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HERBERT JACKSON v. RICHARDS 5 & 10 INC. T/A REO DISCOUNT STORES (07/31/81)

filed: July 31, 1981.

HERBERT JACKSON, APPELLANT,
v.
RICHARDS 5 & 10 INC. T/A REO DISCOUNT STORES



No. 2744 October Term, 1978, Appeal from the Order of the Court of Common Pleas, Civil Division, Philadelphia County, at No. 5413 March Term, 1975.

COUNSEL

David A. Scholl, Philadelphia, for appellant.

Irwin Lee Gross, Philadelphia, for appellee.

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

Author: Cercone

[ 289 Pa. Super. Page 448]

This case comes before us from an order dated October 24, 1978, issued by the Court of Common Pleas of Philadelphia County dismissing the appellant's exceptions and motion for rehearing, and making final the decree nisi of December 20, 1976, from which the appellant now appeals.

On December 30, 1974 appellant, Jackson, entered into an oral agreement for the purchase of all the inventory, fixtures and good will of two stores, then owned by the appellee, Richard's 5 & 10, Inc., operating under the trade name of REO Discount Stores (hereinafter referred to as REO). One of the stores was on North 52nd Street and the other on Baltimore Avenue, both in Philadelphia. Until that time Jackson had been employed by the appellee as manager of the two stores. Beginning with the new year, 1975, Jackson took control of the two stores and operated them as if he were owner, although under the name of REO Discount Stores. In reliance on the oral agreement of sale of the business to him by REO, Jackson purchased the building in which the Baltimore Avenue store was housed. On January 30, 1975 both parties signed a written agreement, purportedly memorializing the previous oral agreement, and setting February 18, 1975 as the date for final settlement. The down payment, per the agreement, called for $5,000. Jackson provided appellee with a certified check for $2,000 and a personal check for $3,000. The latter was subsequently returned marked "non-sufficient funds." When the time for settlement came Jackson failed to appear, whereupon appellee "secured" the premises of both stores in an attempt to preclude Jackson from their further use, possession or control. The following day Jackson gained entrance to the businesses and resumed operations. On February 28, 1975 the parties signed another agreement concerning the purchase of the businesses. The date for final settlement was set as March 31, 1975. The down payment required was $2,000 in cash and a deed to Jackson's house executed by him in favor of the appellee, to be recorded only in the event of default. The agreement contained several other conditions,

[ 289 Pa. Super. Page 449]

    of which three are here relevant.*fn1 Two of the conditions, 6(b) and 8(c), required that Jackson perform certain obligations by March 3, 1975 and that he show evidence of performance to appellee's attorney. Evidence of the performance of those two conditions was never furnished by Jackson. Furthermore, the rent on the 52nd Street store was not paid for February or March; the chancellor found this to be a violation of the condition in paragraph 10(b). Appellee requested that Jackson meet the conditions' requirements. On March 21, 1975 appellee seized the two stores, removed all the merchandise from the Baltimore Avenue store and placed it in the 52nd Street store, and subsequently sold a large quantity of the merchandise (Easter Candy) without notice of the sale to Jackson. The deed to Jackson's house, which he had executed in favor of the appellee, was recorded. On March 25, 1975 appellant filed a complaint in equity and a petition for an injunction seeking to restrain the transfer or encumbrance of appellant's home. A preliminary injunction was granted April 28, 1975, but was ordered dissolved by the decree nisi which followed a one-day trial September 14, 1976, which decree, in addition to dissolving the preliminary injunction denied Jackson the relief he sought, and awarded appellee $10,000 in damages.*fn2 On

[ 289 Pa. Super. Page 450]

February 10, 1978 appellant filed exceptions to the adjudication and a Petition for Rehearing. Argument was heard on the post-trial motions on October 12, 1978 and an order making final the Decree Nisi issued on October 24, 1978. This appeal followed.

We are asked to consider the appropriateness of the chancellor's holding that the appellant breached the contract of February 28, 1975 such that the appellee was warranted in recording the deed to appellant's house, which the appellee held as security in case of a default. Secondly, we are asked to consider the propriety of the chancellor's award of $10,000 in damages to the appellee, despite the fact that the appellee had failed to plead a "counterclaim," or later, to move to amend the pleadings. We consider these questions in reverse order.

Rule 1510 of the Pennsylvania Rules of Civil Procedure provide that a defendant may plead a counterclaim to an action in equity if the cause of action "arises from the same transaction or occurrence or series of transactions or occurrences from which the plaintiff's cause of action arose." Pa.R.Civ.P. 1510(a). Failure to plead a set-off or counterclaim is not fatal to the claim since such counterclaims are not mandatory but only permissible. This is true even where, as here, the issues raised by a defendant's pleadings include all the elements of the counterclaim. Furthermore, Pa.R.Civ.P. 1033 allows for amendments of pleadings at any stage of the trial litigation, either upon consent of the adverse party or by leave of the trial court.*fn3 Of course, leave to amend is not automatically granted by the trial court; it must first be requested, and then the request may be accepted or denied at the discretion of the court. Sheppard v. First Penna. Banking & Trust Co., 199 Pa. Super. 190, 184 A.2d 309 (1962); 5A Anderson Pa. Civ. Pract. 404. In

[ 289 Pa. Super. Page 451]

    the instant case, appellee never pleaded a counterclaim, neither did it obtain the consent of the appellant nor the leave of the chancellor to amend its pleadings. See Garber Oil Co. v. Mitzel, 60 Lanc.L. 467 (1967); B. F. Goodrich Rubber Co. v. Shaffer, 36 Dauph. Co. Rpts. 322 (1933).*fn4 Appellee's contention that the appellant was obliged to object preliminarily to its answer and new matter on grounds of insufficiency of the counterclaim begs the question. Preliminary objections are certainly appropriate where a pleading is ambiguous or incoherent or fails to state adequately an element of a cause of action, but it would be ludicrous in the extreme to require preliminary objections asserting insufficiency of a pleading where the pleading was never ...


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