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PAWCO v. BERGMAN KNITTING MILLS (12/29/80)

filed: December 29, 1980.

PAWCO, INC.
v.
BERGMAN KNITTING MILLS, INC., APPELLANT



No. 1130-1131 October Term 1978 Appeal from the Orders of the Court of Common Pleas of Philadelphia County, Trial Division, Civil Section at No. 5410 and 5418 August Term, 1977.

COUNSEL

Tom P. Monteverde, Philadelphia, for appellant.

Marvin J. Levin, Philadelphia, for appellee.

Cercone, President Judge, and Price, Spaeth, Hester, Cavanaugh, Brosky and Wickersham, JJ. Price, J., notes dissent.

Author: Spaeth

[ 283 Pa. Super. Page 445]

This is a landlord-tenant case. The lower court refused to strike or open judgments confessed by the landlord for ejectment and monetary damages (the court reduced the latter judgment from $76,810.16 to $69,580.91). On the tenant's appeal, a panel of this court (VAN der VOORT,

[ 283 Pa. Super. Page 446]

WIEAND and LIPEZ, JJ.) affirmed the orders refusing to strike, but reversed the orders refusing to open the judgments. On the landlord's petition, we granted reargument before this court en banc as to whether the judgments should be opened.

The tenant is Bergman Knitting Mills, Inc. For a good many years, Bergman has conducted its knitwear manufacturing business on the leased premises, which are the top three floors of a seven floor building at 2102-2199 Lehigh Avenue in Philadelphia. The landlord is Pawco, Inc. It bought the building on Lehigh Avenue in September 1975, and Bergman's lease was assigned to it. On September 2, 1977, Pawco filed complaints confessing judgments against Bergman in ejectment and for monetary damages. The complaints alleged that Bergman had breached its lease in that it had failed to pay rent for June, July, August and September, 1977, and also various charges, assessed as additional rent, for electricity, water and sewer, and automatic sprinkler service. On September 21, 1977, Bergman filed its petitions to strike or open the judgments. Pawco answered the petitions and depositions were taken. Since the petitions to open were promptly filed, the only issue is whether they plead a meritorious defense. Kardos v. Morris, 470 Pa. 337, 368 A.2d 657 (1977); Fidelity Bank v. Act of America, Inc., 258 Pa. Super. 261, 392 A.2d 784 (1978). The principal defense pleaded is as follows. Under the lease Pawco is required to supply heating oil to heat the premises and generate live steam to operate the equipment Bergman uses in its business. On May 23, 1977, Pawco wrote Bergman that "[i]t is impossible for our company to provide the cash flow necessary for us to buy fuel so that [you] can be provided steam twelve months of the year." (Supp. Record, 34b). The letter went on to state that "[i]t is our desire to amicably resolve this inability," and offered "a number of plans." (Id.) On June 3, Pawco wrote Bergman that "[a]t the present rate of consumption there is enough fuel in inventory to supply high pressure steam to you until Monday afternoon, June 6;" the letter also stated that "we will be

[ 283 Pa. Super. Page 447]

    unable to acquire additional fuel oil;" and "we will not allow any credit against rent if you decide to provide your own oil." (Supp. Record, 36b) The parties were unable to come to an agreement, and on June 28, Bergman informed Pawco that henceforth it would pay its monthly rent and charges for electricity, less the amounts paid for fuel oil, into an escrow account in the name of its attorney. It did this for July and August, and, as mentioned above, on September 2, Pawco confessed judgments in ejectment and for monetary damages. It is Bergman's position that its promise to pay rent and Pawco's promise to supply heating oil were mutually dependent, and when Pawco breached its promise, Bergman was entitled to relief, including withholding rent.

The lower court held that this was not a meritorious defense, stating:

[Bergman's] unilateral action [in paying into an escrow account] was neither permitted by the lease agreement or sanctioned by the law applicable to commercial properties. It has long been recognized that covenants of a lease are independent of each other and therefore a breach by the lessor of one of the conditions does not excuse the obligation of the lessee to pay rent and other charges reserved as rent. McDanel v. Mack Realty Company et al., 315 Pa. 174 [172 A. 97 (1934)]; Roth v. Golden Slipper Restaurant & Catering, Inc., 167 Pa. Super. 558 [76 A.2d 475 (1950)]. Nothing but a surrender or release or an eviction can absolve a tenant from his obligation to pay rent as specified in the lease. Gale, Ind., Inc. v. Bristol FM&A Co., 431 Pa. 464 [246 A.2d 391] (1968).

(Slip op. at 3)

The issue that we must decide is whether this is a correct statement of the law. For the reasons that follow, we are persuaded that it is not.

It may be granted that the law once was as stated by the lower court. Thus in Roth v. Golden Slipper Restaurant & ...


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