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SUN SALES CORP. v. BLOCK LAND

July 17, 1970

SUN SALES CORPORATION and Spartan Steel Corporation, Joint Venturers, t/a Pocono Investment Properties
v.
BLOCK LAND, INC., Poplar Ridge Corporation, Effort Corporation, and Fred Frankel, Individually


Higginbotham, District Judge.


The opinion of the court was delivered by: HIGGINBOTHAM

In February, 1969 Pocono Investment Properties, Inc., a Pennsylvania corporation and the successor in interest to Pocono Investment Properties, filed suit in the Court of Common Pleas, Philadelphia County, against Block Land, Inc., Poplar Ridge Corporation, Effort Corporation, and Fred Frankel alleging breach on the part of all the defendants of a written agreement involving commissions on the sale of certain undeveloped land in Monroe County, Pennsylvania (hereinafter referred to as "the State Suit"). Late in January, 1970, Sun Sales Corporation and Spartan Steel Corporation, New York corporations, trading as a joint venture under the name of Pocono Investment Properties, filed the instant complaint against the same defendants in this Court on the basis of diversity jurisdiction alleging breach of the same written agreement (hereinafter referred to as "the Federal Suit.") The defendants have moved to dismiss the complaint and in the alternative for a summary judgment. Among the multiple grounds for defendants' motion is the assertion that matters crucial to the plaintiffs' recovery in this lawsuit have already been decided adversely to plaintiffs' contentions in the State Suit.

 THE STATE COURT PROCEEDINGS

 In the State Suit the present plaintiffs' successor in interest alleged that Pocono Investment Properties' right to act as the exclusive sales agent for the sale of defendants' land on the installment plan at a commission of forty per cent (40%) of the "Net Sales Price," had been breached by the defendants' failure to comply with various state regulations throughout the country for installment sales of real estate. (Para. 6, Complaint in the State Suit.) Because the defendants had allegedly breached the agreement by selling the realty themselves and by refusing to allow the plaintiffs to perform their duties under the contract, the plaintiffs sought several forms of relief in the State Suit. The plaintiffs sought to enjoin the defendants from mortgaging or conveying the property without first paying the plaintiffs its brokerage commissions of forty per cent (40%). The plaintiffs further sought an accounting from the defendants from the date of the agreement for the amounts to which the plaintiffs were purportedly entitled.

 The defendants filed multiple preliminary objections to the plaintiffs' complaint in the State Suit. (A verified copy of the pleadings and proceedings in the State Suit are attached to defendants' motion for summary judgment, docket entry No. 4.) The defendants raised preliminary objections in the nature of a demurrer, objections to venue, objections on the grounds that the suit was lis pendens by another action pending in the Court of Common Pleas, objections to equity jurisdiction, and objections for failure to join another cause of action in the same court.

 Of these five types of objections, some of which had several sub-parts, the State Court ruled only on those in the nature of a demurrer, and felt it unnecessary to consider the others. The State Trial Judge sustained defendants' preliminary objections 1(b) and 1(c). Those objections read:

 
"1. The facts alleged in the complaint do not set forth a cause of action in that:
 
* * *
 
"(b) The plaintiff has not averred any facts sufficient to show that it has any cognizable interest in the controversy, and
 
"(c) the plaintiff has failed to aver that it is a proper party under the Act of May 1, 1929, P.L. 1216, 16 as amended."

 The State Trial Judge's order provided that:

 
"Preliminary Objections 1(b) and (c) of defendants to plaintiffs' complaint are sustained, with leave to the plaintiff, within thirty (30) days, to plead facts averring that at the times referred to in the said complaint, the plaintiff, in compliance with the Real Estate Brokers' License Act of 1929, as amended, was a duly licensed real estate broker in the Commonwealth of Pennsylvania. Upon failure of the plaintiff to so amend his complaint, the complaint is dismissed.
 
"The Real Estate Brokers' License Act of 1929, as amended, applies to the present action, particularly those Sections set forth in 63 P.S. 431, 442, and 446. The case of Curtis & Co. v. [Pennsylvania] Salt Mfg. Co., 351 Pa. 148 [40 A. 2d 481] applies to the present case. Mandatory compliance with the Act cannot be avoided by pleading a contract which contravenes the provisions of said Act.
 
"It is therefore unnecessary for the Court at this time to consider the other preliminary ...

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