author: LOUGHRAN, J.,

text:
    Commonwealth v. Griffith

      Allen P. Powanda, assistant district attorney, for the commonwealth.

      James A. Stranahan IV, for defendant.
    October 30, 1989
   LOUGHRAN, J.,

On May 5, 1989 defendant was charged in a criminal complaint with seven counts of theft by failure to make required disposition of funds received under 18 Pa.C.S. §3927. The charges stem from the failure of defendant to forward money allegedly owed to a victim located in Adamsburg, Westmoreland County, Pennsylvania, known as Wrap-A-Round Division of Gratton Fabricating and Welding Inc.

Defendant filed an omnibus pretrial motion which _was heard by this court on September 26, 1989 asking the court, among other things, to quash the information on the basis that the overt act inclüded in the offenses charged must have occurred in Westmoreland County, and that since no overt act supposedly occurred in Westmoreland County, that this court therefore lacks jurisdiction.

FINDINGS OF FACT

(1) Defendant is Richard Griffith, who resides in Mercer County, Pa. Mr. Griffith is doing business as G&G Agricultural Service, which is also located in Mercer County.

(2) The victim is Wrap-A-Round Division of Gratton Fabricating and Welding Inc., located in Adamsburg, Westmoreland County, Pa. The president is Robert Gratton.

(3) In the spring of 1988, defendant entered into discussions with Wrap-A-Round regarding employment as a sales representative. At that time, defendant was living and working in Johnstown, Cambria County, Pa. The conversations occurred by telephone between the victim in Westmoreland County and defendant in Cambria. County. Also,' a fax message was sent to Westmoreland County by defendant from Cambria County.

(4) Eventually defendant agreed to perform services for the victim. Defendant traveled throughout the northeastern part of the country obtaining buyers for Wrap-A-Round Divison products. Once a sale of machinery or material was obtained, defendant would inform the company in Westmoreland County of the sale. The equipment or material would then be shipped from Westmoreland County to the buyer.

(5) The buyer would send money for the items to defendant in Mercer County. Defendant would deposit the money in an account in the name of G&G Agricultural Services. This account was located in the First National Bank of Mercer County.

(6) After the money was deposited, defendant would remit the money to Wrap-A-Round Division, located in Westmoreland County. Defendant had several checks sent from Mercer County to Westmoreland County during the summer of 1988.

DISCUSSION

Pursuant to an omnibus pretrial motion to quash the information, defendant has alleged that the information. filed against him in Westmoreland County should be quashed due to the lack of subject-matter jurisdiction. It is an established principal of law that before a county can take jurisdiction over a criminal case, some overt act involved in that crime must have occurred within that county. Commonwealth v. Tumolo, 455 Pa. 424, 317 A.2d 295 (1974). In the case at bar, the commonwealth has alleged that defendant committed the criminal offense of theft by failure to make required disposition of funds received, 18 Pa.C.S. §3927. This offense does not involve overt acts, but rather the failure to act. The Pennsylvania Supreme Court has stated that the “determining of the locus of a crime becomes more difficult when the crime consists of a -failure to act. In determining the locus of a failure to act, it is necessary to consider the nature of the duty and that specific act which defendant failed to perform.” Commonwealth v. Boyle, 516 Pa. 105, 113, 532 A.2d 306, 310 (1987). The court also stated that it is necessary to “look to the nature of the offense arid the elements thereof to determine whether the crime was sufficiently related to the locus where defendant is being prosecuted.” Id. at 113, 532 A.2d at 310.

In the present case, the duty to which defendant was subject was the remitting of monies received to the Wrap-A-Round Division of Gratton Industries, located in Westmoreland County. Until defendant failed to remit these monies, no crime had been committed. It is an essential element of the offense that defendant failed to perform an act here in •Westmoreland County, which was the payment of monies. It is irrelevant for purposes of jurisdiction whether the monies were to be paid in person or whether they were to be received by postal service.. In either case, the specific act which defendant failed to. perform was the payment of monies to the company in Westmoreland County.

While the specific issue appears to be one of first impression, the case of Commonwealth v. Boyle, supra is instructive. In that case, a restaurant owner was charged with failing to file sales tax returns. Defendant was an attorney, who was also the owner and sole shareholder of Meadville Foods Inc., doing business as Palace Fine Foods Restaurant in Crawford County. However, defendant’s residence and law practice were located in Allegheny County. The Crawford County restaurant was operated by a manager who collected applicable sales taxes and deposited the same in a corporate account in a Crawford County bank. The manager would forward the paperwork to defendant, who would prepare the necessary returns himself, and mail or hand deliver the monies due to the Pennsylvania Department of Revenue in Harrisburg (Dauphin County), or the branch office in Pittsburgh (Allegheny County). The commonwealth alleged that funds collected between August 1982 and October 1983 had not been remitted to the commonwealth, nor were, the required returns filed for that period. Defendant filed an omnibus pretrial motion challenging, inter alia, the jurisdiction of the Crawford County Court of Common Pleas. After this motion was denied, defendant perfected an interlocutory appeal to the Superior Court as to the venue issue. The Superior Court decided that since there was" no branch office of the Department of Revenue located in Crawford County, performance of filing and remitting of tax returns was impossible in. Crawford County. Therefore, that non-performance could not support a finding of proper venue. See Commonwealth v. Boyle, 347 Pa. Super.’ 602, 500 A.2d 1221 (1985). In reaching, its decision, the court cited the U.S. Supreme Court case of Johnson v. United States, 351 U.S. 215, 76 S.Ct. 739, 100 L.Ed. 1097 (1955), for the proposition that, where the crime charged is a failure to perform a legally imposed act, the place designated for its execution determines the situs of the crime, (emphasis supplied)

In his dissenting opinion, Judge Wieand cited Commonwealth v. Bertels, 260 Pa. Super. 496, 394 A.2d 1036 (1978), aff'd, 491 Pa. 187, 420 A.2d 404 (1980), for the legal principle that jurisdiction to try a criminal action where the alleged crime is a failure to act is not necessarily limited to one situs. In some cases, requisite elements of the completed crime may be committed in different jurisdictions, and in such cases any county in which an essential part of the crime is committed may take jurisdiction.

Applying these principles to the case at bar, it is clear that the place designated for the execution of the duty was Westmoreland County. This duty is an essential part óf the alleged crime. , Based on this, it is clear that Westmoreland County can assert jurisdiction over this matter.

ORDER OF COURT

And now, October 30,1989, after argument in the within matter and after review of the submitted briefs by all counsel, it is hereby ordered, adjudged and decreed that the motion to quash the information for lack of jurisdiction is hereby denied and the Criminal Court Administrator is directed to schedule the case for the next available jury session of jury trials.


source: Caselaw Access Project

author: HORN, J.,

license: Public Domain

text:
    Nazmack Development Corp. v. Eisenhart Real Estate

      Glenn C. Vaughn, for plaintiffs.

      Rebecca N. Tortorici, for defendant.
    October 26, 1989
   HORN, J.,

These cases involve an oral real estate listing agreement between Eisenhart Real Estate, as the listing agent, and Nazmack Development Corporation, as the seller. The parties are now before us on preliminary objections to Eisenhart’s counterclaim in case 89-SU-00496-01 and Eisenhart’s amended complaint in case 89-SU-02428-01.

Eisenhart’s counterclaim and amended complaint allege that they had an exclusive right to sell and receive commissions on all 101 condominium units built by Nazmack Corporation, but were discharged by Nazmack Corporation after selling approximately two-thirds of those units. They seek damages under either a breach of contract or quantum meruit/ unjust enrichment theory. Nazmack Corporation and its owner, defendant Michael Nazmack, demur on three bases.

The first demurrer is to Eisenhart’s attempt to “pierce the corporate veil” and hold Mr. Nazmack liable for the actions of Nazmack Corporation.

The factors the court must consider in determining whether to discard the protections of the corporate entity are many, they include: substantial intermingling of corporate and personal funds, gross undercapitalization, failure to observe corporate formalities, non-payment of dividends, siphoning of corporate funds, and the lack of corporate duties performed by the officers or directors. See e.g., Solomon v. Klein, 770 F.2d 352 (1985); Kaites v. Dept. of Environmental Resources, 108 Pa. Commw. 267, 529 A.2d 1148 (1987). The court must find that the corporate form was used to perpetrate a fraud or that its existence would defeat public policy and the burden of proof is on the party attempting to pierce the veil. Reverse Vending Assoc. v. Tomra Systems U.S. Inc., 655 F.Supp. 1122 (1987).

Eisenhart’s complaint alleges that Mr. Nazmack, as president and sole shareholder “so dominated and controlled Nazmack Development Corporation that he could and did immediately direct its action [and] . . . was directly benefited by the damages sustained by the plaintiff and the wrongful termination of the contractual relationship and as such was unjustly enriched.”

Although courts have held that veil-piercing is typically a factual question, Carpenter’s Health and Welfare Fund v. Kenneth R. Ambrose Inc., 727 F.2d 279 (1983), we find the complaint so inadequate in this regard that even taking the allegations as true an action cannot be sustained against Mr. Nazmack. We, therefore, grant the demurrer in this regard and tailor the remaining discussion to the disputes between Eisenhart and Nazmack Corporation.

The second demurrer alleges that the oral exclusive listing agreement is in violation of Pennsylvania law and unenforceable as: (1) it is not in writing; (2) it does not state in bold type that Eisenhart earns the commission regardless of who actually sells the properties; (3) it fails to specify a definite termination date; and (4) it provides for a period of duration exceeding one year. See The Real Estate Licensing and Registration Act, 63 Pa.C.S. §455.101 et seq. (most specifically section 455.604(10) and the regulations promulgated pursuant to section 455.404 found at 49 Pa. Code,§§35.281 and 35.332). Eisenhart argues that these provisions are not properly a basis for preliminary objections as they constitute a defense based on the Statute of Frauds and should be asserted by answer/new matter pursuant to Pa.R.C.P. 1030. Preliminarily, we note the incongruencies of Nazmack Corporation’s position as they seek us to find Eisenhart in breach of an oral contract they now assert is unenforceable.

Other jurisdictions have found substantially identical regulations as barring not only recovery for a breach of an alleged oral listing contract, but quantum meruit as well. See Maynes Real Estate Inc. v. McPherron, 353 N.W.2d 425 (Iowa 1984); Beahler v. Clark, 32 Ind.App. 222, 68 N.E. 613 (1903); Harris v. Blasberg, 30 Ohio App. 100, 164 N.E. 367 (1928). Cf., 41 A.L.R. 2d 901, 910 (1955); Restatement (Second) of Contracts §110(5) (1979). This, however, is not the law in Pennsylvania.

A thorough reading of the Real Estate Licensing and Registration Act shows that its provisions are not to affect the substantive law of contracts, but rather provide guidelines, enforced solely by the Real Estate Commission after an administrative hearing, for the actions of brokers. Further, any civil penalty or fine imposed by the commission is paid into the Professional Licensure Augmentation Account and not to the “injured” party. This reading of the act is borne out by several recent Pennsylvania cases upholding the validity of oral listing contracts. Stroudt Realty Inc. v. Haverstock, 382 Pa. Super. 340, 555 A.2d 210 (1989); In re Yobe, 74 Bankr. 430 (1987); Christo v. Ramada Inns Inc., 609 F.2d 1058 (1979). Nazmack Corporation’s second demurrer also contends Eisenhart cannot sustain a cause of action as they have failed to state that any other real estate broker was employed to sell the remaining units. The court finds this position wholly untenable as an ex-elusive listing agreement would entitle Eisenhart to the contracted commission upon sale of the units regardless of whether the sale was through another broker or the corporate owner. Accordingly, we deny the corporation’s second demurrer.

The next demurrer contends that even should Eisenhart recover under a quantum meruit theory, they would not be entitled to commissions on the remaining units as they performed no services which would unjustly enrich the corporation. The court is not currently in a position to hold, as a matter of law, that any services and advertising done by Eisenhart in an attempt to procure buyers for those lots that were actually sold, did not have the residual effect of bringing in buyers after the termination of the agreement; hence, we must deny this objection. As a subpart of this demurrer, the corporation claims that Eisenhart’s unjust enrichment count is inappropriate where an express contract is alleged. As Pa.R.C.P. 1020(c) permits pleading in the alternative and Eisenhart properly pleaded the quasi-contractual remedy in the amended complaint, we deny this demurrer. Cf., Birchwood Lakes Community Association Inc. v. Comis,, 296 Pa. Super. 77, 442 A.2d 304 (1982).

In accordance with the foregoing opinion we issue the following

ORDER

And now, October 26, 1989, the court orders the following:

(1) Michael Nazmack’s demurrer to those portions. of the complaint, in action 89-SU-02428-01 which seek to hold him personally liable for the actions of the complaint is granted.

(2) All other objections are denied.


author: DOWLING, J.,

text:
    Commonwealth v. $2,275 U.S. Currency

      Jerry J. Russo, assistant district attorney, for the commonwealth.

      Timothy J. O’Connell, for defendant.
    December 7, 1989
   DOWLING, J.,

We are here introduced to the Prussian version of “Lassie,” a purebred male Weimaraner, named “Baron Von Schittler.” His curriculum vitae is impressive. He is a graduate of the Narcotic Detector Dog School of the Bureau of Training and Education, Pennsylvania State Police Academy, where he maintained a 97-percent proficiency rating. During the year 1988, Baron was responsible for the confiscation of nearly three million dollars worth of drugs, cash, and property. At the Pennsylvania State Police Canine Association Police Dog Competition held at Hamburg, Pennsylvania on May 8, 1988, he was adjudged “top dog.” He has been awarded the degree of Police Narcotic Dog (PND) by the Police K-9 Association of America. While he was not authored any articles or spoken at any prestigious gatherings, it is reliably rumored that TV and movie contracts are in the offing. This Rin Tin Tin of the 1980s is the chief character in the above case, for it was Baron who sniffed Mr. Hicks’ roll.

It seems that Oswald Hicks was stopped for a traffic violation, and when a records search was made, arrested on an outstanding warrant for assault. A search of his person incident to his arrest yielded $2,275 composed of 110 bills in various denominations including 75 twenties. There were no controlled substances found on Mr. Hicks or in his vehicle. The money was confiscated and a check of the serial numbers did not reveal it to be controlled-buy money. On May 18, it was turned over to the Pennsylvania State Police, who arranged for “Baron” to perform a “cash scan” on the currency. The money was put in an envelope and placed alongside two similar but empty envelopes. The dog “alerted” to. the envelope containing the respondent’s money. Based on Von Schittler’s response, the commonwealth filed a forfeiture' complaint, seeking possession of the money pursuant to 42 Pa.C.S. §6801(a)(6)(i)(A) and (B) which provides:

“Money, negotiable instruments, securities or other things of value furnished or intended to be furnished by any person in exchange for a controlled substance in violation of The Controlled Substance, Drug, Device and Cosmetic Act, and all proceeds traceable to such an exchange.” 42 Pa.C.S. §6801(a).(6)(i)(A).

“Money, negotiable instruments, securities or other things of value used or intended to be used to facilitate any violation of The Controlled Substance, Drug, Device and Cosmetic Act.” 42 Pa.C.S. §6801(a)(6)(i)(B). .

The act further provides that:

“Such money and negotiable instruments found in close proximity to controlled substances possessed in violation of The Controlled Substance, Drug, Device and Cosmetic Act shall be rebuttably presumed to be proceeds derived from the selling of a controlled substance in violation of The Controlled Substance, Drug, Device and Cosmetic Act.” 42 Pa.C.S. §6801(a)(6)(ii).

This new Pennsylvania forfeiture statute replaced 35 Pa.C.S., subsection 780-128, 129 on July 1, 1988. Forfeiture proceedings under both statutes are civil in form but quasi-criminal in nature. Therefore, the commonwealth is required to prove its material allegations by a preponderance of the evidence. Commonwealth v. Tate, 371 Pa. Super. 611, 538 A.2d 903 (1988). This remains true whether or not the commonwealth is afforded the benefit of any rebuttable presumptions under the act. Tate, supra.

The commonwealth appears to be proceeding under two somewhat similar theories. At the time of (the suppression hearing it seemed to be chiefly relying on the presumption that the money was found in close proximity to a controlled substance because of the scent of druges emanating from it. The act, however, requires.that the money be found in close proximity to illegal substances for the presumption to arise.

There appears to be no authority in Pennsylvania as to whether the legislature intended this to mean close proximity in time rather than space, .but there are decisions on point from other jurisdictions. In Limon v. State, 685 S.W.2d 515 (Ark. 1985), the Arkansas appellate court held that “in close proximity” under the Arkansas Controlled Substances Act, Ark. Stat. Ann. §82-2629(a)(6) (Supp. 1983), “simply means ‘very near.’” 685 S.W.2d at 516 (1985). In Ewachiw v. Director of Finance of Baltimore, Md., 70 Md. App. 58, 519 A.2d 1327 (1987), the Maryland appellate court specifically declined to define “close proximity” under Md. Ann. Code, Art. 27, §296(a)(6). The court likened close proximity to Justice Stewart’s comment on pornography — “we do not define it, but we know it when we see it.” 519 A.2d at 1330 (1987). This statement was in the context of moneys found on one floor of a house, while the majority of the contraband found was discovered on another floor. Once again, the “close proximity” referred to was physical.

The most illustrative case in this vein comes out of Illinois, pursuant to the Illinois Controlled Substance Act (Ill. Rev. Stat. 185 Ch. 56 1/2, par. 1505), the provisions of which are virtually identical to the provisions of the Pennsylvania act called into question here. In Re $27,440,164 Ill. App. 3d 44, 115 Ill. Dec. 293, 517 N.E.2d 704 (3d Dist. 1987), a paper bag containing $27,440 in the form of 969 bills in U.S. currency was seized from the car of a drunk driver. The passenger in the car told the arresting officer that they had driven to a park in Springfield and that two paper bags were exchanged. A small amount of cocaine residue was found on the money.

Based on this evidence, the state attempted to have the money forfeited and tried to apply the close-proximity presumption. The trial court denied forfeiture based on this evidence and the appellate court affirmed the denial noting that, “At best the state’s evidence invited speculation or surmise that someone might have delivered cocaine in a park in Springfield in exchange for the $27,440. But such conjecture is no substitute for proof, and is legally insufficient to support the conclusion that the requisite exchange took place . . . The purpose of the broad forfeiture provision is to control illegal trafficking in controlled substances, not to divest persons of all currency that happened to come into contract with controlled substances at some earlier point in time. Clearly, the legislature intended the presumption to apply to situations where observable controlled substances or distributable paraphernalia, etc. are found in near proximity to currency. ...” 517 N.E.2d at 706-7.

In its brief, the commonwealth emphasizes that Baron’s “alert” to the money means that at some time the money was in proximity to drugs and that, like stolen property, once such a status is established, it is subject to forfeiture. Thus, the commonwealth argues that, from that point in time, no valid property right can come into evidence. This contention has a certain surface appeal for, in fact, no one knows how long the “scent of evil” can remain; despite the expression, money can’t really be “laundered.” However, if we carry the argument to its logical end, its delusive character is demonstrated. If, for example, the prosecuting attorney were to cash his paycheck at a local bank, and one of the bills received had at some time been tucked away in a bale of marijuana or stashed with cocaine packets, and if, as he left the bank, “Baron” came loping by and was “alerted,” his hard-earned pay would be subject to forfeiture. Then there is the greengrocer whose store is in a high-drug area, and who might be unable to keep any cash which was not tainted with the baneful odor. We could go on and on, but res ipsa loquitur.

Legislation must be given a common-sense interpretation in light of the mischief to be remedied, the object to be obtained, and the consequences of a particular interpretation. There is, moreover, a presumption that the General Assembly does not intend a result that is absurd, impossible of execution, or unreasonable. 1 Pa.C.S. §§1921, 1922.

So, Oswald can keep his $2,275 and, if any remains after counsel fees, invest it in United States bonds or give it to his favorite charity.

Accordingly, we enter the following

ORDER

And now, December 7,1989, the commonwealth’s petition for forfeiture is denied.


author: FORNELLI, J.,

text:
    McCann v. Reynolds School District

      William J. Maikovich, for plaintiffs.

      William G. McConnell, for defendant.
    February 9, 1989
   FORNELLI, J.,

Plaintiffs were teachers in defendant’s school district who have filed an action for declaratory judgment asserting a right to sabbatical leave at a time when they were suspended. Defendant has demurred. In considering a demurrer, we must accept as true all well-pled facts in the complaint. Moreover, all the parties agree there is no factual dispute among them. It is agreed that except for their suspension plaintiff teachers would be otherwise eligible for sabbatical leave under section 1166 of the Public School Code, 24 P.S. §§11-1166. It is agreed that the School Board except for the claimed sabbaticals otherwise had the power and properly suspended plaintiffs by reason of a substantial decrease in pupil enrollment in the school district under section 1124 of the code, 24 P.S. §§11-1124, as amended.

This case deals with the apparent conflict between these two provisions of the School Code. During the 1987-88 school year (July 1, 1987 to June 30, 1988), the board voted and announced on May 20, 1987 its intention to suspend teachers for the next school year — July 1, 1988 to June 30, 1989 — because of decreased student enrollment. Plaintiffs did not assert a right to a hearing on the suspensions nor did they then assert a claim for sabbatical leave prior to their suspensions. Long after the end of the school term and after the end of the school year in which the suspensions were announced (1987-88), plaintiffs while suspended requested on July 16, 1987 a sabbatical leave. They were denied. That a substantial decrease in school enrollment in the district had occurred is uncontested and plaintiffs are the only two teachers who have asserted a right to sabbatical status to end their suspensions.

The applicable portions of section 1166 of the code granting a sabbatical leave provide:

“§1166. Persons Entitled
“Any person employed in the public school system of this commonwealth who has completed 10 years of satisfactory service as a professional employee. . . shall be entitled to a leave of absence for restoration of health, study, or travel, or, at the discretion of the board of school directors, for other purposes ...” 24 P.S. §11-1166. (emphasis supplied)

The Supreme Court of Pennsylvania in Bristol Township School District v. Karafin, 508 Pa. 409, 498 A.2d 824 (1985), a case of first impression, held that teachers who are due to be suspended as a result of declining school enrollment may properly assert as a matter of entitlement sabbatical status. That right turned on the teachers’ ability to qualify as “employed” within the meaning of the statute. Plaintiffs in Bristol had applied for sabbatical leave prior to the effective date of their suspensions (the coming school year) and while they were active employees in the current school year.' Accordingly, the Supreme Court found that since the teachers met the requirements of this section, the granting of the leave was mandatory. In response to the school. district’s argument that the teachers had not met the requirements of section 1166 because they were scheduled to be suspended, the court said:

“We find'no merit in/this argument. The appellees herein were certainly employed when they applied for their leaves. Furthermore, the sabbatical leaves will operate to postpone the suspension, since under section 1170, an employee on sabbatical leave will be considered to be in full-time daily attendance . . . Therefore, if the teachers are scheduled to be suspended, such suspension cannot become effective until the end of the sabbatical leave, if a suspension is still scheduled.” Bristol at 416, 498 A. 2d at 828. (emphasis supplied)

• Similarly, the Commonwealth Court recognized a right to a sabbatical requested by a. school superintendent while still employed in United School District v. Rushin, 106 Pa. Commw. 157, 525 A.2d 868 (1987).

However, in the case at bar, plaintiffs did not submit their request for a sabbatical until during the next school year and after their suspensions had occurred. Thus, unlike Bristol, they were not employed at the. time of the request and did not meet the statutory requirements of section 1166 for á sabbatical. Also, unlike Bristol, the suspensions0 having already become effective, a sabbatical could not retroactively or conceptually deem them to be in full-time daily attendance.

The simple lesson of Bristol is that any teacher who is actively employed (even though facing future suspension because of decreased enrollment) and who otherwise qualifies under section 1166 of the code is entitled to a sabbatical leave upon request. That teacher will under section 1170 be deemed in attendance during that leave even though a school board tries to override the statutory mandates of section 1166 and 1170 by a suspension which’ takes effect thereafter. But once a teacher is suspended and not actively employed, he may not then assert a sabbatical leave to interrupt that suspension and thereby override the school board’s previous exercise of its grant of power under section 1124 to suspend for decreased school enrollment.

As suspended employees, plaintiff’s had no employment status at the time of their requested sabbaticals except for the statutory right of recall to employment should their certification and seniority qualify them for an open position. See section 1125.1(d)(2) and (3). It is of note that a suspended teacher is not considered “employed” within the meaning of the Unemployment Compensation Statute. See 43 P.S. §753(u). A suspended teacher is eligible for unemployment compensation. See Kandala v. Unemployment Compensation Board of Review, 88 Pa. Commw. 199, 489 A.2d 293 (1985). There is no sound basis to believe that the legislature intended that a person “employed” within section 1166 of the School Code include a suspended teacher who is deemed not employed by the Unemployment Compensation Law.

This holding is both a logical and practical mesh.ing of sections 1166, 1170 and 1124. of the code. To interpret “employed” under section 1166 to include employees already suspended from employment would extend the right to sabbatical under section 1166 to individuals anytime during their suspensions. It cannot be logically asserted that the legislature intended a suspended teacher could come forward during the second, fifth or tenth year after his suspension and require a school board to then provide him with a sabbatical leave at one-half pay and all of the other fringe benefits including seniority and pension provided by section 1170 during sabbatical status.

Moreover, the meshing of these School Code sections as provided herein works no hardship upon the teachers who need merely to assert their right to a sabbatical prior to the effective date of suspension, as the plaintiffs did in Bristol, i.e., while employed. Why plaintiffs here did not do so is known only to them.

Hence, this

ORDER

And now, February 9, 1989, plaintiffs’ request that a judgment be declared that defendant’s refusal to grant plaintiffs a sabbatical during their suspension was a denial of their rights under the School Code is denied.


author: ERB, J.,

text:
    Richard D. Poole Inc. v. Sacarellos

      Harry R. Harmon, for plaintiff.

      Dorothy Livaditis, for defendants.
    October 30, 1989
   ERB, J.,

This matter is before the court with reference to defendants’, Charidimos G. Sacarellos a/k/a Dimos G. Sacarellos and Lola D. Sacarellos a/k/a Theodora D. Sacarellos, preliminary objections to a mechanic’s lien filed by claimant, Richard D. Poole Inc.

The relevant pleaded facts are as follows. On or about March 17, 1988, claimant and defendants entered into a written contract to have claimant construct a single-family home for defendants. The house was completed on January 23, 1989. Defendants have not paid claimant $365,294.94 which is outstanding. Claimant filed a mechanic’s hen claim on February 28, 1989. Defendants then filed preliminary objections to the hen on May 4, 1989.

Defendants claim that the mechanic’s hen, filed by claimant, does not meet the requirements of the Act of August 24, 1963, P.L. 1175, Article V, section 503, 49 P.S. §1503, which sets forth in subsection (5):

“If filed by a contractor under a contract or contracts for an agreed sum, an identification of the contract and a general statement of the kind and character of the labor or materials furnished; ...”

To support'their objections, defendants offer Giansante v. Pascuzzo, 205 Pa. Super. 28, 206 A.2d 340 (1965) and Cioppi v. Norris, 1 Bucks L. Rep. 130 (1955). Giansante, supra, involves a subcontractor rather than a contractor. However, claimant in Giansante, supra, was upheld in the matter of having provided enough detail in his mechanic’s lien claim. In the instant case, defendants are seeking relief based on the contention that claimant has not provided enough detail.

Cioppi, supra, involved an oral contract rather than a written contract as in the instant case. The court stated in the Cioppi case at 132:

“[W]hile as a general rule lumping charges is not proper, less particularity is required when the lien is filed by a contractor than when filed by a subcontractor.”

We accept claimant’s argument that the requirements on the mechanic’s lien claim are different for contractors than for subcontractors. Subcontractors are required to provide more detail when filing claims against owners because there is no privity between subcontractors and owners. These requirements for subcontractors are clearly stated in 49 P.S. §1503(6), which specifically excludes contractors filing a claim under subsection (5). Case law supports this contention.

In Diem v. Whirt, 50 Lancaster L. Rev. 259 (1947), the court held:

“Where the contract is between the claimant and the owner, the same particularity as to the kind and amount of materials furnished and the nature or kind of work done and the time when the materials were furnished is not required as in a case involving a subcontractor and the owner.” Diem at 260.

When, as in the instant case, a written contract exists between the parties, it is not necessary to file a detailed mechanic’s hen claim. The claimant in this case was the contractor, not a subcontractor.

Under the Mechanics’ Lien Law of 1963, a copy of the contract need not be attached to the claim. It need only be identified. 49 P.S. §1503(5) requires only that a contractor state “an identification of the contract...” Claimant did identify the contract by date, parties, and subject matter. Also, it is not beyond reason to presume that defendants have a copy of the contract.

Substantial compliance with the statute is the standard invoked by Pennsylvania courts to determine whether the claimant has conformed with the particularities of the statute. In Mandos v. Baptist Church of Phoenixville, 8 Chester L. Rep. 108, 110 (1957), the court stated that a “substantial compliance with the Mechanic’s Lien Act is sufficient, and this is shown to exist whenever enough appears on the face of the statement to point the way to successful inquiry.” In the instant case, sufficient information is contained in the mechanic’s lien claim to identify the particular transaction in question.

In conclusion, in interpreting the Mechanics’ Lien Law of 1963, supported by case law, the court finds claimant has met the requirements for a mechanic’s lien claim. Therefore, defendants’ preliminary objections will be denied.

Accordingly, we enter the following

ORDER

And now, October 30, 1989, defendants’, Charidimos G. Sacarellos a/k/a Dimos G. Sacarellos and Lola D. Sacarellos a/k/a Theodora D. Sacarellos, preliminary objections to mechanic’s lien claim filed by claimant, Richard D. Poole Inc. are refused and denied.


author: COFFROTH, S.J.,

text:
    Custer v. Somerset Manor Associates

      Robert I. Boose II, for plaintiff.

      Jon A. Barkman, for defendant.
    March 8, 1989
   COFFROTH, S.J.,

This case is here on plaintiffs motion for judgment on the pleadings made orally at argument and without objection to the form or timeliness thereof, and on defendant’s motion for arbitration pursuant to the contract of the parties.

This is a civil action in equity brought by the executrix of a deceased general partner, Robert L. Custer, plaintiff, against the limited partnership of which he was a member, Somerset Manor Associates, defendant, to recover the value of decedent’s partnership interest, requesting an accounting, payment of expense and counsel fee, and general relief. We deal first with the defense motion for arbitration as presented in the following

QUESTION AT ISSUE

Is a dispute between the estate of a deceased general partner and his limited partnership, over whether the estate is entitled on death to receive the value of decedent’s partnership interest, arbitrable under the provision of the partnership contract which mandates arbitration of “any dispute under this agreement,” where the relevant provisions of the contract are:

(1) “The partnership . . . shall continue until February 9, 2027, unless sooner terminated under this agreement,” and

(2) Liquidation and distribution of the partnership assets to partners is provided for “Upon the dissolution of the partnership . . . ,” and

(3) “Upon the death of a general partner, the remaining general partner(s) have the right to continue the partnership” which in fact occurred, and

(4) “This agreement shall be binding upon and inure to the benefits of the parties, their respective heirs, personal representatives, successors and assigns,” and

(5) There is no specific mention of the right of the estate of a deceased general partner to payment at death of the value of his partnership share?

Since we answer the question of arbitrability in the affirmative, we do not reach the merits of the motion for judgment.

DISCUSSION

Contentions of the Parties

Defendant’s motion for arbitration is based on the contention that the dispute in the case is a “dispute under” the agreement involving interpretation of the contract, not merely of partnership law, which in turn is based on the following propositions:

(1) The main issue is whether Custer’s death caused a “dissolution [ment,” sic] of the partnership, which is covered by the provisions of the contract, and

(2) Contracts for arbitration should be liberally construed in favor of arbitration unless it can be stated with positive assurance that the dispute was not intended to be arbitrated, and

(3) The nature of the partnership business (long-term financed investment in real estate) makes it reasonable that there should be no liquidation oí distribution of a deceased general partner’s share until dissolution.

Plaintiff’s opposition to arbitration is based on the contention that the instant dispute does not arise under and is not to be solved by the contractual provisions, because:

(1) The “agreement is silent as to the rights of the estate of a deceased general partner,” and

(2) Arbitration agreements are to be strictly construed and not extended by implication, and arbitration of an issue must be agreed to in a clear and unmistakable manner, and

(3) The rights of the estate of a deceased general partner are covered by provisions of the partnership statutes in favor of plaintiff, and

(4) It is unreasonable to construe the agreement as postponing liquidation or distribution of the deceased partner’s share and the closing of his estate until the year 2027, some 38 years.

Arbitrability, General Principles

At the outset, it is vital to a proper resolution of our question that we keep in mind .that we are deciding only arbitrability of the dispute, that is, whether the merits of plaintiffs claim shall be decided by arbitrators or by this court; and since we have concluded in favor of arbitrability, we will not decide the main dispute in the case. Arbitrability in this case is a matter of contract; hence, absent an agreement to arbitrate an issue, the parties cannot be compelled to arbitrate that issue. Lincoln University v. Lincoln University Chapter, 467 Pa. 112, 119, 354 A.2d 576, 580 (1976); Hoffman v. Gekoski, 250 Pa. Super. 49, 53, 378 A.2d 447, 448 (1977). So, the question presented now is simply whether in the contract between the parties they have agreed to arbitrate the merits of plaintiffs claim, and if they did, to order arbitration without deciding the merits. This question of arbitrability of an issue must, when challenged, be decided by the court prior to submission to arbitration, not by the arbitrators after submission. See Women’s Society v. Savage, 440 Pa. 34, 269 A.2d 888 (1970); Philadelphia Marine Association v. Longshoreman’s Association, 382 Pa. 326, 115 A.2d 419 (1955); Goldstein v. ILGWU, 328 Pa. 385, 196 Atl. 43 (1938); Goslin Inc. v. LGC Exports Inc., 334 Pa. Super. 132, 482 A.2d 1117 (1984); Hassler v. Columbia Gas Transmission Corp., 318 Pa. Super. 302, 464 A. 2d 1354 (1983). In deciding arbitrability, the court “is limited to the question of whether an agreement to arbitrate was entered into and whether the dispute involved falls within the scope of the arbitration provision.” Flightways Corp. v. Keystone Helicopter Corp., 459 Pa. 660, 331 A.2d 184 (1975) (emphasis supplied); Muhlenberg Township School District Authority v. Pennsylvania Fortunato Constuction Co., 460 Pa. 265, 323 A.2d 184 (1975).

The cases do not clearly define the phrase “scope of the arbitration provision”: in fact, that phrase is not universally used in the opinions to describe the standard for determining arbitrability under a contract. See, for example: Flightways, supra, whether the language did or did not “embrace the disputes in issue”; Women’s Society v. Savage, supra, “ . . . whether this dispute is one that is covered by the terms of the arbitration agreement ... ”; Am-bridge Borough Water Authority, 458 Pa. 546, 551, 328 A.2d 498, 501 (1974), “ . . . whether the dispute in question falls within the purview of the [contractual] submission”; Neshaminy Federation of Teachers v. Neshaminy School District, 501 Pa. 534, 462 A. 2d 629 (1983), “ . . . whether the terms of the agreement encompass the subject matter of dispute”; North Star School District v. PLRB et al., 35 Pa. Commw. 429, 386 A.2d 1059 (1978), appealfrom this court, whether or not the dispute “falls within the arbitration clause,” accord: Wolf v. Baltimore, 250 Pa. Super. 230, 378 A.2d 911 (1977). (emphasis supplied in all cases above)

As stated in Hade v. Nationwide Ins. Co., 349 Pa. Super. 541, 546, 503 A.2d 980, 983 (1986):

“[I]t has been explicitly held that whether a given dispute is within the terms of an arbitration agreement is for the court to determine, provided that issue is not intertwined with the merits of the claim. Sharon Steel Corp. v. Jewell Coal & Coke Co., 735 F.2d 775 (3d Cir. 1984) ...” (emphasis supplied)

In Sharon, supra, a trial judge denied arbitration on the ground that the arbitration clause did not cover the particular dispute in suit, but the appellate court reversed, saying of the trial judge’s interpretation of the contract:

“This is a reasonable interpretation of the contract, and it may well prove to be the correct one. However, we do not believe that it was appropriate for the district court to make it. So long as the appellant’s claim of arbitrability was plausible, interpretation of the contract should have been passed on to the arbitrator.” 735 F.2d at 778. (emphasis supplied)

Another frequently used criterion for arbitrability, which we prefer as most descriptive, is that the case will go to arbitration if the main dispute in the case is arguably within the scope, coverage or purview of the contractual language, that is, that coverage is “susceptible of reasonable argument.” See Hollinger v. Department of Public Welfare, 469 Pa. 358, 365 A.2d 1245 (1976). As stated in North Star School District, supra:

“The issue we must decide, therefore, is whether or not the grievance between the parties arguably involves an interpretation of one of the provisions of the agreement. See Oxford Board of School Directors v. Pennsylvania Labor Relations Board, 31 Pa. Commw. 441, 376 A.2d 1012 (1977).”

See also the slip opinion of this court of August 1, 1977, at 18-20, in North Star citing, inter alia, Grunwald-Marx v. Los Angeles, 343 P.2d 23, 32 (Cal. 1959) and Sears Roebuck v. San Diego, 553 P.2d 603 (Cal. 1976). If coverage by the agreement’s arbitration clause is reasonably arguable, it follows that the merits in an issue “ . . . involving the interpretation of the contract and its resolution is for the arbitration process to determine.” Kwalik v. Bosacco, 329 Pa. Super. 235, 478 A.2d 50 (1984).

Arbitrability This Case

We conclude that is is reasonably arguable that proper disposition of plaintiffs claim is a matter of contractual interpretation for the following reasons:

(1) The sole provision in the contract for paying to a partner the value of his share in the partnership is paragraph 8.2 thereof which becomes operative only upon “dissolution of the partnership,” under the principle that, absent contrary indication, the mention of specific matter excludes others not mentioned (expressio unius est exclusio alteráis). See Commonwealth v. Charles, 270 Pa. Super. 280, 411 A. 2d 527 (1979).

(2) The general principle of law is that the death of a general partner dissolves the partnership (subject to winding up by liquidation) unless otherwise agreed. P.L.E., Partnership §201 (general partnership) and §313 (limited partnership). In this case it has been “otherwise agreed.” Thus, as between the parties, the partnership contract is the law of the partnership. Meek Estate, 53 D.&C. 2d 207 (1971). The foregoing is apparent under both the partnership contract and the partnership statutes, as follows.

Statutes

The Limited Partnership Act of 1917, P.L. 55 as amended (pursuant to which the instant partnership was formed), §20, 59 P.S. §204, provides:

“§204. Effect of retirement, death, or insanity of a general partner
“The retirement, death, or insanity of a general partner dissolves the partnership, unless the business is continued by the remaining general partners:—
“(a) Under a right so to do stated in the certificate, or
“(b) With the consent of all members.” April 12, 1917, P.L. 55, §20.

Its successor, the Uniform Limited Partnership Act of 1975, P.L. 524, now in effect, contains precisely the same provision in 59 Pa.C.S. §534. Here, the partnership “business is continued by the remaining general partner[s] — (a) under a right to do so as stated in the certificate,” paragraph 13 of which states:

“In the event of death, retirement or insanity of a general partner, the remaining general partner may continue the partnership business.”

Hence, by virtue of the certificate’s language, the death of Mr. Custer did not dissolve the partnership.

Partnership Contract

Paragraph 8.1 of the contract contains a similar provision in the following language:

“8.1. Cause of Dissolution
“Upon the death, retirement or insanity of a general partner, the remaining general partner(s) have the right to continue the partnership, or if no general partner remains, the limited partners have the right to continue the partnership by designating a new general partner.”

Pennsylvania law is stated in the black-letter rule of P.L.E., Partnerships §211 as follows:

“§211. Continuance of Business of Firm
“While generally the partnership dissolves upon the death of a partner thereof, and the surviving partner has no authority to continue the partnership business, the partners may provide by express agreement that the partnership continues after the death of one of them. ”

It is reasonably arguable that continuation of the partnership after Mr. Custer’s death has the effect of non-dissolution, under both the contract and the statutes. This conclusion is further indicated by the express provision in the contract (paragraph 1.2) fixing a specific term for duration of the partnership; paragraph 1.2 states:

“1.2. Commencement and Term of Partnership
“The partnership shall commence on the February 10, 1975, and shall continue until February 9, 2027, unless sooner terminated in accordance with ft,the provisions of this agreement.”

An earlier termination (dissolution) of the partnership would occur upon death of a general partner “in accordance with the provisions of this agreement” in the event the remaining general partner did not, after a general partner’s death, elect to continue “the partnership” under paragraph 8.1, supra of the contract (and paragraph 13 of the partnership certificate). Since the option to continue was admittedly exercised here, and there is no other contractual provision for dissolution, there will be no dissolution under the contract (or the certificate) until February 9, 2027 (absent further contrary agreement of the parties).

(3) There being no dissolution of the partnership on Mr. Custer’s death — there is no liquidation or settlement of accounts, and his estate is not therefore presently entitled to payment of the value of his share as claimed, unless otherwise provided for in the certificate, the statues or the contract. Examination of those sources shows that there is not only no provision otherwise, but that the language of both the contract and the statutes arguably confirm the general principle above stated:

(a) Certificate: Contains no provision on the subject.

(b) Contract: Contains one provision on the subject, paragraph 8.2 thereof which provides as follows:

“8.2. Liquidation Procedures
“Upon the dissolution of the partnership, the assets of the partnership shall be liquidated, and the resultant funds shall be applied in the following order after any gain or loss to be allocated to the parties under 2.2 is first allocated to the partners’ capital accounts to reflect the results of liquidation,
“(a) . . . [payment of expenses and debts].
“(b) To the limited partners . . .
“(c) To the limited partners . . .
“(d) To the general partners . . .
“(e) To the general partners . . .
“(f) To the genefal partners . . .
“Upon the dissolution of the partnership, a statement shall be prepared by the certified public accountant employed by the partnership setting forth the assets and the liabilities of the partnership, and a copy of such statement shall be furnished to each partner within 45 days after dissolution.” (emphasis supplied)

It seems plain from that language, at least reasonably arguable, that a general partner (or his estate) has no right of distribution except upon dissolution (which has not yet occurred) under the principle that, absent contrary indication, the mention of specific matter impliedly excludes others not mentioned (expressio unius est exclusio alterius). In this view, dissolution of the partnership upon Mr. Custer’s death is essential to his or his estate’s entitlement to the value of his share. Although section 8.2 speaks only of payment to the partner without mentioning death or the estate of a deceased partner, paragraph 9.9 of the contract makes all its terms binding upon heirs and personal representatives, that is, upon a deceased partner’s estate.

Limited Partnership Statutes

The Uniform Limited Partnership Act of 1975, 59 Pa.C.S. §541(a), provides for “distribution of assets” to creditors and partners in the following language:

“(1) In settling accounts after dissolution the liabilities of the partnership shall be entitled to payment in the following order:
“(a) . . . [creditors];
“(b) . . . [limited partners];
“(c) . . . [limited partners];
“(d) . . . [general partners];
“(e) . . . [general partners];
“(f) . . . [general partners];

The Limited Partnership Act of 1917, 59 P.S. §221 contains the same provision. There is no other provision in those statutes for payment to the estate of a deceased partner of the value of his share.

Uniform Partnership Act

There are four provisions of this act, 59 Pa.C.S. §§362 through 365, which bear upon settling a partner’s accounts upon dissolution and/or continuation of the partnership business, some of which are cited by plaintiff as establishing her right of recovery, as follows:

Section 362 (“Rules for distribution”) provides for “settling accounts between the partners after dissolution ...” (emphasis supplied); since under our reasoning there is arguably no dissolution here, the section is inapposite.

Section 363 (“Liability of persons continuing the business”) provides for payment to partners upon continuation of the business after death or retirement of a partner in a number of specific situations, subsections (a) through (j), none of which is applicable here.

Section 364 (“Rights of retiring partner or estate of deceased partner when business continued”), cited and relied on by plaintiff, provides in relevant part as follows:

. “§364. Rights of retiring partner or estate of deceased partner when business is continued
“When any partner retires or dies, and the business is continued under any of the conditions set forth in section 360(b)(2) (relating to dissolution in contravention of agreement) or section 363(a), (b), (c), (e) and (f) (relating to reliability of persons continuing the business), without any settlement of accounts as between him or his estate and the person or pamership continuing the business, unless otherwise agreed, he or his legal representative as against such persons or partnership may have the value of his interest at the date of dissolution ascertained, and shall receive as an ordinary creditor an amount equal to the value of his interest in the dissolved partnership with interest, or, at his option, or at the option of his legal representative, in lieu of interest, the profits attributable to the use of his right in the property of the dissolved partnership; ...” (emphasis supplied)

This section is inapplicable instantly because: (a) sections 360(b)(2) and 363 referred to are irrelevant, (b) section 364 provides for payment only by a “dissolved partnership,” and (c) section 364 provides for payment only “unless otherwise agreed.” The cases cited by plaintiff as applying section 364 in favor of payment to the deceased partner’s estate, namely: Spivak v. Bronstein, 367 Pa. 70, 79 A.2d 205 (1951); Conway Estate, 366 Pa. 641, 79 A.2d 208 (1951) and Underdown v. Underdown, 279 Pa. 482, 124 Atl. 59 (1924), are inapposite. To begin, none of them is an arbitration case passing on arbitrability; a decision in such cases favoring payment of the deceased partner’s estate on the merits does not necessarily preclude reasonable arguability of a contrary result under the contract. Moreover, those cases differ factually in material respects from the instant case: in Spivak, the partnership contract contained no provision governing dissolution in case of death and contained no provision for continuance of the business; Conway does not involve arbitration or a partnership and appears to be miscited. In Underdown, the partnership contract provided that death of the partner “should not dissolve the partnership, which should be continued by the survivor to the end of the current year”; the court applied the provisions of section 364 because the contract did not otherwise provide and the effect of the contractual provision for continuation of the business only until the end of the year of death merely postponed dissolution until then, analogous to the postponement in this case until the year 2027, there being no other time limitation here on continuing the business. Our case arguably comes within the principle of Underdown as stated in C.J.S., Partnership §294 at 800, n. 31 that: “Where the partnership articles provide for continuation for a specified time only after the death of a co-partner, such death works a dissolution at the expiration of such period.” See also Wisocki v. Howell, 37 D.&C. 3d 666, 670 (1965) holding that the provisions of section 364 are applicable because: “The agreement here provides nothing as to dissolution or any procedure for winding up the partnership.”

Section 365, also cited by plaintiff, reads:

“§365. Accrual of right to account
“The right to an account of his interest shall accrue to any partner, or his legal representative, as against the winding up partners or the surviving partners or the person or partnership continuing the business, at the date of dissolution, in the absence of any agreement to the contrary.” December 19, 1975, P.L. 524, §1.

Since arguably no dissolution has occurred here by reason of the provisions of the partnership contract and certificate, section 365 is inapplicable.

(4) The defense contention that postponement of payment of plaintiffs partnership share value until dissolution in the year 2027 and holding decedent’s estate open for administration until then, is not a ground for denying arbitration if postponement until then arguably was agreed to by decedent; moreover, the reasonableness of such a postponement is arguably supported by the nature of the business, that is, investment in real estate with borrowed funds over the long term. Compare footnote 4 at page 235, supra.

It is apparent that plaintiffs right to the payment claimed arguably hangs on whether a dissolution occurred on death which in turn depends on interpretation of the contract. Whether the foregoing reasonably arguable interpretation of the partnership contract will or should prevail in the judgment of arbitrators remains to be seen.

Arbitrability Public Policy

We have reached our conclusion of arbitrability without giving attention to the public policy arguments of the parties; but as often occurs, public policy preferences lie at the heart of legal choices and of devising principles and procedures for giving expression to those preferences. A common device used in accomplishing such preferences is the presumption (conclusive or rebuttable) favoring the desired policies, or placing or increasing the burden of proof on the parties seeking a solution against policy. For example, our society prefers freedom in the use and alienation of private property over restrictions and forfeitures, so the courts refuse to recognize or to enlarge restrictions and forfeitures by implication only and resolve every doubt and ambiguity against them. See Metzner v. Soles, 28 Somerset Leg. J. 261, 266 et seq. (1973); quoting Jones v. Park Lane, 384 Pa. 268, 120 A.2d 535 (1956); Wahl and Jones v. M.F. Land Co. Inc., 30 Somerset Leg. J. 291, 299-300 (1975), “Such restrictions ‘are contrued with the utmost jealousy, and very easy modes have always been countenanced for defeating them.’ ”; B, C & H Corp. v. Acme Markets Inc., 39 Somerset Leg. J. 163, 171-3 (1980); Maust v. Frye, 39 Somerset Leg. J. 190, 196-7 (1981). Where justice or strong public policy favors a particular claim, the courts Mil search for a rationale to support it. “ ‘If a principle in law or equity can be found to sustain [it]..., it ought to be applied. ’ ” Craig Estate, 35 Somerset Leg. J. 259, 281 (1978), quoting from Harris Appeal, 323 Pa. 124, 186 Atl. 92 (1936).

A cornerstone of plaintiffs objection to arbitration is her assertion that contracts for arbitration are disfavored as against public policy, that arbitrability is not to be found by implication, and that such proscribed implication is essential to arbitrability here of the claim of a deceased general partner’s estate to payment of his share at death, because the contract “is silent as to the rights of the estate of a deceased general partner ...” Plaintiffs policy-implication argument is grounded on language in Hassler v. Columbia Gas Transmission Cory., supra whose opinion states, quoting from Emmaus Municipal Authority v. Eltz, 416 Pa. 123, 125, 204 A.2d 926, 927 (1964) as follows:

“In making this determination [of arbitrability] we are governed by two basic propositions: (1) that arbitration agreements are to be strictly construed and that such agreements should not be extended by implication, and (2) that when the parties agree to arbitration in a clear and unmistakable manner, then every reasonable effort will be made to favor such agreements.” (citations omitted)

But in our view this policy-implication-clear-unmistakable argument is inapplicable here and does not impair our conclusion that contractual arbitration of the instant dispute is at least reasonably arguable.

First, despite our respect for the opinion writer, Judge Spaeth, in Hassler, we cannot agree that Pennsylvania law, either now or in 1983 when Hassler was written, mandates a strict construction of arbitration contracts, although that rule did represent the judicial attitude in the not too distant past, because such contracts operated to “deprive” the courts of and to “oust” them from jurisdiction. See P.L.E., Arbitration §7. Hence, the courts would enforce contracts for arbitration only if such agreement was crystal clear. But with developing congestion in the courts from increased litigation, they soon recognized the value of arbitration as a diversionary device which relieved congestion; and instead of giving arbitration contracts a strict construction and treating them as against public policy, they now favor them and give them a liberal construction. The switch is well documented in the Supreme Court in Ambridge Borough Water Authority, supra, where the court said:

“Fundamental in our law of contracts is the axiom that parties may write their own contracts, and that it is the function of the courts to interpret those contracts and to enforce them as made. It is now recognized in this commonwealth that the enforcement of agreements by the parties to submit future disputes, that may arise under their agreement, to a tribunal other than the courts is not against public policy and is consistent with the concept of the courts’ role in dealing with the contractual relationships of individuals. ‘Settlements of disputes by arbitration are no longer deemed contrary to public policy. In fact, our statutes encourage arbitration and with our dockets crowded and in some jurisdictions congested arbitration is favored by the courts. . . .’ ” (emphasis supplied)

Accord: Chester County School Authority v. Aberthaw Construction Co., 460 Pa. 343, 333 A.2d 758 (1975), headnote 6 of which states: “Arbitration agreements are to be given a liberal construction.” Accord: P.L.E., Arbitration §8. “Arbitration of disputes is generally favored under the statutory and decisional law of this commonwealth.” Cohen v. Temple University, 299 Pa. Super. 124, 445 A.2d 179 (1982). As stated in Neshaminy Federation of Teachers v. Neshaminy School District, 59 Pa. Commw. 63, 66-7, 428 A.2d 1023, 1025 (1981): “This holding is totally compatible with the premise that judges should not be hostile to arbitration as an invader of the exclusive jurisdiction of the courts.” We see this as present law notwithstanding that some cases still repeat the strict construction idea, compare Cumberland-Perry v. Bogar et al., 261 Pa. Super. 350, 396 A.2d 433 (1978).

Whether a contractual provision is to be given a strict or liberal construction, or is disfavored or favored on policy grounds, affects the burden a proponent of a particular interpretation has in order to persuade the court to adopt it. Thus, in strict construction where arbitration is disfavored, the scale of persuasion is already somewhat tipped against arbitration, and the proponent must persuade the court that the contract clearly provides for arbitration of the issue; thus in Hassler it is said that it is essential that “ . . . the parties agree to arbitration in a clear and unmistakable manner ...” But in liberal construction where policy favors arbitration, the scales are already tipped toward arbitration and the party opposing it must clearly establish the contrary. For this reason the modem statement of the burden is:

“To be consistent with the general policy favoring arbitration of contractual differences, we believe an order enjoining arbitration of a particular grievance should not be granted unless it may be said with positive assurance that the clause involved is not susceptible to an interpretation that covers the asserted dispute.” Lincoln University v. Lincoln University Chapter, supra.

This is a materially different approach prescribed by the Supreme Court than that stated in Hassler and is the one to be followed here.

Second, we think plaintiff misapplies Hassler’s prohibition upon construction by implication. It should be noted that the language of Hassler couples the prohibition directly with the mandate for strict construction, because the former is a concomitant of and is derived from the latter; so, given liberal construction a prohibition against implication loses force. Moreover, the language of the prohibition itself does not warrant plaintiffs insistence on precise, explicit, specific and express contractual reference to the particular issue before the court, a virtual absolute abolition of any implication in construing contractual language. Hassler does not ban the reasoning process of implication; it says that the contracts should not be extended by implication, that is, should not be extended beyond their unambiguous meaning without proscribing inferential interpretation of the meaning of language in synonymous but unused words. It is one thing to infer contractual intention from surrounding circumstances, quite another to translate contractual language into synonymous words which have not been used in the contract. The former might be extension by implication, but the latter is simply definition in alternative words according to accepted meanings of the words used. The very purpose of definition is to communicate meaning by use of alternative (synonymous) words or phrases. Compare Frank v. Zoning Board of Conemaugh Township, 47 Somerset Leg. J. 30, 36-7 (1988). “What’s in a name? That which we call a rose by any other name would smell as sweet.”

To appreciate this distinction, we need only look at the facts and holding of Hassler itself. There the contract provided for arbitration for “damages which may. arise to crops or fences from the maintaining, operating, or removal of said [pipe] line ...” (emphasis supplied) At issue was the arbitrability of damages to cows and trees, neither of which was specifically mentioned in the contract. The court held that: (i) the word “arising” is broad enough to include consequential damages from maintaining the right of way such as loss of the cow, (ii) but “by no stretch of language can we conclude that a cow is either a crop or a fence ... an unwarranted extension of the right of way agreement,” (iii) but, although the court on the same principle of strict construction could have been expected to say that a tree is not a crop within the ordinary meaning of language, concluded instead that trees were a crop and that arbitration of damage to trees was proper as being embraced within the word “crops,” a definitional implication on the basis of the following reasoning:

“As regards the award for the loss of the trees, however, we find no error. For we believe that to construe ‘crops’ as embracing ‘trees’ represents a ‘reasonable effort... to favor’ the parties’ agreement to arbitrate. Capecci v. Capecci, supra. It is true that ‘crop’ ordinarily means ‘all products of the sod that are grown and raised annully and gathered during a single season,’ Black’s Law Dictionary, ‘Crop’ at 448-9 (rev. 4th ed. 1968). But it also means, ‘[i]n a broader sense, any product of the soil.’ Id. Here we know from the allegations in appellant’s petition to vacate the arbitration award and appellees’ answer to the petition that whether the trees damages by the spraying, and subsequently removed, were ‘crops’ was an issue tried to the arbitrators.”

Thus, in Hassler, a “treé” is a “crop.”

In deciding (ii) supra that arbitration is limited to damages to “crops or fences,” the Hassler court also by implication applies the. principle used in interpreting writings, both statutory and contractual, of expressio unius est exclusio alterius, that is, the mention of specific matter implies the exclusion of others not mentioned. C.J.S., Contracts §312. “The maxim is one of long-standing application, and it is essentially an application of common sense and logic.” Commonwealth v. Charles, supra. It should be noted, however, that expressio unius is restrictive in its effect, whereas inclusion of “trees” as “crops” seems to be an extension of the contract by implication. It seems that the holdings of Hassler are consistent with our view of the process of determining arbitrability, notwithstanding that some of its language seems contrary.

As stated earlier, the maxim of expressio unius is arguably applicable to paragraph 8.2 of the partnership contract which provides for liquidation and distribution to partners “upon dissolution,” so that distribution for other causes (except of course a further agreement) such as death of a general partner is impliedly excluded, leaving only the question of defining dissolution — a question of contractual interpretation for the arbitrators. Compare Margolies v. Zimmerman, 341 Pa. 493, 19 A.2d 737 (1941); Wolf v. Baltimore, supra. In this light, the contract is not silent on either the right of a deceased partner’s estate to receive payment of his share at death, nor on the procedure to be followed in that event; instead the contract arguably covers the subject in the instant controversy when interpreted in light of its paragraphs 1.2 (“Commencement and Term of Partnership”), and 8.1 (“Causes of Dissolution” and continuation of the partnership).

Finally, “dissolution” of a partnership in the context of continuation of “the partnership” following death of a partner is essentially a legal concept of well-established meaning absent other language indicating some other meaning; although definition in synonymous terms can be helpful in achieving precision, “dissolution” in such context is not really an:ambiguity. “Ambiguity is the effect of words thát have either no definite sense, or else a double one ...” Ellmaker v. Ellmaker, 4 Watts 89 (1835). Legal terms used in a contract are given their legal meanings unless the context indicates otherwise. Fischer & Porter Company v. Porter, 364 Pa. 495, 72 A.2d 98 (1950); P.L.E., Contracts §147; C.J.S., Contracts §302(1).

From the foregoing it seems clear that the rights of the estate of the general partner may well be covered by the contract, even though not specifically mentioned therein in so many words, depending on how its provisions are interpreted — a matter for the arbitrators. See Kawlik v. Bosacco, supra. See also, Duquesne School District v. Duquesne Education Association, 475 Pa. 79, 380 A.2d 353 (1977).

CONCLUSION

We hold that the dispute in issue is a dispute under the partnership contract, and is arbitrable. This conclusion, being based solely on the arguable reasonableness of the contractual interpretation, which would cover the instant dispute, does not attempt to evaluate either the arguabiüty or the merits of plaintiffs contrary contentions, except to say that those contentions do not exclude reasonable arguability of the contrary. Accordingly, we shall stay further proceedings in this action until arbitration can be had in accordance with the contract. See Kramer v. Madston, 38 Somerset Leg. J. 316, 322 (1978).

ORDER

Now, March 8, 1989, defendant’s motion for arbitration of the claim here involved is granted, hence all other proceedings in this action are stayed until further order. The motion for judgment on the pleadings is denied.

      . Section 502(2) of the 1975 Act, 59 Pa.C.S., states that limited partnerships formed under the 1917 Act are governed by. the 1975 Act.

      . Paragraph 7 of the limited partnership certificate states: “The partnership will exist from February 10, 1975, the date of filing this certificate of limited partnership, until February 9, 2027 or until prior dissolution as provided in agreements of limited partnership.”

      . Compare 59 Pa.C.S. §336(b).

      . Section 311(b) of the Uniform Partnership Act (1975), 59 Pa.C.S. provides in relevant part that its provisions governing general partnerships “ ... shall apply to limited partnerships except insofar as the statutes relating to such partnerships are inconsistent herewith.” See also 59 Pa.C.S. §523 which provides that a general partner in a limited partnership "... shall have all the rights and powers, and be subject to all the restrictions and liabilities, of a partner in a partnership without limited partners,...” with seven listed specific exceptions, number seven of which states that a general partner in a limited partnership has no authority to: “Continue the business with partnership property on the death, retirement, or insanity of a general partner, unless the right to do so is given in the certificate.” Here, the certificate grants the option to the remaining general partner to continue “the business” on death of a general partner which, in light of the contractual and statutory provisions respecting dissolution discussed in this opinion, arguably includes the right to do so “with partnership property.”

      . Shakespeare, Romeo and Juliet, Act II, scene ii. Compare Alice (in Wonderland) and Humpty Dumpty on the meanings of words. Baer Estate, 41 Somerset Leg. J. 171, 179 (1982).


author: KUHN, J.,

text:
    Golibart v. Reamer

      Samuel E. Teeter, for plaintiff.

      Henry O. Heiser, for defendants.
    November 1, 1989
   KUHN, J.,

For the second time we address the same issue. On April 24, 1989, we granted defendants’ preliminary objection in the nature of a demurrer challenging plaintiffs capacity to sue. Plaintiff has now filed an amended complaint to which defendants again raise plaintiff’s capacity to sue.

Plaintiff now alleges that on or about June 30, 1988, he was hired by defendants to find an investor to join them in developing and building a 300-unit planned unit development on a 107-acre tract in the Borough of Carroll Valley. Defendants claimed they had an “option” to purchase the tract as well as approval of a preliminary site plan from the Carroll Valley Borough Planning Commission and the Carroll Valley Borough Council. Plaintiff was to receive a finder’s fee of $30,000.

On or about July 15, 1988, plaintiff introduced Alexander Ellioff to defendants as a prospective investor. Subsequently, on or about October 21, 1988, defendants entered into a partnership with Ellioff known as Carroll Valley Partnership which was organized to build and develop the project.

Plaintiff sues for the finder’s fee.

Defendants allege that plaintiff was a broker within the meaning of the Real Estate Licensing and Registration Act of 1980, 63 P.S. §455.101-909, and therefore as a condition precedent to enforcement of a commission agreement he was required to aver that he was licensed under the act.

Again, we must examine the act.

Section 301 of the act provides that:

“It shall be unlawful for any person,. . . acting in the capacity of a broker . . . within this commonwealth without first being licensed or registered as provided in this act, unless he is exempted from obtaining a license or registration certificate under the provisions of section 304.”

The term broker is defined in section 201, in part, as:

“Any person who, for another and for a fee, commission or other valuable consideration:
“(1) negotiates with or aids any person in locating or obtaining for purchase, lease or acquisition of interest in any real estate;
“(2) negotiates the listing, sale, purchase, exchange, lease, time share and similarly designated interests, financing or option for any real estate; ...”

Section 302 of the act provides:

“No action or suit shall be instituted, nor recovery be had, in any court of this commonwealth by any person or compensation for any act done or service rendered, the doing or rendering of which is prohibited under the provisions of this act by a person other than a licensed broker. . . unless such person was duly licensed and registered hereunder as broker ... at the time of offering to perform any such act or service or procuring any promise or contract for the payment of compensation for any such contemplated act or service.”

We must initially comment that the court has been presented with record information outside the parameters of the amended complaint. Although the information may be relevant at a later time in this case, we decline to comment upon it further in considering the precise procedural issue before the court.

Plaintiff argues that since he was hired to find an investor for the development of the parcel of real estate, i.e. a business venture separate and apart from ownership of the real estate, he is not a broker. We agree that if plaintiff was hired only to. find a purchaser of a business located on certain real estate the act does not apply even if the prospect eventually also purchases the real estate itself. Schoenfeld v. Meckes, 166 Pa. Super. 101, 70 A.2d 377 (1950).

Based upon the averments of the amended complaint we are compelled to overrule defendants’ preliminary objections. Nothing therein suggests that plaintiff was to negotiate an interest in real estate or negotiate a financing package for any real estate. Instead, he was allegedly hired to locate a developer-builder. That person would not be required to obtain an interest in the real estate. Therefore, the act would not require plaintiff to be licensed.

Therefore, we enter the attached

ORDER OF COURT

And now, November 1, 1989, defendants’ preliminary objections to plaintiffs amended complaint are hereby denied.

Defendants are granted 20 days to file an answer to the amended complaint.

      . In reviewing the agreement of sale dated November 5, 1986, which granted defendants an interest in the real estate, we decline to use the word “option.” The agreement is clearly an agreement of sale and not an option agreement.

      . For future reference the parties’ attention is drawn to the court’s interpretation of the word “negotiate” in 163 Pa. Super. 635, 639, 63 A.2d 366, 368 (1949).


author: LEVIN,

text:
    Gray v. Erie Metropolitan Transit Authority

      Ritchie T. Marsh, for plaintiffs.

      Nancy M. Sennett and E. Max Weiss, for defendant School District of the City of Erie.

      Mark Mioduszewski, for defendant Erie Metropolitan Transit Authority.

      Ronald Slater, for defendant Jerome A. Banko.
    July 20, 1989
   LEVIN,

Presently before the court is a motion for summary judgment brought by defendants, Erie Metropolitan Transit Authority, the School District of the City of Erie, and Edward Sandusky.

The essential facts are undisputed. The cause of action arises out of an accident which occurred on October 19, 1983, when Lisa Gray was struck by an automobile operated by Jerome Banko after being discharged from a bus owned by Erie Metropolitan Transit Authority and driven by Edward Sandusky, its employee. The accident occurred while Mr. Banko was in the process of passing the EMTA bus as well as other automobiles which had stopped to permit the bus to discharge passengers.

Defendant, Erie. Metropolitan Transit Authority, claims that the EMTA bus was not in operation and that the accident did not arise out of the operation of the EMTA bus. Consequently, the Erie Metropolitan Transit Authority and Mr. Sandusky, as a local agency and an employee of a local agency, respectively, are shielded from liability by virtue of the Governmental Immunity Act, 42 Pa.C.S. §8541 et seq.

Pennsylvania Rule of Civil Procedure 1035(b) provides that summary judgment “shall be rendered if 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 judgment as a matter of law.” The Erie Metropolitan Transit Authority and Mr. Sandusky are a local agency and an employee of a local agency, respectively. These two defendants claim that they are entitled to the protections of the doctrine of governmental immunity. See 42 Pa.C.S. §8541,

There are eight exceptions to the general rule of governmental immunity. Of those exceptions only one has any potential application to permit the plaintiffs to attempt to impose liability on the Erie Metropolitan Transit Authority and Mr. Sandusky. This section, 42 Pa.C.S. §8542(b)(l) reads as follows:

“(b) Acts which may impose liability — The following acts by a local agency or any of its employees may result in the imposition of liability on a local agency:
“(1) Vehicle liability — The operation of any motor vehicle in the possession or control of the local agency. As used in this paragraph, ‘motor vehicle’ means any vehicle which is self-propelled and any attachment thereto, including vehicles operated by rail, through water or in the air.”

Exceptions to the general rule of immunity must be construed narrowly. Mascaro v. Youth Study Center, 514 Pa. 351, 523 A.2d 1118 (1987).

It is an established fact that at the time of the accident the EMTA bus was standing still. The issue before the court is whether the EMTA bus can be considered to have been in “operation.” If the court found that the EMTA bus was in operation at the time of the accident then governmental immunity would not apply. 42 Pa.C.S. §8542(b)(l).

All witnesses deposed in this case consistently testified that at the time of the accident, the EMTA bus was standing still.

There are three noteworthy cases on the subject of immunity concerning government vehicles. These cases are: City of Philadelphia v. Love, 98 Pa. Commw. 138, 509 A.2d 1388 (1986); Laney v. City of Philadelphia, 663 F.Supp. 1097 (W.D. Pa. 1987); and Commonwealth of Pennsylvania, Pennsylvania State Police v. Robinson, 123 Pa. Commw. 401, 544 A.2d 172 (1989). •

The court notes that these two defendants relied principally upon the cases of City of Philadelphia v. Love, supra, and Laney v. City of Philadelphia, supra, in their June 17, 1988, motion for judgment on the pleadings. On June 29, 1988, the court denied this motion for judgment on the pleadings. The court based its decision on its interpretation of Love and Laney cases as being unclear. The courts in these cases were unclear on whether the “operation” of a government vehicle included the occasions when it was temporarily stopped while passengers disembarked. However, any doubts were resolved with the ruling in the recently decided case of Commonwealth of Pennsylvania, Pennsylvania State Police v. Robinson, supra. The court in Robinson made it quite clear when they interpreted Love to mean that a vehicle must actually be in motion for the vehicle exception to apply. Consequently, the court will grant the summary judgment motion of defendants EMTA and Edward Sandusky.

ORDER

And now, July 20, 1989, it is hereby ordered, adjudged and decreed that the motion for summary judgment of defendants EMTA and Edward Sandusky is granted for the reasons set forth in the attached opinion. The companion case of this court regarding defendant, School District of the City of Erie, is hereby incorporated by reference.

       “Motion” has been defined to mean “the action or process of changing position.” Thus, motion presupposes movement. American Heritage Dictionary, 2d College ed., at 816 (1982).


author: HERRON, J.,

text:
    Joyner v. Harleysville Insurance Company

      Claire D. Newman, for plaintiffs.

      Paul A. Lockrey, for defendant.
    June 9, 1989
   HERRON, J.,

This is an action involving a claim by plaintiffs for payment of basic loss benefits from.an insurance policy they held with defendant, Harleysville Insurance Company, under the Pennsylvania No-fault Motor Vehicle Insurance Act, 40 P.S. §1009.101 et seq. (repealed 1984, February 12, P.L. 26, §8(a), effective October 1, 1984). Plaintiffs seek these payments for injuries they sustained from an autqmobile accident that occurred on January 31,1984. Both parties, through their counsel, have, submitted to this court an agreed-upon statement of facts upon-which they request an entry of judgment. A summary of the statement of facts follows.

In September 1982, plaintiff, Arnold Joyner, purchased automobile insurance under the “assigned risk” plan of the Pennsylvania No-fault Motor Vehicle Insurance Act, 40 P.S. §1009.105, 75 P.S. §17. Plaintiff purchased this insurance through a licensed insurance broker in Philadelphia trading under the name Seers Insurance Agency.

Defendant, Harleysville Insurance Company, was selected under the plan as the servicing insurance carrier and issued an automobile insurance policy to plaintiff. Plaintiffs policy continued in force throughout 1982 and was renewed for an additional year in September 1983. Plaintiff made all of his insurance premium payments in cash to Seers. More specifically, plaintiff paid Seers $165 in September 1983, $200 in November 1983, and $200 in December 1983. Seers was responsible for then forwarding plaintiff’s payments via checks to Harleysville. During 1983, defendant sent plaintiff a total of three cancellation notices — the first was issued in September and the second in October for non-payment of premiums because Seers forwarded plaintiff’s September 1983 premium payment to Harleysville in the form of a check which was returned for non-sufficient funds. In response to these notices, plaintiff, Arnold Joyner, contacted Seers in September and October and both times was assured that the cancellation notices had been issued in error and that his automobile insurance policy was in force. In October 1983, Harleysville eventually did rescind the September and October cancellation notices upon receipt of a replacement check from Seers in the amount of . $165. The December 13 cancellation notice mailed to plaintiff was to take effect on January 1, 1984. In response to this notice, plaintiff again went to Seers’ office and spoke with an unnamed person to whom he had given all of the aforementioned cash premium payments. In plaintiff’s presence, this person purported to call Harleysville after which it was reported to plaintiff that the December 13 notice was issued in error and that plaintiff’s policy was in effect. Apparently, however, a telephone call was not actually placed to Harleysville and the assurances given to plaintiff were false. As a result of the conversation with the Seers representative, plaintiff believed that all his premiums had been paid to Harleysville by Seers, that his policy was in effect, and that his next payment was due in February 1984.

When Harleysville did not receive payment for premiums due from either plaintiff or Seers, it cancelled plaintiff’s policy on January 1, 1984. On January 31, 1984, plaintiff, his wife, Ruth, and daughter were injured in an automobile accident in which all three sustained injuries which required medical treatment and resulted in medical bills totalling $16,313.40. When plaintiff attempted to report this accident to Seers, he learned that the agency had closed permanently. Plaintiff then gave timely and reasonable notice of the accident to HarleysviUe and on March 2, J984 forwarded proof of the loss, its amount and all expenses incurred to that date. Defendant, HarleysviUe, responded by notifying plaintiff that his poUcy had been canceUed as of January 1, 1984 and that no payment for medical bUls would be made. Plaintiffs then filed the instant action.

In general, absent some special condition or circumstance in the particular case, a broker is not the agent of an insurer and may not be converted into an agent of an insurer without some action on the part of the insurer, or the existence of some facts by which his authority to represent it may be fairly inferred. Couch on Insurance 2d §25:95. It is also the general rule, however, that an insurance broker acts as an agent for the insurer for the purpose of coUecting and remitting the premium and deUvering the poUcy to the insured. Id.; see Transcontinental Oil Co. v. Atlas Assur. Co. Ltd., 278 Pa. 558, 123 Atl. 497 (1924); Pearl Assur. Co. Ltd. v. National Insurance Agency Inc., 150 Pa. Super. 265, 28 A.2d 334 (1942).

WhUe there are no Pennsylvania cases which have considered or discussed, in the context of an assigned risk plan, the UabiUty of an insurer for the default of a broker, this problem was addressed in Sands v. Granite Mutual Ins. Co., 232 Pa. Super. 70, 331 A.2d 711 (1974) which involved a dispute over uninsured motorist coverage. In Sands, the plaintiff-policyholder applied to a broker for automobile insurance, indicating that he desired to be “fully covered.” The plaintiff signed a blank insurance application, trusting the broker to fill in all necessary information. The broker placed the insurance with defendant, Granite Mutual Insurance Company. However, despite plaintiff’s request for full coverage, the broker did not procure uninsured motorist coverage for plaintiff. During the ensuing two years, plaintiff paid all premiums on the policy to the broker, who also processed a renewal of the policy for plaintiff at the end of the first year. Toward the end of the second year of the policy, plaintiff made an installment payment of the premium to the broker in order to renew the policy. Within two months plaintiff paid to the broker the entire balance due in full. The broker, however, neither forwarded plaintiff’s application nor his payments to the insurance company." Plaintiff learned this when, several months after he made his final payment, he. was injured in an automobile accident involving an uninsured motorist and sought payment under his policy. When the defendant-insurance company denied coverage, plaintiff brought suit. The Sands court held that the broker was authorized to receive premium payments from plaintiff. The court reasoned, therefore, that payment of the premium to the broker by plaintiff was good payment and bound the insurance company, even though the broker did not forward the premium or plaintiff’s renewal application. This court finds the Sands holding to be persuasive and applicable to the instant case.

In the instant case, plaintiffs had a relationship with Seers lasting over a period of two years and, similarly, Seers had a relationship with Harleysville. Plaintiffs at all times made timely payments of their insurance premiums to Seers which forwarded same to Harleysville during the first year of the policy beginning September 1982; moreover, at least one premium payment was forwarded to Harleysville in September 1983. Harleysville presumably benefited from these premiums. Seers also processed a renewal of plaintiffs’ policy in September 1983 which Harleysville accepted. Harleysville, therefore, was well accustomed to dealing with Seers, and the court finds that Seers, at minimum, had apparent or implied authority to accept plaintiffs’ premiums on behalf of Harleysville. When, in the latter part of 1983, Seers neglected to forward plaintiffs’ premium payments to Harleysville in a timely fashion, Harleysville through the cancellation notices it mailed to plaintiffs failed to give plaintiffs adequate notice tailored to fuly alert them to the extent and amount of Seers’ default. Despite this failure, plaintiffs responded to the cancellation notices by making inquiries at Seers. The court finds that plaintiffs reasonably relied on Seers’ representations that the cancellation notices were wrongfully issued and that plaintiffs’ policy remained in force since, indeed, the September and October 1983 cancellation notices were rescinded by Harleysville.

As between plaintiffs and Harleysville, the latter was in a far better position to obviate Seers’ default. Harleysville could have advised plaintiffs to forward their premium payment directly to the company, but this was never done. Since Seers was clothed with apparent authority to accept premiums, the payment to them by plaintiffs were good payments. As was said in 14 Appelman, Insurance Law Practice, §7982:

“The receipt of premiums by an agent appointed either expressly or by implication by the insurer to deliver the policy and collect premiums has been considered a receipt of such premiums by the insurer. The fact that such agent, authorized to collect premiums, fails to remit them to the insurance company, does not deprive the insured of his protection. The majority rule seems to he that from the insured’s point of view it is immaterial whether such agent fails to remit the premiums to the insurer until after the loss or at all; if the insured was entitled to rely upon such agent’s apparent authority to receive premiums, the payment is a valid one, irrespective of actual receipt by the company.” (emphasis supplied)

Harleysville, having accepted the benefit of doing business in Pennsylvania and the benefit of plaintiffs’ premiums paid over before Seers’ default, will not now be heard to deny the burden of its contract with plaintiffs. Accordingly, plaintiffs are entitled to judgment in their favor and the court so orders.

       The court found neither Taylor v. Crowe, 444 Pa. 471, 282 A.2d 682 (1971) cited by plaintiffs, nor Pearson v. Selected Risks Ins. Co.,
        154 N.J. Super. 240, 381 A.2d 91 (1977) cited by defendant, dispositive of the instant case since both hold that an insurance company is not bound by a broker’s representations to a policyholder regarding substantive provisions of the policy. But see, Pa. National Mutual Casualty Insurance Co. v. Insurance Commissioner of Pa., 121 Pa. Commw. 618, 551 A.2d 368 (1988) (insurance company liable to plaintiff for agent’s assurance to plaintiff that homeowner’s coverage was in effect upon her signing policy application and paying premium). In the instant case, the question concerns the effect of a broker’s default on the insurance company when plaintiff has timely paid premiums to the company.