Court Opinion

ID: 9698638
Source: CourtListenerOpinion
Date Created: 2023-08-25 19:56:28.590008+00
Date Added: 2024-06-11T18:20:42.511090
License: Public Domain

CERCONE, P. J.,
dissenting:
There are times when it is necessary to find, along the mainstream of the law, an alcove, a haven where the waters do not rush so precipitately, a dry dock where a seafaring litigant can steer his vessel and find leave to repair the damages sustained while on the high seas of generally accepted jurisprudential precepts. The instant case is an example of the occasion when a litigant should be rescued from the rough and roiling waters of general law and receive the benefit of the more beneficial and caressing laws of equity.
The primary question presented in this case is whether it is both consonant with existing Pennsylvania law and equitable doctrine, that a tenant in all cases has no equitable right to renew a lease if notice to renew is not given in strict compliance with the provisions in a lease. The majority reasons that a lessee, under the circumstances of this case, has no such equitable right, and accordingly, reverses the chancellor’s determination that equity is warranted in granting relief to a tenant who admittedly failed to give timely notice. Since we conclude under existing Pennsylvania law equity has both the authority and power to grant the requested relief, we dissent.
I.
The majority relates that the rule in Pennsylvania is that punctual notice is of the essence in renewal options, and the right to renewal is irretrievably lost if notice is not provided within the specified time. A reading of prior cases reveals that “exceptions” are acknowledged, but that our courts have neither had an opportunity to articulate them, nor to *200announce the equitable principles or factors which would support granting them in particular adjudications.
A.
The case of Murtland v. English, 214 Pa. 325, 329-30, 63 A. 882, 883, (1906), stands for the narrow proposition that merely remaining in possession of leased premises without ever giving any notice or paying an increased rent does not evidence a renewal. The rationale of this rule is that strict compliance with the terms of an option is necessary where the lessee gives no indication other than his holding over that he intends to exercise and be bound by the option to renew. Under those circumstances, both courts of law and equity have been sympathetic to the plight of the lessor, i. e., the lessor would in effect be bound by the option while the lessee is free to accept or reject.1 Id., 214 Pa. at 330, 63 A. at 883.
Rhodes v. Good, 271 Pa. 117, 121, 114 A. 494, 495 (1921) involved an agreement to repurchase land. In affirming a lower court judgment in favor of the lessor, the court gratuitously considered the agreement as an option to repurchase. Consistent with Murtland, the court reasoned that if the agreement were so construed, it expired by its own terms as the lessee never expressed any intention to accept the option, late or otherwise. Good, 271 Pa. at 121, 114 A. at 495.
Warner v. Bedell Co., 278 Pa. 576, 123 A. 490 (1924) (per curiam) is perhaps the most closely analogous to the present case. Bedell addressed the question whether delivery of written notice to cancel the lessee’s right to renew was *201properly exercised where notice was served on the lessee one day late. The court, in upholding an injunction against ejectment proceedings brought by the lessor, explained:
“Ordinarily, the possessor of such a right must exercise it on the day, or within the time, specified . . ., and nothing sufficient to take this case out of the general rule has been shown” Id. at 578-79, 123 A. at 490-91 (citations omitted) (emphasis added).2
The court, therefore, in applying the general rule, significantly inferred that exceptions to this rule do exist,3 although the opinion gave no further guidance on the factors which would entitle a lessee to relief. The inference drawn in Bedell, supra, strongly points to a conclusion that equitable principles are material and relevant in lessor-lessee option controversies. At this juncture, inquiry properly shifts into ascertaining which factors will be deemed determinative in deciding whether a lessee has an equitable right to relief, and further, whether as a matter of law the lessee made such a showing in this case.
II.
In the instant case, the Chancellor below was of the opinion that American House, Inc. v. Schneider, 211 F.2d 881 (3d Cr. 1954) provided guidance as to what factors a court of equity might consider in determining whether a tenant has *202established the existence of an equitable interest and a right worthy of protection.4 Circuit Judge Hastie, authored the well-reasoned and cogent Schneider opinion. Schneider held that “sound and salutary equity doctrine and practice,” requires a federal court “in real hardship cases to allow a renewal despite slight, relatively inconsequential and excusable tardiness.” The court identified three considerations as paramount to its holding. Those considerations were:
“(1) the nature of the mistake on the lessee’s part which led to the delay, (2) the hardship which would result to the lessee should the lease be terminated, and (3) whether the lessor has had a change in position based upon his reliance on the fact that the lessee did not exercise his option to renew within the required time.”5 Id. at 1357-58.
Armed with these criteria of decision, the Chancellor found relative to the first factor that the delay in sending *203notice to the lessor, which was only four days or two business days,6 was not due merely to forgetfulness7 or gross neglect8 on the part of the lessee. On the contrary, the delay being unquestionably slight and attributable to a complicated expansion program which precipitated a hectic time in the lessee’s offices, the Chancellor determined the equities weighed in favor of the lessee as to the first consideration.
Regarding the second factor, the Chancellor found that the lessee would suffer harm if it were not permitted to exercise the option. Specifically, the lessee would be deprived of a valuable business interest in the location of the property9 as well as the benefit of an $84,000.00 investment *204it made in improving the property.10 The Chancellor also concluded the third factor weighed in the lessee’s favor. The lessor unequivocally related it did not enter into any agreement for the leasing of the premises, nor did it take any other detrimental action based upon the lessee’s failure to give notice in accordance with the date in the lease. Based on these findings, the Chancellor granted the lessee’s motion for summary judgment and entered an order compelling the landlord to accept the lessee’s exercise of its option.
a.
While we disagree with the majority’s substantive conclusion that the lessee failed to establish a triable case as to entitlement to equitable relief, we are, however, of the opinion that summary judgment in favor of the lessee was not appropriate on this record. Summary judgment is proper only in the “clearest of cases,” see, e. g., Kotasinski v. Rasner, 436 Pa. 32, 258 A.2d 865 (1969); Prince v. Pavoni, 225 Pa.Super. 286, 392 A.2d 452 (1973) in which there are no genuine issues of material fact. Having reviewed the evi*205dence in the light most favorable to the appellant-lessor, we are convinced that disputed questions do exist. In this procedural posture, equity and good conscience dictate a full and fair trial be had for the question of relief to be definitively settled. See, e. g., McGovern v. Spear, 463 Pa. 269, 272, 344 A.2d 826, 827 (1975); Marchese v. Marchese, 457 Pa. 625, 629, 326 A.2d 321, 323 (1974). However, we do not mean to suggest that summary judgment is never appropriate in cases like the present. Rather, there might arise causes where for various reasons summary judgment is particularly fitting. Cf. B-Automotive Co. v. Harrison, 443 Pa. 360, 362-63, 278 A.2d 890, 891 (1971) (attempted exercise of option approximately four years after it became exercisable—not timely).11
The new proceedings should include testimony on: (1) the precise nature and extent of monetary loss to the lessee regarding its improvements to the property if forced to relocate; (2) the hardship to the lessor, if forced to accept the option at the original rental, i. e., have utilities, taxes or other expenses associated with ownership and maintenance of the property substantially increased such that continued payment of the original rental fee would clearly outweigh the degree of financial hardship to the lessee if forced to vacate. See, 5629 Corporation v. Ideal Lighting Fixtures Co., 538 S.W.2d 139, 141 (Tex.Civ.Ct.App.1976), and (3) the extent to which the lessee’s improvements to the land have increased the rental value and useful life of the lease hold. See Application of Topp, 81 N.Y.S.2d 344, 346 (Sup.Ct.1948).
Accordingly, I would reverse the judgment of the lower court and remand for a trial on the above matters.
BROSKY, J., joins in this opinion.

. This principle is apparent in decisions from other jurisdictions as . well; see, e. g., United States v. 70.39 Acres of Land, 164 F.Supp. 451, 468 (D.C.Cal.1958); Cicinelli v. Iwasaki, 170 Cal.App.2d 58, 66, 338 P.2d 1005, 1010 (D.Ct.App.1959); McClellan v. Ashley, 200 Va. 38, 41, 104 S.E.2d 55, 59 (1958).
We also discern that this rationale would not apply in a case like the present. The lessor can make no claim, as it did not in this appeal, that it had any justifiable or reasonable expectation that the lessee did not attempt to exercise the right to renew and be bound thereby. See, Sosani v. Pernetti Holding Corp., 115 N.J.Super. 409, 415, 279 A.2d 904, 908 (1971).

. In this appeal, it is not necessary to reach the question whether or not there are commonsense differentiations between options to repurchase, purchase, renew, or cancel such that different rules and results may be applicable when the lessee or lessor fails to give timely notice in these settings. Suffice it to say, that to this writer there is no apparent reason, nor has the defendant-lessor offered any, why the rule applicable to options to cancel a leasehold is or should be different than that applicable to options to renew.

. See Sum.Pa.Jur. Landlord & Tenant, § 281 (1956) (recognizing that equity will grant relief to a lessee who fails to give timely notice, which notice is a condition precedent to renewal, where the failure is attributable to fraud, accident, surprise, mistake, or where there are other special circumstances which warrant a court of equity’s action). See generally, J. W. Pomeroy, A Treatise on Equity Jurisprudence, § 453(b) (5th ed. 1941); 50 Am.Jur.2d Landlord & Tenant, § 1187-88 ( Supp. 19 ), Annot., 44 A.L.R.2d 1359 () (collecting cases on various aspects of the general rule).

. Appellant correctly points out in its brief Schneider is not binding precedent on this court. In Schneider, the court applied federal common law in determining the rights of the parties to the lease, id. at 882-883, and only inferred from its reading of White v. Long, 289 Pa. 525, 137 A. 673 (1927) that Pennsylvania courts would grant relief on similar facts. Id.
Additionally, although our Supreme Court has not specifically endorsed the analysis adopted in Schneider, we agree with the Chancellor’s view that Schneider provides workable and fair guidelines as regards the question whether or not special circumstances exist within the meaning of Bedell, supra.
Moreover, a judgment acknowledging equity’s broad powers to prevent rigid rules of law from working often unnecessary hardships on the parties to a lease is more in accord with equity’s traditional rule in our jurisprudence. As the late Justice Musmanno pertinently observed:
“Equity can travel in any direction to achieve its objective of truth, and when it has found truth it can land on terrain which often would be utterly futile and unapproachable to formalistic law. And on that terrain of ascertained fact, equity surveys the whole situation and grants the relief which justice and good conscience dictate.”
Weissman v. Weissman, 384 Pa. 480, 485, 121 A.2d 100, 103 (1956).

. This list of factors is not all inclusive. For instance, also material and relevant is whether severe hardship would result to the lessor in compelling him to accept the option at the prior rental rate, when due to factors other than improvements made solely by the lessee, the rental value of the property itself has substantially increased, or the costs associated with a lessor’s duty of maintaining the property *203has increased, i. e., utilities, taxes, etc. Of course, in determining whether relief should be granted all evidence is admissible which tends to prove that the equity’s in favor of compelling acceptance, outweigh any hardship which might result to the lessor. See, F. B. Fountain Co. v. Stein, 97 Conn. 619, 118 A. 47 (1922).

. The delay in receiving notice was only six days or four business days.

. Compare Marjer v. Layfmen, 140 N.J.Eq. 68, 53 A.2d 187 (1947) (mere forgetfulness will not entitle tenant to relief), and Xanthakey v. Hayes, 107 Conn. 459, 140 A. 808 (1922) (mere forgetfulness where other factors are present might not foreclose relief).

. All cases are in accord that relief should be denied when failure to notify results from willful or gross negligence. See, e. g., Jones v. Gibbs, 133 Tex. 627, 130 S.W.2d 264 (1939); Beckow v. Hammer, 189 Va. 489, 53 S.E.2d 1 (1949).

. Initially, we observe that “locational goodwill” is certainly not the only property interest which equity will or should protect in cases such as the present. Rather, the interest which equity deems worthy of protection is “a valuable interest in ... property.” See Application of Topp, 81 N.Y.S.2d 344 (Sup.Ct.1948). The Chancellor’s finding of loss of a valuable interest is supported by the deposition testimony of Mr. H.C. Randolph, Jr., Assistant Vice President of the lessee-bank. Mr. Randolph related:
“This was our busiest branch, transaction—volume wise, and it’s got a substantial deposit liability in the branch and we didn’t want to do anything that was going to jeopardize losing that particular location.”
Appellant’s Reproduced Record at 41a.
*204Nor do we find persuasive the majority’s analysis of the potential hardship which would result to the lessee from the loss of the option to renew. The mere fact the improvements to the property become the property of the lessor at the end of the term does not inescapably lead to the conclusion that no loss of a valuable property interest occurs. While the record does not disclose the method of federal income tax reporting by the lessee, it is quite conceivable that the loss of depreciation deductions based on the increased useful life of the building will have an adverse economic impact on the lessee’s investment. Also, in view of the record testimony it is quite clear that the loss of use of the building itself constitutes some hardship to the lessee.

. Expenses incurred in making improvements to a leasehold has been a significant factor in some cases which have recognized an equitable right to renew despite failure to give timely notice. See, e. g., Schneider, 211 F.2d at 1358; Galvin v. Simons, 128 Conn. 616, 25 A.2d 64 (1942); Deane v. Mitchell, 312 Ky. 389, 227 S.W.2d 893 (1950); Application of Topp, supra. However, the mere fact that such improvements have been made has been held not to be determinative in and of itself. See, e. g., Rounds v. Owensboro Ferry Co., 253 Ky. 301, 69 S.W.2d 350 (1934); Medomak Canning Co. v. York, 143 Me. 190, 57 A.2d 745 (1948); I. X. L. Furniture & C. Installment House v. Besets, 32 Utah 454, 91 Pa. 279 (1907).

. See also, cases cited in n. 9 supra.