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JAMES W. KELLY v. LORNA E. RHODES AND ELMER M. RHODES AND BETTY JANE RHODES (07/18/80)

filed: July 18, 1980.

JAMES W. KELLY, AN INCOMPETENT BY HIS GUARDIAN, SOUTHERN PENNSYLVANIA BANK, AND BREEZY TAVERN, INC., T/A BREEZY TAVERN
v.
LORNA E. RHODES AND ELMER M. RHODES AND BETTY JANE RHODES, AND ART MURPHY OF YORK, INC. NO. 76 APPEAL OF ART MURPHY OF YORK, INC. NO. 78 APPEAL OF LORNA E. RHODES AND ELMER M. RHODES



No. 76 and 78 March Term, 1979, Appeals from the Order of the Court of Common Pleas of York County, Pennsylvania, Civil Action - Equity, Entered March 22, 1979, at No. 77-S-1844.

COUNSEL

Victor Dell'Alba, York, for Art Murphy, appellant in No. 76 and for appellee in No. 78.

John C. Herrold, York, for Rhodes, appellant in No. 78 and for appellee in No. 76.

Cercone, President Judge, and Watkins and Montgomery, JJ.

Author: Montgomery

[ 279 Pa. Super. Page 479]

This equity action was originally brought in 1977 by Southern Pennsylvania Bank, as guardian of James W. Kelly, an incompetent, and Breezy Tavern, Inc. (Breezy). Kelly died in 1979 and the case was thereafter prosecuted on behalf of his estate by his executor, Southern Pennsylvania Bank. It was originally brought against Elmer M. Rhodes and Lorna E. Rhodes, his present wife, and Betty Jane Rhodes, from whom he had been divorced. It sought to recover possession of premises on which the defendants were operating a licensed liquor establishment known as Breezy Tavern,*fn1 an accounting for profits, etc. therefrom, and a decree that said defendants had no interest in Breezy Tavern, or in the real estate on which the tavern is situated. Art Murphy of York, Inc. (Murphy) was brought in as an additional party on the petition of plaintiff as the result of the pre-trial conference.*fn2

[ 279 Pa. Super. Page 480]

The issue presented on this appeal concerns the original written agreement dated July 11, 1962 whereby Breezy Tavern, Inc. agreed to pay to Elmer M. Rhodes and Betty Jane Rhodes as the registered managers of the corporation ninety per cent of the net proceeds from the operation of the tavern; which agreement also provided, inter alia:

"In the event that Breezy desires to sell the license and equipment as hereinbefore referred to, and in the event that Breezy should obtain a firm offer for the purchase of said license and equipment, Breezy doth hereby grant unto Rhodes the right of first refusal to purchase the license, inventory and equipment as hereinbefore referred to under the same terms and upon the same conditions as that contained in the firm offer of third party purchaser to Breezy, which right shall be exercised by Rhodes within a period of sixty (60) days of notification to Rhodes by Breezy."

By way of answer to the complaint filed by plaintiff, Lorna E. Rhodes and Elmer M. Rhodes set up an alleged written modification of the agreement of 1962, dated June 1, 1969 by which they contend that the selling price of the Breezy Tavern and property was set at $40,000.00. That alleged agreement was written on a scrap of paper by Lorna E. Rhodes and signed by Elmer M. Rhodes, James W. Kelly, Lorna E. Rhodes, Eugene Klinefelter and Clifford M. Kelley in that order and reads as follows:

"I, Elmer M. Rhodes, agree to give the children of James M. Kelly $40,000.00 upon his death for the Breezy Tavern and Property."

The lower court found that the words "and property" were written after the rest of the statement but stated that it was not clear from the testimony whether the words "and property" were inserted before or after the agreement was signed.

It also found that "By instrument, dated July 7, 1978, Art Murphy of York acquired the interest of Betty Jane Rhodes, now Betty Jane Sliver, in the agreement of July 11, 1962." However, the chancellor concluded that she had nothing to

[ 279 Pa. Super. Page 481]

    assign since she had parted with whatever interest she had by her divorce settlement with Elmer M. Rhodes. Thus, whatever rights existed in the tavern and "the property" by reason of the aforesaid 1962 agreement were being held by Elmer M. Rhodes alone and that ...


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