author: JOHNSON, Judge. DEL SOLE, Judge,

text:
    657 A.2d 1261
    Anthony HORBAL, and John Horbal, Individuals for the Use and Benefit of Highland Financial Ltd., a Corporation, and James R. Walsh, an Individual v. MOXHAM NATIONAL BANK, a Corporation. Appeal of HIGHLAND FINANCIAL LTD., and James R. Walsh, Esquire, Appellants.
    Superior Court of Pennsylvania.
    Argued Dec. 6, 1994.
    Filed April 10, 1995.

      James R. Walsh, Johnstown, for appellants.
    Jeffrey T. Morris, Pittsburgh, for appellees.
    Before ROWLEY, P.J., and CAVANAUGH, WIEAND, CIRILLO, DEL SOLE, POPOVICH, JOHNSON, HUDOCK and SAYLOR, JJ.
   JOHNSON, Judge.

We are asked to determine whether the Deficiency Judgment Act, originally the Act of July 16, 1941, P.L. 400, 12 P.S. § 2621.1 et seq., reenacted as the Act of July 9, 1976, P.L. 586, No. 142, § 2, now 42 Pa.C.S. § 8103 et seq., bars the redemption of a certificate of deposit (CD) by an assignee bank, where the assignment secured an antecedent indebtedness also secured by a mortgage upon real estate. We conclude that the Act has no application to the facts presented on this appeal. Moreover, we find that all conditions of the assignment were met and redemption of the CD was in full compliance with the “Uniform Commercial Code” (UCC) then in effect. Accordingly, we affirm the order which granted summary judgment in favor of the assignee bank.

In February 1988, Moxham National Bank (the Bank) loaned $120,000 to John and Anthony Horbal and Elaine Adams, co-partners t/a Potomac Associates II (collectively, the debtors). The loan was secured by a mortgage executed that same day on real estate owned by the debtors. Two weeks later, the Horbals, in their individual capacities, assigned a $25,000 CD to the Bank. The assignment secured the “present and unconditional payment and performance when due” of “[a]ny and all indebtedness, obligations and liabilities of [the debtors] to the Bank, now or hereafter existing or arising, due or to become due.” The Horbals also granted the Bank a power of attorney to withdraw all or part of the CD without notice to, or further consent of, the debtors. The assignment could be released only upon complete payment of the debtors’ obligations or the mutual agreement of the Bank and the Horbals.

The debtors defaulted on the $120,000 loan obligation, and the Bank initiated foreclosure proceedings. The real property serving as security for the loan was sold by the sheriff and deeded to the Bank. One week later, on January 29, 1991, the Bank withdrew the CD and applied the proceeds totaling $26,437 to the remaining loan balance, which at that time was approximately $116,000.

Ten months later, the Horbals assigned to Highland Financial Limited and James R. Walsh (Use Plaintiffs) any rights or causes of action the Horbals might possess by virtue of the Bank’s withdrawal of the CD and application of the proceeds to the loan balance. The Bank rejected the Use Plaintiffs’ demands that it turn over the proceeds realized upon withdrawal of the CD, prompting the present litigation. Upon the closing of the pleadings, both sides filed motions seeking summary judgment. The trial court granted summary judgment in favor of the Bank, leading to this appeal.

Our Supreme Court has set forth the standard of review to be followed when reviewing an appeal from an order granting summary judgment as follows:

Summary judgment is properly granted where “the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, show that there is no genuine issue of material fact and that the moving party is entitled to a judgment as a matter of law.” Pa.R.C.P. 1035(b). “The record must be viewed in the light most favorable to the nonmoving party, and all doubts as to the existence of a genuine issue of material fact must be resolved against the moving party.” Summary judgment may be entered only in those cases where the right is clear and free from doubt.

Pennsylvania State University v. County of Centre, 532 Pa. 142, 144 — 45, 615 A.2d 303, 304 (1992) (citation omitted); accord Anderson v. Moore, 437 Pa.Super. 642, 646-47, 650 A.2d 1090, 1092 (1994).

As in the trial court, the Use Plaintiffs argue to this Court that (1) the Bank was required to proceed under the Deficiency Judgment Act prior to withdrawing the CD proceeds; (2) collection of the $26,437 without proceeding under the Deficiency Judgment Act constituted the charging and collecting of a usurious rate of interest under 41 P.S. § 502; and (3) by virtue of the Bank’s alleged violation of 41 P.S. § 502, it is liable for costs and attorneys’ fees pursuant to 41 P.S. § 503.

First, the Use Plaintiffs assert that the Bank was required to proceed under the Deficiency Judgment Act prior to redeeming the CD. We disagree. We find no error in the trial court’s rejection of the Use Plaintiffs’ attempt to introduce Deficiency Judgment Act principles into the analysis of the Bank’s right to withdraw the CD proceeds. Given the express terms of the assignment, that Act has no relevance to the Bank’s action in proceeding on its unrelated secured interest. Because the merit of the second and third contentions depends upon the resolution of this first issue, we further conclude that they, too, are without merit.

In their Summary of Argument, the Use Plaintiffs contend that:

after the occurrence of a Sheriff Sale of the mortgaged premises at which the executing creditor is the purchaser, the executing creditor is precluded from taking any action against any additional collateral for the obligation to collect upon any alleged deficiency unless and until it seeks and obtains a Deficiency Judgment under the “Deficiency Judgment Act.”

Brief on Reargument of Appellants at 13-14. We reject this contention.

The Use Plaintiffs do not direct this Court to any language within the Deficiency Judgment Act which would expressly grant them the relief sought. We are mindful that, in ascertaining the intention of the General Assembly, we may presume that our legislature did not intend a result that is either absurd or unreasonable. 1 Pa.C.S. § 1922(1). We further are guided by the command that, when the words of a statute are clear and free from all ambiguity, the letter of the law is not to be disregarded under the pretext of pursuing its spirit. Since negotiation of bank certificates of deposit is not expressly covered by the Act, we first turn to the assignment itself under which the Bank secured its right to redeem the CD.

An examination of that assignment demonstrates that the debtors and their assignees have no valid complaint regarding the Bank’s actions. The assignment provides, in material part, as follows:

ASSIGNMENT OF DEPOSITS

The undersigned, Anthony Horbal and John Horbal (hereinafter called “Assignors”), for and in consideration of good and valuable considerations in hand paid, the receipt and sufficiency of all of which is hereby acknowledged, does hereby ASSIGN, TRANSFER and PLEDGE to the Moxham National Bank, a National banking corporation with its principal place of business at 550 Central Avenue, Johns-town, PA 15902, (hereinafter called “Bank”), all of Assignors’ right, title and interest, on Certificate of Deposit Number 2005581, in the principal amount of Twenty Five thousand and 00/100 Dollars ($25,000.00), payable to the Assignors and issued by the Bank in January 27,1988 and all sums now or at any time hereafter on deposit therein, and all sums due or to become due on account of said deposit and any and all renewals, reissues or substitutions thereof, whether in respect of interest paid thereon, the value thereof, or otherwise together with interests of every kind of Assignors therein (all of which is hereafter called the “Account”).

This Assignment and security interest is granted to the Bank to secure the prompt and unconditional payment and performance when due of the following (all of which is herein called the “Indebtedness”).

Any and all indebtedness, obligations and liabilities of Potomac Associates II (hereinafter the “Debtors”) to the Bank, now or hereafter existing or arising, due or to become due.

Assignors hereby constitutes and appoints the Bank their true and lawful attorney, with full power of substitution, (i) to ask, demand, collect, receive, receipt for, sue for, compound and give acquittance for any and all amounts which may be due or become due and payable under the Account, (ii) to execute any and all withdrawal receipts or other orders for the payment of money drawn on the Account, (iii) and/or to withdraw all or part of the Account without notice to or further consent by Assignors.

Upon the complete payment of the Indebtedness or upon the mutual agreement of the Assignors and the Bank, the Bank will release or partially release this Assignment.

******

If for any reason any of the Indebtedness is not paid on or before the maturity thereof, or if any representation or warranty of the Assignors or Debtors herein or in any other agreement now or hereafter executed in connection with or as security for any of the indebtedness or in any certifícate at any time furnished in connection herewith or therewith, or if any financial statement of Assignors or Debtors shall prove to be incorrect in any material respect, or if Assignor or Debtors shall default in the performance of any covenant or other agreement of this Assignment or of any other agreement now or hereafter executed in connection with or as security for any of the indebtedness, the Bank shall be entitled to receive or withdraw any or all funds in the Account.

The rights and remedies of the Bank under this Assignment and any other instrument or agreement executed in connection with or as security for any of the Indebtedness shall be cumulative, and the exercise or partial exercise of any such right or remedy shall not preclude the exercise of any right or remedy.

* H* * H? Hs

WITNESS THE EXECUTION HEREOF, this 18th day of February, 1988.

ASSIGNORS:
s/ Anthony Horbal Anthony Horbal
s/ John Horbal John Horbal

By its express terms, the assignment transfers to the Bank all of the Horbals’ right, title and interest in the CD, along with all sums due or to become due on account of the CD. The assignment grants full power to the Bank to collect and receive all amounts which may be due or become due and payable, along with the express power and right to withdraw all or part of the account without notice. The only restriction on the Bank’s ability to act is that, upon complete payment of the indebtedness or upon mutual agreement, the Bank would release or partially release the assignment.

Initially, we note that at all times material to the transactions involved in this appeal, the effective statute was the “Uniform Commercial Code,” Act of Nov. 1, 1979, P.L. 255, No. 86, § 1. All references in this Opinion are to that Code. The 1992 amendments to the Code are not pertinent to this appeal.

The CD, a type of negotiable instrument, 13 Pa.C.S. § 3104(b), meets all prerequisites to negotiability set forth in 13 Pa.C.S. § 3104(a). The CD was payable at an indefinite time, 13 Pa.C.S. § 3109, and payable “to order,” 13 Pa.C.S. § 3110(a). The negotiability of the CD was not affected by the separate mortgage agreement executed between the debtors and the Bank two weeks before assignment of the CD. 13 Pa.C.S. § 3119.

The debtors’ transfer of the CD to the Bank vested in the Bank such rights as the debtors had therein. 13 Pa.C.S. § 3201(a). The Bank took the instrument for value, in good faith, and without notice that it was overdue, had been dishonored or was subject to any claim or defense against it. The Bank, therefore, became a holder in due course, 13 Pa.C.S. § 3302, and was free to transfer or negotiate the CD and to enforce payment in its own name. 13 Pa.C.S. § 3301. That section provides:

The holder of an instrument whether or not he is the owner may transfer or negotiate it and, except as otherwise provided in section 3603 (relating to payment or satisfaction), discharge it or enforce payment in his own name.

13 Pa.C.S. § 3301 (main volume). As a holder in due course, the Bank took the CD free from all claims to it on the part of any person, including the debtors. 13 Pa.C.S. § 3305. As pointed out in the UCC Comment, following 13 Pa.C.S. § 3305, main volume:

2. The language “all claims to it on the part of any person” is substituted for “any defect of title of prior parties” in the original Section 57 in order to make it clear that the holder in due course takes the instrument free not only from any claim of legal title hut also from all liens, equities or claims of any other kind.

(Emphasis added).

Because the CD is a negotiable instrument within the meaning of the UCC provision, and the Bank had an absolute right to enforce payment in its own name, we are unable to find any fault in the Bank’s redemption of the CD on January 29, 1991. Any analysis under the Deficiency Judgment Act depends upon the CD’s status as a “personal asset” of the debtors. Clearly, the CD was no longer a “personal asset” of the debtors because the rights against the obligor/bank on the CD immediately vested in the creditor/bank upon execution of the assignment documents. 13 Pa.C.S. § 3301. Thus, the assignee bank was free to redeem the CD subject only to the terms contained within the assignment itself.

Accordingly, the theory upon which the Use Plaintiffs seek to proceed is without merit. The Deficiency Judgment Act simply is not implicated in proceedings involving the exercise of express rights to withdraw the proceeds of a CD upon default of an underlying obligation.

As the distinguished trial judge, the Honorable Thomas A. Swope, Jr., concluded:

The Assignment is clear and unambiguous, when the loan went into default the Defendant became entitled to the C.D. It is of no moment that Defendant did not liquidate the C.D. until January 29, 1991, after having first pursued remedies under the Mortgage. Defendant’s right to possession of the C.D. proceeds accrued on the date of the default, by operation of the contract, which predated the purchase of the real property at the Sheriff Sale. The right to the C.D. was independent and unrelated to the default judgment. Therefore the Act has no application to the Assignment.

Opinion, Swope, J., June 22, 1993, at 5.

Applying established contract law, the parties well could have provided for contingencies requiring other, additional action by the Bank prior to its exercise of the clear right to liquidate the CD that is contained in the agreement. They did not. When the economic realities of the transaction are considered, it is not surprising that the Bank sought, and obtained, additional security. When the debtors defaulted on the mortgage note, the Bank’s act in liquidating the CD was predictable.

Because we conclude that the Deficiency Judgment Act has no application to the facts presented on this appeal, we affirm the order granting summary judgment to Moxham National Bank.

Order of June 22, 1993 is AFFIRMED.

DEL SOLE, J., files a Dissenting Opinion in which WIEAND, HUDOCK and SAYLOR, JJ., join.

DEL SOLE, Judge,

dissenting.

The question for consideration is not as stated by the Majority, but is whether a judgment creditor who, following execution on the judgment, purchases the debtor’s real property at a sheriffs sale, has the right to liquidate a certificate of deposit assigned to it as collateral security on the underlying debt without complying with the Deficiency Judgment Act, 42 Pa.C.S.A. § 8103 et seq. Since I conclude that a judgment creditor, who purchases the debtor’s real property at an execution sale on the judgment and fails to establish a deficiency as required by the statute, cannot seek further collection on the underlying debt, I must dissent.

In my view, the result reached by the Majority ignores the Deficiency Judgment Act and subjects debtors to repeated efforts by judgment creditors to collect a judgment without determining if there was a satisfaction of the indebtedness by the creditor’s purchase of the debtor’s property. Unfortunately in focusing on the Assignment of Deposits Instrument, the Majority does not discuss the requirement that in order to invoke redemption there must be an existing “indebtedness.” This record contains no indication of the fair market value of the sheriffs sale property and, since there was no attempt to fix that value within six months of the sale, the Act operates to satisfy the debt.

Appellants, Highland Financial and Mr. Walsh, filed a complaint seeking recovery of the proceeds from a certificate of deposit, treble damages and counsel fees. Moxham National Bank, the Appellee, filed preliminary objections which were denied in part and granted to the extent that a claim for punitive damages was dismissed. The parties then filed Motions for Summary Judgment. The trial court denied Appellants’ Motion and granted Appellee’s motion. Appellants filed this timely appeal.

On appeal, an entry of an order of summary judgment by a trial court will not be disturbed unless there has been an error of law. Today’s Express, Inc. v. Barkan, 426 Pa.Super. 48, 626 A.2d 187 (1993). The Superior Court will affirm a grant of summary judgment only where, pleadings, depositions, interrogatory answers, and admissions on file, with affidavits, if any, show that no genuine issue of material fact exists and that the moving party is entitled to judgment as a matter of law. Id. When determining whether summary judgment was properly granted, we will examine the record in the light most favorable to the non-moving party. Id.

On February 4, 1988, Moxham National Bank loaned $120,-000.00 to John Horbal, Anthony Horbal and Elaine Adams, d/b/a Potomac Associates II (the debtors), which was secured by a mortgage executed the same day on the debtors’ property and evidenced by a note. As additional security for the loan an instrument entitled “Assignment of Deposits” was executed. Therein Moxham was assigned all “right, title and interest” in a certificate of deposit (CD), in the principal amount of $25,000.00 to secure the payment of “any and all indebtedness” owed to Moxham by Potomac Associates.

In 1989, the debtors defaulted on the loan. Moxham commenced a mortgage foreclosure action alleging that the amount due on the loan was $130,946.83, which included a principal amount of $116,670.90, plus interest and attorney fees. Moxham obtained a default judgment for that amount and executed on the real property of the debtors. At the sheriffs sale, Moxham purchased the debtor’s property for $666.40. The deed was delivered to Moxham and recorded on January 21, 1991.

On January 29, 1991, shortly after delivery of the sheriffs deed, Moxham liquidated the certificate of deposit. It applied these proceeds to the amount it claimed was still owed by the debtors. Later that same year debtors assigned any causes of action arising from Moxham’s withdrawal of the CD to Appellants, Highland Financial Services, Ltd. and James R. Walsh. Appellants subsequently made demands to Moxham to return the proceeds of the CD, which it refused. This refusal prompted Appellants to commence the underlying action to recover the proceeds of the CD, counsel fees and treble damages. The complaint was premised on the principle that Moxham failed to comply with the provisions of the Deficiency Judgment Act, 42 Pa.C.S.A. § 8103(a) thereby making Moxham’s retention of the CD proceeds, wrongful. Thereafter, Moxham filed a Motion for Summary Judgment which was granted by the court, and affirmed by the Majority, accepting Moxham’s position that the Act did not apply because the Assignment arose as a separate contract, entirely distinct from the Mortgage. My reading of the Assignment instrument, the Deficiency Judgment Act and relevant case law, prompts me to reach a different conclusion.

In this appeal, Appellants argue that Moxham was required to comply with the Deficiency Judgment Act prior to liquidating the certificate of deposit. Critical to a resolution of Appellants’ claim is an examination of the terms of the instrument entitled, “Assignment of Deposits.”

The Assignment recites that Moxham (the Bank) is to be assigned all “right title and interest” on a certificate of deposit, in the principal amount of $25,000.00. It provides that the assignment and security interest is granted to the Bank to secure the prompt payment of the “Indebtedness.” That term is defined in the document as:

Any and all indebtedness, obligations and liabilities of Potomac Associates II (hereinafter the “Debtors”) to the Bank, now or hereafter existing or arising, due or to become due.

The Bank was also given power of attorney and the power to withdraw from the account without notice or consent from the debtors. In the event of any default for any indebtedness, the Bank was entitled under the terms of the Assignment, to receive or withdraw any or all funds in the account. The instrument also provides the following regarding release of the Assignment:

Upon the complete payment of the Indebtedness or upon the mutual agreement of the Assignors and the Bank, the Bank will release or partially release this Assignment.

Thus, according to the terms of the Assignment instrument, Moxham’s rights to the CD were created to ensure payment of the “Indebtedness” and continued until the “Indebtedness” was extinguished, or the parties agreed otherwise.

Appellants argue that the “Indebtedness,” the loan obligation of $120,000.00, no longer existed at the time Moxham liquidated the CD, because that loan was deemed to have been satisfied. This occurred as a result of the fact that Moxham purchased the realty at the Sheriffs sale and did not, within six months after the sale, seek to establish a deficiency under the Deficiency Judgment Act. Moxham responds to this argument by asserting that Assignment, which transferred to it all “rights, title and interest” in the asset, was a separate agreement from that upon which the underlying judgment and execution sale was based. Moxham also contends that the assignment was not type of in personam judgment or claim covered in the Act. Alternatively Moxham argues that its liquidation of the CD was proper since it occurred within six months of the sale and receipt of the deed, which was within the time allowed before a deficiency need be established.

The express terms of the Assignment agreement cause me to conclude that the Assignment does not stand alone, and that the provisions of the Deficiency Judgment Act must govern the actions taken in this case. The Assignment granting Moxham all rights to the CD was designed to continue indefinitely absent a mutual agreement or release, which are not at issue here, or until “complete payment of the Indebtedness.” The term “Indebtedness” included all obligations and liabilities due Moxham, which necessarily concerned the $120,-000.00 loan. The facts indicate that a default on the loan prompted Moxham to purchase at a sheriff sale, the property which was offered as security for the loan. Moxham did not take action prior to that sale to enforce its security interest in the CD, to liquidate it, and apply those proceeds to the outstanding debt.

Whether the property alone had a value in excess of the amount due Moxham, or whether it was insufficient to cover the indebtedness and thus a deficiency existed, was not determined prior to Moxham’s actions with regard to the CD. Under the terms of the Assignment instrument, only if an indebtedness continued to exist was the assignment of all rights to the CD valid. Therefore, while the Assignment can be seen as a separate and distinct agreement, the terms of the agreement made it necessary to determine whether the “Indebtedness” was extinguished by Moxham’s receipt of the property in the sale. To be entitled to the proceeds of the CD, Moxham had to establish that a debt existed.

Where a creditor takes the position that the receipt of the debtor’s real property at a sheriffs sale is insufficient to satisfy the amount of the judgment, the Deficiency Judgment Act directs what actions should be taken to obtain satisfaction. First National Consumer Discount Company v. Fetherman, 515 Pa. 85, 527 A.2d 100 (1987). The Act governs situations where real property is sold to a judgment creditor and it must be determined whether the fair market value of the property is sufficient to satisfy the debt. It provides as a general rule:

Whenever any real property is sold, directly or indirectly, to the judgment creditor in execution proceedings and the price for which such property has been sold is not sufficient to satisfy the amount of the judgment, interest and costs and the judgment creditor seeks to collect the balance due on said judgment, interest and costs, the judgment creditor shall petition the court having jurisdiction to fix the fair market value of the real property sold. The petition shall be filed as a supplementary proceeding in the matter in which the judgment was entered.

42 Pa.C.S.A. § 8103(a)

In this case it is undisputed that Moxham was the judgment creditor in the execution proceeding. Further, it is Moxham’s position that the property it received was insufficient to satisfy the amount of the judgment. However, Moxham never filed a petition to fix the fair market value of the property. The legal result of this inaction is set forth in the statute, which provides:

If the judgment creditor shall fail to present a petition to fix the fair market value of the real property sold within the time after the sale of such real property provided by section 5522 (relating to six months limitation), the debtor.... may file a petition, ... setting forth the fact of the sale, and that no petition has been filed within the time limited by statute after the sale to fix the fair market value of the property sold, whereupon the court, after notice as prescribed by general rule, and being satisfied of such facts, shall direct the clerk to mark the judgment satisfied, released and discharged.

42 Pa.C.S.A. § 8103(d).

These provisions of the Act have been interpreted to create “an irrebuttable presumption” that a creditor has been paid in full where that creditor has failed to file a petition to fix the fair market value of the real estate sold within six months after the sale. Fetherman, 515 Pa. at 93, 527 A.2d 100, citing Valley Trust Co. of Palmyra v. Lapitsky, 339 Pa.Super. 177, 488 A.2d 608, 610 (1985), quoting McGrath Estate, 159 Pa.Super. 78, 80, 46 A.2d 735, 736 (1946). The Fetherman court stated:

We hold that where a judgment creditor purchases the debtor’s real estate at a sheriffs sale and then fails to petition to fix the fair market value of that real estate within the statutory time limitation, the judgment creditor is deemed to have received full satisfaction in kind of the underlying debt obligation.
......
In this case the appellee judgment creditor purchased the Fetherman’s real estate at the sheriffs sale. The appellee did not bring a petition to fix the fair market value of the real estate within six months after the sheriffs sale. Thus, the appellee is deemed to have been satisfied in full in kind and will not be heard to say it did not receive full satisfaction.

Fetherman, 515 Pa. at 97, 527 A.2d at 105.

The rationale for the creation of this statutory presumption was also detailed in Fetherman:

[T]he Deficiency Judgment Act, ... was enacted to remedy an inequity resulting to judgment debtors when the judgment creditor bought the debtor’s property at a forced sale. Prior to adoption of the Act, a judgment creditor could purchase, at sheriffs sale, valuable real estate of the debtor for a nominal sum, (i.e. costs and taxes), and yet retain the full amount of his judgment. The debtor was to be credited only for the actual sum realized at the sale. Under the Deficiency Judgment Act, the creditor’s judgment is to be reduced by the fair market value of the property bought by the creditor rather than by the sale price. If no petition to fix the fair market value of the property is timely brought by the creditor, the judgment in favor of the creditor is satisfied, released and discharged as a matter of law.

Id., 515 Pa. at 96, 527 A.2d at 105. (citations and footnote omitted.)

In the instant case Moxham, as the creditor, purchased the debtors’ property at a sheriffs sale, and believing that the debtors’ debt had not been satisfied by that action, it sought and obtained the proceeds of the certificate of deposit. The fault with Moxham’s actions lies in the fact that it was unknown at the time whether or not the receipt of the mortgaged property at the sheriffs sale was sufficient to satisfy the debtors’ debt. Because an “Indebtedness” remained only if the fair market value of the property was insufficient to cover the amount of the debt, Moxham was not free to seize additional collateral in an attempt to cover an undetermined loss. Moxham had no right or power regarding the CD, absent an existing indebtedness.

The Deficiency Judgment Act was designed to prevent the action taken by Moxham in this case. The Act provides the means whereby a creditor can seek to obtain the debtor’s other property in order to receive full satisfaction of the debt when the initial receipt of real property through a sheriffs sale is insufficient. The Act’s pronouncement that a judgment creditor is deemed to have received full satisfaction if the provisions in the Act for establishing a deficiency are not followed, ensures that debtors are protected from the seizure of their property even after their debt has been extinguished. Even if the parties agreed to the value of the real estate sold at the sheriffs sale, it was still necessary for Moxham to formally utilize the procedures outlined in the Act to obtain a finding in an appropriate court proceeding of the property’s fair market value. See Auerbach v. Corn Exchange National Bank & Trust Co., 148 F.2d 709, 712 (3rd Cir.1945). Because such action was not undertaken by Moxham, an irrebuttable presumption was created that it, as the creditor and mortgagee in the underlying foreclosure, was paid in full, in kind.

As an alternative argument, Moxham asserts that at the time it liquidated the CD, it could not have been presumed to have had its debt satisfied because a six month period for filing a petition under the Act had not passed. . It contends that under the terms of the Act it had six months after the sale of the property in which to file a petition for a deficiency judgment. Because it took action against the CD within one month of obtaining its deed from the sheriffs sale, Moxham claims it acted properly.

This argument must also be dismissed. While it is true that a judgment creditor may petition the court within six months to fix the fair market value of the property sold and establish a deficiency, it is necessary for the creditor to file a petition before it seeks to recover additional property as satisfaction. While a proceeding must be commenced within six months or it will be barred, 42 Pa.C.S.A. § 5522(b)(2), and the presumption that the judgment creditor has been satisfied will apply, it is nevertheless necessary to first file a petition before proceeding to seize other property in order to obtain satisfaction. The Act requires that a petition be filed. Moxham, as a creditor, did not file a petition within the six month limitation period, and, therefore, it could not proceed against the CD. Because of this inaction, the presumption arose and the debtors became entitled, upon petition, under 42 Pa.C.S.A. § 8103(d) to have the judgment marked, “satisfied”.

In Com. Bank and Trust Co. v. Hemsley, 395 Pa.Super. 447, 577 A.2d 627 (1990), as security for a mortgage loan, three parcels of property were pledged. The Bank obtained a judgment in mortgage foreclosure and bought a parcel at sheriffs sale. When it failed to file a deficiency petition within six months of the sale of the first parcel of secured property, the court ruled that an irrebuttable presumption was created that it had been paid in full. The court cited to Valley Trust Company of Palmyra v. Lapitsky, 339 Pa.Super. 177, 488 A.2d 608 (1985), where a bank sought to foreclose on each of three separate properties which it held to secure an indebtedness. After it executed on two of the properties, the bank sought to execute on the third. A motion was filed by the debtors to stay the sheriffs sale on the third, arguing that the creditor failed to comply with the provisions of the Deficiency Judgment Act. The court held that it is best, for the protection of the debtor, to mandate compliance with the Act after the first parcel is sold. Because a petition was not filed within six months of the first sale, the court ordered the execution to be stricken. In so ruling, the court rejected the claim made by Moxham that First Pennsylvania Bank N.A. v. Lancaster County Tax Claim Bureau, 504 Pa. 179, 470 A.2d 938 (1983) compelled a different result. The language cited by Moxham was found to be of “little precedential value” because it did not command a clear majority of the votes on that issue. Lapitsky, 339 Pa.Super. at 183, 488 A.2d 608. Further, when focusing on the purpose of the Act, to protect the debtor by having a determination made as to the fair market value of the realty, the court concluded that the “better result” is to require the Act to be followed. Id,. Moxham’s failure to follow the provisions of the Act in seeking to receive full satisfaction for the “Indebtedness” caused an irrebuttable presumption to arise that the “Indebtedness” no longer existed and that Moxham had been paid in full. Accordingly, because no amount was due and owing to Moxham, it had no right to obtain the proceeds of the CD. The trial court’s decision awarding Moxham summary judgment, based upon the conclusion that the liquidation was proper, should, in my judgment, be reversed. As a result, I dissent.

WIEAND, HUDOCK and SAYLOR, JJ. join.


source: Caselaw Access Project

author: OLSZEWSKI, Judge: CIRILLO, Judge,

license: Public Domain

text:
    657 A.2d 1270
    Mary BOLTON, Appellee, v. William C. BOLTON, Appellant.
    Superior Court of Pennsylvania.
    Argued Oct. 20, 1994.
    Filed April 25, 1995.

      Richard J. Orloski, Allentown, for appellant.
    Jean Engler, Asst. Dist. Atty., Jim Thorpe, for Com.
    Before CIRILLO, OLSZEWSKI and HESTER, JJ.
   OLSZEWSKI, Judge:

William Bolton appeals the order of the Court of Common Pleas of Carbon County dismissing his exceptions and adopting the findings of fact and temporary support order recommended by the hearing officer. We vacate and remand.

The parties, appellant William C. Bolton (Father), and appellee Mary C. Bolton (Mother), are the divorced parents of William Bolton, Jr., a recent graduate of Wilkes University. In August 1990, Father was ordered to pay $109 per month to help his adult son through college. The payments stopped in December 1992, when our high court handed down its decision in Blue v. Blue, 532 Pa. 521, 616 A.2d 628 (1992). In 1993, the Legislature effectively reversed Blue with Act 62, creating a statutory duty for divorced parents to help pay for their adult children’s college educations. See 23 Pa.C.S.A. § 4327. On July 22, 1993, Mother petitioned the lower court to reinstate the support payments. By this time William Jr. was 21 years old and about to begin his senior year at Wilkes University.

The Master found Father owed a duty of support in the amount of $127 per month, retroactive to the date of the suspension of the prior order. The Master first determined that William Jr. was a diligent and above-average student, had applied for and received all the financial aid reasonably available, and was working over the summers and during the school year to help finance his education. R.R. at 9a. William Jr. thus qualified under Act 62 for a court-ordered educational subsidy from his divorced parents. See 23 Pa.C.S.A. § 4327(a) and (e).

The Master then determined William Jr.’s annual educational expenses, grants, scholarships, and income. The Master could have simply taken William Jr.’s educational expenses, subtracted the financial aid and income, and then split all or part of the difference equitably between the parents. Id. at (e). But he decided to inquire into William Jr.’s personal expenses.

The Master found that William Jr. spent more than $450 per month on his medical insurance and allergy treatment, transportation, “normal living expenses, entertainment and car repairs.” R.R. at 9a. The Master provided no greater detail for this finding. He did accept into evidence a handwritten schedule of William Jr.’s annual expenses which included payments/insurance/repairs for his car ($2800), food/toiletries/haircut ($800), life insurance ($96), clothing ($900), telephone ($225), entertainment ($750), and cable TV ($127). R.R. at 118a.

The Master thus found that William Jr.’s “expenses for education and personal expenses, exceed his income and financial aid by at least $840.00 per month.” R.R. at 9a. Again, no details were provided — only the final figure. The Master then put this figure aside, determined the comparative incomes of the parents, and went to the child support guidelines. The guideline figure for Father’s income, relative to his ex-wife’s, called for a child support payment of $127 per month, which is what the Master ordered. R.R. at 11a.

Father took exception to the Master’s use of the child support guidelines in this case, but the trial court considered the error harmless, writing:

This Court concurs with the Hearing Officer’s finding that the child’s expenses for education and personal expenses exceed his income and financial aid by at least $840.00 per month. (Finding of Fact # 8). Although the Master erred in using the “support guidelines” to determine the amount of support, this Court finds the error to be harmless, as the “guideline” amount is less than the amount Defendant would have to pay based on his proportion of the uncovered expenses. Based on the record, the Hearing Officer found, and this Court agrees, that the Defendant pay approximately Vi of the child’s monthly needs.

Trial court opinion, 4/14/94 at 4. Thus, even though the amount of the award derived solely from the support guidelines, the trial court affirmed it because it did not exceed Father’s equitable share of William Jr.’s combined educational and personal expenses.

Because of its recent passage, we have had little opportunity to interpret Act 62. One aspect of this law should be obvious from its face, though: it only covers educational costs. 23 Pa.C.S.A. § 4327(a) and (b). Educational costs are tuition, fees, books, room, board and other education materials. Id. at (j). Father has no obligation under any statute or at common law to pay for such sundries as his 21-year-old son’s car insurance or cable television.

Father properly excepted to the inclusion of personal expenses in the support award, but the trial court never addressed the issue. R.R. at 12a, 169a; appellant’s brief at 1. The court clearly erred in allowing the award to be based on William Jr.’s personal expenses, and its order must therefore be vacated and remanded for recalculation. See McGettigan v. McGettigan, 433 Pa.Super. 102, 639 A.2d 1231 (1994) (trial court improperly included personal living expenses in Act 62 support order).

The record reveals that the Master approached this action as though it were a regular child support case. He relied largely on the parties’ testimony to determine William Jr.’s expenses, and then arrived at an award amount by simply plugging his parents’ monthly incomes into the support guidelines. The trial court acknowledged that the guidelines should not have been used, but affirmed the award as a reasonably equitable division of William Jr.’s educational and personal expenses. Yet the record only shows a single semester’s tuition bill, and no receipts for other defined educational expenses. Also, by the time the monthly support order was approved by the trial court, William Jr. was well into his senior year. Thus, it would appear that the order was questionable in three respects: it provided scant factual basis for the payment amount, it improperly included William Jr.’s personal expenses, and it required continuing court supervision to enforce and eventually terminate. We therefore offer the following observations to guide the lower court on remand.

Support actions under Act 62 are profoundly different from ordinary child support actions. When determining monthly support payments to minor children, we do not even try to calculate the children’s living expenses. We rely instead on the guideline amounts, which have been formulated to reflect what parents of a particular income level would reasonably be expected to spend in support of their minor children. See Ball v. Minnick, 538 Pa. 441, 648 A.2d 1192 (1994).

Act 62, on the other hand, authorizes courts to order parents to contribute to their adult children’s undergraduate educations. Hence, we are not dealing with the broad and hard-to-quantify category of general living expenses, but rather with a narrow and specific set of costs which can be precisely and easily documented. We are also not dealing with children, but with adults. There is no reason why adults who seek parental contributions to their college expenses should not be expected to back up their requests with proper documentation. Father’s statutory duty to contribute to defined educational costs ought not to be extrapolated from a single semester’s tuition bill and vague estimate of book store purchases. If William Jr. and his mother have not bothered to keep careful track of their expenditures, perhaps Wilkes University can help them reconstruct an accurate record of the actual tuition, fees, room and board that they have paid.

Along the same line, we see no reason why the lower court would fashion any future award as a monthly support payment. William Jr. should have graduated by now, and his undergraduate educational costs should be liquidated. Since Mother is no longer spending money on William Jr.’s college education, the trial court should treat this as an action to recover educational costs already expended. 23 Pa.C.S.A. § 4327(b). The final order in this case should therefore be a judgment for a sum certain, which could be collected by ordinary legal means.

Thus, we vacate the order and remand this case for calculation of the costs which may be properly charged to Father under Act 62, noting that: 1) Act 62 support awards must be limited to defined educational costs; 2) these costs should be carefully documented, from the big tuition bills down to the last itemized receipt from the campus book store; and 3) since these costs have now been liquidated, the action is addressed to the court’s law side and may result in a money judgment, but not a support order.

Vacated and remanded with instructions. Jurisdiction relinquished.

Dissenting statement by CIRILLO, J.

CIRILLO, Judge,

dissenting:

I respectfully note my dissent. Although Father does not expressly raise a constitutional equal protection challenge to Act 62, in my opinion this court denies ultimate justice by ignoring the blatant issue before it, that Act 62 invidiously discriminates against divorced parents.

In 1992, our Supreme Court determined that the duty of support extended to a “basic education,” defined as a high school education, or until a minor reaches the age of eighteen, whichever occurs later. Blue v. Blue, 532 Pa. 521, 616 A.2d 628 (1992). The Court stated:

In recent history, the Superior Court has adopted and applied the [Commonwealth v.] Gilmore[, 97 Pa.Super. 303 (1929)] analysis to college educational support of a child. In essence, the Superior Court has transferred this “principle of necessity” of a basic fundamental education to a requirement that each child be entitled to an “enhanced” education.

We do not agree with this transformation.

Id. 532 Pa. at 529, 616 A.2d at 632.

Act 62, applicable only to divorced parents, imposes upon that class of parents an obligation to provide financially for an adult child’s college or postsecondary education. Nondivorced parents have no coextensive legal obligation to provide support for their child’s postsecondary education. Just as parents in an intact family enjoy the freedom of making the personal decision of whether and to what extent to provide postsecondary educational support for their child, free from interference or mandates by the courts or laws of the Commonwealth, so too should divorced parents be free to manage this matter on their own.

In my opinion, Act 62 differentiates between parents similarly situated and that this classification bears no reasonable relationship to a legitimate legislative purpose. See McGowan v. Maryland, 366 U.S. 420, 425-26, 81 S.Ct. 1101, 1104-05, 6 L.Ed.2d 393 (1961). Act 62, which codifies this court’s pronouncements beginning with Ulmer v. Sommerville, 200 Pa.Super. 640, 190 A.2d 182 (1963), frustrates the legislative purpose to assure children of divorced parents a postsecondary education. I discern no rational basis for compelling divorced parents to pay for their adult child’s post-secondary education where no similar obligation lies with non-divorced parents.

It is with this in mind that I would find that Act 62, which imposes a duty of postsecondary educational support upon divorced parents where no similar obligation exists for married parents, is unconstitutional on equal protection grounds. Application of Christy, 362 Pa. 347, 67 A.2d 85, cert. denied, Christy v. Conver, 338 U.S. 869, 70 S.Ct. 145, 94 L.Ed. 533 (1949); 16A Am.Jur.2d, Constitutional Law, §§ 735-738 (1979); 7A P.L.E. Constitutional Law, § 241 (1980). See Moore, Parents’ Support Obligations to Their Adult Children, 19 Akron L.Rev. 183, 192 (1985) (presenting the argument that compelling divorced parents but not married parents to pay post-minority support is a violation of equal protection).

      . William Jr. testified that he was "carrying about a 2.8 average.” R.R. 69a. The record does not contain a copy of his grade transcripts, and the master made no other findings regarding William Jr.’s academic abilities and performance.

      . William Jr.'s schedule of educational expenses included his room and board, so these food expenditures would be in addition to his regular visits to the dining hall.

      . In general, we note that actions under Act 62 are expressly removed from the context of ordinary support actions. See Pa.R.C.P. § 1910.16-5(k), 42 Pa.C.S.A. While trial courts might still choose to structure Act 62 support awards as monthly payments, there is no requirement that they do so. Also, the extraordinary equity powers which a court exercises in child support proceedings, such as the power to jail a nonpaying party for contempt, would not necessarily apply here.

      . The term "divorced parents” refers to all parents to which Act 62 is applicable, including unmarried parents or separated parents subject to a support agreement, support order, property settlement agreement, equitable distribution agreement, custody agreement and/or court orders and agreed to or stipulated court orders. See 23 Pa.C.S. § 4327(i)(l).


author: POPOVICH, Judge:

text:
    657 A.2d 1274
    Grace A. HOFFMASTER, an Individual, and Keystone Insurance Company, a Corporation, Appellant, v. HARLEYSVILLE INSURANCE COMPANY, a Corporation, Blair Vilsack, an Individual, City of Pittsburgh, a Municipal Corporation, Bloomfield Italian Independent Club and Marlene Studeny and Gerald Studeny.
    Superior Court of Pennsylvania.
    Argued Jan. 24, 1995.
    Filed April 25, 1995.

      Sean P. Hannon, Pittsburgh, for appellant.
    Keithley D. Mulvihill, Pittsburgh, for appellees.
    Before ROWLEY, President Judge, and McEWEN and POPOVICH, JJ.
   POPOVICH, Judge:

This is an appeal from the order of March 16, 1994, entered in the Court of Common Pleas of Allegheny County, denying the motion for summary judgment filed by appellants, Grace Hoffmaster and Keystone Insurance Company (“Keystone”), and granting the motion for summary judgment filed by appellees, Blair Vilsack and Harleysville Insurance Company (“Harleysville”). Herein, we are presented with questions of first impression for a Pennsylvania appellate court: whether “other insurance” clauses provided by each automobile liability insurance policy containing virtually identical language should be disregarded as mutually repugnant thereby rendering each insurer to share generally in the loss; and whether apportionment of the loss should be made equally or be prorated on the basis of the maximum coverage limit of each policy. Upon review, we affirm.

The case was submitted to the lower court on the following stipulated facts:

STIPULATED STATEMENT OF FACTS This case arises out of an accident on June 13, 1986 at the
intersection of Sapphire Way and Adeline Street in the City of Pittsburgh. A car owned by Blair Vilsack and driven by Grace Hoffmaster collided with a car driven by Marlene Studeny. Mr. Vilsack was insured under a policy issued by Harleysville Mutual Insurance Company with a liability limit of $100,000. Ms. Hoffmaster was insured under a policy issued by Keystone Insurance Company with a liability limit of $50,000.
Marlene Studeny filed a lawsuit against Grace Hoffmaster and Blair Vilsack. Without admitting liability, Harleysville paid $25,000 and Keystone paid $5,000 to Marlene Studeny in settlement of her claim.
Both the Harleysville and Keystone policies would provide coverage to Grace Hoffmaster as the driver of Blair Vilsack’s car in the absence of any other applicable insurance. The two policies contain identical clauses which are set forth under the heading “Other Insurance” and state:
If there is other applicable insurance we will pay only our share of the loss. Our share is the proportion that our limit of liability bears to the total of all applicable limits. However, any insurance we provide for a vehicle you do not own shall be excess over any other collectible insurance.
Copies of the clauses from the Harleysville and Keystone policies are attached and marked Exhibits A and B.

R.11.

On June 17, 1991, Keystone filed a complaint in a declaratory judgment action against Harleysville seeking indemnity and defense costs incurred by Keystone in the lawsuit between Marlene Studeny and Grace Hoffmaster. R.l. Thereafter, both Harleysville and Keystone filed cross-motions for summary judgment. R.10-13. On March 16, 1994, the court below entered a memorandum opinion and order denying Keystone’s motion for summary judgment and granting Harleysville’s motion for summary judgment. The lower court rejected Keystone’s argument that the two policies be read congruently so that Keystone would be deemed an excess insurer and Harleysville a primary insurer. Instead, the lower court found that the “Other Insurance” clauses were mutually repugnant and held each insurer to share equally in indemnity and defense costs. Trial Opinion 3/16/94 at 3-4. This timely appeal ensued.

Keystone poses the following issues for our review:

1. Whether the plain language of identical “Other Insurance” clauses, based upon facts in this case, can be read in conjunction to determine primary and excess liability as between insurance companies.
2. Assuming that the defense and indemnification must be shared on a pro rata basis, whether each insurance company should pay equally despite different liability limits in each policy.

Appellant’s Brief at 2.

“The proper construction of a policy of insurance is a matter of law which may properly be resolved by a court pursuant to a motion for summary judgment.” Fisher v. Harleysville Ins. Co., 423 Pa.Super. 362, 365, 621 A.2d 158, 159 (1993), citing, Steinbacher v. Page, 410 Pa.Super. 586, 588, 600 A.2d 608, 609 (1991); Vale Chem. Co. v. Hartford Accident & Indem. Co., 340 Pa.Super. 510, 516 n. 4, 490 A.2d 896, 899 n. 4 (1985), rev’d on other grounds, 512 Pa. 290, 516 A.2d 684 (1986). Summary judgment may only be entered where no genuine issue of material fact exists and the moving party is entitled to judgment as a matter of law. Fisher, 423 Pa.Super. at 363-65, 621 A.2d at 159; Pa.R.Civ.P. 1035(b), 42 Pa.C.S.A. An appellate court may disturb a trial court’s entry of summary judgment only where there has been an error of law or clear abuse of discretion. DeWeese v. Anchor Hocking Consumer And Industrial Products Group, 427 Pa.Super. 47, 50-52, 628 A.2d 421, 423 (1993); Dibble v. Security of America Life Ins. Co., 404 Pa.Super. 205, 207-09, 590 A.2d 352, 353 (1991).

Guided by the aforementioned standard of review, we proceed in addressing the merits of Keystone’s claims. Initially, we note that there are three general categories of “other insurance” clauses which determine how liability is to be assigned when multiple coverage exists. “The first, a ‘prorata’ clause, limits the liability of an insurer to a proportion of the total loss. The second, an ‘escape’ clause, seeks to avoid all liability. The third, an ‘excess’ clause . .. provides that the insurance will only be excess.” Carriers Ins. Co. v. American Policyholders’ Ins. Co., 404 A.2d 216, 218 (Me.1979). See Western Cas. & Sur. v. Universal Underwriters, 232 Kan. 606, 609-12, 657 P.2d 576, 579-80 (1983); 7A Am.Jur.2d Automobile Insurance § 434 (2d ed. 1980).

Here, the policies provided by Keystone and Harleysville each have “pro-rata” and “excess” clauses. The parties have stipulated that the language of those clauses is identical. Keystone asserts that although the “Other Insurance” clauses are identical, they do not conflict when properly interpreted as the insurers intended. Keystone maintains that a construction of both policies, in light of the facts of this case, reveals that the parties intended Keystone to provide excess insurance and Harleysville, primary insurance. Keystone directs our court’s attention to the definition of “you” stated in both policies to buttress its argument that only Keystone intended to provide excess insurance to Grace Hoffmaster.

We note that Keystone’s brief in support of its motion for summary judgment, which was presented to the lower court, does not mention how the definition of “you” affects the construction of the “Other Insurance” clauses, and the court below did not address this claim. R.11, 14.

“Issues not raised in the lower court are waived and cannot be raised for the first time on appeal.” Pa.R.A.P. 302(a), 42 Pa.C.S.A. See Kryeski v. Schott Glass Technologies, Inc., 426 Pa.Super. 105, 626 A.2d 595 (1993).

Consequently, we find as waived appellant’s argument that the policies’ definitions control the question of which insurer provides primary coverage.

Even if review of the policies’ definitions were appropriate at this juncture, we decline to delve into such semantic microscopy. “It merely encourages the continuing draftsmanship battle by which insurers seek still more specific policy terms, and the end is not in sight.” Carriers Ins. Co., 404 A.2d at 219, quoting, Note, Concurrent Coverage in Automobile Liability Insurance, 65 Colum.L.Rev. 319 (1965). “The question of whether the particular insurance is primary or excess is not a public matter but merely a concern of the insurance companies which have extended coverage to the risk.” Cosmopolitan Mut. Ins. Co. v. Continental Cas. Co., 28 N. J. 554, 563, 147 A.2d 529, 534 (1959) (citations omitted). We wholeheartedly embrace the following reasoning articulated by the Supreme Judicial Court of Maine in Carriers Ins. Co., 404 A.2d at 220:

We perceive no methodology which is neither arbitrary nor utterly mechanical by which we could rationally resolve the enigma of which policy should be given effect over the other. Both clauses attempt to occupy the same legal status. Any construction this Court renders should attempt to maintain the status quo. This goal can be achieved only by abandoning the search for the mythical “primary” insurer and insisting instead that both insurers share in the loss. Such an approach best carries out the intent of the insurers which was to reduce or limit their liability.

We are of the opinion that the Supreme Court of Pennsylvania would subscribe to the rule shared by the vast majority of courts from other jurisdictions. That rule provides that irreconcilable “other insurance” clauses in automobile liability insurance policies are to be disregarded as mutually repugnant thereby rendering each of the coverages to be treated as primary insurance. See Universal Underwriters Ins. Co. v. Allstate Ins. Co., 99 Md.App. 595, 602-04, 638 A.2d 1220, 1224 (1994).

“[I]f literal effect were given to both ‘excess insurance’ clauses of the applicable policies, neither policy would cover the loss and such a result would produce an unintended absurdity.” 7A Am.Jur.2d Automobile Insurance § 434, pp. 87-88. “[A]ny attempt to give effect to the ‘other insurance’ provision of one policy while rejecting it in another is like pursuing a will o’ the wisp.” Lamb-Weston, Inc. v. Oregon Automobile Ins. Co., 219 Or. 110, 122, 341 P.2d 110, 115-116 (1959). “[Wjhere the clause in each policy ... attempts to make its own liability secondary to that of any other policy issued by a similar primary insurer: For then the primary and (attempted) secondary liability of each policy chase the other through infinity, something like trying to answer the question: Which came first, the chicken or the egg?” Carriers Ins. Co., 404 A.2d at 219, quoting, State Farm Mutual Ins. Co. v. Travelers Ins. Co., 184 So.2d 750, 753-54 (La.App.1966). “[T]hey cannot be excess to each other, since they are identical. It is sort of ‘After you Alfonse; no you, Gaston’ act which the courts refuse to countenance.” Western Cas. & Sur., 232 Kan. at 611, 657 P.2d at 580, quoting, 8A Appleman, Insurance Law and Practice § 4909 (rev.1981). See Horace Mann Ins. Co. v. Colonial Penn Ins. Co., 777 P.2d 1162 (Alaska 1989); State Farm Mut. Auto. Ins. Co. v. Bogart, 149 Ariz. 145, 717 P.2d 449 (1986); Argonaut Ins. Co. v. Transport Indem. Co., 6 Cal.3d 496, 99 Cal.Rptr. 617, 492 P.2d 673 (1972); Allstate Ins. Co. v. Frank B. Hall & Co. of California, 770 P.2d 1342 (Colo.App.1989); Liberty Mut. Ins. Co. v. Fireman’s Fund Ins. Co., 479 A.2d 289 (Del.1983); Allstate Ins. Co. v. Executive Car and Truck Leasing, Inc., 494 So.2d 487 (Fla.1986); Continental Cas. Co. v. New Amsterdam Cas. Co., 28 Ill. App.2d 489, 171 N.E.2d 406 (1960); United Services Automobile Assoc. v. American Interinsurance Exchange, 416 N.E.2d 875 (Ind.Ct.App.1981); Aid Ins. Co. v. United Fire & Cas. Co., 445 N.W.2d 767 (Iowa 1989); State Farm Mut. Auto. Ins. Co. v. Universal Underwriters Ins. Co., 594 S.W.2d 950 (Mo.App.1980); CC Housing Corp. v. Ryder Truck Rental, Inc., 106 N.M. 577, 746 P.2d 1109 (1987); American Home Assur. Co. v. Hartford Ins. Co., 74 A.D.2d 224, 427 N.Y.S.2d 26 (1st Dept. 1980); Buckeye Union Ins. Co. v. State Auto Mut. Ins. Co., 49 Ohio St.2d 213, 361 N.E.2d 1052 (1977).

Having concluded that both insurers are to share generally in the loss, we now turn to the question of how that loss should be apportioned between the insurers. As noted by the Supreme Court of Washington in Mission Ins. Co. v. Allendale Mut. Ins. Co., 95 Wash.2d 464, 465-66, 626 P.2d 505, 506 (1981), three approaches have been adopted by courts in resolving this issue.

(1) Policy Limit. Under this rule, the total loss is prorated on the basis of the maximum coverage limits of each policy. Buckeye Union Ins. Co. v. State Auto Mut. Ins. Co., 49 Ohio St.2d 213, 361 N.E.2d 1052 (1977); (2) Maximum Loss. The loss is prorated based upon the maximum loss which each insurer standing alone would incur in the particular incident. Ruan Trans. Corp. v. Truck Rentals, Inc., 278 F.Supp. 692 (D.Colo.1968); (3) Premiums Paid. The loss is prorated in proportion to the premiums paid. Insurance Co. v. Employers Liab. Assurance Corp., 163 F.Supp. 143 (S.D.Cal.1958); see Cosmopolitan Mut. Ins. Co. v. Continental Cas. Co., 28 N.J. 554, 147 A.2d 529, 69 A.L.R.2d 1115 (1959).
Of these approaches, policy limit appears to be the older and majority rule, maximum loss is the minority but emerging rule, while premiums paid has been nearly universally discarded.

See Continental Ins. Co. v. McKain, 821 F.Supp. 1084, 1086 (E.D.Pa.1993).

Keystone contends that Pennsylvania courts should follow the majority rule which apportions the loss in accordance to each insurer’s respective policy limit. Keystone’s policy limit is $50,000.00, and Harleysville’s policy limit is $100,000.00. Keystone takes the position that its apportionment of loss should be one-third ($50,000.00/$150,000.00), and that Harleysville’s should be two-thirds ($100,000.00/$150,000.00). In Marlene Studeny’s lawsuit against Grace Hoffmaster and Blair Vilsack, the amount of loss was $30,000.00. Keystone argues that under the rule of policy limit, its apportionment of the loss is $10,000.00, and Harleysville’s is $20,000.00.

On the other hand, Harleysville asserts that Pennsylvania courts should adopt the minority rule (maximum loss approach) which prorates the loss equally up to the limits of the lower policy. Harleysville maintains that each insurer’s apportionment of loss is $15,000.00.

Keystone advances the following three reasons to support its claim that the majority rule of apportionment is proper in the instant case: (1) The “Other Insurance” clause of each policy expressly provides for proration in accordance to the rule of policy limit. (2) The Pennsylvania legislature favors proration based upon each insurer’s respective policy limit. (3) The rationale underlying this method of apportionment of loss is sounder than the minority approach.

Keystone relies upon the opinion of the United States District Court for the Eastern District of Pennsylvania in Continental Ins. Co. v. McKain, 821 F.Supp. 1084 (E.D.Pa.1993), to argue initially that the precise language of the policies controls the method of apportionment. In McKain, the court noted that the language of policies as to apportionment is often determinative. Id. at 1087. “Where both relevant policies contained language favoring a particular principle of apportionment, the court applied it.” Id., citing, Occidental Fire and Cas. Co. v. Brocious, 772 F.2d 47 (3d Cir.1985); Liberty Mut. Ins. Co. v. Home Ins. Co., 583 F.Supp. 849 (W.D.Pa.1984). There, the court was presented with two insurance policies which contained “other insurance” clauses. One policy showed a clear preference for proration in accordance to each insurer’s respective policy limit. The second policy showed no preference as to the method of apportionment. Id. at 1087-1088. Because the latter policy did not state a preference, the court determined that the language of the policies did not control the question of apportionment in that case. Id. at 1088. However, the court concluded that the majority rule applied rather than the minority rule (maximum loss approach) on the grounds that the Pennsylvania legislature favored the former and that the reasoning behind this method of apportionment was more persuasive. Id. at 1089-1090.

In the case at bar, both policies provide for apportionment on the basis of the maximum coverage limit of each policy. The “Other Insurance” clauses state, “Our share is the proportion that our limit of liability bears to the total of all applicable limits.” R.11. However, since we construe the “Other Insurance” clauses as irreconcilable, they are repugnant and each is rejected in toto. See Lamb-Weston, Inc., 219 Or. at 121, 341 P.2d at 119 (irreconcilable “other insurance” clauses, regardless of nature of clause, were repugnant and each was rejected in toto); United Services Auto. Assoc. v. American Interinsurance Exchange, 416 N.E.2d 875, 878-879 (Ind.Ct.App.1981) (same). In light of our finding that the clauses are to be disregarded because they are mutually repugnant, we are not inclined to rely upon the language of the clauses to determine the proper method of apportionment. Moreover, we are of the opinion that courts ought not effectuate the language in irreconcilable “Other Insurance” clauses for the simple reason that the policies are not agreements between the insurers. As keenly noted by the Supreme Court of Oregon in Lamb-Weston, Inc., 219 Or. at 124-26, 341 P.2d at 117, quoting, American Auto. Ins. Co. v. Seaboard Surety Co., 155 Cal.App.2d 192, 318 P.2d 84, 86 (1958).

[T]heir agreements are not with each other. See Offer v. Superior Court, 194 Cal. 114, 118, 228 P. 11 [ (1924) ]; Fireman’s Fund Ins., Co. v. Palatine Ins. Co., 150 Cal. 252, 256, 88 P. 907 [ (1907) ]. Their respective obligations flow from equitable principles designed to accomplish ultimate justice in the bearing of a specific burden. As these principles do not stem from agreement between the insurers their application is not controlled by the language of their contracts with the respective policy holders. The Minnesota Supreme Court, dealing with policies covering two insured persons whose liability for an accident was primary and secondary between themselves, said in Commercial Casualty Ins. Co. v. Hartford Accident & Indemnity Co., 190 Minn. 528, 252 N.W. 434, 435, 253 N.W. 888: “The two contracts of insurance and their interpretation must be the factual basis of decision. But there was no contract and so no contractual relation between the insurers. Neither was beneficiary of the other’s contract. Neither having any contract right against the other, but both being under contractual obligations in respect to the same risk, it remains only to determine the respective equities. If they are concurrently liable for the same risk, it is but obvious equity that there should be contribution.”

Consequently, we reject Keystone’s contention that the language provided in “other insurance” clauses is determinative of which method of apportionment a court ought to apply.

We next address Keystone’s assertion that the Pennsylvania legislature favors proration based upon each insurer’s respective policy limit. In McKain, supra, 821 F.Supp. 1084 the federal district court evaluated the following clause entitled, “Pro rata liability” under a statute promulgated by the General Assembly which concerns coverages for fire insurance: “This Company shall not be liable for a greater proportion of any loss than the amount hereby insured shall bear to the whole insurance covering the property against the peril involved, whether collectible or not.” 40 Pa.Stat.Ann. § 636(2). The court recognized that the Pennsylvania legislature did not promulgate a similar requirement with regard to other types of insurance. Nevertheless, the court was convinced that the legislature preferred apportionment based upon policy limits over the minority rule for other types of insurance since the legislature specifically opted for the former approach in enacting 40 Pa.Stat.Ann. § 636(2). Id. at 1087, 1090.

We agree with the federal court’s finding in McKain, supra, 821 F.Supp. 1084, that the Pennsylvania legislature did not promulgate a provision regarding apportionment in coverages for automobile liability insurance. However, we depart from the federal court’s determination in McKain, supra, 821 F.Supp. 1084, that the legislature would necessarily apply the same method of proration for both fire insurance and automobile liability insurance. Compare Richardson v. Jones, 551 F.2d 918 (3d Cir.1977) (omission of provision from similar statute was significant to show a different intent existed).

Although “pro rata” generally means a division of loss in proportion to policy limits (policy limit approach), it may also mean apportionment by equal shares (maximum loss approach). Windt, Insurance Claims and Disputes § 7.04 (1988). Upon review, we do not construe “Pro rata liability” under 40 Pa.Stat.Ann. § 636(2) to only mean apportionment under the policy limit approach. That provision is broad in its language and could also be interpreted as apportionment based upon the maximum loss approach.

Upon examination of the rationales underlying the methods of apportionment, the court in McKain, supra, 821 F.Supp. 1084, determined that the majority rule for apportionment was more convincing. The court reasoned as follows:

Despite the majority rule in favor of pro rata apportionment when two carriers provide coverage on the same basis, insurance companies have continued to provide significant amounts of excess insurance at low cost. Their calculation of the overall cost of providing such insurance will have included the financial consequences of the fact that, in the majority of jurisdictions, they have been required to contribute pro rata when their high coverage policies have provided “other insurance” to policies with lower limits. Assuming that insurance companies have adjusted their practices to the majority rule (rather than expecting the majority rule to adjust to their practices, as Continental [appellant] seems to suggest), then equal shares apportionment will provide “something of a windfall to the insurer with the higher limits, ...” Windt at § 403.

Id. 821 F.Supp. at 1089.

Contrarily, courts following the maximum loss approach have found that the majority rule of apportionment is inequitable to the insurer which provides the larger policy. See Liberty Mutual Ins. Co. v. Fireman’s Fund Ins. Co., 479 A.2d 289 (Del.1983); Western Cas. & Sur. v. Universal Underwriters, 232 Kan. 606, 657 P.2d 576 (1983); Universal Underwriters Ins. Co. v. Allstate Insur. Co., 99 Md.App. 595, 638 A.2d 1220 (1994); Cosmopolitan Mutual Ins. Co. v. Continental Casualty Co., 28 N.J. 554, 147 A.2d 529 (1959); Mission Ins. Co. v. Allendale Mutual Ins. Co., 95 Wash.2d 464, 626 P.2d 505 (1981). In Carriers Ins. Co., 404 A.2d at 221-22, the Supreme Judicial Court of Maine determined that the rationale behind the maximum loss approach was much sounder than that of the policy limit method:

[T]he majority rule has been criticized since “it is commonly known that the cost of liability insurance does not increase proportionately with the policy limits.” Cosmopolitan Mutual Insurance Company v. Continental Casualty Co., supra note 4 at 564, 147 A.2d at 534. Once minimum coverage has been obtained, significant supplemental coverage can be provided at only a modest increase in cost....
The minority rule adopted by the presiding Justice utilizes the best aspects of both approaches without the limitations. Like the majority rule, it is easy to administer. It would simply require each company to contribute equally until the limits of the smaller policy were exhausted, with any remaining portion of the loss then being paid from the larger policy up to its limits. Nationwide Mutual Insurance Company v. State Farm Mutual Automobile Insurance Company, [209 F.Supp. 83 (N.D.W.Va.1962) ] supra; Dairyland Insurance Company v. Drum, 193 Colo. 519, 568 P.2d 459, 464 (Colo.1977) (Carrigan, J., dissenting in part).
Unlike the majority rule, this Solomon-like approach comports with a most basic sense of justice. See Exodus, ch. 21, par. 35 (“When one man’s ox hurts another’s ox so badly that it dies, they shall sell the live ox and divide this money as well as the dead animal they shall divide equally between them.”) Moreover, the majority rule unfairly discriminates against the larger policy by apportioning the loss in proportion to the respective policy limits, utterly forgetting that both insurers, by their contracts, have in fact agreed to cover a loss up to the limits of the lesser policy. Until that point is reached, the majority rule amounts to no more than an unacceptable subsidy from the high-coverage to the low-coverage carrier. We are in complete accord with the presiding Justice when he adopted the persuasive opinion of Judge Doyle in Ruan Transport Corp. v. Truck Rentals, Inc., [278 F.Supp. supra note 7, 692 at 696 (D.Colo.1968) ].
“The majority method of prorating operates inequitably in its differentiating treatment of the high-loss and low-loss insurer. In return for a greater premium the insurer providing higher coverage has undertaken to protect the insured against accidents involving high losses. Yet because of this undertaking to protect against high loss the larger insurer is in an unfavorable position vis-a-vis the other insurer even in cases of low loss, since under the majority method of prorating the insurer affording the greater maximum coverage pays the greater segment of any loss incurred, regardless of the amount of the loss. This seems inequitable since both insurers have equally undertaken to insure against the low-loss accident.”
The majority rule would hardly encourage an insurer from increasing its coverage where it is aware that there is a lesser policy. It would increase the insurer’s potential liability not only in the high-risk situation which additional premiums are presumably meant to recompense, but it would have the untoward effect of increasing liability in the more likely to occur low-risk situation. Carried to its extreme, it would further increase the cost of additional insurance thereby reducing the likelihood that an insured would choose such coverage. See Dairyland Insurance Company v. Drum, supra, (Carrigan, J., dissenting in part). The Court would be reluctant to adopt a rule which would seemingly have little social utility.

Herein, our court finds the aforementioned analysis of the Maine court to be more persuasive than that of courts clinging to the majority rule. Although neither rule is perfect, we are of the opinion that the maximum loss approach affords more equitable treatment to insurers. See Mission Ins. Co., 95 Wash.2d at 466-68, 626 P.2d at 507 (Supreme Court of Washington adopts maximum loss rule and overrules its prior decisions wherein policy limit rule was approved).

Because the “other insurance” clauses in the case at bar are irreconcilable, they are repugnant and each is rejected in toto. Without any guidance from our legislature on which method of apportionment applies to automobile liability insurance, we hold that Pennsylvania law requires application of the maximum loss method rather than the policy limit method. The court below properly ruled that each insurer was to share equally in the losses. Accordingly, the lower court did not commit an error of law nor an abuse of discretion in denying the motion for summary judgment filed by appellants, Keystone and Grace Hoffmaster, and granting the motion for summary judgment filed by appellees, Harleysville and Blair Vilsack.

Order affirmed.

      . On May 9, 1994, the order in question was reduced to judgment in favor of Harleysville and against Keystone for the amount of $10,-702.15.

      . Harleysville's “Other Insurance” clause provides:

        If there is other applicable auto medical payments insurance we will pay only our share of the loss. Our share is the proportion that our limit of liability bears to the total of all applicable limits. However, any insurance we provide with respect to a vehicle you do not own shall be excess over any other collectible auto insurance providing payments for medical or funeral expenses.
      R.11.
      Keystone’s "Other Insurance” clause reads:
      If there is other applicable liability insurance we will pay only our share of the loss. Our share is the proportion that our limit of liability bears to the total of all applicable limits. However, any insurance we provide for a vehicle you do not own shall be excess over any other collectible insurance.
      R.11.

      . We are mindful of Pennsylvania appellate court decisions that have addressed the question of apportionment in insurance coverages in contexts distinguishable from the instant case. See Vrabel v. Scholler, 369 Pa. 235, 85 A.2d 858 (1952) (Vrabel I), appeal after remand, 372 Pa. 578, 94 A.2d 748 (1953) (Vrabel II); Fireman’s Fund Ins. Co. v. Nationwide Mutual Ins. Co., 317 Pa.Super. 497, 464 A.2d 431 (1983). In those cases, unlike here, the clauses provided in the policies were not deemed by the courts to be irreconcilable with each other and disregarded as mutually repugnant. In Fireman’s Fund Ins. Co., supra, the clauses at issue involved insurance coverages for first-party benefits not liability. In that case, and in the Vrabel decisions, the courts found that the existing statutes, i.e. "No-Fault Motor Vehicle Insurance” 40 P.S. §§ 1009.101 to 1009.701 (repealed), offered no guidance on any particular method of proration. The courts then concluded that apportionment ought to be determined according to the express terms of the policies. See Fireman’s Fund Ins., 317 Pa.Super. at 509-13, 464 A.2d at 438-39; Vrabel, 369 Pa. at 240-44, 85 A.2d at 861-62. In Fireman’s Fund Ins. our court was not able to effectuate the language of the policies with respect to apportionment because the relevant clauses were not included in the record for evaluation. Our court remanded the case for further proceedings consistent with the following instructions:
      It may be that both policies contain language similar to that in the model clause prescribed by the Commissioner [31 Pa.Code § 66.102(e), Condition H], If so, that language should be followed. If there is a conflict between the language of the policies, that conflict should first be resolved in the trial court by reference to the language contained in the policies. If the clauses are irreconcilable, they should be disregarded as mutually repugnant and the common law rule of Vrabel I and Vrabel II applied, i.e. the policy-limits ratio. If that common law rule is to be altered, it should be done only after careful consideration and reflection, with due regard for the uniformity, coherence, simplicity and certainty of the No-Fault system of insurance desired by the legislature.

      317 Pa.Super. at 512, 464 A.2d at 439 (citations omitted) (emphasis added).
      Because our court did not conclude that the clauses at issue in Fireman's Fund Ins., supra, were irreconcilable, we find our panel’s decision which favored application of the policy limit rule is dictum and not binding upon us herein. Our research reveals that our supreme court has not evaluated the reasoning behind the majority rule in relation with the minority rule (maximum loss approach). Under the circumstances of this case, we are of the opinion that our supreme court would join the growing number of courts and apply the maximum loss method where “other insurance” clauses are disregarded as mutually repugnant.

      . In Carriers Ins. Co., supra, the policies at issue provided limits of $2,990,000.00 and $250,000.00, respectively. Despite that tremendous disparity in coverages, the Supreme Judicial Court of Maine rejected the majority rule of apportionment.


author: CAVANAUGH, Judge:

text:
    657 A.2d 1282
    William ALEXANDER, Edwin L. Kennedy, Donovan R. Beachley, Sr., and John C. Baker v. CNA INSURANCE COMPANY and American Casualty Company of Reading Pa., Inc. Appeal of AMERICAN CASUALTY COMPANY OF READING PA., INC.
    Superior Court of Pennsylvania.
    Argued Nov. 17, 1994.
    Filed May 3, 1995.

      Richard M. Faulkner, State College, for appellants.
    Cecilia M. Clarke, Chicago, IL, for appellees.
    Before CAVANAUGH, POPOVICH and SAYLOR, JJ.
   CAVANAUGH, Judge:

This matter is presently before the court on the appeal of American Casualty Company of Reading (“ACC”) from the order of the Court of Common Pleas of Centre County of April 19, 1994 which entered declaratory judgment against it. For the reasons which follow we affirm.

The facts of the instant matter, involving as they do several different lawsuits, require a somewhat lengthy recitation.

' Plaintiff Alexander is vice president for financial affairs of Juniata College. Plaintiffs Kennedy, Beachley and Baker are (or were at all times material hereto) members of the Finance Committee of the Board of Trustees of Juniata College. In May, 1982 Juniata College filed a lawsuit (the “Juniata” action) against Penn Central National Bank alleging that the bank (which was the custodian of Juniata College’s stocks) failed to give them timely notice of a tender offer for some of their stock holdings which failure resulted in an untimely tender of the stocks and, Juniata College claimed, monetary damages to the college. The college asserted causes of action in negligence and breach of contract against the bank.

Penn Central responded by joining plaintiffs herein (Alexander, Kennedy, Beachley and Baker) as additional defendants, claiming that it was they who had breached their contract with, and breached their duty to, the college, by failing to exercise proper care in the administration of the financial affairs of the college.

In effect during this period was a “Board of Education Liability” insurance policy ACC had issued to the college. Each of the plaintiffs herein were “Assureds” under the policy, which entitled them to coverage for claims falling within the policy. Plaintiffs herein submitted to ACC the claim filed against them in the Juniata action. ACC informed plaintiffs that they would not provide them a defense and that the Assureds must retain their own attorney, and further that should there be an award against them for breach of contract the policy would not reimburse them for such damages.

The Juniata action was settled prior to trial with plaintiffs herein and Penn Centra] Bank agreeing to pay Juniata College $25,000 each for a total settlement of $50,000. ACC “consented” to this settlement but also informed plaintiffs that it was not waiving any of its “previously stated coverage positions.” ACC thereafter continued to deny plaintiffs coverage under the policy and plaintiffs instituted the instant declaratory judgment action seeking a determination of whether ACC must indemnify them for the settlement of the Juniata action, and whether ACC must reimburse them for the costs of their defense of the Juniata action. On April 19, 1994 the court below determined that ACC was liable to the plaintiffs, under the term of the insurance policy, for payment of the plaintiffs costs of defense and the amount payable by the plaintiffs in settlement of the Juniata action. This appeal followed.

On appeal ACC raises the following issues:

I. Whether the trial court erred in finding that ACC had a duty to defend the plaintiffs against the complaint brought against them in the Juniata action.
II. Whether the trial court erred in ruling that ACC was obligated to indemnify the plaintiffs for their settlement of the Juniata action.

In our determination of the controversy before us, we need only address appellant’s second claim, that the court erred in finding that it was obligated to indemnify the plaintiffs for their settlement of the Juniata action. In support of this argument appellant claims; that plaintiffs did not demonstrate an actual “loss” covered by the policy, that Paragraph IV(b)(6) of the policy precludes plaintiffs’ recovery, and that any payment by ACC would constitute unjust enrichment. We shall discuss each of these claims and begin with appellant’s argument that the plaintiffs have demonstrated no covered “loss”.

The proper construction of a policy of insurance is resolved as a matter of law in a declaratory judgment action. Aetna Casualty and Surety Company, 437 Pa.Super. 414, 420-22, 650 A.2d 94, 98 (1994). The relevant terms of the insurance policy regarding this issue are contained in the policy’s Insuring Clause (Clause I), and the Liberalization Endorsement at Paragraph III(d). Clause I states that the Insurer agrees:

(a) With the Assureds that if, during the policy period any claim or claims are made against them individually or collectively, for a Wrongful Act occurring during the policy period, the Insurer will pay on behalf of, in accordance with the terms of this policy, the Assured, ... for all loss which the said Assureds or any of them shall become legally obligated to pay.
(Emphasis added.)

“Loss” is defined in the Liberalization Endorsement as:

Loss shall mean any amount which the Assured ... are legally obligated to pay ... for a claim or claims, made against an Assured for a Wrongful Act and shall include but not be limited to damages, judgments, settlements and costs, cost of investigation and defense of legal actions....
(Emphasis added.)

Appellant makes several claims as to why, in its opinion, the plaintiffs have suffered no “loss” as that term is defined in the contract; appellant argues that any wrongdoing by the plaintiffs (as agents of Juniata College) should be considered the wrongdoing of Juniata College, that Juniata is responsible for the acts of its employees under the doctrine of respondeat superior, and finally, that plaintiffs have offered no proof that they have actually paid the settlement amount.

In response, we first note that a court is required to give effect to the unambiguous language of an insurance policy. Fran and John’s Doylestown Auto Center, Inc. v. Allstate Insurance Company, 432 Pa.Super. 449, 453, 638 A.2d 1023, 1024 (1994). Reviewing the policy of insurance under this standard reveals that Paragraph III(d) of the policy clearly states that the term “loss” shall mean any amount which the Assureds become legally obligated to pay, for a claim made against them for a wrongful act, and shall includ ed settlements. In the case before us, Penn Central Bank made a claim against the plaintiffs, for a wrongful act, which claim was settled with the plaintiffs becoming legally obligated to pay the sum of $25,000. Accordingly, under the contracts unambiguous language the plaintiffs herein clearly suffered a covered “loss.”

Since “we are powerless to place upon the language of the policy ... any construction which conflicts with its plain meaning”, Id., and since the plaintiffs have met the definition of a covered loss under the insurance policy, appellant cannot prevail on its first claim.

Appellant next claims that plaintiffs may not recover from them in that coverage is precluded by Paragraph IV(b)(6) of the policy.

Paragraph IV(b)(6) reads as follows:

The Insurer shall not be liable to make any payments for loss in connection with any claim against the Assureds; (6) For any amounts due, under the terms of any contractual obligation, ...
(Emphasis added.)

In count I of its complaint against the plaintiffs Central Penn Bank alleged that the plaintiffs had breached their contract with Juniata College. Count II alleged that the plaintiffs breached their duty to Juniata College. Appellant claims that the court below erred in finding that Count IPs allegations brought the matter under the policy’s cover, since, appellant argues, plaintiffs’ duty to Juniata could only exist as a result of plaintiffs contractual relationship with Juniata. Appellant therefore argues that any and all claims against plaintiffs are properly considered to be breach of contract claims.

To resolve this issue we look again to the insurance contract’s clear and unambiguous language which reveals that at Paragraph 1(a) the appellant agreed to cover the plaintiffs for claims made against them for any “wrongful act” occurring during the policy period. “Wrongful act” is defined at Paragraph III(c) as meaning any “... neglect of duty by the Assured in the discharge of their duties.” This is precisely the claim made by the Bank at paragraphs 12 and 13 of Count II of its complaint against plaintiffs herein. Thus, Count II of the Bank’s complaint against plaintiffs is clearly within the scope of the policy and appellant is not entitled to relief on this claim of error.

Finally, appellant argues that any payment by them to plaintiffs would result in plaintiffs unjust enrichment since the plaintiffs did not suffer an “actual loss”.

As we have already held that the plaintiffs did suffer a loss as that word is defined in the parties contract of insurance, appellants last claim must necessarily fail.

Accordingly, as the court below did not err in entering judgment against the appellant, its order is affirmed.

Order affirmed.

      . The policy states, at Paragraph VI of its Liberalization Endorsement, that the Assureds shall select and retain their own legal counsel. However, the policy also states that it will pay the Assureds' losses covered by the policy which includes the cost of the defense of legal actions. (Paragraph III(d)).

      . Appellant's claim that the court erred in finding that it had a duty to defend the plaintiffs does have merit but does not bear on the ultimate issue before us. Although it has been held that an insurer has no duty to defend if the contract of insurance does not include a duty to defend clause, see: Widener University v. Fred S. James & Co., Inc., 371 Pa.Super. 79, 537 A.2d 829 (1988), which clause was not included in the insurance policy at issue here, the real issue we must determine is whether ACC must indemnify plaintiff’s for their settlement of the claim against them. Accordingly, although we agree that ACC had no specific duty to defend plaintiff’s in the lawsuit brought against them, this fact is of no moment in the instant appeal because, as we stated in footnote # 1, the finding of a duty to indemnify includes a duty to repay the plaintiffs their cost of defense.

      . We note that, were we to accept appellant’s argument, that portion of the policy in which the Assureds were supposedly covered for their "wrongful acts" could never afford them relief since all of their acts would be contractual in nature and thus excluded under the policy. We refuse to adopt this interpretation of the contract's unambiguous language.