Bauer v. P. A. Cutri Co. of Bradford

• Decision Date: 09 May 1969
• Citation: 434 Pa. 305,253 A.2d 252
• Parties: Jack R. BAUER and Marjorie Bauer v. P. A. CUTRI COMPANY OF BRADFORD, Inc., Ray L. Sturm, individually and as owner and manager of the P. A. Cutri Company of Bradford, Inc. and Donald R. Cutri. Appeal of Ray L. STURM.
• Court: Pennsylvania Supreme Court

253 A.2d 252

434 Pa. 305

Jack R. BAUER and Marjorie Bauer v. P. A. CUTRI COMPANY OF BRADFORD, Inc., Ray L. Sturm,

individually and as owner and manager of the P. A. Cutri Company of Bradford, Inc. and Donald R. Cutri. Appeal of Ray L. STURM.

Supreme Court of Pennsylvania.

May 9, 1969.

R. T. Mutzabaugh, Mutzabaugh & Mutzabaugh, Bradford, for appellant.

James K. Angell, Angell & Angell, Smethport, for appellee.

Before BELL, C.J., and JONES, COHEN, EAGEN, O'BRIEN ROBERTS and POMEROY, JJ.

OPINION OF THE COURT

ROBERTS Justice.

In 1961 appellee sold his insurance agency in Bradford, Pennsylvania to Rand for $2,500.00 in cash and an unliquidated amount to be computed from a formula based on a percentage factor multiplied by yearly renewal figures over a period of years. Appellee also agreed to sign a covenant-not-to-compete, the exact terms of which are no longer relevant. Rand proceeded to organize the Bradford Area Insurance Center Agency, Inc. which employed appellee on a commission basis and paid him $500.00 per month to apply to the purchase price of the Agency still owed by Rand.

Subsequently Rand transferred his interest in the Agency to Cutri. In 1964 Cutri and appellee apparently agreed upon $5,000.00 as the sum still owed to appellee from the initial purchase by Rand, and Cutri agreed to pay that sum to appellee. At the same time, Cutri and appellee orally agreed that appellee would continue with the Agency as a salaried employee, to be paid $500.00 per month, a sum which later was raised to $550.00 per month. Appellee once again entered into a convenant-not-to-compete, which was part of the instrument which contained the agreement that the agency would pay appellee $5,000.00. The agreement stated 'That Bradford Area Insurance Center Agency, Inc. agrees to pay over to the Seller (appellee) Five Thousand ($5,000.00) Dollars upon the execution of this Agreement, Receipt of which is hereby acknowledged by the Seller, in full satisfaction of original agreement.' (Emphasis supplied.)

Despite this acknowledgement, appellee was not paid the $5,000.00, although Cutri did help appellee to obtain a loan in that amount. Appellee continued to work for the Agency, which became the P. A. Cutri Company of Bradford, Inc. until 1967. At that point, the Agency, and its rights and obligations were purchased by Sturm, appellant in this action. Appellant had also been an employee of the Agency, and appellee had known of appellant's interest in purchasing the company. Appellant likewise knew of the 1964 agreement between appellee and Cutri, and of appellee's acknowledgement of the receipt of the $5,000.00 owed to him. Appellee gave no indication that the money had not in reality been paid to him, and prior to instituting this suit, made no claim for it.

After taking over the Agency, appellant informed appellee that the latter's salary was being discontinued, and threatened to enjoin appellee from selling insurance in the area if appellee attempted to do so. Appellee countered by bringing this suit in equity to have the covenant-not-to-compete declared null and void and to recover the $5,000.00 which had never been paid to him. The court below found for appellee on both counts, and after dismissing appellant's exceptions, entered a final decree and judgment. Appellant was waived his objections to that part of the decree that strikes down the convenant-not-to-compete, and appeals only from the $5,000.00 judgment.

Appellant first claims that it was error for the court below to hear testimony concerning appellee's non-receipt of the $5,000.00 in question. Appellant maintains that this testimony violated the parol evidence rule since it was proof that varied the explicit terms of the writing, which stated that appellee had indeed received the money. However, it has long been the law in this Commonwealth that 'receipts which are mere acknowledgements are in no way contractual in their nature and hence are not subject to the parol evidence rule * * *.' Wagner v. Marcus, 288 Pa. 579, 584, 136 A. 847, 848 (1927). Only where the receipt represents an exclusive memorial of the contractual agreement between the parties does the parol evidence rule apply. Id.; Emery Estate, 362 Pa. 142, 148, 66 A.2d 262, 265 (1949); 'The rule that a receipt is only prima facie evidence of payment, and may be explained by parol, does not apply when the question involved is not as to the fact of payment but as to the existence of rights springing out of the contract.' See Bardwell v. Willis Co., 375 Pa. 503, 506 fn., 100 A.2d 102, 104 n. 1 (1953). Cf. Pronzato v. Guerrina, 400 Pa. 521, 163 A.2d 297 (1960); Peyton v. Margiotti, 398 Pa. 86, 156 A.2d 865 (1959).

There is no question that the case before us involves merely a dispute as to 'the fact of payment'--whether appellee did or did not receive the money in question. Appellee is not questioning 'the rights springing out of the contract,' but simply is demanding the money due, the consideration for his entering into the agreement. Cf. Pronzato v. Guerrina, supra. It was thus proper for the court below to admit evidence proving that appellee had never been paid.

Appellant next claims that appellee's recovery should be barred by the equitable doctrines of laches and/or unclean hands, since appellee did not inform appellant that the Agency owed appellee money and did not make a claim for the money until after appellant had purchased the Agency. Appellant claims that he was prejudiced by this action (or non-action) of appellee, since he did not consider the $5,000.00 obligation when negotiating to purchase the Agency. Appellee claims that his conduct was completely innocent since he is not possessed of business sense of the most astute kind, and as a result, did not realize that the money was owed to him...