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HomeMy WebLinkAbout00-2099 civil termRONALD E. BEINHAUR and IN THE COURT OF COMMON PLEAS OF YVONNE M. BEINHAUR, CUMBERLAND COUNTY, PENNSYLVANIA PLAINTIFFS Mo LINWOOD B. PHILLIPS, III and MARIE B. PHILLIPS, DEFENDANTS 00-2099 CIVIL TERM IN RE: PETITION TO STRIKE CONFESSION OF JUDGMENT BEFORE BAYLEY, J, ORDER OF COURT AND NOW, this ~'~" day of June, 2000, the petition of Linwood B. Phillips, III, to strike a confession of judgment, IS DENIED. ~,By the Ceart~. ~'~ JOhnFor PlaintiffsE' Beinhaur, Esquire Edga~B. B~yley.~. Robert Frey, Esquire For Defendants :saa RONALD E. BEINHAUR and IN THE COURT OF COMMON PLEAS OF YVONNE M. BEINHAUR, CUMBERLAND COUNTY, PENNSYLVANIA PLAINTIFFS V. LINWOOD B. PHILLIPS, III and MARIE B. PHILLIPS, DEFENDANTS 00-2099 CIVIL TERM IN RE: PETITION TO STRIKE CONFESSION OF JUDGMENT BEFORE BAYLEY, J. OPINION AND ORDER OF COURT Bayley, J., June 8, 2000:-- On April 6, 2000, plaintiffs, Ronald E. Beinhaur and Yvonne M. Beinhaur, confessed judgment for $38,602.82 against defendants, Linwood B. Phillips, III and Marie B. Phillips. The judgment provided: Pursuant to the authority contained in the warrant of attorney, the original or a copy of which is attached to the complaint filed in this action, I appear for the Defendants and confess judgment in favor of the Plaintiffs and against Defendants as follows: NOTE BALANCE $28,115.70 INTEREST AT 9% PER ANNUM $ 5,487.12 FROM 12/01/97-03/31/00 ATTORNEYS FEES $ 5,000.00 TOTAL $38,602.82 Defendant, Linwood B. Phillips, Ill, filed a petition to strike the judgment in which he averred, "1 did not voluntarily, intelligently and knowingly give up my right to notice and hearing prior to the entry of judgment." A Rule was entered against plaintiffs to 00-2099 CIVIL TERM show cause why the petition should not be granted, upon which hearings were conducted on May 25 and June 5, 2000. Defendants purchased plaintiffs' landscaping business in 1992. After negotiations they agreed to a purchase price of $145,000, payable $95,000 in cash with plaintiffs financing the balance of $45,000. At settlement on September 25, 1992, defendants signed a note to plaintiffs in the principal sum of $45,000 payable in monthly installments of principal and interest of $570.04 from November 1, 1992, through October 1, 2002. The interest rate was 9% amortized over ten years. The note contained nineteen paragraphs, eighteen of which were in regular type with paragraph eight in capitals, as follows: MAKER HEREBY IRREVOCABLY AUTHORIZES AND EMPOWERS ANY ATTORNEY OR THE PROTHONOTARY OR CLERK OF ANY COURT IN THE COMMONWEALTH OF PENNSYLVANIA, OR ELSEWHERE, TO APPEAR FOR MAKER AT ANY TIME AFTER DEFAULT HEREUNDER IN ANY ACTION BROUGHT AGAINST MAKER ON THIS NOTE AT THE SUIT OF PAYEE, WITH OR WITHOUT DECLARATION FILED, AS OF ANY TERM, TO WAIVE THE ISSUANCE AND SERVICE OF PROCESS AND THEREIN TO CONFESS OR ENTER JUDGMENT AGAINST MAKER FOR THE ENTIRE UNPAID PRINCIPAL OF THIS NOTE AND ALL OTHER SUMS PAID BY PAYEE TO OR ON BEHALF OF MAKER PURSUANT TO THE TERMS OF THIS NOTE OR THE MORTGAGE, AND ALL ARREARAGES OF INTEREST THEREON, TOGETHER WITH COSTS OF SUIT, A REASONABLE ATTORNEYS' COMMISSION FOR COLLECTION (BUT IN ANY EVENT NOT LESS THAN FIVE THOUSAND ($5,000.00) DOLLARS) AND TO ASSESS DAMAGES FOR THE AMOUNT DUE; AND FOR SO DOING THIS NOTE OR A COPY HEREOF VERIFIED BY AFFIDAVIT SHALL BE SUFFICIENT WARRANT. Prior to purchasing plaintiffs' landscaping business in 1992, defendant had been -2- 00-2099 CIVIL TERM doing some landscaping work. He had never previously purchased a business. Defendant and his wife were able to purchase plaintiffs' business when he received a $100,000 personal injury settlement from Roadway Trucking Company.' He used $95,000 for the down payment and $5,000 to start operations. Defendant testified that after signing a confidentiality agreement, he had access to plaintiffs' business records, however, he never saw any of the paperwork for the closing until settlement on September 25, 1992. Defendant testified that there was a written contract of sale that specifically set forth that he could obtain counsel, however, he had no money other than the $100,000 from his personal injury settlement that he was putting into the business so he felt he could not afford to hire an attorney. He did not seek the advice of an attorney during any of the negotiations or at settlement. Plaintiffs' son is an attorney and he prepared all of the settlement papers. Defendant testified that plaintiff, Ronald E. Beinhaur, led him to believe that he would get free representation from the son although he acknowledged that he had no agreement with the son for representation. Defendant testified that he trusted plaintiffs' son and did not read any of the settlement documents including the note containing the warrant to confess a judgment after a default. He testified that the settlement took about an hour and that everything was rushed. He had an opportunity to ask questions to plaintiffs' son which he did. He testified that he remembered something about a ' Defendants are now divorced. Marie B. Phillips is not a party to the petition of Linwood B. Phillips, III, to strike the confession of judgment. -3- 00-2099 CIVIL TERM $5,000 attorney fee although he had no idea what it meant. Defendant, Linwood B. Phillips, III, is now a laborer who works for his father. Plaintiff, Ronald E. Beinhaur, is now a commercial real estate broker. Plaintiff testified that defendants approached him about purchasing his business. He testified that he wanted a total cash transaction but that defendants' source of cash was limited by the amount he would be receiving from an upcoming personal injury settlement. Plaintiff testified that defendants reviewed his books and records at the company office after they signed a confidentially agreement, and that they took some of those records to their home for further review. After negotiating the terms of purchase, and before settlement, defendant spent some time at the business which included going out on calls with plaintiff to met customers. Plaintiff testified that he thought defendants were using professional advice and that he never discouraged them from obtaining an attorney. He testified that he never told defendants that they would be receiving free representation from his son, and that defendants never expressed any dissatisfaction with the purchase. Attorney, John E. Beinhaur, testified that his father asked him for representation regarding the sale of the landscaping business. He met with the Phillips and discussed some proposals for a sale. Beinhaur testified that Linwood Phillips told him he would use Robert Frey, Sr., Esquire, if he needed legal assistance. When the terms of the sale were negotiated, Beinhaur prepared an Agreement and asked Phillips if he wanted it sent to Attorney Frey. Phillips said "no." The agreement signed on July 28, 1992, -4- 00-2099 CIVIL TERM contained the following clause: Representation. The parties hereto agree that they have consulted legal counsel, or have had the opportunity to do so, regarding the provisions contained in this Agreement and the effect thereof on each party, legal or otherwise. Beinhaur testified that he was representing his parents and his father never asked him to represent the Phillips. He told the Phillips that he was representing his parents. He does not know if the Phillips ever sought legal advice. Beinhaur testified that he prepared the closing documents and they were available for review during the week prior to the closing on September 25, 1992; however, he does not remember if the Phillips did review them. DISCUSSION This was a commercial transaction. As set forth in Germantown Savings Bank v. Talacki, 657 A.2d 1285 (Pa. Super. 1995), Pennsylvania's confession of judgment procedure has been upheld in commercial transactions. D.H. Overmyer Co. v. Frick Co., 405 U.S. 174, 92 S.Ct. 775, 31 L. Ed.2d 124 (1972); International Equity Corp. v. Pepper & Tanner, Inc., 222 Pa. Super. 118 (1972). The warrant of attorney to confess judgment was prominently highlighted in paragraph 8 of the note the Phillips signed on September 25, 1992. The failure to read a contract before signing it is an unavailing excuse or defense and cannot justify an avoidance, modification or nullification of the contract. Germantown Savings Bank v. Talacki, supra. We find that John Beinhaur, Esquire, told the Phillips that he was representing his parents, not them. There was no -5- 00-2099 CIVIL TERM fraud by plaintiffs nor was there a mutual mistake of fact concerning legal representation during the negotiations and the execution of the contract and closing documents. Upon default, defendant voluntarily, intelligently and knowingly gave up his rights to notice and hearing prior to the entry of judgment. ORDER OF COURT AND NOW, this ~ day of June, 2000, the petition of Linwood B. Phillips, III, to strike a confession of judgment, I$ DENIED. By the Court,, ~- ,~ Edgar S. Bayley, O. ( John E. Beinhaur, Esquire For Plaintiffs Robert Frey, Esquire For Defendants :saa -6-