No. 613 October Term, 1978, Appeal from the Judgment of the Court of Common Pleas of Philadelphia County, Civil Action--Equity, No. 307 October Term, 1976.
Lewis H. VanDusen, Jr., Philadelphia, for appellant.
C. K. Walters, Philadelphia, for appellee.
Cercone, President Judge, and Price, Spaeth, Hester, Cavanaugh, Brosky and Wickersham, JJ. Cercone, P. J., files a dissenting opinion in which Brosky, J., joins.
[ 285 Pa. Super. Page 189]
The instant appeal is from the judgment entered pursuant to an order granting a motion for summary judgment in favor of Western Savings Fund Society of Philadelphia (hereinafter referred to as Western). Western sued in equity seeking to enforce an option to renew a lease against appellant, Southeastern Pennsylvania Transportation Authority (hereinafter SEPTA),*fn1 notwithstanding its failure to
[ 285 Pa. Super. Page 190]
comply with a lease provision requiring that notice be timely filed. Reasoning that equitable relief was nonetheless appropriate, the chancellor granted Western's motion for summary judgment. Arguing both that the chancellor erred in denying its motion for summary judgment and in entering judgment for Western, SEPTA appealed. A three judge panel of this court reversed the chancellor's order and dismissed Western's complaint. (Filed October 12, 1979).*fn2 Western's petition for allocatur was denied by our supreme court on January 9, 1980. On March 19, 1980, we granted Western's application for reargument before the Court en banc. For the reasons which follow, we reverse the order granting summary judgment to appellee and direct entry of judgment for appellant.
The pertinent facts are undisputed. On November 26, 1965, Western and SEPTA entered into a lease agreement whereby Western leased certain premises in Philadelphia's Suburban Station Concourse at an annual rental rate of $10,350. The lease became effective April 16, 1966, was for a ten year term, and provided Western the option to renew for an additional ten year period at the 1966 rental rate. The manner in which the option was to be exercised was stipulated in the lease agreement as follows:
[ 285 Pa. Super. Page 191]
That, if Lessee shall have satisfactorily performed its obligations and covenants herein contained, Lessee shall have the option of renewing this lease after expiration of the original term hereby created for an additional term of ten years, upon giving three months' notice in writing to Lessor prior to the expiration of the said original term, of its intention so to do. In the event said option is exercised, this lease shall continue for a further term of ten years under the same terms and conditions. It being understood and agreed, however, that in the absence within Page 191} the time specified, of the aforesaid notice of Lessee of its intentions to exercise its option to renew this lease for an additional ten year term, said option herein granted shall expire absolutely, and in this event the lease shall cease and determine at the expiration of the original ten year term.
Clause V(b) (emphasis added). See Record at 11a (Exhibit A).
Both appellant and appellee agree that the date by which notice was required to have been given pursuant to the lease was January 16, 1976. Western's notice was not mailed until January 20, 1976, however, and was not received by SEPTA until January 22, 1976. SEPTA thus rejected the notice because it was not timely filed and informed Western that the lease would expire at the end of the predetermined ten year term. SEPTA did offer Western a new ten year lease, however, albeit at a higher rental rate of $29,580 per year. Western initially accepted the offer but, ultimately, revoked its acceptance when it decided to seek specific enforcement under the more favorable 1966 terms. See Record at 20a. Western's suit in equity thus followed.
Termed an "administrative oversight" by one of Western's vice presidents, see Record at 29a, the delay was found by the chancellor to have been "occasioned by the fact that at the time of the exercising of the option to renew, [Western] was engaged in a 'massive branch expansion program.'" Slip op. at 2. Since SEPTA was not harmed by the delay and to safeguard Western's "large investment"*fn3 in the
[ 285 Pa. Super. Page 192]
premises, the chancellor opined that the delay of six days "must be considered de minimis." Slip op. at 6. The chancellor thus deemed equitable relief appropriate and granted Western's motion for summary judgment. Appellant SEPTA contends that this was error. We agree.
"[I]t is a sound legal principle that unless an option is exercised within the time fixed it necessarily expires: McMillan v. Philadelphia Company, 159 Pa. 142, 28 A. 220 [(1893)]; Vilsack v. Wilson, 269 Pa. 77, 112 A. 17 [(1920)]; Rhodes v. Good, 271 Pa. 117, 114 A. 494 [(1921)]; Loughey v. Quigley, 279 Pa. 396, 124 A. 84 [(1924)]." Phillips v. Tetzner, 357 Pa. 43, 45, 53 A.2d 129, 131 (1947). This is so because "[t]ime is always of the essence in an option contract." New Eastwick Corporation v. Philadelphia Builders, 430 Pa. 46, 50, 241 A.2d 766, 769 (1968). Cf. 6 Williston on Contracts § 853 at 212 (3d ed. 1962) ("whether the question arises either at law or in equity it is settled that 'time is of the essence of an option.'" Id. at 212-13 (footnote omitted)). Accord, Unatin 7-Up Company, Inc. v. Solomon, 350 Pa. 632, 39 A.2d 835 (1944).*fn4
In urging us to ignore both the rule requiring punctuality in exercising an option and the express language of the lease agreement mandating the same, appellee contends that Pennsylvania courts recognize exceptions to the general rule, which exceptions "allow equity to relieve a tenant, in a proper case, from the consequences of a tardy renewal notice." Brief for appellant 7-8. Appellee's inability to cite
[ 285 Pa. Super. Page 193]
a single Pennsylvania decision in which such exceptions were operative casts considerable doubt on the validity of this position. Appellee's reliance on Unatin 7-Up Co., Inc. v. Solomon, 350 Pa. 632, 39 A.2d 835 (1944), Warner v. Bedell Co., 278 Pa. 576, 123 A. 490 (1924) (per curiam), ...