Opinion
C.A. No. 01J-10-094 / G-2-307-309
Submitted: July 16, 2002
Decided: October 31, 2002
Paul D. Sunshine, Esq., Dover, Delaware. Attorney for Plaintiff.
John E. O'Brien, Esq., Dover, Delaware. Attorney for Defendants.
OPINION
The plaintiff seeks a judgment against the defendants for the sum of $7,000 plus interest, costs and counsel fees under Superior Court Civil Rule 58.1. The proceeding is based upon a promissory note containing a confessed judgment clause. The defendants duly appeared and objected to entry of judgment. A hearing was held at which the defendants raised three contentions: (1) that notice letters required by the rule were not properly sent to the defendants; (2) that the defendants did not effectively waive their right to notice and a hearing at the time they executed the note; and (3) that the plaintiff lacks an essential document, an affidavit which is required where the defendants are non-residents at the time the note is signed.
THE FACTS
The defendants, Jack Whitaker and Venita Whitaker, entered into an agreement to buy the plaintiff's house near Felton, Kent County, Delaware. At the time, they lived in New Jersey. They were buying the Felton property to move there as their primary residence. Settlement on the Felton property was scheduled for December 19, 2000. When that date arrived, the defendants still owned their residence in New Jersey, which was for sale. They were $7,000 short of the necessary funds to buy the Felton house, and, in order to complete settlement, the plaintiff, Donna Goodwin, agreed to receive a promissory note from the defendants for that amount. Ms. Goodwin's attorney prepared a note reciting that the defendants would pay the $7,000 upon sale of their house in New Jersey or by June 19, 2001, whichever first occurred. The note began by reciting "KNOW ALL MEN BY THESE PRESENTS THAT WE, JACK WHITAKER and VENITA WHITAKER, Husband and Wife, of Kent County and State of Delaware . . . are held and firmly bound unto DONNA GOODWIN. . ." It contained a confessed judgment clause which authorized confession of judgment in "any court of record in the State of Delaware, or elsewhere" for the principle debt of $7,000, plus interest, costs and counsel fees.
Prior to settlement, the plaintiff had vacated her house so that she could deliver possession to the defendants at settlement. Settlement was held at the office of the buyers' attorney. He reviewed the note and he and his clients had as much opportunity as they wished to review it together. The Whitaker's signed the note at the conclusion of the settlement and their attorney signed as witness.
The plaintiff knew the defendants still owned their house in New Jersey, but thought they were moving into the house they were buying that day. Specifically, she testified that "[t]hey were moving in that day, as far as I knew." After settlement, however, Mr. Whitaker stayed in the house in New Jersey for at least a month, and after that moved back and forth until June, when the house in New Jersey was sold. His wife moved into the Delaware house in January and also went back and forth until the New Jersey house was sold.
DISCUSSION
The defendants first contend that the notice letters required by Rule 58.1 were not sent in the manner prescribed by the rule. The praecipe which initiated the proceeding was filed on October 25, 2001. It was accompanied by one form of notice letter upon which the defendants were separately shown as addressees. Two identical letters were sent, one for each defendant, care of their attorney. There are two green postal receipts, one for each defendant, showing that the letter for each was received at the attorney's office on November 1, 2001. While typically a notice letter mailed to an attorney for a party would not be sufficient, in this case the defendants' attorney agreed in advance to receive the letters on their behalf. The defendants in fact received notice and asserted their right to a hearing. I find there has been substantial compliance with the notice letter requirement.
The defendants next contend that they did not effectively waive their right to notice and a hearing at the time they executed the note. The burden of establishing that the defendants did so is on the plaintiff. The defendants argue that they never read the note before signing it. A similar argument was made and rejected in Pellaton v. Bank of N.Y. As was stated in that case, "a person signing a contract, having the capacity and the opportunity to read its contents, cannot avoid the contract on the ground that he/she signed the contract without reading it." Here, the note had only two pages of double spaced text. The confessed judgment clause took up nearly half of the second page. The defendants had their attorney with them and had a full opportunity to review the note before signing it. I find that, under the totality of the circumstances, the defendants knowingly, voluntarily and intelligently waived their right to notice and a hearing at the time they executed the note.
Superior Court Civil Rule 58.1(d)(5).
592 A.2d 473 (Del. 1991).
Id. at n. 6.
The defendants next contend that the proceeding must be dismissed because they did not sign an affidavit which is required of non-residents. They contend they were non-residents on the day they signed the note and did not become residents until, at the earliest, about a month later when they started moving into their new Delaware home. 10 Del. C. § 2306(c) provides as follows:
In the case of a defendant-obligor who was at the time of executing the document authorizing the confession of judgment, a non-resident, the plaintiff must file with the Prothonotary an affidavit executed by the defendant-obligor stating:
(1) The sum of money for which judgment may be entered; (2) Authorization of entry of judgment in the Superior Court of the State in and for a specific county; (3) The contact with the State in the transaction; (4) Defendant-obligor's mailing address and residence where he or she most likely would receive mail.
The purpose of this provision is to give non-resident debtors a protection not thought necessary for residents. It requires the creation of a record that sufficient contact exists with Delaware to confer jurisdiction over the non-resident. It is also based on a recognition that non-residents may enter into debt transactions which have little to do with Delaware or do so under circumstances where it may not reasonably occur to the debtor that judgment might be confessed in a county in Delaware. This provision is meant to assure in each case, by a sworn statement, that a non-resident is aware that judgment may be confessed in a county in Delaware and that he authorizes such act.
In this case, although the defendants apparently said nothing at settlement to mislead the plaintiff into thinking they were moving into the house that day, the plaintiff believed that they were establishing residency in Delaware at that time. Under the circumstances, which include the fact that the second line of the note expressly refers to the defendants as being of Kent County and State of Delaware, I find that her belief was reasonable.
Equitable estoppel may be found where a party by his conduct leads another, in reliance on that conduct, to change his position detrimentally. I am of the opinion that when the defendants affixed their signatures to the note which recited that they were of Kent County, they became estopped to assert in this proceeding that they were non-residents at the time they signed the note. I conclude, therefore, that under the facts and circumstances of this case, 10 Del. C. § 2306(c) is not applicable.
Robertson v. Gest, 608 A.2d 729 (Del. 1991).
Therefore, the plaintiff's application for entry of judgment is granted.