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decided: April 12, 1979.


No. 308 April Term, 1977, Appeal from the Order of the Court of Common Pleas of Erie County at No. Watkins, President Judge, and Jacobs, Hoffman, Cercone, Price, Van der Voort and Spaeth, JJ. Spaeth, J., files a concurring and dissenting opinion. Cercone, President Judge, files a dissenting statement. Jacobs and Watkins, former President Judges, and Hoffman, J., did not participate in the consideration or decision of this case.

Author: Price

[ 265 Pa. Super. Page 81]

This case is before us following the lower court's dismissal of appellants' complaint in assumpsit and entry of judgment on the pleadings in favor of appellees. For the reasons stated herein, we reverse and remand for further proceedings.

A demurrer admits every well pleaded material fact set forth in the pleadings, as well as all inferences, other than conclusions of law, reasonably deducible therefrom. Gekas v. Shapp, 469 Pa. 1, 364 A.2d 691 (1976); Buchanan v. Brentwood Federal Savings and Loan Association, 457 Pa. 135, 320 A.2d 117 (1974); Bordon v. Baldwin, 444 Pa. 577, 281 A.2d 892 (1971). Viewing the pleadings in this light, the facts pertinent to our decision are as follows. On November 10, 1972, Sam Tanenbaum and Max Algase, appellants, together with Louis J. Porreco, entered into an agreement with ASC Realty of Pennsylvania, Inc. (ASC) and William M. Cafaro (Cafaro) to purchase from ASC and Cafaro a tract of land in Erie, Pennsylvania, identified in the pleadings as the "old Sears property." Pursuant to the agreement, the purchasers established an escrow account consisting of five thousand dollars ($5,000) in cash and a demand note of forty-five thousand dollars ($45,000). ASC and Cafaro were at that time negotiating with Sears, Roebuck and Company (Sears) to acquire title to the property. These negotiations were consummated on March 19, 1973, when Sears agreed to convey the property to Cafaro or a nominee designated by Cafaro. On July 29, 1974, Sears established a closing date for the transaction of September 19, 1974.

In accordance with their option and the November 10th agreement, Cafaro appointed appellants and Porreco as nominees on September 16, 1974. The nomination provided that Sears would transfer the property to the nominees as if they had been the original signatories to the agreement.

[ 265 Pa. Super. Page 82]

This was, however, conditioned on the nominees complying with all the provisions of their November 10th agreement, and performing the obligations of Cafaro under the latter's March 19th agreement with Sears.

On September 23, 1974, Sears notified all parties that because closing had not been effected on September 19, Sears would cease paying its pro-rated share of continuing costs, and closing would be rescheduled to October 7, 1974. Sears further indicated that failure to close on that date would leave them with "no alternative but to look to Cafaro Co. to complete its obligations." Cafaro confirmed this action of Sears in a letter to appellants and Porreco which informed them that they both must assume the now-halted Sears payments, and that they would be considered in default if the closing were not held on the specified date.

In the interim, however, Porreco had refused to supply certain financial data necessary to obtain financing for the purchase, and made certain demands on appellants concerning control over the resale and leasing of the property. As a result of this action, appellants on September 12, 1974, notified Porreco that failure to supply the requisite financial data would result in default and cancellation of his equitable interest. No response was immediately forthcoming from Porreco, but appellants nonetheless secured financing on September 26, 1974. Subsequently, on October 2, 1974, Porreco demanded that appellants pay him one hundred thousand dollars for his interest in the venture. Although appellants refused, Cafaro informed them that Cafaro would not permit the conveyance without the participation of Porreco. The following day, Sears indicated that in the event Cafaro did not approve the transfer, it would convey the property directly to Cafaro.

On October 7, 1974, the agreed upon date for closing, appellants filed an action in equity in Erie County against Porreco and appellees for specific performance and money damages, seeking to cancel any equitable interest of Porreco and to have the property conveyed directly to appellants. Sears remained adamant in refusing to transfer the property

[ 265 Pa. Super. Page 83]

    to them alone, but on October 10, 1974, all parties to the action entered into a settlement and the suit was discontinued. The settlement agreement provided in essence that the equity action would be withdrawn, appellants would take title in their name alone, and appellants would indemnify Sears and Cafaro against any loss arising out of the agreement to exclude Porreco. The agreement further contained the following two paragraphs relating to the new time of closing:

"3. The closing of the sale of the property to MAX ALGASE and SAM TANNENBAUM [ sic ] will take place on or before October 21, 1974, at 1:30 p. m. at the offices of Attorney James Toohey at 1415 Baldwin Building, Erie, Pennsylvania. In the event SAM TANNENBAUM [ sic ] and MAX ALGASE are unwilling or unable to complete the sale on or before said closing date, they hereby agree to release THE CAFARO COMPANY, WILLIAM M. CAFARO, ASC REALTY OF PENNSYLVANIA, INC., and SEARS, ROEBUCK & CO. from any and all liability under the terms of this Agreement and the above referenced agreements, and they further agree, in such event, that THE CAFARO COMPANY may take title to the subject property directly in its name and any additional expenses, costs, fees or additions to the purchase price that may be required to be paid to SEARS, ROEBUCK & CO. shall be reimbursed to THE CAFARO COMPANY by SAM TANNENBAUM [ sic ] and MAX ALGASE.

4. SAM TANNENBAUM [ sic ] and MAX ALGASE further agree that in the event they are unwilling or unable to close the sale as set forth herein, then THE CAFARO COMPANY, WILLIAM M. CAFARO, and ASC REALTY OF PENNSYLVANIA, INC. shall be entitled to all of the proceeds covered under the Escrow Agreement dated November 10, 1972, which agreement is held by The First National Bank of Pennsylvania for the sum of Five Thousand Dollars ($5,000.00) in cash plus interest ...

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