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August 30, 1972


Willson, Senior District Judge.

The opinion of the court was delivered by: WILLSON

WILLSON, Senior District Judge.


 This is a lawsuit brought by Sportservice Corporation ("Sportservice") of Buffalo, New York, against Pittsburgh Athletic Company, Inc., ("Pirates") and others to recover damages and to obtain injunctive relief for breach of an alleged contract between Sportservice and the Pirates concerning the concession business conducted by Sportservice at Forbes Field in Pittsburgh. Beginning with the 1970 baseball season, the Pirates began to play their home games at the new Three Rivers Stadium in Pittsburgh. Sportservice claims that it ought to be the concessionaire at Three Rivers Stadium, and since another company serves as concessionaire there, Sportservice is entitled to damages for breach of contract. Plaintiff has asked this Court to find that it owns the concession rights at Three Rivers Stadium for the period which will end in the year 2011.

 The non-jury trial of this civil action on liability only, which was transferred from the Eastern District of New York to this court, has been concluded. This litigation is now ready for final decision. Extensive discovery has been had by both parties, and several issues have been presented by motion and also have been raised in pretrial proceedings and conferences. As the background and factual situation of the long-time business arrangement between these parties was explored, it became increasingly apparent that the key to the decision was whether the two corporations, that is plaintiff and defendant, became bound by a letter understanding dated October 9, 1946, (Plf. Ex. 2), written by Louis M. Jacobs as President of Penn Sportservice, Inc., plaintiff's predecessor, and approved and accepted by Frank E. McKinney, as President of Pittsburgh Athletic Company, Inc., the principal defendant in this case. Although several officers of the corporate defendant were also joined as defendants, the evidence fails to disclose any liability on their part so that if there is liability to plaintiff it is only the liability of the corporate defendant.

 At the final oral argument, this Court announced the decision in this case in favor of the defendant. Counsel for both sides, however, have filed proposed Findings and Conclusions. In their brief, plaintiff's counsel stated the issues as follows:

A. Did the October 9, 1946, amendment to the December 29, 1944, contract constitute a valid contract?
B. If the October 9, 1946, agreement was valid, was it subsequently modified by the parties to a year to year agreement?

 For clarity as to plaintiff's position, the statement of facts in the brief submitted by plaintiff's counsel is attached hereto as Appendix A.

 This is plaintiff's view of what the evidence reveals. But plaintiff's summary of the evidence in its behalf is not accepted by this Court. In the first place and without giving consideration to the long-time relationship between these parties, the first sentence of the October 9, 1946, letter on which plaintiff relies says in part:

" . . . your desire that we change our per capita arrangement in our present concession contract dated December 29, 1944 . . ."

 It is to be noted that Plaintiff's Exhibit 1 is a formal concession agreement signed by defendant and plaintiff's predecessors in which each corporate seal is attached with the signatures of the Presidents and attestation by witnesses. In other words, the 1944 Concession Agreement was a formal document executed in a manner to bind corporate entities. This document is in some 12 numbered paragraphs with subdivisions, and in Paragraph 11, the five calendar years of its duration are set out. It expired at the end of 1950. What the plaintiff's summary of the facts does not reveal is that when McKinney's syndicate purchased the Pirates in 1946 McKinney had borrowed $330,000.00 from Louis M. Jacobs to enable him to purchase forty percent of the Pirate stock. "A piece of the action" was that $250,000.00 of this loan was to be interest free but on sale of the Pirates, McKinney was to divide any profit on the sale of that portion of his stock purchased by the proceeds of the $250,000.00 loan, with Jacobs. In fact, when McKinney did sell his interest to Messrs. Galbreath and Johnson in 1950, Jacobs made a profit of $46,000.00 of McKinney's investment in the defendant's stock.

 It is clear under the evidence that the October 9, 1946, letter understanding between Jacobs and McKinney was never presented to the Board of Directors of the defendant. Defendant's Board of Directors was, however, informed by McKinney of the change in the amount of the concession payments and the basis for those payments, that is, from per capita to percentage. But there is no evidence in this case that during McKinney's presidency of the defendant corporation that he ever informed his associates of his loan arrangement with Jacobs nor of his long-time extension of the term of the 1944 Concession Agreement as set out in the October 9, 1946 letter. When Galbreath and Johnson bought McKinney's stock in 1950, they brought in Branch Rickey, an experienced baseball man and a man whose integrity was and is well known, to operate the Pirate organization. Mr. Rickey soon learned that the October 1946 letter was in the files. From then on until this lawsuit was filed and even now the subject matter of that letter was a point of controversy between these parties.

 There has been considerable testimony as well as argument by counsel as to what was said and done at a Buffalo meeting held in January 1953, attended by Galbreath, Johnson, and Jacobs. Mr. Rickey disapproved of Mr. Jacobs' method of doing business and did not attend the meeting. However, an exchange of letters between Jacobs and Johnson, (Dft. Exs. A and B), both written after the Buffalo meeting, clearly indicate that defendants disavowed the term of the 1946 letter and that these men were attempting to reach a new amicable arrangement as to the duration of plaintiff's concession agreement as well as the disposition of plaintiff's property at the end of a new contract term. The evidence is clear that by January 1953 the officers of defendant, Galbreath and Johnson, had concluded that McKinney had no authority to bind the corporation to the long-term contract containing the automatic extension from year to year based on each $5,000.00 expenditure by plaintiff and so informed Jacobs at the Buffalo meeting. Defendant's Exhibit A is Jacobs' letter to Johnson dated January 26, 1953. A careful reading of this letter convinces one that Galbreath, ...

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