Opinion ID: 2361751
Heading Depth: 1
Heading Rank: 3

Heading: Faber's Lease to Sun Oil Company

Text: The trial court found as fact that it was the intention of both appellee Faber and the Sun Oil Company that their lease not grant Sun the immediate right of possession but only promised that vacant possession would be delivered to Sun or its assignee, upon the termination of the then current prior lease. Sun was paying a monthly rental of fifty dollars to maintain their option to gain possession of the leased property upon expiration of the previous West Penn lease. Sun drafted the language of the lease. Thus we must interpret and construe any ambiguous portions strongly against Sun. Where the words of the contract are clear and unambiguous, the intent of the parties must be determined from the agreement itself. Kennedy v. Erkman, 389 Pa. 651, 133 A.2d 550 (1957). One part of a contract cannot be so interpreted as to annul another part, but, rather, writings which comprise an agreement must be interpreted as a whole. Shehadi v. Northeastern National Bank of Pennsylvania, 474 Pa. 232, 378 A.2d 304 (1977). Ambiguous language in a contract is to be interpreted most strongly against the party who selected the language. West Penn Realty Co. v. Acme Markets, Inc., 224 Pa.Super. 202, 303 A.2d 836 (1973). Village Beer and Beverage, Inc. v. Cox, supra, 327 Pa.Superior Ct. at 107, 475 A.2d at 121. We find a number of problems of construction in the Sun lease. To begin, Sun knew of the prior West Penn lease, including Exhibit B, which granted West Penn and its assignees a right of refusal. Nonetheless, Sun included a right of first refusal in their second lease. (N.T. at 170). The Sun lease never mentions the right of first refusal granted to West Penn and its assignees. This Court must therefore determine how Sun's right of refusal would operate so as to also give effect to the West Penn right of refusal. We hold that Sun's right of first refusal, and its possessory interests, must yield to the rights of the first leaseholder in interest, appellee Emeryville. See National Forge Co. v. Carlson, 452 Pa. 516, 307 A.2d 902 (1973). Accordingly, appellants' interests, as assignees of the Sun lease, are subordinate to those of Emeryville. Thus, when we construe the Sun lease in the context of Sun's knowledge of the prior West Penn lease, we find Sun's right to enter into possession of the premises was conditional. Sun's rights were conditioned on the fact that the tenant in possession under the West Penn lease would not exercise its right of refusal and accept an offer to buy the leased premises. Sun's rights under the lease would become executory only if West Penn did not opt to buy the premises. Sun apparently accepted this conditional status, and the risks involved, because Sun operated under the assumption that the tenant in possession under the West Penn lease would not exercise the right of refusal. For instance, one of the negotiating agents for Sun testified: Q. Now, you mention the sale was really not an issue with you? A. Yes, it was. I attempted to buy the property first prior to leasing it. Q. No. I meant Mr. Rezzetano's, a sale to Mr. Rezzetano [the tenant in possession under the West Penn lease]. You said that was not an issue with you? A. No, sir. Q. It was not an issue with you because you didn't think he had the ability to go through with the sale, correct? A. That's correct. Q. Because he was financially strapped? A. Yes, sir. (N.T. at 188). Sun apparently overlooked the possibility that the West Penn lease could be assigned to a party capable of purchasing the property. To Sun's misfortune, this possibility became reality; the prior lease did not expire, but rather, the right of refusal was exercised. Consequently, the Sun lease never became executory. This is the only interpretation consistent with the language of both lease documents, the intent of the parties, and Sun's knowledge of the prior lease. Appellants, as Sun's assignees, had both constructive and actual knowledge of West Penn's lease. Appellants' interest in the leased premises were subject to the superior rights contained in the West Penn lease.