1806, but is acting in a ministerial capacity in behalf of tbe defendant, pursuant to tbe authorization *92 contained in tbe note. The Court there concluded: “It was therefore not necessary that any of the requirements of the Act of 1806 should have been observed” and that “if the amount was overstated or the claim for interest or collection fees was unjustified defendant’s remedy was by a rule to open the judgment, not to strike it off.” The court below, therefore, clearly erred in striking off the judgment because (1) interest was payable under the terms of the note; (2) the uncontradicted evidence revealed the rate of the interest to be included on the note was 1% above the prime interest rate of the bank (9 and 9%%); and (3) even if the interest had been improperly included or improperly assessed, such error would not have constituted a ground for striking off the judgment entered on complaint and not under the Act of 1806. Nor do we find any ground for remanding the case to the court below for determination of appellee’s alternative request for relief, the opening of the judgment. The record, even assuming as true all the evidence in favor of appellee and drawing all inferences from the evidence favorable to him, presents no valid reason for the opening of the judgment. As before stated, the amount of interest, as already shown by the evidence, was properly calculated at 1% above the bank’s prime interest rate in accordance with the agreement of the parties. As to a novation or a release of the appellee, in whole or in part, from his obligations under the note, the evidence not only fails in proof of such claims but the correspondence and the acts of the parties clearly reveal there was no such novation or release. Nor does the record support any claim of equitable circumstances which would cause the 15% collection fee agreed upon in the note to be regarded as an unreasonable and therefore unenforceable penalty. *93 Accordingly, the order of tlie court below is reversed and defendant’s petition to strike or, in the alternative, to open the judgment confessed against him, is ordered dismissed. Spaulding, J., concurs in the result. Jacobs and Hoffman, JJ., dissent.