Appeal from decree of Court of Common Pleas No. 3 of Philadelphia County, Sept. T., 1963, No. 1377, in re trustees of estate of Stephen Girard, deceased, Revelle W. Brown, John A. Diemand et al. v. Bankers Securities Corporation.
Ernest R. von Starck, with him Donald A. Scott, Arthur Littleton, Thomas J. Gaffney, and Gaffney and Gaffney, and Morgan, Lewis & Bockius, for appellants.
Bernard M. Borish, with him Alan J. Davis, and Wolf, Block, Schorr and Solis-Cohen, for appellee.
Bell, C. J., Musmanno, Jones, Cohen, Eagen, O'Brien and Roberts, JJ. Opinion by Mr. Justice Cohen. Mr. Justice Roberts concurs in the result. Concurring and Dissenting Opinion by Mr. Chief Justice Bell. Mr. Justice Musmanno joins in this Concurring and Dissenting Opinion.
For many years prior to 1951 the principal income-producing asset of the Stephen Girard Trust Estate had been Snellenburgs Department Store. By that year, however, the sales volume had declined substantially from its wartime peak, and the owners of the business were anxious to cease operations. Although
the Estate's lease with N. Snellenburg & Co. was not due to expire until 1958, the Estate entered into discussion with Bankers Securities Corporation (Bankers) regarding a possible takeover of Snellenburgs by Bankers. These discussions culminated in a purchase of all of the stock of N. Snellenburg & Co. by Bankers, the purchase of the Snellenburg-operating assets by Bankers and the taking of a sublease by Bankers until January 31, 1958.
Bankers then established a Snellenburgs-Division to operate the business. About a year later (May, 1952), Bankers and the Estate opened negotiations for a new long-term lease. After more than a year of negotiations the parties executed a new lease on November 6, 1953. The lease was for a period of 25 years and contained extensive provisions regarding the rights and obligations of the parties. Among these provisions is the one primarily at issue here:
"20 A. The liability of the Lessee (and of any assignee of Lessee to whom Lessee may assign this lease under Paragraph 20 B hereof without the Lessor's consent upon such assignee's assuming in writing all of the Lessee's obligations hereunder), for the performance of the covenants and agreements herein contained and the liability for breach of any of the said covenants or agreements howsoever arising, and the exercise or enforcement of any remedies afforded under the terms hereof or under the laws of the Commonwealth of Pennsylvania shall be and is hereby limited to the assets which would be available to meet such liability if (I) a separate corporation had executed this lease as Lessee, and (II) on the date on which this lease commenced such corporation had a net worth of $10,000,000, and (III) such net worth were thereafter charged with any losses not restored by subsequent profits sustained in the operation of the department store business conducted under the name 'Snellenburgs'
or under such name as may be used at any time in the future to identify that business, and (IV) there were treated as withdrawn by such corporation's shareholders from such net worth all sums in excess of $10,000,000 whether or not actually withdrawn, provided that no withdrawal shall be treated as having been made which would reduce the said net worth below $10,000,000 at the time of such withdrawal.
"B. The Lessee may at any time (I) sublet or license portions of the demised premises for the operation of leased departments under the name 'Snellenburgs' or such name as may be used at any time in the future to identify the department store business on the demised premises, and with the written consent of Lessor, sublet any part or all of the demised premises for any of the purposes permitted hereunder, but in either of such events Lessee shall not be relieved of its obligations hereunder; or (II) assign this lease to a corporation engaged in the type of business permitted to be conducted on the demised premises under the terms of this lease and whose net worth is not less than the liability of the assignor determined in accordance with Paragraph 20A at the time of such assignment, whether such corporation be affiliated directly or indirectly with the Lessee, and in the event of such assignment Lessee shall be relieved of all obligations hereunder upon the assignee's assuming such obligations in writing. This right of assignment shall not be exhausted by one exercise thereof and this lease may be assigned and re-assigned from, by or to the Lessee without increasing or extending Lessee's or the assignee's ...