Driscoll, R. v. Arena, J.

J-A25036-17
2018 PA Super 26ROBERT W. DRISCOLL, JR. IN THE SUPERIOR COURT
OF PENNSYLVANIA
Appellant
v.
JOHN A. ARENA
Appellee No. 226 EDA 2017
Appeal from the Order Entered December 19, 2016
In the Court of Common Pleas of Philadelphia County
Civil Division at No: 03288, May Term, 2016
ROBERT W. DRISCOLL, JR. IN THE SUPERIOR COURT
OF PENNSYLVANIA
Appellant
v.
JOHN A. ARENA
Appellee No. 228 EDA 2017
Appeal from the Order Entered December 30, 2016
In the Court of Common Pleas of Philadelphia County
Civil Division at No: 03293, May Term, 2016
ROBERT W. DRISCOLL, JR. IN THE SUPERIOR COURT
OF PENNSYLVANIA
Appellant
v.
THOMAS ARENA
Appellee No. 286 EDA 2017
Appeal from the Order Entered December 14, 2016
In the Court of Common Pleas of Philadelphia County
Civil Division at No: 03286, May Term, 2016
J-A25036-17
BEFORE: OTT, STABILE, JJ., and STEVENS, P.J.E.*
DISSENTING OPINION BY STABILE, J.: FILED FEBRUARY 12, 2018
The Majority affirms the orders striking Appellant’s confessions of
judgment, concluding that the underlying promissory notes (the “Notes”) were
not filed under seal and are therefore subject to the four-year statute of
limitations of 42 Pa.C.S.A. § 5525(a)(8). The Notes each contain an identical
statement regarding seal: “Borrower intends this to be a sealed instrument
and to be legally bound hereby.” See Complaint in Confession of Judgment,
5/25/16, at Exhibit A.1 I believe this statement is sufficient to create a sealed
document. I would therefore conclude that the confessions of judgment were
subject to the twenty-year statute of limitations of 42 Pa.C.S.A. § 5529(b)(1),
and that the trial court erred in granting Appellees’ petitions to strike.
“The application of the statute of limitations to an alleged cause of action
is a matter of law to be determined by the court.” Packer Soc’y Hill Travel
Agency, Inc. v. Presbyterian Univ. of Pennsylvania Med. Ctr., 635 A.2d
649, 651 (Pa. Super. 1993). In Beneficial Consumer Discount v. Dailey,
644 A.2d 789, 789 (Pa. Super. 1994), the borrowers signed a document on
which the word “seal” was pre-printed next to their names. When the lender
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* Former Justice specially assigned to the Superior Court.
1 The note is a two-page document. The quoted portion appears on the
second page in a paragraph titled “Waiver.” The note attached to the March
25 complaint erroneously omitted the first page of the note, but Appellant
subsequently filed a praecipe to substitute the complete note.
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sued for default, the borrowers claimed they did not understand that they
were signing a document under seal, and that the four-year statute of
limitations should apply. Id. This Court disagreed, holding that “when a party
signs a contract which contains the pre-printed word “SEAL,” that party has
presumptively signed a contract under seal.” Id. at 790 (citing Klein v. Reid,
422 A.2d 1143 (Pa. Super. 1980), superseded by statute on other
grounds as stated in Packer, 635 A.2d at 649)). The borrowers failed to
rebut the presumption and thus the 20-year statute of limitations applied. Id.
at 790-91. This Court concluded as follows:
Unless one distances himself from the pre-printed seal, the
other party to a contract should be entitled to rely on the objective
manifestations of the maker’s actions. There can be no question
that the pre-printed “SEAL” is an actual seal and that the
[borrowers] signed next to it. The [borrowers] were under no
duty to accept the seal, and had every opportunity to inquire
about its significance, and signed the agreement freely. We must
therefore agree with the trial court that the obligation should be
enforced.
Id. at 791. Thus, Beneficial Consumer holds that a presumption of a sealed
document arises where the pre-printed word “seal” appears by the
signatures.2 I believe that the Majority and the parties agree on this point.
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2 I note that Collins v. Tracy Bar & Grill Corp., 19 A.2d 617 (Pa. Super.
1941), cited in Appellees’ Brief and in one of the trial court opinions in this
matter, involves a distinct issue. There, the borrower signed on behalf of his
company next to the pre-printed word “seal.” Id. at 619. The document did
not use an official corporate seal of the signee’s company. The question in
Collins, therefore, was “did the corporation intend to adopt the word ‘seal’ as
its corporate seal for the occasion.” Id. at 620. The use of a corporate seal
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More significant for the present case, however, is what Beneficial Consumer
does not hold. It does not hold that the word “seal” by the signature line is
required. And Beneficial Consumer is silent on the circumstances before
us—an explicit statement of the parties’ intent within the contract
unaccompanied by any mark at the signature line. There appears to be no
authority directly controlling the question before us, though a 19th century
opinion from our Supreme Court provides some guidance:
The days of actual sealing of legal documents, in its original
sense of the impression of an individual mark or device upon wax
or wafer, or even on the parchment or paper itself, have long gone
by. It is immaterial what device the impression bears, and the
same stamp may serve for several parties in the same deed. Not
only so, but the use of wax has almost entirely—and, even of
wafers, very largely—ceased. In short, sealing has become
constructive, rather than actual, and is in a great degree a
matter of intention.
Loraw v. Nissley, 27 A. 242 (Pa. 1893) (emphasis added).
Finding no binding authority directly on point, I would turn to general
principles of contract interpretation. “When a contract is clear and
unequivocal, its meaning must be determined by its contents alone.” N.E.A.
Cross, Inc. Nat’l Fuel Gas Supply Corp., 600 A.2d 228, 229 (Pa. Super.
1991), appeal denied, 608 A.2d 31 (Pa. 1992).
The paramount goal of contractual interpretation is to
ascertain and give effect to the intent of the parties. In
determining the intent of parties to a written agreement, the court
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evidencing the signee’s authority to sign on behalf of a corporation is not at
issue in this case.
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looks to what they have clearly expressed, for the law does not
assume that the language of the contract was chosen carelessly.
Id. (quoting PBS Coals, Inc. v. Burnham Coal Co., 558 A.2d 562 (Pa.
Super. 1989), appeal denied, 568 A.2d 1248 (Pa. 1989)). Further, “a
contract must be interpreted to give effect to all of its provisions.”
Commonwealth ex rel. Kane v. UPMC, 129 A.3d 441, 464 (Pa. 2015).
“Thus, our Court ‘will not interpret on provision of a contract in a manner
which results in another portion being annulled.’” Id. (quoting LJL Transp.
v. Pilot Air Freight, 962 A.2d 639, 648 (Pa. 2009)).
The Majority holds that a contract is not under seal unless an
appropriate mark appears at the signature line, even in the fact of a clear
statement to the contrary elsewhere in the contract. I find nothing in the law
governing sealed instruments that supports such a holding, and I believe the
principles of contract interpretation require a different result.3 Here, the
Majority fails to give effect to all provisions in the Notes. Under the Majority’s
analysis, the parties’ clear statement of intent—“Borrower intends this to be
a sealed instrument and to be legally bound hereby”—is rendered
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3 Appellee cites In re Polkowski, 303 B.R. 585 (Bankr. M.D. Pa. 2003), in
which the Court wrote that “a written or printed seal, word, scrawl or other
sign appears to be absolutely essential notwithstanding a finding of a party’s
intention to execute a sealed instrument.” Id. at 587. In the next sentence,
the Bankruptcy Court cites the presumption created by the presence of the
word seal at the signature line. Id. The holding of a federal bankruptcy court
on a matter of state law is, at most, persuasive authority. For the reasons
explained in the main text, I do not find Polkowski persuasive on this point.
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meaningless. In a similar vein, the Majority interprets one part of the Notes
to annul another, in clear violation of our rules of contract interpretation.
Indeed, the Majority goes even further than interpreting an express term to
annul another. The Majority relies on the absence of any mark at the
signature line to annul a clear, positive statement of the parties’ intent. See
Radio Craft Co. v. Westinghouse Elec. & Mfg. Co., 7 F.2d 432, 434 (3d
Cir. 1925) (reasoning that “unnecessary presumptions, based upon silence,
[…] cannot destroy plain, positive provisions of an agreement.”). Finally, the
contract clearly states that the borrower intends “this to be a sealed
instrument….” I do not believe it is possible, as Appellees suggest, to read
the disputed sentence as a mere statement of intent to file a sealed document
in the future. To do so would ignore the Notes’ unambiguous language.
The Majority relies on Toll v. Pioneer Sample Book Co., 94 A.2d 764(Pa. 1953), but I believe that reliance is misplaced. Toll involved a contract
for the sale of real estate under seal. The Tolls sued Pioneer on the contract,
which was signed by Pioneer’s agent in his own name under seal. Id. at 765.
The Tolls argued the seal was mere surplusage and that Pennsylvania had
abolished the difference between sealed and unsealed documents. Id. at 765-
66. The Toll Court noted the rule that “[w]here a contract made by an agent
in his own name is under seal, the general rule is that a principal is not bound,
unless he is a party to the contract or named therein as one for whose benefit
it was made.” Id. at 765 (italics in original). Pioneer was not a party to the
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contract, nor were they named as the entity for whose benefit the contract
was made. The Supreme Court rejected the Tolls’ argument that the seal was
surplusage:
To so hold would in many instances negate the acts and
intentions of the parties; and would require us to change or
overrule many established principles and decisions with respect to
sealed instruments which parties have relied on for a century.
What, for example, will happen to the familiar and so frequently
used straw-man real estate transactions; what becomes of our
rule which holds that a seal imports a consideration; and what
statute of limitations will apply to instruments under seal
if a seal is, for all purposes, not only surplusage but also
meaningless?
Id. at 766 (emphasis added). The bolded portion, quoted by the Majority,
does not support its holding. Majority Opinion at 12. Here, the Majority has
elevated form over substance, requiring a stray mark at the signature line,
and in so doing the Majority has turned the parties’ clear statement of intent
into surplusage.
In summary, the Majority’s result is unsustainable under the principles
of contact interpretation and in conflict with the rationale of Loraw and Toll.
Based on all of the foregoing, I would conclude that the Notes are sealed
instruments.
Next, I consider Appellees’ argument that § 5529 does not apply
because the Notes are governed by the Uniform Commercial Code (“UCC”),4
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4 Appellant does not dispute that the Notes are negotiable instruments subject
to the UCC.
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and because § 5529’s twenty-year limit conflicts with the UCC’s six-year
statute of limitations, which would otherwise apply in this case. See 13
Pa.C.S.A. § 3118(a).5 Section 5501(b) of the Judicial Code provides that
“[t]he provisions of Title 13 (relating to commercial code), to the extent that
they are inconsistent with this chapter, shall control over the provisions of this
chapter.” 42 Pa.C.S.A. § 5501(b).
I would reject Appellees’ argument for the simple reason that § 3118(a)
does not expressly address instruments under seal. Thus, there is no direct
conflict between § 3118(a) of the UCC and § 5529 of the Judicial Code. Cf.
Osprey Portfolio, LLC v. Izett, 32 A.3d 793, 798 (Pa. Super. 2011) (finding
no conflict on the meaning of the word “instrument” as used in §§ 5525 and
5529 of the Judicial Code and as defined in § 3104 of the UCC), affirmed, 67
A.3d 749 (Pa. 2013). Appellees’ position would forbid the parties to any
instrument governed by § 3118(a) to avail themselves of § 5529(b)(1)’s
twenty-year statute of limitations, despite the absence in § 3118 of any
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5 Section 3118(a) provides: “Except as provided in subsection (e), an action
to enforce the obligation of a party to pay a note payable at a definite time
must be commenced within six years after the due date or dates stated in the
note or, if a due date is accelerated, within six years after the accelerated due
date. 13 Pa.C.S.A. § 3118(a).
The trial court judge who presided over one of these three consolidated
matters found § 3118(a) applicable. The trial judge presiding over the other
two matters did not address the issue because Appellant filed these actions
more than six years after Appellees’ default. Thus, it did matter whether the
court applied a four- or six-year statute.
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reference to sealed instruments.6 I would not infer any such limitation on
contractual freedom absent an express pronouncement to that effect from the
General Assembly or from our Supreme Court.
Finally, I note my disagreement with the Majority’s holding that
Appellees’ filed timely petitions to strike. Here, Appellees were required to file
their petition to strike within thirty days of their receipt of written notice of
execution of the judgments by confession. Pa.R.C.P. No. 2959(a)(3).
Appellant served written notice of execution on June 29, 2016. Appellees filed
their motions to strike on September 23, 2016. Rule 2959(a)(3) therefore
requires denial of the petitions absent “compelling reasons for the delay.”
Pa.R.C.P. No. 2959(a)(3). Appellees’ asserted compelling reasons are that
they attempted to remove these actions to federal court in Massachusetts.
Their removal petition apparently consisted of a letter from Massachusetts
counsel mailed to an incorrect address. The trial court dockets do not reflect
receipt of any removal petitions. Given Appellees’ failure to complete the
relatively simple procedure of filing a removal petition, and their failure to
follow up to ensure the trial court’s receipt of the alleged removal petitions, I
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6 Section 5529(b) is set to expire on June 27, 2018. 42 Pa.C.S.A.
§ 5529(b)(2). Our General Assembly is considering proposed legislation that
would delete § 5529(b)(2), thus eliminating the expiration date. 2017
Pennsylvania House Bill No. 1979, introduced on December 21, 2017.
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would find no compelling reason for their failure to meet the thirty-day
deadline.7
For all of the foregoing reasons, I would vacate the orders striking the
confessed judgments and remand for further proceedings. I therefore
respectfully dissent.
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7 Given my conclusion that the twenty-year statute of limitations applies, I
need not consider M & P Mgmt., L.P. v. Williams, 937 A.2d 398, 401 (Pa.
2007), wherein our Supreme Court held that a void judgment, such as a
judgment entered without subject matter jurisdiction, cannot be made valid
by the passage of time. The Majority concludes the instant confessions of
judgment were void because they were entered after the expiration of the six-
year limit in § 3118(a) (the Majority made no determination as to whether
§ 5525 or 3118 governed this case because the confessed judgments void
under either). Majority Opinion at 16. I would observe that the statute of
limitations is, in most cases, a waivable affirmative defense. Griffin v.
Central Sprinkler Corp., 823 A.2d 191, 195 (Pa. Super. 2003). It is not
clear to me that the running of the statute, even where it occurs, renders a
confessed judgment “void,” and thus not subject to Rule 2959(a)(3), rather
than merely “voidable.” See M & P, 937 A.2d at 401-02.
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