Credit Alliance Corp. v. Philadelphia Minit-Man Car Wash Corp.

• Decision Date: 16 March 1973
• Docket Number: MINIT-MAN
• Parties: CREDIT ALLIANCE CORPORATION and Daniel C. Hanna, Individually and trading as Hanna Industries and Hanna Enterprises, Appellants, v. PHILADELPHIACAR WASH CORPORATION et al., Appellees.
• Court: Pennsylvania Supreme Court

Page 816

301 A.2d 816

450 Pa. 367

CREDIT ALLIANCE CORPORATION and Daniel C. Hanna Individually and trading as Hanna Industries and Hanna Enterprises, Appellants, v. PHILADELPHIA MINIT-MAN CAR WASH CORPORATION et al., Appellees.

Supreme Court of Pennsylvania.

March 16, 1973.

Oscar Spivack, Steven M. Dranoff, Spivack & Dranoff, Philadelphia, for appellant

Frank A. Bedford, III, Wynnewood, for appellees.

Before JONES, C.J., and EAGEN, O'BRIEN, ROBERTS, POMEROY, NIX and MANDERINO, JJ.

OPINION OF THE COURT

O'BRIEN, Justice.

Appellee Herbert A. Ottey (Ottey) on December 30, 1968, entered into an agreement with appellee Philadelphia Minit-Man Car Wash Corporation (Minit-Man) for the purchase of car-wash equipment. Minit-Man assigned its interest in the agreement to appellant Hanna Industries (Hanna), which in turn assigned its interest to appellant Credit Alliance Corporation (Credit Alliance). Concurrently with the execution of the aforementioned agreement, Ottey, as debtor and buyer, executed a financing statement on the equipment in favor of the secured party and seller, Minit-Man. The financing statement was assigned to Hanna and then to Credit Alliance, and the statement and assignments were properly filed and recorded in Montgomery County. At approximately the same time as the execution of the sales agreement and prior to the execution of the financing statement, Ottey took possession of the car-wash equipment and installed it at Jenkintown, Pennsylvania, on premises leased to Ottey by Minit-Man, the prime lessee of the premises. Ottey then assigned all his right, title and interest in the lease to Credit Alliance. Minit-Man consented to the assignment. Hanna and Credit Alliance permitted the installation of the car-wash equipment on the demised premises in reliance upon Paragraph 37 of the lease agreement, which provided:

'37. Lessee may install new additional equipment and make additions, alterations and improvements to the building and present equipment subject to the prior written approval of Lessor which shall not be unreasonably withheld and subject to the filing of waiver of mechanics' liens prior to the commencement of work. Lessor agrees to execute a Landlord's Waiver in connection with any new, additional equipment installed at the inception of this lease.'

Later, Minit-Man, without the knowledge and approval of Hanna and Credit Alliance, changed the landlord's waiver by adding conditions not contemplated by the lease agreement, which, if effectuated, would deny appellants the protection promised in the original waiver, and in Paragraph 37 of the lease agreement.

On or about August 1, 1970, Ottey abandoned the car wash and equipment and defaulted in the payments of installments due under the agreement with Minit-Man which had been assigned to Credit Alliance. At that time, there was due and owing to Credit Alliance, under the agreement, the sum of $54,319.96. Subsequent to the default by Ottey, Credit Alliance advised Minit-Man that Minit-Man could operate the equipment only upon payment of the installments due, and if payments were not made, the equipment would be removed. Minit-Man refused to make any payments and refused to permit the equipment to be removed. Instead, Minit-Man sold or leased the equipment to appellees Richard Sheehan and Chester Fazio, who continued to operate the car wash.

Hanna and Credit Alliance filed a complaint in equity, later amended, alleging fraud on the part of Minit-Man, in changing the landlord's waiver, and seeking a preliminary injunction against appellees. The injunction sought was to prevent appellees from interfering with the removal of the car-wash equipment and the exercise by Hanna and Credit Alliance of their rights as secured parties in the equipment. The complaint further requested that a receiver be appointed to take charge of the equipment and to operate the car-wash business and that the court require appellees to account for funds derived from the operation of the car-wash.

After a hearing on the amended complaint, the chancellor...