author: CIRILLO, Judge: DEL SOLE, Judge,

text:
    608 A.2d 1061
    DENLINGER, INC., Appellant, v. Brad A. DENDLER and Pennsylvania National Bank and Trust Company. DENLINGER, INC. v. Brad A. DENDLER and Pennsylvania National Bank and Trust Company. Appeal of Brad A. DENDLER.
    Superior Court of Pennsylvania.
    Argued Jan. 30, 1992.
    Filed May 11, 1992.

      Nedric L. Nissly, Lancaster, for appellant.
    Alan B. Ziegler, Reading, for Dendler, appellee.
    Before CIRILLO, DEL SOLE and KELLY, JJ.
   CIRILLO, Judge:

This is a consolidated appeal from an order entered in the Court of Common Pleas of Lancaster County granting defendant Brad A. Dendler’s motion for summary judgment and denying his request for attorney’s fees pursuant to 42 Pa.C.S.A. § 2503(9). Plaintiff Denlinger, Inc. is appealing the granting of summary judgment, while defendant Dendler is cross-appealing the denial of attorney’s fees. We reverse the order granting summary judgment and affirm the order denying attorney’s fees.

Defendant Brad Dendler (“Dendler”) is the sole shareholder, president and treasurer of Blue Mountain Development Company, Inc. (“Blue Mountain”), a construction company that specializes in residential projects. Blue Mountain was incorporated under the laws of Pennsylvania on July 15, 1988, after having functioned as a de facto corporation since April of 1988. Prior to forming Blue Mountain, Dendler had been in the construction business for several years, operating as a sole proprietorship under the name of Blue Mountain Contractors. Plaintiff Denlinger, Inc. (“Denlinger”) is a building supply company based in Lancaster, Pennsylvania. As a sole proprietor, Dendler had regularly purchased materials and supplies from Denlinger, on a cash-only basis. However, once Dendler formed Blue Mountain, he either contacted, or was contacted by, Den-linger to open a credit account. In July of 1988 Dendler was given a one page, two-sided credit application to complete. Dendler returned the completed form four to six weeks later, and an “open book” credit account was established for Blue Mountain. Essentially, it is the validity of the credit application Dendler completed which is under review here.

Blue Mountain filed a voluntary petition under Chapter Eleven of the Bankruptcy Code in May of 1990. At that time Blue Mountain owed Denlinger $44,157.94 for materials that had already been delivered and accepted. On June 26,1990 Denlinger filed suit against Brad Dendler personally, as permitted by paragraph four of the credit application, to recoup the $44,157.94 due on the account, plus $5,994.84 in finance charges, and attorney’s fees. Dendler asserted in his answer, as an affirmative defense, that the credit application was an adhesion contract and, as such, was unconscionable and against the public policy of the Commonwealth. Dendler also counterclaimed for attorney’s fees under section 2503(9) of the Judicial Code, 42 Pa. C.S.A., contending that Denlinger’s suit was arbitrary, vexatious, and filed in bad faith. The trial court agreed that the credit application was an adhesion contract, and on that basis granted summary judgment in favor of Dendler. The court denied Dendler’s request for attorney’s fees, finding that Denlinger’s conduct did not rise to the level required by section 2503(9). Denlinger filed this timely appeal; subsequently, Dendler filed a timely cross-appeal.

Denlinger presents the following issues for our consideration:

1. Is the sole shareholder and president of a closely held corporation to be held personally liable for corporate obligations when he has signed a writing assuming personal responsibility?
2. Does Pennsylvania law require a separate signature in an “individual capacity” for a personal guarantee to be effective, even though the individual signing in a representative capacity has unequivocally agreed to be personally liable; and does Pennsylvania law require a contracting party to explain to another business person the effect of a personal guarantee?
3. Is a credit application a contract of adhesion; is demanding a personal guarantee from the sole shareholder of a closely held corporation unconscionable?
4. Is a personal guarantee of a sole shareholder supported by consideration when given with respect to credit extended to his closely held corporation?
5. Is a signature in a representative capacity sufficient to satisfy the statute of frauds applicable to guarantee agreements?
6. Are finance charges (or interest) and percentage attorney’s fees collectible when agreed upon in writing?

In his cross-appeal Dendler asks us to determine whether the trial court erred in refusing to award him attorney’s fees pursuant to section 2503(9) of the Judicial Code.

Summary judgment may only be granted when “the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, show that there is no genuine issue as to any material fact and that the moving party is entitled to a judgment as a matter of law.” Pa.R.C.P. 1035(b). Summary judgment should be granted only when the right is clear and free from doubt. Musser v. Vilsmeier, 522 Pa. 367, 369, 562 A.2d 279, 280 (1989).

In determining whether a summary judgment was properly granted, we must accept as true all properly pleaded facts, as well as all reasonable inferences that may be drawn therefrom. Overly v. Kass, 382 Pa.Super. 108, 111, 554 A.2d 970, 971 (1989). We must resolve all doubts regarding the existence of a genuine issue of material fact against the party moving for summary judgment. Marks v. Tasman, 527 Pa. 132, 133, 589 A.2d 205, 206 (1991). On appeal, we must examine the record in the light most favorable to the non-moving party, id., and we will not reverse the trial court’s order unless there has been an error of law or a manifest abuse of discretion. Vargo v. Hunt, 398 Pa.Super. 600, 601, 581 A.2d 625, 626 (1990).

About the time he formed Blue Mountain, Dendler discussed opening a credit account at Denlinger with one of Denlinger’s salesmen, Robert Witmer. Witmer gave Dendler a blank credit application form. Several weeks later, Dendler returned the completed application to Witmer who then forwarded it to the credit manager, Robert Hamor. The credit application consists of an 8V2 inch by 14 inch two-sided form which is used for corporations, partnerships or individual applicants. On the face of the form all printing is in upper case block letters one-eighth inch high. Beneath the Denlinger logo and address at the top center, the first line reads “name of applicant.” Dendler inserted “Blue Mountain Development Co., Inc.” in large capital letters. Dendler completed the “corporation” section and left blank the sections for individuals and partnerships. He also supplied the financial information requested on the face of the form. The reverse side of the form, which is captioned “Terms and Conditions” in bold letters, contains six individually numbered paragraphs, set off from one another by double spacing. Each paragraph outlines a separate term governing credit accounts at Denlinger. See n. 2 & 3, supra. The printing, in upper and lower case letters, is only marginally smaller than that on the face of the form. The lower half of the page contains designated areas for up to four separate parties to sign. Dendler signed “Blue Mountain Development Corp., Inc. By Brad Dendler, Pres.” in proper corporate form on the appropriate lines.

Although Denlinger presents several issues for our review, the outcome of both the appeal and the cross-appeal hinge on our determination of whether the credit application, particularly paragraph four, that Dendler submitted as the basis for obtaining a credit account for Blue Mountain, is void as against the public policy of the Commonwealth. Paragraph four on the reverse side of the application form provides:

4. In consideration of the credit which has been or which may in the future be extended to Applicant, the undersigned, if signing on behalf of a corporation, partnership or other entity, jointly and severally if more than one, hereby personally guaranteed) prompt and full payment of all accounts now or hereafter owing by Applicant to Denlinger, Inc. The undersigned further agree(s) that the foregoing guarantee is continuing, absolute and unconditional and may be enforced against any of the undersigned, individually, jointly or in any combination, without first proceeding against Applicant and waive(s) any right to be released by reason of any extension of time or change in terms of payment and any other defense now or hereafter available, except the defense of payment, (emphasis added).

In its opinion the trial court stated:

It is Defendant Dendler’s contention that this language [paragraph four] imposing personal liability on him is unconscionable and should be stricken. This Court has little problem in so construing such phraseology both as an adjunct and extension to the public policy pronouncement in Galligan v. Arovitch, 421 Pa. 301, 219 A.2d 463 (1963), wherein our Supreme Court condemned the exculpatory clause of a residential form lease and also under general contract principles.

We cannot agree. Galligan is inapposite to this case. In Galligan, the plaintiff/tenant had been injured on the lawn of dfefendant/lessor’s apartment building. The standard form lease tenant had signed contained a lengthy exculpatory clause which listed, among other things, seven places from which the lessor was relieved of liability for injury or damage. Although hallways and sidewalks were listed exclusions, lawns were not. Thus, following the rule that any document which reduces legal rights that would otherwise exist must spell out “with the utmost particularity” the intention of the parties, Morton v. Ambridge Borough, 375 Pa. 630, 635, 101 A.2d 661, 663 (1954), and the rule of construction that a written instrument is to be strictly construed against the maker, Darrow v. Keystone, 365 Pa. 123, 74 A.2d 176 (1950), our supreme court found the xculpatory clause did not protect the lessor in that particular case. Galligan, 421 Pa. at 304, 219 A.2d at 465.

In concluding the opinion for the court, Mr. Justice Cohen added: “[tjhere are, however, policy considerations which, though not necessary to this decision, are the writer’s personal observation and do bear some relevance.” Id. Justice Cohen then commented that the exculpatory clause is to be found in every form lease and, Id. In light of the trial court's reliance on Justice Cohen’s comments, we are compelled to reiterate Justice Cohen’s own observation that his remarks are obiter dicta. It is well established that general expressions in an opinion “must be considered in the light of and cannot be dissevered from the facts of that case; what is actually decided and controlling is the law applicable to the particular facts of that particular case and while all other statements and conclusions therein are entitled to great consideration they are not controlling.” In Re Estate of Mary C. Pew, 411 Pa. 96, 104-105, 191 A.2d 399, 404 (1963); see also In Re Estate of Cassell, 334 Pa. 381, 6 A.2d 60 (1939). Nevertheless, we will address the concerns voiced by Justice Cohen and the trial court.

understandably enough, landlords are unwilling to strike therefrom that provision which strongly favors them. Thus it is fruitless for the prospective tenant of an apartment to seek a lease having no exculpatory clause. The result is that the tenant has no bargaining power and must accept his landlord’s terms. There is no meeting of the minds, and the agreement is in effect a mere contract of adhesion, whereby the tenant simply adheres to a document which he is powerless to alter, having no alternative other than to reject the transaction entirely, (emphasis added).

Initially we note that, unlike the case at hand, the plaintiff in Galligan was a consumer, an individual seeking an apartment to rent. The defendant, however, was an experienced businessman, operating an apartment building as a commercial venture. There was a great disparity in their business acumen as well as in their bargaining power. A prospective tenant like Galligan, although displeased with the objectionable clause in the lease, had no alternative but to sign the lease if he wanted to rent an apartment. As virtually every landlord in the area used the same standard form lease, it was futile to seek a lease without such an exculpatory clause. According to Justice Cohen, the prospective tenant had only two alternatives: sign the lease with the objectionable clause, or reject the lease altogether. Galligan, supra. This court’s statement in Germantown Manufacturing Company v. Rawlinson, 341 Pa.Super. 42, 56, 491 A.2d 138, 145 (1985), that “[t]the need for application of this standard [unconscionability] is most acute when the professional seller is seeking the trade of those most subject to exploitation—the uneducated, the inexperienced and the people of low incomes” aptly describes the situation which prompted Justice Cohen’s comments in Galligan.

Conversely, here neither party is a consumer. Both Dendler, as president and sole shareholder of Blue Mountain, and Denlinger, are commercial enterprises. Both are corporations. Although Dendler repeatedly points out that he is only a high school graduate, he is, nonetheless, an experienced businessman. For at least six years prior to forming Blue Mountain, Dendler worked in the building and construction trade as a sole proprietorship. According to the credit application, he was seeking a twenty to thirty thousand dollar line of credit. Dendler was engaged in building residences that sold for approximately a quarter of a million dollars. Unlike Galligan, in which a prospective renter was powerless against the landlords of the region who all used the same standardized lease, here the monolithic unity of the landlords and the coercive atmosphere inherent in a lack of alternatives are absent. In Galligan, the plaintiff was seeking a necessity—a place to live—while Dendler was merely seeking a more convenient method of paying corporate bills. Consequently, under the circumstances of this case, the trial court’s concern about unequal bargaining power and overreaching is misplaced. Moreover, “it would be improper to borrow, without differentiation, concepts developed to protect consumers and employ them in favor of one commercial party over another.” Stanley A. Klopp, Inc. v. John Deere Co., 510 F.Supp. 807 (E.D.Pa.1981), affirmed 676 F.2d 688 (3rd Cir.1982).

Dendler’s principal argument is that Denlinger’s credit application is an adhesion contract and is also unconscionable. This contention lacks merit. An adhesion contract, according to Black’s Law Dictionary (5th ed. 1979), is a

standardized contract form offered to consumers of goods and services on essentially “take it or leave it” basis without affording consumer realistic opportunity to bargain and under such conditions that consumer cannot obtain desired product or services except by acquiescing in form contract. Distinctive feature of adhesion contract is that weaker party has no realistic choice as to its terms____ Not every such contract is unconscionable. (citations omitted)

Insurance contracts, for example, are generally considered contracts of adhesion because the parties are not of equal bargaining power and the consumer, should he want to obtain insurance, is forced to accept the non-negotiable terms of a standard form contract. Bishop v. Washington, 331 Pa.Super. 387, 400, 480 A.2d 1088, 1094 (1984) (citations omitted). However, not every form contract can be termed a contract of adhesion. Whether a contract is, in fact, an adhesion contract must be determined on an individual basis, in light of the particular circumstances and parties involved. Commonwealth of Pennsylvania v. Monumental Properties, Inc., 10 Pa.Cmwlth. 596, 609, 314 A.2d 333, 339 (1973). As our supreme court has noted, leases containing exculpatory clauses which could be considered contracts of adhesion will not be so termed when the parties involved are corporations with equal bargaining power. See Employer’s Liability Assurance Corp., Ltd. v. Greenville Business Men’s Assoc., 423 Pa. 288, 224 A.2d 620 (1966).

The doctrine of unconscionability is both a statutory and a common law defense to the enforcement of an allegedly unfair contract or provision in a contract. Wagner v. Estate of Rummel, 391 Pa.Super. 555, 561, 571 A.2d 1055, 1058 (1990), allocatur denied 527 Pa. 588, 588 A.2d 510 (1991); Germantown Manufacturing, 341 Pa.Super. at 55, 491 A.2d at 145. Although the party challenging the contract or provision bears the burden of affirmatively pleading and proving the unconscionability, Bishop, 331 Pa.Super. at 399, 480 A.2d at 1094 (citations omitted), the actual determination of unconscionability is a question of law for the court. Id.; Klopp, supra; see also 13 Pa.C.S.A. § 2302. Once a contract is deemed to be one of adhesion, its terms must be analyzed to determine whether the contract as a whole, or specific provisions of it, are unconscionable. Bishop, 331 Pa.Super. at 387, 480 A.2d at 1088. It is important to note, however, that our supreme court, and the federal courts of Pennsylvania, have “refused to hold contracts unconscionable simply because of a disparity in bargaining power.” Witmer v. Exxon Corporation, 495 Pa. 540, 551, 434 A.2d 1222, 1228 (1981) (citations omitted); Koval v. Liberty Mutual Insurance Company, 366 Pa.Super. 415, 423, 531 A.2d 487, 491 (1987), allocatur denied 518 Pa. 619, 541 A.2d 746 (1988); Klopp, supra.

In support of his contention that the credit application is an adhesion contract, Dendler cites salesman Witmer’s deposition testimony in which he stated that generally Denlinger did not permit modifications of the terms of the application, and if asked to modify the application, the employees would say no. However, Witmer also stated that he had seen applications where some of the terms had been crossed out. When asked which terms had been deleted, Witmer responded: “I’ve seen some builders put lines through some of these but I couldn’t tell you which one. I just—I generally just turn them in in any respect that I’m given them and then it’s up to our officers as to whether or not they will accept them that way.” Similarly, when the credit manager of Denlinger, Robert Hamor, was asked in his deposition if the company would permit an applicant to delete any of the paragraphs on the reverse of the form he replied, “Only under certain conditions we do.” Hamor further elaborated that “we review any application that has been altered, with altered terms, and generally we require additional financial information. We then make a further judgment of that application based on that additional financial information.” When asked whether Denlinger had ever deleted the personal guarantee provision in any of the applications, Hamor responded, “Yes.” When queried as to when, Hamor responded, “I don’t know specifically. We have done so.”

In light of the deposition testimony of Witmer and Hamor, it cannot be said that a credit applicant “has no bargaining power and must accept [Denlinger’s] terms.” Galligan, supra. Unlike the tenant described by Justice Cohen, a Denlinger credit applicant is not forced to sign “a document which he is powerless to alter.” Id. Dendler does not allege that he was forced to acquiesce in the form credit application in order to obtain the building supplies he needed. Bishop, supra; Overly, supra. As the deposition testimony of Witmer and Hamor reveals, in dealing with Denlinger, it is not “fruitless” to seek to have objectionable clauses deleted or modified. Galligan supra. Therefore, we conclude that the Denlinger credit application is not a contract of adhesion.

Dendler next contends that the credit application is unconscionable. We do not agree. The test of unconscionability, as mandated by our supreme court, is twofold. First, for a contract or a term to be unconscionable, the party signing the contract must have lacked a meaningful choice in accepting the challenged provision. Second, the challenged provision must “unreasonably favor” the party asserting it. Witmer v. Exxon Corp., 495 Pa. 540, 551, 434 A.2d 1222, 1228 (1981); Koval, supra; see also Beckman v. Vassall-Dillworth, Etc., 321 Pa.Super. 428, 468 A.2d 784 (1983). Dendler has failed to meet his burden in establishing that, as the party signing the contract, he lacked a meaningful choice in accepting paragraph four of the credit application.

In his deposition testimony Dendler admitted he did not attempt to negotiate or change any terms of the credit application. Dendler also admitted no Denlinger employee ever told him the terms were non-negotiable, or that it was futile to even ask about modifying the terms and conditions on the application. Moreover, Denlinger is not an exclusive supplier of rare or much-sought-after goods, a situation which could induce one to “adhere” to an unfavorable contract, Galligan, supra, and thereby reduce meaningful choice. Witmer, supra. Denlinger sells building materials and construction supplies which are readily available from a variety of sources. If Dendler found the terms of Denlinger’s credit application onerous, he was at liberty to seek a credit account elsewhere. Dendler has not alleged that there are no other lumberyards within traveling distance. Overly, supra. Nor has Dendler alleged that it would have been futile to seek a credit account elsewhere because the other area supply sources utilized the same standardized credit application. Overly, supra; Galligan, supra. In addition, Dendler was free to obtain his supplies from Denlinger on a cash-only basis, as he had when he operated as a sole proprietorship. As this court recently stated, “where, as here, a contract provision affects commercial entities with meaningful choices at their disposal, the clause in question will rarely be deemed unconscionable.” Vasilis v. Bell of Pennsylvania, 409 Pa.Super. 396, 399, 598 A.2d 52, 54 (1991); see also Klopp, supra (noting a number of courts have recognized that, although it is possible, rarely will a commercial contract or term be found to be unconscionable.) As Dendler is unable to meet the first requirement of our supreme court’s two-part test, we cannot conclude Denlinger’s credit application is unconscionable.

Dendler insists that his failure to complete the “individual” section of the credit application attests to the fact that he never intended to be personally liable for the unpaid debts of Blue Mountain. Dendler’s assertion strains credulity. The credit application is a multi-purpose form used by corporate, partnership and individual applicants alike. Each applicant is to furnish the information requested in the section reflective of its legal status. After listing Blue Mountain Development Corporation, Inc. as the applicant on the credit application, Dendler was correct in completing the “corporation” section of the form and leaving unanswered the questions posed by the inapplicable “partnership” and “individual” sections. By doing so Dendler merely reinforced that the applicant, Blue Mountain, was a corporation, and not a partnership or individual. There is simply nothing more that can be legitimately inferred from Dendler’s completion of the “corporation” section on the face of the credit application. This is especially true in light of the clear language of paragraph four of the application, which is directly applicable to an individual signing on behalf of a corporation.

Similarly, Dendler argues that because he was applying for credit in the corporate name and he signed the credit application only as an official of the corporation, he never understood he was binding himself personally for Blue Mountain’s debts. This argument lacks merit. In Beckman, supra, this court was faced with an analogous situation. In Beckman, the appellant argued that when he was given the disputed insurance contract to sign he was never told or made aware of the “no-agency” clause on the reverse side of the contract. Therefore, the appellant argued, not only was the clause unconscionable, but the contract itself was a contract of adhesion. This court stated then, as we do again now, that although a party “may not have been ‘told or made aware’ of the print on the back side of the agreement, he nevertheless admitted in a deposition that he had read the whole contract before signing it.” Beckman, 321 Pa.Super. at 437, 468 A.2d at 788. Here, as in Beckman, “the record showed that he was an experienced businessman, equipped to understand the meaning of the terms of the agreement he signed.” Id., 321 Pa.Superior Ct. at 438, 468 A.2d at 789. Consequently, in the absence of allegations of fraud or mutual mistake to explain the presence of paragraph four in the the credit application, Dendler is bound by his signature. Id.

Dendler “was legally bound to know the terms of the contract in which he himself engaged.” Montgomery v. Levy, 406 Pa. 547, 550, 177 A.2d 448, 450 (1962). Moreover, “[contracting parties are normally bound by their agreements, without regard to whether the terms thereof were read and fully understood and irrespective of whether the agreements embodied reasonable or good bargains, (citations omitted) Ignorantia non excusat.” Simeone v. Simeone, 525 Pa. 392, 400, 581 A.2d 162, 165 (1990) (emphasis in original). In his deposition testimony Dendler admitted that he had read the credit application. He also admitted that he had discussed certain terms and conditions on the application with Witmer, and that Witmer had answered everything he had asked. Dendler admitted that he had never asked Witmer about paragraph four, and that he had never sought an attorney’s advice about it. Dendler had the credit application in his possession for thirty to forty days before he returned it to Denlinger. Dendler had ample time in which to consult with an attorney, or anyone else of his choice, as to the meaning and legal effect of the “Terms and Conditions” on the the credit application.

Our supreme court has stated that:

A person of age is presumed to know the meaning of words in a contract, and if relying upon his own ability, he enters into an agreement not to his best interests he cannot later be heard to complain that he was not acquainted with its contents and did not understand the meaning of the words used in the instrument which he signed, (citations omitted) (emphasis added).

Schoble v. Schoble, 349 Pa. 408, 411-412, 37 A.2d 604, 605 (1944). “It is well established that one having the capacity to understand a written document... who signs it, is bound by his signature.” 13 Williston on Contracts, § 1577 (3rd ed. 1970). Moreover, “[where a signer] has made himself acquainted with the words of the document and his mistake concerns its interpretation or legal effect, his unilateral error affords no more grounds for relief than does ignorance of the words.” Id. (emphasis added).

The “Terms and Conditions” on the reverse side of the credit application are written in clear and distinct type. Each paragraph is separately numbered and distinctly set off from each other. The entire section is comprised of only six short paragraphs. The terms are written in plain English. The term “Applicant” is always capitalized, which draws attention to it. There is no technical terminology, no attempt to bury significant information in bewildering verbiage. “The agreement in question is not couched in such fineness of terminology that appellee can successfully contend that he could not understand the meaning of the written words.” Schoble, 349 Pa. at 411, 37 A.2d at 605. In addition,

[t]he law demands of every man who bargains with another that he should do so only after due reflection of the possible consequences of his bargain and if he misjudges the consequences that could have been expected by a reasonably intelligent man, he cannot rely on the law to remedy his fecklessness.

New Charter Coal Company v. McKee, 411 Pa. 307, 312, 191 A.2d 830, 833 (1963). Paragraph four is clearly worded and conspicuously displayed. Dendler, therefore, cannot avoid the consequences of that paragraph by attempting to prove that he did not understand it. Standard Venetian Blind Company v. American Empire Insurance Company, 503 Pa. 300, 307, 469 A.2d 563, 567 (1983) (citations omitted).

Accepting as true all properly pleaded facts and all inferences that can reasonably be drawn therefrom, Overly, supra, and examining the record in the light most favorable to Denlinger as the non-moving party, Marks, supra, we conclude that the Denlinger credit application is not a contract of adhesion and that paragraph four of the “Terms and Conditions” is not unconscionable and void as against the public policy of the Commonwealth. We find that the trial court committed an error of law and, therefore, we reverse the trial court’s order granting summary judgment to Dendler. Vargo, supra. We affirm the order denying Dendler attorney’s fees. As we have already determined that summary judgment was improvidently granted, we need not reach the other issues presented in this appeal.

Order granting summary judgment reversed; order denying attorney’s fees affirmed: case remanded for trial on the issues.

Jurisdiction relinquished.

DEL SOLE, J., files a dissenting opinion.

ADDENDUM TERMS AND CONDITIONS

DEL SOLE, Judge,

dissenting.

I must dissent from the Majority’s opinion, and would affirm the trial court’s order granting summary judgment in favor of Appellee.

In the instant case, the applicant for credit from Denlinger was Blue Mountain Development Co., Inc. As the majority notes, Mr. Dendler had recently incorporated his small, sole proprietorship construction business, and we may assume that one of the reasons for forming such a corporation was to benefit from the limited liability afforded corporations in this Commonwealth. As we stated in Village at Camelback Property Owners' Association Inc. v. Carr, 371 Pa.Super. 452, 458, 538 A.2d 528, appeal granted 519 Pa. 668, 548 A.2d 257 (1988), affirmed 524 Pa. 330, 572 A.2d 1 (1990);

[ 0]ne of the central reasons for conducting business in corporate form is the avoidance of personal liability by those holding equity in the corporation and limitation of the risk of those persons to the value of their equity ... [B]ecause of this goal, our Business Corporations Law permits liability for corporate debt to be assessed against shareholders, officers and directors in only the most limited of circumstances.

It is also the settled law of this Commonwealth that a corporation is a creature of legal fiction which can act only through its officers, directors and other agents, Lokay v. Lehigh Valley Cooperative Farmers, Inc., 342 Pa.Super. 89, 97, 492 A.2d 405, 408 (1985), and that when, “a party contracts with a corporation through a corporate agent who acts within the scope of his authority and reveals his principal, the corporate principal alone is liable for breach of contract.” Daniel Adams Associates, Inc., v. Rimbach Publishing, Inc., 360 Pa.Super. 72, 519 A.2d 997, 1000-1001 (1987). Therefore when a corporation contracts with another company for credit through its officer, and the officer acts within the scope of that authority and reveals the corporate principal, it is reasonable to expect that the corporate principal alone and not the officer/signatory will be liable if there is a breach of contract.

It is undisputed that the credit application was signed by Mr. Dendler in his corporate capacity as president of Blue Mountain, and there was no separate signature of Mr. Dendler’s in his individual capacity. He was acting within the scope of his authority and revealed the identity of his principal. Furthermore, the named applicant was Blue Mountain Development Co., Inc., and Mr. Dendler filled in the application in the space provided for a corporate applicant, rather than in the other spaces provided for a partnership or an individual. Therefore, Mr. Dendler intended to bind the corporation, not himself, personally, and because a central benefit of incorporating was to avoid personal liability, he reasonably expected that in signing the application in his corporate capacity, he was binding the corporation and was not incurring personal liability.

The majority correctly sets forth a test regarding unconscionability as found in Witmer v. Exxon Corp., 495 Pa. 540, 541, 434 A.2d 1222 (1981). Later cases of this court, however, have expanded and explained this test to apply to a variety of circumstances, some of which are particularly relevant to the case before us.

In Germantown Manufacturing Co. v. Rawlinson, 341 Pa.Super. 42, 491 A.2d 138, 146-47 (1985), we discussed one type of unconscionability which may be classified under the rubric of “unfair surprise”.

This type of unconscionability involves contractual terms which are not typically expected by the party who is being asked to “assent” to them. An unexpected clause often appears in the boilerplate of a printed form and, if read at all, is often not understood. By signing such a form, a party is bound only to those terms which such party would reasonably expect such a printed form to contain. If the form contains a material, risk shifting clause which the signer would not reasonably expect to encounter in such a transaction, courts have held that the clause may be excised as it is unconscionable. This type of unconscionability is typically found only in consumer cases and courts have exhibited some reluctance to apply it in cases dealing with merchant-to-merchant contracts. A court must determine what a particular party, in the context of the particular transaction, reasonably expected beyond the “dickered” terms. Unread terms in the form that are consistent with that expectation should be operative: those that are inconsistent should be inoperative. The conspicuousness of the print as well as the character of the document would be considered. J. Murray, The Standardized Agreement Phenomenon in the Restatement (Second) of Contracts, 67 Cornell L.Rev. 735, 776 (1982).

In the instant case, Mr. Dendler could not reasonably expect that there would be a clause in the boilerplate of the printed form which would hold him personally liable for the debts of the corporation. He had signed the document in his corporate capacity and had applied for credit for the corporation in the space on the form provided for corporations, not in the space provided for individuals. Furthermore, there is no question that the clause in dispute is a material, risk-shifting clause. It completely negates the value of a corporation’s limited liability, and shifts the risk of default onto the officer who is acting for the corporation.

The disputed clause found in the document is part of the boilerplate language found on the back of the form. There is no bolding or underlining or variation in the typeface which distinguishes this clause from the rest of the small print on the back of the form, although, in contrast on the back, the part of the form which limits warranties is capitalized and printed in darker, thicker print. In general, this clause is a classic example of a physically inconspicuous provision in the boilerplate of a standard form.

Finally, in finding unconscionability we are asked to consider the character of the document. The document in question, a credit application form, is divided into sections applicable to various types of applicants: partnerships, corporations, and individuals. Therefore, we may characterize the document as a credit application form for corporations, or partnerships, or individuals. In filling out the section for corporations, it may be fairly said that Mr. Dendler was filling out a corporate credit application, and therefore a clause forfeiting the corporation’s limited liability may be said to be inconsistent with the character of the document.

For all these reasons, I would find that the clause in the form, holding Mr. Dendler personally liable for the debts of the corporation, is inoperative and falls under the category of unconscionability by unfair surprise.

The Germantown case, which sets out the standard for finding unconscionability by unfair surprise, is a consumer case and the question of whether merchant-to-merchant transactions may be unconscionable was not in issue. However, the Court did note that, “modern courts recognize that the signer may be theoretically and technically a merchant but functionally a consumer in terms of education, business acumen, and experience.” Germantown, supra, 341 Pa.Superior Ct. at 57, 491 A.2d at 146, n. 5. More importantly, in a recent case, Moscatiello v. Pittsburgh Contractors Equipment Company, 407 Pa.Super. 363, 595 A.2d 1190 (1991), we found unconscionability in a contract between merchants.

In Moscatiello, we held that clauses in a sales contract signed by Franco Moscatiello, as owner of a construction company and Pittsburgh Contractors Equipment Company [PCEC], which excluded consequential and incidental damages, and limited Moscatiello’s remedies to the return of the purchase price less wear and use of machine, was unconscionable and unenforceable because of the, “absence of meaningful choice on the part of one of the parties together with contract terms which are unreasonably favorable to the other party.” Id., 407 Pa.Superior Ct. at 373, 595 A.2d at 1195, quoting, Germantown, supra, 341 Pa.Superior Ct. at 55, 491 A.2d at 145.

The Moscatiello court cited the following language contained in Section 353 of J. Murray, Murray on Contracts, (2nd ed., 1974).

The parties will not be found to have agreed to an abnormal allocation of risk if the only evidence thereof is an inconspicuous provision on the boilerplate of a standard form. At a minimum, the reallocation must be physically manifested in a fashion comprehensible to the party against whom it is sought to be enforced. Id.

We held that Moscatiello had no reason to expect that the contract he signed contained a clause that was buried in the fine print on the reverse side which shifted to him the risk of economic loss resulting from the purchase of the machine. We also held that Moscatiello was not a dealer or manufacture of heavy equipment of any kind, nor was the Moscatiello corporation a substantial business concern, skilled in the negotiation of contracts for goods. In contrast, PCEC had negotiated many other contracts for the purchase of this type of equipment and was familiar with the “conditions” On the reverse side of its own form. We also concluded that PCEC clearly held the superior bargaining position. Id., 407 Pa.Superior Ct. at 376, 595 A.2d at 1196-1197. Therefore, this court found that Moscatiello, was “functionally a consumer in terms of education, business acumen and experience,” and the terms of the contract limiting damages from the malfunctioning of the machine were unreasonable and unconscionable. Id.

Like Moscatiello Co., Blue Mountain Development Co. was not a substantial business concern, in fact it was probably smaller than Moscatiello which was engaged in highway construction projects, while Blue Mountain was a small construction business which specialized in residential projects and had just recently incorporated. It was not skilled in credit purchases, for as the Majority notes, prior to incorporation it dealt only in cash purchases of building materials from Denlinger. Denlinger, on the other hand, is a dealer in construction supplies, with many salespeople, a credit department, and wide experience in extending credit to its buyers. Clearly there was a vast disparity between the two parties in terms of bargaining power and sophistication in conducting this type of business, and therefore even though both parties were merchants, for the purposes of this contract, I would find that Mr. Dendler was functionally a consumer.

Furthermore, like the form contract in Moscatiello, the disputed clauses were buried in the fine print on the reverse side of the application, and the clause materially shifted the risk of economic loss away from the corporation, and to the individual acting for the corporation. Therefore, like the court in Moscatiello, I would find that the clause in which Mr. Dendler assumed personal liability for the corporation’s debts, unenforceable and unconscionable.

I am in full agreement with the trial court which stated:

“Where someone is to be held personally liable for the debt of another, albeit a corporate obligation, that intent should be indicated in the most unequivocal and explicit language and especially by a separate signature in an individual capacity acknowledging such responsibility. Plaintiff in the present case is attempting to thwart the primary reason for incorporation of many small businesses—the avoidance of personal liability. While we are not here formulating a complete ban on such action, we are vigorously endorsing the principle that this will not be permitted except under the clearest circumstances and in the most unambiguous terms. (Trial Court Opinion at 4, May 20, 1991. (emphasis in original)).

      . Denlinger also filed suit against Pennsylvania National Bank and Trust Company ("PNB") for the $44,157.94 in past due bills, plus attorney s fees and “interest at the legal rate.” Denlinger alleges that it had increased Blue Mountain’s line of credit on the basis of a letter of credit from PNB. PNB denied the allegation, stating that the letter of credit was limited to the costs incurred in erecting a residence for the Greskos, who had obtained a mortgage from PNB to finance the construction of their house. The scope of PNB’s letter of credit for Dendler is the subject of a separate suit filed by Denlinger, and therefore not at issue here. In addition, PNB notified this court that it will “not be actively participating in the appeals before Superior Court."

      . Paragraph three, which delineates the payment terms governing charge accounts, provides for a two percent (2%) discount for all invoices paid by the tenth of the month in which they are due, and up to a two percent (2%) per month finance charge for all invoices not paid in full in the month they are due.

      . Paragraph five of the credit application reads in part: "In the event that Applicant’s account is referred to an attorney for collection, Applicant agrees that Denlinger, Inc. shall be entitled to collect, in addition to principal and accrued finance charges, an attorney’s fee of fifteen percent (15%) thereof."

      . In his brief to this court, Dendler inaccurately reproduced this critical paragraph. On the actual credit application, in paragraph four and throughout the “Terms and Conditions," the word "Applicant" is consistently capitalized, and we think, intentionally so. Although ostensibly quoting from the credit application form, Dendler nevertheless consistently replaces the upper case "A” with a lower case "a," thereby changing the visual presentation, which in this case, is of some import.

      . Throughout its brief Denlinger refers to Dendler as the “sole share-, holder” of Blue Mountain, and whenever possible, gratuitously mentions that fact. However, Denlinger’s focus is misplaced, for it is well established in the Commonwealth that a corporation is to be regarded as an independent entity, even if its stock is owned entirely by one person. See College Watercolor Group, Inc. v. William H. Newbauer, Inc., 468 Pa. 103, 360 A.2d 200 (1976).

      . Unconscionability in contracts involving goods and services under the purview of the Uniform Commercial Code is policed by 13 Pa. C.S.A. § 2302, entitled “Unconscionable contract or clause.”

      . According to Hamor’s deposition testimony, the credit committee, which made all decisions regarding the extension of credit, consisted of Robert Hamor, the credit manager, and John Denlinger, an owner of Denlinger, Inc.

      . “Generally, if a mistake is not mutual, but unilateral, and is not due to the fault of the one not mistaken, there is no basis for relief.” Warren v. Greenfield, 407 Pa.Super. 600, 609, 595 A.2d 1308, 1312 (1991), citing McFadden v. American Oil Company, 215 Pa.Super. 44, 257 A.2d 283 (1969) (emphasis in original).

      . In Estate of Brandt, 463 Pa. 230, 235, 344 A.2d 806, 809 (1975), our supreme court reiterated that "this Court has repeatedly held that in the absence of proof of fraud 'failure to read is an unavailing excuse or defense and cannot justify avoidance, modification or nullification of the contract or any provision thereof,’ ’’ quoting Olson Estate, 447 Pa. 483, 488, 291 A.2d 95, 98 (1972). Here, as no allegations of fraud appear in the record, we find no grounds for “avoidance, modification or nullification” of paragraph four. Id.

      . In McKee v. Moon, 400 Pa.Super. 161, 583 A.2d 5 (1990), Moon, the president of a corporation, signed a contract to have work performed for the corporation. Like Dendler, Moon signed the contract in his capacity as a corporate officer only; he did not sign as an individual. Paragraph five of the contract provided:
      The person executing this Agreement on behalf of the Client represents that he or she has full authority to do so and guarantees the payment by Client to Agent of all the fees and expenses described above. The parties further agree that this Agreement shall not be altered or amended without the written consent of both parties thereto.
      Unlike Dendler, in McKee, Moon’s attorney had explained the contract to him “paragraph by paragraph and word for word," id., 400 Pa.Superior Ct. at 162, 583 A.2d at 6, before Moon signed it, to ensure that Moon fully understood the potential consequences of his personal guarantee. This court found Moon’s argument that he signed the contract in the corporate name only unconvincing; the panel affirmed the trial court order enforcing the contract against Moon.
      Paragraph four of the Denlinger credit application outlines the personal guarantee imparted by a corporate signature in much more explicit and understandable terms than paragraph five of the contract in McKee. Nevertheless, we choose not to decide this case on the basis of McKee. In McKee, Moon's attorney had thoroughly explained the consequences of paragraph five to him. Although Dendler could have availed himself of legal counsel, he failed to do so. We find Dendler’s lack of legal counsel to be sufficiently distinguishable to preclude reliance on McKee.

       The addendum has been reduced for publication purposes.


source: Caselaw Access Project

author: CERCONE, Judge:

license: Public Domain

text:
    608 A.2d 1074
    James C. HETRICK and Clara A. Hetrick, Appellants, v. APOLLO GAS COMPANY, a Corporation.
    Superior Court of Pennsylvania.
    Argued Dec. 11, 1991.
    Filed May 13, 1992.

      George D. Kulakowski, Punxsutawney, for appellants.
    John Porter, Pittsburgh, for appellee.
    Before ROWLEY, President Judge, and KELLY and CERCONE, JJ.
   CERCONE, Judge:

This is an appeal from an order granting summary judgment in favor of defendant/appellee, Apollo Gas Company. For the reasons appearing below, we affirm.

The events underlying the instant appeal began in May of 1917, when Clara Niel, a predecessor in title to an estate in land currently owned by plaintiffs/appellants, James and Clara Hetrick, entered into a drilling agreement with Ma-honing Gas and Oil Company (hereinafter “Mahoning”). Cast in the form of an oil and gas lease, the document signed on May 3, 1917, gave Mahoning the right to drill wells and extract oil and gas from the Niel property in exchange for the payment of certain moneys on a regular schedule. James and Clara Niel, as well as their successors in interest, were also entitled to take 200,000 cubic feet of natural gas per calendar year free of charge to use on the premises for domestic purposes. Appellants have not alleged any default regarding the timely payment of royalties by appellee and its predecessors in interest; however, the instant case does raise a question concerning the acquisition of free natural gas by appellants and their predecessors in interest.

In an attempt to prevent appellee from extracting further minerals under color of the purported 1917 agreement and to enforce what they view as their cumulative right to free natural gas, appellants filed a complaint in equity seeking both money damages and a prohibitory injunction. Appellants have proceeded under two theories of entitlement in the instant action. First, they contend that the drilling agreement signed by Clara Niel was not a lease but was actually an attempt to convey a mineral estate in fee simple. The crux of this argument is that the document signed in 1917 must be treated as a failed deed, void under the Married Women’s Property Act of 1893, because Clara Niel’s alleged husband James never signed it. Consequently, appellants’ claim that the rights of the parties in the instant action are governed by the common law of corporeal interests in land rather than by the terms of the agreement signed in May of 1917. Second, appellants argue that they have the right to receive cumulative arrearages amounting to 7,000,000 cubic feet of free natural gas which they allege accrued between 1917 and the date on which natural gas service was actually connected to their domicile. Appellants contend that since 1975, they have been unfairly required to pay for gas use in excess of 200,000 cubic feet per calendar year, despite the many years in which appellee failed to supply any free natural gas. They further aver that they have made the allegedly unjust payments to Apollo Gas Company, albeit under protest.

After a trial schedule was established and discovery was accomplished, appellee filed a motion for summary judgment. Appellee’s motion was granted on March 14, 1991 and the instant timely appeal followed by which appellants raise two issues for our consideration: (1) whether an agreement which provides for gas and oil drilling for a term of fifteen years, and as long thereafter as oil or gas is produced in “paying quantities” constitutes a conveyance in fee of such oil and gas; and (2) whether a contract right for a specified amount of free gas each year is cumulative. These challenges to the lower court’s ruling must be evaluated under the relevant standard of review as set forth by the Pennsylvania Supreme Court:

Summary judgment is properly granted where “the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, show that there is no genuine issue as to any material fact and that the moving party is entitled to a judgment as a matter of law.” Pa.R.C.P. [No.] 1035(b) [, 42 Pa. C.S.A.] An entry of summary judgment may be granted only in cases where the right is clear and free from doubt. Musser v. Vilsmeier Auction Co., Inc., 522 Pa. 367, 369, 562 A.2d 279, 280 (1989). The moving party has the burden of proving the nonexistence of any genuine issue of material fact. Thompson Coal Co. v. Pike Coal Co., 488 Pa. 198, 202-204, 412 A.2d 466, 468-69 (1979). The record must be viewed in the light most favorable to the nonmoving party, and all doubts as to the existence of a genuine issue of material fact must be resolved against the moving party. Davis v. Pennzoil Co., 438 Pa. 194, 264 A.2d 597 (1970).

Marks v. Tasman, 527 Pa. 132, 134-35, 589 A.2d 205, 206 (1991). See Penn Center House, Inc. v. Hoffman, 520 Pa. 171, 176, 553 A.2d 900, 903 (1989) (entire record before lower court must be thoroughly examined and all doubts as to the existence of a genuine issue of material fact are to be resolved against a grant of summary judgment). An appellate court will overturn a trial court’s entry of summary judgment only if there has been an error of law or a clear abuse of discretion. McCain v. Pennbank, 379 Pa.Super. 313, 318, 549 A.2d 1311, 1313 (1988).

Appellants first argue that the written agreement concluded on May 3, 1917 between Mahoning and Clara Niel must be deemed a deed and not a lease. Under this theory, the purported agreement is rendered void and of no legal effect because only Clara Niel actually signed the document and her action was never ratified by her alleged husband. Appellants contend that based on the behavior of the parties following May 3,1917, the transaction which transpired constituted the conveyance of a mere corporeal interest in the natural gas actually transferred to Mahoning and its various successors in interest. Thus, appellants urge this court to vacate the lower court’s order entering summary judgment against them. However, in order to grant appellants the relief they seek with regard to their first claim, we must arrive at two legal conclusions not reached by the trial court. First, we would have to determine that the agreement in question was a failed conveyance of the mineral estate in fee simple rather than a fully consummated conveyance of a leasehold in the mineral estate. Second, we must conclude that the Married Women’s Property Act of 1893, supra, required both James and Clara Niel to sign the challenged contract in order to give it legal effect.

Pennsylvania law recognizes three discrete estates in land: the surface estate, the mineral estate, and the right to subjacent (surface) support. Gioia v. Gioia, 382 Pa.Super. 538, 547 n. 4, 555 A.2d 1330, 1335 n. 4 (1989), citing Smith v. Glen Alden Coal Co., 347 Pa. 290, 304, 32 A.2d 227, 234-35 (1943). Because these estates are severable, different owners may hold title to separate and distinct estates in the same land. Id. As appellants have correctly argued, the Pennsylvania rule permitting severance of the mineral estate for coal and other solid minerals applies with equal force to oil and gas. Duquesne Natural Gas Company v. Fefolt, 203 Pa.Super. 102, 105, 198 A.2d 608, 610 (1964). As with any estate in land, the owner of the mineral estate may convey his entire bundle of rights in fee or may grant a mere portion thereof via leasehold. See id. (quoting 24 P.L.E. Mining; Oil and Gas § 11 at 144). Unfortunately, under our law the precise nature of any particular agreement is a complex question because a document purporting to grant only a leasehold may in actuality constitute a sale of the mineral in situ which conveys a fee interest to the mineral estate in favor of the grantee. See, e.g., Lichtenfels v. Bridgeview Coal Co., 344 Pa.Super. 257, 262-263, 496 A.2d 782, 785 (1985) (construing the legal character of a purported coal lease). Thus any court attempting to settle a controversy regarding the ownership of minerals in place must first determine the nature of the contract between the parties.

The seminal Pennsylvania cases construing the nature of mining agreements are Benson v. Miners' Bank, 20 Pa. 370 (1853), which held that an unrestricted right to take and carry away all the coal under a tract of land constitutes a corporeal right, and Caldwell v. Fulton, 31 Pa. 475 (1858), the landmark decision which interpreted a mining agreement as a sale of coal in place. However, more pertinent to our resolution of the issue before this court is the more recent case of Hummel v. McFadden, 395 Pa. 543, 150 A.2d 856 (1959). In Hummel, the Pennsylvania Supreme Court recognized that a mining agreement may constitute “a sale absolute, a conditional sale, a lease in the ordinary acceptance of that term, or a mere license to mine and remove the minerals.” Id., 395 Pa. at 553-54, 150 A.2d at 861, quoting Girard Trust Co. v. Delaware & Hudson Company, 246 Pa. 161, 166, 92 A. 129, 130 (1914). When determining the precise nature of a particular mining agreement, the form of the document employed and the language utilized are not themselves dispositive. Id., 395 Pa. at 555, 150 A.2d at 861. Rather, “the character of the transaction [is] controlling.” Id. (emphasis in original). In Hummel, the court found it highly material that the disputed mining agreements contained no minimum royalty payable upon sale of the coal, and failed to impose “any limitation in respect to the time, the quantity or the purpose of removal of the coal [or] upon the person who is to remove the coal.” Id., 395 Pa. at 556, 150 A.2d at 862. Because the agreements in question gave McFadden “full and complete dominion over the coal until the exhaustion thereof,” they were deemed “sales of the coal in place.” Id.

Transferring the principles enunciated in Hummel to the context of a drilling agreement for gaseous and/or liquid minerals is a difficult proposition. Owing to the marked differences in the nature of oil and gas and solid minerals such as coal, the rights of lessees in the respective minerals are not the same. Appeal of Baird, 334 Pa. 410, 6 A.2d 306, 311 (1939). Thus, rules applicable to a particular type of mineral extraction contract cannot be applied indiscriminately to all instruments whether they amount to a license, a lease, a conditional sale or an absolute sale, and whether they concern solid minerals or minerals of the character of oil and gas. Id. Accord Greek Catholic Congregation v. Wilson Coal Co., 329 Pa. 341, 198 A. 41 (1938); Denniston v. Haddock, 200 Pa. 426, 50 A. 197 (1901).

In general, it may be understood that a contract which grants the “exclusive right and privilege for digging and boring for oil and other minerals” for a certain term, is a lease for the production of oil and not a sale of the oil or an interest in the land. Duffeld v. Hue, 129 Pa. 94, 107-09, 18 A. 566, 568 (1889). In 1939, our supreme court refined this definition by holding that where the contract is “in the form of a grant and lease of land with the exclusive right and for the purpose of drilling for and producing petroleum and gas for a definite term ‘and so long thereafter as oil or gas can be produced in paying quantities’ and provides that one-eighth of the oil produced is to be delivered to the lessor in the pipe lines as produced, the right to receive that royalty is an incident to an estate in the oil and gas remaining in the grantor as an owner of land.” Appeal of Baird, supra, 334 Pa. 410, 6 A.2d at 312. When determining the nature of the right or estate created by an instrument, the court will consider the document as a whole, without regard to its formal division into parts and may refer to the habendum clause when the terms of the grant under an oil and gas extraction agreement are ambiguous. Irwin v. Hoffman, 319 Pa. 8, 15-16, 179 A. 41, 45 (1935).

The certified record in this case contains a copy of the document signed by Mrs. Niel on May 3, 1917. In pertinent part it states that James and Clara Niel, “the first party,” and Mahoning, the “second party,”

Witnesseth, that the said first party for and in consideration of one dollar in hand paid by the said second party, the receipt whereof is hereby acknowledged, and the further consideration of the agreement hereinafter contained, to be done, kept and performed by said second party, hereby demises and lets unto said second party its successors or assigns, all that certain tract of land situated in Perry & W. Mahoning Township, Jefferson & Indiana county, Pennsylvania, bounded and described as follows: [legal description of tract] Containing Four Hundred (400) acres, more or less.
TO HAVE AND TO HOLD the above described premises for the sole and only purpose of drilling and operating for oil and gas with the exclusive right to operate for same for the term of fifteen years, and as long thereafter as oil or gas is produced in paying quantities or operations for oil or gas are being conducted thereon, including the right to drill other wells, together with a right of way for pipe lines to convey oil, gas, water or steam off, on or across the same as long as said second party, its successors or assigns, desires to maintain the same, also the right to operate any well on said premises. The party of the second party hereby agrees to made [sic] just compensation for any damages done to growing crops or improvements by said operations. The party of the second part also agrees to locate wells wherever convenient on land not tillable or under tillage.
IN CONSIDERATION of the above demise, said second party agrees to deliver in pipe line unto said first party the one-eighth part of the oil produced and saved from the premises.
Should any well not produce oil, but produce gas, and the gas therefrom be sold off the said premises, the consideration to said first party for the gas from each well from which gas is marketed shall be as follows: At the rate of One Hundred Seventy-Five ($175.00) dollars per year. While gas is being sold off these premises, said first party may have gas free of cost for domestic purposes on said premises to the extent of 200,000 cubic feet per year, said first party to make the necessary connections and assume all risk in using said gas. The said second party shall not be liable for any shortage, or failure in supply of gas for said domestic purposes caused by pumping gas from said premises or otherwise:
The said first party to have the free use and enjoyment of the premises except the part necessary for drilling and operating, and no wells to be drilled within two hundred feet of the buildings now on the lease without consent of said , first party.
The said second party to have the free use of water and gas from the premises to run its machinery, and the right at any time during or after the term of this agreement to remove from the premises all machinery, pipe lines, buildings and fixtures belonging to it (including the right to draw and remove casing), whether placed thereon under this or any former lease.

Complaint filed February 13, 1985, “Exhibit A” (emphasis added). Appellee has conceded that although the document listed both James and Clara Niel as parties of the first part, Mr. Niel did not sign it. See appellee’s brief at 8.

Styled in the form of a land-lease, the document signed by Mrs. Niel granted Mahoning the exclusive use of specifically described parcels of land for the sole purpose of “drilling and operating for oil and gas” for a term certain of fifteen years, “and as long thereafter as oil or gas is produced in paying quantities.” This language is remarkably similar to that which the Pennsylvania Supreme Court found to be more consistent with a lease than with a fee simple conveyance in Appeal of Baird, supra. As the Baird court ruled, the grant of the exclusive right and privilege of digging and boring for oil and other minerals for a term certain plus “so long thereafter as oil or gas can be produced in paying quantities” must be treated as a lease and not as a sale of either the minerals or of an interest in the land. Id.

We note additionally that, as in Baird, the payment to Mrs. Niel and her successors in interest is cast in the form of rent or royalties which are conditioned upon the continuing production of oil and/or gas by Mahoning and its successors in interest. As further evidence that the parties in the instant case intended a lease agreement rather than a fee conveyance, the granting clause employs the term “lets” rather than “grants.” Moreover, twice within its final two paragraphs, the parties explicitly characterized the document in question as a “lease.” It is true that under Hummel v. McFadden, supra, the form and language of the document which embodies a mining agreement are not dispositive regarding the nature of that agreement. However, upon due consideration of the material phrases employed to embody the mining agreement in this case, we conclude that the nature of the transaction between Clara Niel and Mahoning Gas and Oil Company was the conveyance of a leasehold interest and not the granting of a fee interest in the mineral estate. We therefore hold that the trial court was legally correct in deeming the document in question to be a lease rather than an attempted conveyance in fee simple.

Having reached this determination, however, we must now consider whether the 1917 contract was rendered void under the Married Women’s Property Act, supra, because James Niel failed to add his signature to that of Clara Niel. Unquestionably, at the time Clara Niel signed the challenged document, the legal efficacy of her actions were governed by the provisions of the Act. See Bosses v. Mahalsky, 365 Pa. 184, 74 A.2d 93 (1950) (during the period when the Married Women’s Property Act was in effect, a married woman lacked the capacity either to contract for the sale of her land or to convey it except in the manner prescribed by statute). Although the Act was amended in 1945, 1947 and 1951, its provisions were as follows on the relevant date:

Hereafter a married woman shall have the same right and power as an unmarried person to acquire, own, possess, control, use, lease, sell or otherwise dispose of any property of any kind, real, personal or mixed, and either in possession or expectancy, and may exercise the said right and power in the same manner and to the same extent as an unmarried person, but she may not mortgage or convey her real property, unless her husband join in such mortgage or conveyance.
Hereafter a married woman may, in the same manner and to the same extent as an unmarried person, make any contract in writing, or otherwise, which is necessary, appropriate, convenient or advantageous to the exercise or enjoyment of the rights and powers granted by the foregoing section, but she may not become accommodation, indorser, maker, guarantor or surety for another, and she may not execute or acknowledge a deed, or other written instrument, conveying or mortgaging her real property, unless her husband join in such mortgage or conveyance.

48 P.S. §§ 31-32; Act of June 8, 1893, P.L. 344 §§ 1-2 (repealed 1957) (emphasis added). Although it is plain that under the Act, a married woman had no right to convey a fee interest in land, it is equally clear that the legislature intended to empower a married woman to execute, during coverture, a lease for her separately titled property. See also Pedrick v. Gordin, 382 Pa. 26, 114 A.2d 124 (1955) (discussing legislative intent re Married Women’s Property Act in the context of the amended statute). Because the document executed by Mrs. Niel was a lease, and not a purported “deed, or other written instrument, conveying or mortgaging ... real property,” its legal validity and enforceability were not automatically negated by operation of the Married Women’s Property Act simply because Mr. Niel never signed it. Thus appellant’s argument in this regard must fail.

Because of our resolution of appellants’ first claim, we need not consider the third sub-point raised thereunder relating to the alleged creation of a co-tenancy between the Niels and Mahoning. We may therefore move on to consider appellants’ contention that their right to obtain free natural gas under the 1917 agreement is cumulative from that year. The relevant paragraph from the 1917 lease contains the following language:

While gas is being sold off these premises, said first party [lessors and their successors in interest] may have gas free of cost for domestic purposes on said premises to the extent of 200,000 cubic feet per year, said first party to make the necessary connections and assume all risk in using said gas. The said second party shall not be liable for any shortage, or failure in supply of gas for said domestic purposes caused by pumping gas from said premises or otherwise^.]

Complaint filed February 13, 1985, “Exhibit A” emphasis added. Unfortunately for appellants, Pennsylvania law is clear that where a lease provides that the lessor shall have “gas free of cost” under an agreement such as the instant lease, the onus is upon the lessor to demand the gas and to put himself in a position to receive it “at or about the well.” Lewis v. United Natural Gas Co., 75 Pa.Super. 44, 50 (1920). Where a lessor fails to meet this burden, the lessee is not in default and the lessor is not entitled to recover the value of the gas so to be furnished. Id. Pennsylvania law thus provides that unused free gas allotments arising under a gas lease are not cumulative prior to the time the lessor puts himself in position to receive the gas “at or about the well.” Id. In the instant case, the lease provides the added restriction that the lessor is responsible for making the necessary connections at the well-head. Further, the instant lease explicitly absolves the lessee from any liability stemming from a failure to supply gas. Under these circumstances, we cannot conclude that the trial court committed either a clear error of law or an abuse of discretion in declining to grant appellants’ petition for cumulative gas rights accruing between 1917 and the tap-in date. We therefore affirm the grant of summary judgment.

Order affirmed.

      . Through a series of assignments, appellee Apollo Gas Company acquired the status of successor in interest to Mahoning with regard to the 1917 agreement.

      . Inter alia, appellants’ complaint requested the trial court to ascertain the fair market values allegedly owed to appellants for minerals extracted at various times by appellee, and to enjoin appellee from terminating gas service to appellants at their residence. Appellants also petitioned the court for an injunction to prevent appellee from drilling any additional wells.

      . 48 P.S. §§ 31-32; Act of June 8, 1893, P.L. 344 §§ 1-2, amended 1945, 1947 and 1951 (repealed 1957).

      . The date on which service commenced appears to be disputed by the parties. However, because our resolution of the underlying issue does not hinge on this point, it need not be resolved here.

      . The older cases dealing with oil and gas leases frequently turn on procedural distinctions peculiar to incorporeal hereditaments, ("a right issuing out of a thing corporate”) as opposed to actual corporeal interests in land. See, e.g., Hicks v. American Natural Gas Co., 207 Pa. 570, 576-77, 57 A. 55, 57 (1904) (action in ejectment cannot be maintained on an oil or gas contract in the form of an incorporeal hereditament but may lie if brought as of right by one who holds “the title of the corporate thing”). See also McKean Natural Gas Co. v. Wolcott, 254 Pa. 323, 326, 98 A. 955, 956 (1916) (an oil and gas lease is not a mere license, but creates in the lessee a corporeal interest in the land); Chicago & Allegheny Oil & Mining Co. v. U.S. Petroleum Co., 57 Pa. 83 (1868) (an agreement to lease land for a term of years, with the exclusive right to bore for and collect oil, giving one-fourth to lessor passes a corporeal interest); Stockdale v. Sellers, 102 Pa.Super. 447, 157 A. 30 (1931) (lease of oil and gas, together with land, for drilling purposes, requiring carrying rentals and royalties, creates corporeal interest in lessee). However, the distinction is without a difference as it pertains to the outcome of the instant case.

      . In Appeal of Baird, the Pennsylvania Supreme Court adopted and incorporated by reference the opinion set forth at 132 Pa.Super. 573, 1 A.2d 485 (1938). Although the Superior Court opinion was reproduced at 6 A.2d 307 et seq., it was not reprinted in volume 334 of the Pennsylvania State Reports.

      . The instant lease states that one-eighth of the oil produced is to be delivered to the lessor in the pipe lines as produced. This provision is identical to the royalty clause in the contract construed in Appeal of Baird. Again as in Baird, the instant agreement also provides for payment of a suitable royalty should the wells yield gas instead of oil.

      . Appellants have cited Pennsylvania Bank & Trust Co., Youngsville Branch v. Dickey, 232 Pa.Super. 224, 335 A.2d 483 (1975) as authority for the proposition that an exclusive grant of the right to extract oil and gas works a fee conveyance. While we agree that Dickey contains such a holding, it is significant that the mining agreement construed in that case lacked any variant of the qualifying phrase “so long ... as oil or gas can be produced in paying quantities” which our supreme court found to be crucial in Appeal of Baird, supra. Because the document which embodies the agreement in the instant case contains a variation of the material term limitation so conspicuously absent from Dickey, we find the latter case inapposite to the present inquiry. Barnsdall v. Bradford Gas Co., 225 Pa. 338, 74 A. 207 (1909), also cited by appellants, is distinguishable from the case sub judice on the same basis as is Dickey and need not be considered further.

      . Neither party has challenged Clara Niel’s legal right to execute a lease absent written ratification by James Niel. That issue is consequently not before the panel and we will not consider it.

      . Appellants erroneously theorized that a co-tenancy, in the oil and gas estate arose when the fee conveyance between the parties allegedly failed resulting in the transfer of a corporeal interest in the natural gas.


author: WIEAND, Judge:

text:
    608 A.2d 1082
    FIRST CAPITAL LIFE INSURANCE COMPANY, Appellee, v. SCHNEIDER, INC., Appellant.
    Superior Court of Pennsylvania.
    Argued Jan. 14, 1992.
    Filed May 15, 1992.
    Petition for Allowance of Appeal Denied Sept. 29, 1992.

      Anthony M. Mariani, Pittsburgh, for appellant
    Ronald G. Backer, Pittsburgh, for appellee.
    Before CAVANAUGH, WIEAND and HESTER, JJ.
   WIEAND, Judge:

In this action in equity, the trial court entered a final decree enjoining a mortgagor in default from interfering with the mortgagee’s entering upon the mortgaged premises to conduct environmental tests. The mortgagor appealed. After careful review, we affirm.

The case was submitted to the trial court on an agreed statement of facts which included the following. On or about August 4, 1986, First Capital Life Insurance Co. (First Capital) made a loan of seven million, three hundred thousand ($7,300,000.00) dollars to Schneider, Inc. The loan was secured by a note and mortgage on real estate located in Scott Township, Allegheny County. Schneider failed to make full payments on the note between December, 1988, and February, 1989, and failed to make any payments after April, 1989. The unpaid principal exceeds seven million ($7,000,000.00) dollars. Schneider has also violated provisions of the note and mortgage which require that the premises remain free and clear of other liens. The defaults have not been cured despite demands therefor by First Capital.

In February, 1989, Schneider granted a request by First Capital to enter the property during normal business hours to inspect the same; and, on March 9, 1989 and again on March 15, 1989, GAI Consultants, Inc. (GAI), representing First Capital, made a surface inspection of the property to determine its environmental condition. In its report, copies of which were provided to First Capital and Schneider, GAI stated:

Based on the prior site use and operation and current evidence of 1 and 5 gallon paint cans and 55 gallon drums of unknown material being incorporated into the fill placed on site, the potential exists for contamination of the subsurface (soil and/or ground water) at the site.

Robert J. Turka, an engineering manager, offered his conclusions as to the source of the potential contamination:

Sipes Chemical Coating Company operated on the property from 1906 until 1973. Sipes manufactured paint and probably used numerous chemicals in its operation. There was at least one large tank used on the property and twenty small tanks holding paints and chemicals. There may therefore be toxic chemicals or other toxic materials in the ground.
The 55 gallon drums and 5 gallon paint cans in the fill along Chartiers Creek, some containing hardened paint or other unknown materials, suggests that the practice at the facility was to dispose of waste in the fill. This was not an uncommon practice in past years.
The site is composed of fill, when Chartiers Creek was relocated, probably around 1900. Part of the creek bed still remains under the property.
There is evidence that an open disposal pit was maintained at one time on adjacent property. Due to the topography of the land and the creek bed, if chemicals were disposed of in this open pit they may be leaking onto the subject property.

GAI recommended, therefore, that a second search be made in an effort to determine the presence or absence of hazardous wastes and the extent of any contamination. This “phase two” investigation would consist of the drilling of approximately twelve (12) holes from 10 to 12 inches in diameter. In nine (9) of those holes, groundwater monitoring wells would be installed.

On June 21, 1989, First Capital requested permission for GAI to conduct the recommended intrusive search or phase two investigation and offered to pay not only for the inspection but also for any repairs or damages caused by the test. Schneider denied First Capital’s request for access to the property and advised First Capital that it would deem the phase two investigation a trespass by First Capital and its representatives. According to the stipulation entered by the parties, Schneider’s expert would testify that the intrusive investigation sought to be performed by First Capital was not without risks and that under current government regulations, Schneider had no obligation to conduct the proposed investigation. If substantial quantities of hazardous materials are found at the site, clean-up costs may well exceed one million ($1,000,000.00) dollars.

First Capital then filed a complaint in equity which requested the trial court to enjoin Schneider from prohibiting or obstructing entry of the mortgaged premises by representatives of First Capital for purposes of making a comprehensive environmental audit. A petition for immediate preliminary relief was also filed, and this was granted by the court on October 3, 1989. On appeal, the Superior Court determined that the trial court’s order was not merely a temporary order but a final determination of the underlying controversy. Because it had been entered without a final hearing, the Superior Court reversed and remanded for further proceedings. Upon remand, the trial court heard testimony regarding the nature of the proposed tests and the risks inherent therein. At the conclusion of the hearing, however, the court again entered an order granting the requested relief. Post-trial motions were denied, and a final decree was entered. Schneider appealed. It contends that the mortgage agreement does not authorize intrusive environmental testing and that, in any event, First Capital has an adequate remedy at law in the form of an action to foreclose the mortgage.

In reviewing equity matters, an appellate court’s standard of review is narrow, “for we are bound by the trial court’s determinations pertaining to the credibility of the witnesses and the weight to be accorded to the evidence.” Hostetter v. Hoover, 378 Pa.Super. 1, 6, 547 A.2d 1247, 1249 (1988).

[A]ppellate review of equity matters is limited to a determination of whether the chancellor committed an error of law or abused his discretion. Commonwealth Dept. of Environmental Resources v. Pa. Power Co., 461 Pa. 675, 337 A.2d 823 (1975). The scope of review of a final decree in equity is limited and will not be disturbed unless it is unsupported by the evidence or demonstrably capricious. Delp v. Borough of Harrisville, 25 Pa.Cmwlth. 486, 360 A.2d 758 (1976).

Id,., 378 Pa.Superior Ct. at 6, 547 A.2d at 1250.

It is well established that “a court of equity has jurisdiction and, in furtherance of justice, will afford relief if the statutory or legal remedy is inadequate, or if equitable relief is necessary to prevent irreparable harm.” Martino v. Transport Workers’ Union of Philadelphia, 505 Pa. 391, 396, 480 A.2d 242, 244-245 (1984). See also: Wood v. Goldvarg, 365 Pa. 92, 95, 74 A.2d 100, 101-102 (1950) (“in order to oust equity jurisdiction, there must be a legal remedy that is adequate and complete.”); Chartiers Valley School District v. Virginia Mansions Apartments, 340 Pa.Super. 285, 294, 489 A.2d 1381, 1386 (1985); South Coventry Township v. Philadelphia Electric Company, 94 Pa.Cmwlth. 289, 299, 504 A.2d 368, 373 (1986). Moreover, “a court of equity has the power to afford relief despite the existence of a legal remedy when, from the nature and complications of a given case, justice can best be reached by means of equity’s flexible machinery.” Hill v. Nationwide Insurance Co., 391 Pa.Super. 184, 188, 570 A.2d 574, 576 (1990), quoting Peitzman v. Seidman, 285 Pa.Super. 228, 234 n. 4, 427 A.2d 196, 199 n. 4 (1981). The Hill court discussed the concept of an adequate and complete remedy at law in greater detail.

To induce equity to refuse its aid to a suitor, it is not sufficient that he may have some remedy at law. An existing remedy at law to induce equity to decline the exercise of its jurisdiction in favor of a suitor must be an adequate and complete one. And when from the nature and complications of a given case, its justice can best be reached, by means of the flexible machinery of a court of equity, in short where a full, perfect and complete remedy cannot be afforded at law, equity extends it jurisdiction in furtherance of justice.

Id., quoting Pennsylvania State Chamber of Commerce v. Torquato, 386 Pa. 306, 329, 125 A.2d 755, 766 (1956), cert. denied sub. nom. Bowman v. Pennsylvania State Chamber of Commerce, 352 U.S. 1024, 77 S.Ct. 589, 1 L.Ed.2d 596 (1957).

Under the Comprehensive Environmental Compensation Liability Act, 42 U.S.C. § 9601, et seq., as amended, (“CERCLA”), liability for cleaning up hazardous waste found on a property is determined by ownership. Ownership alone triggers liability even though an owner has not actively participated in generating or disposing of the hazardous substance. See, e.g.: Tanglewood East Homeowners v. Charles-Thomas, Inc., 849 F.2d 1568, 1572 (5th Cir.1988); United States v. Stringfellow, 661 F.Supp. 1053, 1063 (C.D.Cal.1987).

In United States v. Maryland Bank & Trust Co., 632 F.Supp. 573 (D.Md.1986), the court was asked to determine “whether a bank, which formerly held a mortgage on a parcel of land, later purchased the land at a foreclosure sale and continues to own it, must reimburse the United States for the cost of cleaning up hazardous wastes on the land, when those wastes were dumped prior to the bank’s purchase of the property.” Id. at 574. The government argued that a bank, by virtue of its purchase of the facility at a foreclosure sale, was the “owner” and, therefore, liable for the clean-up. The bank countered that it was only protecting its security interest in the property, and CERCLA’s definition of an “owner or operator”, section 101(20)(A), 42 U.S.C. § 9601(20)(A), excluded from liability “a person, who, without participating in the management of a vessel or facility, holds indicia of ownership primarily to protect his security interest in the ... facility.” The court rejected the bank’s contention and held that a mortgagee who purchases the premises in order to protect its interest is liable for clean-up costs. In so holding, the court focused on the time period of the bank’s security interest and found that foreclosure constituted “ownership” for purposes of CERCLA liability, since the security interest had expired upon foreclosure.

The United States District Court for the Western District of Pennsylvania reached a similar conclusion in Guidice v. BFG Electroplating and Manufacturing, Co., 732 F.Supp. 556 (W.D.Pa.1989). In Guidice, a bank had purchased at sheriff’s sale a piece of real estate in which it had previously held a security interest and held record title to the property for approximately nine months before conveying it to a third party. The property was subsequently found to be contaminated, and the bank was joined as a third party in a suit for damages. In deciding whether the bank was an “owner or operator” and liable for the clean-up under CERCLA, the court distinguished between the time frame prior to the bank’s foreclosure and the period following the bank's purchase of the property. With regard to the former, the court held that the bank was protected from liability by the security interest exemption of CERCLA as there was “no evidence suggesting that the Bank controlled operational, production, or waste disposal activities at the [property].” Id. at 562. However, after the bank had purchased the property at a foreclosure sale, the court viewed its role differently.

We find the concern expressed in Maryland Bank & Trust, that an exemption for landowning lenders would create a special class of otherwise liable landowners, and the failure of the 1986 amendments to specifically exempt mortgagees-turned-landowners persuasive. When a lender is the successful purchaser at a foreclosure sale, the lender should be liable to the same extent as any other bidder at the sale would have been.

Id. at 563.

In United States v. Fleet Factors Cory., 901 F.2d 1550 (11th Cir.1990), cert. denied, — U.S.-, 111 S.Ct. 752, 112 L.Ed.2d 772 (1991), the Eleventh Circuit held that a lender could be found liable for CERCLA clean-ups if it had the capacity to affect hazardous waste disposal decisions even if it had not acquired the property.

Finally, even the Environmental Protection Agency has recognized the potential for lender liability under the CERCLA statutory scheme. It has published a public notice in the Federal Register pertaining to de minimis landowner settlements under CERCLA. According to the EPA,

Lenders may also be eligible for de minimis settlements in some circumstances. A lender who does not participate in the management of a facility and who only holds “indicia of ownership primarily to protect his security interest” is excepted from the definition of “owner or operator” and, therefore, is not liable. Section 101(20)(A)(ii). If, however, a lender becomes an owner by foreclosing and taking title to the property, or by conducting management activities at the site, he is potentially liable. Under these circumstances, the lender may be eligible for a de minimis settlement, if he meets the requirements of Section 122, including that he demonstrates that he conducted “all appropriate inquiry” prior to acquisition of the facility, (emphasis added).

Public Notice, 54 Fed.Reg. 34235, 34238 (August 18, 1989).

In view of the current state of the law, therefore, it seems abundantly clear that foreclosure of the mortgage may not be a complete and adequate remedy when the mortgagor defaults. Equitable relief “depends not so much on the want of a common-law remedy, as upon its inadequacy and its exercise is a matter which often rests within the discretion of the court; in other words the court may take upon itself to say whether the common-law remedy is, under all the circumstances and in view of the conduct of the parties, sufficient for the purpose of complete justice____” Cohen v. Pelagatti, 342 Pa.Super. 626, 634-635, 493 A.2d 767, 771 (1985), quoting Penn. Iron Co., Ltd. v. City of Lancaster, 25 Pa.Super. 478, 483 (1904). Where foreclosure may result in the taking of title to environmentally damaged or contaminated real estate, equity may intervene to provide relief to an innocent lender.

However, a court of equity cannot create rights which have not been established by the terms of the mortgage or other agreement between the parties. Therefore, we must examine the terms of the mortgage to ascertain whether the right to conduct intrusive environmental tests was reserved to the mortgagee by the terms of the written mortgage.

The mortgage contains language allowing inspections of the premises by the mortgagee as follows:

15. Inspections. Mortgagor shall allow Mortgagee and its representatives to enter upon the Subject Property during normal business hours and upon reasonable advance notice to inspect the condition of the same and to examine, copy and audit the books, records, accounting data and other documents of the Mortgagor or the party for whose benefit Mortgagor is acting relative to the Subject Property. Such inspections are solely for Mortgagee’s benefit; to the extent the Subject Property or such books, records, accounting data are in the possession or control of others, then Mortgagor shall make the same available to Mortgagee.

This right of inspection must be construed according to its terms. The terms of the mortgage permit the mortgagee and its representatives to go upon the land to inspect the condition of the premises. The term “inspection” is defined in Black’s Law Dictionary, 5th ed. 1979, as follows:

Inspection. To examine; scrutinize, investigate, look into; check over; or view for the purpose of ascertaining the quality, authenticity or conditions of an item, product, document, residence, business, etc.

Here, the mortgagee wishes to do more than examine, scrutinize, check over or view the premises; it wishes to dig holes in the mortgaged premises and conduct tests calculated to ascertain sub-surface conditions. This, we are constrained to conclude, is not included in the authorization to the mortgagee to “inspect” the premises. If the parties had intended the mortgagee to have the right to go upon the land and conduct intrusive environmental tests, they would not have relied upon language authorizing an “inspection” of the premises.

The terms of the mortgage also authorize the mortgagee, in the event of default by the mortgagor,

“(d) to enter upon, possess, manage and operate the Subject Property or any part thereof; to make, terminate, enforce or modify leases of the Subject Property upon such terms and conditions as Mortgagee deems proper; to make repairs, alterations and improvements to the Subject Property necessary, in Mortgagee’s judgment, to protect or enhance the security thereof.”

This clause permits the mortgagee, in the event of default, to go into possession of the mortgaged premises and operate the same to protect its interest. Thus far, the mortgagee has not taken possession of the premises. However, the mortgage also permits the mortgagee, in the event of default, to make repairs, alterations and improvements “to protect or enhance the security thereof.” This is broad enough to include environmental clean-ups, for certainly real estate which is environmentally clean has a greater market value than if it were environmentally contaminated. In order to determine whether environmental clean-up is necessary, according to the evidence in this case, phase two testing is necessary. The making of these tests, we conclude, was within the contemplation of the parties to the same extent as structural tests if preliminary examination revealed potential danger.

The trial court, as we have observed, determined that environmental testing was within the contemplation of the parties’ agreement and that equitable relief was required because of the mortgagor’s refusal to allow representatives of the mortgagee on the premises. We have examined carefully the proceedings in the trial court and conclude that the trial court’s order does not represent either an error of law or an abuse of discretion.

Affirmed.

CAVANAUGH, J., concurs in the result.

      . According to one commentator, the Eleventh Circuit’s decision in Fleet Factors "has dramatically increased the lending community’s awareness of potential CERCLA liability." Note, Cleaning Up The Debris After Fleet Factors: Lender Liability And CERCLA’s Security Interest Exemption, 104 Harv.L.Rev. 1249, 1257 (1991).