Denlinger, Inc. v. Dendler

608 A.2d 1061 DENLINGER, INC., Appellant,

v. Pennsylvania Brad A. DENDLER and National Company. Bank and Trust DENLINGER, INC. Pennsylvania Brad A. DENDLER and National Company. Bank and Trust Appeal of Brad A. DENDLER.

Superior Pennsylvania. Court

Argued Jan. 1992. May 11, Filed Lancaster, appellant. for L. Nissly, Nedric Dendler, Reading, appellee. for Ziegler, Alan B. KELLY, CIRILLO, DEL SOLE and JJ. Before CIRILLO, Judge: from an order entered appeal

This is a consolidated granting County Pleas of Lancaster of Common Court judgment motion summary Dendler’s for Brad A. defendant attorney’s pursuant his fees request denying and appealing Inc. is Denlinger, Plaintiff Pa.C.S.A. § 2503(9). Den- defendant summary judgment, while granting fees. We attorney’s denial cross-appealing dler is and affirm summary judgment granting reverse the order attorney’s fees. denying the order is the sole share- (“Dendler”) Dendler Defendant Brad Develop- Blue Mountain holder, treasurer of president com- (“Blue Mountain”), a construction Inc. Company, ment Blue Mountain in residential projects. specializes pany on Pennsylvania July laws of under the incorporated corporation as a de having functioned 1988, after facto Mountain, forming Blue Prior of April since for several in the construction business had Dendler been name of under the proprietorship a sole years, operating Inc. Denlinger, Plaintiff Contractors. Blue Mountain in Lancas- based building supply company ais (“Denlinger”) regu- had proprietor, As a sole ter, Pennsylvania. Denlinger, from supplies materials larly purchased Blue However, Dendler formed once basis. cash-only Den- contacted, by, contacted or was Mountain, either he In 1988 Dendler July of a credit account. open linger to to com- application credit two-sided page, a one given was to six form four completed the returned Dendler plete. was estab- later, credit account “open book” and an weeks validity it the of Essentially, Blue Mountain. lished for is under completed which Dendler credit application the here. review

Blue Mountain a voluntary petition filed under Chapter of the Bankruptcy Eleven Code in of At May that 1990. Blue Denlinger time Mountain owed for materi- $44,157.94 als that had and already accepted. been delivered On June 26,1990 Denlinger filed suit Brad against personal- Dendler of ly,1 permitted by paragraph application, as four the credit recoup account, to the due on the $44,157.94 $5,994.84 plus in charges,2 finance and fees.3 attorney’s Dendler asserted answer, defense, in his as an affirmative that credit and, such, application was an adhesion contract against unconscionable and the public policy of the Com- Dendler also monwealth. counterclaimed for attorney’s Code, fees under section Judicial 2503(9) C.S.A., contending Denlinger’s that suit was arbitrary, vex- atious, in agreed and filed faith. The trial court bad that contract, was an application credit adhesion and that in granted summary judgment basis favor of Dendler. The request fees, court attorney’s finding denied Dendler’s for Denlinger’s that did not to required conduct rise the level this Denlinger section filed 2503(9). timely appeal; sub- sequently, Dendler filed a timely cross-appeal. Denlinger against Pennsylvania 1. also filed suit National Bank and $44,157.94 bills, Company ("PNB") past plus for Trust attorney1 due legal alleges s Denlinger fees and at the “interest rate.” that it had increased Blue Mountain’s line of credit on the basis of a letter allegation, stating from of credit of PNB. PNB denied the that letter erecting was limited the costs to incurred a residence for Greskos, mortgage who had obtained a from PNB finance to scope of their construction house. PNB’s letter of credit for subject separate by Denlinger, filed suit addition, not at therefore issue here. PNB notified this court that it actively participating appeals Superior will “not before Court." three, payment Paragraph governing 2. which delineates the terms accounts, (2%) charge provides percent for a two for discount all due, paid by they up which invoices to a two the tenth month in are percent (2%) per charge month finance for all invoices not paid they full in the are month due. Paragraph part: five of the credit reads in "In the event collection, Applicant’s attorney is referred an that account collect, agrees Denlinger, Applicant Inc. shall be entitled principal charges, attorney’s and accrued fee addition finance (15%) percent fifteen thereof." for consider- following issues our Denlinger presents ation: of a held president closely and

1. Is the sole shareholder for corporate held liable personally be corporation to writing assuming per- a he has obligations when responsibility? sonal require separate signature

2. law a Pennsylvania Does to guarantee a be personal capacity” in an “individual repre- in a effective, though signing the individual even person- to unequivocally agreed has be capacity sentative liable; require a contract- Pennsylvania and does law ally the effect person to to another business explain ing party guarantee? personal a adhesion; a is contract 3. Is a credit the sole sharehold- guarantee a from demanding personal held corporation er unconscionable? closely sup- of a guarantee sole shareholder personal 4. Is a respect to credit given with ported by consideration when closely corporation? to his held extended capacity in a sufficient signature representative 5. Is guarantee frauds to applicable the statute of satisfy to agreements? interest) charges (or percentage at- Are finance writing? agreed upon collectible when

torney’s fees Dendler asks us to determine whether cross-appeal his attorney’s him refusing court erred award the trial 2503(9) of Judicial Code. to section pursuant fees “the only granted when judgment may Summary and ad interrogatories, pleadings, depositions, answers affidavits, if file, any, show together with missions fact and any issue as material genuine is no there as a matter entitled to a moving party judgment that the 1035(b). should be judgment Summary Pa.R.C.P. law.” clear free from doubt. right granted only when Vilsmeier, Musser

(1989).

In determining whether a summary judgment was properly granted, accept we must as true all properly pleaded facts, as well all reasonable inferences that may Kass, be drawn therefrom. Overly v. 108, 382 Pa.Super. 970, (1989). 554 A.2d 971 We must all resolve doubts regarding the existence of genuine issue of material fact against the moving for party summary judgment. Marks v. Tasman, 132, 133, (1991). 206 On appeal, we must examine the record in light most id., favorable to the non-moving party, and we will not reverse the trial court’s order unless there has been an error of law or a manifest abuse of Vargo discretion. Hunt, 398 Pa.Super. (1990). A.2d

About the time he formed Mountain, Blue Dendler dis- cussed opening a credit Denlinger account at with one of salesmen, Denlinger’s Robert Witmer. gave Witmer Den- dler a blank credit application later, form. Several weeks Dendler returned the completed application to Witmer who then forwarded it to the manager, credit Robert Hamor. The application credit consists of an 8V2inch inch two- sided form which is used corporations, for or partnerships applicants. individual theOn face of the form all printing is in case upper block letters one-eighth inch high. Beneath the Denlinger logo center, and address at the top the first line applicant.” reads “name of Dendler inserted “Blue Co., Development Mountain Inc.” in large capital letters. Dendler completed the “corporation” section and left blank the sections for individuals and partnerships. He also sup- plied the financial information requested on the face of the form. The form, reverse side of the which is captioned “Terms letters, and Conditions” in bold contains six individ- ually numbered set paragraphs, off from one another by spacing. double Each paragraph outlines a separate term governing credit accounts at Denlinger. See n. 2 & supra. The printing, upper letters, and lower case only smaller marginally than that on the face of the form. page lower half of the designated contains areas up for to four separate parties sign. “Blue Dendler, Brad Pres.” Inc. Development Corp., By Mountain lines. appropriate on the corporate form proper issues for our several Denlinger presents Although cross-appeal and the review, appeal the outcome both applica the credit of whether on our determination hinge four, Dendler submitted as tion, paragraph particularly Mountain, Blue account for obtaining the basis of the Commonwealth. public policy against is void as form the reverse side four on Paragraph provides:4 of the credit which has been or In consideration Applicant, extended to future may

which corporation, signing undersigned, behalf of if if more severally entity, jointly or other and partnership and one, prompt hereby personally guaranteed) than owing by all accounts now or hereafter payment of full undersigned further Denlinger, Inc. Applicant continuing, is abso- foregoing guarantee agree(s) that against bemay any and lute and unconditional enforced or in individually, jointly any combi- undersigned, Applicant and proceeding against without first nation, exten- waive(s) any released reason right any other any in terms of change payment of time or sion available, the defense of except or hereafter defense now added). (emphasis payment, the trial court stated: opinion In its language Dendler’s contention that this It is Defendant himon imposing personal liability [paragraph four] This Court has and should be stricken. unconscionable phraseology in so such both as construing little problem pronounce- to the public policy and extension adjunct court, inaccurately reproduced this 4. In his brief to this Dendler paragraph application, paragraph. On the actual credit critical Conditions," "Appli- throughout “Terms and the word four and cant" is though ostensibly think, intentionally consistently capitalized, we so. Al- form, quoting from the credit upper consistently replaces case "A”with a lower case nevertheless "a," case, changing presentation, which in this is of thereby the visual import. some ment in Arovitch, v. Galligan 219 A.2d 463 (1963), wherein our Supreme Court condemned the excul- patory clause of a residential form lease and also under general principles. contract We cannot agree. Galligan inapposite to this case. Galligan, the plaintiff/tenant had injured been on the lawn of dfefendant/lessor’s apartment building. The standard form lease tenant had contained a lengthy exculpato- ry listed, clause which among other things, places seven from which the lessor was relieved of liability for or injury damage. Although hallways and sidewalks were listed exclusions, Thus, lawns not. were following the rule that any document legal which reduces rights that would other- spell wise exist must out “with the utmost particularity” the intention of the parties, Morton v. Ambridge Borough, (1954), 375 Pa. and the rule of construction that a written instrument is to be strictly against maker, construed Darrow Keystone, 365 Pa. (1950), 74 A.2d 176 our supreme court found the clause did xculpatory protect not the lessor in particu- lar case. Galligan, 219 A.2d at 465.

In concluding opinion court, for the Mr. Justice Cohen are, “[tjhere however, added: policy which, considerations though decision, not necessary this are the writer’s personal observation and do bear some relevance.” Id. Justice Cohen then commented that the exculpatory clause and, is to be found in every form lease understandably enough, landlords unwilling are to strike provision therefrom that which strongly favors them. Thus it is for the prospective tenant of an fruitless apartment to seek a lease having no exculpatory clause. The result is that the tenant has no bargaining power and must accept his landlord’s terms. There is no minds, of meeting agreement the and the is in effect a adhesion, mere contract of the whereby tenant simply adheres to a document powerless alter, which he is to having no other reject alternative than to the transaction entirely, (emphasis added).

173 court's reliance on Justice Cohen’s Id. light the trial In Cohen’s comments, to reiterate Justice compelled we are dicta. It is obiter are that his remarks own observation an opinion in expressions that general established well cannot be dissevered light the of and “must considered case; actually is decided that what from the facts of facts of particular law to controlling applicable all other statements case and while particular they great consideration therein are entitled to conclusions Pew, 411 Re C. Mary Estate are not controlling.” In Re 399, see also (1963); 96, 104-105, 191 A.2d 404 Cassell, (1939). A.2d Neverthe- Estate of Justice Cohen the concerns voiced less, will address we trial court. and the hand, plain- case that, unlike the

Initially we note consumer, an seeking Galligan was a an individual tiff defendant, however, experi- was an apartment rent. The businessman, building as operating apartment enced disparity in their great commercial venture. There was a A power. bargaining as their business acumen well Galligan, although displeased with tenant like prospective lease, had no alternative but clause in the objectionable As apartment. if rent an the lease he wanted to sign used same standard landlord in the area virtually every lease, such an form to seek a lease without it was futile Cohen, pro- According to Justice exculpatory clause. sign the lease spective tenant had two alternatives: only clause, altogether. or the lease objectionable reject with the Germantown supra. This court’s statement Galligan, Rawlinson, Company Pa.Super. Manufacturing (1985), applica- need that “[t]the most acute [unconscionability] tion this when standard most seeking seller is the trade those professional uneducated, inexperienced subject exploitation—the the situation people aptly and the of low incomes” describes in Galligan. comments which Justice Cohen’s prompted Den- is a consumer. Both Conversely, here neither party dler, as president and sole shareholder5 of Mountain, Blue Denlinger, are enterprises. commercial Both are corpo- rations. Although Dendler repeatedly points out that he is high is, a only graduate, nonetheless, school he an experi- enced businessman. For at least six years prior to forming Mountain, Blue building worked and con- struction trade as a sole proprietorship. According to the application, credit he seeking was a twenty thirty thou- sand dollar line of credit. Dendler engaged in building residences that sold for approximately quarter of a million Galligan, dollars. Unlike prospective which a renter was powerless against the landlords of the region who all used lease, the same standardized here the monolithic unity the landlords and atmosphere the coercive inherent a lack are Galligan, alternatives absent. plaintiff was seeking a necessity—a place to live—while Dendler was seeking a more merely convenient method of paying corpo- rate Consequently, bills. under the circumstances of this case, the trial court’s concern about unequal bargaining power and overreaching misplaced. Moreover, “it would borrow, improper differentiation, without concepts developed protect consumers and them in employ favor A. of one commercial party over another.” Stanley Klopp, Co., Inc. v. John Deere (E.D.Pa.1981), 510 F.Supp. 807 (3rd Cir.1982). 676 F.2d 688 affirmed Dendler’s principal argument Denlinger’s is that is an adhesion contract and is also uncon scionable. This contention lacks merit. An adhesion con tract, (5th 1979), to Black’s according Dictionary Law ed. contract form offered to consumers of

standardized goods and services on “take it or essentially leave it” share-, Throughout Denlinger its brief refers to Dendler as the “sole Mountain, possible, gratuitously holder” Blue and whenever men- However, Denlinger’s misplaced, tions that fact. focus is for it is well corporation regarded established the Commonwealth that a is to be entity, independent entirely by as an even if its stock is owned one Newbauer, person. College Group, See Watercolor Inc. v. William H. Inc., (1976). 360 A.2d 200

175 opportunity consumer realistic affording without basis consumer cannot and under such conditions that bargain by acquiescing or product except desired services obtain of contract Distinctive feature adhesion in form contract. its has choice as to that weaker no realistic party is terms____ Not such contract is unconscionable. every omitted) (citations contracts, example, generally are considered for

Insurance equal are not of parties of adhesion because the contracts consumer, he and the should want bargaining power insurance, accept non-negotiable is forced to the obtain v. Bishop Washington, terms of a standard form contract. 1088, (1984) (citations 387, 400, Pa.Super.

331 480 A.2d 1094 However, can termed omitted). every not form contract be is, fact, an a of adhesion. Whether a contract contract an contract must be determined on individual adhesion basis, light parties circumstances and particular v. Pennsylvania Monumen- involved. Commonwealth of 333, 596, 609, Inc., 314 A.2d 10 Pa.Cmwlth. Properties, tal noted, (1973). our has leases contain- supreme 339 As court contracts clauses which could be considered ing exculpatory involved parties of will not be so termed when adhesion Em- equal bargaining power. with See corporations are Corp., Ltd. Greenville Liability Assurance ployer’s 288, (1966). A.2d Assoc., 423 Pa. 224 620 Business Men’s is both a statutor unconscionability The doctrine of of and a common law defense to enforcement y6 Wag or contract. provision unfair contract a allegedly 561, 555, Rummel, 571 A.2d Pa.Super. 391 ner v. Estate of 588, A.2d 588 1055, (1990), 1058 denied allocatur at Pa.Super. 341 (1991); Manufacturing, 510 Germantown Although challenging 55, party at 145. 491 A.2d affirmatively of or bears burden provision contract 331 unconscionability, Bishop, pleading proving (citations omitted), the at 480 A.2d 1094 Pa.Super. at goods involving under Unconscionability in and services contracts policed by Pa. Code is 13 purview of the Uniform Commercial or clause.” entitled “Unconscionable contract C.S.A. § actual is unconscionability determination question Id.; law the court. see Klopp, supra; also 13 Pa.C.S.A. adhesion, 2302. Once a contract deemed to be one of § terms analyzed its must to determine whether the con- whole, it, tract as specific provisions or are unconscio- nable. Pa.Super. 480 A.2d Bishop, at 1088. It note, however, important supreme court, that our Pennsylvania, federal courts of have “refused to hold contracts simply unconscionable because a disparity bargaining power.” Corporation, Witmer v. Exxon (citations (1981) omitted); Koval v. Mutual Insurance Liberty Company, 366 Pa.Su- (1987), per. allocatur denied 518 (1988); 541 A.2d 746 Klopp, supra.

In of his contention that the support credit applica contract, is an tion adhesion Dendler cites salesman Wit mer’s in deposition testimony which he stated that generally Denlinger of the permit did not modifications terms of the and if asked to application, modify application, the employees say However, would no. Witmer also stated applications that he had seen some where the terms of had been crossed When asked terms out. which had been deleted, responded: Witmer some “I’ve seen builders put through lines of these I couldn’t tell you some but which I just—I one. turn generally just any respect them I’m given that them and then it’s to our up officers as or not will them they accept way.” Similarly, whether that Hamor, manager7 Denlinger, the credit of when Robert if asked his would deposition company permit was any to delete of the on the of applicant paragraphs reverse form replied, “Only he under certain conditions we do.” any Hamor further elaborated that “we review application altered, terms, has that been with altered we generally financial require additional information. We then make a judgment application further of that addition- based committee, testimony, According deposition to Hamor’s the credit credit, regarding which made all of decisions extension consisted Hamor, manager, Denlinger, of credit Robert and John an owner Denlinger, Inc. Denlinger al financial information.” When asked whether personal guarantee provision had ever deleted the any applications, Hamor “Yes.” responded, queried When when, as to Hamor “I responded, specifically. don’t know done We have so.” light deposition testimony Witmer and Ha-

mor, it cannot applicant be said that a credit “has no bargaining power accept [Denlinger’s] and must terms.” Galligan, supra. Unlike the tenant described by Justice Cohen, a Denlinger applicant credit is not forced to “a sign document he is powerless which alter.” Id. Dendler allege does not that he forced acquiesce in the form in order to building obtain the he supplies needed. Bishop, supra; supra. As the Overly, deposition reveals, testimony Witmer and Hamor in dealing with it is Denlinger, not “fruitless” to seek to objectionable have clauses Therefore, deleted or modified. Galligan supra. we conclude Denlinger that the credit application is not a contract of adhesion.

Dendler next contends that the credit applica tion is agree. unconscionable. We do not The test of unconscionability, court, as mandated our supreme First, twofold. for a contract or a term to be unconsciona ble, party signing the contract must have lacked a meaningful accepting choice the challenged provision. Second, the challenged provision must fa “unreasonably the party asserting vor” it. Witmer v. Exxon 495 Corp., 540, 551, (1981); Koval, 434 A.2d supra; see Vassall-Dillworth, Etc., also Beckman v. 321 Pa.Super. (1983). 468 A.2d 784 Dendler has failed meet his that, in establishing burden as the party signing the con tract, meaningful he lacked a in accepting choice paragraph four of application. the credit

In his deposition testimony Dendler admitted he not did negotiate or attempt change any terms of the credit application. Denlinger Dendler also admitted no employee him non-negotiable, ever told the terms or were that it was futile to even ask modifying about the terms and conditions Moreover, Denlinger

on the is not an application. exclusive much-sought-after goods, of rare or a situation supplier “adhere” to which could induce one to an unfavorable Galligan, supra, contract, meaningful reduce thereby Witmer, supra. Denlinger building choice. sells materials are from a supplies readily and construction which available Denling- of sources. If Dendler found the terms of variety onerous, he was at to seek a application liberty er’s credit alleged Dendler has not credit account elsewhere. lumberyards traveling there are no other within distance. Overly, supra. alleged Nor has Dendler that it would have futile to seek a credit account elsewhere because the been other area sources utilized same standardized supply application. Overly, supra; Galligan, supra. credit addition, supplies free to obtain his from basis, operated on a as he had when he Denlinger cash-only stated, recently a sole As this court proprietorship. as “where, here, provision a contract affects commercial disposal, choices at their the clause meaningful entities with unconscionable.” Vasilis deemed question rarely will be v. Bell Pa.Super. Pennsylvania, Klopp, supra see also (1991); (noting a number of that, although possible, rarely it is recognized courts have contract or term be found to be unconscio- will a commercial nable.) requirement Dendler is to meet the first As unable test, conclude two-part court’s we cannot supreme of our application unconscionable. Denlinger’s the “individu- complete Dendler insists that his failure attests to the fact that application section of the credit al” for the personally unpaid intended to liable he never Dendler’s assertion strains credu- of Blue Mountain. debts is a form used multi-purpose The credit lity. alike. Each applicants and individual corporate, partnership information requested is to furnish the applicant listing status. After Blue legal reflective of its section applicant Inc. as the on Development Corporation, Mountain the completing Dendler was correct application, the credit leaving the form and unanswered section of “corporation”

179 inapplicable “partnership” posed by the questions rein- doing merely so Dendler By “individual” sections. Mountain, corporation, Blue applicant, that the was forced simply or individual. There is noth- partnership and not a inferred from Dendler’s ing legitimately more that can be on the face of the “corporation” of the section completion light This is true in of the application. especially credit four of the which language paragraph application, clear of a applicable signing to an individual behalf directly corporation. argues ap that he was

Similarly, because and he corporate for credit name plying he corporation, as an official of the application only binding he himself personally never understood was In argument Blue Mountain’s debts. This lacks merit. Beckman, analogous this court was faced with an supra, Beckman, he appellant argued situation. that when he was given disputed sign insurance contract was aware of the clause on the “no-agency” never told or made Therefore, appellant of the contract. ar reverse side unconscionable, not was the clause but gued, only This a contract of adhesion. court contract itself was now, then, again although do a party as we stated on the print not have been ‘told or made aware’ “may he admitted in a agreement, side of the nevertheless back that he had read the whole contract before deposition Beckman, 321 468 A.2d at Pa.Super. it.” signing Here, Beckman, “the record that he 788. showed businessman, equipped to understand the experienced Id., agreement signed.” he meaning of the terms Consequently, 321 Ct. at 468 A.2d at 789. Pa.Superior of fraud or mutual mistake8 to allegations absence mutual, unilateral, “Generally, if mistake is not but and is not due mistaken, one not there is no basis for relief.” to the fault of the Greenfield, Pa.Super. A.2d Warren v. (1991), Pa.Super. citing Company, McFadden v. American Oil (1969) (emphasis original). 257 A.2d 283 180

explain presence paragraph four the the credit Id. application, by signature.9 Dendler is bound his legally Dendler “was bound to know the terms of v. engaged.” contract which he himself Montgomery 547, 550, 177 448, Levy, (1962). Moreover, 406 Pa. A.2d 450 “[contracting parties are normally agree bound their ments, regard without to whether the terms thereof were read and fully irrespective understood and of whether the agreements (cita good bargains, embodied reasonable or omitted) Ignorantia non excusat.” Simeone v. Si tions meone, 400, 392, 162, 165 (1990) 581 A.2d (emphasis in original). In his deposition testimony Dendler admitted application. that he had read the credit He also admitted that he had discussed certain terms and conditions on the Witmer, application with and that Witmer had answered he everything had asked. Dendler admitted that he had four, paragraph never asked Witmer about and that he had sought attorney’s never an advice about it. Dendler had in his for possession thirty forty he returned it to days Denlinger. before had ample time which to consult or attorney, anyone with choice, meaning legal else of his as to the effect of the “Terms and Conditions” on the the credit application.10 supreme court has stated that:

Our Brandt, 230, 235, (1975), Pa. 344 A.2d Estate 463 809 our supreme repeatedly "this court reiterated that Court has held that in proof unavailing the absence of of fraud 'failure to read is an excuse avoidance, justify or defense and cannot of the contract or modification or nullification ’’ thereof,’ Estate, any provision quoting Olson 447 Here, (1972). allegations 291 A.2d as no of fraud Pa. appear record, “avoidance, grounds we find no modification paragraph or nullification” of four. Id. Moon, Moon, Pa.Super. (1990), 10. In McKeev. 583 A.2d 5 signed performed president corporation, a contract to of a have work Dendler, corporation. Moon in his for the Like the contract corporate only; sign capacity as a officer he did not as an individual. provided: Paragraph the contract five of executing Agreement repre- person on behalf of the The this Client authority guarantees sents that he or she has full to do so and payment by Agent expenses Client to parties of all the fees and described agree Agreement further that this shall not be above. meaning to know age presumed person A ability, own upon his contract, relying in a words if he his best interests not to agreement into an he enters he not complain be heard to later cannot and did not understand its contents acquainted with he words used in the instrument which meaning of added). omitted) (citations (emphasis signed, 411-412, 604, 605 Schoble, Schoble having capacity the that one (1944). “It is well established it, is bound signs document... who a written to understand (3rd Contracts, on 1577 13 Williston signature.” his by § made has Moreover, signer] 1970). ed. “[where himself his mis- the document and the words with acquainted or his unilat- interpretation legal effect, concerns its take for relief than does grounds no more affords eral error added). Id. (emphasis of the words.” ignorance the side of on the reverse “Terms and Conditions” type. in clear and distinct are written application credit set distinctly separately numbered Each paragraph only comprised entire section is other. The off from each in En- plain The terms are written paragraphs. six short capitalized, which always “Applicant” The term glish. no terminology, There is no technical to it. draws attention bewildering ver- information significant attempt bury parties written consent of both without the or amended altered thereto. Dendler, McKee, attorney explained had the contract Moon’s Unlike word," id., Pa.Supe- 400 by paragraph and word for “paragraph to him it, 6, signed to ensure that before Moon 583 A.2d rior Ct. at personal consequences his potential fully the understood Moon argument that he found Moon’s guarantee. This court unconvincing; panel only af- corporate name contract against enforcing Moon. the contract order the trial court firmed Denlinger outlines Paragraph four of corporate signature more imparted by in much guarantee personal paragraph five of the contract terms than explicit and understandable Nevertheless, this case on we choose not to decide in McKee. McKee, thoroughly explained attorney Moon's had In basis of McKee. Although Dendler could paragraph to him. consequences five counsel, We find legal failed to do so. he himself of have availed sufficiently distinguishable to legal to be counsel lack of Dendler’s McKee. preclude reliance on biage. “The agreement question is not couched such fineness of appellee can terminology con- successfully tend that he could not understand the meaning Schoble, written words.” 349 Pa. at 37 A.2d at 605. addition, law demands of man every bargains who with [t]he another that he should do so after due only reflection of possible consequences bargain of his and if he mis- judges consequences that could have expected been man, a reasonably intelligent he cannot rely the law to remedy his fecklessness. McKee,

New Charter Coal Company 307, 312, (1963). Paragraph 191 A.2d four is worded clearly Dendler, and conspicuously therefore, displayed. cannot avoid the consequences paragraph of that by attempting to prove that he did not understand it. Standard Venetian Company Blind v. American Empire Insurance Compa- ny, (1983) (citations omitted).

Accepting pleaded as true all properly facts and all infer- therefrom, ences that can reasonably be drawn Overly, supra, examining the record in the light most favorable Marks, to Denlinger non-moving as the supra, we party, conclude that the Denlinger is not a contract of adhesion and that four of paragraph the “Terms Conditions” not unconscionable and as against void public policy Commonwealth. We find that the and, trial court therefore, committed error of law we reverse the trial granting court’s order summary judgment supra. We affirm the order to Dendler. Vargo, denying fees. As attorney’s we have determined already that summary judgment improvidently granted, we presented need not reach the other issues appeal. this granting reversed; Order summary judgment deny- order ing attorney’s fees affirmed: case remanded trial on the issues. relinquished.

Jurisdiction SOLE, J., DEL dissenting opinion. files a

ADDENDUM TERMS AND CONDITIONS* SOLE, DEL Judge, dissenting.

I must dissent from Majority’s opinion, and would affirm the trial court’s order granting summary judgment in favor Appellee. case,

In the instant applicant credit from Denling- Blue Co., er was Mountain Development Inc. major- As the notes, ity small, Mr. Dendler recently incorporated had his proprietorship business, sole construction and we may as- * publication purposes. has been addendum reduced for

sume that one of the reasons for forming such a corpora- tion was to benefit from the limited liability afforded corpo- rations in this Commonwealth. As we stated in Village Camelback Property Owners' Carr, Association Inc. v. 371 Pa.Super. 452, 458, 528, 538 A.2d appeal granted 519 668, (1988), A.2d 257 572 A.2d affirmed (1990); of the central reasons for conducting business in

[ 0]ne corporate form is the avoidance of personal liability by those holding equity corporation and limitation of the risk of persons to the those value of their ... equity goal, this our Business Corporations [B]ecause Law permits liability for corporate debt to be assessed against shareholders, officers and directors only the most limited of circumstances.

It is also the settled law of this Commonwealth that a corporation is a creature of legal fiction which can act only through officers, its directors and other agents, Lokay v. Lehigh Valley Cooperative Farmers, Inc., 342 Pa.Super. (1985), 492 A.2d when, and that “a party contracts with a corporation through a corporate agent who acts within the scope of his authority reveals his principal, corporate principal alone is liable for breach of contract.” Associates, Inc., Daniel Adams v. Rimbach Inc., Publishing, 360 Pa.Super. 1000-1001 (1987). Therefore corporation when a contracts with anoth- er company officer, for credit through its and the officer acts within the scope of that authority reveals the corporate principal, it is to expect reasonable corporate principal alone and not the officer/signatory will if be liable there is a breach of contract.

It is undisputed that the was Mr. Dendler in his corporate capacity president of Blue Mountain, and there no separate was signature of Mr. Dendler’s in his individual capacity. He acting within scope of his authority and revealed of his identity principal. Furthermore, the named applicant was Blue Development Co., Inc., Mountain and Mr. Dendler filled in

185 corporate appli- for a space provided in the application the partner- for a provided spaces in other cant, than the rather intended to Therefore, Mr. Dendler an individual. ship or himself, and because a personally, not corporation, the bind liabili- personal to avoid was incorporating of central benefit in in signing expected reasonably he ty, binding corporation he was corporate capacity, his liability. incurring personal not uncon- regarding a test forth correctly sets majority The Corp., v. Exxon as found Witmer scionability court, of this (1981). Later cases 1222 540, 541, 434 A.2d this test to apply however, explained expanded have circumstances, particularly are some of which variety a of us. to the case before relevant Rawlinson, Co. v. Manufacturing In Germantown (1985),we discussed one A.2d 146-47 Pa.Super. under the be classified unconscionability may which type surprise”. of “unfair rubric contractual terms involves unconscionability type

This party who expected by not typically are which An clause unexpected to them. to “assent” being asked and, if form boilerplate printed of a appears often signing such a all, By not understood. is often read terms which such form, to those only a is bound party a form to expect printed such reasonably party would material, shifting If the form contains a risk contain. expect to reasonably not signer would clause which transaction, have held that the in such a courts encounter This type as it is unconscionable. be excised may clause in consumer only found unconscionability typically to apply some reluctance courts have exhibited cases and contracts. dealing with merchant-to-merchant it in cases particular party, A must determine what court transaction, reasonably expected particular of the context form terms “dickered” terms. Unread beyond opera- should be expectation with that that are consistent inoperative. inconsistent should be that are tive: those character as the print of the well conspicuousness The of the document would be considered. J. Murray, Standardized Agreement Phenomenon in the Restate- (Second) Contracts, ment 67 Cornell L.Rev. (1982). case,

In the instant Mr. Dendler could not reasonably expect that there would clause boilerplate printed form which would hold him personally liable for the corporation. debts of the He had the in document corporate his and capacity applied had for credit for the corporation in the space provided the form for corpora- tions, in not the space provided for individuals. Further- more, there is no question that the clause in dispute is a material, risk-shifting clause. It completely negates the of corporation’s value a limited liability, and shifts the risk of default onto the officer who is acting corporation. for the in disputed clause found the document is part of the boilerplate found on language the back of the form. There bolding is no or or underlining variation in the typeface distinguishes which this clause from the rest of the small print form, on the although, back in contrast on the back, part of the form which limits warranties is capital- darker, ized in printed and thicker In print. general, this clause is a classic example of a physically inconspicuous provision boilerplate of a standard form. Finally, finding are unconscionability we asked to con- sider the character the document. The document form, a question, application credit is divided into sections applicable types various of applicants: partnerships, cor- Therefore, and porations, individuals. may we characterize the document as a form for corporations, or or In partnerships, filling individuals. out the section for it corporations, may fairly be said that Mr. Dendler was filling corporate out a credit application, and therefore a forfeiting corporation’s clause liability limited bemay said to inconsistent be with character of the document. reasons,

For all these I would find that the clause in the form, holding Mr. Dendler personally for the liable debts category and falls under inoperative corporation, surprise. unconscionability by unfair case, the standard which sets out

The Germantown is a consumer surprise, unfair finding unconscionability by merchant-to-merchant and of whether question case in issue. How- not may be unconscionable was transactions recognize that, ever, did note “modern courts the Court a merchant technically and signer may theoretically education, a in terms of business consumer functionally but Germantown, 341 Pa.Su- acumen, supra, experience.” and 146, n. More importantly, Ct. at perior case, Contractors Pittsburgh recent Moscatiello 363, 595 Pa.Super. A.2d Company, 407 Equipment unconscionability in a contract between (1991), we found merchants. in a sales contract Moscatiello, held that clauses we Moscatiello, construction

signed by Franco owner Company Equipment company Pittsburgh Contractors incidental dam- consequential excluded [PCEC], which return remedies to the limited Moscatiello’s ages, and machine, less and use of was uncon- wear purchase price the, of of “absence scionable and unenforceable because parties together on of one of the meaningful part choice the to unreasonably terms which are favorable with contract Id., at 595 A.2d Pa.Superior other Ct. party.” the Germantown, Pa.Superior Ct. supra, at quoting, at at following language con-

The court cited Moscatiello Contracts, Murray, Murray in 353 of on tained J. Section ed., 1974). (2nd agreed to an will found to have parties not be if thereof is of risk evidence only

abnormal allocation of a stan- provision boilerplate on the inconspicuous minimum, At a the reallocation must be dard form. in a fashion comprehensible manifested physically Id. sought to be enforced. whom it party against expect no that Moscatiello had reason We held that clause was buried contained a contract he to him the risk the reverse side which shifted print fine on of ma- resulting purchase from the economic loss of chine. We also held that Moscatiello was not a dealer or of equipment kind, manufacture heavy any of nor was the corporation Moscatiello a concern, substantial business skilled in the negotiation of for goods. contracts con- trast, PCEC had other negotiated many for contracts purchase of this of type equipment and was familiar with the “conditions” On the reverse of side its form. own We also concluded that clearly superior bargain- PCEC held the ing Id., position. Ct. Pa.Superior 595 A.2d at Therefore, this Moscatiello, court found that 1196-1197. education, was “functionally a consumer in of terms busi- ness acumen and experience,” and the terms of the contract limiting damages from the malfunctioning of the machine were unreasonable and unconscionable. Id. Co.,

Like Moscatiello Blue Mountain Development Co. concern, not substantial business in fact it was smaller probably engaged than Moscatiello which was highway projects, construction while Blue Mountain was a small construction which specialized business in residential projects and had just recently incorporated. It was not purchases, notes, skilled in credit for prior as the Majority it incorporation only purchases dealt cash building from hand, materials Denlinger. Denlinger, the other a dealer in supplies, construction many salespeople, with credit department, extending and wide experience to its there vast buyers. Clearly was a disparity between parties bargaining power two terms sophistica- business, tion in conducting type this and therefore even merchants, though parties both purposes were contract, this I would find that Mr. Dendler was functional- ly a consumer.

Furthermore, Moscatiello, like the form in contract disputed print clauses were the fine buried on the reverse application, side of the and the clause shifted the materially away risk of economic loss from corporation, and to the Therefore, acting corporation. individual for the like the Moscatiello, court in I would find that the clause which corporation’s for the liability personal Mr. Dendler assumed debts, and unenforceable unconscionable. which stated: the trial court agreement

I with am full liable for the held personally “Where someone intent another, obligation, that corporate a debt of albeit explicit unequivocal most indicated should be in an separate signature a and especially language responsibility. such acknowledging capacity individual attempting thwart present case Plaintiff in small many business- primary incorporation reason for we are not liability. While personal es—the avoidance action, we are ban on such formulating complete here will not be that this endorsing principle vigorously and in clearest circumstances permitted except under the (Trial Opinion Court most terms. unambiguous in original)). (emphasis 1991. May

608 A.2d 1074 Hetrick, Appellants, A. HETRICK Clara James C. COMPANY, Corporation. APOLLO GAS Superior Pennsylvania. Court of

Argued Dec. 1991. May Filed

Case Details

Case Name: Denlinger, Inc. v. Dendler

Court Name: Superior Court of Pennsylvania

Date Published: May 11, 1992

Citation: 608 A.2d 1061

Docket Number: 1988 and 2127

Court Abbreviation: Pa. Super. Ct.