Lancellotti v. Thomas,

491 A.2d 117 (Pa. 1985).

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Nature of the Case

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Facts

P and D entered into an agreement in which P agreed to purchase Ds' luncheonette business and to rent from D the premises on which the business was located. P agreed to buy the name of the business, the goodwill, and equipment. The inventory and real estate were not included in the agreement. The price was $25,000 payable on signing of the agreement contingent upon P's promise that only he would own and operate the business. P also wanted permission to build an addition to the existing building, which would measure 16 feet by 16 feet, cost at least $15,000, and be 75 percent complete by May 1, 1974. D would lease the property on which the business was operated for a period of five years, with D having the option of an additional five-year term. The rent was $8,000 per year for a term from September 1, 1973, to August 31, 1978. A separate lease was executed by the parties on the same date that the agreement for sale was executed. The agreement to build the existing building was a condition of the lease. In exchange for P's promise to build the addition, there was to be no rental charge for the property until August 31, 1973. If the addition was not constructed as agreed, the lease would terminate automatically. P and D executed a change on August 14, 1973, and modified the lease agreement, providing that 'if the addition to the building as described in the Agreement is not constructed in accordance with the Agreement, P shall owe the D $6,665 as rental for the property . . .' for the period from July 25, 1973, to the end of that summer season. The addendum also provided that all the equipment would revert to Ds upon P's default in regard to the addition. D paid the $25,000 and began to operate the business. At the end of the 1973 season, P claims that the building permit necessary to construct the addition was denied. Ds claim that they obtained the building permit and presented it to P who refused to begin construction. Ds claim that P agreed to reimburse them if they built the addition. Ds built a 20 foot by 40-foot addition for $11,000. In the spring of 1974, it was discovered that P was no longer interested in operating the business. Ds resumed possession of the business and, upon opening the business for the 1974 summer season, found some of their equipment missing. P sued in assumpsit demanded that Ds return the $25,000 plus interest. Ds counterclaimed for damages totaling $52,000: $6,665 as rental for the property for the 1973 summer season and the remainder was for emotional distress and damages to the goodwill of the business. P only conceded liability for the $6,665 rent under the terms of the addendum. The trial court found against P on the original claim, allowing Ds to retain the $25,000 and for Ds on the counterclaim, allowing them to recover the $6,665 rent.