Grove North America, Div. of Kidde Industries, Inc. v. Arrow Lift & Const. Equipment Co., Inc.

• Decision Date: 16 November 1992
• Citation: 617 A.2d 369,421 Pa.Super. 12
• Parties: GROVE NORTH AMERICA, DIVISION OF KIDDE INDUSTRIES, INC. v. ARROW LIFT & CONSTRUCTION EQUIPMENT COMPANY, INC., Kenneth B. Patch, Donna K. Patch, Richard K. Wallace, Cynthia L. Wallace, Appellants.
• Court: Pennsylvania Superior Court

Page 369

617 A.2d 369

421 Pa.Super. 12

GROVE NORTH AMERICA, DIVISION OF KIDDE INDUSTRIES, INC. v. ARROW LIFT & CONSTRUCTION EQUIPMENT COMPANY, INC., Kenneth

B. Patch, Donna K. Patch, Richard K. Wallace,

Cynthia L. Wallace, Appellants.

Superior Court of Pennsylvania.

Argued June 3, 1992.

Filed Nov. 16, 1992.

Barbara Ann B. Townsend, Chambersburg, for appellants.

James J. Bee, Philadelphia, for appellee.

Before MONTEMURO, KELLY and CERCONE, JJ.

MONTEMURO, Judge:

In this Opinion, we are called upon to determine whether the trial court acted within its discretionary powers by requiring appellants, residents of Massachusetts with no assets in this Commonwealth, to post a bond identical to the amount of appellee's confessed judgment, $202,942.68, within ten days or suffer the penalty of having their petition to open confessed judgment automatically stricken. We reverse.

The relevant facts and procedural history are as follows. On April 12, 1984, appellant, Arrow, granted to Manlift ¹ a security interest in all inventory, equipment, and machinery, including proceeds sold by Manlift to appellant Arrow. Pursuant to the security agreement, appellant Arrow agreed to "fully, timely, and faithfully" pay all of its obligations as defined in the security agreement to Manlift.

Appellant Arrow further agreed to secure all obligations of appellant Arrow to Manlift as stipulated in the security agreement. (R. 21a, 26a). Moreover, appellant Arrow agreed to "venue and jurisdiction of any court in the State of Pennsylvania for any matter" arising under the security agreement; and that the security agreement was to be determined by the laws of the principal place of business of Manlift, the secured party. (R. 23a, R. 25a).

On April 12, 1984, appellants Kenneth and Donna Patch and Richard and Cynthia Wallace (hereinafter the Patches and Wallaces), executed guaranty and surety agreements in order to induce Manlift to enter into the conditional sale agreements with appellant Arrow. In these agreements, appellants, the Patches and Wallaces, agreed to be "jointly, severally, directly and unconditionally liable" for the payment of present and future debts of appellant Arrow to Manlift. Moreover, they "irrevocably authorize[d] any attorney of any court of record in Pennsylvania or elsewhere to appear for and confess judgment against any [of the appellants]." (Guaranty and Security Agreement, R. 28a-32a).

On April 24, 1991, appellee confessed judgment in Franklin County Court of Common Pleas against appellants in accordance with the provisions of the security agreement and the guaranty and surety agreements. In turn, appellants filed a petition to open judgment on May 20, 1991 and requested a stay of action. On the same day, the trial court ordered that a rule be issued against appellee to show cause why the judgment should not be stricken or opened and granted appellants' request for a stay of action. That order also stayed all proceedings in this matter.

Subsequently, on July 24, 1991, appellee filed a motion to order cause for argument pursuant to Pennsylvania Rule of Civil Procedure 209. In addition, appellee also filed a motion to strike the May 20, 1991 stay or, in the alternative, to require appellants to post a bond based upon appellants' failure to take depositions within fifteen days after being so ordered.

On July 31, 1991, the trial court ordered appellants to post a bond within five days of the date of the order or their stay would be stricken. In response, appellants, on August 7, filed a motion to vacate the July 31 order. This motion was subsequently denied.

When appellants failed to post the required bond, appellee filed a motion to strike the stay. The trial court subsequently ordered the stay lifted on August 22, 1991. On August 26, 1991, appellants filed a motion for a rule to show cause why depositions should not be taken and the trial court issued a rule to show cause.

On September 16, 1991, appellee filed an answer to appellants' rule to show cause and a motion to strike appellants' petition to open confessed judgment. After appellants contacted the trial court to express their opposition to these motions, the trial court decided to intervene. A conference between counsel for all parties and the trial court was held on October 3, 1991. As a result of that conference, the trial court again directed appellants to post a bond within ten days or the confessed judgment would automatically become final. The trial court also ordered appellee to pay the cost of bond acquisition if the confessed judgment was later determined to be frivolous.

Additionally, the trial court's order precluded the appellants from initiating any discovery until the required bond was posted. This timely appeal followed.

Appellants raise the following issue for our review:

DID THE LOWER COURT ERR IN DISPOSING OF A PETITION TO OPEN A CONFESSED JUDGMENT BY A JUDGMENT DEBTOR BY STRIKING THE PETITION, BASED SOLELY UPON THE JUDGMENT DEBTOR'S FAILURE TO FILE SECURITY FOR THE PAYMENT OF THE JUDGMENT, AND PREVENTING THE JUDGMENT DEBTOR FROM PROCEEDING TO DISCOVERY PURSUANT TO Pa.R.C.P. 209, WITHOUT REGARD TO THE MERITS OF THE CASE OR WHETHER THIS ALLOWS DUE PROCESS FOR THE JUDGMENT DEBTOR?

(Appellants' Brief at 4). Before we may consider the merits of this appeal, we must determine whether the appellants have appealed from a final order.

Generally, an appeal will only be permitted from a final order unless otherwise permitted by statute or rule of court. Pugar v. Greco, 483 Pa. 68, 72-73, 394 A.2d 542, 547 (1978). An order is generally not a "final order" unless it serves to put the litigant out-of-court either by ending the litigation or disposing of the case entirely. Bender's Floor Covering v. Gardner, 387 Pa.Super. 531, 534, 564 A.2d 518, 520 (1989). In ascertaining what is a final appealable order, this Court must look beyond the technical effect of the adjudication to its practical ramifications. In Interest of C.A.M., 264 Pa.Super. 300, 301, 399 A.2d 786, 787 (1979). An order will be found to be final when its practical effect is to terminate the litigation by prohibiting either party from proceeding with the action. Urbano v. Meneses, 288 Pa.Super. 103, 108, 431 A.2d 308, 310 (1981).

Instantly, the trial court's order directing appellants to post a bond within ten days or suffer the consequences of having their petition to open confessed judgment stricken is a self-executing order which has, upon appellants' failure to post the required bond, effectively prevented them from proceeding with this action. Accordingly, this order is a final order and is properly before us on appeal.

Next, we turn to the substantive issue raised by appellants in this appeal. Appellants contend that the trial court erred in directing that their petition to open confessed judgment be stricken if they failed to post the court ordered bond. Appellants argue that the trial court abused its discretion by making its consideration of their petition contingent upon the payment of a bond.

We agree, and hold that the trial court did not have the authority to require appellants to post a bond as a prerequisite to granting their petition to open a judgment by confession.

Rule 2959 of the Pennsylvania Rules of Civil Procedure provides in pertinent part:

(b) If the petition states prima facie grounds for relief the court shall issue a rule to show cause and may grant a stay of proceedings. After being served with a copy of the petition the plaintiff shall file an answer on or before the return day of the day of the rule. The return day of the rule shall be fixed by the court by local rule or special order.

* * * * * *

(e) The court shall dispose of the rule on petition and answer, and on any testimony, depositions, admissions and other evidence. The court for cause shown may stay proceedings on the petition insofar as it seeks to open the judgment pending disposition of the application to strike off the judgment. If evidence is produced which in a jury trial would require the issues to be submitted to the jury the court shall open the judgment.

Pa.R.C.P. 2959, 42 Pa.C.S.A. (emphasis added). Thus, while appellee is correct in its statement that Rule 2959 does not prohibit a trial court from requiring the posting of a bond as a prerequisite to granting a petition to open, this Rule does state that if a jury question is presented the court shall open the judgment. Clearly, if this language is interpreted as mandatory, then the trial court lacked the authority to ignore it and set a bond requirement. However, if the words "shall open the judgment" are construed to be merely discretionary, then the trial court acted within its authority in requiring the posting of a bond.

The intent of the legislature determines whether a statute's use of the term "shall" is to be deemed mandatory or discretionary. Commonwealth v. Ferguson, 381 Pa.Super. 23, 552 A.2d 1075 (1988); Tyler v. King, 344 Pa.Super. 78, 496 A.2d 16 (1985) (word "shall" although usually mandatory or imperative when used in statute may nonetheless be directory or permissive depending on the legislature's intent). When interpreting Legislative intent:

(a) The object of all interpretation and construction of statutes is to ascertain and effectuate the intention of the General Assembly. Every statute shall be construed, if possible, to give effect to all its provisions.

(b) When the words of a statute are clear and free from doubt all ambiguity the letter of it is not to be disregarded under the pretext of pursuing its spirit.

(c) When the words of the statute are not explicit, the intention of the General Assembly may be ascertained by considering, among other matters:

(1) The occasion and necessity for the statute.

(2) The circumstances under which it was enacted.

(3) The mischief to be remedied.

(4) The object to be attained.

(5) The former law, if any, including other statutes upon the same or...