Western Sav. Fund Soc. of Philadelphia v. Southeastern Pennsylvania Transp. Authority
| Decision Date | 06 March 1981 |
| Citation | 285 Pa.Super. 187,427 A.2d 175 |
| Parties | The WESTERN SAVINGS FUND SOCIETY OF PHILADELPHIA, v. SOUTHEASTERN PENNSYLVANIA TRANSPORTATION AUTHORITY, Appellant. |
| Court | Pennsylvania Superior Court |
Argued June 13, 1980.
Lewis H. VanDusen, Jr., Philadelphia, for appellant.
C K. Walters, Philadelphia, for appellee.
Before CERCONE, President Judge, and PRICE, SPAETH, HESTER CAVANAUGH, BROSKY and WICKERSHAM, JJ.
The instant appeal is from the judgment entered pursuant to an order granting a motion for summary judgment in favor of Western Savings Fund Society of Philadelphia (hereinafter referred to as Western). Western sued in equity seeking to enforce an option to renew a lease against appellant, Southeastern Pennsylvania Transportation Authority (hereinafter SEPTA) [1] notwithstanding its failure to comply with a lease provision requiring that notice be timely filed. Reasoning that equitable relief was nonetheless appropriate, the chancellor granted Western's motion for summary judgment. Arguing both that the chancellor erred in denying its motion for summary judgment and in entering judgment for Western, SEPTA appealed. A three judge panel of this court reversed the chancellor's order and dismissed Western's complaint. (Filed October 12, 1979). [2] Western's petition for allocatur was denied by our supreme court on January 9, 1980. On March 19, 1980, we granted Western's application for reargument before the Court en banc. For the reasons which follow, we reverse the order granting summary judgment to appellee and direct entry of judgment for appellant.
The pertinent facts are undisputed. On November 26, 1965, Western and SEPTA entered into a lease agreement whereby Western leased certain premises in Philadelphia's Suburban Station Concourse at an annual rental rate of $10,350. The lease became effective April 16, 1966, was for a ten year term, and provided Western the option to renew for an additional ten year period at the 1966 rental rate. The manner in which the option was to be exercised was stipulated in the lease agreement as follows:
That, if Lessee shall have satisfactorily performed its obligations and covenants herein contained, Lessee shall have the option of renewing this lease after expiration of the original term hereby created for an additional term of ten years, upon giving three months' notice in writing to Lessor prior to the expiration of the said original term, of its intention so to do. In the event said option is exercised, this lease shall continue for a further term of ten years under the same terms and conditions. It being understood and agreed, however, that in the absence within the time specified, of the aforesaid notice of Lessee of its intentions to exercise its option to renew this lease for an additional ten year term, said option herein granted shall expire absolutely, and in this event the lease shall cease and determine at the expiration of the original ten year term.
Clause V(b) (emphasis added). See Record at 11a (Exhibit A).
Both appellant and appellee agree that the date by which notice was required to have been given pursuant to the lease was January 16, 1976. Western's notice was not mailed until January 20, 1976, however, and was not received by SEPTA until January 22, 1976. SEPTA thus rejected the notice because it was not timely filed and informed Western that the lease would expire at the end of the predetermined ten year term. SEPTA did offer Western a new ten year lease, however, albeit at a higher rental rate of $29,580 per year. Western initially accepted the offer but, ultimately, revoked its acceptance when it decided to seek specific enforcement under the more favorable 1966 terms. See Record at 20a. Western's suit in equity thus followed.
Termed an "administrative oversight" by one of Western's vice presidents, see Record at 29a, the delay was found by the chancellor to have been "occasioned by the fact that at the time of the exercising of the option to renew, (Western) was engaged in a 'massive branch expansion program.' " Slip op. at 2. Since SEPTA was not harmed by the delay and to safeguard Western's "large investment" [3] in the premises, the chancellor opined that the delay of six days "must be considered de minimis." Slip op. at 6. The chancellor thus deemed equitable relief appropriate and granted Western's motion for summary judgment. Appellant SEPTA contends that this was error. We agree.
"(I)t is a sound legal principle that unless an option is exercised within the time fixed it necessarily expires: McMillan v. Philadelphia Company, 159 Pa. 142, 28 A. 220 ((1893)); Vilsack v. Wilson, 269 Pa. 77, 112 A. 17 ((1920)); Rhodes v. Good, 271 Pa. 117, 114 A. 494 ((1921)); Loughey v. Quigley, 279 Pa. 396, 124 A. 84 ((1924))." Phillips v. Tetzner, 357 Pa. 43, 45, 53 A.2d 129, 131 (1947). This is so because "(t)ime is always of the essence in an option contract." New Eastwick Corporation v. Philadelphia Builders, 430 Pa. 46, 50, 241 A.2d 766, 769 (1968). Cf. 6 Williston on Contracts § 853 at 212 (3d ed. 1962) . Accord, Unatin 7-Up Company, Inc. v. Solomon, 350 Pa. 632, 39 A.2d 835 (1944). [4]
In urging us to ignore both the rule requiring punctuality in exercising an option and the express language of the lease agreement mandating the same, appellee contends that Pennsylvania courts recognize exceptions to the general rule, which exceptions "allow equity to relieve a tenant, in a proper case, from the consequences of a tardy renewal notice." Brief for appellant 7-8. Appellee's inability to cite a single Pennsylvania decision in which such exceptions were operative casts considerable doubt on the validity of this position. Appellee's reliance on Unatin 7-Up Co., Inc. v. Solomon, 350 Pa. 632, 39 A.2d 835 (1944), Warner v. Bedell Co., 278 Pa. 576, 123 A. 490 (1924) (per curiam), and McHenry v. Mitchell, 219 Pa. 297, 68 A. 729 (1908), moreover, is misplaced.
Unatin 7-Up Co., Inc. v. Solomon, 350 Pa. 632, 39 A.2d 835, fails to vindicate appellee's position because it stands for the singular proposition that where the optionor himself prevents an optionee from accepting an option in a timely fashion, the optionee has done everything possible to affect a timely acceptance, and notice of acceptance is nonetheless given as soon after the prescribed time as is possible, given the optionor's conduct, the option will be specifically enforced. Rather than positing an exception to the rule requiring punctuality, therefore, the Unatin decision simply comports with the view in this Commonwealth that the timely notice requirement may be waived by agreement or by conduct of the parties, see note 4 supra, and, if such a waiver occurs, failure to give timely notice will not prevent the option from being enforced.
To be sure, the court in Warner v. Bedell Co., supra, gratuitously commented that, "Ordinarily, the possessor of (an option) must exercise it on the day, or within the time specified ... and nothing sufficient to take this case out of the general rule has been shown." 278 Pa. at 578-79, 123 A. at 491 (citation omitted) (emphasis added). Even accepting, arguendo, appellee's premise that the italicized portion of the court's statement establishes Pennsylvania's recognition of exceptions, it does not follow a fortiori that the instant case is such an exception.
Analysis of the Warner holding reveals only strict adherence to the rule of punctuality and the requirements stipulated in the lease regarding the manner in which the option was to be exercised. Thus, where the lessor was obliged to give notice of his intent to cancel a lease by registered mail on or before a specified date, the notice was ruled untimely since, although it was given by the lessor to one of his own employees on the correct date, the lessor's employee failed to deliver it to the lessee until the day following the required notification date. This result obtained notwithstanding the court's concession that, even had the lessor followed the procedure outlined in the lease, viz., sending the notice by registered mail, the letter could not possibly have been received by the lessee until at least the day on which the notice was, in fact, hand delivered. Pivotal to this conclusion was the court's belief that time was clearly of the essence and thus, that
in contemplation of law, the sending of the letter by registered mail on (the required date) would have been notice instanter of the exercise of the option ... and hence within the express terms of the lease, whereas (the lessor's) personal delivery of the notice could not take effect before (the day following the required date) ... after the right to cancel (the) lease had expired.
Id. at 578, 123 A. at 491 (citation omitted) (emphasis added).
Appellee's reliance on the court's pronouncement in McHenry v. Mitchell, 219 Pa. 297, 68 A. 729, that "(t)ime is presumably of the essence of this, and every other optional agreement," id. at 301, 68 A. at 731 (emphasis added), is similarly unavailing. Even if we assume that the court's use of the word "presumably" in some way intimates that exceptions to the rule of punctuality exist, the McHenry court's further conclusion that time is always of the essence when, as here, the contracting parties have made it so seemingly precludes the application of any such equitable exception.
Appellee purports to sustain its argument in favor of equitable relief by referring us to decisions by courts in other jurisdictions wherein equitable relief has been granted when: (1) the failure to give timely notice results not from negligence but rather from...
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