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November 16, 1955


Appeal, No. 155, Oct. T., 1955, from judgment of Court of Common Pleas of Berks County, Nov. T., 1953, No. 119, in case of M.M. Waterbor, Inc. v. George S. Livingood. Judgment affirmed.


C.L. Cushmore, Jr., with him Thomas Raeburn White, and White, Williams & Scott, for appellant.

Raymond K. Hess, with him Moss, Rieser & Bingaman, for appellee.

Joseph L. Cohen, Assistant Deputy Attorney General, Edward L. Springer, Deputy Attorney General, and Herbert B. Cohen, Attorney General, for Commonwealth of Pennsylvania, amicus curiae.

Before Rhodes, P.j., Hirt, Ross, Gunther, Wright, Woodside, and Ervin, JJ.

Author: Hirt

[ 179 Pa. Super. Page 612]


Plaintiff is in the business of supplying passenger automobiles and trucks to approved applicants on a rental basis. As a member of the Hertz System of car rental organizations plaintiff uses three apparently standardized forms of rental contracts: One form is used for the lease of a motor vehicle for a short period not exceeding 30 days. A second form is employed where the rental period is a specific number of months or years. The third type, in issue here, is used when the rental of the motor vehicle is for an indeterminate period. The vehicles licensed under the first and second classes of contracts are standard models of popular makes of cars selected by plaintiff as best suited to this branch of its business. The motor vehicles necessary to supply the demand for these classes of service are bought outright by plaintiff and constitute a pool from which they are drawn for rental to various customers in succession. The subject matter of a contract of the third class is a vehicle bought by plaintiff on the customer's specifications as to manufacture and model or even specific design. Contracts 1 and 2 provide for the return of the vehicle to the plaintiff at the end of the rental term. Form 3, although it purports to be a "contract of leasing only" provides for the purchase of the vehicle by the lessee on certain contingencies.

The vehicle in the present appeal is an Oldsmobile "Holiday" sedan purchased by the plaintiff on defendant's specifications and leased to him on February 9, 1953. In the contract of the third type the plaintiff leased the vehicle to the defendant for a term beginning with the date of delivery to him "and continuing indefinitely thereafter until terminated as in this agreement provided." The services assumed by plaintiff under the terms of the lease were all inclusive. Among them the plaintiff as lessor undertook to furnish complete

[ 179 Pa. Super. Page 613]

    garage service for the leased automobile including washing, polishing, oiling, greasing, periodic inspection, and storage. The lessor also agreed to furnish necessary license tags and to make necessary repairs and to keep the vehicle in good running condition throughout the term of the lease. It also was obliged to supply gasoline, oil and lubricants, and all necessary tires and tubes. The lessor was bound to provide a substitute vehicle while the leased car was out of service for repair or any other reason. Lessor also agreed to maintain property and public liability insurance, and in the contract the defendant as lessee was relieved from liability from collision or other damage to the leased vehicle in excess of $50. For these services the "Fixed Rental Charge" which defendant agreed to pay was $27 per week; to this there was an additional charge of 4 cents per mile on the basis of the number of miles the vehicle was driven. The contract by its terms gave either party the right of cancellation on any anniversary of the date on which the vehicle entered the lessee's service. And it provided for the sale of the vehicle by lessor to the lessee on the happening of any one of three contingencies: (1) In the event that the lessee should cancel the lease at the end of any yearly term the lessor agreed to sell and the lessee agreed to buy the vehicle on the basis of a formula for computing the price set forth in the lease; (2) on the termination of the contract at the end of any year by the lessor the lessee was given the option to buy at a price as above computed; (3) On the default of lessee in any of the payments required of him under the agreement the lessor was given the option of terminating the agreement and the lessee was given the right to buy the car.

The defendant paid the rentals reserved in the lease up to August 29, 1953, and then ...

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