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TENREED CORPORATION v. PHILADELPHIA FOLDING BOX COMPANY (03/31/77)

SUPERIOR COURT OF PENNSYLVANIA


decided: March 31, 1977.

TENREED CORPORATION, APPELLANT,
v.
PHILADELPHIA FOLDING BOX COMPANY, DEFENDANT, AND CHARLES BENJAMIN, INC., AND CONTINENTAL BANK, GARNISHEES

Appeal from the Order dated May 7, 1976, of the Court of Common Pleas, Philadelphia County, at No. 2504 November Term, 1975. No. 1867 October Term, 1976.

COUNSEL

Miles Warner, Warner & Huntington, Philadelphia, for appellant.

Edwin L. Scherlis, Philadelphia, for appellee.

Watkins, President Judge, and Jacobs, Cercone, Price and Van der Voort, JJ. Price, J., dissents; Hoffman and Spaeth, JJ., took no part in the consideration or decision of this case.

Author: Jacobs

[ 246 Pa. Super. Page 437]

This is an appeal from an order of the lower court striking off a judgment confessed by appellant Tenreed

[ 246 Pa. Super. Page 438]

Corporation against Philadelphia Folding Box Company, appellee, for the amount of $50,400.00. We are convinced that the judgment was improperly stricken, and reverse.

The parties originally entered into a lease agreement for the rental of a commercial property in Philadelphia, effective December 1, 1963, for ten years at an annual rent of $21,000.00. The 1963 lease contained a provision for the continuation of the lease on the same terms and conditions for an additional year if neither party gave ninety days written notice of intent to determine the lease at the end of the original ten years.*fn1 The lease also contained covenants to the effect that lessee, Philadelphia Folding Box, would not remove property from or vacate the premises during the term of the lease,*fn2 and that if such covenants were violated, rent for the entire term of the lease would be immediately due. Further, the lease contained a clause authorizing confession of judgment for rent for the unexpired balance of the term

[ 246 Pa. Super. Page 439]

    of the lease whenever such rent was due and had not been paid.*fn3

At the end of the original ten years, the parties entered into a writing which extended the term of the lease an additional year, until November 30, 1974, at an annual rent of $36,000.00. This writing made a few minor amendments to the original lease, but expressly stated that all other terms and conditions of the 1963 lease were to continue in effect.*fn4 The writing also stated that the ninety day notice provision would remain in effect during the one year extension of the lease.*fn5 The parties entered

[ 246 Pa. Super. Page 440]

    into a second extension agreement in December 1974, in which it was agreed that the lease would continue in effect for an additional year, until November 30, 1975, at an annual rent of $48,000.00, with all terms and conditions of the original lease, as amended by the first extension agreement, to remain in effect.*fn6

Early in November, 1975, Philadelphia Folding Box, under the impression that the lease would expire on November 30, 1975, without the ninety days written notice provided in the earlier agreements, began to remove equipment from the premises in anticipation of occupying new premises. Tenreed Corporation, asserting that failure of the lessee to give notice worked to extend the term of the lease an additional year until November 30, 1976, confessed judgment on November 19, 1975, for the full amount of that additional year's rent, on the basis that lessee had violated the covenant not to abandon and thus accelerated the rent for the remaining term of the lease.

Appellee promptly petitioned to either strike or open the confessed judgment. The lower court did strike the judgment, thus the petition to open was not considered. Tenreed Corporation appealed from the order striking the judgment.

[ 246 Pa. Super. Page 441]

The lower court reached the decision to strike without considering whether or not the lease had actually been extended for the year December 1, 1975, to November 30, 1976. The court said that even if the lease had been extended for the additional year, that the lease, which provided for confession of judgment for the "rent for the entire unexpired balance of the term of this lease," did not give authority to confess judgment on November 19, 1975. Although the lower court correctly states that a warrant of attorney must be strictly construed, Walter E. Heller & Co. v. Lombard Corporation, 423 Pa. 333, 223 A.2d 716 (1966), we do not believe this justifies the ruling that confession of judgment was authorized for the rent during the current year of the lease, but not for the unexpired balance of the term of the lease, as provided by the confession of judgment clause.

It is the opinion of this court that if in fact the lease was extended for an additional year, which we do not now decide, then that additional year, November 30, 1975, to December 1, 1976, was part of the "unexpired term of the lease." Confession of judgment would have been authorized at the time entered because lessee had begun to remove equipment. When a lease is "extended," as the parties did here by written agreement on two occasions the "term" of the lease becomes the original term plus the period of extension. No new demise is made; rather, the original demise is for whatever total number of years the parties ultimately agree to, including extension. Thompson on Real Property, Vol. 3, ยง 1120 (1959). Obviously the parties here did not contemplate any re-letting of the premises under a new lease or term. The term of the 1963 lease was to be a minimum of ten years, and was to continue beyond that period until one of the parties chose to determine the term of the lease.*fn7 Thus the language in the warrant of attorney authorizing

[ 246 Pa. Super. Page 442]

    confession of judgment for rent for "the unexpired balance of the term of this lease" cannot reasonably be construed to mean judgment could only be confessed for rent due in the current year of the lease, if in fact the term of the lease had been extended for the next year.

The lower court's opinion indicates that numerous arguments made below concerning whether or not the lease had been extended were not considered by the court due to the disposition below. Since we now hold that the court's basis for striking the judgment was improper, on remand the lower court should deal with the arguments not heretofore considered in deciding whether the judgment should be stricken or opened.

Order reversed, case remanded for proceedings consistent with this opinion.


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