J-A09023-14


NON-PRECEDENTIAL DECISION - SEE SUPERIOR COURT I.O.P. 65.37

JOAN I. GLISSON TRUST, BY JOAN I.               IN THE SUPERIOR COURT OF
GLISSON, TRUSTEE                                      PENNSYLVANIA

                            Appellee

                       v.

THE GREATER DELAWARE VALLEY
SAVINGS BANK, D/B/A ALLIANCE BANK,
KITCHIN ASSOCIATES, LLC, TODD R.
KITCHIN, RICHARD R. KITCHIN

                            Appellants               No. 1880 EDA 2013


              Appeal from the Judgment Entered August 15, 2013
               In the Court of Common Pleas of Delaware County
                       Civil Division at No(s): 09-003496


BEFORE: BOWES, J., LAZARUS, J., and OTT, J.

MEMORANDUM BY OTT, J.:                            FILED OCTOBER 08, 2014

       The Greater Delaware Valley Savings Bank, d/b/a Alliance Bank

(“Alliance Bank”), brings this appeal from the judgment entered on August

15, 2013, in the Court of Common Pleas of Delaware County, in favor of

Joan I. Glisson, Trustee of the Joan Glisson Trust (“the Glisson Trust” or “the

Trust”), in the amount of $294,103.06, together with post-judgment

interest, and further assessment of counsel fees and costs.1 The judgment

was entered on the verdict issued after a one-day non-jury trial in this action
____________________________________________


1
  Although Kitchin Associates, LLC, Todd R. Kitchin, and Richard R. Kitchin
(“Kitchen Associates”) appear as appellants in the above caption, judgment
was entered against Alliance Bank only, and Kitchin Associates are not
parties to this appeal.
J-A09023-14



for breach of contract and negligence.      In this appeal, Alliance Bank raises

five questions, which we rephrase as follows: (1) Whether the Commercial

Pledge Agreement and Commercial Guaranty signed by the Trust created an

express   contract   of   bailment;   (2)   Whether   the   Commercial   Pledge

Agreement could be interpreted as creating an express obligation to return

an assigned mortgage to the Trust; (3) Whether the Trust’s contract claims

are controlled by the four-year statute of limitations set forth in 42 Pa.C.S. §

5525(7), rather than the 20-year statute of limitations set forth at 42

Pa.C.S. § 5529; (4) Whether Alliance Bank was obligated to satisfy all

mortgages held as collateral for its original loan, pursuant to the Mortgage

Satisfaction Act, 21 Pa.C.S. § 721-1 et seq.; (5) Whether the Trust had

standing to assert the claims against Alliance Bank.        See Alliance Bank’s

Brief, at 4. Based upon the following, we affirm.

      This action arose after Alliance Bank caused a purchase money

mortgage, assigned by the Trust to Alliance Bank as substitute collateral for

a business loan obtained by M & J Roofing Supplies, Inc., to be marked

satisfied, instead of returning the mortgage to the Trust, following full

repayment of the business loan. The trial court has aptly summarized the

facts underlying this appeal, as follows:

            Joan I. Glisson is the grantor, trustee and a beneficiary of
      the Joan I. Glisson Trust (herein “the Glisson Trust” or “the
      Trust”). Alliance Bank is a wholly owned subsidiary of Alliance
      Bancorp, Inc. of Pennsylvania, and is registered to conduct
      business in Pennsylvania, having a business location at 541
      Lawrence Road, Broomall, Marple Township, Delaware County,


                                      -2-
J-A09023-14


     Pennsylvania, (herein “Alliance Bank”). Kitchin Associates, LLC.,
     is a defunct limited liability company which formerly conducted
     business at 1400 Chester Pike, Sharon Hill Borough, Delaware
     County, Pennsylvania, (herein “Kitchin Associates”). Todd R.
     Kitchin, is an adult individual who was a member and agent of
     Kitchin Associates, (herein “Todd Kitchin”). Richard R. Kitchin, is
     an adult individual who was a member and agent of Kitchin
     Associates, (herein “Richard Kitchin”).

           On February 7, 2000, the Glisson Trust, which was created
     in 1996, was the owner under a deed of commercial real estate
     known generally as 1400 Chester Pike, Sharon Hill Borough,
     Delaware County, Pennsylvania. At that time, Joan I. Glisson and
     her late husband, Maurice J. Glisson, were the corporate
     Treasurer and President respectively of two Pennsylvania
     business corporations, M & J Roofing Supplies, Inc., and J & M
     Window Manufacturing.

            On February 7, 2000, Joan I. Glisson and Maurice J.
     Glisson entered into a written business loan agreement with
     Alliance Bank to obtain $300,000.00 for the use of M & J Roofing
     Supplies, Inc. The business loan Promissory Note was secured, in
     part, by a mortgage upon the 1400 Chester Pike, Sharon Hill
     Borough premises given to Alliance Bank, by the Glisson Trust.

           On June 1, 2001, Kitchin Associates entered into a written
     agreement for the sale of real estate with the Glisson Trust,
     concerning the 1400 Chester Pike, Sharon Hill Borough
     premises. On July 3, 2001, at the request of the late Maurice
     Glisson, Alliance Bank agreed to accept an Assignment of the
     Kitchin Associates Promissory Note and Mortgage to the Glisson
     Trust as substitute collateral for the M & J Roofing Supplies, Inc.,
     business loan, in exchange for Alliance Bank releasing its
     mortgage upon the 1400 Chester Pike, Sharon Hill Borough
     premises. On July 5, 2001, Alliance Bank released its mortgage
     upon the 1400 Chester Pike, Sharon Hill Borough premises, and
     accepted the assignment of the Kitchin Associates Promissory
     Note and Mortgage to the Glisson Trust as substitute collateral.
     On July 11, 2001, the Glisson Trust conveyed the 1400 Chester
     Pike, Sharon Hill premises to Kitchin Associates for $300,000.00.
     On July 11, 2001, the Glisson Trust, by Joan I. Glisson, Trustee,
     executed the documents required by Alliance Bank including an
     assignment of the Kitchin Associates to Glisson Trust mortgage,
     necessary to complete the substitution of collateral.

                                    -3-
J-A09023-14



            On July 11, 2001, the Glisson Trust executed the
     Commercial Guaranty. The Commercial Guaranty is secured by
     collateral. In part, the Commercial Guaranty provides as follows:
     “This Guaranty is secured by Assignment of $300,000.00
     Promissory Note and Purchase Money Mortgage from Kitchin
     Associates, LLC, dated July 11, 2001, and covering the property
     known as 1400 Chester Pike, Borough of Sharon Hill, Delaware
     County, Pennsylvania, Parcel No. 41-00-00335-00, and any and
     all proceeds thereof. Property description attached hereto.”

            On July 11, 2001, Alliance Bank secured the Commercial
     Guaranty executed by the Glisson Trust by requiring the Glisson
     Trust to execute the Commercial Pledge Agreement. In part, the
     Commercial Pledge Agreement provides as follows: “Lender may
     hold the Collateral until all indebtedness has been paid and
     satisfied. Thereafter, Lender may deliver the Collateral to
     Grantor or to any other owner of the Collateral.” The Commercial
     Guaranty and the Commercial Pledge Agreement each relate to a
     loan transaction between Alliance Bank, as lender, and M & J
     Roofing Supplies, Inc. The loan transaction took place on
     February 7, 2000, when Joan I. Glisson, who is the grantor,
     trustee and a beneficiary of the Glisson Trust, and her late
     husband, Maurice J. Glisson, executed a business loan
     agreement as officers of M & J Roofing Supplies, Inc., borrowing
     $300,000.00 from Alliance Bank.

            On March 31, 2003, Joan I. Glisson and Maurice J. Glisson
     paid the M & J Roofing Supplies, Inc. loan balance due Alliance
     Bank, in full. On April 30, 2003, Maurice J. Glisson died. In error,
     on May 30, 2003, Alliance Bank through its employees prepared
     a satisfaction piece for the Kitchin Associates to Glisson Trust
     mortgage, the above referenced substituted collateral for the
     Alliance Bank loan to M & J Roofing Supplies, Inc.

            On June 2, 2003, Alliance Bank marked as satisfied the M
     & J Roofing Supplies, Inc., loan of February 7, 2000; but, rather
     than return the Kitchin Associates to Glisson Trust Mortgage —
     the substituted collateral — to the Trust on June 3, 2003,
     Alliance Bank filed the satisfaction piece prepared in error and
     mistakenly satisfied the Kitchin Associates mortgage.

           On March 3, 2005, and without the knowledge of the
     Glisson Trust, Kitchin Associates sold the 1400 Chester Pike,

                                    -4-
J-A09023-14


     Sharon Hill premises to CLAM Enterprises, LLC, for $402,000.00.
     At closing on the sale of the premises, Kitchin Associates,
     Richard R. Kitchin and Todd R. Kitchin kept the net proceeds of
     the sale including the balance then outstanding on the Kitchin
     Associates July 11, 2001, loan to the Glisson Trust.3
        _______________________________________________________________


        3
         This Court ultimately determined that Kitchin Associates,
        Richard Kitchin and Todd Kitchin, each acted intentionally
        and unlawfully in dissipating the proceeds from the sale
        of the 1400 Chester Pike, Sharon Hill premises.
        _____________________________________________

             On or about September 8, 2008, Kitchin Associates,
     Richard R. Kitchin and Todd R. Kitchin ceased payment to the
     Glisson Trust on the Kitchin Associates Promissory Note of
     July11, 2001, and the Glisson Trust discovered the Kitchins’
     wrong doing. On or about September 8, 2008, the Trust
     discovered the outstanding principal balance of $201,287.73 on
     the Kitchin Associates Promissory Note of July 11, 2001, was
     uncollectable because Alliance Bank’s mistaken satisfaction of
     the Kitchin Associates Mortgage destroyed the security interest
     the Glisson Trust would have had in the 1400 Chester Pike,
     Sharon Hill Borough premises. Following their default, Kitchin
     Associates, Richard R. Kitchin and Todd R. Kitchin pursued
     bankruptcy protection. The Glisson Trust recovered $51,500.00
     of its loss in the Todd R. Kitchin bankruptcy proceeding.

           The Glisson Trust has never been revoked, and Joan I.
     Glisson who is the Grantor of this Trust remains the trustee and
     beneficiary of the Trust. In her management of the Glisson Trust
     as trustee, Joan I. Glisson has acted consistently with the advice
     of estate legal counsel. The Commercial Pledge Agreement was
     signed on behalf of the Glisson Trust in favor of Alliance Bank.
     The Commercial Pledge Agreement directs the Glisson Trust to
     deliver the pledged collateral to Alliance Bank, and the pledge
     agreement directs Alliance Bank to return the pledged collateral
     to the Glisson Trust once the M & J Roofing Supplies, Inc.,
     business loan Promissory Note of February 7, 2000, is paid in
     full.

            …


                                        -5-
J-A09023-14


              At trial, the Glisson Trust asserted that Alliance Bank failed
       to adequately protect the collateral it delivered to the bank and
       failed to return the collateral to the Trust in breach of the
       Commercial Pledge Agreement. The Glisson Trust also alleged
       that Alliance Bank was negligent and the negligent conduct of
       Alliance Bank was a factual cause resulting in the damages
       sustained by the Plaintiff.

Trial Court Opinion, 9/12/2013, at 1–5 (record citations omitted).

       The trial court concluded that the Trust proved a material breach of

contract by Alliance Bank within the meaning of Restatement Second of

Contracts, § 241 (“Circumstances Significant in Determining whether a

Failure Is Material.”). The trial court further determined that the Trust had

proved negligence and damages, and that it did not recognize the negligence

until September 8, 2008, when Kitchins Associates defaulted on the

promissory note, but concluded that the two-year statute of limitations, 42

Pa.C.S. § 5524(7), barred the Trust’s negligence claim.2 The court’s verdict

in favor of the Trust totaled $294,103.06, together with post-judgment

interest and further assessment of counsel fees and costs.         Following the



____________________________________________


2
    The trial court rejected the Trust’s argument that, “under the
circumstances presented in this case, the Trust did not know it had been
harmed through the negligent act of Alliance Bank, and for this reason, the
discovery rule applies tolling the statute of limitations.” Trial Court Opinion,
9/12/2013, at 11. The trial court held: “The Glisson Trust knew the Kitchin
Associates purchase money mortgage was satisfied in June 2003. The
discovery rule has no application in this case, and the Trust’s negligence
action is barred by the two year statute of limitations.” Id.




                                           -6-
J-A09023-14


denial of Alliance Bank’s motion for post-trial relief pursuant to Pa.R.C.P.

227.1, this appeal by Alliance Bank followed.3

       At the outset, we note our standard of review:

            [We are] limited to a determination of whether the
            findings of the trial court are supported by competent
            evidence and whether the trial court committed error in
            the application of law. Findings of the trial judge in a non-
            jury case must be given the same weight and effect on
            appeal as a verdict of a jury and will not be disturbed on
            appeal absent error of law or abuse of discretion. When
            this Court reviews the findings of the trial judge, the
            evidence is viewed in the light most favorable to the
            victorious   party    below    and     all    evidence    and
            proper inferences favorable to that party must be taken
            as true and all unfavorable inferences rejected.

       The court’s findings are especially binding on appeal, where they
       are based upon the credibility of the witnesses, “unless it
       appears that the court abused its discretion or that the court’s
       findings lack evidentiary support or that the court capriciously
       disbelieved the evidence.”

            Judicial discretion requires action in conformity with law
            on facts and circumstances before the trial court after
            hearing and consideration. Consequently, the court
            abuses its discretion if, in resolving the issue for decision,
            it misapplies the law or exercises its discretion in a
            manner lacking reason.

       “To the extent that the trial court’s findings are predicated on
       errors of law, we review the court’s findings de novo.”

Hart v. Arnold, 884 A.2d 316, 330–331 (Pa. Super. 2005) (citations

omitted).
____________________________________________


3
  Alliance Bank timely complied with the order of the trial court to file a
concise statement of errors complained of on appeal, pursuant to Pa.R.A.P.
1925(b).



                                           -7-
J-A09023-14


     As the first two arguments raised by Alliance Bank concern the

commercial loan documents, we discuss those arguments together. Alliance

Bank first contends the verdict and judgment were erroneously based upon

the common law doctrine of bailment. Secondly, Alliance Bank contends the

trial court impermissibly reformed the commercial loan documents.

     In finding in favor of the Trust, the trial court opined:

            To successfully maintain a cause of action for breach of
     contract the plaintiff must establish: (1) the existence of a
     contract, including its essential terms, (2) a breach of a duty
     imposed by the contract, and (3) resultant damages. Hart v.
     Arnold, 884 A.2d 316, 332 (Pa. Super. Ct. 2005). A breach
     must have been a material breach of the contract. In
     determining whether a failure to render or to offer performance
     is material, the following circumstances are significant: (a) the
     extent to which the injured party will be deprived of the benefit
     which he or she reasonably expected; (b) the extent to which
     the injured party can be adequately compensated for the part of
     that benefit of which he or she will be deprived; (c) the extent to
     which the party failing to perform or to offer to perform will
     suffer forfeiture; (d) the likelihood that the party failing to
     perform or offer to perform will cure his or her failure, taking
     account of all the circumstances including any reasonable
     assurances; (e) the extent to which the behavior of the party
     failing to perform or offer to perform comports with standards of
     good faith and fair dealing. Oak Ridge Constr. Co. v. Tolley,
     504 A.2d 1343, 1348 (Pa. Super. Ct. 1985) citing Restatement
     (Second) of Contracts § 241 (1981).

            On May 3, 2013, Kathleen Lynch, an employee of Alliance
     Bank testified during the trial of this civil action. Through her
     testimony, Kathleen Lynch demonstrated specific knowledge of
     the applicable Alliance Bank procedures and protocols for the
     safe keeping and management of pledged collateral. Ms. Lynch
     identified the various Alliance Bank officers and employees who
     participated in the various dealings and transactions between
     Alliance Bank and the Glisson Trust. Kathleen Lynch admitted
     Alliance Bank made a mistake when, following the payment in
     full of the M & J Roofing Supplies, Inc., business loan Promissory

                                     -8-
J-A09023-14


     Note of February 7, 2000, an employee of Alliance Bank satisfied
     the Kitchin Associates Mortgage rather than returning the Kitchin
     Associates Mortgage to the Glisson Trust as required by the
     terms of the Commercial Pledge Agreement. The mistaken or
     negligent conduct of the Alliance Bank employee rendered
     valueless the incorporeal property delivered to Alliance Bank by
     the Glisson Trust. This Court found the testimony offered at trial
     by witness, Kathleen Lynch, to be credible.

        This Court ultimately determined that the Glisson Trust
     proved by a preponderance of the evidence as follows:

        (a) The Glisson Trust delivered the pledged collateral - -
        the Kitchins’ purchase money mortgage - - to Alliance
        Bank;

        (b) M & J Roofing Supplies, Inc., paid in full the
        indebtedness due Alliance Bank under the terms of the
        commercial loan agreement;

        (c) As a Guarantor of that Alliance Bank loan, Glisson
        Trust had completed its performance under the express
        terms of the Commercial Guaranty and the Commercial
        Pledge Agreement (Plaintiff Exhs. R and S-1);

        (d) Glisson Trust, as the owner of the pledged collateral,
        was entitled to the return of the collateral on or about
        June 2, 2003;

        (e) Alliance Bank failed to exercise or use reasonable care
        in the preservation of the collateral when its employee
        mistakenly or carelessly caused the collateral - - the
        Kitchins’ purchase money mortgage - - to be marked
        satisfied rather than delivering that collateral back to the
        Glisson Trust through an appropriate reassignment of
        that purchase money mortgage; and,

        (f) As the injured party, the Glisson Trust was deprived of
        its security interest in the 1400 Chester Pike, Sharon Hill
        Borough premises exposing Plaintiff to a significant
        financial loss.

            The Glisson Trust proved a material breach of contract by
     Alliance Bank within the meaning of Restatement (Second) of

                                   -9-
J-A09023-14


        Contracts § 241 (1981). The Commercial Guaranty and the
        Commercial Pledge Agreement between Plaintiff Glisson Trust
        and Defendant Alliance Bank created a bailment by express
        contract. “Bailment” is defined as a delivery of personalty for the
        accomplishment of some purpose upon contract, express or
        implied. After that purpose has been fulfilled, the personal
        property shall be delivered to its owner, otherwise handled
        according to its owner’s directions, or kept until reclaimed by the
        owner. When a bailment is for a mutual benefit of the bailor,
        here the Glisson Trust, and bailee, here Alliance Bank, the bailee
        must use ordinary diligence and is liable for ordinary negligence.
        Prince v. Brown, 680 A.2d 1149 (Pa. 1996). In the instant
        case, the Commercial Pledge Agreement imposed a duty to “use
        ordinary reasonable care” upon Alliance Bank, as Lender, in its
        maintenance of the collateral. (Plaintiff Exh. S-1 pg. 2.) On
        termination of a bailment, the bailor, here Glisson Trust, is
        entitled to the return of the identical thing bailed. Schell v.
        Miller North Broad Storage Co. 16 A.2d 680 (Pa. Super. Ct.
        1940). Here, the Glisson Trust, the bailor, did not receive from
        Alliance Bank, the bailee, a return of the Kitchins’ purchase
        money mortgage, the thing bailed, in breach of the Collateral
        Pledge Agreement and in breach of long standing law in the
        Commonwealth of Pennsylvania concerning the bailment of
        corporeal or incorporeal personal property. When a bailee fails
        to act as required in the contract of bailment and the result is a
        loss of the subject of the bailment, that bailee is liable to the
        bailor of the property.

Trial Court Opinion, 9/12/2013, at 6–8 (record citations omitted). For the

reasons set forth below, we find no error.

        Alliance Bank contends the court’s determination — that “[t]he

Commercial Guaranty and the Commercial Pledge Agreement between

Plaintiff Glisson Trust and Defendant Alliance Bank created a bailment by

express contract”4 — constitutes reversible error because bailment was

____________________________________________


4
    Trial Court Opinion, 9/12/2013, at 8.



                                          - 10 -
J-A09023-14


never pled, and the court had no authority to raise it sua sponte. Alliance

Bank further maintains that the elements for a bailment were not

established in this case. Specifically, Alliance Bank argues:

      Our Supreme Court has detailed the elements required to
      establish rights under a bailment agreement as follows:

         [A] cause of action for breach of a bailment agreement
         arises if the bailor can establish that personalty has been
         delivered to the bailee, a demand for return of the bailed
         goods has been made and the bailee has failed to return
         the personalty. (emphasis added).

      Price v. Brown, 680 A.2d 1149, 1152 (Pa. 1996).             The
      evidence in this case unequivocally demonstrates that neither of
      the elements required to establish a valid cause of action for
      breach of a bailment agreement was proven at trial.

Alliance Bank’s Brief, at 21. Alliance Bank claims that the Kitchin mortgage

is not “personalty,” and that the Trust made no “demand” for return of the

mortgage. We are not persuaded by this argument.

      We conclude the court’s bailment analogy provides no basis upon

which to disturb the decision of the trial court.       Moreover, our review

confirms the trial court’s determination that, based upon the commercial

loan documents, the Trust established a material breach by Alliance Bank of

its contractual obligation to return the assigned mortgage to the Trust. In

this regard, we reject Alliance Bank’s assertion that the trial court

impermissibly reformed the commercial loan documents.

      Turning to the documents at issue, the Commercial Guaranty states, in

relevant part:


                                    - 11 -
J-A09023-14


     COLLATERAL. This Guaranty is secured by Assignment of
     $300,000 Promissory Note and Purchase Money Mortgage from
     Kitchin Associates, LLC., dated July 11th, 2001, and covering the
     property known as 1400 Chester Pike, Borough of Sharon Hill,
     Delaware County, PA, Parcel No. 41-00-00335-00, and any and
     all proceeds thereof. Property description attached hereto.

                                       ****

     LIMITED OBLIGATION OF GUARANTOR. The Joan I. Glisson Trust
     of 1996, (the Trust), granted a Mortgage and Assignment of
     Rents dated February 7, 2000 on the property known as 1400
     Chester Pike, Borough of Sharon Hill, Delaware County, PA. to
     support a Loan by Lender to M & J Roofing Supplies, Inc. The
     Trust has agreed to sell the property to Kitchin Associates, LLC
     for $300,000 and as consideration for the sale the Trust will take
     back a $300,000 Note and Mortgage. The Trust has asked the
     Lender [Alliance Bank] to remove the existing Mortgage, permit
     the Deed to be transferred to Kitchin Associates, LLC and to
     receive this Guaranty, and an Assignment of Note and Mortgage
     as substitute collateral. Lender hereby agrees to the collateral
     substitution and further agrees to limit the obligations of the
     Trust under Guaranty to the collateral known as 1400 Chester
     Pike[,] Sharon Hill, PA and any and all proceeds thereof.

Commercial Guaranty, 7/11/2001.

     Furthermore, the Commercial Pledge Agreement contains the following

terms:

     GRANT OF SECURITY INTEREST: For valuable consideration,
     Grantor [Joan I. Glisson Trust of 1996] grants to Lender
     [Alliance Bank] a security interest in the collateral to secure the
     indebtedness and agrees that Lender shall have the rights stated
     in this Agreement with respect to the Collateral, in addition to all
     other rights which Lender may have by law.

     COLLATERAL DESCRIPTION. The word “Collateral” as used in
     this Agreement means Grantor’s present and future rights, title
     and interest in and to, together with any and all present and
     future   additions   thereto,  substitutions  therefore,   and
     replacements thereof, and further together with all income and
     Proceeds as described herein:

                                    - 12 -
J-A09023-14



         Assignment of a certain $300,000 Promissory Note and
         Purchase Money Mortgage dated July 11, 2001 from
         Kitchin Associates, LLC to the Joan I. Glisson Trust of
         1996.

                                    ****

     LENDER’S RIGHTS AND OBLIGATION WITH RESPECT TO
     COLLATERAL.     Lender may hold the Collateral until all
     indebtedness [the M & J Roofing Supplies, Inc. loan] has
     been paid and satisfied. Thereafter, Lender may deliver
     the Collateral to Grantor [the Trust] or to any other owner
     of the Collateral. …


                                    ****

     LIMITATIONS ON OBLIGATIONS OF LENDER. Lender shall use
     ordinary reasonable care in the physical preservation and
     custody of the Collateral in Lender’s possession, but shall have
     no other obligation to protect the Collateral or its value. …

Commercial Pledge Agreement, 7/11/2001 (emphasis supplied).

     The guaranty and pledge agreement reflect the parties’ intent (1) that

Alliance Bank would release its mortgage against the Trust’s property, 1400

Chester Pike, which was collateral for the M & J Roofing Supplies, Inc. loan;

(2) that the Trust would sell the property at 1400 Chester Pike to Kitchin

Associates, LLC, for $300,000.00; (3) that the Trust would take back a note

and mortgage from Kitchin Associates, LLC, for $300,000.00; and (4) that

the Trust would assign the Kitchin mortgage and note to Alliance Bank as

substitute collateral for the $300,000.00 business loan from Alliance Bank to

M & J Roofing Supplies, Inc.




                                   - 13 -
J-A09023-14



       Although Alliance Bank argues that use of the word “may” in the

pledge agreement indicates that return of the mortgage was permissive and

not mandatory, we find this argument to be groundless. It is obvious that

the assignment of the Kitchin Mortgage was pledged as substitute collateral

for the M & J Roofing Supplies, Inc., business loan, until full repayment of

the loan. As such, the pledge agreement obligated Alliance Bank to deliver

the substitute collateral — the assigned mortgage — to the Trust, or any

other owner of the collateral, upon full repayment of the loan. Even though

the provision regarding “Lender’s Rights and Obligation With Respect to

Collateral,” uses the word “may,” Alliance Bank would have no right to retain

the collateral once the loan is repaid in full, and Alliance Bank offers no valid

support to the contrary.5 Therefore, the Trust was entitled to return of the

Kitchin mortgage on or about June 2, 2003, when Alliance Bank marked as

satisfied the M & J Roofing Supplies, Inc., loan of February 7, 2000.6
____________________________________________


5
  As will be discussed more fully below, Alliance Bank’s position that it was
obligated to satisfy the mortgage pursuant to the Mortgage Satisfaction Act
is unavailing.
6
  We note that Alliance Bank also cites provisions set forth in the pledge
agreement, under the headings, “Maintenance and Protection of Collateral,”
and “Limitations on Obligations of Lender,” in support of its argument that
the trial court, by finding that the pledge agreement created a mandatory
obligation on the part of Alliance Bank to return the assigned mortgage to
the Trust, impermissibly reformed the pledge agreement. See Alliance
Bank’s Brief, at 25–27.

      Alliance Bank relies on language in the provision regarding
“Maintenance and Protection of Collateral,” which specifies, “Lender may, but
(Footnote Continued Next Page)


                                          - 14 -
J-A09023-14



      Based on our review, we agree with the trial court that, in light of the

guaranty, and given terms of the pledge agreement, the Trust established a

material breach of contract on the part of Alliance Bank in causing the

Kitchin mortgage to be marked satisfied, instead of delivering the assigned

mortgage and note to the Trust. Accordingly, we reject Alliance Bank’s first

two arguments.

      Nor do we find merit in the contention of Alliance Bank that the court

erred in applying the 20-year statute of limitations found in 42 Pa.C.S. §

5529 for a document “under seal.” In this regard, we reject Alliance Bank’s

argument that the four-year statute of limitations set forth in 42 Pa.C.S. §

5525(7) is applicable, and bars the Trust’s contract claim.

      Section 5525(7) of the Judicial Code provides a four-year statute of

limitation for “An action upon a negotiable or nonnegotiable bond, note or

other similar instrument in writing. ….”            42 Pa.C.S. § 5525(7).   However,

Section 5529 states, in relevant part, “Notwithstanding section 5525(7)

                       _______________________
(Footnote Continued)

shall not be obligated to take such steps as it deems necessary or desirable
to protect, maintain, insure, store, or care for the Collateral.” In addition,
Alliance Bank points to the “Limitations on Obligations of Lender” provision
that states, “Lender shall have no responsibility for (A) any depreciation in
value of the Collateral or for the collection or protection of any Income and
Proceeds from the Collateral, (B) preservation of rights against the parties to
the Collateral or against third persons, ….”.

      Having reviewed these provisions, we conclude Alliance Bank’s reliance
is misplaced, as we find these provisions regarding collateral are not
relevant after the loan has been fully repaid.



                                           - 15 -
J-A09023-14



(relating to four year limitation), an action upon an instrument in writing

under seal must be commenced within 20 years.” 42 Pa.C.S. § 5529(b)(1).

      In this case, the last sentence of the pledge agreement specified:

“THIS AGREEMENT IS GIVEN UNDER SEAL AND IT IS INTENDED

THAT THIS AGREEMENT IS AND SHALL CONSTITUTE AND HAVE THE

EFFECT       OF   A    SEALED    INSTRUMENT       ACCORDING        TO    LAW.”

Commercial Pledge Agreement, 7/11/2001 (capitalization and bold in

original).   Similarly, the last sentence of the guaranty stated:        “THIS

GUARANTY IS GIVEN UNDER SEAL AND IT IS INTENDED THAT THIS

GUARANTY IS AND SHALL CONSTITUTE AND HAVE THE EFFECT OF A

SEALED INSTRUMENT ACCORDING TO LAW.”                    Commercial Guaranty,

7/11/2001 (capitalization and bold in original). It is undisputed that “Joan I.

Glisson, Trustee” placed her signature on the signature line for the Trust, on

both the pledge agreement and the guaranty, immediately below the above-

quoted wording.       Alliance Bank, however, claims that since Alliance Bank

was not a signatory to these commercial loan documents, the four-year

statute of limitations is applicable, and not the 20-year statute of limitations

for instruments in writing under seal. We find this argument to be meritless.

      It bears mention that the guaranty and pledge agreement, which were

prepared by Alliance Bank, and signed by Trust in favor of Alliance Bank,

contained only one signature line — for the “Joan I. Glisson Trust of 1996.”

In addition, “this Court has held, in accord with many cases written by our

Supreme Court, that when a party signs an instrument which contains a pre-

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printed word ‘SEAL,’ that party has presumptively signed an instrument

under seal.” In re Estate of Snyder, 13 A.3d 509, 513 (Pa. Super. 2011),

quoting Beneficial Consumer Discount v. Dailey, 644 A.2d 789, 790 (Pa.

Super. 1994). As Alliance Bank has not rebutted the presumption that the

maker of the instrument, the Trust, adopted the seal, it is presumed to have

been signed under seal. See Klein v. Reid, 422 A.2d 1143, 1144 (Pa.

Super. 1980).   Furthermore, there is no restriction in Section 5529 based

upon which party is bringing suit or seeking the benefit of the limitation

period. Accordingly, we conclude the trial court properly ruled the 20-year

statute of limitation at 42 Pa.C.S. § 5529 was applicable herein.

      In the fourth issue raised on appeal, Alliance Bank claims that the trial

court erred in failing to apply the Mortgage Satisfaction Act.      According to

Alliance Bank, “[w]hen the M & J Roofing Supplies, Inc. loan was paid in full

and the fees to satisfy the liens [were] delivered, [Alliance Bank] was

obligated to satisfy all mortgages it was holding as collateral in accordance

with 21 Pa.C.S. § 721-4.” Alliance Bank’s Brief, at 30. The trial court, in

rejecting this argument, opined: “This defense on its face is without merit.

[Alliance’s] obligation under the Commercial Pledge Agreement was to

reassign the Kitchins’ purchase money mortgage to [the Trust] in June

2003.” Trial Court Opinion, 9/12/2013, at 10. We agree with the trial court,

and find no merit in the argument of Alliance.

      Section 721-4 of the Mortgage Satisfaction Act provides:           “Every

mortgagee shall, upon receipt of payment of the entire mortgage obligation

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and tender of all required satisfaction and recording costs, [etc.] .. present

for recording … a duly executed satisfaction piece.” 21 Pa.C.S. § 721-4. As

already discussed, under the pledge agreement, the Trust had assigned the

Kitchin mortgage as substitute collateral for the M & J Roofing Supplies, Inc.

business loan, and once the loan was fully repaid, Alliance Bank was

required to return the Kitchin mortgage and note to the Trust.            While 20

Pa.C.S. § 721-2(1) defines a “mortgagee” as “the current holder of the

mortgage or the current holder of the mortgage and note,” Section 721-4 is

not applicable to the present scenario. Here, Alliance Bank was not a true

assignee entitled to mortgage payments, but was merely a holder of the

Kitchin mortgage as collateral, with no entitlement to mortgage payments.

Accordingly,   we   reject   Alliance    Bank’s   reliance   upon   the   Mortgage

Satisfaction Act.

      Finally, Alliance Bank claims the Trust lacked standing to assert its

claims against Alliance Bank. In this regard, Alliance Bank has summarized

its argument as follows:

      [T]he Trial Court refused to acknowledge that the Joan I. Glisson
      Trust of 1996 was dissolved, and assigned the right to income
      from the assigned Kitchin Mortgage to a new trust in 2002.
      Inasmuch as the Trust no longer existed, and had no rights with
      respect to the income secured by the assigned Kitchin Mortgage,
      the Trust lacked standing to initiate this action, much less be
      entitled to a money judgment.

Alliance Bank’s Brief, at 17.




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J-A09023-14



      More specifically, Alliance Bank asserts that Joan I. Glisson “testified,

at deposition, that the Trust was dissolved, and the assets transferred to a

new trust created in 2002.” Alliance Bank’s Brief, at 34. Alliance Bank also

points to trial exhibit MM, entitled “Additional Special Directives of Maurice J.

Glisson and Joan I. Glisson, Trustees and Settlors of the Maurice J. and Joan

I. Glisson Revocable Living Trust,” 8/5/2002, which specified: “I direct that

JESSE GLISSON get the mortgage payment from the property located at

1400 Chester Pike, Sharon Hill, Pennsylvania.” See Alliance Bank’s Brief, id.

Notwithstanding that 20 Pa.C.S. § 7752 is specifically applicable to revocable

trusts, Alliance Bank cites Section 7740(a) of the Uniform Trust Act, which

provides:

      A trust terminates to the extent it is revoked or expires pursuant
      to its terms, no purpose of the trust remains to be achieved or
      the purposes of the trust have become unlawful or contrary to
      public policy. …

20 Pa.C.S. § 7740(a).     In reliance on the above quoted statute, Alliance

Bank contends “[t]he Plaintiff Trust ceased to have a purpose when all of its

assets were transferred to a new trust.”         Alliance Bank’s Brief, at 35.

Alliance Bank concludes “[a]ny claim which may have arisen by virtue of

[Alliance Bank’s] satisfaction of the assigned instrument belonged to a

different trust.” Id. at 35.

      Here, the trial court determined that “[t]he Glisson Trust has never

been revoked, and Joan I. Glisson who is the Grantor of this Trust remains




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the trustee and beneficiary of the Trust.” Trial Court Opinion, 9/12/2013, at

5. We find no error.

        Preliminarily, we note there is no prohibition to having more than one

revocable trust.     The 2002 trust document contains no provision that it is

replacing the Trust nor that any assets owned by the Trust were transferred

to the 2002 trust in which both Maurice J. Glisson and Joan I. Glisson were

the settlors. Therefore, the trial court was entitled to consider the testimony

of Joan I. Glisson at her deposition that the Trust had been “dissolved” as a

statement by a layperson.

        Furthermore, the “Additional Special Directives,” discussed above,

must be read in conjunction with the “Special Directives” of each settlor,7 all

of which contemplate the division of trust assets after the death of a settlor.

The direction that Jesse Glisson receive mortgage payments at some point in

the future does not require the assignment of the Kitchin mortgage to the

2002 Trust any more than a right of a beneficiary to receive dividends from

a stock requires the transfer of the stock.8 Therefore, Alliance Bank’s claim

that “all of [the Trust’s] assets were transferred to a new trust” is

unsupported by the record.



____________________________________________


7
 See Revocable Living Trust Agreement, at 28–32, 8/5/2002 (trial exhibit
KK).
8
    See Pennsylvania Principal and Income Act, 20 Pa.C.S. § 8101 et seq.



                                          - 20 -
J-A09023-14



     Finally, “[w]hen a settlor of a trust reserves a power to revoke in a

given manner and under certain conditions, revocation cannot be effected in

another manner.” Scalfaro v. Rudloff, 934 A.2d 1254, 1257 (Pa. Super.

2007).   See 20 Pa.C.S. § 7752(c)(1) (providing settlor may revoke or

amend a revocable trust only “[b]y substantial compliance with a method

provided in the trust instrument.” (citation omitted)). The Trust instrument

provides that the Trust terminates upon either the death of both the Grantor

(Joan I. Glisson) and her spouse, Maurice Glisson, or as expressly provided

in Paragraph 18, which states:

     The Trust shall be revocable by the Grantor at any time, and
     either in whole or in part. The Grantor may, in addition, amend
     or modify this trust at any time, in any way whatever. Any such
     revocation, amendment, or modification shall be made by a
     written and acknowledged instrument delivered to the acting
     Trustees.

Trust Instrument, Joan I. Glisson Trust of 1996, 3/28/1996, at 8 ¶18.

     Here, the method provided in the Trust for revocation was mandatory

and exclusive, and Alliance Bank does not contend that the Joan I. Glisson

Trust of 1996 was revoked in accordance with the above quoted provision.

Therefore, for the above reasons, we conclude the trial court properly

determined that the Trust was not revoked, and correctly rejected Alliance

Bank’s argument that the Trust lacked standing in this case.

     Judgment affirmed.




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J-A09023-14


Judgment Entered.




Joseph D. Seletyn, Esq.
Prothonotary



Date: 10/8/2014




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