*2 LIPEZ, JJ. SPAETH, Before CAVANAUGH CAVANAUGH, Judge: upon peti- from court orders
These cases involve appeals *3 which were entered upon judgments tions to and strike open Marshall against The Bank S. Fidelity note by promissory F. Harry N. Gorson and Gorson, Joseph The of Estate The as Gorson Glazer, trading Enterprises. and individually in the amount of three note demand note was an unsecured It contained a provision dated 1978. May million dollars confess maker judgment against to the empowering Fidelity of after A confession maturity. time before or any to a complaint was entered on the note judgment pursuant on Philadelphia County Pleas Court of filed the Common and filed 11, 1980. Marshall Gorson Glazer January S. Gorson and the petitions judgments. to the confessed open Gorson, been a N. who had Joseph executors of the Estate deceased, filed to strike petitions maker of the note but had as to the S. opened judgment The court judgment. denied the filed on behalf petitions Marshall Gorson and has N. Gorson. Joseph Fidelity Glazer and the Estate judgment of the Marshall Gorson appealed S. opening Estate have from the appealed Glazer and the Gorson The three have been petitions. appeals order their denying pur- has been designated appellant consolidated and Fidelity suant to Pa.R.A.P. 2136.
I Gorson v. Marshall Fidelity S. a result of note and as execution
After the Marshall Fidelity, with S. had arisen which disputes certain reached eventually into negotiations entered Gorson the bank dated October with supplemental agreement following provision contained This agreement dispute: relevant to the present $3,000,000on a Bank others) owes (together Gorson payment to demand any not agrees basis. Bank demand of one from year for a period from Gorson principal of interest payment a default hereof, date except upon that no agrees pay- Bank period. during Gorson for a period due or payable ment of interest shall be Thereafter, interest hereof. the date from sixty days at the same inter- rate and at the same shall be payable during has accrued Interest which vals as heretofore. upon maturity due shall become sixty-day period added). note. (Emphasis did not seek Fidelity judgment
Following entry
of the princi-
or obtain payment
judgment
execute
bank,
entered,
only
said
was
pal.
judgment
hand,
Gorson,
argued
on the other
security.
purposes
Fidelity
agreement
supplemental
that under the October
in the event
only
the note
action upon
to take
entitled
not occurred.
event which had
an
paid,
that interest was
parties’ agreement
under the
is whether
Thus the issue
for the
solely
purpose
enter judgment
bank
right
had
*4
that
court found
The lower
security.
a lien for
creating
of
note was in fact
on the demand
of judgment
entry
quoted provision
to the above
in contravention
“demand”
one
which
prohibited
the parties
between
agreement
are
The parties
of principal.
for payment
demand
year any
a judg-
law
Pennsylvania
that under
not in disagreement
device
security
as a
employed
be
ordinarily
ment note may
An
entered at
time.
any
bemay
and that the judgment
to
general right
recognized
case
early Pennsylvania
court stated:
The
security.
a note as
employ
apparently
and
appellee,
of the
in the view
The difficulty
distinguish
to
failing
below, is
court
of the learned
to his judgment
plaintiff
of the
right
present
between the
future,
right
and the
in the
payable
as
for a debt
security
due. As
presently
on a debt
to execution or satisfaction
collateral, and
large
to as
a right
the creditor has
security,
chose to
it,
parties
as the
forms
as
different
many
the court
which
That
is a matter
contract for.
satisfaction, by
enforcement
But the
cannot interfere.
to be governed
a matter
otherwise, is
execution or
within the
comes
parties,
of the
rights
equities
creditor
case the
In the present
of the court.
jurisdiction
bond,
on the
his judgment
enter up
did
more than
nothing
he was
doing
on.
In so
agreed
of the
part
had no authori-
and the court
rights,
within his strict legal
to interfere with his action.
ty
v.
Insurance,
Deposit Company
Trust & Safe
Title
Integrity
491-92,
Rau,
488,
(1893).
The
to enter
right
judgment
as to when
is silent
be
whenever the note
present
Lumber Com-
&
Building Supplies
be taken. Triangle
may
(1976).
315,
was held to constitute a sufficient demand to initiate the payment of interest under a note which required demand before interest due. In Dominion became Trust Co. v. Hildner, 253, 243 A. (1914), Pa. it was held that entry demand as to judgment was sufficient so the need negate for a demand before suit on a note. We prior instituting think that these are not inapposite cases since they represent a reasonable of the intent of parties. interpretation Likewise, in this case we conclude that it would unreasona- bly language agreement strain October to inter- it pret precluding entry judgment security. The parties in the terms of the reaching negotiated October agreement could altered rights have under the original note by prohibiting the on the entry judgment note soby but failed to providing, they do so. We with the disagree lower court which concluded that entry judgment was violative of the terms of the October agreement. The order of the court opening judgment against Marshall S. Gorson is reversed and judgment reinstated.
II Gorson, v. Estate of N. Fidelity Joseph Deceased N. Joseph Gorson one the makers of the 23, judgment note dated 1978. He died May on February 1979. The Gorson Estate was not a to the party October agreement Gorson, discussed the case of S. Marshall supra. was entered Judgment against the Estate on Janu ary 1980. This is from appeal the refusal of the lower court to strike on a judgment demand note after the death of the maker. On close we analysis are unable to accept conclusion Fidelity’s cases distinguish between situ ations where the right to confess judgment is contingent upon default which occurs after death, the maker’s and the to enter right on a note judgment (as here) not contingent upon default, and that they permit entry judgment in the latter situation. A reading cases does not make such a distinction cognizable under Pennsylvania law. Rath er, the cases indicate that the maker’s demise terminates the *6 warrant of to confess First attorney judgment. Federal Savings Porter, 236, and Loan Association v. 408 Pa. 183 A.2d (1962). 318 It is true that the case of early Webb v. Wiltbank, 324, 1 2 Pa.L.J. 303 is (1842) Clark cited by lower court as for the support principle the death of the However, maker does not void the warrant to confess. this is a brief of a lower court deci- authority merely summary sion and in of later light pronouncements by Pennsylva- nia Court is of doubtful Supreme authority.
It
is also true that
of the “death voids
validity
has been
In
warranty” principle
questioned.
Brennan v.
Ennis,
291,
219 Pa.Super.
(1971),
Cases
rule that
citing
general
judgment cannot be
entered
confession after the maker’s death
have done
so without discussion of any
rationale.
underlying
Stuck
er
Shumaker,
348, 351,
v.
290 Pa.
A power judgment to confess for a attorney proper creditor, consideration is to the is with an coupled interest and is irrevocable. The entry judgment is
not a new act debtor, but is a legal result beyond his control. will not Lunacy revoke a to confess judgment, which was valid when executed. Pa. at at 294 (citations omitted, 196 A.2d emphasis added).
From this it is argued rule proper is that an irrevocable which was validly and which granted requires no further occurrence to become operative does not terminate death or grantor’s It incompetence. contended that while the authority in note that permits confession of after a judgment default might expire on the death of maker, in a which, here, note authority permits the *7 entry judgment any time does not. The other case cited Brennan rule, questioning Chan- iewicz, involves the death post of a entry judgment on a support order which had been fully litigated and had fixed the decedent’s obligations prior to his death.
Despite the report early Wiltbank case and the question raised in Brennan we hold that it is the law of Pennsylvania that the death of the maker revokes the war rant to judgment confess even for purposes of security even if the warrant is not contingent upon default under In obligation. holding so we are persuaded by the following line of cases which support our conclusion.
In Pawson, 480, v. 38 Pa. Lanning (1861), 486 it was held that:
It was manifestly very ... to strike proper off the judgment that had been entered on the warrant of attor- on ney, the fact being found that the defendant was dead before it was entered.
In Cain, 528, Kummerle v. 82 Pa.Super. 529 (1924), the court stated:
The authorities in this state are to the effect that a judgment entered by confession on the authority accompa- nying promise to simple pay after the money, death of the promisor and without an action brought the lifetime of such is party irregular and will be vacated applica- [on tion].
9 348, 351, 139 (1927) A. 114 Shumaker, 290 Pa. v. In Stucker it that: was stated when the efficacy . . . lost its to confess warrant
maker died. Walters, 624, Kingston Pa.Super. Bank v. 163
In
National
380,
it was held
(1949)
A.2d
that:
entered
confession
that a judgment
It is the rule
be stricken off.
the maker will
after the death of
Association v.
& Loan
Savings
also: First Federal
See
Pa.
Ill R. Glazer Fidelity Harry of is that the on behalf Glazer made only argument not of permitting opening lower court erred in beneficiary is a third judgment party since Glazer held to prohibit October which should be agreement reach the issue of whether of We need not entry judgment. Mar- Fidelity—S. Glazer is a third party beneficiary that since we have held that already shall Gorson agreement entering judgment from agreement prevent Fidelity did of the maker of the note. The against for purposes security order of the lower court as to F. Glazer is affirmed. Harry
SPAETH, J., and concurring dissenting opinion. files SPAETH, Judge, concurring dissenting: I I III of the But I join majority opinion. Parts dissent from I am unable to with the agree Part II. For conclusion, 269, that “the death of majority’s slip op. maker to confess even judgment revokes the warrant and even if the warrant is not contin- purposes security gent obligation.” a default under the article,
Professor noted in his Termination Seavey Death of 31 Yale Law Attorney, Powers Proprietary Journal (1921), first case in the raising question United States
[t]he the termination of death of the agency] power by [an v. Bennett in which grantor Bergen Chancel- lor Kent held that a of sale in a was a mortgage “power an interest” and was not affected coupled It death of the was Hunt v. Rousmanier’s mortgagor. Administrators, however, which proved to be the founda- tion of later American cases. Administrators,
In Hunt v. Rousmanier’s 8 Wheat. L.Ed. had Hunt a (1823), given Rousmanier as for the security repayment to sell certain vessels attorney of a loan. insolvent without having repaid Rousmanier died recover, the loan. When Hunt sued to Rousmanier’s admin- istrator demurred. The lower court sustained demurrer. Justice Marshall reversed order of the Although Chief case for on the argument lower court and remanded the mistake, issue the law of agency of mutual he outlined as for a applied to a held debt: no or of conveyance This instrument contains words but to sell and As assignment, simple power convey. of one man act for another on the depends other, will and license of that ceases when the *9 will, rule, this The general or is withdrawn. permission, time, be therefore, is, attorney may, any that a letter it; his revoked who makes and is revoked by by party rule, which results from the death. But this general modification. act, nature of the has sustained some contract, a and part Where a letter of forms a attorney is a act any or for the security money, performance valuable, irrevocable which is deemed it is made generally terms, so, in in or if not is deemed irrevocable law. nature, a letter of from its on Although depends, it, the will of the be person making may, general, will, recalled himself for considera- at his if he binds a yet, tion, contract, terms, or the nature of his not to by will, him to it. permit change his the law will not change Rousmanier, therefore, not, life, his during by any could own, act of his this letter of But attorney. have revoked does it his death? We think it retain its after efficacy settled, does not. We it that a think well irrevocable the life of the attorney, though during party, becomes extinct his death. by
This principle (sec. 66.), is asserted in Littleton Lord by Coke, in his (52b.), on that section and in commentary note, Willes’ (105, 565). reason of Reports legal the rule is a It plain one. seems on the presump founded tion that the substitute acts virtue of by authority his at the time the act is principal, existing performed; and on the manner in which he must execute his authori as ty, stated in Coombes’ case.1 In that case it was resolved that “when has any authority attorney to do act, any he to do it in his name who ought gave The reason of this resolution is obvious. The authority.” can, title regularly, pass out of the in whom it is person vested, name; in his own and this only by conveyance cannot him, be executed another for when it could not, in law, be executed himself. A conveyance name time, of a who was person dead at would be a manifest absurdity. doctrine,
This general that a must be executed in it, name of person who founded on gives doctrine *10 in transaction, is most usually engrafted the nature of the is, that the substitute the Its usual power language itself. in to do the name of empowered shall do that which he is of his his He is in the and stead put place principal. act in his name. This accustomed form and is to principal, Hunt is observed in the instrument under consideration. make, is and is authorized to and constituted the attorney, execute, of sale in the name of Rousmanier. bill regular in Now, as an must be order to make authority pursued, the act of the the act of the it is principal, substitute of sale should be in the name of that this bill necessary Rousmanier; and it would be a that a gross absurdity him, even by by deed should to be executed" purport death; the is in the place after his attorney, of the that alone which the capable doing principal, principal might do. rule, ceases with the life of power
This general it, the If a exception. admits one person giving “interest,” be it survives the person with an coupled it, executed after his death. giving and bemay As is laid down too positively this proposition controverted, books to be it becomes necessary inquire what is meant the “a with by expression, power coupled an in subject interest.” Is it an interest on which the exercised, it power is to be or is an interest in that which the exercise of the We it to produced by power? hold be clear that the interest which can after protect it, the death creates must be an of a who interest person words, in itself. In other must be thing engrafted on an estate in the thing. mean- import
The themselves would seem to this words “A with an interest” is a which ing. power coupled with, or is connected an interest. The accompanies, and are united in the same But if we person. interest “interest,” are to understand the word an interest in that which produced by is to be exercise power, then are never united. The they power, produce the exercise, interest, exercised, must be its is extin- commences, when the interest guished. power ceases and, therefore, cannot, in law said language, accurate be to be with it. “coupled”
But the of the court on opinion substantial basis of this point, legal is found reason principle. being The interest or title in vested in the thing him, person who it be gives power, remains unless can conveyed power, pass out him only by a regular substitute, act in his own name. The act of the *11 therefore, case, which, in such is the of a the principal, act to effectual, name, be be in legally must his must such be an act as the principal capable himself would be of per- forming, and which would valid if be him. performed by a power Such ceases with the life of necessarily the person interest, estate, it. making But if the or passes with the power, and the person by power vests whom is to be exercised, such his person estate, acts in own name. The him, in from a being passes by conveyance him in his own name. He is longer substitute, no a in acting place the another, and name of a but is in own principal acting his name, in pursuance of his powers which limit estate. The legal reason limits which to the life of the power person it, giving exists no and the ceases longer, rule with the on reason which it is founded. The intention of the instrument be effected without may violating legal any principle.
Id. at (footnotes omitted). L.Ed. that in Finding “the this is a power given case naked power of attorney, coupled interest,” not with an at 202, id. 5 L.Ed. at 597, the Chief Justice concluded that Hunt’s interest did not survive the of death Rousmanier. Thus Hunt lost his position as a despite secured the party parties’ undisputed intention to the contrary.1 opinion, intention, acknowledged parties’ In its the Court the stat- ing inquire, appellant that to “[i]t remains whether the to entitled give parties the aid this to Court effect to the intention of the subject Industry the interest in of Rousmanier the Nereus and to the payment money plaintiff the on advanced the credit vessels, purpose having totally those the instrument taken Administrators Hunt Rousmanier's when
Since decided, “have seen the equity courts many the consequences and have avoid attempted situation result supra at 294. The has Seavey, opinion.” Marshall’s been confusion: great clear, as to save in what England, are at all
The courts not with ... in an interest. coupled constitutes power coupled “power courts have used cases American many When power. a contractual meaning with an interest” as the power to the termination of determination as square a variety there are has presented, death been title estate is given to real legal Thus where holdings. held that title holder, everywhere to a it is power real is a lien legal upon property, survives. Where there be the lien should held it would seem that the existence make the nonterminable. to create an interest sale courts, finding that the can But some of hold that mortgagee, exercised the name be mortgagor. death of terminates lien, the have generally Where there is than a courts less ground does not survive held that a dead the name of man. can not be exercised *12 297. supra at Seavey, cases. Pennsylvania is apparent
This confusion view, with the others majority’s many While cases accord grantor’s to survive the attorney have held the of power Pa. A. 710 Estate, 565, (1890), In Keys’s death. of having attorney Daniel died after executed Keys to collect the from a proceeds to sister her authorizing his as money sale so much of the was keep real estate and to Upholding he owed her. the necessary to a debt repay the Court stated: power, to of Daniel was Keys specifically
The manifest purpose
share in his
estate as
so
of his
brother’s
much
appropriate
mentioned;
the indebtedness therein
necessary
was
to pay
his
with full
and,
end,
authority
to that
he invested
sister
Administrators,
Hunt
Rousmanier’s
object.”
effect
its
failed to
supra at
For cases had delivered to the holder the grantor death where debt, New York & see In Fisher v. securing property Co., *14 138. Definition §
A power given as is a to affect the security power legal another, relations created the form of an agency but held for the authority, benefit of holder or a third person given to secure the performance or title, either duty protect legal or equitable, such power being given when the or title is created duty or given for consideration.
Section 139 defines the circumstances in a power which as given be terminated: security may Security Termination of Powers Given as §
(1) Unless otherwise agreed, power given as security is not terminated by:
(a) revocation by the creator of the power; (b) surrender the holder of the by power, if he holds another; for the benefit of
(c) the loss of capacity the lifetime either during the creator of the power or the holder of the or power;
(d) the death of the or, holder of the power, if the given as for a which security duty does not terminate at the death of the creator of the power, by his death.
(2) A power as given security is terminated its by surrender if of full by beneficiary, or capacity; by which, terms, of events happening by its discharges the obligations it, secured or which makes its execu- tion illegal or impossible.
In the Comment to 139 it Section is said:
[*] [*] [*] üc [*] <1. Death. If dies, holder a court of equity will direct the exercise of for the benefit of the If beneficiary. the creator of the power dies and the power is given to secure the performance of a duty terminated death of the power giver, the power survives.
Among illustrations to the Section are the following: A to A and delivers to corporation 5. P sells shares in a certificate, his share and a to transfer P dies corporation. the shares the books upon A’s before are transferred the books. the shares power to make the transfer is not terminated. A A a gives
6. P borrows from and money *15 collect a debt in case of P’s default in to power, payment, T P and to himself out of the pay proceeds. owed to by is not affected the death by A’s to collect the debt power of P. A, case of P from and as in money security borrows to take and sell attorney A a
nonpayment, gives power P, then sea. P makes default certain to ships belonging in in ships pur- and A takes payment, possession suance of the P dies. A can now sell the power. ships, P’s notwithstanding death. the law first in appeared Preliminary
This formulation of Draft by # which was issued American Institute Law in as The (Professor Seavey Reporter). acting draft was an Note to the Coun- accompanied by explanatory cil, which stated:
Note to the This is a from departure Council: Section Tentative Draft corresponding Sections Second (§§ 233, 235) given 234 and in that it states that a power is not terminated the death of the security by power In 233 it was stated that a giver. § (e) as is terminated “. . . the death of given security of the as stated in 235.” In giver except § security 235 it was stated: “A as is power given § terminated the death of the of the if such giver power (a) constitutes a term in or a of the creation of part or in legal estate or equitable mortgage upon property person giving power, (b) or forms a of a part transaction which creates a lien legal equitable or (c) of such or forms a of a transaction property giver, part which constitutes a or legal equitable assignment of the whole or a of a debt or demand due to such or part giver, (d) forms a term in a amounting transaction pledge (e) of such or is a term in a contract whose property giver, estate, obligations survive such and which against giver’s receive, retain, or grants rights possess appropriate of such property giver.”
These
in
light
Sections were written
the case of Hunt
Rousmanier,
Preliminary # 54 at Agency 155-57 (1934).
In the American Law Institute has my opinion, stated the better rule, and we adopt should it. I acknowledge that doing so would be inconsistent some cases. But it would others, be consistent with and would our law bring up-to-date by recognizing practical considerations of the commercial world.
As Gorson, to the Estate of N. Joseph the order of the lower court should be affirmed.
Shirley M. BARNES. Superior Pennsylvania. Court of
Argued April 1981. Filed Feb. Notes (1950); Judgment § if claim that even accept Fidelity’s we (1961). Nor can p. executing the holder from maker prevents the death of the purposes note, judgment on entry distinction to be not find this We do only permissible. of our Rather, language Su- the cases. supported by Shumaker, supra, In preme Court is absolute. Strucker . . lost its efficien- warrant to confess . the court stated “the Savings And in First Federal when the maker died.” cy Loan, 241 that: page it was stated at supra, “[the maker’s] warrant of demise terminated the automatically of the lower court is reversed confess The order judgment.” against in favor of Bank Fidelity and the entered judgment Deceased, Gorson, is ordered strick- N. Joseph Estate of
Notes
Notes R. Cas. Wkly. Field & Coal Middle Coal Estate, (1880). Notes Cas. Wkly. Droste’s (1892), and from such distinguishable course case is of The present nor equitably assigned was neither cases. Bank Fidelity for the debt. property given possession specific Fidelity’s power But seem archaic. such requirements interest” insofar as its exer- with an “coupled was attorney not the creator. Had cise holder and was to benefit its sufficient to secure property taken control Fidelity it is Enter- debt, unlikely three million dollar Gorson as a business. going could have been maintained prises with, if not is to interfere opinion effect of the majority unavailable, divorce. a sensible commercial make treatment of the problem The American Law Institute’s reflects such commercial considera- of irrevocable agency is with an “coupled when defining tions. Instead of the con- emphasizes interest,” (Second). Agency Restatement 138 provides: cept security. Section prays bankrupt, and he therefore estate of the the benefit of the selling injunction grant the bank from an to restrain court to assignee permit to transferring stock and for an order transfer the same. Id. at 302. selling enjoin and held the bank from the stock The instead that the refused to Court attorney received, only by but it for value its own terms irrevocable legal agreement operation which induced it. was so of the interest, power coupled and executed It is a with an and was made very carrying agreement performance. purpose of into for the When means of consideration, adopted by parties, as the is thus agreement upon carrying valid made sufficient out their operation its must be the nature and sustained ancillary it is purpose it is and which of the contract to which contract, is, partes, inter to effectuate. If the effect intended as itself of the subject-matter here, give right property or interest party agreement, the execution to the for whose benefit intended, estate or interest follows the transferred, by opera- agreed irrevocable to be and becomes thus tion of law. Id. at 304-305.