Music, Inc. v. Henry B. Klein Co.

245 A.2d 650, 213 Pa. Super. 182, 1968 Pa. Super. LEXIS 739

• Court: Superior Court of Pennsylvania
• Decided: September 12, 1968
• Docket: Appeal, 74
• Status: Published

Opinions

Opinion by

Spaulding, J.,

This is an appeal from a judgment entered in favor of Henry B. Klein Co., defendant-appellee, in an as-sumpsit action in Allegheny County Court.

Music, Inc., appellant, which provides a programmed music service commonly known as “Musak,” contracted with appellee to provide such service from April 1, 1963 to November 30, 1966. The contract in part provided: “The term of this agreement shall be for three (3) years and eight (8) months from the date of installation and shall continue thereafter for subsequent like periods unless at least (60) sixty days prior to the end of any term either party shall give the other written notice of desire to discontinue said service at the end of the current term.” In an attempt to end the contract, appellee wrote a letter of termination which was posted on Friday, September 30, 1966, sixty-one days prior to the termination date of November 30. This notice, which was clear and unambiguous, was received by appellant on Monday, October 3, 1966, fifty-eight days before the termination date.

The sole question on this appeal is whether effective termination notice was given pursuant to the terms of the contract and the intent of the parties. The trial court, in an action by appellant for the additional monthly payments due under the extended contract, rendered judgment for the appellee, concluding “that the notice given by the defendant was adequate under the contract.”¹

There was no specific provision in the contract making time of the essence and no circumstances have been demonstrated which clearly indicate that both parties intended that time should be of the essence. In Central Guarantee Co. v. Nat'l Bank, 137 Wash. 24, 241 Pac. 285 (1925), the court held that under a clause in a subscription contract covering a series of 5 years giving the subscriber the privilege to cancel “at the end of the first year,” his right to act arises at the termination of the year, so that he must be given a reasonable time thereafter to signify his cancellation, and that such action within 10 days after the stipulated period expires was reasonable. Several other courts have approved a rule of construction which permits a finding that a termination notice is sufficient even though delivered later than the period specified in the contract when the terminating party acted reasonably under the circumstances and there is no demonstrable prejudice resulting from the delayed notice. Those courts found, however, as a matter of law, that the notice in those cases was not given within a reasonable time after that permitted by the contract, and therefore held the termination notice legally insufficient.²

This question, which appears to be one of first impression in Pennsylvania appellate courts, clearly provides a case demanding the application of the above approach. There was, according to uncontradicted evidence, a telephone call one day before the 60 day period, from appellee to appellant to the effect that appellee wished to discontinue the service;³ actual receipt of the notice occurred on the first business day within that 60 day period; and, finally, appellant can demonstrate no prejudice stemming from the short delay in its receipt of the belated termination notice.⁴ We can see no reason to disturb the conclusion of the court below that there was nothing “in the nature of the transaction or the subject matter of the contract that would justify treating this contract as one making time of the essence. Plainly, the contract provision here was merely indicative of the parties’ intention, when contracting, that ample notice be given of any cancellation.” Absent a showing that appellant was damaged in any way by receipt of the termination notice on October 3rd, or that it changed its position to its detriment, it would be unconscionable to hold appellee to an additional contract of three years and eight months. Under the circumstances of this case we hold that notice of cancellation received on the first business day after that literally required by the contract was adequate to effect a termination of the contract.⁵

-Judgment affirmed.

Montgomery, J., concurs in the result.

1 Unreported opinion of the County Court of Allegheny County, filed February 7, 1968 at No. 595 of 1967.

2 See, e.g., Mayhew v. Vanway, 371 S.W. 2d 90 (Ct. Civ. App., Tex., 1963) (notice after 4 years found unreasonable where contract provided for 2 year period within which termination might be effected); Bennett’s, Inc. v. Krogh, 115 Col. 18, 168 P. 2d 554 (1946) (20 months notice unreasonable in face of 6 months contract provision).

There is also a question as to whether the issue of reasonableness is to be submitted to the trier of fact or ruled on as a matter of law. We need not reach that determination in the instant case since, once we establish that reasonableness is a relevant determination, it is apparent that a finding that notice in the case at bar was unreasonable would have to be reversed as a matter of law.

3 The position has also been taken that the notice may be verbal even though the contract calls for written notice. Coopersmith v. Isherwood, 219 Md. 455, 150 A. 2d 243 (1959).

4 Indeed, were it necessary, we would hold alternatively that notice on the first business day of the contract period satisfies the contract even under a strict construction. See Berg Co. v. Thomas & Son Co., 256 Pa. 584, 100 Atl. 951 (1917). To the extent that Central Guarantee Co. v. Union Nat’l Bank, 92 Pa. Superior Ct. 70 (1927), derogates from this opinion in that it makes time of the essence as a matter of law in such contracts, that opinion is overruled.

5 This case is to be distinguished from strict construction given renewal clauses in leases, for the availability of equitable relief in those cases establishes prejudice as a matter of law. Trickett, Landlord and Tenant (Stern 3rd ed., 1950), 12. But see American Houses v. Schneider, 211 F. 2d 881 (3d. Cir., 1954).