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PHILADELPHIA v. PHILADELPHIA TRANSPORTATION COMPANY. (06/26/61)

June 26, 1961

PHILADELPHIA, APPELLANT,
v.
PHILADELPHIA TRANSPORTATION COMPANY.



Appeal, No. 169, Jan. T., 1961, from order of Court of Common Pleas No. 1 of Philadelphia County, June T., 1960, No. 31, in case of City of Philadelphia v. Philadelphia Transportation Company. Order affirmed.

COUNSEL

Harold E. Kohn, with him William T. Coleman, Jr., Special Counsel for City of Philadelphia, and David Berger, City Solicitor, for appellant.

Hamilton C. Connor, Jr., with him Edward G. Bauer, Jr., Peter Platten, and Ballard, Spahr, Andrews & Ingersoll, for appellee.

Before Jones, C.j., Bell, Musmanno, Jones, Cohen, Bok and Eagen, JJ.

Author: Jones

[ 404 Pa. Page 283]

OPINION BY MR. JUSTICE BENJAMIN R. JONES.

This appeal presents the problem of the availability of a declaratory judgment proceeding to construe and interpret an option-to-purchase provision in a written agreement between the City of Philadelphia (City) and Philadelphia Transportation Company (PTC).

On July 1, 1907, the City and the Philadelphia Rapid Transit Company, of which PTC is now the successor, entered into a written agreement which, by a later extension, remains effective until July 1, 1962. Under the provisions of that agreement, the City is granted an option to purchase on the first of July of any year, while the agreement is in force, all the leaseholds, franchises, real and personal property of PTC

[ 404 Pa. Page 284]

    and its wholly-owned subsidiaries. If the City exercises that option, the option price is to be ascertained in accordance with a formula set forth in paragraph 11 of the agreement.*fn1

On June 6, 1960, the City filed a petition for a declaratory judgment in Court of Common Pleas No. 1 of Philadelphia County in which proceeding that court was asked to determine both the proper construction of paragraph 11 of the agreement, i.e., the price fixing formula, and the option price. In its petition, inter alia, the City averred that: (1) since April 1, 1952, the City and PTC have been negotiating to establish a proper price for the option; (2) PTC claims that under the formula the option price as of December 31, 1960 exceeds $95,000,000, while the City claims that the option price as of that date does not exceed $62,000,000; (3) the existence of this dispute as to the contract formula and the option price prevents the exercise of the option; (4) the source of the dispute is not only the interpretation of the language of paragraph

[ 404 Pa. Page 28511]

but in the application of such language, i.e., whether certain items appearing on PTC's books as assets should not be eliminated as worthless, fictitious and excessive, whether PTC's books correctly and properly reflect the depreciation reserve, etc.; (5) it is important that the City, prior to its exercise of the option, know the exact price called for under the formula since the City will be ...


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