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CRAIG NEWMAN SHAFFER AND WILLIAM E. CARLL v. EILEEN R. FLICK (01/16/87)

filed: January 16, 1987.

CRAIG NEWMAN SHAFFER AND WILLIAM E. CARLL, APPELLEES,
v.
EILEEN R. FLICK, CO-EXECUTOR OF THE ESTATES OF GLENN W. SHAFFER AND VIOLET M. SHAFFER, APPELLANT



Appeal from Order of the Court of Common Pleas, Civil Division, of Forest County, No. 122 of 1985, Orphans' Court 6 of 1985.

COUNSEL

Henry G. Beamer, III, Pittsburgh, for appellant.

David W. Swanson, Warren, for appellees.

Cavanaugh, Wieand and Johnson, JJ.

Author: Wieand

[ 360 Pa. Super. Page 194]

This is an appeal from a declaratory judgment. The trial court held that tenants of a farm property, whose lease contained an option to buy, were entitled to the proceeds of a policy of fire insurance, with extended coverage, when they exercised their option after the buildings on the farm had been destroyed by tornado. We affirm.

On or about May 1, 1980, Glenn and Violet Shaffer, husband and wife, decided to retire from farming and leased their farm property, consisting of 250 acres and including three residences, three barns, three silos, a shop and a milkhouse, to their son, Craig Newman Shaffer, and their son-in-law, William E. Carll.*fn1 The lease agreement, in paragraph 13, granted the tenants an option to buy the farm for $140,000.00. On May 31, 1985, a tornado struck Forest County, killing Glenn and Violet Shaffer and destroying most of the improvements on the farmland. The tenants, pursuant to the terms of the lease agreement, had purchased fire insurance and extended coverage on the farm improvements, naming as insureds themselves and Glenn and Violet Shaffer as the interests of the insureds might appear. As a result, insurance proceeds became payable in the total amount of $147,000.00.*fn2 Letters testamentary were issued to Eileen R. Flick, and the insurance proceeds were paid to and received by her in her representative capacity. On September 11, 1985 and again on October 23, 1985, Shaffer and Carll gave notice to Flick in writing that they intended to exercise their option to buy the farm and that they wished to apply the insurance proceeds on account of the purchase price. Flick refused to release the

[ 360 Pa. Super. Page 195]

    insurance proceeds and also refused to execute and deliver a deed for the farm property.

Shaffer and Carll thereupon filed an action for declaratory judgment. They contended that the terms of their agreement required the application of insurance proceeds on account of the purchase price for the farm and that legal and equitable principles, independently of the terms of the agreement, required the same result. Flick denied that the agreement required that Shaffer and Carll receive the insurance proceeds and contended that the attempt to exercise the option had been ineffective because it had been conditional upon receipt of the insurance proceeds.*fn3 Flick also filed a separate action to have the insurance proceeds declared assets of her parents' estates. All proceedings were consolidated for hearing, after which the trial court determined that Shaffer and Carll had validly exercised the option to purchase the farm and that they were entitled to have the proceeds of the insurance policy applied against the purchase price of the farm.

Our scope of review is narrow. In Supp v. Erie Insurance Exchange, 330 Pa. Super. 542, 479 A.2d 1037 (1984), this Court said:

Because a declaratory judgment action follows "as nearly as may be" the practice and procedure in an action in equity, Pa.R.C.P. No. 1601(a), we will review the determination of the trial court as we ...


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