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KEYSTONE BUILDING CORPORATION v. LINCOLN SAVINGS AND LOAN ASSOCIATION (07/02/70)

decided: July 2, 1970.

KEYSTONE BUILDING CORPORATION
v.
LINCOLN SAVINGS AND LOAN ASSOCIATION, APPELLANT



Appeal from decrees of Court of Common Pleas of Allegheny County, July T., 1969, No. 3441, in case of Keystone Building Corporation v. Lincoln Savings and Loan Association.

COUNSEL

Milton W. Lamproplos, with him John R. Smith, and Eckert, Seamans & Cherin, for appellant.

Frank J. Gaffney, with him Thorp, Reed & Armstrong, for appellee.

Bell, C. J., Jones, Cohen, Eagen, O'Brien, Roberts and Pomeroy, JJ. Opinion by Mr. Justice Roberts.

Author: Roberts

[ 439 Pa. Page 445]

The Keystone Building Corporation, the Lincoln Savings and Loan Association, and the Manufacturers Life Insurance Company of Canada entered into a construction loan agreement on October 7, 1968. Under the terms of the agreement Lincoln agreed to lend Keystone the funds necessary to finance Keystone's construction of an apartment complex and Manufacturers agreed to be the permanent mortgagee for the project.

In May of 1969, approximately two months after construction had begun, a dispute arose between Lineoln

[ 439 Pa. Page 446]

    and Keystone over the terms and conditions under which Lincoln was obligated to advance the necessary funds. Essentially, the dispute revolved around the nature and sufficiency of the proofs of expenditure which Keystone was required to present to Lincoln as precondition for payment. After protracted negotiations, Keystone commenced a suit in equity on July 3, 1969, asking that Lincoln be compelled to advance the requisitioned loan proceeds and that money damages be assessed against Lincoln for its asserted breach of contract.

A hearing was held and, on July 18, 1969, the court decreed that Keystone had to support its present and future requisitions for loan proceeds in a specified manner and that Lincoln had to promptly pay the amounts thus requisitioned. Unfortunately, Lincoln and Keystone could not agree on the meaning of the decree, and the dispute continued unabated. On August 5, Keystone petitioned for and was granted a rule to show cause why Lincoln should not be held in contempt for allegedly not complying with the July 18 decree. A lengthy hearing was held and, on October 6, the court decreed that although Lincoln had not been in contempt, it was obligated to pay Keystone the aggregate of its claim since the dispute arose, $116,286.27, and to advance all sums properly requisitioned thereafter.

The controversy continued, however, and on October 10, Keystone again petitioned for and was granted a rule to cause why Lincoln should not be held in contempt. Lincoln filed a motion to dismiss this second rule on the grounds of prematurity, but the motion was dismissed. Thereafter, on October 16, Lincoln appealed the decrees of July 18, October 6 and October 15 to this Court.

On December 8, 1969, Keystone contacted Lincoln and informed them that the ...


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