In Re: Estate of Dembosky, W., Dec. ( 2023 )

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NON-PRECEDENTIAL DECISION - SEE SUPERIOR COURT O.P 65.37
IN RE: ESTATE OF WALTER C. : IN THE SUPERIOR COURT OF
DEMBOSKY, DECEASED : PENNSYLVANIA
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APPEAL OF: WALTER J. DEMBOSKY :
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: No. 571 MDA 2022
Appeal from the Order Entered March 16, 2022
In the Court of Common Pleas of Lackawanna County Orphans' Court at
No(s): 2020-00156
BEFORE: PANELLA, P.J., OLSON, J., and KUNSELMAN, J.
MEMORANDUM BY PANELLA, P.J.: FILED: JUNE 15, 2023
Walter J. Dembosky (“Walter”), appeals from the order determining his
rights as a creditor to the Estate of his deceased father. Walter contends the
trial court erred by failing to use compound interest when calculating the debt
his father’s estate owed him. As we conclude the trial court did not abuse its
discretion, we affirm.
Decedent, Walter C. Dembosky, died on November 22, 2019. On
February 7, 2020, an Estate was probated with Dell A. Dembosky (“Dell”),
another son of Decedent’s, being the named executor. On February 17, 2021,
Walter filed a notice of claim against the Estate in the amount of $1,318,
488.22. Walter’s claim alleged that the amount owed to him stemmed from a
promissory note for $10,500.00, which was executed by Decedent and his
wife in 1984.
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On September 27, 2021, the Estate filed a petition for special
relief/motion to strike the claim. The Orphans’ court held a hearing and
accepted briefs from the parties. At the hearing, the Estate acknowledged the
existence of an outstanding debt. However, the Estate disputed the amount
of the debt. On March 16, 2022, the court entered an order granting the
Estate’s petition for relief/motion to strike. Further, the order directed the
estate to pay Walter $63,174.30. Walter filed this timely appeal.
Our standard of review of an order of the Orphans’ court is deferential.
“[W]e will not reverse unless there is a clear error of law or an abuse of
discretion. Our scope of review is also limited: we determine only whether the
court’s findings are based on competent and credible evidence of record.” In
re Estate of Karschner, 919 A.2d 252, 255-56 (Pa. Super. 2007) (quoting
In re Estate of Westin, 874 A.2d 139, 142 (Pa. Super. 2005)). “An abuse of
discretion is not merely an error of judgment; if, in reaching a conclusion, the
court overrides or misapplies the law, or the judgment exercised is shown by
the record to be either manifestly unreasonable or the product of partiality,
prejudice, bias or ill will, discretion has been abused.” Silver v. Pinskey, 981
A.2d 284, 291 (Pa. Super. 2009) (en banc) (quoting Mencer v. Ruch, 928
A.2d 294, 297 (Pa. Super. 2007)).
Walter first argues that the orphans’ court improperly calculated the
amount due because it used simple interest rather than compound interest.
See Appellant’s Brief at 11-16. Walter contends that the promissory note
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included a monthly payment amount, which reflected that the parties
understood the interest be compounded interest. See id. at 16.
It is undisputed that notes representing a promise to pay money under
specific terms are not substantially different from any other type of contract
and must be evaluated in accordance with the general principles which govern
our construction of all contracts. See Katzeff v. Fazio, 628 A.2d 425, 427
(Pa. Super. 1993). When the words used in a written contract are clear and
unambiguous, the accepted plain meaning of the language, rather than the
silent intentions of the contracting parties, determines the construction to be
given to the agreement, and we will not resort to extrinsic aids or evidence.
See Steuart v. McChesney, 444 A.2d 659, 661 (Pa. 1982).
We have explained that “interest is compounded when it is added to the
principal, the result of which is treated as a new principal for calculating the
interest due for the next term.” Katzeff, 628 A.2d at 430 (citation omitted).
“It is generally true that the law of this Commonwealth frowns on an award of
compound interest on a debt except where the parties agree to it or a statute
expressly authorizes it.” Ralph Myers Contracting Corp. v.
Commonwealth, 436 A.2d 612, 614 (Pa. 1981).
The promissory note at issue contains the following pertinent language:
On this day, Walter C. Dembosky and Irene Dembosky, his wife
do hereby Borrow the sum of Ten Thousand Five Hundred dollars
($10,500) from their son, Walter J. Dembosky for the purpose of
a farm purchase near Fleetville, Lackawanna County. Walter C.
and Irene Dembosky agree to re-pay the loan in monthly
installment of ($126.77) at 13-1/2% Interest for Twenty Years.
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Promissory Note, 12/14/84, at 1. As the Orphans’ court aptly observed, “The
promissory note states nothing about compound interest.” Trial Court Opinion,
3/16/22, at 3. Walter attempted to establish the intent of the parties by
presenting amortization charts as a method of extrapolating that the parties
committed to applying compound interest when they agreed to the monthly
installment amount. However, the Orphans’ court noted that both parties
submitted amortization schedules, which conflicted with each other. This led
the court to the following conclusion: “These conflicting amortization
schedules, that are extrinsic to the promissory note, demonstrate why the law
requires the court to look at only the four corners of the promissory note to
determine the parties’ intentions. Because the document that encompasses
the agreement of the parties says nothing about compound interest, and
because Pennsylvania law does not permit compound interest on a debt unless
it is expressly provided for in the agreement interest will not be compounded
here.” Trial Court Opinion, 3/16/22, at 4 (citation omitted). We discern no
error by the Orphans’ court in reaching its conclusion that the promissory note
is silent concerning the application of compound interest and conclude that
the court properly held that the law prescribes that compound interest is not
appropriate in this matter.
In addition, Walter argues the Orphans’ court erred in excluding
evidence that allegedly established the parties had agreed to repayment of
the loan with compound interest. See Appellant’s Brief at 17-23. Walter
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contends that the Orphans’ court “erred in misapplying the [p]arol [e]vidence
[r]ule” to exclude the amortization charts that were presented. Id. at 17. He
asserts that the charts were merely graphic depictions of the mathematical
calculations used to arrive at the agreed upon monthly payment.
We have reiterated that when parties deliberately put their
engagements in writing, the law declares the writing to be not only the best,
but the only evidence of their agreement. See Ragnar Benson, Inc. v.
Hempfield Twp. Mun. Authority, 916 A.2d 1183, 1189 (Pa. Super. 2007).
However, where the language of an agreement is ambiguous, courts may
consider extrinsic or parol evidence to determine the parties’ intent. See id.In reaching its conclusion that the amortization schedules supplied by
the parties should not be considered in its review, the trial court stated,
[T]he claimant also argued that the Katzeff case allows the court
to examine the monthly payment amount in the note and
extrapolate from that amount that the parties intended the
interest to be compounded monthly. However, the amortization
schedules that the court considered in Katzeff were actually
appendices to the notes, and thus were part of the agreement of
the parties. The promissory note at issue here does not include
any amortization appendices. This court will not consider
amortization tables that are not part of the agreement of the
parties.
Trial Court Opinion, 3/16/22, at 4-5.
We discern to error by the Orphans’ court in declining to consider the
amortization charts presented by the parties. Contrary to Walter’s contention,
there is no apparent ambiguity in the language of the promissory note.
Moreover, as the Orphans’ court noted, the caselaw relied upon by the parties
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in an effort to utilize their amortization charts is distinguishable because the
parties in Katzeff had appended the amortization document to the promissory
note. That is not the situation in the present matter. To the contrary, in this
case the Orphans’ court was presented with conflicting amortization charts
that were generated by online computer systems that were, most likely, not
in existence when the promissory note was entered into nearly forty years
ago. We find no error by the Orphans’ court in choosing to overlook this
particular extrinsic evidence, which was never considered by the parties in
formulating their agreement. Therefore, Walter’s claim fails.
In addition, we observe that Walter includes an argument in his
appellate brief asserting that the Orphans’ court should have taken judicial
notice of the calculations presented in the amortization tables. See Appellant’s
Brief at 20-22. Judicial notice is governed by Pa.R.E. 201, which states that a
court may take judicial notice on its own; or must take judicial notice if a party
requests it and the court is supplied with the necessary information. See
Pa.R.E. 201(c). Our review of the certified record reflects that neither party
requested the court to take judicial notice of the amortization charts. As such,
the Orphans’ court was not required to take judicial notice of the tables.
Further, prior to this appeal, Walter did not raise any challenge to the
court’s taking judicial notice of the amortization tables that he now sets forth.
In addition, he made no mention of the court’s taking judicial notice in his
Rule 1925(b) statement. Accordingly, his claim that the Orphans’ court erred
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in failing to take judicial notice is waived. See Pa.R.A.P. 302(a) (“Issues not
raised in the trial court are waived and cannot be raised for the first time on
appeal.”); Pa.R.A.P. 1925(b)(4)(vii) (“Issues not included in the Statement
and/or not raised in accordance with the provisions of this paragraph (b)(4)
are waived.”).
Order affirmed.
Judgment Entered.
Joseph D. Seletyn, Esq.
Prothonotary
Date: 6/15/2023
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