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KEYSTONE BUILDING CORPORATION v. LINCOLN SAVINGS AND LOAN ASSOCIATION (07/06/76)

decided: July 6, 1976.

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



COUNSEL

John A. Metz, Jr., Metz, Cook, Hanna & Kelly, Pittsburgh, for appellant.

Frank J. Gaffney, Thorp, Reed & Armstrong, Pittsburgh, for appellee.

Jones, C. J., and Eagen, O'Brien, Roberts, Pomeroy, Nix and Manderino, JJ. Jones, C. J., and Pomeroy, J., concur in the result.

Author: Roberts

[ 468 Pa. Page 87]

OPINION OF THE COURT

This case involves a dispute over an alleged breach of contract by appellant Lincoln Savings and Loan Association. The controversy between Lincoln and appellee Keystone Building Corporation has been the subject of protracted litigation including an earlier appeal to this Court, 439 Pa. 444, 266 A.2d 648 (1970). On remand, the trial court held that a decree entered by consent of the parties is res judicata on the issue of Lincoln's liability for breach of contract. The Superior Court affirmed and we granted the petition for allowance of appeal.*fn1 We find that there was no determination of Lincoln's liability, reverse the order and remand for further proceedings.

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 1969, approximately two months after construction had begun, a dispute arose between Lincoln and Keystone over the terms and conditions under which Lincoln was obligated to advance the necessary funds. The dispute revolved around the nature and sufficiency of the

[ 468 Pa. Page 88]

    proofs of expenditure which Keystone was required to present to Lincoln as a precondition for payment. Keystone believed it was submitting the vouchers in the proper form. Lincoln refused payment contending that the vouchers were not in accordance with the contract requirements. 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.

On July 18, 1969, the court entered a consent decree based on an agreement between counsel for both parties.*fn2 The decree sought to resolve the dispute between Keystone and Lincoln concerning the form of the vouchers necessary to authorize payments. The decree provided that Keystone had to support its present and future requisitions for loan proceeds in a specified manner and that Lincoln had to advance the amounts thus requisitioned promptly. Unfortunately, Keystone and Lincoln could not agree on the implementation 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 failing to comply 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 provide Keystone with the funds properly qualified under the construction loan agreement and to advance all sums properly requisitioned thereafter. The court found that certain other expenses were not payable because they were beyond the terms of the construction loan agreement. The October 6 decree did not address whether Keystone was ...


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