Wilcox v. Regester

207 A.2d 817, 417 Pa. 475, 1965 Pa. LEXIS 373
Supreme Court of Pennsylvania·Decided March 16, 1965·No. Appeal, 42·Published·Cited by 57 cases

Opinions

Opinion by

Mr. Justice Roberts,

On March 1, 1963, appellant, Robert Regester, agreed to sell his restaurant liquor license to Two West Avenue Corporation for $12,500. Of this sum, $2,000 was paid directly to appellant and $10,500 was deposited in an escrow account. The agreement of sale was conditioned upon the approval of the transfer of the license by the Pennsylvania Liquor Control Board. Appellant agreed that he would execute all forms required by the board for the purpose of transferring the license. No date was fixed for the consummation of the sale.

Two West Avenue Corporation assigned all of its right, title and interest in this agreement to appellees, James Wilcox and Harry Yarrow. In turn, appellees reassigned the agreement for $20,000 to John Dutton and C. N. Agnew and, later, to Traders Investment Corporation (Traders), the nominee of Dutton and Agnew. The reassignment from appellees to Dutton and Agnew provided that it would become null and [478] void and that the parties would be relieved of further liability or obligation in the event the Liquor Control Board failed or refused to approve the transfer to Dutton and Agnew or their nominee.1 Appellant had notice of and consented to each of the assignments but he was not informed of the terms of the reassignment to Dutton and Agnew.

In accordance with the agreement of sale, appellant and Traders filed an application with the Liquor Control Board seeking to transfer the license. After processing the application, the Liquor Control Board notified Traders that it would not complete its investigation until appellant and Traders executed a new agreement of sale reflecting the full consideration of $20,-000.2 Appellant, now aware of the $20,000 reassignment, refused to enter into such a new agreement unless he received a portion of this increased consideration.

Subsequently, appellant declared that the original agreement of sale had been violated and that, in accordance with that agreement,3 he was retaining the $2,000 [479] payment as liquidated damages. The board then refused to approve the transfer of the liquor license to Traders; Dutton and Agnew notified appellees that they would not appeal the decision of the board.

Appellees filed a complaint in equity seeking to compel appellant to transfer the license to them. The chancellor made findings of fact and conclusions of law sustaining appellees’ right to specific performance or damages for loss of profits. The court concluded that appellees had fully performed their obligations pursuant to the terms of the agreement and that appellant had wrongfully withheld his co-operation, thereby preventing appellees from completing their sale to Traders.

A decree nisi was entered directing appellant to execute the necessary papers to effectuate the transfer of the license to appellees. In the alternative, the decree directed appellant to return to appellees the $2,-000 retained as liquidated damages, to release the escrow fund of $10,500, and to pay appellees $7,500 for loss of profits. Exceptions were filed, argued and dismissed. The decree nisi was made absolute and this appeal followed.

Appellant raises two questions by this appeal. First, are appellees, as assignors of the contract, real parties in interest in whose behalf such action might be instituted? Second, was the refusal of appellant to execute the new agreement requested by the Liquor Control Board a breach of appellant’s agreement to sell so that appellant is now liable to appellees?

[480] In deciding this case, we first look to the applicable general principles. Rule 2002 of the Rules of Civil Procedure requires that all actions be prosecuted by the real party in interest. In an assignment, the nature of the particular assignment determines the identity of the real party. Ordinarily, an effective assignment is one by which the assignor’s right to performance by the obligor is extinguished and the assignee acquires a similar right to such performance. Restatement, Contracts §150(1) (1932); see Purman Estate, 358 Pa. 187, 190, 56 A. 2d 86, 88 (1948). Therefore, the assignee is usually the real party in interest and an action on the assignment must be prosecuted in his name.

Conditional assignments present added difficulties. Nevertheless, an assignment is not ineffective merely because it is conditional, and such a conditional assignment will not extinguish the assignor’s right as a real party until the condition occurs. Restatement, Contracts §150(2) and comment b (1932) ; 4 Corbin, Contracts §875 (1951). Importantly, however, an assignment of a right will not be effective if it purports to make a material change in the duties or responsibilities of the obligor, unless the obligor assents to such changes. Restatement, Contracts §151 (a) (1932); see Gordon v. Hartford Sterling Co., 319 Pa. 174, 178, 179 A. 234, 236 (1935); 4 Corbin, Contracts §870, at 475 (1951).

With these principles in mind, we examine the contentions of the parties. Appellees point out that their assignment to Traders was conditioned upon the approval of Traders by the Liquor Control Board. They claim that upon the refusal by the Board to approve the transfer of the license to Traders, this assignment became null and void. Appellees’ conclusion is that since the condition on which the assignment was based never occurred, their rights were never extinguished.

[481] While we agree that the assignment by appellees to Traders was, in fact, conditional, we nevertheless conclude that appellees are precluded from successfully asserting that they have remained as real parties in interest who are now able to enforce the contract on their own behalf. We reject appellees’ conclusion because, in our view, it would materially increase the burden and responsibility of appellant without his necessary consent.

Under the terms of the original agreement of sale, appellant was obliged to execute all papers and do all necessary acts required by the Liquor Control Board. In the event that the proposed transferee should be rejected by the Liquor Control Board, each of the parties was to be immediately released from his respective obligations under the agreement. Appellees now claim, however, that their conditional assignment has caused appellant to remain bound by the agreement, notwithstanding the rejection of Traders by the Liquor Control Board. If this were so, appellant would be subjected to the new and additional burden of doing all things necessary in submitting a second application to the Liquor Control Board. Thus, instead of being bound to comply with the terms of his agreement once, appellant would now be bound to comply twice.

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Wilcox v. Regester, 207 A.2d 817, 417 Pa. 475, 1965 Pa. LEXIS 373 (Pa. 1965).

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