Steuart v. McChesney

• Decision Date: 30 April 1982
• Citation: 444 A.2d 659,498 Pa. 45
• Parties: Lepha I. STEUART, Appellant, v. William McCHESNEY and Joyce McChesney, Appellees.
• Court: Pennsylvania Supreme Court

444 A.2d 659

498 Pa. 45

Lepha I. STEUART, Appellant, v. William McCHESNEY and Joyce McChesney, Appellees.

Supreme Court of Pennsylvania.

April 30, 1982

Argued March 2, 1982.

M. Richard Mellon, Gerald J. Villella, Erie, for appellant.

James C. Blackman, Blackman, Blackman & O'Sheill, Warren, for appellees.

Before O'BRIEN, C. J., and ROBERTS, NIX, LARSEN, FLAHERTY McDERMOTT and HUTCHINSON, JJ.

OPINION OF THE COURT

FLAHERTY Justice.

This is an appeal from an Order of the Superior Court ^[1] which reversed a Decree of the Court of Common Pleas of the Thirty-Seventh Judicial District construing a Right of First Refusal affecting the sale of certain real property.

On June 8 1968, the appellant, Lepha I. Steuart, and her husband, James A. Steuart (now deceased), executed an agreement granting to the appellees, William C. McChesney and Joyce C. McChesney husband and wife, a Right of First Refusal on a parcel of improved farmland. The agreement provided:

(a) During the lifetime of said Steuarts, should said Steuarts obtain a Bona Fide Purchaser for Value, the said McChesneys may exercise their right to purchase said premises at a value equivalent to the market value of the premises according to the assessment rolls as maintained by the County of Warren and Commonwealth of Pennsylvania for the levying and assessing of real estate taxes; provided, however, that the date of valuation shall be that upon which the said Steuarts notify said McChesneys, in writing, of the existence of a Bona Fide Purchaser.

On July 6, 1977, the subject property was appraised by a real estate broker at a market value of $50,000. Subsequently, on October 10, 1977 and October 13, 1977 respectively, appellant received bona fide offers of $35,000 and $30,000 for the land. Upon receiving notice of these offers, the appellees sought to exercise their right to purchase the property by tendering $7,820. This amount was exactly twice the assessed value of the property as listed on the tax rolls maintained in Warren County, it being the practice in that County to value real estate for tax assessment purposes at 50% of market value. The tender was refused, however, by appellant, who then commenced an action in equity seeking to cancel the Right of First Refusal, or, in the alternative, to have the agreement construed as requiring that the exercise price be that of a bona fide third party offer or fair market value as determined independently of assessed value. Appellees, requesting a conveyance of the subject premises for $7,820, sought specific performance.

The primary issue on appeal concerns the price at which the Right of First Refusal may be exercised. The Court of Common Pleas, after hearing testimony, held that the formula of twice the assessed value was intended to serve as "a mutual protective minimum price for the premises rather than to be the controlling price without regard to a market third party offer." The agreement was, therefore, construed as granting appellees a preemptive right to purchase the land for $35,000, the amount of the first bona fide offer received. ^[2] The Superior Court reversed, holding that the plain language of the agreement required that assessed market value, alone, determine the exercise price. We agree.

It is well established that the intent of the parties to a written contract is to be regarded as being embodied in the writing itself, and when the words are clear and unambiguous the intent is to be discovered only from the express language of the agreement. Estate of Breyer, 475 Pa. 108, 379 A.2d 1305 (1977); Felte v. White, 451 Pa. 137, 302 A.2d 347 (1973); East Crossroads Center, Inc. v. Mellon-Stuart Co., 416 Pa. 229, 205 A.2d 865 (1965); Siciliano v. Misler, 399 Pa. 406, 160 A.2d 422 (1960); Kennedy v. Erkman, 389 Pa. 651, 133 A.2d 550 (1957); Atlantic Refining Co. v. Wyoming National Bank of Wilkes-Barre, 356 Pa. 226, 51 A.2d 719 (1947). As this Court stated in East Crossroads Center, Inc. v. Mellon-Stuart Co., 416 Pa. at 230-231, 205 A.2d at 866, "[w]hen a written contract is clear and unequivocal, its meaning must be determined by its contents alone. It speaks for itself and a meaning cannot be given to it other than that expressed. Where the intention of the parties is clear, there is no need to resort to extrinsic aids or evidence." Hence, where language is clear and unambiguous, the focus of interpretation is upon the terms of the agreement as manifestly expressed, rather than as, perhaps, silently intended.

Application of the plain meaning rule of interpretation has, however, been subjected to criticism as being unsound in theory. "The fallacy consists in assuming that there is or ever can be some one real or absolute meaning." 9 Wigmore, Evidence § 2462 (Chadbourn rev. 1981). "[S]ome of the surrounding circumstances always must be known before the meaning of the words can be plain and clear; and proof of the circumstances may make a meaning plain and clear when in the absence of such proof some other meaning may also have seemed plain and clear." 3 Corbin, Contracts § 542 (1960). "It is indeed desirable that it be made as difficult as is reasonably feasible for an unscrupulous person to establish a meaning that was foreign to what was in fact understood by the parties to the contract. However, this result can be achieved without the aid of an inflexible rule." Murray, Contracts, § 110 (1974).

While adhering to the plain meaning rule of construction, this Court, too, has cautioned:

We are not unmindful of the dangers of focusing only upon the words of the writing in interpreting an agreement. A court must be careful not to "retire into that lawyer's Paradise where all words have a fixed, precisely ascertained meaning; where men may express their purposes, not only with accuracy, but with fullness; and where, if the writer has been careful, a lawyer, having a document referred to him, may sit in his chair inspect the text, and answer all questions without raising his eyes." Thayer, Preliminary Treatise on Evidence 428, quoted in 3 Corbin on Contracts § 535 n.16 (1960).

Estate of Breyer, 475 Pa. at 115, 379 A.2d at 1309 n.5 (1977). Indeed, whether the language of an agreement is clear and unambiguous may not be apparent without cognizance of the context in which the agreement arose:

The flexibility of or multiplicity in the meaning of words is the principal source of difficulty in the interpretation of language. Words are the conduits by which thoughts are communicated, yet scarcely any of them have such a fixed and single meaning that they are incapable of denoting more than one thought. In addition to the multiplicity in meaning of words set forth in the dictionaries there are the meanings imparted to them by trade customs, local uses, dialects, telegraphic codes, etc. One meaning crowds a word full of significance, while another almost empties the utterance of any import.

Hurst v. Lake & Co., Inc., 141 Or. 306, 310, 16 P.2d 627, 629 (1932), quoted in 4 Williston, Contracts § 609 (3d. ed. 1961).

Nevertheless, the rationale for interpreting contractual terms in accord with the plain meaning of the language expressed is multifarious, resting in part upon what is viewed as the appropriate role of the courts in the interpretive process: "[T]his Court long ago emphasized that '[t]he parties [have] the right to make their own contract, and it is not the function of this Court to re-write it, or to give it a construction in conflict with ... the accepted and plain meaning of the language used.' Hagarty v. William Akers, Jr. Co., 342 Pa. 236, 20 A.2d 317 (1941)." Felte v. White, 451 Pa. at 144, 302 A.2d at 351. " 'It is not the province of the court to alter a contract by construction or to make a new contract for the parties; its duty is confined to the interpretation of the one which they have made for themselves, without regard to its wisdom or folly.' [13 C.J. § 485, p. 524]" Moore v. Stevens Coal Co., 315 Pa. 564, 568, 173 A. 661, 662 (1934). In 17A C.J.S. Contracts § 296(3), appears the following:

The court may not rewrite the contract for the purpose of accomplishing that which, in its opinion, may appear proper, or, on general principles of abstract justice ... make for [the parties] a better contract than they chose, or saw fit, to make for themselves, or remake a contract, under the guise of construction, because it later appears that a different agreement should have been consummated in the first instance....

(Footnotes omitted.)

In addition to justifications focusing upon the appropriate role of the courts in the interpretive process, the plain meaning approach to construction has been supported as generally best serving the ascertainment of the contracting parties' mutual intent. "When the parties have reduced their agreement to writing, the writing is to be taken to be the final expression of their intention." 17A C.J.S. Contracts § 296(2). "Where the contract evidences care in its preparation, it will be presumed that its words were employed deliberately and with intention." 17A C.J.S. Contracts § 296(2). "In determining what the parties intended by their contract, the law must look to what they clearly expressed. Courts in interpreting a contract do not assume that its language was chosen carelessly." Moore v. Stevens Coal Co., 315 Pa. at 568, 173 A. at 662. Neither can it be assumed that the parties were ignorant of the meaning of the language employed. See Fogel Refrigerator Co. v. Oteri, 391 Pa. 188, 137 A.2d 225, 231 (1958).

Accordingly the plain meaning approach enhances the extent to which contracts may be relied upon by contributing to the security of belief that the final expression of consensus ad idem will not later be construed to import a meaning other...