Searching over 5,500,000 cases.


searching
Buy This Entire Record For $7.95

Download the entire decision to receive the complete text, official citation,
docket number, dissents and concurrences, and footnotes for this case.

Learn more about what you receive with purchase of this case.

WAGMAN v. CARMEL

February 6, 1985

Howard WAGMAN on his own behalf, Seymour A. Freedman, on his own behalf, and Bernard G. Segal, Frances S. Sheerr, Richard C. Sheerr and The Glenmede Trust Company, as Co-Executors of the Estate of Stanley Sheerr, deceased
v.
David B. CARMEL



The opinion of the court was delivered by: KATZ

 KATZ, District Judge.

 This action arises out of a contract between the parties forming a joint venture to acquire and develop real property located in the Township of Egg Harbor, New Jersey. Plaintiffs seek a declaratory order from this Court stating that a majority in interest of the members of the Atlantic City Joint Business Adventure have the right to sell the entire property of the venture and that no members constituting a minority in interest have a right of first refusal with respect to the proposed sale. Plaintiffs and defendant have filed cross motions for summary judgment and stipulated to the relevant facts. The parties represent that there are no disputed material facts. I find that the plaintiffs are entitled to summary judgment.

 On January 4, 1965 the parties or their predecessors in interest executed the Atlantic City Joint Business Adventure Agreement (hereinafter "Agreement"). The Agreement was amended three times, once in 1971, again in 1973 and finally in 1980. The purposes of the joint venture include the acquisition, improvement, leasing, operation and sale of property located in Egg Harbor, New Jersey. Each of the members of the joint venture owns an interest in an undivided portion or share of the venture's property equivalent to the interest of that member in the venture as a whole. Under the Agreement and subsequent amendments thereto a member's undivided portion or share of the venture property is "co-extensive" with that member's interest in the venture itself. According to Paragraph 8 of the December 31, 1980 Amendment to the Agreement, "Transfers of such interest in the PROPERTY and of related Membership interests hereunder may not be made separately; a transfer of the Membership interest herein shall effect a transfer of the related interest in the PROPERTY and vice versa." Record title to the property is held by a trust.

 Under the original Agreement, all actions of the joint venture required the unanimous consent of its members. In 1971 this provision was amended to eliminate the necessity of unanimous consent and instead to require only a majority vote. Article I, Section 2(c) now provides that "all actions of the Joint Business Adventure shall be authorized by a majority in interest of the Members. . . . All members respectively agree to be bound by and to execute and deliver all such instruments and do all such things as may reasonably be required of them to carry out actions agreed upon by the Members . . ."

 Article V, entitled "Changes in Membership" contains the provision chiefly at issue in this action. As amended in 1980, Article V, section 1 prohibits a member from selling or otherwise disposing of his interest in the joint venture unless the other members unanimously consent thereto or unless the Agreement so provides. Section 3 provides that a member may sell his entire "Membership interest" to a third party subject to the right of first refusal of the other Members and of the venture itself. Section 3 provides that "within thirty (30) days of the receipt of such written notice [of the proposed sale to a third party], the other Members of the Adventure may elect to purchase all, but not less than all of the interest being sold by the selling Member upon the same terms and conditions as the offer received by the selling Member . . . ." In the event that no Member asserts his right in thirty days to purchase the membership interest, the venture itself may purchase the interest. Should neither the other members nor the venture assert a right of purchase, the third party may purchase the interest subject to the requirement of executing appropriate documents agreeing to be bound by all of the terms and conditions of the Agreement.

 Article VII, section 1 of the Agreement provides that it shall be interpreted in accordance with the laws of the Commonwealth of Pennsylvania.

 Since 1980, members of the joint venture have sought a purchaser for the Egg Harbor property. In 1981-1982 the members received an offer to purchase the property by the Rouse Company. By letter, dated March 25, 1982, the defendant objected to the proposed sale to Rouse and asserted his alleged right of first refusal. The sale to Rouse was never consummated. Further negotiations with other potential purchasers have also failed to result in an agreement to sell the property. Plaintiffs allege in their complaint that the defendant's assertion of a right of first refusal has thwarted all of their efforts to sell the Egg Harbor property since it has created uncertainty over their power to convey good title.

 Plaintiffs, all original members of the joint venture or the original members' successors in interest, seek an order by this Court declaring that a majority may agree to sell the venture's property free from any individual member's right of first refusal. Plaintiffs argue that the majority rule language in Article I governs the sale of the venture property and that all members are contractually bound to take all steps necessary to implement decisions arrived at by the majority. They further assert that the right of first refusal provision applies to the sale of individual membership interests in the ongoing venture and therefore not to the sale of the entire venture property. Defendant responds by arguing that a majority of the venture's members may not force him to sell his interest since he owns an undivided share in the venture property as a tenant in common. Furthermore, since the sale of the venture property also results in a sale of membership interests, the defendant asserts that the first right of refusal provisions in Article V govern, thereby allowing him the option of purchasing his co-venturers' interests.

 In their cross motions for summary judgment, plaintiffs and the defendant ask this Court to construe the provisions of the Agreement in accordance with their positions as outlined above. Summary judgment is appropriate in cases where a court is asked to construe contractual clauses that are clear and unambiguous despite the parties' differing views as to what consequences flow from those provisions. See Landtect Corp. v. State Mutual Life Assurance Co., 605 F.2d 75, 79-80 (3d Cir. 1979); County of Erie v. American States Insurance Co., 573 F. Supp. 479, 483 (W.D.Pa.1983), aff'd, 745 F.2d 45 (3d Cir.1984); C. Wright, A. Miller, & M. Kane, Federal Practice and Procedure § 2730.1 (1983). All parties in this case assert in their cross motions for summary judgment that the contractual provisions are clear and that no material facts are in dispute. I find from my analysis of the contract that the provisions involved in this dispute are clear and unambiguous and that giving them legal effect through construction is a matter for the Court. Cf. Ram Construction Co. v. American States Insurance Co., 749 F.2d 1049 at 1052-1053 (3d Cir.1984).

 I

 Defendant's argument that he cannot be forced to sell the property due to his status as a tenant in common is without merit. A tenancy in common is an estate in which there is a unity of possession, but separate and distinct titles. Each tenant has a right to possess the entire estate, but this right of possession is not exclusive. See J.M. Shober Farms, Inc. v. Merrill, 179 Pa.Super. 446, 448, 115 A.2d 384, 386 (1955); 14 Pennsylvania Law Encyclopedia, Estates in Property, § 41 at 26 (1959). Ordinarily, although a tenant in common may freely sell or otherwise dispose of his own interest in jointly held property, he may not act so as to prejudice the rights of his co-tenants. For example, a tenant in common may not unilaterally bind his co-tenants to an agreement concerning the use, control, or title to the joint property. See McKinley v. Peters, 111 Pa. 283, 3 A. 27 (1885). Nevertheless, a tenant in common may bind his co-tenants to an agreement affecting the ownership of the tenancy property if he or she has been authorized to enter into such an agreement or if the other co-tenants later ratify the agreement. See Caveny v. Curtis, 257 Pa. 575, 580, 101 A. 853 (1917); McKinley v. Peters, 111 Pa. 283, 286, 3 A. 27 (1885); Browning v. Cover, 108 Pa. 595, 599 (1885); 4A Powell on Real Property 633 (1982). Thus, tenants in common can agree that the property may be sold by majority vote.

 By agreeing to the 1971 Amendment, the defendant has contractually authorized and empowered a majority of the joint venture to sell his interest in the venture's property along with their own, provided that the sale is one of the permissible activities of the venture. *fn1" Article I expressly includes the sale of venture property as a purpose of the joint venture. All members have agreed to be bound by and to execute and deliver all instruments and to do all things required to implement the decisions of the majority. Defendant may not now avoid the ...


Buy This Entire Record For $7.95

Download the entire decision to receive the complete text, official citation,
docket number, dissents and concurrences, and footnotes for this case.

Learn more about what you receive with purchase of this case.