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STRICK REAL ESTATE CO. v. FRUEHAUF CORP.

March 7, 1968

STRICK REAL ESTATE COMPANY
v.
FRUEHAUF CORPORATION v. STRICK CORPORATION



The opinion of the court was delivered by: LORD, III

 Presently before me is the motion by the third party defendant Strick Corporation for summary judgment on the claim asserted by the third party plaintiff Fruehauf Corporation ("Fruehauf").

 In order to place this motion in the proper perspective it is necessary to set out the factual background of the entire case. Plaintiff in this action is the Strick Real Estate Company ("Real Estate"). On February 1, 1955, plaintiff leased certain real property to Strick Plastics Corporation ("Plastics"). Fruehauf subsequently purchased Plastics which it operated as its Strick Division. With the consent of the lessor, Real Estate, Fruehauf took an assignment of the lease which became one of the assets of Fruehauf's Strick Division.

 Fruehauf claims to have terminated this lease in 1962. Real Estate claims that this termination was invalid and that Fruehauf owes for rents due from the period March 1962 to November 1966, and also damages for the failure to make necessary repairs.

 Fruehauf, although in no way conceding liability, asserts that if the lease is still in effect all amounts due are owed by the third party defendant, Strick Corporation ("Strick").

 Having examined the documents before me, particularly the Agreement of Sale, I find that the circumstances are such that it would be inappropriate to foreclose any of the issues at this time. Thus, summary judgment must be denied.

 Assuming that the lease was not effectively terminated, the broad question here is whether Strick, by virtue of its purchase, assumed the liability for all or part of the amounts due. *fn1"

 With regard to that portion of the amount alleged due on the closing date *fn2" (as opposed to amounts accruing after that time) Fruehauf points to Section 3 of the Agreement of Sale to support its position. This section provides in part that:

 
"The liabilities of Seller to be assumed by Buyer at the closing date shall consist of the following as then constituted: (a) the classifications of current liabilities (without the dollar amounts) of the Strick Division shown on the comparative balance sheet as follows:
 
"Current Liabilities:
 
"Trade Accounts Payable Reserve for Warranties Other Current Liabilities."

 It is undisputed that amounts due under a lease would be classified under "Other Current Liabilities." Fruehauf contends that it is of no importance that the existence of the liability may not have been known at the date of the closing. All that matters is that it did, in fact, exist at that time. To support this argument Fruehauf would have us take special note of the fact that no dollar amount was placed in any of the categories. This, it claims, demonstrates the parties' intent that Strick should assume all liabilities that would have been classifiable under one of the appropriate headings if the liability had been known on the closing date. In other words, Fruehauf claims that Strick assumed the risk of an unknown liability.

 After examining the entire Agreement of Sale we are not persuaded by this argument. The Agreement is dated January 11, 1966, to be effective, however, as of January 1, 1966. At that time there was no precise figure as to the liabilities of the Strick Division. Thus, the parties could only estimate the net book value. This they ...


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