Village Beer and Beverage, Inc. v. Vernon D. Cox and Co., Inc.

• Decision Date: 05 June 1984
• Citation: 475 A.2d 117,327 Pa.Super. 99
• Parties: VILLAGE BEER AND BEVERAGE, INC. v. VERNON D. COX AND CO., INC. and Edwin Boyer and Frank Fleming and Neshaminy Valley Beer and Soda Centers, Inc. Appeal of NESHAMINY VALLEY BEER AND SODA CENTERS, INC. VILLAGE BEER AND BEVERAGE, INC. v. VERNON D. COX AND CO., INC.; Edwin Boyer; Frank Fleming; and Neshaminy Valley Beer and Soda Centers, Inc. Appeal of VERNON D. COX & CO., INC., Edwin Boyer and Franklin Fleming.
• Court: Pennsylvania Superior Court

Page 117

475 A.2d 117

327 Pa.Super. 99

VILLAGE BEER AND BEVERAGE, INC. v. VERNON D. COX AND CO., INC. and Edwin Boyer and Frank

Fleming and Neshaminy Valley Beer and Soda Centers, Inc.

Appeal of NESHAMINY VALLEY BEER AND SODA CENTERS, INC.

VILLAGE BEER AND BEVERAGE, INC. v. VERNON D. COX AND CO., INC.; Edwin Boyer; Frank Fleming; and Neshaminy Valley Beer and Soda Centers, Inc.

Appeal of VERNON D. COX & CO., INC., Edwin Boyer and Franklin Fleming.

Superior Court of Pennsylvania.

Argued Nov. 23, 1983.

Filed March 23, 1984.

Reargument Denied June 5, 1984.

Charlotte Thurschwell, Plymouth, for appellants.

Hyman Lovitz, Philadelphia, for appellee.

Before MONTEMURO, WATKINS and HOFFMAN, JJ.

MONTEMURO, Judge:

This matter is before this court on the consolidated appeals of Vernon D. Cox and Co., Inc.; Edwin Boyer and Frank Fleming; and Neshaminy Valley Beer & Soda Center, Inc.; defendants below. Plaintiff/appellee, Village Beer and Beverage, Inc., brought this action in equity alleging that it had an exclusive lease with defendant/appellants, Boyer and Fleming, and requesting that all defendant/appellants be enjoined from entering into a separate lease which would violate the exclusivity agreement of appellee's lease. A non-jury trial was held before the Honorable William H. Rufe, III, and an adjudication primarily in the nature of equitable relief, and an amended adjudication in the nature of a monetary award, were rendered. ¹ The lower court, en banc, dismissed the exceptions of appellants, ² and a final decree was entered on March 24, 1982. Timely appeals were filed from this final decree.

Our scope of review of an adjudication in equity is well established. A chancellor's findings of fact, affirmed by the court en banc, have all the force and effect of a jury's verdict and will not be disturbed on appeal if there is sufficient evidence to sustain such findings. Piercing Pagoda, Inc. v. Hoffner, 465 Pa. 500, 351 A.2d 207 (1976). This rule is particularly applicable to findings which are predicated upon the credibility of witnesses, whom the chancellor has had the opportunity to hear and observe. Herwood v. Herwood, 461 Pa. 322, 336 A.2d 306 (1975). It is equally well settled that a chancellor's conclusions, whether of law or ultimate fact, are always reviewable as they are no more than his reasoning from the underlying facts. Chambers v. Chambers, 406 Pa. 50, 176 A.2d 673 (1962).

We do not disturb the findings of fact of the chancellor, there being sufficient evidence to support them. Those findings are extensive and we paraphrase their essence: In the fall of 1975, appellee, Village Beer and Beverage, Inc., (hereinafter "Village Beer") became interested in renting space at the Village Center Shopping Center, which was then under construction in Bensalem Township, Pennsylvania. Village Beer desired to operate a beer distributor business at Village Center Shopping Center, and in order to do so, it first had to purchase a beer distributor license and then get approval of transfer of the license from the Pennsylvania Liquor Control Board. The parties were aware that for one to apply for approval of a license transfer, the applicant had to have a location for his business. The Village Center Shopping Center is owned by appellants, Boyer and Fleming. Appellant, Vernon D. Cox & Co., Inc. (hereinafter "Cox & Co.") is the exclusive rental agent for the Village Center Shopping Center.

On December 18, 1975, Village Beer entered into a five year lease for rental of stores Nos. 21 and 22 in the Village Center Shopping Center. The parties stipulated that the lease was their total effective agreement, and the lease was made part of the record below. The parties to the lease ratified a handwritten change in the term of the lease, moving the commencement of the term back to February 1, 1976. The lease provides that monthly installments of rent in the amount of $1,266.66, were to be paid in advance on the first day of each month, said rent to begin on the first day of the term of the lease. The lease further provides:

7. Place of Payment. All rent shall be payable without prior notice or demand at the office of the Lessor ....

8. Affirmative Covenants of Lessee (a) Payment of Rent. Lessee covenants and agrees that he will without demand

(a) Pay the rent ... at the times and at the place that the same are payable, without fail....

* * *

14. Remedies of Lessor. If the lessee

(a) Does not pay in full when due any and all installments of rent ...

* * *

(d) ... or if for any other reason Lessor shall, in good faith, believe that Lessee's ability to comply with the covenants of this lease, including the prompt payment of rent hereunder, is or may become impaired,

thereupon:

(1) The whole balance of rent and other charges ... shall be taken to be due and payable....

(2) At the option of Lessor this lease and the terms hereby created shall become absolutely void ... whereupon, Lessor shall be entitled to recover damages for such breach in an amount equal to the amount of rent reserved for the balance of the term of this lease....

A rider prepared by appellee and made a part of the lease provides:

(a) LESSOR reserves and LESSEE covenants to pay to the LESSOR without prior demand therefor being made, as rent for the demised premises:

(1) The annual sum of FIFTEEN THOUSAND AND TWO HUNDRED 00/100 DOLLARS in equal monthly installments of TWELVE HUNDRED AND SIXTY SIX 66/100 DOLLARS each, in advance on the first day of each and every month during the five (5) years hereof; i.e., Feb. 1st 1976 to Jan. 31st 1981, [terms of Feb. 1st 1976, and Jan. 31st 1981, are handwritten replacing crossed out typed terms of November 1st 1975 and October 31st 1980]

* * *

42. The term of this lease shall begin on the 1st day of the month next following the date such building is completed, and shall continue for a period of five (5) years, from such date of commencement, and LESSEE is notified that it may take possession thereof.

* * *

45. It is understood that LESSEE is making application for the transfer of a certain beer distributors' license with the Pennsylvania Liquor Control Board; therefore, this Agreement is contingent upon the transfer being approved by the Liquor Control Board of Pennsylvania.

46. It is understood that LESSOR will not enter into any tenancy with anyone for the purpose of establishing another beer distributor business in said shopping center.

On February 19, 1976, the officers of Village Beer met with Frank Cox of Cox & Co. Cox was given a check for $1,266.66, the security deposit to be held under the terms of the lease. At that time, Village Beer related that it had not yet purchased a beer distributor's license, so it would not be taking possession immediately. Cox acknowledged that he understood the problem.

Village Beer never made any payments to Cox & Co. or to Boyer and Fleming other than the security deposit. By letter dated February 24, 1976, Cox requested from Village Beer a check for rent due on February 1, 1976. By letter dated March 4, 1976, Cox requested from Village Beer a check for rent due on February 1, 1976, and March 1, 1976.

In early April, 1976, Cox & Co. began negotiations with appellant Neshaminy Valley Beer & Soda Center, Inc. (hereinafter "Neshaminy"), concerning a lease in Village Center Shopping Center for a beer distributor store. Counsel for Cox & Co. sent a letter dated May 12, 1976, to Village Beer. That letter stated in pertinent part:

This is notice under Section 14(d)(2) that the lessor is exercising his option that the lease is hereby terminated by reason of your failure to pay rent for any month during the term of the lease.

Be advised that the lessor has moved immediately to mitigate damages by leasing the property to another party.

On May 13, 1976, Neshaminy entered into a ten year lease for possession of store No. 1 at Village Center Shopping Center, and presently conducts a beer distributor business there. Village Beer rented space at another shopping center, obtained a license and approval of transfer, and operated a beer distributor business there until it sold its license on or about March 4, 1977. ³

From these facts, the chancellor concluded that Village Beer's failure to pay rent in February, March, April, and May of 1976, did not constitute a breach of the lease, and so that lease was in effect until it was anticipatorily breached by Boyer and Fleming's letter of repudiation of May 12, 1976, and was also breached by Boyer and Fleming's execution of the lease with Neshaminy on May 13, 1976. Thus, the chancellor fashioned equitable relief which put Village Beer in Neshaminy's store at Village Center Shopping Center and enforced the Village Beer lease.

The chancellor focused his analysis on a portion of the lease contained within the rider, at paragraph 45: "this Agreement is contingent upon the transfer [of the beer distributor license] being approved by the Liquor Control Board of Pennsylvania." After pointing out that the word "contingent" created a condition, the chancellor summarily announced that the condition operated as a condition precedent to Village Beer's obligation to pay rent, and as a condition precedent to Boyer and Fleming's obligation to turn over possession. Since approval of transfer of license had not been obtained in February, March, April, and May of 1976, ⁴ the chancellor concluded that the condition precedent had not been fulfilled and Village Beer had no obligation to pay rent. Curiously, the chancellor held that the condition had no effect on the validity of the lease and its remaining provisions, including Boyer and Fleming's obligation to forebear from renting to another beer distributor business.

A thorough examination of the lease compels us to reject this analysis. Without resort to the language of the condition, other provisions of the lease, or the intent of the contracting parties, the chancellor arrived at a definitive...