Federal Land Bank of Baltimore v. Fetner
| Decision Date | 09 January 1980 |
| Citation | 410 A.2d 344,269 Pa.Super. 455 |
| Parties | FEDERAL LAND BANK OF BALTIMORE v. Philip Jay FETNER, Appellant. |
| Court | Pennsylvania Superior Court |
Paul R. Beckert, Jr., Fairless Hills, for appellant.
Paul L. Stevens, Morrisville, for appellee.
Before VAN der VOORT, HESTER and WIEAND, JJ.
VAN der VOORT, Judge:
This is an appeal from a decision of the Court of Common Pleas of Bucks County, sitting without a jury, in a mortgage foreclosure action, in favor of the plaintiff/appellee, Federal Land Bank of Baltimore (hereinafter, the Bank) and against defendant/appellant, Philip Jay Fetner (hereinafter, appellant or Fetner), in the sum of $137,194.45, plus interest and costs of foreclosure. Counterclaims by the appellant were dismissed. Appellant appeals both from the judgment against him and the dismissal of his Counterclaims.
The Bank's Complaint alleged that on October 9, 1974, Fetner borrowed the sum of $117,500 from it, secured by a mortgage of some twenty-five acres of improved land located in Nockamixon Township, Bucks County. The Complaint alleged that Fetner defaulted on the mortgage by failing to pay some $8,106.36 in monthly installments due from July 1, 1976 to February 1, 1977 and by failing to pay real estate taxes in the amount of $1,659.16. The Complaint recited that as a result of these defaults, the Bank was exercising its right to acceleration under the terms of the mortgage. Judgment was demanded for unmatured principal, monthly installments due, interest, real estate taxes and attorney's commission, totalling $137,195.45.
Fetner filed Preliminary Objections to the Bank's Complaint which were dismissed after briefs were submitted. He then filed a 169-paragraph document which included his Answer, New Matter and numerous Counterclaims. The Counterclaims consisted of eleven counts and sought aggregate damages, compensatory and punitive, in excess of $5,000,000.
The Bank's claim that appellant was in default in his mortgage payments was established by undisputed evidence. In appellant's Answer, he claimed to have made a $2,000 payment for which he was not given credit, but he offered no proof in support of this averment. In any event, this would not have cured the default which has continued since July 1, 1976.
Appellant has averred that the provision for a 10% Counsel fee in the mortgage bond is unconscionable. The test of such a fee must be its reasonableness, determined by the circumstances of each case. As this court said in Foulke v. Hatfield Fair Grounds Bazaar, Inc., 196 Pa.Super. 155, 160, 173 A.2d 703, 706 (1969):
The mortgagee, having loaned a fixed sum of money, should recover both the principal and interest without diminution for expenses which he may be forced to pay.
Certainly the circumstances of this case, involving preliminary objections, briefs, depositions, a trial and this appeal, each involving many of the issues tendered by the appellant in his Counterclaims make a fee of 10% Of the mortgage quite reasonable, and probably not fully compensatory for the Bank's legal expenses. There was no other challenge to the amount of the judgment on foreclosure.
There remain for consideration the many issues raised in appellant's Counterclaims. Counterclaims are limited by Rule 1148 of the Pa.R.C.P. to those "which arise from the same transaction or occurrence or series of transactions or occurrences from which the plaintiff's cause of action arose". The Counterclaim must have been a part of or incident to the creation of the mortgage itself, and this is to be read narrowly. Mellon Bank N.A. v. Joseph, --- Pa.Super. ---, 406 A.2d 1055 (1979).
So tested, those which met the requirement of the rule amounted to averments that the Bank was guilty of fraud in the inducement of the mortgage. Averments in support of this claim of fraud were: (1) that Penn DOT had obtained an easement over a portion of the mortgaged property which was not disclosed to the appellant at or before the time of closing; (2) that appellant had been promised 80% Mortgage financing which he did not receive; and (3) that appellant had been promised "lenient" treatment if he fell behind in his payments, but foreclosure followed a second default.
The background from which these allegations emerge is the negotiation between the appellant and Russell Albright, the local manager of the New Britain Branch of the Southeast Association, an organization which procured loan applications for submission to the Bank. Appellant testified that he told Albright that he had located a "gentleman's country estate and horse farm" on which he planned to sign an agreement to purchase in June, 1974. The purchase price was to be $180,000 and appellant requested 80% Financing. Albright is said to have replied that he would recommend such a loan and that his recommendations had not been turned down by the Bank as yet. He did not say that he had authority to approve the loan.
At or about the same time, appellant, who is a lawyer, authorized a title search and in due course a preliminary title report was delivered to Albright which did not show the easement to Penn DOT. It was created at a later date and placed on record on October 1, 1974.
The closing took place on October 9, 1974 at which time the appellant executed the bond and mortgage in favor of the Bank as security for a loan of $117,000, the maximum the Bank would lend. He signed the documents and received the proceeds at that time. A final title report was on hand at the time of the closing which showed the Penn DOT easement. This would appear to have been available to all parties at the closing, including the appellant, but it does not appear that he read it. There is no evidence that he did not understand the terms of the bond and mortgage.
In November, 1974, appellant lost his job and fell behind in his mortgage payments. The Bank threatened foreclosure but did not do so, and by March 1976 appellant became current in his payments. However, he did not pay the 1975-1976 school taxes on the property, and the Bank did so pursuant to authority vested in it under the terms of the mortgage. Appellant again fell behind in his monthly payments on July 1, 1976, and has made no payments since that date, although he has continued to occupy the property.
Attached to the appellant's Counterclaims...
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