20 YEAR STATUTE OF LIMITATIONS FOR BUSINESS PROMISSORY NOTE EXECUTED UNDER SEAL
Where the evidence established that defendants executed a business loan agreement and promissory note under seal, the 20-year statute of limitations set forth in 42 Pa.C.S. 5529 for actions brought upon an instrument under seal was applicable to plaintiff’s action; therefore, plaintiff’s action upon a loan and promissory note was not time-barred. The court denied defendants’ petition to open and/or strike a default judgment.
Defendants executed a business loan agreement with NOVA Savings Bank on Dec. 1, 2006. They borrowed $130,000 from the bank and executed a promissory note for the same amount. NOVA later assigned the loan agreement and promissory note to plaintiff, CRE/ADC Venture 2013-1, LLC. Plaintiff confessed judgment against defendants on June 20, 2017. Here, defendants petitioned the court to open and/or strike the judgments by confession. They argued, inter alia, that the default judgments should be stricken because the underlying note giving rise to the confessed judgment was not “under seal.” Thus, the statute of limitations applicable to plaintiff’s claim was the four-year period set forth in 42 Pa.C.S. §5525, according to defendants. They maintained that the suit should be dismissed because it was filed 11 years after the 2006 execution of the note. The court noted that under §5525(b)(1), an action upon an instrument in writing under seal must be commenced within 20 years. There was no dispute that the note defendants executed was an instrument; thus, the issue at bar turned on whether the note was “under seal.” Under Pennsylvania precedent, when a party signs an instrument containing the pre-printed word “seal,” that party has presumptively signed an instrument under seal, the court observed. The note at issue in this case contained a pre-printing of the word “seal” in the parenthesis immediately adjacent to defendants’ signature lines. Moreover, immediately above the signature lines, the document stated the following in bold and capital letters: “this note is given under seal and it is intended that this note is and shall constitute and have the effect of a sealed instrument according to law.” After considering the note in question and applicable case law, the court concluded that the note was in fact an instrument under seal. Given that, the applicable statute of limitations was the 20-yer time limit set forth in 42 Pa.C.S. 5529. Since Plaintiff had 20 years to bring this suit against defendants, this action was not time-barred, the court concluded in its opinion denying defendants’ petition.
Reference: Digest of Recent Opinions, Pennsylvania Law Weekly, 41, PLW 649, July 10, 2018, CRE/ADC Venture 2013-1, LLC v. Anderson, PICS Case No. 18-0772 (C.P. Carbon May 18, 2018)
Kindly visit our Business & Commercial Litigation and Business Law websites or contact one of our Business Litigation Attorneys or Business Law Attorneys at 215-977-8200 for more information on this topic.