March 21, 1980
LECO VENDING COMPANY, INC.
JOSEPH A. SULLIVAN T/A SULLIVAN'S PUB, APPELLANT
No. 2250 October Term, 1978, Appeal from the Decision and Order of the Court of Common Pleas - Civil Action- of Delaware County at No. 75-11294.
Before Cercone, P.j., Watkins and Hoffman, JJ. Cercone, P.j. concurs in the result.
Decision and Order of the court below affirmed on the opinion of Judge Jerome.
Cercone, P.J. concurs in the result.
IN THE COURT OF COMMON PLEAS OF DELAWARE COUNTY, PENNSYLVANIA CIVIL ACTION - LAW
LECO VENDING COMPANY, INC. v. JOSEPH SULLIVAN t/a SULLIVAN'S PUB
Rodger L. Mutzel, Esquire, for the Plaintiff Robert T. Seiwell, Esquire, for the Defendant
FILED: SEP. 7, 1978
Plaintiff commenced an action In Assumpsit to recover damages allegedly incurred as a result of defendant's breach of certain obligations that he had undertaken pursuant to certain contracts. The matter was heard before the Court sitting without a jury who found in favor of plaintiff. Exceptions were then filed pursuant to Rule 1038(d) of Pennsylvania Rules of Civil Procedure which were dismissed by the Court en banc by Order dated July 20, 1978. An Appeal has been taken to the Superior Court necessitating this Opinion.
The evidence reveals that on August 29, 1974, the parties entered into three contracts for the installation of certain vending machines. Specifically, a cigarette machine, amusement machine and music machine were to be installed at defendant's premises. The contracts provided that they were exclusive and the use of similar machines at the premises was a violation. At the time the contracts were entered into, the sum of $1,500.00 was lent by plaintiff to defendant, which amount was to be paid back out of commissions. At the time of this litigation it was agreed by all that said $1,500.00 had been paid back.
On July 7, 1975 the plaintiff learned that the defendant had installed other machines on his premises and was not using plaintiff's machines. When plaintiff as finally able to contact the defendant, defendant stated he had a different or better deal and had signed a similar contract with a competitor. Thereupon defendant signed a written request that plaintiff remove the three machines from his premises. The machines were subsequently removed whereupon this litigation was commenced.
Each of the three contracts contains a liquidated damage clause which was the basis of plaintiff's claim. Using it, the Court awarded damages accordingly.
At the time of trial defendant did not deny signing the contracts or the fact that he entered into similar contracts with a competitor. The only excuse given for the breach was an alleged breakdown of the cigarette machine. It was argued by defendant that the breach of this contract was a sufficient basis for eliminating his obligations under the other two contracts. Defendant took the position that all three contracts should be taken as a whole and not individually since they resulted from the original $1,500.00 loan. With this argument the Court cannot agree. The contracts were separate and distinct. They are clear and unambiguous and do not have to be read together for purposes of interpretation. Therefore, even if there was a breach of the cigarette contract it was not a sufficient basis for justifying defendant's action in breaching the other two contracts.
Before considering the defendant's argument with regard to the cigarette contract, it should be noted that the trial Judge's findings have the weight of a jury verdict and as such the evidence is to be viewed in a light most favorable to the verdict winner. See Darlington Brick and Clay Products, Inc. v. Aino, 225 Pa. Superior Ct. 186 (1973
With regard to the cigarette contract defendant's argument that it was breached is not supported by the testimony. Defendant contends that there were approximately twenty-two service calls over the period from August of 1974 through July of 1975. Plaintiff presented evidence that this was not an unusual number of breakdowns for an electrical machine considering one-third the service calls were related to foreign objects such as slugs or bent coins being lodged in the machine. Certainly plaintiff can bear no responsibility for this type of breakdown.
Plaintiff also presented testimony to the effect that at the time the contract was entered into it attempted to dissuade the defendant against installation of an electronic cigarette machine because it was not as reliable as a mechanical one. Defendant however insisted on the use of an electronic machine.
There is also testimony that on several occasions during the course of the contract plaintiff agreed to replace the cigarette machine with a mechanical one. However, defendant refused to permit the change.
The contract itself provides:
"2(d) Operator shall service machine as often as necessary, keep it stocked with standard brands of cigarettes and in operating condition; the temporary or occasional inability or failure to comply with this provision shall not constitute a breach by operator hereunder."
It is therefore evident that under these specific terms of the contract temporary or occasional inability to keep the machine in operating condition is not a breach. It was agreed by all that plaintiff promptly serviced the machines when called. The Court therefore finds the number of service calls during the period in question under the circumstances here present did not constitute a material breach warranting defendant's action in this case.
The final argument of the defendant relates to the liquidated damage clauses in the three contracts. These clauses are similar. In the cigarette contract it is for example provided:
"9. Upon a breach of the Agreement by PROPRIETOR, or whenever in the opinion of OPERATOR a breach is imminent, OPERATOR may immediately terminate this Agreement and demand and collect from PROPRIETOR either:
(a) The full consideration paid herein, or
(b) A sum equal to the average monthly profit received by OPERATOR hereunder prior to the breach, multiplied by the number of months remaining in the unexpired original or renewal term."
Defendant has taken the position that since the $1,500.00 loan was repaid this means that plaintiff has gotten the full amount referred to under Paragraph 9(a) set forth above and is not entitled to any further damages. This interpretation is completely at variance with the provisions of the contract. The purpose of the clause is to put the injured party in the same position he would have been in had full performance taken place. One resorts to the liquidated damage clause only after a breach occurs. Since the breach took place after the loan of $1,500.00 was repaid, paragraph 9(a) is not applicable to measure damages. To interpret the clause otherwise would leave plaintiff without a remedy. Contracts must be reasonably construed and it is the intent of the party which is controlling. The above contract is clear in this regard and damages have been awarded in accordance with the above provision.
BY THE COURT:
DOMENIC D. JEROME, Judge
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