HomeMy WebLinkAbout07-16-12 (2)~ }
No V. Otto, III, Esquire
I.D. No. 27763
George B. Faller, Jr., Esquire
I.D. No. 49813
Jennifer L. Speazs, Esquire
I.D. No.87445
MARTSON LAW OFFICES
10 East High Street
Cazlisle, PA 17013
(717) 243-3341
Attorneys for Lisa M. Morgan
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IN THE COURT OF COMMON PLEAS OF
~ RE: :CUMBERLAND COUNTY, PENNSYLVANIA
Estate of Robert M. Mumma, Deceased.
N0.21-86-398
ORPHANS' COURT DIVISION
REPLY TO NEW MATTER OF ROBERT M. MUMMA, II FILED ON JUNE 22.2012
1. Denied. This paragraph is a legal conclusion to which no response is required.
By way of further response, the Trust holds title to the real estate as a tenant in common, as a
successor in interest to the Estate. The Residuary Trust owns a majority interest (81.82507%) in
MRA. The sole Trustee, Mrs. Morgan, has determined that the sale of the property in question is
in the best interest of the Trust at this time.
2. Denied. The MRA I Agreement speaks for itself and must be reviewed in its
entirety. By way of further response, there is no "dispute" requiring arbitration, and the minority
interest holders' permission is not required for the sale of the property in question. Judge
Sheely's Order and Opinion of March 24, 1992, and adopted as a final decree by Judge Sheely's
Order of November 5, 1992, both in Barbara McK. Mumma et al. v Robert M. Mumma, II et al. ,
No. 66 Equity 1988 (C.P. Cumberland), are attached hereto as Exhibits "A" and "B,"
respectively. Judge Sheely found that "the MRA agreements were never drafted with the
intention of providing any tenant-in-common with a right of first refusal as to the individual
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parcels of property owned by the tenants-in-common." (Exh. A, at 26). Rather, "Section 3(b)
only granted a very narrow right of first refusal to the MRA tenants-in-common and pertained to
a single tenant-in-common selling his or her undivided interest in the premises." (Exh. A at 26-
27 (citation omitted)). "[B]y contrast, Section 4 applies when the majority in interest of the
tenants-in-common (i.e., the Estate and the executrices) vote to dispose of one or more pieces of
property owned by the tenants-in-common. Under Section 4, the decision to sell is made by
majority rule." (Exh. A at 26). Judge Sheely further held that "under Section 4 of the [MRA
Agreements, consent of the owners `shall be by a majority (in interest) vote, ... As a result, the
provisions of Section 3 are not triggered at all in the event of a sale consented to by a majority in
interest of the tenants-in-common." (Exh. B at 13).
Judge Sheely's decisions were affirmed by the Superior Court, and the Supreme Court
denied a petition for allocatur. Because Mrs. Morgan, individually and as trustee, represents a
majority in interest of the tenants, in light of the final order in the prior litigation, the minority in
interest tenants may not dispute the sale, and the arbitration clause may not be invoked.
3. Denied. See paragraph 2 above. The arbitration clause of the MRA Agreements
is inapplicable here.
4. Admitted that the Petition does not reference surrounding properties, as they are
irrelevant to this sale.
5. Denied. Mrs. Morgan denies that the subject real estate is the only existing entry
to surrounding real estate.
6. Denied. This pazagraph is a legal conclusion to which no response is required.
By way of further response, Mrs. Morgan lacks any knowledge as to the factual assertions made
by Mr. Mumma, II. To the contrary, Mrs. Morgan reasonably believes the adjacent tract of real
estate belonging to Bobali can be developed independently of the subject real estate.
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7. Denied. See pazagraph 6.
8. Denied. See pazagraph 6.
9. The Petition is in writing and speaks for itself, and all characterizations thereof
are denied.
10. Denied as a conclusion of law. While Babs Mumma, Linda Mumma and Robert
M. Mumma, II, have undivided interests in MRA I, a tenancy in common which owns the real
estate that is the subject matter of the instant petition, the operation of MRA I is governed by the
MRA I Agreement referred to above. See pazagraph 2. Because Mrs. Morgan, individually and
as trustee, represents a majority in interest of the tenants, the position advanced Mr. Mumma, II,
is, in light of the final order in the prior litigation, foreclosed by collateral estoppel and/or res
judicata. Any attempt by Mr. Mumma, II, to assert those positions in this matter merely
subjects MRA I, and therefore the Residual Trust, to unnecessary delay, burden and expense.
11. Denied. Mrs. Morgan has no knowledge of the Purchaser's long term use for the
parcel. Petitioner admits their stated, present intent is to use it as a pazking lot, however they aze
not bound to use it in that manner.
12. Denied. On the contrary, the buyer expressed to Mrs. Morgan a desire to
purchase the property. As the offered price was substantially in excess of the appraised amount
for the property, Mrs. Morgan determined that a sale of the property at the negotiated price and
on the negotiated terms was in the best interest of the Residual Trust. Mrs. Morgan further
denies the allegations of this pazagraph to the extent they purport to suggest that the buyer of the
property ever expressed a willingness to lease the real estate in question.
13. Denied. This paragraph is a legal conclusion to which no response is required. A
sale of the property will also generate revenue for the Trust. See also pazagraph 12 above.
14. Denied. On the contrary, Mrs. Morgan believes it is in the best interest of the
trusts and beneficiaries that an advantageous sale to the property occur now. The proposed sale
is substantially in excess of the appraised value of the property. Mrs. Morgan lacks knowledge
of Mr. Mumma, II's understanding, nor is it supported in the record. See also pazagraph 12
above.
15. Denied. The Residuary Trust owns a majority interest (81.82507%) in MRA I.
16. Denied. The MRA I Agreement speaks for itself and must be reviewed in its
entirety. Moreover, paragraphs 1 and 3 are inapplicable in light of Judge Sheely's decisions
discussed above and this issue is foreclosed by collateral estoppel and/or res judicata. See also
pazagraphs 2 and 10 above.
17. Denied. The MRA I Agreement speaks for itself and must be reviewed in its
entirety. See also pazagraphs 2, 10 and 16 above.
18. Denied. See also paragraphs 2, 10 and 16 above. Mr. Mumma, II, fails to
comprehend the MRA I Agreement and Judge Sheely's Orders, cited above. Although Mr.
Mumma, II, did not have a right of first refusal, Mrs. Morgan did, in fact, contact each of the
beneficiaries in writing to determine if any of them had an interest in purchasing the property,
before she entered into negotiations with UPS. Mr. Mumma, II, indicated he was not interested
in purchasing the properly.
19. Denied. See also pazagraphs 2, 10, 16 and 18 above.
20. Denied. The MRA I Agreement speaks for itself and must be reviewed in its
entirety. Also, see pazagraphs 2, 10, 16 and 18 above.
21. Denied. See also paragraphs 2, 10, 16 and 18 above.
22. Admitted in part, denied in part. It is admitted that Mrs. Morgan did not notify
Mr. Mumma, II, Babs Mumma or Linda Mumma that they had a right of first refusal with respect
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to the proposed transaction. In fact, they had no such right. See also paragraphs 2, 10, 16 and 18
above.
23. Denied. See also pazagraphs 2, 10, 16 and 18 above.
24. Denied. See also pazagraphs 2, 10, 16 above.
25. Denied. This paragraph is a legal conclusion to which no response is required.
26. Denied. This pazagraph is a legal conclusion to which no response is required.
Moreover, Mrs. Morgan is permitted, subject to her fiduciary duties as trustee, to dispose of trust
assets when and as she deems appropriate. As the offered price is substantially in excess of the
appraised value of the property, Mrs. Morgan properly determined that a sale of the property at
the negotiated price and on the negotiated terms was in the best interest of the Residual Trust.
WHEREFORE, for the foregoing reasons, Mrs. Morgan respectfully requests that this
Court dismiss Robert M. Mumma, II's New Matter filed on June 22, 2012.
Respectfully subnpi~d,
By: _
No V. o, III, s re
I.D. No. 27763
George B. Faller, Jr., Esquire
I.D. No. 49813
Jennifer L. Spears, Esquire
I.D. No.87445
MARTSON LAW OFFICES
10 East High Street
Carlisle, PA 17013
(717) 243-3341
Brady L. Green, Esquire
MORGAN, LEWIS & BOCKIUS LLP
1701 Mazket Street
Philadelphia, PA 19103-2921
(215)963-5079
Attorneys for Lisa M. Morgan
Date: July 16, 2012
_ ._.
BARBARA MCR. MUMMA and
LISA M. MOAGAN, individually
and as Executrixes of the s
Estate of ROBERT M. MUMMA, s
deceased, and LINDA M. ROTH, s
Plaintiffs r
s
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s
ROBERT M. MUMMA, II and s
BARBARA M. McCLURE, _
Defendants s
IN THE COURT OF COMMON PLEAS OF
CUMBERLAND COUNTY, PSNNSYLVANIA
CIVIL ACTION - EQUITY
NO. 66 EQUITY 1988
IB R8s DHCl.1lE11?ORZ JDDt~NT
HBPORE BSI~.Y. B.J.
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AND NOW, this ~ y ~'~ day of / ~~'- V , 1992, in
accordance with the foregoing findings of fact and conclusions of
law, it is hereby ordered that the declaratory judgment shall be
entered aS folloaas
1) The two tenancy-in-common agreements MRA I and MRA
II signed by Robert M. Mumma, II on December 19, 1986, are
binding upon him and grant him no right of first refusal as to
any transfers by the executrices, Barbara McR. Mumma and Lisa M.
Morgan, of the real estate held by the MRA tenants-in-common when
there is approval by a majority in interest=
2) The MRA general power of attorney which Robert M.
Mumma, II executed on December 19, 1986, is valid and
irrevocable, and pursuant to Section 14 of the MRA agreements,
esagowers Mrs. Mumma and Lisa to transfer properties held by the
MRA tenancies-in-common= and
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b1 TeWlnion~l whelrOf~1FIA~n unbunb M~ ~
iM1d tM ~ d said Court of Cam.
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EXHIBIT "A"
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, X10. 66 EQUITY 1988
3) Robert M. Mumma. II was never given an oral right
of first refusal to purchase Pennsy Supply, Inc., in June• 1987,
in exchange for hfs promise to execute a power of attorney for
Lot 1-B in Lemoyne.
Hy the Court.
Harold E. Shee y• P.J.
Thomas M. Kittredge. Esquire
Richard W. Stevenson. Esquire
John Hardin Young. Esquire
Anthony Vale• Esquire
liam F. Martson• Esquire
Charles E. Shields. III. Esquire
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,
BARBARA Mex. MUMMA and s
LISA M. MORGAN, individually s
and as 8xecutrices of the s
8state of ROBERT M. MUMMA, s
deceased, and LINDA M. ROTH, s
Plaintiffs
V
R088RT M. MUMMA, II and s
BARBARA M. McCLURE, s
Defendants
IN THE COURT OF COMMON PLEAS OF
CUMBERLAND COUNTY, P$NNSYLVANIA
CIVIL ACTION - EQUITY
NO. 66 EQUITY 1988
OPI1120x AMD ORDER OF COURT
On March 4, 5, 6, and 13, 1991, a hearing was held to
determine through a declaratory judgment 1) whether the two
tenancy-in-common agreements (MRA I and II) were validly executed
on December 19, 1986, 2) whether the MRA power of attorney
executed by Robert M. Mumma, II on December 19, 1986 was
irrevocable, and 3) whether Robert M. Mumma, II had a right of
first refusal to purchase Penney Supply, Iac. From this hearing
we make the following findings of facts
FIXDIxGB OF FACT
1. On April 12, 1986, Robert M. Mumma died testate.
2. Plaintiffs, Barbara McK. Mumma (Mrs. Mumma) and
Lisa M. Morgan (Lisa) are executrices of the Estate of Robert M.
Mumma (the Sstate).
3. At the time of Mr. Momma's death the following
conditions existed with respect to the family owned business,
Pennsylvania Supply Co. (Penney Supply):
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• NO. 66 EQUITY 1988
a) The Estate owned approximately 98 percent of the
stock of Pennsy Supply.
b) Pennsy Supply owned more than 82 percent of the
outstanding stock of Rim Company, the second tier holding ,
company.
c) Rim Company was the largest shareholder of Nine
Ninety-Nine, Inc. (999).
d) The Estate controlled, through its majority stock
holdings, both Penney Supply and Rim Company.
e) Pennsy Supply was a wholly-owned subsidiary of 999.
f) The Estate, Mrs. Mumma, Lisa, Linda M. Roth
(Linda), Robert M. Mumma II (Bob), and Barbara M. McClure
(Barbara) were the shareholders of Rim Company.
g) The Estate, Mrs. Mumma, Lisa, Linda, Bob and
Barbara were also the shareholders of 999.
4. At a meeting at the offices of Pennsy Supply on
November 5, 1986, Arthur L. Klein, a tax specialist at Morgan,
Lewis and Bockius, brought to the attention of the shareholders
of Pennsy Supply and Rim Company, the unfavorable changes in the
federal tax laws caused by the passage of the 1966 Tax Reform
Act.
5. The 1986 Tax Reform Act overruled the General
Utilities doctrine which had previously permitted corporations to
liquidate and pay only one tax on the appreciation in the value
of corporate assets rather than two taxesi one at the corporate
and the other at the shareholder level.
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' N0. 66 EQUITY 1988
6. The November 5, 1986 meeting at Pennsy Supply was
attended by Mr. Klein, Mrs. Mumma, Lisa, Bob, Linda, Barbara, and
George W. Hadley.
7. Mr. Hadley is a partner in the accounting firm of
Luckey, Kennedy and Felmeden in Buffalo, New York and is the
accountant for the Mumma family businesses.
8. At the November 5 meeting, the shareholders, Mr.
Klein and Mr. Hadley discussed the desirability of liquidating
Pennsy Supply and Rim Company prior to December 31, 1986, in
order to take advantage of the grace period allowed by the 1986
Tax Reform Act.
9. Mr. Klein advised Mrs. Mumma and Lisa that they
could avoid the unfavorable consequences of double taxation if
the assets of Pennsy Supply and Rim Company were transferred to
the shareholders as tenants-in-common.
10. If the assets of Rim Company and Pennsy Supply had
been transferred to the family members as a partnership, both the
transferors and the recipients would have been required to pay
real estate transfer taxes to the Commonwealth of Pennsylvania.
11. It was the understanding of Mr. Hadley that the
tenancies-in-common which were formed to receive the assets of
the dissolved corporations would function similar to
partnerships. (Hadley Direet, Vol. iI, p.302).
12. The tenancy-in-common agreements were drafted to
include provisions for majority-in-interest control over the
management of the properties and voting control of the tenants-
in-common based upon their percentage holdings in Pennsy Supply
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N0. 66 EQUITY 1988
and Kim Company. (Klein Direct, Vol. I, pp.33-35, Hadley Direct,
Vol. II, p. 303.
13. Following the November 5, 1986 meeting, Mr. Klein
sent Bob a letter explaining that complete liquidation of the
corporation coul$ take place and the charter of Pennsy Supply
would not be terminated as long as no corporate actions were
taken for a sufficient length of time following the dissolution.
14. Lisa circulated a single draft agreement among
tenants-in-common (Exhibit R-10) to Mrs. Mumma, Bob, Linda, and
Barbara along with a cover letter dated December 11, 1986. (Mrs.
Mumma Direct, Vol. II, pp. 189-190, Klein Cross, Vol. I, p.74).
15. Following the circulation of the single draft
agreement among the
because Rim Company
Supply, it would be
among the tenants-i~
percentages for the
p.371).
tenants-in-common, it was decided that
was not a wholly-owned subsidiary of Pennsy
preferable to have two separate agreements
n-common due to the different shareholding
two companies. (Lisa Direct, Vol. II,
16. One tenancy-in-common agreement would govern the
properties formerly owned by Rim Company (agreement commonly
referred to as MRA I) and the other tenancy-in-common agreement
would control the properties formerly held by Pennsy Supply
(agreement commonly referred to as MRA II) (Exhibits P-1, P-2).
17. As of December 18, 1986, the two separate tenancy-
in-common agreements (MRA I and II) concerning the liquidation of
Pennsy Supply and Rim Company had been prepared. (Lisa Crosa,
Vol. III, p.481). ~
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NO. 66 EQUITY 1988
18. Both MRA I and MRA II contained additional
language under Section 14 that had not been included when the
single draft agreement among tenants-in-common was circulated on
December 11, 1986.
19. On the evening of December 18, 1986, language was
added to Section 14, entitled "Further Assurances," which
provided that each tenant would execute a power of attorney to
facilitate any transactions to 'be made pursuant to the agreement.
(Lisa Cross, Vol. IiI, pp. 482-483).
20. MRA I and MRA II were completed by the morning of
December 19, 1986.
21. The signature pages of MRA I and MRA II agreements
differed because each agreement set forth the percentage interest
of each tenant-in-common. The percentages used corresponded with
the percentage interests of the tenants-in-common as shareholders
of Pennsy Supply and Rim Company. (Klein Cross, Vol. I, p.74),
Skinner Direct, Vol. I, p.135).
22. The other difference between the two agreeraenta
was that MRA I contained language referring to the Union Quarries
stock owned by Rim Company which language did not appear in MRA
II.
23. Mr. Skinner inserted additional language into
Section 2 of MRA I after speaking to Mr. Klein and Mr. galley on
the morning of December 19, 1986. (Skinner Direct, Vol. I,
p.136) .
24. The inserted language in Section 2 stated:
"except for $272,617.95 being distributed to the individual
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NO. 66 EQUITY 198$
owners [of Kim Company) in lieu of Union Quarries, Inc. stock,
which shall be held by Manager for distribution to them in 1987."
(Exhibit P-1, p.8, Skinner Direct, Vol. I, p.136).
25. Prior to December 19, 1986, Kim Company owned
fifty percent of the stock of Union Quarries and the Hempt family
owned the remaining fifty percent of the stock. (Klein Direct.
Vol. I, pp.37-38).
26. The language was inserted into Section 2 upon the
advice of Mr. Hadley that the Union Quarries shares should be
held in a block. Thia would preclude the possibility that one or
more of the Rim Company shares might be transferred to the
Hempts, giving the Hempts voting control over the corporation.
(Hadley Disect, Vol. II, p.295, Lisa Direct. Vol. II, pp. 368-69,
Bob Direct, Voi. iiI, p.640).
27. Bob and the other shareholders of Rim Company
agreed that the Union Quarries' shares should be held in a block.
(Klein Direct, Vol. I, p.38).
28. As a result of the Estate owning more than eighty
percent of the Rim Company stock, the Estate would hold the block
of Union Quarries' shares. (Hadley Direct, Vol. II, p.295, Lisa
Direct, Vol. Ii, p.37D).
29. The figure of $272,617.95 inserted into Section 2
of MRA I represented the proportional value of the individual
holdings of Mrs. Mumma, Lisa, Linda. Bob, and Barbara, through
their respective interests in Rim Company, in Union Quarries at
the time of the liquidation of Rim Company. (F?adley Direct, Vol.
II, p.295).
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N0. 66 EQUITY 1988
30. On the morning of December 19, 1986, William S.
Skinner, an associate at Morgan, Lewis & Bockius's Philadelphia
office brought the two tenant-in-common agreements in addition to
several deeds and documents to Harrisburg. (Klein Cross, Vol. I,
p.71).
31. On the afternoon of December 19. 1986, a meeting
was held at the offices of Pennsy Supply in Harrisburg to execute
the two tenancy-in-common agreements and other documents
concerning the liquidations of Kim Company and Pennsy Supply.
Another purpose of the meeting was to take the necessary steps to
create the two new corporations, Mumma Realty Associates, Inc.
and Hummelstown Quarries, Inc. (Skinner Direct, Vol. I, pp.143-
147).
32. Mrs. Mumma, Hob, and Mr. Skinner attended the
December 19, 1986 meeting in person. Lisa and Mr. Klein were
present by telephone from the offices of Morgan, Lewis & Bockius
in Philadelphia and Linda was present by telephone from St.
Louis. Barbara was not present at the meeting. (Skinner Direct,
Vol. I, p.372, Barbara Direct. Vol. III, p.579, Bob Direct, Vol.
III, p.638).
33. Mr. Hadley was also present in Harrisburg for
portions of the December 19, 1986 meeting which pertained to the
valuation figure used for the Union Quarries' shares in Section 2
of MRA i. (Mrs. Mumma Cross, Vol. II, pp.232-33, Hadley Cross,
Vol. II, p.322).
34. Mr. Skinner provided Mrs. Mumma and Bob with
copies of the two tenancy-in-common agreements. During the
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NO. 66 EQUITY 1988
course of the meetfng Mrs. Mumma and Bob reviewed the agreements
with Lisa• Linda, Mr. Klein and Mr. Skinner. (Skinner Direct,
Vol. I, p.139, Mrs. Mumma Direct, Vol. II, p.193, Lisa Direct,
Vol. II, p.373, Bob Direct, Vol. III, pp.636, 639).
35. At the meeting, Bob had some concerns about
whether the agreements would affect his ability to pledge his
interest as collateral and transfer his interest in the
properties in trust for the benefit of his children. (Klein
Direct. Vol, I, pp.46-47, Skinner Direct, Vol. I, pp.140-142,
Mrs. Mumma Direct, Vol, II, pp.193-94, Lisa Direct, Vol. II, p.
374, Bob Direct, Vol. III, pp.640-41, Bob Cross, Vol. IV, pp.690-
91) .
36. During the meeting, Bob also had questions about
Section 2 of MRA I and was told that the provision was inserted
to maintain the Union Quarries' stock as a block. (Skinner
Direct, Vol. I, p.142, Lisa Direct, Vol. II, p.374).
37. Mrs. Mumma and Bob signed the two tenancy-in-
common agreements (MRA I and MRA II) at the December 19, 1986
meeting. The signature pages were attached to the original
agreements when Mrs. Mumma and Bob signed them. (Skinner Cross,
Vol. I, pp.147, 167-168, Mrs. Mumma Direct, Vol. II, pp194-95,
Mrs. Mumma Cross. Vol. II, pp.236-37, Exhibits P-1, P-2).
38. In addition, Mrs. Mumma and Bob signed several
additional loose signature pages identical to those attached to
the agreements. (Skinner Cross, Vol. i, pp.167-68, Mrs. Mumma
Cross, Vol. Ii, p.237).
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N0. 66 EQUITY 1988
39. Bob admits that his signature appears on Exhibit
P-1 and Exhibit P-2. (MRA I and MRA II agreements). (Bob
Direct, Vol. III, pp.642-43).
40. Lisa signed the MRA agreements on the evening of
December 18, 1986, at Morgan, Lewis 6 Bockius in Philadelphia.
(Lisa Direct, Vol. II, p.376).
41. Mr. Skinner and Lisa attest that 8xhibits P-1 and
P-2 are exact copies of the MRA agreements as signed by Mrs.
Mumma and Bob. (Skinner Cross, Vol. I, p.167, Lisa Direct, Vol.
II, p.376).
42. Following the December 16, 1986 meeting, both Mr.
Skinner and Lisa saw the executed originals of MRA I and MRA II.
(Skinner Cross, Vol. I, pp.158-59, Lisa Cross, Vol. III, pp.499-
500).
43. At the end of the December 19, 1986 meeting, Pam
Smeltzer, an employes of Penney Supply, was given the MRA
agreements and extra signature pages signed by Mre. Mumma, Lisa,
and Bob. (Skinner Direst, Vol. I, p.148, Mrs. Mumma Cross, Vol.
II, p.239).
44. Linda signed both MRA agreements around Christmas,
1986. (Linda Direct, Vol. III, p.567, Lisa Cross, Vol. III,
p.571, Exhibit P-1, Exhibit P-2).
45. Barbara signed both MRA agreements and remembers
signing some documents prior to December 31, 1986, in connection
with the liquidations. (Barbara Direct, Vol. III, p.583, Exhibit
P-1, Exhibit P-2).
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NO. 66 EQUITY 1988
46. Mrs. Mumma explained that she would not have gone
forward with the liquidation of Pennsy Supply and Kim Company if
Bob had refused to sign the two tenancy-in-common agreements on
December 19, 1986. (Mrs. Mumma Direct, Vol. II, p.195).
47. Section 3(e) of each of the MRA agreements
provides in part as follows:
Except as hereinafter provided in this
Section, no owner shall dispose of, sell,
transfer, assign, convey- mortgage, pledge.
grant a security interest in, hypothecate, or
encumber part or all of his or her undivided
interest in the Premises without the prior
consent of the owners. (Exhibit P-1, pp.8-
11, Exhibit P-2, pp.8-11).
48. Section 4 of each of the MRA agzeements provides
as follows:
General, overall management of the
Premises and of all matters arising out of or
in connection with the Premises, including a
sale or mortgage of the entire Premises or
any part thereof, shall be vested in the
Owners jointly and each Owner shall abide by
the policies and decisions in respect
thereof. Any agreement, approval, decisions
consent, request or other action of the
Owners shall be by majority (in interest)
vote and in writing unless otherwise
indicated. (Exhibit P-1, p.12, Exhibit P-2,
p.12) .
49. Section 3(b) applies to the situation where a co-
owner desires to independently sell his or her interest. In this
situation the other family members possess a right of first
refusal to buy the interest and preclude the entry of a stranger
into the ownership of the properties. (Rlein Direct, Voi. I,
pp.43, 86-87, Lisa Cross, Vol. III, pp.548-49, 553-55).
50. In contrast, Section 4 was meant to govern
situations where a majority-in-interest of the tenants-in-common
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NO. 66 EQUITY 1988
desire to sell one or more pieces of property owned by the
tenancies-in-common. Under this section, the will of the
majority prevails. (Klein Cross, vol. I, pp.87-88, 116 Lisa
Cross, Vol. IIi, pp.554-57j.
51. Section 14 of the MRA agreements requires that the
individual tenants-in-common execute documents or perform other
necessary actions to carry out the intent of the agreement or to
effectuate decisions of the majority in interest. (Exhibit P-1,
Exhibit P-2, Klein Dfrect. Vol. I, pp.44-45, Skinner Direct, Vol.
I, pp.148-149).
52. In addition to the execution of the MRA agreements
on December 19, 1986, the shareholders of Rim Company and Pennsy
Supply, including Bob, executed a bill of sale transferring
certain real and personal property of Rim Company and Pennsy
Supply to themselves in proportion to their respective
shareholdings in the two corporations. (Exhibit P-3, Skinner
Direct, Vol. I, pp.146-47).
53. On December 19, 1986, Bob in his capacity as Vice-
President of Rim Company and Pennsy Supply, also executed a joint
deed transferring all real estate owned by Rim Company and Pennsy
Supply to their shareholders as tenants-in-common under the MRA I
and MRA II agreements. (Exhibit P-4, Skinner Direct, Vol. I,
pp.146-47).
54. In addition to the master deed, Bob, in hfs
capacity as Vice-President of Penney Supply, also executed on
December 19, 1986, four deeds transferring various rights and
interests from Pennsy Supply to Hummelstown Quarries, Inc.
(Skinner Directr Vol. Ir pp•145-46).
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55. The shareholders took possession of the
transferred property as tenants-in-common under the fictitious
name of Mumma Realty Associates.
56. A fictitious name certificate and a certificate of
incorporation for Mumma Realty Associates, Inc. was filed with
the Secretary of State on December 19, 1986. (Skinner Direct,
Vol. I, p.136) .
57. A certificate of incorporation for Hummelstown
Quarries, Inc. was also filed with the Secretary of state on
December 19, 1986. (Skinner Direct, Vol. I, p.136).
58. Pursuant to Section 1 of the MRA agreement, Mumma
Realty Associates. Inc. was appointed manager of both of the
properties governed by MRA I and MRA II. (Rlein Direct, Vol. i,
p.42).
59. Mrs. Mumma and Lisa are the officers and directors
of Mumma Realty Associates, Inc.
60. Mrs. Mumma is the sole shareholder of Mumma Realty
Associates, Inc. (Skinner Direct, Voi. I, p.144).
61. On December 19, 1986, Bob executed a power of
attorney (the MRA power of attorney) pursuant to Section 14 of
the MRA agreements. (Skinner Direct, Vol. I, pp.148-49, Mrs.
Mumma Cross, Vol. II, pp. 140-41, Bob Direct, Vol. III, p.644,
Exhibit P-12).
62. The MRA power of attorney named the other tenants-
in-common, including the Estate, Mrs. Mumma and Lisa, as Bob's
attorneys in fact to execute on his behalf any deeds or other
instruments necessary and desirable to carry out any of the
purposes under the MRA agreements. (Exhibit P-12).
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63. The MRA power of attorney states that it is
coupled with an interest and is irrevocable. (Exhibit P-12).
64. Mrs. Mumma. Lisa, and Linda executed similar
powers of attorney. Mrs. Mumma and Lisa also executed a power of
attorney as executrices of the 8state. (Mrs. Mumma Cross. Vol.
II, pp.242-43).
65. The purpose of the MRA powers of attorney signed
by the tenants-in-common was to enable a majority in interest of
the tenants to proceed with transactions pursuant to the majority
control provisions of Section 4 of the MRlr agreements and
effectuate decisions with or without the subsequent cooperation
of an individual tenant. (Klein Direct, Vol. I, p.45, Skinner
Direct, Vol. I, p.149). '
66. The MRA power of attorney signed by Bob on
December 19, 1986, was not connected with or motivated by Bob's
upcoming trip to Colorado. (Klein Cross, Vol. I, pp.91-92).
when Mr. Skinner prepared the power of attorney, he was not aware
that Bob would be out of town in late December and early January.
(Skinner Directr Vol. I, p.149).
67. One of the reasons powers of attorney were needed
for all of the tenants-in-common was because Bob was seldom in
town. Barbara was often unavailable, and Linda was lining in St.
Louis. (Mrs. Mumma Cross, Vol. II, pp.240-41, Lisa Direct, Vol.
II, p.377).
68. Following the execution of the MRA agreements in
December, 1986, Gerald T. Brawner, a partner at Morgan, Lewis &
Bockius, was asked to review the MRA agreement and make
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appropriate changes or revisions. (Klein Cross. Vol. I, pp.101-
02) .
69. On March 11, 1987. Mr. Brawner sent the revised
MRA agreements with a cover memorandum to the tenants-in-common
and to Mr. Klein for their review and comment. (Klein Cross.
vol. I, pp.101-02, Lisa Direct, voi. II, p.380, EXhibit P-7).
70. On April 21, 1987, Mrs. Mumma, Lisa, Bob, and
Barbara met with Mr. Brawner at the offices of Pennsy Supply to
review the revised agreements among tenants-in-common. (Lisa
Direct, Vol. ii, pp.381-82, Barbara Direct. Vol. IIr p.579,
Exhibit P-10).
71. Following the April 21, 1986 meeting, Mr. Brawner
prepared ngw revised agreements among tenants-in-common and sent
them to Lisa. (Lisa Direct, Vol. II, p.386. The signature page
was paginated "18". EXhibit P-16).
72. On June 7, 1987, upon Lisa's request, all of the
tenants-in-common signed the revised agreement except for Bob.
An acknowledgement of the agreement was taken by Charlie Lear, a
notary at Pennsy Supply. (Lisa Direct. Vol. II, pp.386-87,
Exhibit P-16).
73. The possibility of Bob making an offer to purchase
Pennsy Supply became a subject of discussion in the autumn of
1986. (Lisa Direct, Vol. II, p.387).
74. On Alovember 10, 1986, Lisa sent Mr. Badley a cover
letter and a copy of a draft letter to Bob which explained that
the executrices were willing to consider an offer from Bob for
the purchase of Penney Supply. (Exhibit P-7). Lisa and Mr.
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Klein had prepared the draft letter. (Lisa Direct, Vol. II,
p.388) .
75. Mr. Klein explained to Lisa that the executrices
had to be careful when giving Bob an opportunity to buy the
business that they did not violate their duties as fiduciaries to
obtain a fair price for the business and that an arm's length
transaction existed. (Klein Direct, vol. I, pp.54-56, Liss
Direct, Vol. II, p.388).
76. A decision was made not to send the letter drafted
by Lisa and Mr. Klein. (Lisa Direct, Vol. II, p.389).
77. On November 20, 1986, Mrs. Mumma sent Bob a
different letter from the one drafted by Lisa and Mr. Klein which
invites Bob to make an offer for Pennsy Supply. (Mrs. Mumma
Direct, Vol. ii, pp.195-96, Lisa Direct. Vol. II, p.389, Exhibit
P-9) .
78. Under the instruction of the executrices, Mr.
Hadley provided Bob with certain financial information which he
desired in reference to the company. (Mrs. Mumma Direct, Vol.
Ii, p.196, Hadley Cross, Vol. II, p.312, Lisa Direct, Vol. II,
p.389) .
79. Mr. Hadley provided Bob with extensive financial
information regarding Pennsy Supply in a letter dated March 2,
1987. (Hadley Direct, Vol. II, pp.297-98, Hadley Cross, Vol. II,
pp.312-13, Lisa Direct, Vol. II, p.390, Bob Direct, Vol. III,
p.645, Exhibit P-37). Bob was previously provided with
depreciation schedules for equipment and facilities. (Hadley
Direct. Vol. ii, gp.297-9$, Bob Direct, Vol. II, p.645).
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B0. In March, 1987, a meeting was held at Mrs. Mumma's
home to give Bob the opportunity to present his offer to purchase
Penney Supply. Mrs. Mumma. Lisa, Bob, and Mr. Hadley were all
present at the meeting. (Hadley Direct, Vol. II, pp.298-99, 300,
Lisa Direct, Vol. II, pp.390-91).
81. Mrs. Mumma, Lisa, and Mr. Hadley expected Bob to
make an offer for the purchase of Pennsy Supply at the meeting
because Bob had already received the financial information he had
requested in reference to the company. (Mrs. Mumma Direct, Vol.
ii, p.199, Hadley Direct, Vol. II, p.299, Lisa Direct, Vol. Ii,
p.390).
82. At the beginning of the March, 1987 meeting, there
was a discussion of an appropriate price for Penney Supply.
(Hadley Direct, Vol. Ii, p.300, Lisa Direct, Vol. II, pp.391-92,
Bob Direct, Vol. III, p.646). Bob explained that he was
interested in buying Elco Concrete, a wholly-owned subsidiary of
Pennsy Supply. (Mrs. Mumma Direct, Voi. iI, pp.197-200, Hadley
Direct, Vol. II, p.300, Lisa Direct, Vol. II, p.391).
83. At the March, 1987 meeting, Mrs. Mumma informed
Bob that she was not interested in selling Elco separately from
the rest of Pennsy Supply. (Hadley Direct. Vol. II, p.300, Mra.
Mumma Direct, Vol. II, pp.199-200, Lfsa Direct, Vol. II, p.392).
84. Bob left the meeting and never made an offer to
purchase Pennsy Supply or Elco Concrete. (Hadley Direct, Vol.
II, p.300, Lisa Direct, Vol. II, pp.392-93).
65. During March or April of 1987, the executrices
began considering the sale of Lot 1-B located in Lemoyne,
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Pennsylvania. The lot was owned by Mumma Realty Associates under
the MRA I agreement. (Mrs. Mumma Direct, Vol. II, p.201, Lisa
Direct, Vol. III pp. 401-02) .
86. Lot 1-B was one of two adjacent parcels of realty
owned by the Mumma family interests in Lemoyne. The second lot
was owned by High Spec, Inc.. a corporation owned 50 percent by
Bob and 50 percent by the Estate.
87. Mrs. Mumma told Bob that Taco Sell had approached
the executrices about buying Lot 1-B. (Mrs. Mumma Direct. Vol.
II, p.202).
88. Bob explained to Mrs. Mumma that the executrices
should not accept less than $500,000 as the asking price for Lot
1-B. (Mrs. Mumma Direct. Vol. II, p.202).
89. Taco Bell was not wi111ng to pay the asking price
of $500,000 for Lot 1-B. (Mrs. Mumma Direct. Vol. II, p.202).
90. Subsequently, the executrices were approached by
Tom Flynn, a developer from Camp Hill, Pennsylvania who was
interested in Lot 1-B. Mr. Flynn agreed to the price of $500.000
quoted by the executrices for Lot 1-B. (Mrs. Mumma Direct, Vol.
II, p.203, Lisa Direct. Vol. II, pp.402-04).
91. Bob explained to Mrs. Mumma in a telephone
conversation that $500.000 would be the asking price for Lot 1-B
(the middle lot) and $600,000 would be the asking price for the
adjacent corner Lot 2. Bob thought that the middle lot should be
sold before the corner lot. (Lisa Direct, Vol. II, p.403).
92. During a trip to Europe in April, 198;, Sob told
Mrs. Mumma that he had heard that she sold Lot 1-B to Tom Flynn.
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Mrs. Mumma explained to Bob that she had negotiated the lot, but
no settlement had been reached with respect to the lot at that
time. During tbis conversation, Bob did not voice any protest or
objection to the sale of Lot 1-H. (Mrs. Mumma Direct, Vol. II,
pp.203-04).
93. After the April, 1987 trip to Europe, Mrs. Mumma
and Lisa learned that Bob indicated that he would not go along
with the sale of Lot 1-S to Mr. Flynn. (Mrs. Mumma Direct, Vol.
II, p.205, Lisa Direct, Vol. ZII, p.425. Bob Direct, vol. III,
p.647).
94. On June 30, 1987, a meeting was held at Barbara's
house to discuss the sale of Lot 1-B. (Mrs. Mumma Direct, Vol.
II, p.206, Mrs. Mumma Cross, Vol. II, p.254, Barbara Direct, Vol.
III, pp.586-67).
95. Mrs. Mumma, Lisa, Linda, Hob, and Barbara attended
the June 30, 1987 meeting. (Mrs. Mumma Direct, Vol. II, p.206,
Lisa Direct, Vol. III, p.426, Hob Direct, Voi. Iii, p.650).
96. At the June 30, 1987 meeting, Lisa told the family
members about the proposed sale of Lot 1-B to Mr. Flynn for the
price of $500,000. (Lisa Direct, Vol. III, pp.426-27).
97. During the June 30, 1987 meeting, Lisa also
explained to the family members the reason they needed to execute
new gowers of attorney in connection with the axle of Lot 1-8.
By executing new powers of attorney, the family members could
avoid filing the MRA I agreement which would have been required
had the MRA powers of .attorney been used to complete the sale of
Lot 1-B. (Lisa Direct, Vol. III, p.427).
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98. At the June 30, 1987 meeting, Bob had no objection
to the $500.000 asking price for Lot 1-B and said that the price
was a Esir one. (Mrs. Mumma Direct, Vol. II, p.206, Lisa Direct.
Vol. iII, pp.427-28, Bob Direct, Vol. III, p.650, Bob Cross, Vol.
IV, p.701).
99. On June 30, 1987, in the middle of discussions
regarding the sale of Lot 1-B, Bob stated that he wanted aright
of first refusal as to Pennsy Supply. (Mrs. Mumma Direct• Vol.
II, p.206, Lisa Direct, Vol. III, p.427, Bob Direct, Vol. III,
pp.651-52).
100. After Bob brought up the subject of a right of
first refusal as to Pennsy Supply, Barbara asked Bob if the
family members could resolve the sale of Lot 1-B first, and then
discuss the right of first refusal issue. (Mrs. Mumma Direct,
Vol. II, p.207, Lisa Direct. Vol. III, p.427).
101. Bob agreed to sign the necessary documents for
the sale of Lot 1-B to Mr. Flynn. (Mrs. Mumma Direct, Vol. II,
p.207) .
lOZ. On June 30, 1987, each of the family members
signed a poser of attorney. (Exhibit P-15. Exhibit P-13). The
powers of attorney signed by Rim, Lisa, Barbara• and Linda were
identical and were provided to Lisa by Mr. Brawner. (Lisa
Direct. Vol. III, p.423).
103. Bob's power of attorney was different from the
other family members because Bob insisted upon the removal of
paragraph 4 from h1s power before he would sign it. After the
meeting, Lisa returned to the offices of Pennsy Supply and had
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the power. retyped without paragraph 4. The revised power was
then hand delivered to Bob who signed the power on the same day
as the other family members. (Lisa Direct, Vol. III, pp.423-24,
428, 8xhibit P-13).
104. AlI of the powers of attorney signed by the
family members on June 30, 1987, were notarized. (Exhibit P-13,
Exhibit P-15).
105. After Bob agreed to sign for the Bale of Lot 1-B,
the discussion at the June 30, 1987 meeting turned to Bob's
request for a right of first refusal as to Pennsy Supply. (Mrs.
Mumma Direct, Vol. II, p.207, Lisa Direct, Vol. III, p.429).
106. Mrs. Mumma and Lisa told Bob at the June 30, 1987
meeting that they were not willing to grant him a right of first
refusal as to Pennsy Supply without first speaking to their
lawyers and accountants. (Mrs. Mumma Crass, Vol. II, pp.255-56,
Lisa Direct, Vol. III, p.429, Linda Cross, Vol. III, p.571).
107. At the June 30, 1987 meeting, there was no
discussion of the duration, terms, contingencies or other
specifics regarding Bob's proposed right of first refusal. (Lisa
Direct, Vol. III, p.430).
108. After the June 30, 1987 meeting at Barbara•s
house, Lisa told Mr. Rlein that Bob had asked for a right of
first refusal a• to Pennsy Supply. Lisa asked Mr. Rlein for hie
advice as to whether the executrices should grant Bob suah a
right. (Klein Direct, Vol. I, pp.53-54).
109. Mr. Riein responded to Lisa's question by stating
that the executrices could give Bob the first opportunity to bid
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• on Pennsy Supply, but Mr. Klein stressed that the executrices
should not give Bob a right of first refusal as to Pennsy Supply.
(Klein Direct, Vol. I, pp.54-56, Lisa Direct. Vol. III, p.437).
Mr. Klein explained that giving Bob such a right would jeopardise
the marketability of the company. Potential purchasers of the
company would be unwilling to incur the costs of due diligence if
Bob had the ability to simply match whatever offer they put
together and buy the company himself. By granting Bob a right of
first refusal, the executrices could handicap themselves. The
executrices would eliminate the chance of selling Pennsy Supply
to anyone but Bob. and as a result could potentially breach their
fiduciary duties to the Estate. (Klein Direct. Vol. I, p.57).
110. In addition to Mr. Klein. Lies consulted with Mr.
Hadley. who also strongly advised against giving Bob aright of
first refusal. (Lisa Direct, Vol. III, p.437).
111. Mrs. Mumma also talked with Mr. Klein and Mr.
Hadley about whether Bob should be given a right of first
refusal. Both Mr. Hadley and Mr. Klein advised against giving
Bob the right. (Mrs. Mumma Cross, Vol. ii, p.257).
112. Subsequent to the discussions Mrs. Mumma and Lisa
had with Mr. Klein and Mr. Hadley, Mrs. Mumma explained to Linda,
Bob, and Barbara, that following the advice of their advisors,
the executrices were unwilling to give Bob a right of first
refusal as to Pennsy Supply. (Mrs. Mumma Cross, Voi. II, p.258,
Lisa Direct, Voi. Iii. pp.437-438, Linda Cross, Vol. iii, pp.571-
72, Barbara Direct, Vol. III, p.592, Bob Direct, Vol. IIi,
p.654).
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113. Early in July, 1987, Bob telephoned Lisa and
demanded that the power of attorney he executed on June 30, 1987
be returned. (Lisa Direct, Vol. iii, pp.432-33, Bob Direct- Vol.
IIi, pp.654-55).
114. Following a discussion with Mr. Klein, Lisa
returned Bob's June 30, 1987 power of attorney. (Lisa Direct,
Voi. III, pp.433-34, Bob Direct, Vol. iiI, p.655).
115. The sale of Lot 1-B was closed on or about July
7, 1987. The executrices used Bob's original MRA power of
attorney, in addition to excerpts of the MRA I agreement provided
by Mr. Skinner, to close the sale of Lot 1-B instead of using
Bob's June 30, 1987 power of attorney. (Lisa Direct, vol. III,
pp.434-35, Exhibit P-58).
116. During the late summer and early fall of 1988,
the executrices were approached and began discussions with a
foreign company interested in purchasing Pennsy Supply. (Lisa
Direct, Vol. III, pp.441-43).
117. On November 2, 1988, Bob sent a letter to Barbara
in which he asserted a right of first refusal as to Pennsy
Supply. Hob claimed the right stemmed from the June 30, 1987
meeting at Barbara's house. (Lisa Direct. Vol. III, p.444,
Barbara Direct, Vol. III, pp.593-94, Exhibit P-84). Lisa also
received a copy of the letter. (Lisa Direct, Vol. IiI, p.444).
118. Prior to the November 2, 1988 letter, Hob had
never asserted to the executrices that he possessed a right of
first refusal as to Pennsy Supply. (Lisa Direct, Vol. IIi,
p.444).
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` 119. Following receipt of Bob's letter of November 2,
1988, Barbara had her attorney draft a response to Bob, which ahe
never sent, explaining that Barbara did not believe that Bob was
granted a right of first refusal as to Penney Supply as a result
of the June 30, 1987 meeting. It was Barbara's understanding
that Mrs. Mumma decided not to give Bob a right of first refusal
when her attorney told her that granting such a right to Bob
would dissuade other potential purchasers from making offers.
(Lisa Direct, Vol. III, p.446, Barbara Cross, Vol. III, pp.615-
19, Exhibit P-18, Exhibit P-35).
120. Linda never gave Bob a right of first refusal to
Penney Supply at either the June 30, 1987 meeting or at any other
time.. (Linda Direct, Vol. III, p.568j.
COI~CLUSIO1t8 OF LAIC
In declaratory judgment actions, the burden of proof in
the vast majority of the cases rests with the moving party.
Philip A. Hunt v. Mallinckro~t Chemical Works, 72 F.Supp. 865
(1947). Having sought the declaratory judgment on tha MRA
agreements, Mrs. Mumma and Lisa are the moving parties in this
case and therefore have the burden of proof.
In addressing the first issue, this court finds that
MRA I and MRA II, the two tenancy-in-common agreements were
validly executed on December 19, 1966. Mr. Skinner, Mrs. Mumma,
and Bob were the only ones present in person at the meeting on
December 19, 1986, and both Mr. Skinner and Mrs. Mumma testified
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that Bob signed the signature pages which were attached to the
complete copies of the MRA agreements. (Skinner Cross, Vol. I,
p.167). Mrs. Mumma 's testimony parallels Mr. Skinner's. She
stated that the draft agreements signed by both Bob and herself
on December 19, 1986, had signature pages attached to them.
(Mrs. Mumma Direct, Vol. II, p.195). Mrs. Mumma confirms that in
addition to the complete agreements, Mr. Skinner also supplied
Bob and herself with loose signature pages. It is clear that
Mrs. Mumma remembers Bob signing the agreements, because she said
that if Bob had refused to sign the agreements, she would not
have gone forward with the liquidation of Pennsy Supply and Rim
Company. (Mrs. Mumma Direct, Vol. II, p.195).
Having established that MRA I and MRA II were validly
executed, we now must address whether the language in sections 3
and 4 of the two agreements provided Bob with aright of first
refusal with respect to ail transfers of MRA properties.
Sections 3 and 4 of the tenancy-in-common agreements do not grant
Sob the expansive right of first refusal to all transfers of MRA
properties which he claims he is entitled to under the tenancy-
in-common agreements.
In construing a contract, this court shall look at the
intentions of the parties and the purposes the parties sought to
accomplish when executing the agreements. See Walton v.
P_hiladelvhia National Bank, 376 Pa. Super. 329, 338-40, 545 A.2d
1383, 1388 (1988)? In Re Carter's Claim, 390 Pa. 365, 371-372,
134 A.2d 908, 912 (1957).
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Mr. Klein testified that the two tenancy-in-common
agreements (MRA I and MRA II) were drafted with the intent of
providing provisions that would be substantially identical to
those found in a partnership agreement. (Klein Direct, Vol. I,
p.34). Under the tenancy-in-common agreements, the participants
would vote on the basis of their proportionate interest just as
they would have done in a partnership, but would not be penalized
by the Pennsylvania realty transfer tax which would have applied
to a partnership. (Klein Direct, Vol. I, pp.33-35).
Mr. Klein explained the significant difference in the
application of Sections 3 and 4 of the two KRA agreements.
Section 3(b)l applies to the situation where a co-owner desires
to independently sell his or her interest. The provision
provides that the tenant who wishes to sell his or her interest
must offer it to the co-tenants before the interest can be sold
to a stranger. (Klein Direct, Vol. I, p.43). Section 3(b) thus
represents a very limited right of first refusal meant to prevent
outsiders from entering into the family tenancy-in-common.
(Klein Cross, Vol. I, p.116).
l Section 3(b) of each of the PIRA agreements provides in
part as follows:
Except as hereinafter provided in this section, no
owner shall dispose of, sell, transfer, assign, convey,
mortgage, pledge, grant a security interest in,
hypothecate, or encumber part or all of his or her
undivided interest in the premises without the prior
consent of the owners and any such transaction
purported to be accomplished contrary to the provisions
hereof shall be absolutely void. (Emphasis supplied.
Exhibit P-1, Exhibit P-2).
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By contrast Section 42 applies when the majority in
interest of the tenants-in-common (i.e.• the Estate and
executrices) vote to dispose of one or more pieces of property
owned by the tenants-in-common. Under Section 4 the decision to
sell is made by majority rule. (Klein Cross, Vol. I, pp.87-88,
116, Lisa Cross. Vol. III, pp.553-557). The Estate. therefore.
being the largest shareholder of both Pennsy Supply and Rim Co.,
would exercise majority control over the properties because the
properties held by the tenants-in-common were to be based upon
the interests of the respective tenants in the pre-existing
corporations of Pennsy Supply and Rim Company. (Klein Direct.
Vol. I, pp.33-35, Hadley Direct. Vol II, p.303).
It is clear from the testimony provided by Mr. Klein
and Mr. Hadley that the MRA agreements were never drafted with
the intention of providing any tenant-in-common with a right of
first refusal as to individual parcels of property owned by the
tenants-in-common. Section 3(b) only granted a very narrow right
of first refusal to the MRA tenants-in-common and pertained to a
single tenant-in-common selling his or her undivided interest in
2 Section 4 of each of the MRA agreements provides as
follows:
General, overall management of the Premises and of
all matters arising out of or in connection with the
Premises, including a sale or mortgage of the entire
Premises or any part thereof. shall be vested in the
Owners jointly and each Owner shall abide by the
policies and decisions in respect thereof. Any
agreement, approval, decision. consent, request or
other action of the Owners hereunder shall be by
majority (in interest) vote and in writing unless
otherwise indicated. (Emphasis supplied). (Exhibit
P-1. Exhibit P-2).
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' ~ the premises. (Rlein Cross, Vol. I, p.116j. The provision was
not intended to provide a broad right of first refusal over every
independent property transfer. Citizen Care v. Degir. of Public
l~~fare, 118 Pa. Cmwlth 397, 401, 545 A.2d 455, 457 (1988) (when
a written contract is clear and unequivocal, its meaning must be
determined by its contents alone). Unless, therefore, there is a
sale of an undivided interest by an individual tenant, in which
case Section 3(b) would apply, the majority rule set forth in
Section 4 serves as approval for all transfers of MRA properties.
This court notes that Bob's percentage interest in the
two tenancy-in-common agreements is very minimal in comparison to
the total value. Bob hold 4.24708 percent of MRA and .47847
percent of MRA II. {Exhibit P-1, Bxhibit P-2). By contrast,
however, Mrs. Mumma and Lisa, through their individual or
representative capacities, hold 87.28 percent. in MRA I and 98.56
percent in MRA II. (Bxhibit P-1, Bxhibit P-2). Under the
majority rule of Section 4 of the MRA agreements, Bob therefore
has no right of first refusal with respect to any transfers of
MRA assets, and because of his minimal holdings he also has no
effective control over these assets. Ths intent of the MRA
agreements was to place the power and control of the MRA assets
with the majority-in-interest because this paralleled the set up
in the pre-existing majority-controlled corporations of Rim
Company and Penney Supply Co. Under the MRA agreements, as with
the pre-existing corporations, Bob, therefore, has no right of
first refusal or control over the transfer of M1tA assets. Bob is
only entitled to a share of the assets held by the MRA tanancies-
in-common that are proportionate to his percentage interest.
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In addressing the second issue, this court finds that
the MRA power of attorney executed by Robert M. Mumma, II on
December 19, 1986 was irrevocable. The MRA power of attorney
(Exhibit P-12) states that it "is coupled with an interest. is
irrevocable and shall be binding upon the successors and assigns
of the undersigned." We consider the MRA power of attorney
irrevocable because the language of the power of attorney is to
be strictly construed, Fiest v. Com Land Title Ins. Co., 499 Pa.
68, 74, 451 A.2d 674, 677 (1982) and both Mrs. Mumma and Lisa
have a direct interest in the MRA properties.
With respect to the construction of the power of
attorney, the Pennsylvania Supreme Court in Nuaem v. Sr+riaasr 357
Pa. 531. 55 A.2d 402 (1947) held that "powers expressly granted
will not be restricted by implication, nor will a construction be
made which will effectively defeat the very purpose of the
agency." Id. 357 Pa. at 533, 55 A.2d at 403. In this case, the
MRA power of attorney expressly provided tbat it was irrevocable
and coupled with an interest.
When the power of attorney is coupled with an interest,
the power is irrevocable. The agent's interest must be in the
subject matter o€ the power. Siee, Hartley's A~vveal, 53 Pa. 212,
213-214 (1866). in this case. when Bob executed the power of
attorney, appointing Mrs. Mumma and Lisa as his agents, the power
was clearly coupled with an interest. Mrs. Mumma and Lisa, as
co-owners of the MRA properties, controlling more than 85 percent
of each of the tenancies, had an interest in the power of
attorney because the value and disposition of the MRA properties
would have a direct effect upon their holdings.
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NO. 66 EQUITY 1988
In addition to the power of attorney being irrevocable,
there is nothing in the language of the power of attorney, or in
Section 14 of the MRA agreements,3 which provides Bob with a
right of first refusal as to transfers of MRA properties which
would be subject to the exercise of the MRA power of attorney.
With respect to the third issue, this court finds that
Robert M. Mumma, II was never granted a right of first refusal to
purchase Pennsy Supply. There is nothing in the record which
indicates that an agreement ever existed. between the parties that
Bob would be granted aright of first refusal in exchange for his
signature on the power of attorney to sell the Lemoyne lot. In
contrnst, the testimony is uncontradicted that Hob agreed to the
transfer of Lot 1-B at the June 30, 1987 meeting, before any
discussion of his interest in a right of first refusal as to
Pennsy Supply occured.
Even if this court were to consider Bob's agreement to
sign the power of attorney as an offer of a quid pro quo in
exchange for a right of first refusal, it was subject to an
express condition precedent. At the meeting on June 30- 1987,
Mra. Mumma and Lisa explained to Hob that their acceptance of his
offer was conditioned upon their attorneys' and accountants'
approval. "it is a basic principle of the law of contracts that
an acceptance must be unconditional and absolute," Thomas A.
~mbruster. inc, v. Harron, 341 Pa. Super. 409, 418-19, 491 A.Zd
3 Section 14 of the MRA agreements provides that the power
of attorney will enable the owners of the MRA properties to
"carry out any of the purposes under this agreement or to
effectuate a decision of the owners thereunder." (Exhibit P-1).
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NO. 66 EQUITY 1988
882, 887 (1988). In this case, the approval of the executrices'
counsel was required before Mrs. Mumma and Lisa would accept
Sob's offer.
When Mrs. Mumma and Liea consulted counsel they were
told that granting Bob a right of first refusal could create
serious problems. It would diminish the value of the Estate by
making Pennsy almost impossible to sell. and could also be
considered a breach of the executrices' fiduciary duties. The
executrices have a duty to use care and diligence in managing the
Estate, See 8state of Rurkowski, 487 Pa. 295, 301-02, 409 A.2d
357, 361 (1979), and if the Estate were to diminish in value.
Mrs. Mumma and Lisa would be liable to the Estate for any loss or
waste which their negligent conduct had caused. Estate of Lohm.
440 Pa. 268, 273. 269 A.2d 451, 454 (1970)= Estate of Albright,
376 Pa. Super. 201, 215-16, 545 A.2d 896, 904 (1988) aDD@al
nied, 522 Pa. 571, 559 A.2d 33 (1989). Thus. the executrices
were strongly advised by Mr. Hadley and Mr. Rlein against
granting Sob a right of first refusal as to Pennsy Supply. The
condition precedent to granting the refusal right, therefore,
never materialised.
Even if this court were to find that no express
condition precedent existed with respect to giving Bob the right
to purchase Penney Supply. Bob did not offer any consideration
for the right of first refusal. Bob agreed to the sale of Lot
1-B prior to any discussion of his right of first zefusal. Even
if Bob claims that his promise to execute a power of attocney was
made in exchange for a right of first refusal as to Pennsy
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•
.~;~ .A
• NO. 66 EQUITY 19$8
Supply, Bob's promise would not constitute consideration to
support the agreement.
"Consideration is a bargained for exchanger evidenced
by a benefit to the promisee and a detriment to the promisor."
Estate of Heck, 489 Pa. 276, 282, 414 A.2d 65, 68 (1980). "There
can obviously be no such bargained for exchange if one of the
parties is already legally bound to render the performance
promised." Com. Devt. of Tr~nsp. v. First Pennsylvania Bank, 77
Pa. Cmwlth 551, 553, 466 A.2d 753, 654 (1983) (citing, C at am
Communications. Inc. v. Gen. Press. Corp.• 463 Pa. 292, 344 A.2d
837, 840 (1975)). The Superior Court in ~rren Tank Car Co. v.
Dodson, 330 Pa. ZB1, 199 A. 139 (1938) elaborated further by
stating that "a promise to carry out a contract subsisting
between the parties or the performance of such a contractual
duty, is not a consideration which will support a contract." Id.
330 Pa. at 284-286, 199 A. at 141.
In this case, Bob had a contractual duty under section
14 of the MRA agreements to execute the power of attorney on
June, 1987• to enable the majority in interest to effectuate
property transfers of the holdings in MRA I and II. Bob's
promise to execute a power of attorney permitting the transfer of
Lot 1-B in June, 1987, was not consideration for any right of
first refusal, because Hob was only complying with his
contractual duties under Section 14 of the MRA agreements.
In addition, Bob had already executed a power of
attorney on December 19, 19$6, pursuant to Section 14 of the MRA
agreements, which was ultimately used by Mrs. Mumma and Lisa in
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. N0. 66 EQUITY 1988
completing the transfer of Lot 1-B. Bob cannot argue that his
execution of the MRA power of attorney on December 19, 1986,
serves as valid consideration for his claimed right of first
refusal because "past consideration will not support a
subsequent agreement." Russell Houser. et al. v. Victor F.
Houser, 36 Northampton 364, 365 (Pa. C. 1962).
OBDB'R 0~ COORT
AND NOW, this a~~ day of ~ilL~cCly , 1992, in
accordance with the foregoing findings of fact and conclusions of
law. it is hereby ordered that the declaratory judgment shall be
entered as follows:
1) The two tenancy-in-common agreements MRA I and MRA
II signed by Robert M. Mumma, iI on December I9- 1986, are
binding upon him and grant him no right of first refusal as to
any transfers by the executrices, Barbara Mcx. Mumma and Lisa M.
Morgan, of the real estate held by the MRA tenants-in-common when
there is approval by a majority in interest]
2) The MRA general power of attorney which Robert M.
Mumma, II executed on December 19, 1986, is valid and
irrevocable, and pursuant to Section 14 of the MRA agreements.
empowers Mrs. Mumma and Lisa to transfer properties held by the
MRA tenancies-in-commons an8
3) Robert M. Mumma. II was never given an oral right
of first refusal to purchase Pennsy Supply, Inc., in June, 1987,
in exchange for his promise to execute a power of attorney for
Lot 1-B in Lemoyne.
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NO. 66 EQUITY 1988
By the Court,
/s/ Harold E. Sheely
P.J.
Thomas M. Kittredge, Esquire
Richard W. Stevenson, Esquire
John HarBin Young, Esquire
Anthony vale, Esquire
William F. Manson, Esquire
Charles E. shields. III, Esquire
:pbg
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BARBARA McR. MUMMA AND
LISA M. MORGAN, individually
and as Executrices of and
Trustees under the Will of
ROBERT M. MUMMA, deceased
AND LINDA M. ROTH,
Plaintiffs
V
ROBERT M. MUMMA, II AND
BARBARA M. McCLURB,
Defendants
IN THE COURT OF COMMON PLEAS OF
CUMBERLAND COUNTY, PENNSYLVANIA
CIVIL ACTION - EQUITY
s
NO. 66 EQUITY 1988
SEFORE SBEELY. P.J.
ORDER OF COURT
AND NOW, this ~ r~ day of ~ a v-~r-~`-t ; 1992,
the defendant's motion for poet-trial relief is hereby DEII<IED.
This opinion shall be considered a FI8]1L DECREE.
By the Court,
Harold E. Sheely, P.J.
x: , '~ _"' • ~ TRUE COPY FROM RlCORD
;•,, , ~ ; ~,, ~ ~'-, In Testimony whereof, I here unto set my hand
'~~~ ~ and the seal ofasaid Court at rlisle, Pa.
l6. WC 30 ~ a no;~ 'this ...~ 7 day of--- us7~~ ~~
~/
EXHIBIT "B"
~ ~ ~~
Marc J. Sonnenfeld, Esquire
Brady J. Green, Esquire
William F. Martson, Esquire
For Barbara Mumma and Lisa Morgan
John Hardin Young, Esquire
For, Linda Roth
Jon A. Baughman, Esquire
William C. Costopoulos, Esquire
Charles B. Shields, III, Bsquire
For Robert Mumma, II
Richard W. Stevenson, Esquire
For Barbara McClure
Ronald M. Katzman, Esquire
spbf
.,a, P .
3~0
BARBARA McR. MUMMA AND
LISA M. MORGAN, individually
and as Executrices of and
Trustees under the Will of
ROBERT M. MUMMA, deceased
AND LINDA M. ROTH,
Plaintiffs
V
IN TH8 COURT OP COMMON PLEAS OF
CUMBERLAND COUNTY, PENNSYLVANIA
CIVIL ACTION - EQUITY
ROBERT M. MUMMA, II AND
BARBARA M. McCLURE, NO. 66 EQUITY 1988
Defendants
IR Rs: ItOSION OF DiFE~tDA~I't ROBERZ K. M[AW1-. II
FOR P08T-TRIAL RRLISF
FACTS
Barad upon our findings of fact of March 24, 1992,
which we herein adopt in toto, with the agreed upon amendments,
the following is a factual and procedural summary of the events
surrounding this action:
Mrs. Mumma and Lisa Mumma Morgan (Lisa) are executrices
of the Bstate of Robert M. Mumma.l They, along with plaintiff
Linda M. Roth (Linda), Robert M. Mumma, II (Bob), and nominal
defendant Barbara M. McClure (Barbara), are the former
shareholders of .Rim Company and Pennsylvania Supply Company,
Harrisburg, Pennsylvania (Pennsylvania Supply). On December 19,
1986, those two corporations were liquidated and their respective
1 Robert M. Mumma died testate on April 12, 1986.
~~~~
assets were conveyed to. the former shareholders of the
corporation as tenants-in-common. Two written agreements among
tenants-in-common were executed by the former shareholders
contemnoraneouely with the liquidation of the corporations. Bob
signed those two agreements, commonly referred to as MRA I and
MRA II, on December 19, 1986. By its terms, MRA I expressly
governed the properties previously held by Kim Company, and MRA
II governs the assets of Pennsylvania Supply.
The liquidation of Pennsylvania Supply and Rim Company
were motivated solely by tax considerations and not by any desire
to alter the management and control structures of the
corporations. The parties sought to retain structures
functionally resembling as closely as possible the pre-existing
corporate arrangement. The shares of the family members in the
tenancies-in-common thus remained identical to their proportional
stock ownership in the corporations. The MRA agreements also
maintained the majority-based decision-making arrangement which
existed in the corporations.
Pursuant to Section 1 of the MRA agreements, MRA, Inc.
was appointed mana~
Mumma and Lisa are
December 19, 1986,
power of attorney)
egg 8xhibit P-12.
tenants-in-common,
ger of both of the tenancies-in-comanon. Mrs.
the officers and directors of MRA, Inc.- On
Bob executed a power of attorney (the MRA
pursuant to Section 14 of the MRA Agreements.
The MRA power of attorney named the other
including the Estate, Mrs. Mumma and Lisa, as
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NO. 6b SQiJITY 1988
Bob's attorneys in fact to execute on hie behalf any deeds or
other instruments necessary and desirable to carry out any of the
purposes under the MRA agreements. The MRA power states on its
face that it is coupled with an interest and is irrevocable.
Similar powers of attorney were executed by the other family
members.
The Estate, Mrs. Mumma, Lisa and Bob are also among the
shareholders of the Nine Ninety Nine, Inc. (999), a privately
held corporation. The Estate owns the largest interest in 999.
Penney Supply, Inc. (Pennsy) is, in turn, a wholly owned
subsidiary of 999. On June 30, 1987, the tenants-in-common under
the MRA agreements held a meeting to discuss the proposed sale by
Mrs. Mumma and Lisa, as officers of MRA, Inc., of a Lot 1-B
located in Lemoyne, Pennsylvania. To facilitate the sale, and in
order to avoid the necessity of filing the MRA agreements, Mrs.
Mumma and Lisa sought to procure from the other owners powers of
attorney specifically referring to the Lemoyne property. Bob
agreed to, and. did, sign the new power of attorney. Bob
subsequently demanded the return of the later power, and Lisa
complied with the request. The sale of the Lemoyne lot was
completed in July of 1987. In order to effectuate the sale, Mrs.
Mumma and Lisa used the still valid MRA power of attorney
executed by Hob in December, 1986, rather than the June, 1987
power.
Following his agreement to sign the new power of
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NO. 66 BQUITY 1988
attorney for use in the sale of the Lemoyne lot, Bob requested
that he be given a right of first refusal to purchase Penney,
should Mrs. Mumma and Lisa decide to sell it. Mrs. Mumma and
Lisa stated that they might be willing to grant Bob a right of
first refusal as to Pennsy, but that they would not consent if
their financial and legal advisors did not approve the step.
Mrs. Mumma aad Lisa's attorneys counseled them that granting the
first refusal right sought by Bob would not be in their financial
or legal interests because it would impair the value of the
Estate by rendering Penney, one of the Estate's largest assets,
virtually impossible to sell for its full market value.
In November, 1988, while Mrs. Mumma and Lisa were
engaged in negotiations with a prospective buyer for a sale of
stock of 999, and thus Pennsy, and real property owned by the MRA
tenancies, Bob sent a letter to Barbara in which he claimed that
he held a right of first refusal stemming from the June 30, 1987
meeting. On December 27, 1988, Mrs. Mumma and Lisa commenced
this action in equity, upon information and belief that Bob would
attempt to disrupt a proposed sale of stock of 999 and real
properties owned by the MRA tenancies. Mre. Mumma and Lisa
sought a declaratory judgment removing Bob's threatened
obstruction of the transfer and declaring the MRA agreements and
the MRA power of attorney signed by Bob on December 19, 1986,
were valid and enforceable.
Following three and one-half days of testimony in this
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NO. 66 EQUITY 1988
matter, this court entered a lengthy thirty-three page opinion
and order on March 24, 1992. The opinion and order set forth
exhaustive and detailed findings of fact and conclusions of law.
Based upon those findings and conclusions, the court entered a
declaratory judgment as followss
1) The two tenancy-in-common agreements
MRA I and MRA II signed by [Bob] on December
19, 1986, are binding upon him and grant him
no right of first refusal as to any transfers
by the executrices, [Mrs. Mumma and Lisa], of
the real estate held by the MRA tenants-in-
common when there is approval by a majority
in interest;
2) The MRA general power of attorney,
which [Bob] executed on December 19, 1986, is
valid and irrevocable, and pursuant to
Section 14 of the MEtA agreements, empowers
Mrs. Mumma and Lisa to transfer properties
held by the MRA tenancies-in-common; and
3) [Bob] was never given an oral right of
first refusal to purchase Penney Supply, Inc.
[Penney Supply], in June, 1987, in exchange
for hie promise to execute a power of
attorney for Lot 1-B in Lemoyne.
Bob now seeks our reconsideration on the matter. In
his motion for poet-trial relief and his brief in support
thereof, he seta forth a wide variety of arguments in an attemgt
to persuade this court to reconsider its findings. Among the
arguments, Bob asserts that our decision is in error because:
1) Bob did not sign the MRA I and MRA II
agreements, and therefore they are not valid,
enforceable and binding upon him;
2) The common law provides for a right of
first refusal with a tenancy-in-common;
3) Even assuming that the tenancy-in-
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N0. 66 EQUITY 1988
common agreements are enforceable, they give
each of the tenants a right of first refusal;
4) The general power of attorney executed
by RHIIYI I I ( Bob ) does not empower the
executrices to transfer properties held by
the tenancies in common;
5) RMM II (Bob) was granted an oral right
of first refusal with respect to the sale of
Pennsy Supply, Inc.;
6) Morgan, Lewis & Bockius should be
disqualified from representing the
plaintiffs.
We will dispense with each point for reconsideration
,e~tsso•
DISCUSSIOx
Bob's first argument in support of his motion for post-
trial relief is that the MRA agreements among tenants-in-common
are not valid and binding upon him because he never signed those
agreements.. Bob alleges on Page six of his brief that he did
not sign the documents purporting to be MRA I and MRA II, and he
certainly could not have signed any such agreements at the
meeting on December 19, 1986, since he was only tendered one
agreement which he substantially revised. He also asserts that,
"It is further clear that whatever agreement was presented to Mr.
Mumma on December 19, 1986, was not signed by all the parties at
such a time since not all the parties were then present, and no
signature pages were attached to the document at the time of
signing (December 16, 1986)." RMM II brief at p.6.
Bob's contention that he "never manifested any
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NO. 66 EQUITY 1988
intention to sign the agreements in the form in which they were
presented to the court" is, however,. belied by the testimony
presented to this court. Both Mrs. Mumma and Mr. Skinner
testified that at the outset of the meeting, Mr. Skinner gave Bob
copies of two distinct and separate agreements among tenants-in-
cam~n. See Skinner Direct, Vol. I, p.139; Mre..Mumma Direct,
Vol. II, p.193; Lisa Direct, Vol. II, p.373; Findings of Fact No.
34, p.7. Moreover, Mrs. Mumma and Mr. Skinner testified that,
after reviewing the language of the agreements and raising some
questions, Bob signed the agreements among tenants-in-common on
December 19 and that, at the time of these signatures, the
signature pages were attached to the original agreements. ,~
Skinner Cross, Vol. I, p.167; Mrs.. Mumma Direct, Vol. II, pp.194-
95; Mrs. Mumma Cross, Vol. II, pp.236-37; Exhibit P-1, Exhibit P-
2; Findings of Fact Nos. 35, 35, 37, p.8. In addition, Sob
admits that his signature appears on MRA I and MRA II. Bob
Direct, Vol. III, pp.642-43; See also Exhibit P-1; 8xhibit p-2;
Findings of Fact No. 39, p.9.
We-find no record to support, other than Bob's own
testimony, his contention that he did not sign the MRA I and MRA
II agreements on December 19, 1986. Indeed, no other witness who
appeared at the trial of this case supported his version of the
events at the December 19, 1986 meeting. Thus, in a last ditch
effort, Hob directs our attention to the fact that not all the
parties were present at the December 19, 1986 meeting and that
-7-
1 2 µ°l
the Best Evidence Rule should be applicable here. First, we
agree with the plaintiffs that whether the other signatories were
or were not present on December 19, 1986, or at any other time is
wholly irrelevant to the gravamen of Bob's position which is
whether tag in fact, signed the agreements that night. We are
confident as we found in Findings of Fact No. 32 that Mrs. Mumma,
Bob and Mr. Skinner attended the December 19, 1986 meeting in
person and that Lisa and Mr. Klein were present by telephone from
the offices of Morgan, Lewis and Bockius in Philadelphia and that
Linda was present by telephone from St. Louis. The only person
not present was Barbara. egg Skinner Direct, Vol. I, p.372;
Barbara Direct, Vol. III, p.579; Bob Direct, Vol. III, p.638.
Secondly, Bob contends that "there is no substantial
evidence that there ever existed original executed MRA
agreements." Bob's brief at p.7. At Page 6 of his brief, he
asserts that "under Pennsylvania's Beat Evidence Rule, the
executrices bore the burden of producing .the original documents
or of offering a satisfactory explanation for their absence." He
cites us to L.C.S. Collurv. Inc. v. Globe Coal Co., 369 Pa. 1, B4
A.2d 776 (1952); .~,nderson v. _Commonwealth_of Pennsylvania, 121
Pa. Commw. Ct. 52•l, 550 A.2d 1049 (1988). It has been pointed
out several tiunes to the court that no original agreements have
been produced, and that plaintiffs have given no satisfactory
explanation as to why no originals have been made available for
production. Mr. Mumma also asserts that there has been no
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NO. 66 EQUITY 1988
substantial evidence that there ever existed original executed
MRA agreements. We disagree.
First, at the trial Mr. Skinner, in addition to
testifying as to having seen Bob sign the MRA agreements, stated
that he recalls having seen fully executed, original copies of
the agreements among tenants-in-common following the December 19,
1986 meeting. deg Skinner Direct, Vol. II, p.158. In addition,
Lisa testified that she recalls seeing such originals sometime
during December, 1986 or January, 1987. Lisa Direct, Vol. II,
p.379; Lisa Cross, Vol. III, pp.498-99. Thus, we believe that
our findings that Exhibits P-1 and P-2 are .copies of the
agreements as executed at the December 19th meeting is amply
supported by the record.
Nor do we believe that the beet evidence rule in any
way impacts upon our conclusion that the MRA I and MRA II
agreements, as signed by Bob, are valid and enforceable. A party
seeking to prove the terms of a writing must either 1) produce
the original writing or, 2). show that the original is
unavailable. See e.q., Hamill-Quinlan. Inc. v. Fisher, 404 Pn.
Super. 482, 489, 591 A.2d 309 (1991) (quoting Nobel C. Quandel
Co. v. Stough Flooring, Inc., 384 Pa. Super. 236, 241, 558 A.2d
99 (1989); 1 Packel & Poulin, Pennsylvania Evidence S1001, at
693-94 (1987). In general, courts have recognized that
destruction or loss is a satisfactory explanation for failure to
produce an original writing. s4gg 2 McCormick on Evidence 5237,
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N0. 66 EQUITY 1988
at 76 (1992); 1 Packel & Poulin 51001.3, at 698-99. In such
circumstances, a copy of the original may be admitted if properly
proven, inter alia, by testimony of witnesses familiar with the
circumstances surrounding the production of the copy. ~
Brenner v. Lesher, 332 Pa. 522, 526, 2 A.2d 731 (1938). For
example, in Olson & French Inc. v. Commonwealth, 399 Pa. 266,
271-72, 160 A.2d 401 (1960), the original of a document had been
mislaid. Plaintiff sought to introduce a photocopy of the
document. The Supreme Court held that testimony of the
plaintiff, as well as of the attorney who prepared the document,
that the proffered photocopy was a true and correct copy of the
original supported admission of the copy under the Best Evidence
Rule. ~
The testimony in the instant case reveals a situation
almost identical to that in Qlson & French, supra. As noted
above, both Lisa and Mr. Skinner testified that they had seen
fully executed MRA agreements subsequent to the December 19th
meeting. The mere fact that the documents subsequently were lost
or mislaid in the files of Morgan, Lewis 6 Bockiue or otherwise
disappeared dose not in any way preclude the admission of
photocopies of those documents or testimony regarding their terms
and provisions. Moreover, the trial court is vested with
discretion to determine whether a party has offered sufficient
evidence of the unavailability of a document, Sgg McCormick 5237
at 77. We held in our March 24, 1992 opinion and order, at Page
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N0. 66 EQUITY 1988
23, that Exhibits P-1 and P-2 are "exact copies of the MRA
agreements as signed by Mrs. Mumma and Bob." 4ee Findings of
Fact No. 41.
Bob's second point of contention is that the common law
provides for a right of first refusal with a tenancy-in-common.
At Page 9 of his brief, Bob asserts, "The Court has authorized
the sale of family-held properties on terms that are in complete
derogation of defendant's common law rights." If it was the
parties' intention to create a common law tenancy-in-common then
Bob's assertions would be accurate. At common law, each co-
tenant enjoys an interest in the whole of the property held in
common. In re Encel's Estate, supra, 413 Pa. 478, 198 A.2d at
507. Regardless of .what the parties entitled these agreements,
we do not believe that the parties sought to enter into a common
law tenancy-in-common agreement. To believe that Mrs. Mumma and
Lisa, with their financial and managerial savvy, would agree to a
common law tenancy-in-common agreement flies in the face of
reason.
Wlsat the parties sought in drafting and executing the
MRA I and MRA II agreements was to procure the tax advantages
flowing from the liquidation of Rim Company and Pennsylvania
Supply, while at the same time preserving as nearly as possible
the pre-existing corporate structures, including majority based
control of the assets held by Kim Company and Pennsylvania
Supply. See Findings of Fact Nos. 9-12. There was never any
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NO. .66 EQUITY 1988
expressed intent on the part of any of the shareholders of Rim
Company and Pennsylvania Supply that the assets of those
corporations would be transferred into common law tenancies-in-
common. Rather, it was envisioned from the outset that the
tenancies would be governed by written agreements. Because it
was intended that the tenancies-in-common created at the time of
the liquidation of Rim Company and Pennsylvania Supply would be
governed by the written MRA agreements, invocation of common laws
are inapplicable.
As we stated earlier, it flies in the face of reason to
think that Mre. Mumma and Lisa would have agreed to create common
law tenancies in which, ae Bob notes, "tenants in common 'own and
possess in equal shares an undivided interest in the whole
property."' Bob's-brief at 17. Clearly, the Estate, which at
all times controlled the overwhelming majority of the stock and
voting power of Rim Company and Pennsylvania Supply, would not
for the sake of gaining a tax advantage, voluntarily have entered
into an arrangement in which it would hold only an "equal share"
with Hob and the other tenants-in-common. In fact, as the
signature pages and the language of the MRA agreements, as well
as the testimony at trial, make clear, the Estate's majority
control of the assets was to be carried over from the corporate
into the tenancy-in-common structures. To create a tenancy-in-
common at common law would have diminished the majority control
of the Estate, which just does not seam that such a move would
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NO. 66 EQUITY 1988
have been prudent or efficacious on behalf of the executrices.
Hob also argues that our interpretation of paragraphs 3
and 4 of the M1tA agreements is at variance with four rules of
contract construction. First, he contends that the plain meaning
of the I~IIiA agreements grants him a sweeping right of first
refusal with respect to any property owned by the tenancies-in-
common. In doing so, he focuses upon Section 1(e)(i) of the
agreements. That section provides that:
[nJo manager (or owner) on behalf of the
owners, without the consent of the owners,
shall have any right or authority implied or
apparent to sell or encumber the
premises or any part thereof or any interest
of an owner therein except as provided in
Section 3 below.
Exhibit P-1 at 6, Bxhibit P-2 at 6 (emphnsis supplied). Thus,
the only circumstance in which Section 3 of the agreement is
implicated in the context of a sale of a property owned by the
tenancies-in-common is when such a sale is attempted without the
consent of the owners, and, under Section 4 of the agreements,
consent of the owners "shall be by a majority (in interest)
vote." Exhibit P-1 at 12; Bxhibit P-2 at 12. As a result, the
provisions of Section 3 are not triggered at all in the event of
a sale consented to by a majority in interest of the tenants-in-
common.
Hased upon the clear language of the MRA agreements, we
concluded that Section 36, which states:
Bxcept as hereinafter provided in this
Section, no owner shall dispose of, sell,
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N0. 66 EQUITY 1988
transfer, assign, convey, mortgage, pledge,
grant a security interest in, hypothecate, or
encumber part or all of his or her undivided
interest in the premises without the prior
consent of the owners. .
represents "a very limited right of first refusal" applicable
only in instances where a co-owner desires to independently sell
his or her interest. See March 24, 1992 opinion and order at 25.
Under the terms of the MRA agreements, should the
Estate, the tenant controlling a majority in interest, elect to
sell the F~tate's interest, the Section 3(b) first refusal right
would be triggered, and tenants owning minority shares would
retain and may exercise a limited right of first refusal.
Contrarily, should a majority in interest decide to sell the
tenancy's interest in a particular property, the 3(b) right is
not triggered.
Bob nrques, however, that the language in the MRA
agreements is unclear and ambiguous. As a result, he urges us to
apply the maxim that doubtful language in a contract should be
construed most strongly against its drafter. We, however, found
the provisions of the MRA agreements to be clear and free from
ambiguity. Even assuming, arquendo, that Sections 3 and 4 of the
MRA agreements are ambiguous, rigid application of the maxim
touted by Bob is inappropriate. Although it is well-settled that
in the case of ambiguous writings, writings should be construed
moat strongly against the drafter:
Where a document is found to be ambiguous,
inquiry should be made into the circumstances
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surrounding the execution of the document in
an effort to clarify the meaning that the
parties sought to express in the language
which they chose. See 11eM Charter Coal Co. -
v. xcltee, 411 Pa. 304, 307, 191 A.2d 830
(1963) ; CosawaMealtb v. lit:~sartia, 376 Pa.
390, 393, 102 A.2d 893 (1954); 1liegard v.
Arericsa Stores, 346 Pa. .253, 256, 29 A.2d
484 (1943). It is only when such an inquiry
fails to clarify the ambiguity that the rule
of constructions should be used to
conclude the matter against the party
responsible-for the ambiguity, the drafter of
the document.
egg A. Corbin, Corbin on Contracts 5559 (one vol.ed 1953);
Restatement of Contracts 5236(d) (1932). Burns Mfq. Co Inc v.
Boehm, 467 Pa. 307, 313 n. 3, 356 A.2d 753 (1976).
Therefore, in the case of ambiguity, the court .should
attempt to determine, from the circumstances surrounding the
preparation of the contract and the intention of the parties, the
intended effect of the contractual language. See March 24, 1992
opinion and order at 24 (citing Walton v PhiladelRhia Nat onal
Bank, 376 Pa. Super. 329, 338-40, 545 A.2d 1383 (1988) and In re
C e , 390 Pa. 365, 371-72, 134 A.2d 908 (1957)). In the case
sub iudice, we carefully considered the testimony of Arthur Klein
and George Hadley relating to the reasons for the liquidation of
Kim Company and Pennsylvania Supply and the drafting of the MRA
agreements. S e March 24, 1992 opinion and order at 25-26. We
also carefully considered the effect that a common law tenancy-
in-common agreement would have on the majority rule provision and
found that a pure common law tenancy-in-common agreement would be
a self-defeating entity for the Estate. Why would the Estate
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give up its majority share interest to stand on equal footing
with the minority shareholders? We could not answer this
proposition. Thus, based upon the outside circumstances, and the
actions of the parties, we believe that the intent behind the MRA
agreements was clear.
Bob also contends that this court misinterpreted the
I~IIiA agreements by failing to apply the concept that specific
provisions in contracts control more generalizations. As a
result, he argues that Section 3(b) overrides Section 4 of the
MRA agreements. fAe disagree. After a careful and thorough
reading of Sections 3(b) and 4, Section 3(b) is longer and more
detailed than Section 4. The fact remains, however, that the two
provisions are aimed at entirely different types of transactions.
Bob also does not believe that our interpretation of
the IYIItA agreements is consistent with the "real nature and
character of the transaction." We believe that we have
reiterated throughout our previous opinion, as well as this one,
that even though the parties may have agreed to call the
agreement presently before us, a tenancy-in-common agreement,
which is probably a misnomer, a tenancy-in-common, as it exists
at common law is not what the parties intended. Unlike a
tenancy-in-common where interests are equally shared among the
co-tenants, these MRA agreements sought to retain majority
control interest. Therefore, the parties did not intend for the
common law rules to apply.
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Bob also contends that this court erred in finding that
the MRA power of attorney that he executed contemporaneously with
this signing of the MRA agreements is valid. Bob contends that
he executed the power of attorney .only to facilitate the
liquidation of Rim Company and Pennsylvania Supply while he was
in Colorado in early 1987. Bis assertion, however, is completely
at odds with the testimony of Mr. Skinner, Mr. Klein, Mrs. Mumma
and Lisa. According to both Mr. Skinner and Mr. Klein, the
purpose of the MRA powers of attorney signed by the tenants-in-
common was to allow a majority in interest of the tenants to
proceed with transactions pursuant to the majority control
provisions of Section 4 of the MRA agreements in the event an
individual tenant was unavailable or refused to cooperate. Klein
Direct, Vol. I, p.45; Skinner Direct, vol. I, p.149.
The MRA powers of attorney were expressly provided for
in p¢~ngraph 14 of the MRA agreements. ^~g Exhibit P-1, p.8
(power of attorney will enable owners of MRA properties "to carry
out any of the purposes under the agreement or to effectuate a
decision of the owners thereunder"), Exhibit P-2, p.18 (same).
Additionally, the MRA power of attorney which Bob signed
expressly states that it is intended to enable the other tenants-
in-common "to execute on [Bob's] behalf any deeds or other
instruments necessary or desirable to carry out any of the
purposes under the Agreement Among Tenants-in-Common. ." We
believe that this language contradicts the notion that the MRA
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power of attorney was intended only for use during January, 1987,
or only for purposes of the liquidations.
We found, previously, based upon the testimony of Mr.
Klein and others that the MRA power of attorney was in no way
related to Bob's upcoming trip to Colorado, and that Mr. Skinner,
the drafter of the power of attorney, was not even aware that Bob
would be out of town in December and January. ~ Findings of
Fact 66. Rather, the need for the powers of attorney from each
of the tenants-in-common stemmed, in part, from the fact that Bob
was seldom in town, Barbara was often unavailable and Linda was
living in st. Louis. ses Findings of Fact 67. As a result,
obtaining the signatures of the tenants-in-common on various
documents posed practical difficulties.
Bob also contends that the power is not valid because
he was not informed of the insertion of language stating that the
MRA power of attorney was "coupled with an interest." We believe
this to be irrelevant. Even had the MRA power of attorney not
contained such language, it was in fact coupled with an interest
and therefore was irrevocable. See Daughters of American
Revolution v. Schenlev, 204 Pa. 572, 54 A. 366 (1903) (where
facts indicate that power is coupled with interest, power is
irrevocable); c.f. A*-Auss v. American Tobacco Co., 283 Pa. 146,
150, 129 A. 60, 61 (1925). We based our initial findings that
the MRA power was valid and irrevocable upon both the language of
the power itself and the fact that Mrs. Mumma and Liea possessed
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an interest in the subject matter of the power. egg March 24,
1992 opinion. and order at 28.
In addition, Bob also contends that Lisa's desire to
obtain a second power of attorney at the time of the sale of the
Lemoyne lot evidences an acknowledgement that Bob's MRA power of
attorney could not be used to consummate the sales of the MRA-
owned properties. This theory does ask us to speculate upon
Lisa's motives for seeking a latter power. We believe, however,
that there was sufficient testimony presented at the trial to
answer her motivation.
Lisa testified, to our satisfaction, that counsel for
the buyer in the Lemoyne lot transaction had requested that the
entire MRA agreements be filed along with the MRA powers of
attorney. In order to avoid the need to file the MRA agreements
and thereby to make public, confidential matters relating to the
MRA properties and the structure of their ownership, Lisa
decided, after consultation with Mr. Klein, to prepare new powers
of attorney for each of the tenants-in-common. Lisa Direct, Vol.
III, pp.405-07. See also Findings of Fact 97 (citing testimony
of Lisa). Therefore, the evidence illustrates that Lisa's
motivation for having Bob sign a second power of attorney stemmed
from a desire to keep the MRA agreements confidential.
Bob further contends that he was granted an oral right
of first refusal with respect to the sale of Pennsy at the June
30, 1987 meeting at Barbara's house. Bob alleges that his
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agreement to sign the power of attorney was performed in exchange
for a right of first refusal. We disagree.
Bob initially argues that this court previously found a
right of first refusal when Bob's motion to disqualify Morgan,
Lewis & Bockius was denied on February 13, 1989. However, this
court's findings of fact in our March 24, 1992 opinion and order
are herein adopted in toto and replace and supersede any prior
inconsistent findings. The March 24th findings in regard to the
declaratory judgment in no way referenced the February 13, 1989
findings regarding Bob's motion to disqualify counsel.
The argument Bob has preeented is contrary to the
testimony heard on this issue at trial. The uncontradicted
testimony indicated that Bob agreed to the transfer of Lemoyne
Lot 1-B at the June 30, 1987 meeting prior to any discussion
regarding a right of first refusal. The fact that he did not
sign the power of attorney until later that same day, after the
meeting had ended, does not detract-from the finding that Bob
agreed to the transfer of Lot 1-B before the right of first
refusal discussion took place.
Additionally, we previously found that Mrs. Momma's and
Lisa's assent to the proposed right of first refusal was subject
to an express condition precedent. Lisa testified that she and
Mrs. Mumma wanted to discuss the issue of Sob's right of first
refusal with Mr. Klein, the Estate's attorney, and Mr. Hadley,
the Estate's accountant, before actually granting Bob a right of
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first refusal. (Lisa Direct, Vol. III, pp.429-30). Linda also
supported Lisa's testimony during her testimony at trial. (Linda
Cross, Vol. III, p.571). Thus, by conditioning their assent upon
the 8state's counsel's approval of the right of first refusal,
the acceptance was not unconditional and absolute. S.ee Thomas A.
Armbruster, Inc. v. Barron, 341 Pa. Super. 409, 491 A.2d 882
(1988).
we are also unable to find any evidence which would.
support Bob's assertion that the alleged agreement was subject to
a condition subsequent. There is no evidence to indicate that a
contract was ever in existence whereby Bob gained a right of
first refusal. The right of first refusal was not solely
conditioned upon Mr. Klein's finding of illegality in the alleged
agreement. Rather, Bob gaining this right was also expressly
conditioned upon the approval of Mr. Klein and Mr. Hadley
regarding the best interests of the Betate. Thus, when the
Estate's counsel strongly advised the executrices against
granting Bob this right, the condition precedent was not met and
Bob was not granted a right of first refusal.
Furthermore, Bob did not offer any consideration for
the right of first refusal. As stated earlier, Bob agreed to the
transfer of the Lemoyne lot prior to the discussion concerning
the right of first refusal. Additionally, Hob had a pre-existing
contractual obligation under Section 14 of the MRA agreements to
execute a power of attorney. There can be no consideration, no
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bargained for exchange, where one party "is already legally bound
to render the performance promised." Com. Dept. of Trans v.
F;*'st Pennsy~vania__Ban]i, 77 Pa. Commw. 551, 553, 466 A.2d 753,
754 (1983) (citing, ^'~~*''~~~^ ^^""""*+'cations. Inc. v. Gen. Press
Corn., 463 Pa. 292, 344 A.2d 837, 840 (1975)). Thus, Bob is
unable to argue that he offered consideration by signing.the
power of attorney due to the fact that he was already obligated
to do so.
Bob further contends that a promise to compromise a
disputed legal claim may serve as consideration. However, we
find no merit in this argument because Bob has failed to identify
any disputed claim which he agreed to compromise in the instant
action.
Bob has also accused Lisa of breaching her fiduciary
duty by failing to deal fairly and openly with him and other
attorneys. Bob claims that Lisa, inter alia, breached her
fiduciary duty by not informing fellow attorneys that Bob would
resist the sale of the Lemoyne lot once the right of first
refusal was not granted. However, as we stated earlier, Bob
agreed to the sale of the Lemoyne lot prior to discussions
concerning a right of first refusal with regard to Pennsylvania
Supply. Therefore, Lisa could not have advised another attorney
concerning Bob's unexpressed position. We believe Bob's
allegations of unethical behavior on the part of Lisa are
meritless.
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Bob also alleges that he was entitled to specific
enforcement of an exclusive right to make an offer for Pennsy
within sixty days after receiving complete financial information
from Mr. Hadley. Bob claims that this exclusive right was the
result of a second agreement made at the June 27, 1987 meeting.
In his brief Bob. states that it is "undisputed" that he
never received year-end financial information that would allow
him to make an offer within the sixty day limitation. While we
do believe that the family agreed to give Bob an opportunity to
make an offer, it is disputed that he has not received the
necessary financial information to make the offer for Pennsy.
Lisa testified that either she or Mrs. Mumma called Mr.
Hadley and informed him to send Bob any financial information he
did not already have. (Lisa Direct, Vol. III, p. 439; Lisa
Cross, Vol. III, p. 516). Lisa also testified that Bob had
already received most of the financial information because the
fiscal year ended June 30th. Thus, any information Bob did not
have would have been limited in amount and significance. Lies
testified that, with the fiscal year ending June 30th, there
might not have been anything additional to supply to Bob in order
to allow him to make an offer.
Lisa Cross, Vol. III, p. 516).
(Lisa Direct, Vol. III, p. 430;
Even if this court determined that Bob did not receive
adequate financial information, the promise to give him an
opportunity to make an offer on Pennsy still lacks consideration.
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Bob contends that the consideration for this promise was his non-
opposition to the sale of the Lemoyne lot. However, as was the
case in the discussion concerning the right of first refusal,
this alleged "exclusive right" did not take place until after Bob
had agreed to the sale of the Lemoyne lot. Bob's agreement to
the sale was not contingent upon his receiving this "exclusive
right."
Additionally, in the case sub iudice, Bob has never
asked this court for relief in any form, including specific
enforcement of the alleged "exclusive right." Therefore, we do
not believe thnt Bob is entitled to specific enforcement of the
alleged "exclusive right" to make an offer for Penney.
Bob's final argument contends that this court erred in
denying to disqualify Morgan, Lewis & Bockius in our lengthy
opinion and order dated February 13, 1989. Bob raises the same
argument in the present action se he raised in the initial action
to disqualify, namely, that Morgan, Lewis gave Sob advice with
regard to the MRA agreements, while at the same time also
representing him in regard to Bob's personal estate planning.
However, in our February 13, 1989 opinion and order,
this court concluded that "the subject matter of the pending
lawsuits are not substantially related to any prior legal
representation Morgan, Lewis provided Mr. Mumma." (February 13,
1989 opinion and order, at 19). Additionally, this court cited a.
letter from Mr. Klein to Bob dated September 5, 1986, in which
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NO. 66 EQUITY 1988
Mr. Klein clearly stated that Morgan, Lewis and Bockius solely
represented Bob for estate planning purposes and disclaimer
purposes under the will of Mr. Mumma, Sr. (7c~, at 13)
We do not believe that Bob has argued any issue novel
to our February 13, 1989 opinion and order. Therefore, we do not
believe Bob's contention that Morgan, Lewis should be
disqualified from the present action contains any merit. For the
reasons set forth within, the defendant's motion for post-trial
relief is denied.
ORDER O! COURT
r ?
AND NOW, this ~~ day of ZJ~°~I~„~-C~t/ , 1992,
the defendant's motion for post-trial relief is hereby D161fISD.
This opinion shall be considered a liaT71L D8CRL3.
By the Court,
/s/ Harold S. Sheely
Harold S. Sheely, P.J.
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NO. 66 EQUITY 1986
Marc J. Sonnenfeld, Esquire
Hrady J. Green, Esquire
William F. Martson, Esquire
For Barbara Mumma and Lisa Morgan
John Hardin Young, Esquire
For Linda Roth
Jon A. Baughman, Esquire
William C. Costopoulos, Esquire
Charles E. Shields, III, Esquire
For Robert Mumma, II
Richard W. Stevenson, Esquire
For Barbara McClure
Ronald M. Katzman, Esquire
:pbf
-Z 6-
I J
~ERTIFIGATE OF SERVICE
I, Tricia D. Eckenroad, an authorized agent for Martson Deardorff Williams Otto Gilroy &
Faller, hereby certify that a copy of the Reply to New Matter of Robert M. Mumma, II, Filed on
June 22, 2012, was served this date by depositing same in the Post Office at Carlisle, PA, first class
mail, postage prepaid, addressed as follows
Jeffrey G. Brooks, Esquire
Minto Law Group, LLC
Two Gateway Center
603 Stanwix Street
Suite 2025
Pittsburgh, PA 15222
Richard F. Rinaldo, Esquire
Williams Coulson Johnson Lloyd Parker & Tedesco
One Gateway Center, 16~' Floor
Pittsburgh, PA 15222
Ms. Linda M. Mumma
P.O. Box 30436
Bethesda, MD 20824
Joseph D. Buckley, Esquire
1237 Holly Pike
Carlisle, PA 17013
Dated: July 16, 2012
MARTSON LAW OFFICES
Y
Tricia D. Ecke •oad
Ten East High eet
Carlisle, PA 17013
(717} 243-3341