Kelly v. Rhodes

421 A.2d 299, 279 Pa. Super. 477, 1980 Pa. Super. LEXIS 2789
CourtSuperior Court of Pennsylvania
DecidedJuly 18, 1980
DocketNos. 76 and 78
StatusPublished
Cited by2 cases

This text of 421 A.2d 299 (Kelly v. Rhodes) is published on Counsel Stack Legal Research, covering Superior Court of Pennsylvania primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Kelly v. Rhodes, 421 A.2d 299, 279 Pa. Super. 477, 1980 Pa. Super. LEXIS 2789 (Pa. Ct. App. 1980).

Opinion

MONTGOMERY, Judge:

This equity action was originally brought in 1977 by Southern Pennsylvania Bank, as guardian of James W. Kelly, an incompetent, and Breezy Tavern, Inc. (Breezy). Kelly died in 1979 and the case was thereafter prosecuted on behalf of his estate by his executor, Southern Pennsylvania Bank. It was originally brought against Elmer M. Rhodes and Loma E. Rhodes, his present wife, and Betty Jane Rhodes, from whom he had been divorced. It sought to recover possession of premises on which the defendants were operating a licensed liquor establishment known as Breezy Tavern \ an accounting for profits, etc. therefrom, and a decree that said defendants had no interest in Breezy Tavern1, or in the real estate on which the tavern is situated. Art Murphy of York, Inc. (Murphy) was brought in as an additional party on the petition of plaintiff as the result of the pre-trial conference.2

[480]*480The issue presented on this appeal concerns the original written agreement dated July 11, 1962 whereby Breezy Tavern, Inc. agreed to pay to Elmer M. Rhodes and Betty Jane Rhodes as the registered managers of the corporation ninety per cent of the net proceeds from the operation of the tavern; which agreement also provided, inter alia:

“In the event that Breezy desires to sell the license and equipment as hereinbefore referred to, and in the event that Breezy should obtain a firm offer for the purchase of said license and equipment, Breezy doth hereby grant unto Rhodes the right of first refusal to purchase the license, inventory and equipment as hereinbefore referred to under the same terms and upon the same conditions as that contained in the firm offer of third party purchaser to Breezy, which right shall be exercised by Rhodes within a period of sixty (60) days of notification to Rhodes by Breezy.”

By way of answer to the complaint filed by plaintiff, Lorna E. Rhodes and Elmer M. Rhodes set up an alleged written modification of the agreement of 1962, dated June 1, 1969 by which they contend that the selling price of the Breezy Tavern and property was set at $40,000.00. That alleged agreement was written on a scrap of paper by Lorna E. Rhodes and signed by Elmer M. Rhodes, James W. Kelly, Lorna E. Rhodes, Eugene Klinefelter and Clifford M. Kelley in that order and reads as follows:

“I, Elmer M. Rhodes, agree to give the children of James M. Kelly $40,000.00 upon his death for the Breezy Tavern and Property.”

The lower court found that the words “and property” were written after the rest of the statement but stated that it was not clear from the testimony whether the words “and property” were inserted before or after the agreement was signed.

It also found that “By instrument, dated July 7, 1978, Art Murphy of York acquired the interest of Betty Jane Rhodes, now Betty Jane Sliver, in the agreement of July 11, 1962.” However, the chancellor concluded that she had nothing to [481]*481assign since she had parted with whatever interest she had by her divorce settlement with Elmer M. Rhodes. Thus, whatever rights existed in the tavern and “the property” by reason of the aforesaid 1962 agreement were being held by Elmer M. Rhodes alone and that Art Murphy of York acquired nothing by this assignment of Mrs. Slivers.

The chancellor further concluded that the writing of June 1, 1969 gave Elmer M. Rhodes no legally enforceable rights in assets of Breezy Tavern, Inc. or the property of James W. Kelly; and that “The agreement of July 11, 1962, was modified by a course of conduct of the parties. Elmer M. Rhodes is not in breach thereof, but to the contrary continues to have a right of first refusal to purchase the assets of Breezy Tavern, Inc., and the real estate of James W. Kelly upon which the tavern is situated.”

The decree nisi entered the 22nd day of September, 1978 provided as follows: -inter alia

“(1) Within sixty (60) days of the date this decree is final, Elmer M. Rhodes shall either: (a) match the offer of Art Murphy of York, Inc. by agreement dated January 6, 1978 by executing a written agreement identical thereto and thereafter fulfilling the terms thereof, or (b) Elmer M. Rhodes and Loma E. Rhodes shall vacate the premises, thereby surrendering any interest in the assets of the corporation or the real estate upon which the tavern is situated.”

Following the filing and disposition of exceptions, the decree nisi was modified “so that the right of first refusal which remains in Elmer M. Rhodes, relates to the assets of Breezy Tavern, Inc. only and not the real estate of James W. Kelly.”

From that final decree, we have before us the appeal of Art Murphy of York, Inc. (# 76) and the appeal of Loma E. Rhodes and Elmer M. Rhodes (# 78).

The appeal of Murphy states the issues raised thereby to be as follows:

[482]*482“I. Was the agreement, dated July 11, 1962, between the plaintiff and the defendant subsequently modified by the writing, dated June 1,1969 so that the defendant acquired the right to purchase the corporate assets and real estate upon the death of the plaintiff for $40,000.00?”
“II. Does the defendant have the right of first refusal to purchase the assets pursuant to the agreement of July 11, 1962?”
“HI. Does the defendant’s right of first refusal under the terms of the agreement dated July 11, 1962, extend to the real estate owned by the plaintiff as well as the corporate assets expressly covered by the agreement?” The Rhodes appeal (# 78) states but one issue, viz. “Did

the written agreement dated June 1, 1969 modify the prior agreement of July 11, 1962 and create in Elmer M. Rhodes the right to purchase the corporate assets and real estate for $40,000.00 upon the death of James W. Kelly?” All appellants acknowledge, however, that the 1962 agreement, as originally written, did not include the real estate of James W. Kelly.

Reviewing the issues as stated by all appellants, it appears the real issue is

(1) Did Elmer Rhodes have the right to purchase the assets of the Breezy Tavern owned by Breezy Tavern, Inc., and also the real estate on which the business of Breezy Tavern is conducted owned by the estate of James W. Kelly deceased, for $40,000.00 upon the death of Kelly by virtue of the writing signed June 1, 1969; and if he does not have that right,
(2) Does Elmer Rhodes have the right of first refusal to purchase the assets of Breezy Tavern under the agreement of July 11, 1962?

Our review of the record persuades us that the findings and conclusions of the chancellor, confirmed by the court en banc, as to the effect of the 1969 writing were correct. To accomplish what Rhodes contends, viz. the right to purchase the corporate assets of Breezy Tavern, Inc. as [483]*483well as the real estate owned by James W. Kelly, individually, the paper is too informal and ambiguous. The 1962 agreement which Rhodes contends it modified, was formally executed by Kelly as President of Breezy Tavern, Inc. The 1969 paper contains no identification of Kelly either as President of the corporation, as a party to the alleged agreement or as a witness.

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Cite This Page — Counsel Stack

Bluebook (online)
421 A.2d 299, 279 Pa. Super. 477, 1980 Pa. Super. LEXIS 2789, Counsel Stack Legal Research, https://law.counselstack.com/opinion/kelly-v-rhodes-pasuperct-1980.