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CARSEK CORP. v. STEPHEN SCHIFTER (10/03/68)

decided: October 3, 1968.

CARSEK CORP., APPELLANT,
v.
STEPHEN SCHIFTER, INC.



Appeal from decree of Court of Common Pleas of Montgomery County, No. 65-6861, in case of Carsek Corp. v. Stephen Schifter, Inc.

COUNSEL

Herbert M. Linsenberg, with him Robert J. Klein, and Meltzer & Schiffrin, for appellant.

Roger B. Reynolds, with him Russell J. Brownback, for appellee.

Bell, C. J., Musmanno, Jones, Cohen, Eagen, O'Brien and Roberts, JJ. Opinion by Mr. Justice O'Brien. Mr. Chief Justice Bell and Mr. Justice Roberts concur in the result.

Author: O'brien

[ 431 Pa. Page 552]

This is an appeal from the final decree of the Court of Common Pleas of Montgomery County, dismissing the complaint in equity of appellant Carsek Corporation. Appellant had sought reformation of a deed and purchase-money mortgage, or payment to it of some $49,000, or other appropriate relief.

On May 11, 1964, James C. Scully entered into a contract to purchase a 57 acre tract of land in Upper Gwynedd Township, Montgomery County, from the appellee, Stephen Schifter, Inc. (hereinafter Schifter) for the purpose of constructing a housing development thereon. Later Carsek, Inc. (hereinafter Carsek) was incorporated with Scully as its president and Carsek was recognized as Scully's nominee by appellee. The price agreed upon was $200,000 -- $25,000 in cash on or before settlement and the balance of $175,000 to be paid in four years time, secured by a purchase-money mortgage. However the Agreement of Sale had one very unusual feature bearing on the purchase price. This was the "upset" provision in Paragraph Seven: "Prior to settlement hereunder, Buyer will have prepared by the Registered Engineer who has prepared the plan of subdivision described hereinabove,*fn1 a list of 'quantities'. The 'quantities' shall set forth all costs for all street improvements necessary to fully improve all ninety lots as the plan will show. This list of 'quantities' will include street-grading, curb, water lines, (and all water company requirements such as fire hydrants, etc., if paid by developer), sidewalks,

[ 431 Pa. Page 553]

    street paving, sanitary sewer lines, sanitary laterals, manholes, storm sewer pipes, culverts, storm sewer man-holes, to consider each lot (including those facing Hancock Road and North Wales Road) fully improved. If these 'quantities' exceed $160,000, Seller will absorb the amount over $160,000, by deducting the overage amount from the consideration being paid by Buyer for the land at settlement. Except that Seller may contest the 'quantities' and the amounts in dollars by providing bid(s) from reliable contractor(s) for the item(s) of the work required, and if it (they) are less than the engineer(s) estimate(s), Buyer will agree to accept this lower price or prices."

Pursuant to an addendum to the agreement, two double sized lots were conveyed by Schifter to Carsek, on September 11, 1964, for $20,000 to enable Carsek to build sample homes thereon, leaving an unpaid balance of $180,000 under the original agreement.

Meanwhile, shortly after execution of the agreement of sale, Carsek engaged Bernard V. Pannone, a registered professional engineer, to develop a subdivision plan of the tract. Several plans were prepared and submitted to Upper Gwynedd Township authorities and a plan dated July 27, 1964, containing 90 lots and known as Rexdale, was approved. Pannone calculated the "quantities" of the street improvement required to develop the entire tract in accordance with the plan dated July 27, 1964, and gave those calculations to Carsek's representative during the summer of 1964. From those calculations Carsek's representative, Walter Hewchuck, prepared tabulations of the estimated improvement costs for the Rexdale subdivision. The complete estimates for the cost of improving Section One of the development were given to appellee's agent, E. Thomas Flood, II, on December 1, 1964. On that date, settlement, set in the Agreement of Sale to occur

[ 431 Pa. Page 554]

    no later than December 11, 1964, was postponed until January 11, 1965. A complete tabulation of the total estimated improvement costs for the entire subdivision, totaling $217,230.00, was not submitted to ...


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