McCoy v. Public Acceptance Corp.

• Decision Date: 04 May 1973
• Citation: 305 A.2d 698,451 Pa. 495
• Parties: Corinne M. McCOY v. PUBLIC ACCEPTANCE CORPORATION et al. Appeal of STUYVESANT LIFE INSURANCE COMPANY.
• Court: Pennsylvania Supreme Court

Page 698

305 A.2d 698

451 Pa. 495

Corinne M. McCOY v. PUBLIC ACCEPTANCE CORPORATION et al.

Appeal of STUYVESANT LIFE INSURANCE COMPANY.

Supreme Court of Pennsylvania.

May 4, 1973.

Rehearing Denied June 27, 1973.

[451 Pa. 496] William J. Brady, Jr., Philadelphia, for appellant.

Manfred Farber, Philadelphia, for appellee, Joseph H. Savitz.

Joseph R. Siegert, Philadelphia, for appellee, Corinne M. McCoy.

Before JONES, C.J., and EAGEN, O'BRIEN, ROBERTS, POMEROY, NIX and MANDERINO, JJ.

OPINION

JONES, Chief Justice.

This is an appeal from a decree of the Court of Common Pleas of Philadelphia refusing to open a default judgment entered against the appellant, Stuyvesant Life Insurance Company.

The relevant facts are as follows. In June of 1963 the appellee's husband, William McCoy, purchased an automobile which was financed through the Public Acceptance Corporation. In order to obtain financing, Mr. McCoy was required to obtain life and disability insurance in the amount of the loan, payable to Public Acceptance in the event Mr. McCoy died or became disabled before the loan was retired. The required insurance was obtained from the appellant, Stuyvesant Life Insurance Company. On January 1, 1965, Mr. McCoy suffered a severe stroke which left him totally disabled until his death on March 19, 1968. On December 30, 1969, Mrs. Corinne McCoy--the widow of insured and beneficiary of the policy--instituted an action in equity by summons against the appellant, Stuyvesant Life Insurance Company. Subsequently, on September 23, 1970, a complaint in equity was filed on behalf of Mrs. McCoy which named four defendants including the appellant, Stuyvesant Life Insurance Company. Count number two of the complaint alleges that the company refused to investigate and pay valid claims made against it under the policies issued to Mr. McCoy. The complaint further alleges that as a result of this refusal to pay benefits under the policies, Mrs. McCoy suffered damages.

The complaint and a notice to plead were sent to the appellant's counsel, William J. Brady, Jr., although he had not entered an appearance in the matter. The complaint was accompanied by the following letter:

'Dear Mr. Brady:

Enclosed please find certified, true and correct copy of Complaint in Equity with notice to plead, original having been filed today.

You may, of course, have additional time for responsive pleading without the necessity of a formal request.

Very truly yours,

/s/ Joseph R. Siegert

(Attorney for Appellee)'

In a letter dated October 13, 1970, Mr. Brady notified Mr. Siegert that he had received the complaint, was grateful for the kindness in extending the time for filing an answer, and would be in touch with the appellee shortly after contacting his client, the Stuyvesant Life Insurance Company.

There was apparently no further communication between the attorneys and on June 2, 1971, seven months and three weeks after the twenty-day period for filing an answer had elapsed, the appellee entered a default judgment against the appellant, Stuyvesant Life Insurance Company. As of that date neither an answer nor an appearance had been filed on behalf of the appellant. Some eleven weeks later, on August 3, 1971, the entry of the default judgment was brought to the attention of Mr. Brady, the appellant's attorney. ^* On August 20, 1971, two and one-half weeks after learning of the default judgment, the appellant filed a petition for a rule to show cause why the default judgment should not be opened and a defense permitted to be entered. The court below refused to open the judgment and this appeal was taken.

The rules governing our review of default judgments have been stated in a number of recent cases. A petition to open is an appeal to the court's equitable powers and is a matter for judicial discretion. This Court will not reverse a lower court ruling, either opening or refusing to open a default judgment unless there was an error of law or a clear, manifest abuse of discretion in this class of case. In determining whether a lower court has abused its discretion we have stated that three factors should be considered and must coalesce before a default judgment can be opened: (1) the petition to open must be promptly filed; (2) the failure to appear or file a timely answer must be excused; and (3) the party seeking to open the judgment must show a meritorious defense. Balk v. Ford Motor Co., 446 Pa. 137, 285 A.2d 128 (1971); Kraynick v. Hertz, 443 Pa. 105, 277 A.2d 144 (1971); Fox v. Mellon, 438 Pa. 364, 264 A.2d 623 (1970); ...