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WEST v. PEOPLES FIRST NATIONAL BANK & TRUST COMPANY (06/28/54)

June 28, 1954

WEST, APPELLANT
v.
PEOPLES FIRST NATIONAL BANK & TRUST COMPANY, APPELLANT



Appeals, Nos. 149 and 151, March T., 1954, from judgment of Court of Common Pleas of Allegheny County, Oct. T., 1949, No. 3368, in case of C. A. West v. Peoples First National Bank & Trust Co., Trustee. Judgment affirmed. Proceeding upon petition for declaratory judgment. Before SMART, J. Judgment entered adjudicating rights of parties. Plaintiff and defendant, respectively, appealed.

COUNSEL

William B. Paul, with him Theodore M. Burns, Jr., and Paul, Lawrence & Rock, for plaintiff.

William S. Moorhead, Jr. and Judson A. Crane, with them A. W. Henderson and Moorhead & Knox, for defendant.

Before Stern, C.j., Stearne, Jones, Bell, Chidsey and Musmanno, JJ.

Author: Stern

[ 378 Pa. Page 277]

OPINION BY MR. CHIEF JUSTICE HORACE STERN

Plaintiff, C. A. West, is engaged in the real estate business and more particularly in the development of large tracts of unimproved land into residential and commercial lots and the sale of the lots so laid out. Defendant, Peoples First National Bank & Trust Company, is the trustee for certain persons known as the "McKelvey heirs" of a tract of 142 acres of land lying east of the Borough of Wilkinsburg in Allegheny County, this land being generally referred to as the "McKelvey tract." Following numerous conferences between plaintiff and defendant's attorney looking to an agreement for its development plaintiff was largely instrumental in obtaining the annexation of the major portion of the tract to the Borough of Wilkinsburg, an annexation which permitted of a much more profitable development of the land.

[ 378 Pa. Page 278]

On April 17, 1941, plaintiff and defendant entered into a written contract which forms the basis of the present controversy. It was entitled an "Agreement of Joint Adventure." Briefly summarized, to provided that plaintiff should have the exclusive right and privilege to enter into possession of the tract, lay out, grade and pave streets, install gas and water mains, electric light facilities and sanitary sewers, develop the land, and market and sell the lots laid out. Plaintiff agreed that he would enter into possession, prepare plans of the property showing proposed streets, grades and lots, procure all necessary permits pertaining to the development and sale of the property, advance all monies necessary to its full development, and advance to defendant sufficient funds to pay the delinquent taxes assessed against the property as well as the currently accruing taxes if defendant at any time during the period of the agreement did not have sufficient funds on hand for that purpose. The agreement provided that the parties were "in no manner whatsoever partners in the enterprise," but that it was merely a "joint adventure." Upon the sale of any parcels of the tract the proceeds were to be applied, first, to the repayment of all monies advanced by plaintiff in the improvement of the land, and, second, to an equal division of the balance between the parties. The agreement was to cease and determine at the end of six years from the date thereof, and plaintiff was thereupon to surrender possession to defendant without claim for any expenses incurred by him; defendant was not to be liable to plaintiff for monies expended by him in the development and improvement of the property but plaintiff was to look exclusively for recoupment to the proceeds theretofore received by him from the sales of lots.

[ 378 Pa. Page 279]

Immediately after the execution of the agreement plaintiff proceeded to carry out his obligations thereunder. He made available to defendant the necessary funds for payments on account of current and delinquent taxes and he and his staff began to make studies of the tract and prepare numerous maps and plans of the area, requiring for such preparation the services of professional engineers and draftsmen. He also collaborated in procuring zoning regulations for the portion of the tract which had been annexed to the Borough of Wilkinsburg, the zoning ordinance providing for both commercial and residential areas. But the joint adventure was ill-starred. World War II began on December 7, 1941, and building restrictions imposed by the federal government made development of the land for the time being practically impossible. Nevertheless plaintiff continued his efforts and prepared maps and studies which he submitted to the Federal Housing Administration in order to interest it in a project for war housing, but this attempt proved abortive.

On October 25, 1943, the parties entered into a second agreement in writing for the purpose of supplementing the earlier one. It provided for the payment of certain tax installments by plaintiff to be repaid to him from the net proceeds first received by defendant as its share of the proceeds from the sale of real estate. It further provided that the six-year period stipulated in the original agreement should not begin to run until the government modified its then existing regulations and restrictions on building construction, it being the understanding of the parties that defendant should have six years from the date that such modification should occur in which to complete the performance of the original agreement.

[ 378 Pa. Page 280]

But another blow struck the joint adventure. In October, 1946, before any development of the land had actually taken place on the ground, the Commonwealth condemned approximately 26 acres of the McKelvey tract, and in November, 1947, an additional 32 acres, for purposes of a limited access highway with elaborate traffic interchanges. This condemned acreage cut through the very heart of the tract, leaving isolated marginal portions at the corners of the original area. The result was that the original purpose of the joint adventure agreement could not be carried out. Moreover, the work of construction of the highway through the tract, which continued thereafter during the entire term of the agreements, made it impossible to attract purchasers to the property so as to effect sales of the uncondemned portions of the land. Plaintiff, however, persisted in his efforts to make the best of the situation. In November, 1946, he obtained the M. & S. Construction Company as a purchaser, for the sum of approximately $20,000, of a parcel of 17.63 acres on the northeasterly side of the tract, the entire proceeds being received by defendant. He hired a real estate appraiser to make further studies of the tract and the damages resulting from the condemnation. He prepared numerous maps and plans covering the uncondemned portions of the land for studies of street and lot patterns designed to render those portions most productive. Throughout 1948 the parties had frequent conferences discussing the ...


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