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HomeMy WebLinkAbout91-0025 CivilR.M.C. VENTURES, INC., IN THE COURT OF COMMON PLEAS OF and ROGER L. BAKER, CUMBERLAND COUNTY, PENNSYLVANIA Plaintiffs V. CIVIL ACTION - LAW RICHARD CURTIS COMPANY, Defendant NO. 25 EQUITY 1991 IN RE: ADJUDICATION BEFORE OLER, J. DECREE NISI AND NOW, this I }'day of August, 1993, following a non jury trial, the Court FINDS in favor of Original Plaintiff R.M.C. Ventures, Inc., and against Interpleaded Plaintiff Roger L. Baker, and DIRECTS Defendant Richard Curtis Company to convey the land which is the subject of the Installment Sales Agreement dated May 26, 1989, between Defendant as seller and "Mark L. Butler, K. Craig Bream and Roger L. Baker, T/A RMC Ventures, Inc.," as purchaser, to R.M.C. Ventures, Inc., upon completion of payment of the purchase price. IF NO MOTION for post -trial relief is filed within 10 days, this Decree Nisi shall, upon praecipe, be entered as a final decree.* BY THE COURT, 7 � . Wesley Oler, J. * See Pa. R.C.P. 227.4. Hubert X. Gilroy, Esq. Attorney for R.M.C. Ventures, Inc. Wayne F. Shade, Esq. Attorney for Roger L. Baker Roger Morgenthal, Esq. Attorney for Richard Curtis Company :rc R.M.C. VENTURES, INC., IN THE COURT OF COMMON PLEAS OF and ROGER L. BAKER, CUMBERLAND COUNTY, PENNSYLVANIA Plaintiffs V. CIVIL ACTION - LAW RICHARD CURTIS COMPANY, Defendant NO. 25 EQUITY 1991 IN RE: ADJUDICATION BEFORE OLER, J. OPINION AND DECREE NISI This equity action arises out of a dispute as to the proper grantee under an installment agreement for the sale of land. The agreement names the purchaser as "Mark L. Butler, K. Craig Bream and Roger L. Baker, T/A RMC Ventures, Inc."' The corporate entity has sued the seller for specific performance in the form of a conveyance to the corporation;' the seller has interpleaded one of the named individuals,' who maintains that the conveyance should be to the individuals." A trial in the matter was held on May 7, 1993, and June 7, 1993, before the undersigned judge. Based upon the evidence presented at the trial, the following Findings of Fact, Discussion and Decree Nisi are made and entered. 1 Plaintiff's Exhibit 6, Trial, May 7, 1993, and June 7, 1993, R.M.C. Ventures, Inc., and Roger L. Baker v. Richard Curtis Company, No. 25 Equity 1991 (hereinafter Plaintiff's Exhibit 2 Plaintiffs Amended Complaint, Count II. 3 Roger L. Baker. 4 Interpleaded Plaintiff's Statement of Claim. No. 25 Equity 1991 FINDINGS OF FACT 1. Plaintiff is R.M.C. Ventures, Inc., a Pennsylvania business corporations 0 having its registered office' and principal place of business' at 1450 Trindle Road, Carlisle, Cumberland County, Pennsylvania. 2. Defendant is Richard Curtis Company, a Pennsylvania partnership having its principal place of business at 139 West High Street, Carlisle, Cumberland County, Pennsylvania.' 3. Interpleaded Plaintiff is Roger L. Baker, an adult individual residing at 425 Kerrsville Road, Carlisle, Cumberland County, Pennsylvania.' 4. The shareholders of Plaintiff R.M.C. Ventures, Inc., are Interpleaded Plaintiff Roger L. Baker, Mark A. Butler and K. Craig Bream; 10 the corporation's name derives from the first letters of the shareholders' given names. s Plaintiff's Exhibit 16 (registry statement). 6 Plaintiff's Exhibit 16 (registry statement). ' Plaintiff's Exhibit 27 (fictitious name registration). 8 Plaintiffs Amended Complaint, paragraph 2; Defendant's Answer to Amended Complaint, paragraph 2. 9 Defendant's Amended Petition for Interpleader, paragraph 1; Interpleaded Plaintiffs Statement of Claim, paragraph 1. '0 Plaintiff's Exhibits 23 (minutes, first meeting of board of directors), 24 (offers to purchase stock). 2 No. 25 Equity 1991 5. In mid -1988, Mark A. Butler approached K. Craig Bream with the concept of establishing a miniature golf course business. 6. Butler suggested that they approach Baker, a brick mason, with a view toward enlisting him as a third party in the venture. 7. During the summer or fall of 1988, Butler contacted Baker with a proposal that Baker would contribute to the enterprise in the form of construction labor and participation in the day-to-day operation of the business, Bream would furnish some money, assist in construction, and participate in the daily operation, and Butler would furnish most of the money. 8. Under the proposal, the business was to be owned equally by Baker, Bream and Butler. 9. The initial requirement for the enterprise was the acquisition of land for the miniature golf course. 10. On December 5, 1988, Bream and Butler signed a proposed Agreement for the Sale and Purchase of Real Estate from Richard Curtis Company, Defendant herein, for the acquisition of 3.7 acres in South Middleton Township, Cumberland County, Pennsylvania, known as lots 1 and 2 on the subdivision plan for Richard Curtis Company, recorded in Plan Book 48, Page 48, in the Office of the Recorder of Deeds for Cumberland County." " Plaintiff's Exhibit 2. 3 No. 25 Equity 1991 11. This proposed agreement named the purchaser as Mark L. Butler and K. Craig Bream. 12. Interpleaded Plaintiff Baker, however, concluded that he would feel more comfortable if he could contribute a third of the down payment and, to this end, borrowed money from his father. 13. In accordance with Baker's wishes, a redrafted agreement for the sale of the land, titled Installment Sales Agreement, was executed by all parties, including the seller, on December 13, 1988, naming as purchasers Butler, Bream and Baker, providing for a purchase price of $80,000, requiring a completed deposit by March 1, 1989, of $8,000,12 and establishing an initial monthly installment date of May 1, 1989. 14. In January of 1989, the purchasers began clearing the land; in addition, legal advice was sought from Michael L. Bangs, Esq., of Lemoyne, Cumberland County, Pennsylvania, with respect to the business. 15. Mr. Bangs, by letter dated January 18, 1989, recommended that the new business be in the form of "a Sub -Chapter S Corporation with each of [the owners] as equal shareholders," contributing "a nominal sum for purchase of shares initially."" 16. In the letter, addressed to Butler, it was stated as follows: After the corporation is set up, a simple agreement will be made between you individually and the corporation 12 Plaintiffs Exhibit 3. 13 Plaintiffs Exhibit 5. 4 No. 25 Equity 1991 identifying the amount you initially invested. This initial investment will be set up as a loan to the corporation and in the agreement it will spell out that the loan is to be paid back first. For example, if you are to give the corporation $50,000 we will create a loan document between you individually and the corporation and also form an agreement between you individually and the corporation whereby it will indicate that the corporation owes you that money and that it agrees to pay you back first from operating proceeds.14 17. The letter also noted that Mr. Bangs had started a title search with respect to the land." 18. The business was incorporated as R.M.C. Ventures, Incorporated, on February 27, 1989.18 19. On May 1, 1989, Butler, Bream and Baker met with Mr. Bangs in his office, discussed the structure of the corporation, the proposition that the corporation pay back as promptly as possible the moneys provided by them, and the intended ownership of the land by the corporation, and executed various corporate documents incident to commencement of the enterprise. 20. The purpose for ownership of the land by the corporation was to limit individual liability with respect to both contract and tort. 21. Documents resulting from the meeting on May 1, 1989, included corporate " Plaintiff"s Exhibit 5. 15 Plaintifrs Exhibit 5. 16 Plaintifrs Exhibit 17 (certificate of incorporation). 5 No. 25 Equity 1991 by-laws, bank designation, minutes of the first meeting of shareholders, minutes of the first meeting of directors, stock purchase offers from the three individuals, and consent of shareholders to Sub -Chapter S election.17 22. The shareholders, with equal ownership of the corporation, were Butler, Bream and Baker;18 the directors were Butler, Bream, and Baker;` and the officers were Butler (president), Bream (vice-president), and Baker (secretary-treasurer).20 23. All three of the individuals participated in the physical improvement of the land, with Baker doing the most and Butler the least. 24. Because construction progress was slower than anticipated, it became economically desirable for the enterprise to renegotiate the installment sales agreement to provide for a later initial monthly installment date. 25. Accordingly, the parties entered into an Installment Sales Agreement dated May 26, 1989, which is the subject of this litigation, superseding the earlier agreement and providing for an initial monthly installment date of May 1, 1990.21 17 Plaintiff's Exhibits 19 (by-laws), 20 (bank designation), 21 (shareholders' minutes), 23 (directors' minutes), 24 (stock purchase offers), 25 (Sub -Chapter S consent). 18 Plaintiff's Exhibits 21 (shareholders' minutes), 23 (directors' minutes), 24 (stock purchase offers). 19 Plaintiff's Exhibit 23 (directors' minutes). 20 Plaintiffs Exhibit 23 (directors' minutes). 21 Plaintiffs Exhibit 6. 0 No. 25 Equity 1991 26. This agreement contained an increased purchase price of $82,000 and a provision increasing the deposit amount to $10,000 but deferring completion of payment thereof to April 1, 1990. 27. The agreement also renamed the purchaser as "Mark L. Butler, K. Craig Bream and Roger L. Baker, T/A RMC Ventures, Inc."' 28. Baker's check for one-third of the $10,000 deposit was made payable to the corporation.24 29. Subsequent to the date of the revised agreement, the corporation was treated by all parties as the purchaser of the land, as evidenced by the following: a. Expenses relating to the land, including payments on the purchase price, were paid by the corporation;28 b. Mortgage interest statements for federal income tax purposes were directed by the seller to the corporation;26 c. Income tax returns filed by the corporation and shareholders were predicated upon the corporation's ' Plaintiff's Exhibit 6. 23 Plaintiffs Exhibit 6. 24 Plaintiff's Exhibit 9. Bream supplied a similar amount to the corporation, and Butler supplied a thousand dollars less, having advanced an initial payment of $1000 to the seller on December 4, 1988. Id.; Plaintiff's Exhibit 4. 25 Plaintiffs Exhibit 24; Plaintiff's Exhibit 1, N.T. 46 (deposition of accountant for corporation). 26 Plaintiffs Exhibits 11, 12. h No. 25 Equity 1991 ownership of the land;Z7 d. A right-of-way grant for overhead electric lines with respect to the land was given to PP&L by the corporation, in a document executed by Butler and Baker in their capacities as corporate officers;28 e. The land development process between the enterprise and South Middleton Township, including execution of a recordable agreement prohibiting separate alienation of the two lots comprising the land, was predicated upon the corporation's ownership of the land;29 and f. The applicable liability insurance policy was obtained in the name of the corporation. 30. The intention of the parties in entering into the Installment Sales Agreement dated May 26, 1989, was that the purchaser, and eventual grantee, was to be Plaintiff, R.M.C. Ventures, Inc. 31. Unhappy differences have arisen between the shareholders, prompting litigation by Baker at No. 1944 Civil 1992, Cumberland County Court of Common Pleas, over corporate finances, and the present action initiated by the corporation. DISCUSSION In the interpretation and construction of contracts for the sale of real estate, the primary object "is to arrive at and give effect to the mutual intention of the parties as 27 Plaintiffs Exhibit 1, N.T. 9 (deposition of accountant for corporation). 28 Plaintiff's Exhibit 7. 29 Plaintiff's Exhibit 8. No. 25 Equity 1991 expressed in the contract when not forbidden by law." 8A Thompson, Real Property §4454, at 319 (1963). Thus, when dealing with an agreement of sale for real estate, "[i]n order to determine the meaning of the agreement, [a court] must examine the entire contract since it is well settled that in construing a contract the intention of the parties governs and that intention must be ascertained from the entire instrument taking into consideration the surrounding circumstances, the situation of the parties when the contract was made and the objects they apparently had in view and the nature of the subject matter." In re Mather's Estate, 410 Pa. 361, 366-67, 189 A.2d 586, 589 (1963). The parties' conduct subsequent bo the agreement is also instructive; as the United States Supreme Court has observed, "[t]here is no surer way to find out what [the] parties meant, than to see what they have done." Insurance Co. v. Dutcher, 95 U.S. 269, 273, — S. Ct. _, _, 24 L. Ed. 410, _ (1877). Based upon the foregoing findings of fact and principles of law, the Court concludes that the conveyance of property to be made pursuant to the parties' agreement herein should be to the corporate entity. For this reason, the following Order will be entered. DECREE NISI AND NOW, this O�e day of August, 1993, following a non jury trial, the Court FINDS in favor of Original Plaintiff R.M.C. Ventures, Inc., and against Interpleaded Plaintiff Roger L. Baker, and DIRECTS Defendant Richard Curtis Company to convey 0 No. 25 Equity 1991 the land which is the subject of the Installment Sales Agreement dated May 26, 1989, between Defendant as seller and "Mark L. Butler, K. Craig Bream and Roger L. Baker, T/A RMC Ventures, Inc.," as purchaser, to R.M.C. Ventures, Inc., upon completion of payment of the purchase price. IF NO MOTION for post -trial relief is filed within 10 days, this Decree Nisi shall, upon praecipe, be entered as a final decree.* *See Pa. R.C.P. 227.4. Hubert X. Gilroy, Esq. Attorney for R.M.C. Ventures, Inc. Wayne F. Shade, Esq. Attorney for Roger L. Baker Roger Morgenthal, Esq. Attorney for Richard Curtis Company :rc BY THE COURT, s/ J. Wesley Oler, Jr. J. Wesley Oler, Jr. J. 10