Atlantic Refining Co. v. Wyoming National Bank of Wilkes-Barre

• Decision Date: 24 March 1947
• Docket Number: 3280
• Citation: 356 Pa. 226,51 A.2d 719
• Parties: Atlantic Refining Company v. Wyoming National Bank of Wilkes-Barre (et al., Appellant)
• Court: Pennsylvania Supreme Court

51 A.2d 719

356 Pa. 226

Atlantic Refining Company v. Wyoming National Bank of Wilkes-Barre (et al., Appellant)

No. 3280

Supreme Court of Pennsylvania

March 24, 1947

Argued November 26, 1946

Appeal, No. 158, Jan. T., 1946, from decree of C.P., Luzerne Co., Dec. T., 1944, No. 6, in case of the Atlantic Refining Company v. The Wyoming National Bank of Wilkes-Barre et al. Decree reversed.

Bill in equity. Before APONICK, J.

Adjudication filed ordering defendant bank to deliver deed to premises to plaintiff under stated conditions; plaintiff's bill as to defendant Jacobs and counterclaim of defendant Jacobs dismissed. Defendant Jacobs appealed.

The decree is reversed and the cause remanded with directions to the court below to dismiss both the plaintiff's bill of complaint and the additional defendant's cross-bill at the costs of the defendant bank.

Samuel A. Goldberg, with him J. Q. Creveling, G. B Kleeman and Edwin H. Sheporwich, for appellants.

Hopkin T. Rowlands, with him E. Humes Garber and Roy W. Johns, for appellee.

Before MAXEY, C.J., DREW, STERN, PATTERSON, STEARNE and JONES, JJ.

OPINION

MR. JUSTICE JONES

Herman Jacobs, an additional defendant, appeals from a decree of specific performance in favor of the plaintiff in a suit by the Atlantic Refining Company (hereinafter referred to as Atlantic) against the defendant bank. The plaintiff joined Jacobs us a party defendant solely for the purpose of rendering doubly effective an incidental restraint sought against the bank's conveyance of the property in controversy to anyone other than the plaintiff, Jacobs having asserted a right thereto as its purchaser at an auction sale conducted by the bank.

After a hearing on the merits, the chancellor made an adjudication and entered a decree nisi awarding the plaintiff specific performance, as prayed for, and dismissing the bill as to Jacobs, at the costs of the defendant bank. Both the bank and Jacobs excepted to the adjudication and decree, but, before the exceptions had been passed upon, Jacobs, by leave of court, amended his answer so as to make a cross-bill of it, adding thereto a prayer for affirmative relief by way of specific performance in favor of himself. The court en banc ultimately dismissed all exceptions and entered a final decree directing the bank to convey the property in question to the plaintiff, dismissing the bill as to Jacobs and dismissing his cross-complaint, at the costs of the defendant bank. Broadly stated, the question involved on this appeal is as to which one, if either, between Jacobs and Atlantic, is legally entitled to a conveyance of the property by the bank under the supportable findings. The material facts are not in dispute.

For a number of years, the bank has been the owner in fee of certain real estate at the corner of South Main and West South Streets in Wilkes-Barre, Pennsylvania, having a frontage of fifty feet on Main Street and running back along South Street a distance of one hundred and fifty feet, preserving an even width throughout. Continuously since 1937, Atlantic had been the lessee of the rear ninety-eight feet by fifty feet, having improved the leased property for use as a filling and service station for automobiles. The remaining portion of the property, i.e., the fifty foot frontage on main Street by a depth of fifty-two feet on South Street has been under lease to other tenants who operate business establishments thereon. On April 28, 1943, Atlantic and the bank entered into a written renewal lease for a term of one year beginning May 1, 1943, for the portion of the property held by Atlantic as above stated. The lease provided that either party could terminate the tenancy at the end of the term by giving ninety days advance notice of intention so to do and that, in default of such notice, the lease, with all of its terms and conditions, should continue to run from year to year until terminated by the specified ninety-day notice prior to the expiration of a year's term. The lease also contained the following first-refusal-to-purchase option: "14. Lessor shall not sell or dispose of the demised premises during the term of this lease, or any extension thereof, without written notice to Lessee of Lessor's intention to do so. Lessor further agrees to notify Lessee in writing of any acceptable offer made to Lessor for the purchase of said premises, giving the terms of the offer and the name of the party or parties making such offer, and agrees to grant and does hereby grant to Lessee a sixty (60) day option beginning with the date upon which Lessee receives said written notice from Lessor, to purchase said premises upon the same terms and conditions as contained in said acceptable offer. Should the Lessee fail to exercise said option herein granted and thereafter Lessor shall not sell or dispose of the premises to the parties making the acceptable offer above mentioned, then the option privilege shall automatically renew itself until said premises have been sold after a bona fide offer to Lessor, failure of Lessee to exercise the option herein granted, followed by sale upon the terms and to the parties mentioned in the notice in writing to Lessee."

In September 1944 (the lease to Atlantic still subsisting), the bank decided to offer the property now in controversy, consisting of the entire plot of fifty feet by one hundred and fifth feet, and certain other properties owned by the bank, for sale at public auction. The bank sent Atlantic an announcement of the proposed auction as contained in a brochure which also described the properties to be sold and the terms of sale, one of the terms being that the sales would be "subject to the rights of the tenants in possession". Atlantic forthwith made the bank an offer, limited to the premises leased by it and an additional six foot by six foot adjoining strip, which offer the bank promptly refused. After due notice by bills posted and newspaper advertisement, the property here involved was sold at the advertised auction on October 4, 1944, to Herman Jacobs, the additional defendant, for a bid of $41,750 which was acceptable to the bank. Upon the property's being knocked down to Jacobs, he at once certified in writing over his signature that he had purchased the described property for his bid of $41,750, and he thereby further agreed "to comply with the terms and conditions of the sale of said premises as above set forth [viz., in the brochure]" which he promptly did in full. Atlantic, acting by a duly authorized representative, had participated in the auction to the extent of making several ineffectual bids for the property in suit. But, neither Atlantic's identity in that connection nor its contractual interest in the property was actually known to Jacobs at the time of the auction.

The bank notified Atlantic by letter of October 27, 1944, that it had received an acceptable offer of $41,750 from Jacobs for the purchase of the entire lot, the letter avowing that the notice was given "pursuant to the provisions contained in [the above quoted] paragraph 14 of the lease..." between the bank and Atlantic. In professed exercise of its option under the lease, Atlantic, by letter of November 1, 1944, notified the bank that it intended to buy the whole of the property at the bid made therefor by Jacobs. And, again, by letter of November 14, 1944, Atlantic "formally" notified the bank of its exercise of the option to purchase the entire lot "in accordance with the offer of Herman Jacobs". With this letter, Atlantic enclosed its checks in fulfillment of the requirements under the terms prescribed for the sale at auction. On November 24, 1944, the bank returned Atlantic's checks and refused to convey the property to it for the reason that the option to purchase contained in the lease was limited to the "demised premises", while Atlantic's offer, on the basis of Jacobs' bid, was for the entire plot. However, the bank did nothing further to complete the sale to Jacobs, nor did it ever execute a deed to him for the property. Such was the situation when Atlantic instituted the proceeding involved in this appeal.

The decree of the learned court below cannot be sustained. In no legally permissible view may Atlantic's preemptive contract right to purchase a portion of the property in controversy (i.e., "the demised premises" ) be thought to extend to anything other than the property actually subject to the opinion in the lease. By virtue of the opinion, when properly exercised Atlantic would have such a "substantial interest" in the property described in its lease as constitutes an equity sufficient to support a bill for specific performance: Kerr v. Day, 14 Pa. 112, 115; see also Stevenson v. Titus, 332 Pa. 100, 105, 2 A.2d 853, and cases there cited; and Driebe v. Fort Penn Realty Company, 331 Pa. 314, 317, 200 A. 62. Atlantic did not, however, have an equitable interest in the larger plot merely because that property happened to embrace "the demised premises" of the lease. Consequently, Atlantic is without standing to maintain the bill as drawn. Stated otherwise, while the bank's offer of the Main and South Streets plot as an entirety at the auction sale did not operate to impair or destroy Atlantic's opinion to purchase "the demised premises" (see Driebe v. Fort Penn Realty Company, supra, at p. 318), neither did it serve to enlarge Atlantic's rights so as to confer upon it a "substantial interest" in the larger property whereof "the demised premises" was but a part: see New Atlantic Garden, Inc., v. Atlantic Garden Realty Corporation, 194 N.Y.S. 34, 40, 201 A.D. 404. Atlantic's right to purchase "the demised premises" at the acceptable bid of another exists by virtue of a contract in writing. The character and extent of...