decided: May 27, 1970.
MORTON ZEIDMAN AND SHEP'S, INC., APPELLANT,
NATIONAL PRODUCTS COMPANY, INC., APPELLANT
Appeals from judgment of Court of Common Pleas No. 3 of Philadelphia County, Dec. T., 1963, No. 3600, in case of Morton Zeidman and Shep's, Inc. v. National Products Co., Inc.
John Rogers Carroll, for plaintiff.
Oscar S. Schermer, with him Schermer and Schermer, for defendant.
Bell, C. J., Jones, Cohen, Eagen, O'Brien, Roberts and Pomeroy, JJ. Opinion by Mr. Justice Roberts.
[ 438 Pa. Page 495]
In the early part of 1961 Morton and Sylvia Zeidman purchased $19,000 worth of kitchen and bar equipment from the National Products Company in order to refurbish their recently acquired restaurant. Unfortunately, the business did not fare well and shortly after the Zeidmans commenced operation they began to negotiate for the sale of the business to one Donnelly. At that time the vice-president of National, Jules Caplen, contacted the Zeidmans' attorney and asked to be allowed to attempt to find a purchaser other than Donnelly, whom Caplen thought unable to handle the business. Caplen's interest in the Zeidman venture stemmed from the fact that National stood to
[ 438 Pa. Page 496]
take a substantial loss if the Zeidmans or their successors in interest defaulted on the installment sales contract under which the equipment had been purchased.
Caplen eventually suggested that the business be sold to two individuals, Klein and Jablonski, whom he knew to be capable and responsible restaurant operators. As an inducement Caplen stated that if the Zeidmans accepted his suggested purchasers he would indemnify the Zeidmans against payment of the restaurant's outstanding debts. The Zeidmans' attorney then called Caplen and told him the Zeidmans would agree to sell the restaurant to Klein and Jablonski, but only after they received a signed indemnification agreement from Caplen. As a result of these negotiations, Caplen signed and delivered to the Zeidmans the following agreement:
"April 11, 1961
National Products Company
113 North 2nd Street
Attention: Mr. Jules Caplen
In accordance with our understanding we agree to sell to David Klein and Mitchell Jablonski, fixtures, equipment, restaurant liquor license of Shep's, Inc., now located at 1809 Chestnut Street, Philadelphia, for the sum of Twenty-nine Thousand Five Hundred ($29,500.00) Dollars and in further consideration of your indemnifying and saving harmless Shep's, Inc., Morton and Sylvia Zeidman against the payment of all of the attached claims and obligations. It is our understanding that you will undertake the satisfaction of all the creditors of Shep's, Inc. which appear on the attached list.
[ 438 Pa. Page 497]
Would you kindly acknowledge your approval of this understanding by returning a signed copy of this letter.
Very truly yours,
By: (s) Morton Zeidman
National Products Company
(s) Jules E. Caplen"
Unfortunately, the list of creditors which was attached to the agreement has been lost.
The trial court decided that the agreement was valid and that the Zeidmans had proven that the list of claims and obligations had totaled at least $9,268.56. Judgment was entered in that amount plus interest from 1961, and both parties appealed.
National contends that its vice-president had no authority, either actual or apparent, to enter into the indemnity agreement; that there was a failure of consideration because Klein and Jablonski never exercised their right to purchase the business; that the amount of damages was improper because the Zeidmans had failed to show an actual loss as to several items; and that the award of interest was improper. The Zeidmans contend that the award was a compromise and that they are entitled to recover much more.
All of these contentions were adequately considered and fully rebutted in the trial judge's able opinion, which we find to be without error.
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