Kaiser v. Meinzer
| Decision Date | 27 November 1979 |
| Parties | Ray KAISER and Kaiser Associates, Inc. v. Henry MEINZER, J. Walter Gallagher, Commonwealth Land Title Insurance Company, Commonwealth Development and Construction Company, Chemical Bank, and National Union Fire Insurance Company of Pittsburgh, and George Hyman, Additional Defendant. Appeal of COMMONWEALTH DEVELOPMENT AND CONSTRUCTION COMPANY. Appeal of Ray KAISER and Kaiser Associates, Inc. |
| Court | Pennsylvania Superior Court |
Argued June 6, 1979.
Mitchell S. Greenspan, Philadelphia, for appellant.
Neil E. Jokelson and with him Arnold Machles, Philadelphia, for appellee, Kaiser.
David A. Saltzburg, Philadelphia, did not submit a brief on behalf of appellee, Meinzer.
Ellis Cook, Philadelphia, did not submit a brief on behalf of appellee, Gallagher.
Charles I. Richman, Philadelphia, did not submit a brief on behalf of Commonwealth Land Title, appellee.
John G. Harkins, Jr., Philadelphia, did not submit a brief on behalf of Chemical Bank, appellee.
John Swartz, Philadelphia, did not submit a brief on behalf of National Union, appellee.
Frederick Gitterman, Philadelphia, did not submit a brief on behalf of Jack Arnold, appellee.
Before PRICE GATES and DOWLING, JJ.
The instant appeals present the issue of the effect of a trial court's action in ordering a bifurcated trial and the duties imposed upon the parties once the first phase of the trial is completed. On March 27, 1978, Judge Stanley Greenberg of the Court of Common Pleas of Philadelphia County entered an order after completion of a non-jury trial on one count of plaintiffs' three count complaint, and held that plaintiffs could not recover on a promissory note executed by Commonwealth Development and Construction Company (Development) on the grounds of usury. This conclusion was affirmed in an order by Judge Greenberg on May 15, 1978. Besides affirming the earlier decision, Judge Greenberg ruled in his May 15 order that his earlier decision was interlocutory, but that plaintiffs, Ray Kaiser and Kaiser Associates, Inc. (Kaiser), could appeal the decision under the Act of July 31, 1970, P.L. 673, art. V, § 501, 17 P.S. § 211.501(b) (Supp.1978-79). Both parties have appealed from the May 15, 1978 order. Kaiser, the appellant at No. 1789, challenges the merits of Judge Greenberg's order finding Kaiser's claim barred on the grounds of usury. [1] Development, the appellant at No 1741, challenges that portion of the May 15 order that granted Kaiser permission to appeal. For the reasons stated herein, we affirm in part, reverse in part and remand to the trial court.
The background of these appeals involves a very complex series of transactions involving individuals and corporate entities in two states and real property in a third. Stated as succinctly as possible, the pertinent facts are these. On October 4, 1972, Kaiser, a New York corporation, and Development, a corporation organized under the laws of this Commonwealth, entered into a loan transaction whereby Kaiser extended a loan of $100,000 to Development. As security for the loan, Development gave a promissory note and a third mortgage on property held by Development in Minnesota. Defendant, Chemical Bank (Chemical) held the second mortgage on Development's Minnesota property. [2]
Development failed to satisfy its obligation to Kaiser, its only effort in this respect being a $7,000 payment on May 4, 1973. Apparently, Development was also delinquent in its obligation to Chemical Bank, and on November 1, 1974, Chemical commenced a foreclosure action on the Minnesota property. Under Minnesota law, a servient interest holder can prevent the forced sale of property if within six months of the foreclosure order the servient holder files a Notice of Intent to Redeem and subsequently satisfies the interests of the foreclosing lienholder and all lienholders superior to the redeeming holder. See Minn.Stat.Ann. § 580.24. On April 22, 1975, Kaiser filed a Notice of Intent to Redeem. On or about that date, Kaiser and Chemical Bank allegedly entered into an agreement under the following terms: (1) Chemical would grant an extension beyond the six months for Kaiser to redeem the superior interests in the Minnesota property; (2) Kaiser would arrange for Development to secure financing to satisfy the first and second mortgages; and (3) if financing could not be arranged and Chemical secured title to the Minnesota property, Chemical would grant Kaiser the exclusive right to develop the property for a period of two years. Apparently, the notice of Chemical's consent to the extension beyond six months was not transmitted to the proper clerk in Minnesota, and at or about the beginning of May 1975, Chemical Bank was granted title to the Minnesota property.
Chemical then entered into an agreement with Development to reconvey the property back to it for a consideration of $1,700,000. Chemical advanced the purchase money to Development, and National Union Fire Insurance Company of Pittsburgh (National) acted as surety on Development's obligation. The first and second mortgages were apparently satisfied, and an additional $550,000 of the loan was placed in escrow with the Commonwealth Land Title Insurance Company as security for the payment of the third, fourth and fifth mortgages. The fourth and fifth mortgages, totalling $250,000, were also satisfied leaving $300,000 remaining in escrow. National and Chemical Bank acquired new first and second mortgages respectively. [3]
In August of 1975, Kaiser initiated suit. After two amendments, the final complaint involved all of the above named corporate entities along with various agents. [4] The complaint was in three counts. The first alleged that Development and Chemical Bank had conspired to prevent Kaiser from fulfilling its agreement with Chemical to develop the Minnesota property if the latter acquired title. The complaint prayed for relief in the form of an order declaring, inter alia, Development as a trustee of the property for the benefit of Kaiser, requiring Development to deed the property over to Kaiser and requiring Chemical Bank and National to remove their encumbrances, or in the alternative, compelling all three parties to pay Kaiser the market value of the property, to wit, $3,069,000. The second count was directed against Chemical Bank and Commonwealth Land Title Insurance Company. It requested, inter alia, that Commonwealth Land Title Insurance Company be ordered to pay Kaiser from the remaining escrow fund of $300,000 the value of the $100,000 mortgage interest, which by then had appreciated with interest, penalties, legal fees and various other charges to the sum of $260,862.32. The final count was against Development for default on the promissory note and requested a judgment of.$180,083.29, which represented the original loan of $100,000 plus interest and penalty.
On May 3, 1977, Judge Greenberg issued a pre-trial order stating that due to the complexity of the case "(t)hat portion of the case which involves the claim of Plaintiff for money due, shall be tried first, it being clear that a determination on this issue is essential to a proper disposition of the other issues involved." On October 24 and 25, 1977, a non-jury was held on Kaiser's claim under count three of the complaint; the only parties participating in the trial were Kaiser and Development. At the completion of the trial, the court filed an opinion on March 27, 1978, to the effect that Kaiser could not recover on the promissory note. In its opinion the court reasoned that: (1) the law of New York was applicable to the claim; [5] and (2) that under New York law the loan transaction was usurious and therefore unenforceable. [6] Kaiser failed to file exceptions to the findings of the court, and on April 18, 1978, Development filed a praecipe for entry of judgment. On May 9, 1978, Kaiser filed a motion to strike the judgment. By order dated May 15, 1978, Judge Greenberg granted Kaiser's motion to strike and amended his opinion of March 27, 1978, to conclude that the issues addressed in that decision were interlocutory, but because they involved a controlling question of law as to which there was substantial difference of opinion and because an immediate appeal might advance the final determination of the matter, Kaiser would be permitted to appeal the decision to this court. See Act of July 31, 1970, supra, 17 P.S. § 211.501(b) (Supp.1978-79). Finally, Judge Greenberg ruled that because the March 27 decision was an appealable interlocutory decision, Kaiser need not file exceptions to preserve the issues for appellate review.
Both parties have appealed from the May 15, 1978 order. Development has appealed at number 1741 asserting that the appeal should be quashed because Kaiser failed to file exceptions to Judge Greenberg's decision of March 27, 1978. [7] See Blake v. Mayo Nursing and Convalescent Home, Inc., 245 Pa.Super. 274, 369 A.2d 400 (1976); Lundvall v. Camp Hill School District, 25 Pa.Cmwlth. 248, 362 A.2d 482 (1976); Pa.R.C.P. No. 1038(d). Kaiser has appealed at number 1789 challenging the merits of Judge Greenberg's decision that the law of New York applied to the instant proceeding and that Development could not recover on the usurious promissory note. [8] On April 27, 1979, the cases were consolidated for appeal. On appeal, the relevant issues that must be addressed are as follows: (1) was Judge Greenberg's decision on March 27 and his order on May 15 1978, final orders from which Kaiser may appeal; [9] (2) has Kaiser waived the issues decided in the March 27 opinion by failing to file exceptions; (3) if not a final appealable decision, was it an appealable interlocutory decision; and (4) if appealable, was Judge ...
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