Henry Thalenfeld, Wilkes-Barre, for appellant.
Joseph G. Feldman, Philadelphia, for appellee.
Watkins, President Judge, and Jacobs, Hoffman, Cercone, Price, Van der Voort and Spaeth, JJ.
[ 243 Pa. Super. Page 104]
This is an appeal from a final decree which: (1) declared an agreement for the sale of land null and void because entered into "as a result of business compulsion and economic duress imposed upon" plaintiff-appellee National Auto Brokers Corporation (hereinafter Nabcor) by defendant-appellant Aleeda Development Corporation (hereinafter Aleeda); and, (2) ordered specific performance of a prior writing which proposed that Nabcor be granted an option to purchase the land in question and which provided that an agreement for sale of the land would be consummated by the parties if the option was exercised. We reverse the order entered below for the reasons which follow a review of the relevant facts.
The first of the two writings involved in this case was initially drafted in the form of a Nabcor proposal to purchase approximately 520 acres of land located in Bear Creek Township, Luzerne County from Aleeda. Dated July 4, 1972, the proposal provided that, in consideration of $2,500, Aleeda would grant a 30 day option to Nabcor to purchase the land involved at $1,000 per acre. The precise acreage was to be determined by a survey that was to be prepared by Nabcor. Since Nabcor was short of funds, the proposal provided that an agreement of sale would be consummated under which Nabcor would furnish a down payment on the purchase consisting of a $150,630 debenture payable in one year and collateralized
[ 243 Pa. Super. Page 105]
by 50,000 shares of Nabcor stock.*fn1 The July 4th proposal read, inter alia, as follows:
"Nabcor desires an option for 30 days and is prepared to turn over a consideration in cash of $2,500.00 as a binder of the option. If the option is exercised the transaction will be consummated through an agreement to purchase at the said price of $1,000.00 per acre, payable 29% of the total purchase price in the form of a one year debenture in the approximate amount of $150,630.00 collateralized by 50,000 shares of Nabcor stock as a guarantee."
The proposal further provided that upon payment of the debenture, the debenture and the 50,000 shares of Nabcor stock would be returned and Aleeda would receive 10,000 shares of Nabcor stock as additional payment. The remainder of the total purchase price of approximately $520,000 was to be subsequently paid in equal quarterly installments over a period of five years at 6% interest. It was also proposed that Aleeda would release lots from the tract to third parties upon payment by Nabcor of $750 per lot, which was to be applied to the overall purchase price. The proposal was signed by Nabcor following a June 19, 1972 meeting; it was signed by Aleeda on July 4, 1972.
Prior to the end of July, 1972, Aleeda's president determined that Nabcor's stock was worth approximately $.25 per share, far below the value necessary to guarantee the proposed debenture*fn2 as provided for in the option
[ 243 Pa. Super. Page 106]
agreement's provision relating to the agreement of sale to be consummated. Consequently, on or about August 1, 1972, Aleeda informed Nabcor that the proposed collateral was unacceptable and that the July 4th agreement would not be implemented unless additional security was furnished. Nabcor insisted that Aleeda was bound by the July 4th writing, however, as adopted.
On August 3, 1972, after discussion between the parties, a second agreement was worked out in the form of a formalized agreement of sale. Under the August 3rd agreement the consideration of $1,000 per acre remained the same, as did the arrangements for determining the precise acreage to be sold. However, the payment terms were substantially different from those contained in the option agreement. Pursuant to the August 3rd agreement of sale, Aleeda was to receive monthly payments of $30,000 for one year (except for three winter months during which $20,000 per month was to be paid by Nabcor) on account of the purchase price.*fn3 At the end of the year Aleeda was to deed the entire tract to Nabcor and to take back a purchase money mortgage.*fn4 Aleeda's right to receive 10,000 shares of ...