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H. FOSTER WALTON v. PHILADELPHIA NATIONAL BANK (07/22/88)

filed: July 22, 1988.

H. FOSTER WALTON, III AND GERTRUDE R. GAUTIER, APPELLANTS,
v.
PHILADELPHIA NATIONAL BANK, GATEWAY FOODS, INC. AND GATEWAY FOODS OF PENNSYLVANIA, INC., APPELLEES



Appeal from the Decree entered June 23, 1987 in the Court of Common Pleas of Montgomery County, Civil Division, No. 87-01551.

COUNSEL

Joseph E. Greene, Jr., King of Prussia, for appellants.

Michael J. Collard, Philadelphia, for Gateway, appellees.

Beck, Kelly and Johnson, JJ.

Author: Kelly

[ 376 Pa. Super. Page 332]

This is an appeal by plaintiffs, H. Foster Walton, III and Gertrude R. Gautier (hereinafter "appellants"), from the order of June 23, 1987, directing appellee, Philadelphia National Bank (hereinafter "PNB"), to release funds held in escrow to appellee, Gateway Foods, Inc. (hereinafter "Gateway"). We vacate and remand.

A summary of the facts which have led to the instant action is as follows. Gateway acquired Reeves, Parvin & Co. (hereinafter "RPCO") pursuant to a merger agreement in January of 1986.*fn1 Proposals for the acquisition of RPCO by Gateway required each RPCO stockholder with more than a five percent (5%) interest in RPCO stock, determined prior to the sale of the corporation, to indemnify Gateway for breach of any representations, warranties, or covenants. To avoid personal stockholder indemnification, RPCO directors proposed the establishment of a $150,000 escrow account from which any claims by Gateway could be paid. Gateway accepted this proposal. PNB was chosen to act as escrow agent under the terms of the agreement reached by the parties.

On December 23, 1986, Gateway mailed a Notice of Claim for funds held in the escrow account pursuant to the terms of the escrow agreement.*fn2 Gateway mailed "courtesy copies" of its Notice of Claim to appellants and the attorney representing RPCO. Pursuant to the agreement, PNB mailed copies of the Notice of Claim to the appellant stockholder representatives by certified mail on December 31,

[ 376 Pa. Super. Page 3331986]

; Walton received a copy on January 6, 1987, and Gaudier received a copy on January 7, 1987. Appellants mailed notices of dispute to PNB on January 14, 1987. PNB received the notices on January 20, 1987;*fn3 the escrow agent found that the notices of dispute were untimely.

On February 5, 1987, appellants filed an action in equity against the appellees seeking to enforce their rights under the escrow agreement. Appellants sought a determination by the trial court that the notices of dispute filed by appellants with PNB were timely filed within the terms of the escrow agreement. Appellants further sought to restrain the escrow agent, PNB, from releasing funds held in escrow to Gateway or Gateway Foods of Pennsylvania, Inc. The court granted appellants' petition for a preliminary injunction against distribution of the escrowed funds.

A hearing was held on February 27, 1987.*fn4 On April 14, 1987, the trial court issued a decree nisi, directing PNB to release the funds held in escrow to appellee, Gateway. Exceptions were filed and denied and a final decree dated June 23, 1987, was entered on the docket on June 26, 1987. The instant appeal followed.

I.

Appellants' primary contention on appeal is that the trial court erred in finding appellants' notices of dispute to Gateway's claim for escrow funds to be untimely pursuant to the language of the escrow agreement. Appellants argue that the court failed to ascertain the intention of the parties to the contract, thereby misconstruing the contract and further failed to find appellees estopped from claiming the notice to be untimely.

First, however, appellants Gautier and Walton argue that appellees are estopped from claiming that notice of

[ 376 Pa. Super. Page 334]

    disputes sent to PNB were untimely. Appellants argue that Mr. David Fontello, an officer in the Corporate Trust Department at PNB, the escrow agent, and administrator of the escrow account between Gateway and RPCO, communicated to stockholder representative Gautier, upon her inquiry, that based on his interpretation of the contract, Gautier had ten days following the date that the Notice of Claim was received by her (January 7, 1987) in which to place her Notice of Dispute in the mail to PNB. Gautier allegedly relied upon this interpretation and placed her Notice of Dispute in the mail on January 14, 1987, within the ten-day period. Appellants allege that appellees are now bound by appellants' detrimental reliance pursuant to the doctrine of estoppel.

Pa.R.A.P. 302(a) states:

(a) General rule. Issues not raised in the lower court are waived and cannot be raised for ...


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