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TRANS-FUEL v. SAYLOR ET UX. (10/09/70)

decided: October 9, 1970.

TRANS-FUEL, INC.
v.
SAYLOR ET UX., APPELLANTS



Appeal from order of Court of Common Pleas of Montgomery County, No. 66-6946, in case of Trans-Fuel, Inc. v. Thomas Saylor et ux.

COUNSEL

Donald A. Semisch, for appellants.

Harry C. Barbin, for appellee.

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

Author: O'brien

[ 440 Pa. Page 52]

The question in this matter is whether a lease for a service station from the appellants to the appellee fuel company (as lessee) and the leaseback from the appellee to the appellants are severable or are so interdependent that the rescission of one amounts to a surrender of rights under the other.

The following statement of facts is contained in the opinion of the court below:

"In 1959, the defendants, Thomas Saylor, and his wife, Diane, were the owners of a piece of vacant ground at Easton Road and Columbia Avenue, Horsham Township, which they wanted to develop as a gasoline service station. In order to obtain and provide control over the operation of a retail outlet for the gasoline and oil which it sells, plaintiff, Trans-Fuel, Inc., loaned the Saylors $15,500 interest free and entered into three agreements with them: (1) The Saylors

[ 440 Pa. Page 53]

    leased the property to Trans-Fuel for the term of ten years at a monthly rental of $200; (2) Trans-Fuel then leased the station back to the Saylors at the same rental for ten years; and (3) The Saylors agreed to buy and Trans-Fuel agreed to sell all the gasoline and oil required for the operation of the station. This document is referred to as a 'sales agreement.'

"The Saylors operated the station for almost a year, and then sublet it to four other persons consecutively, all of whom entered into sales agreements with Trans-Fuel for the purchase of gasoline and oil.

"At the end of 1963, the Saylors wanted to make extensive improvements to the property. With the help of Trans-Fuel, the Saylors secured a $30,000 loan, and a three-bay station was constructed. On May 1, 1964, two agreements were entered into by the parties: (1) The Saylors leased the property to Trans-Fuel for the term of ten years at a monthly rental of $350 (this will hereafter be referred to as the 'lease'); (2) Trans-Fuel then leased the station back to the Saylors at the same rental for ten years, (this will hereafter be referred to as the 'lease-back'). Although a sales agreement was prepared, it was never executed. Aside from that, the 1960 and 1964 agreements were substantially the same as to form.

"n July, 1965, a dispute developed between the parties as to whether Trans-Fuel intended to forgive a balance of $8900 due on the original $15,500 loan at the time the new leases were executed. The Saylors advised Trans-Fuel that they would obtain a new source of supply for gasoline and oil unless Trans-Fuel terminated the judgments which had been previously entered against the Saylors to secure the original loan. This court by the ...


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