Nicholas, J. v. Hofmann, D.
158 A.3d 675
Pa. Super. Ct.2017Background
- Conrad J. Hofmann (decedent) owned real property (551 E. Cambria St., Philadelphia) and all stock of Keehof Bar, Inc.; his will left 51% to son Drew and 49% to son Conrad Jr.; Drew named executor.
- On Nov. 8, 2010 Drew (as Executor of the Estate) signed a $195,000 promissory note and mortgage in favor of the partnership Nicholas & Strothers (N&S); the note recited that $140,000 had been advanced previously and $55,000 was advanced on the date of the note; the note included the phrase “Intending to be legally bound.”
- N&S satisfied an earlier mortgage and received an irrevocable stock power for 100 shares of Keehof Bar; payments on the note ceased and N&S confessed judgment (later stricken) and then filed this foreclosure on Sept. 19, 2013.
- Conrad Jr. conveyed “one half interest” to N&S by deed dated Jan. 25, 2012 for $5,000; the deed misstated estate shares (recited 50% though Will provided 49%) and was executed while probate was ongoing.
- At a non-jury trial the trial court voided the Nov. 8, 2010 mortgage and the Jan. 25, 2012 deed, quieted title in favor of defendants, and barred N&S from asserting any interest; the trial court concluded there was no meeting of the minds and that the mortgage was supported by past consideration.
- The Superior Court vacated the judgment as to the mortgage foreclosure (remanding for further proceedings), held the trial court erred in voiding the mortgage based on its UWOA/consideration and "meeting of the minds" analysis, and held the trial court exceeded the scope of a foreclosure action in voiding and quieting title as to the later deed.
Issues
| Issue | Plaintiff's Argument (N&S) | Defendant's Argument (Drew/estate/Conrad Jr.) | Held |
|---|---|---|---|
| Validity/enforceability under UWOA (consideration) | Note contains “Intending to be legally bound” so UWOA dispenses with need for fresh consideration; mortgage enforceable | Mortgage unenforceable because supported by past consideration ( $140,000 ) | Court: Trial court erred — note’s language satisfies UWOA; cannot void solely for past consideration without addressing other defenses; remand to reconsider related issues |
| Meeting of the minds / use of parol evidence | Written mortgage/note contain essential clear terms; court should construe four corners and not invalidate contract because of extrinsic testimony | Parties had conflicting testimony; ambiguity re $140,000 shows no mutual assent | Court: Trial court misapplied law — material terms (debt amount, due date, property) were clear; ambiguity about timing of $140,000 was non‑essential and did not defeat enforceability; parol evidence could resolve ambiguity but did not justify voiding mortgage; remand |
| Executor authority / Will provisos (spendthrift/protective clause) | Will authorized executor to mortgage estate property (Sections VI.C/D); trial court overlooked this | Protective provision in Will precluded encumbrance or creditors asserting claims against estate; Drew lacked authority | Court: Trial court must reassess on remand — UWOA error and overlooked Will provisions; authority to sign (and effect of protective clause) requires reexamination in light of correct legal analysis |
| Scope of foreclosure action — deed & quiet title | Foreclosure proceeding cannot adjudicate unrelated quiet-title claims; the Jan. 25, 2012 deed (executed after mortgage) is outside Rule 1148 scope | Deed is void ab initio (parties sometimes conceded defects) and court correctly voided and quieted title | Court: Trial court exceeded its statutory/in rem foreclosure authority in voiding the 2012 deed and quieting title; that relief is improper in this foreclosure action and must be vacated |
Key Cases Cited
- Socko v. Mid-Atlantic Sys. of CPA, Inc., 126 A.3d 1266 (Pa. 2015) (UWOA intent-to-be-bound language can supply consideration and validate written obligations)
- Ins. Adjustment Bureau, Inc. v. Allstate Ins. Co., 905 A.2d 462 (Pa. 2006) (when written contract is clear, intent is ascertained from the document; parol evidence only if ambiguity exists)
- Simeone v. Simeone, 581 A.2d 162 (Pa. 1990) (parties bound by written agreements regardless of subjective understanding; do not escape by claiming they did not understand terms)
- Cunningham v. McWilliams, 714 A.2d 1054 (Pa. Super. 1998) (Rule 1148 counterclaims in foreclosure are narrow — only those incident to creation of the mortgage relationship allowed)
- Newman v. Sablosky, 407 A.2d 448 (Pa. Super. 1979) (equity may limit enforcement of contracts based solely on past consideration in certain circumstances)