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ATLANTIC RICHFIELD COMPANY v. WILLIAM M. RAZUMIC (08/10/78)

decided: August 10, 1978.

ATLANTIC RICHFIELD COMPANY
v.
WILLIAM M. RAZUMIC, APPELLANT. ATLANTIC RICHFIELD COMPANY, APPELLANT, V. WILLIAM M. RAZUMIC



No. 40 March Term, 1977, Appeal from the Order of the Superior Court of Pennsylvania at No. 198 April Term, 1976, affirming the Order of the Court of Common Pleas of Allegheny County, Civil Division, at No. 5354 of 1973. No. 41 March Term, 1977, Appeal from the Order of the Superior Court of Pennsylvania at No. 236 April Term, 1976, affirming the Order of the Court of Common Pleas of Allegheny County, Civil Division, at No. 5354 of 1973.

COUNSEL

Daniel J. Beggy, Pittsburgh, for William M. Razumic.

George I. Minch, Wright & Rundle, Pittsburgh, Richard E. LaFarge, Philadelphia, for Atlantic Richfield Co.

Eagen, C. J., and O'Brien, Roberts, Pomeroy, Nix, Manderino and Packel, JJ. Packel, J., did not participate in the decision of this case. Pomeroy, J., filed a Concurring Opinion in which Nix, J., joins.

Author: Roberts

[ 480 Pa. Page 369]

OPINION OF THE COURT

In these cross-appeals, we hold that the trial court erred in: (1) directing a verdict entitling Atlantic Richfield Company (Arco) to take possession of the Arco service station Razumic operated for over twenty years; and (2) denying Razumic's motion for a new trial on his counterclaim for damages arising out of Arco's attempted termination of a franchise agreement.*fn1

I. PROCEDURAL HISTORY

In 1953, William Razumic, his partner Robert Mowry, and Arco signed a printed form "DEALER LEASE" prepared by Arco authorizing Razumic and Mowry to operate a newly constructed Arco service station in Monroeville. Razumic and Mowry invested more than $5,000 of borrowed funds in inventory, equipment, and working capital. Arco financed their first supply of gasoline and the pair opened for business.

Mowry died one year later, but Razumic continued to operate the station. Over the years, Razumic and Arco signed numerous writings, all of which resembled the first form. The parties also signed additional form writings prepared by Arco concerning such matters as purchase of fuel from Arco and check cashing privileges for Arco credit card customers. Razumic participated in many of Arco's promotional campaigns, and one year was named one of the top ten Arco retailers in the Pittsburgh area. An Arco marketing representative characterized Razumic as an "excellent dealer."

[ 480 Pa. Page 370]

In 1970, Arco completed construction of a new service station to replace the station Razumic had operated for seventeen years. That August, Razumic and Arco signed another "DEALER LEASE," again prepared by Arco, containing many of the same printed provisions as the previous forms. The 1970 writing also contained a typed provision for a three year term of occupancy. The parties signed a separate form authorizing Razumic to use Arco's property to the rear of the service station for parking rental vehicles which the Hertz Corporation authorized Razumic to rent to the public. The latter form contained a typed provision authorizing either party to terminate the Hertz parking lot agreement upon thirty days' notice, "with or without cause."

On June 29, 1973, Arco notified Razumic that his "DEALER LEASE" would not be renewed. Arco directed Razumic to leave the premises by August 1, 1973, the last day of the term stated in the writing. On July 31, Arco likewise notified Razumic that the Hertz parking lot lease would not be renewed and gave him one month to vacate the premises. When Razumic refused to vacate the station property, Arco discontinued his supply of gasoline and filed a Landlord and Tenant Complaint with the District Justice for Monroeville. The District Justice entered judgment for Arco, directing Razumic to deliver the station premises to Arco and awarded Arco damages for Razumic's detention of the premises beyond the expiration date set forth in the form "DEALER LEASE." Razumic appealed to the Court of Common Pleas of Allegheny County, filed a bond, and obtained a supersedeas.

Arco then filed a "Complaint in Assumpsit" in the Court of Common Pleas of Allegheny County, seeking fair rental value of the premises while Razumic remained in possession beyond the term stated in the "DEALER LEASE," and a "Complaint in Ejectment," seeking possession of both the service station and parking lot properties. Razumic answered and raised "New Matter and Counterclaim," requesting damages in excess of $10,000 for what Razumic characterized as Arco's wrongful attempt to terminate their business

[ 480 Pa. Page 371]

    relationship.*fn2 Razumic also requested a jury trial. The trial court overruled Arco's preliminary objections and denied Arco's motion for summary judgment.*fn3

After both parties presented evidence, the trial court granted Arco's motions for a directed verdict of possession of both the service station and Hertz parking lot and for a compulsory non-suit on Razumic's counterclaim. The trial court submitted to the jury Arco's claim for damages for Razumic's allegedly wrongful detention of both premises. The jury awarded Arco damages of $200 per month for Razumic's detention of the Hertz parking lot and returned no award for the service station property. Razumic moved to set aside the compulsory non-suit and for judgment not-withstanding the verdict and a new trial, while Arco sought a new trial on the issue of damages for Razumic's detention of the service station. The trial court denied the motions and both parties appealed to the Superior Court, which affirmed without opinion. We granted Razumic's and Arco's petitions for allowance of appeal.*fn4

[ 480 Pa. Page 372]

II. THE SERVICE STATION FRANCHISE

In his pleadings, at trial, and on appeal to this Court, Razumic has urged that he and Arco were parties to a franchise agreement Arco could not terminate at will. Arco, on the other hand, has contended throughout that the dealership agreement could be terminated for any reason. We agree with Razumic.

A. The Nature of The Agreement

The 1970 printed form signed by Arco and Razumic, captioned a "DEALER LEASE," identifies Arco as "lessor" and Razumic "lessee," and uses those terms to define the parties' rights and obligations. The instrument sets the "term" of the "lease" at three years, requires "lessee" to pay taxes and various utilities and "maintain and keep in good order the leased premises." The printed form provides that "lessee's" right of possession shall not extend "beyond the period of LESSOR'S right thereto." The form also recites that "[t]his lease contains the entire agreement of the parties and its execution has not been induced by any representation, understanding, or agreement of any kind other than those herein expressed" and "cannot be amended except by written instrument duly executed by both parties." Nothing in the writing sets forth the parties' rights and obligations concerning renewal of the agreement. Arco contends the above provisions, coupled with the absence of an express provision governing renewal, demonstrate that the parties contemplated a landlord and tenant relationship, terminable by either party upon expiration of the term of occupancy. See Sterle v. Galiardi Coal & Coke Co., 168 Pa. Super. 254, 77 A.2d 669 (1951) (covenants for continued renewal of leasehold interest will not be inferred); 51C C.J.S. Landlord and Tenant §§ 54 et seq. (1968).

To determine an agreement, a writing must be interpreted as a whole, giving effect to all its provisions. Shehadi v. Northeastern Nat. Bk. of Pa., 474 Pa. 232, 378 A.2d 304 (1977); Buchanan v. Brentwood Federal Savings & Loan Ass'n, 457 Pa. 135, 320 A.2d 117 (1974); Restatement

[ 480 Pa. Page 373]

(Second) of Contracts § 228(2) (Tent.Draft No. 5, 1970); 4 Williston, Contracts § 618 (3d ed. Jaeger 1961); 3 Corbin, Contracts § 549 (1960). An examination of all the provisions of the writing signed by Razumic and Arco reveals that the parties contemplated an agreement imposing obligations, and conferring rights, beyond those of a lessor-lessee agreement. The writing authorizes Razumic to operate an "Atlantic Richfield Service Station." The instrument further provides:

"[T]he sole purpose and use of the leased premises shall be the lawful, diligent and businesslike operation of a first-class automotive service station retailing petroleum products and TBA merchandise [tires, batteries, and accessories] normally handled at competitive service station outlets. Recognizing that compliance with such authorized purpose and use is essential for the accomplishment of LESSOR'S desire to obtain a fair rental consistent with the reasonable value of the service station business potential ...


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