Opinion ID: 2166504
Heading Depth: 1
Heading Rank: 4

Heading: Panaccion's Appeal

Text: In contesting the grant of the judgment n.o.v., Panaccion claims that Eberharter was not authorized to release the escrowed shares without Panaccion's approval under paragraph 5 of either the original escrow agreement or the amended agreement. The resolution of this claim requires us to interpret the language of the escrow agreement. The parties agreed at trial that the construction of a writing, such as the escrow agreement, is a question of law subject to the determination of the court. Upon review of a question of law, this Court need not defer to the finding of the trial court. Erie Insurance Exchange v. Transamerica Insurance Co., 352 Pa.Super. 78, 507 A.2d 389 (1986). In making our determination, we are guided by general principles of contract law as well as by specific rules which govern when an escrow agreement is implicated. When a written agreement is questioned, the intent of the parties is ascertained by that writing and where the words are clear and unambiguous, the language of the agreement is determinative. See e.g. Woytek v. Benjamin Coal Co., 300 Pa.Super. 397, 446 A.2d 914 (1982). An agreement must, however, be interpreted as a whole and effect given to all of its provisions. Central Dauphin School District v. American Casualty Co., 493 Pa. 254, 258, 426 A.2d 94, 96 (1981). Of particular importance here is the rule that an escrow agent is bound to follow the terms of the escrow agreement. Paul v. Kennedy, 376 Pa. 312, 315, 102 A.2d 158, 159 (1954); Mursor Builders, Inc. v. Roddy Realty, Inc., 459 F.Supp. 1317, 1322 (M.D.Pa. 1978). Further, the powers of an escrow agent are limited to those enumerated in the escrow agreement. In re Dolly Madison Industries, Inc., 351 F.Supp. 1038, 1042 (E.D.Pa. 1972). See generally Angelcyk v. Angelcyk, 367 Pa. 381, 80 A.2d 753 (1951). The question here is whether the escrow agent acted outside of his grant of authority. We agree with both the reasoning and conclusion of the trial court that there is no evidence on the record supporting a claim that Eberharter breached his duties under the escrow agreement. After carefully reviewing the escrow agreement, particularly paragraph 5, we find no language that obligated Eberharter to first notify Panaccion and to obtain his approval before transferring the certificates. To the contrary, the agreement expressly contemplates the transaction that occurred here, e.g., the reissuance of the original shares. The only limitation in this regard is the requirement that the reissued shares (called substituted shares in the language of the agreement) be held by the escrow agent and subject to all the terms of the escrow agreement. As the trial court found, there are no facts of record indicating that this was not done. At all times, the escrow agent held all of the issued and outstanding shares of stock and retained control over those shares. We believe that such an interpretation of the escrow agreement is both reasonable and consistent with the spirit of the agreement. Because the shares always remained in the escrow agent's control, the purpose of the agreement  securing the unpaid obligation  was respected. If we were to accept Panaccion's argument that his prior authorization was necessary, paragraph 5 of the escrow agreement would be meaningless; no stock could be reissued  even upon the death of a shareholder  without first obtaining Panaccion's prior approval. In short, Panaccion's interpretation of the escrow agreement is overly restrictive and inconsistent with the language of the agreement. Panaccion argues, however, that this conclusion is unwarranted because the provision of the escrow agreement upon which the trial court relied, paragraph 5, as amended, is inapplicable. Panaccion asserts that the amendment to paragraph 5 changed the legal effect of the original provision, but that Eberharter told him that the amendment had no legal effect. According to Panaccion, Eberharter is estopped from relying on the amended version of the escrow agreement. [6] In our opinion, the circumstances here do not trigger the invocation of the estoppel doctrine. Equitable estoppel arises when a party by acts or representation intentionally or through culpable negligence, induces another to believe that certain facts exist and the other justifiably relies and acts upon such belief, so that the latter will be prejudiced if the former is permitted to deny the existence of such facts. Straup v. Times Herald, 283 Pa.Super. 58, 71, 423 A.2d 713, 714 (1980). In short, the doctrine is one of fairness; it prevents a party from taking a position that is inconsistent to a position previously taken and, thus, disadvantageous to the other party. Commonwealth ex. rel Gonzalez v. Andreas, 245 Pa.Super. 307, 311-312, 369 A.2d 416, 418 (1976). In view of these principles, we conclude that Panaccion's argument is misdirected. There is no evidence on the record that Eberharter's construction of amended paragraph 5 was inconsistent with his interpretation of the original version of paragraph 5. Eberharter has never maintained that Panaccion's approval was required prior to the exchange of the certificates. [7] In our view, the inconsistency of which Panaccion speaks arose not out of Eberharter's word, act, or silence, but out of a determination made in hindsight that the final version of the escrow agreement did not express his wishes. In addition, there is no indication on the record that Eberharter induced Panaccion to believe that certain facts existed which Eberharter now attempts to deny. An `inducement' sufficient to create an estoppel may consist of words or conduct that intentionally or negligently causes another to believe that a promise has been made or that a particular state of facts exists. Havas v. Temple University of the Commonwealth System of Higher Education, 357 Pa.Super. 353, 356, 516 A.2d 17, 19 (1986). There is no evidence that Eberharter, in advising Panaccion to accept the amendment, made a promise for a future performance. Nor can Eberharter's representation be construed as an expression of fact which was sufficient to induce reliance. See Northcraft v. Edward C. Michener Assoc., 319 Pa.Super. 432, 466 A.2d 620 (1983) (ambiguous statements made in writing were insufficient to establish estoppel). Compare Straup, 283 Pa.Super. 58, 423 A.2d 713 (1980) (statements, acts and silence by newspaper clearly demonstrated that a contract existed by estoppel). At most, Eberharter's statement that the amendment had no legal effect was a legal opinion as to the implications of that provision. Based upon Ebherharter's opinion regarding the amendment, Panaccion could not have been deceived into thinking that his approval was necessary before any action whatsoever was taken with the certificates. Such an interpretation conflicts with the language of both the amended agreement and the original provision. In any event, there is no evidence that Panaccion ever received any assurances that his approval was necessary pursuant to the escrow agreement. In essence, Panaccion faults Eberharter either for failing to grasp the legal significance of the amendment or for failing to explain the implications of the amendment. Such allegations would more properly impose liability on Eberharter for negligence under a claim brought in trespass, not in assumpsit. No such claim of malpractice was brought against Eberharter. Having determined that there is no basis for estoppel, we conclude that Eberharter's performance as escrow agent must be evaluated pursuant to the terms of the final agreement. As we interpret that agreement, the issuance or reissuance of the Clifco stock was permissible and Eberharter was not required to obtain Panaccion's prior written approval before substituting the certificates. The only limitation on Eberharter's authority was the requirement in paragraph 5 that the stock shares remain in the control of the escrow agent and subject to the provisions of that agreement. There is no evidence that this was not done. Accordingly, there was no material fact at issue to be submitted to the jury regarding Panaccion's claims that Eberharter breached the escrow agreement. Thus, the trial court properly entered judgment in Eberharter's favor. In a cross appeal by Eberharter, he questions whether this cause of action is actually one for malpractice and, thus, time-barred pursuant to the two year statute of limitations on such actions. Our determination of this case has made it unnecessary to address the statute of limitations issue. Order affirmed.