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BEST ET AL. v. REALTY MANAGEMENT CORP (12/29/53)

December 29, 1953

BEST ET AL.
v.
REALTY MANAGEMENT CORP



COUNSEL

Albert M. Cohen, Philadelphia, Louis A. Bloom, Chester, for appellants.

Thomas J. Burke, H. Lester Haws, R. Winfield Baile, Upper Darby, for appellee.

Before Rhodes, P. J., and Hirt, Reno, Ross, Gunther, Wright and Woodside JJ.

Author: Ross

[ 174 Pa. Super. Page 327]

ROSS, Judge.

This appeal is from the refusal of the Court of Common Pleas of Delaware County to enter judgment on

[ 174 Pa. Super. Page 328]

    the pleadings for the plaintiffs in an action of assumpsit for the recovery of a down payment on realty.

On March 31, 1951 plaintiffs as vendee and defendant as vendor executed a written agreement for the purchase of a house then under construction by the defendant corporation. Plaintiffs paid $2,025 on account of the stipulated price of $13,415. The instrument contained the following so-called 'escalator clause': '14. It is mutually agreed that in the event of the increase in the cost of said labor (or for any part thereof), then and in that event the seller shall have the option to increase the price of the property, the subject of this agreement, in an amount equal to the increased cost of said labor, and/or said materials or both. Purchaser/s shall be notified in writing of said increase as aforesaid, if any, and Purchaser/s shall elect within five days to pay the increased cost as set forth in said written notice to him, or to request the return of Purchaser/s deposit (or deposits). Seller may elect, even in the event of an increase in cost of labor or material, to accept as the full consideration the purchase price herein set forth.'

On April 25, 1952 the defendant notified the plaintiffs' attorney by letter of an increase of $400, in accordance with paragraph 14. By letter of April 30 plaintiffs rejected the increase and demanded return of their down payment, which was refused. Plaintiffs then brought assumpsit, defendant filed an answer, plaintiffs' motion for judgment on the pleadings was refused by the court en banc, and this appeal followed.

Our decision depends necessarily upon the construction of paragraph 14 of the contract. Appellants' position is that when they received notice of an increase in price they then had the option of accepting and binding themselves to pay $400 more for the house, or of rescinding, and that by timely notice to appellee of

[ 174 Pa. Super. Page 329]

    their intention to rescind they effectively nullified the contract and terminated all contractual rights and duties thereunder. Appellee, on the other hand, contends, and the court below held, that the reasonable meaning of the paragraph is that the seller upon learning that the cost of its labor and materials had increased could notify the purchasers of such increase, whereupon the purchasers could accept and pay the increased price or could notify the seller of their decision to rescind. It was then the seller's option either to terminate the contract by accepting the offer of rescission, or to hold the purchasers to the original price. In short, that the purchasers' notice to rescind did not finally and conclusively bind the seller to rescission but only restrained it from receiving the increase in price; that contractual rights and duties were extinguishable only by the seller's acceptance of the offer of rescission and that having rejected such offer, appellee still had the alternative contractual right to hold its purchasers to their original obligation. We agree that this is the reasonable construction of paragraph 14. Appellants' interpretation entirely ignores and renders meaningless the last sentence of the 'escalator clause', and such interpretation is untenable for the ...


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