New Eastwick Corp. v. Philadelphia Builders Eastwick Corp.

• Decision Date: 16 April 1968
• Citation: 430 Pa. 46,241 A.2d 766
• Parties: NEW EASTWICK CORPORATION, Appellant, v. PHILADELPHIA BUILDERS EASTWICK CORPORATION.
• Court: Pennsylvania Supreme Court

Page 766

241 A.2d 766

430 Pa. 46

NEW EASTWICK CORPORATION, Appellant, v.PHILADELPHIA BUILDERS EASTWICK CORPORATION.

Supreme Court of Pennsylvania.

April 16, 1968.

Rehearing Denied June 3, 1968.

Theodore Voorhees, Philadelphia, for appellant; Dechert, Price & Rhoads, Philadelphia, of counsel.

John R. McConnell, H. Mark Solomon, Philadelphia, for appellee; Morgan, Lewis & Bockius, Philadelphia, of counsel.

Before MUSMANNO, JONES, COHEN, EAGEN, O'BRIEN and ROBERTS, JJ.

OPINION OF THE COURT

O'BRIEN, Justice.

This is an appeal by New Eastwick Corporation(NEC), plaintiff in the court below, from a final decree of the Court of Common PleasNo. 2 of Philadelphia County, dismissing plaintiff's complaint in equity.Plaintiff sought to restrain defendant, Philadelphia Builders Eastwick Corporation(PBEC), from interfering with NEC's contractual rights under a Redevelopment Agreement dated July 12, 1961 with the Redevelopment Authority of the City of Philadelphia(Authority).

By the terms of that agreement NEC agreed to purchase for the sum of $12,192,865 all of the residential land (Stages I, II, III and IV) in the Eastwick Urban Renewal Area of Philadelphia, subject to a thirty-months option in favor of PBEC to purchase Stage III and IV, amounting to approximately one-half of that land.¹The option expired on January 12, 1964, and it was not exercised at that, or any later, time.Ten months later, during the month of October, 1964, PBEC presented the Authority with a 'preliminary agreement' which would grant PBEC an entirely new option for the same stages covered by the original one.The date of expiration of this proposed option was three years later, however, i.e., on January 12, 1967.When plaintiff was finally told about this agreement and learned of the willingness of the Authority to execute it, it instituted this suit to restrain PBEC from interfering with its contractual rights to the land in question.

The case was heard by Judge Alessandroni, who died before writing an adjudication.It was then agreed by counsel that Judge Reimel be substituted for Judge Alessandroni and that he should decide the case on the record of the hearing before Judge Alessandroni.On July 18, 1966 Judge Reimel entered his adjudication and a decree nisi dismissing the complaint.Exceptions were filed by NEC and dismissed on January 5, 1967, by a court en banc consisting of Judges Reimel, Doty and Reid.Plaintiff took this appeal from the court's final decree.

The court below dismissed the complaint because it found that the plaintiff had waived strict compliance with the time limitation of the option.It also concluded that plaintiff had failed to make a showing of irreparable injury.On this appeal appellant urges that on the undisputed facts there is no support for PBEC's claim that the time limitation was waived and that even if there were a waiver, that fact would not justify PBEC's later interference with the contractual rights of NEC.It is also urged that the proposed deprivation of NEC's right to redevelop the land in question constituted a clear instance of irreparable injury to the plaintiff.

The deadline for the exercise of the option was January 12, 1964.In the fall of 1963, PBEC indicated to the Authority that it would like to be given more time.Following some exploratory exchanges of views, representatives of NEC, PBEC and the Authority met together on December 3, 1963, not quite six weeks before the expiration of the option.Thomas, the local manager of NEC, thereupon made a proposal to extend the time in which PBEC would be required to enter into a redevelopment contract, provided that PBEC enter into a preliminary agreement and post a $150,000 bond immediately.He also stated as a condition to this offer that the Authority agree to certain additional matters respecting the industrial redevelopment of Eastwick.Thomas repeated his offer in writing in a letter to the authority dated December 19, 1963.The Authority, which had been acting as go-between, failed to communicate Thomas' written offer to PBEC, and the latter, on January 10, 1964, two days before the option expired, wrote to the Authority asking that the expiration date be set off until the unresolved matters be cleared away.

The court below based its decision mainly upon its conclusion that plaintiff had waived strict performance of the option by defendant.As support for his holding, the Chancellor said in his adjudication: 'Thomas nowhere in his testimony states categorically that plaintiff was going to insist on performance by defendant, as required, on or before January 12, 1964.'Moreover, the Chancellor emphasized Thomas' admission that the letter of December 19 was sent because he felt that he had not made his position clear as to the expiration of the option clause.In our view, the Chancellor was under a mistaken impression as to where the burden lies when time is of the essence.And here, despite appellee's protestions to the contrary, time was indeed of the essence.Time is always of the essence in an option contract.Phillips v. Tetzner, 357 Pa. 43, 53 A.2d 129(1947);Rhodes v. Good, 271 Pa. 117, 114 A. 494(1921).Although the word 'option' is not used, it is clear that an option had been created, and the Chancellor so concluded.²

The Chancellor seemed to feel that NEC had the duty to inform PBEC that it (NEC) intended to insist on strict performance of the option.On the contrary, performance in accordance with the contract terms (i.e. by January 12, 1964) is assumed, and a deviation is permissible only if NEC affirmatively assents to it.Inaction by NEC during negotiations to modify the contract can in no way be said to give PBEC permission to ignore the then existing terms of that contract.The case of Cohn v. Weiss, 356 Pa. 78, 51 A.2d 740(1947), relied upon by appellee and the court below, is distinguishable.In that case, a real estate settlement was set for December 26th, with time of the essence.As the date approached, complications developed in the nature of judgments against a person bearing the same name as the vendor, Weiss, and the illness of Weiss' son.Although the facts are in dispute as to when the vendee, Cohn, first informed Weiss that settlement had been set for December 29th and was told that Weiss would let him know, by Weiss' own testimony, he was told on December 26th about 4 P.M. that settlement would be on December 29th, and replied that he would let Cohn know in the morning.The next morning Weiss said that he would not go through with the settlement.In Cohn's suit for specific performance, this court quite properly ruled that there was an estoppel or implied waiver in view of the way that plaintiff was trapped.Weiss' statement on December 26th that he would let Cohn know in the morning clearly showed that he, Weiss, was not going to insist on the day originally set for settlement.

The same cannot be said for the actions of NEC in the instant case.In fact, the Chancellor found not that...