Appeal, No. 37, Jan. T., 1963, from judgment of Court of Common Pleas of Berks County, Oct. T., 1959, No. 110, in case of J. Miller Kready v. Bechtel, Lutz & Jost. Judgment reversed.
Paul N. Schaeffer, for appellant.
David H. Roland, with him George B. Balmer, and Snyder, Balmer & Kershner, for appellee.
Before Bell, C.j., Musmanno, Jones, Cohen, Eagen, O'brien and Roberts, JJ.
OPINION BY MR. JUSTICE O'BRIEN
Appellant, who was employed as a salesman by appellee, purchased, on January 2, 1942, three shares of the stock of appellee. On April 11, 1942, the parties entered into a written agreement which obligates appellee to purchase appellant's shares "upon the death of Kready, or upon his leaving their employ", "at the book value of said stock as appears on a balance sheet of [defendant] as of the 31st of December preceding
the death or leaving of their employ", and bound appellant to transfer the shares to appellee upon payment.
Appellee caused a notice to be typed on the stock certificate representing these three shares, to the effect that the certificate was held subject to the terms of the agreement of April 11, 1942. On July 1, 1943, January 3, 1944 and January 2, 1945, appellant purchased five, two and two additional shares, respectively, of appellee's stock. On each of these stock certificates, the same notice of subjectivity to the April 11, 1942 agreement was noted. Some time between January of 1946 and 1950, the testimony on the point being extremely vague, appellant surrendered his stock certificates to appellee. The certificates were returned to him with the word "Void" written across the notice of subjectivity to the April 11, 1942 agreement and with the following notation on them: "This certificate is held subject to the right of Bechtel, Lutz & Jost, Inc. to purchase the shares represented by this certificate upon the death of the registered owner hereof, or upon the registered owner hereof ceasing to be in the employ of Bechtel, Lutz & Jost, Inc. The price shall be the book value of said shares. Agreed to. J. Miller Kready." On January 2, 1946, appellant purchased three additional shares of appellee's stock and when he received the certificate it contained the notice last above quoted. This purchase brought appellant's total stock ownership to fifteen shares.
Appellant ended his employment relationship with appellee on January 30, 1959, at which time the value of appellee's capital stock was $1,244.35 per share. Appellant offered to surrender his shares for the aforesaid price, but appellee refused to purchase them, whereupon appellant commenced, by complaint, an action of assumpsit, alleging a breach of the agreement of April 11, 1942. Appellee filed an answer and new matter, setting up as a defense to the action the abrogation
of the April 11, 1942 agreement and relying upon the second notation on the certificate, this second notation being an option to purchase rather than an unconditional obligation to do so. Appellant replied to the new matter, alleging that the second notation was made without his consent or authorization, as was the placing of the word "Void" on the first notation, and neither the alleged cancellation of the first notation nor the second notation's existence affected appellee's obligation to purchase. Appellant further averred that there was no consideration for any agreement between the parties to nullify the agreement of April 11, 1942.
The matter came on for jury trial and, at the close of appellant's case, the trial court, on appellee's motion, entered a judgment of compulsory non-suit. Appellant's motion to take off the non-suit was refused by the court en banc, one member thereof dissenting, and this appeal followed.
The court below held that appellant had consented to the nullification of the April 11, 1942 agreement and the substitution therefore of the subsequent option agreement, and that such consent was supported by consideration, namely, appellee's forbearance of its right to discharge appellant from its employ. The reasoning of the court below is summarized in its opinion as follows: "The plaintiff and defendant under the contract of April 11, 1942, had established a legal relationship which required defendant to purchase plaintiff's stock at a book value as of a certain date preceding the death or leaving of the employ of defendant by plaintiff. At the time the plaintiff agreed to the second notation quoted above, changing the contractual obligation of defendant to purchase the stock to an option or right to purchase said stock, the defendant had a clear right to discharge the plaintiff from its employ had it chosen to exercise this right. In our opinion its forbearance to do so, ... for a period of years following
the agreement of plaintiff to accept the changed relationship pertaining to the shares of stock, constitutes legal consideration to support plaintiff's agreement. Jordan v. Sun Life Assurance Co., 366 Pa. 495 (1951) supports this conclusion.See also Langer v. Superior Steel Corp., 105 Pa. Superior Ct. 579, and Restatement, Contracts, § 90.
"For the foregoing reasons we are of opinion that the entry of a compulsory non-suit by the Trial Judge was legally correct and that the motion for its ...