Great A. & P. Tea Co. v. Bailey

5'40 relation- from of a confidential

trusts the abuse arising com- be made with conduct which ship will consistent enforce mences the statute of limitations actions ad- In from actual fraud.6 arising constructive trusts that which the view we here take is line with dition, prevails jurisdictions.7 other for the demand made present no was case, de- return of the the lifetime during promise ceased son, reconvey, therefore, until the prop- breached his estate refused to convey present -after death 1963. The erty plaintiff his period action is thus well within five year statutory prop- of the statute defense of limitations erly rejected.

We have considered the other contentions carefully raised and find them with- by appellant equally to be out merit. n Decreeaffirmed. Each .to own costs. party pay ' Mr. Justice Cohen concurs result.

n Eagen and Mr. dis- Mr. Chief Justice Justice Bell sent. 6 April 22, 1856, 532, §6, §83, P. L. 12 The Act of P.S. contains any proviso: “Provided, following That as to one affected fraud, begin trust, by said limitation reason his shall - discovery thereof, when, only dili reasonable from the run might party . . .” have discovered same. gence, defrauded Theory Relationship Comments, Con The Confidential See Frauds, Exception Ford- Statute Trusts —An structive 561, p. n.64 L. Rev.

ham Bailey. Appellant, v. Tea Co., & P. Great Mus- 1965. Before C. J., October Bell, Argued and Roberts, O’Brien Cohen, Eagen, manno, Jones, JJ. him Yolanda and Barco, with G. Barco, J.

George Kietort, appel- Humes for Barco, Barco lant. Blystone, Blystone,

Peter him Ful- E. Ediets, appellees. ler & Kinnunen, Joseph intervening F. defendant. Thomas, May 1966: Opinion Mr. Eagen, Justice injunctive equity seeking re- action in This is an may purpose ^appeal, lief. For of this the facts briefly summarized follows: Bailey his Elizabeth S., Bobert M. land Crawford were the record owners farm wife, proposed de- County, they Pennsylvania, on which velop shopping tract was At that time, public highway Boutes, IT.S. known as cut two 322. Nos. 19 and a Baileys into

On entered November 23, 1954, Tea and Pacific written lease with the Great Atlantic specifi- (A. P.), whereby Company, a certain Inc. & portion cally side on the north of the land described operation highway to A. was leased P. for .& building there- a constructed of a food market be accompanying parking facilities. on with . duly inter

The which was recorded, contained, lease, a,re provision following here with we alia, particularly concerned: the Lessors and when “If, develop purposes, adjoining for business parking square that the area of 107,524 it is understood parking be used common with the feet will be by at but no time shall ratio furnished Lessors, parking area to floor less the total Lessee’s area be agreed further understood to one. than five Lessors and Lessee hereof that no other between vegetable grocery, supermarket, meat or market bewill occupy space adjacent property permitted on the during the by term Lessors of this lease owned granted. prop- herein aforementioned the renewals Park erty known as South Avenue Extension, shall Pennsylvania.” Meadville, July Baileys

On with into a lease 1, 1957, entered Quality building (Quality) Inc. for a store Markets, original piece abutting be constructed on a of land by tract owned them and located to the north thereof.1 particular Baileys As of that did not own this date, piece (a approximately but feet thereto land, wide) title September acquired 19, 1962, corporation solely name formed and owned (Plaza). known South Park This Inc. them, Plaza, Quality lease with also contained restrictive covenant prohibiting occupancy any part of Park Avenue by any supermarket except Quali- Plaza2 other those of ty and A. & P. August Baileys conveyed

On title 31, 1961, to Plaza original to the tract owned which included them, the land under lease & to A. P. On October Baileys assigned their with & P. to Plaza. On October this lease was 12, 1961, renewed for an ad- options years, ditional term of five to further re- incorporated new. The restrictive covenant there- reference. August purchased acquired On Plaza 27, 1963, piece approximately title to additional land, feet in which abutted and width, was located immedi- acquired ately north September, of the land 1962. April portion On Plaza leased a 13, 1964, most recently acquired Super Duper, (Super land to Inc. Duper) operation to be used the erection and of a subsequently assigned food market. This lease was Flickinger Company, M. S. Inc. enjoin Baileys

This action followed to and Plaza permitting by Super from use of the Duper, land Quality Super Duper for a food market. others and 1 pertinent here, building reasons not For con- never structed. 2 name under which the is the This center was then known.

544 chan- After intervene, hearing, permitted were favor nisi in decree and adjudication cellor entered defendants. the original and Plaza, Baileys & P. appealed. later made final. A. decree was tract original of A. & P. that the It is the contention subse- lands the additional and Baileys owned one inte- form in the name of Plaza quently acquired cove- the restrictive grated shopping center, from Plaza Baileys lease precludes nant its purposes market thereof food portion leasing any On the other hand, the term of its lease. during Super Duper, leased to maintain that the land appellees inter- had any neither nor Plaza Baileys origi- A. P. lease was or title the dates the & est subject and later is not nally executed renewed, ,restriction. contract interpretation

It is a rule of general is contract at the time the the intention v. Co., Heidt Coal governs: Aughentaugh entered into rule (1962). A. 2d 400 This same 406 Pa. 176 188, cove in the of restrictive interpretation true also holds A. 2d Inc. v. 370 Pa. 87 Baederwood, Moyer, 35, nants: v. Pa. 104 Burns, 18, McCandless 377 246 (1952), is there 2d (1954). However, 123 Pennsylvania, interpretation in the rule of important ah difference of land. restrictive covenants on the use applied restrictions are not favored is this. Land use deemed strictly are will be construed, nothing law, a restriction that in plain such violation words: Park express of its Jones v. Lane For disregard Pa. 384 120 A. 535 Convalescents, 268, 2d (1956); v. Pk. C. Assn. 396 Pa. Sandy Lunnemann, ford v. ; Siciliano 399 (1959) A. 2d 898 Pa. Misler, Witt v. 422 (1960); and, A. 2d Steinwehr Dev. 162 A. 2d 191 Pa. 609, Corp., Also, Chief Justice Steen Mr. in the first cited stated in reference land use at restrictions: . . case, are no implied from restric- rights arising [T]here tion which the courts will that a restriction recognize; is not to be extended or that enlarged implication; by restriction every will be against construed most strictly grantor doubt lan- every in its ambiguity resolved in guage favor of the owner.” It is, established therefore, that beyond argument for order A. P.& to covenant the restrictive prevail, involved expressed must by its terms indicate clearly that intended it to extend to and include after-acquired land. We cannot reach this conclusion. To rule that such is included would read into the cove- nant that something just not enlarge there. It would and extend the restriction implication has proscribed been by decisions Court this many years. if even we Further, assume that ambiguity it exists, long has been the law that the ambiguity a restrictive covenant must be construed one to be benefited the restriction. Food Fair See, Inc. v. Stores, 396 Pa. Kline, 152 A. 2d 661 In support of its position that intended to include after-required lands within the restriction, A. & P. emphasizes parts two of the covenant: the use of the words as and therein, “if, when the lessors de- velop the adjoining property business purposes,” “no other supermarket . and, . . will permitted space occupy adjacent property owned the term Lessors this during lease or the renewals herein granted.” (Our emphasis throughout.) argues language lends itself to no other construction that after-acquired but lands were intended to be in- cluded. portion to the latter

As the above recited lan- & P. argues since the guage, could the term beyond extend possibly or its lease, and the renewals, granted speaks specifically the term of running during lease, its granted owned all lands it must mean and deal with renewals, argument acquired during period. over- and that This stipulated a have looks that could the fact the period force, in restriction to remain shorter the specific covenant on the and that time limitation necessary. it to not construe We do was, therefore, A. & P. relate or what asserts. to, intend, “adjoining” persuaded Nor that are we the words “adjacent” urges.3 noted A. & As connote P. what the time lease was before, consummated, at its southerly Baileys on side of land located owned separated portion thereby highway, from that P.& leased to A. the tract included land developed, part, other in This has been at least since enterprises. that business It is reasonable to conclude “adjacent”, “adjoining” by the use of words parties intended include land within the this ambiguity very and, At the restriction. exists least, & P. such a it must be resolved A. situation, Township District, Kessler v. Lower Merion School See, (1943), 346 Pa. 2d 117 and Witt v. Stein supra. Corp., Dev. wehr urges & construc-

A. P. also rule of strict applied to land should modi- tion use restrictions be present day practices affect- view needs fied, development. holding ing land We find no con- why long vincing be established rule reason should If the intended to after- modified. include acquired agree- within the land restriction, said so. have ment should argued may be also the contract involved one in restraint construed and, trade

should interpreted liberally dealing than more one therefore, land use. a restrictive We cannot Dictionary (3d 1961), International New ed. de Webster’s meaning: “adjacent” nearby “Not distant or far off: but fines touching”. comprehend position of the how this enhance the would appellant. no Such contracts are more favored restricting law than contracts of land. use party pay Decree affirmed. Each costs. own result, Mr. Cohen Justice concurs Dissenting Opinion Mr. J : ustice Roberts agree majority’s I am unable to unreason- with the ably construction narrow of the restrictive dispute. presently my only reasonable view, construction of the covenant on is that this record appellant, “adjacent property”, the use of the term appellees sought agreed any A & and land P, to bind shopping which “dur- was assimilated into the center ing the term [A&P’s] lease . . . renewals.” [its] majority give The failure the re- to this effect improperly deprives striction A & P of a benefit right bargained contractual for it entitled which is fairly to have enforced.

The record in reveals that November defend- ant-appellees unimproved were record owners of certain Township, real estate located in Vernon Crawford proposed County, they develop shopping on which a step they development, center. in As the first en- agreement tered into an A & P with lease of a supermarket pro- to be constructed at the of the site posed agreement lease inter contained, dispute provided: the covenant here alia, which “It agreed . . . understood between the Lessors supermarket, grocery, no other Lessee . . . that meat or permitted vegetable space occupy market will be on property adjacent by during owned the Lessors granted.” lease or the term of this renewals herein appellant’s supermarket Until was the sole development. mercantile establishment There- tenants were other obtained after, 1962 the expanded point to the plot had center that of land 548' appellees A & P with at the time lease

owned Desiring fully to en- had utilized. was executed been appellees purchased large two center, lying directly contiguous the north tracts of land April they lease On a the center. executed 3, 1964, portion acquired newly with land of the tract of supermarket. operation Super Duper, for the of a Inc., appellees right into to enter It is this lease and the light it restrictive contained present agreement A & P is the source of litigation. appellees urging that the lease entered into Super Duper, of the 1954

with breach Inc., agreement parties, A & P the covenant relies on defendant-appellees therein contained would space permit supermarket competing occupy “to adjacent [defendant-appel- property by . . owned . during the renewals term of this or the lees] granted.” herein

Defendant-appellees, the re- however, contend acquired not extend strictive does subsequent agreement to the execution of the lease position A P. & is their term “owned” that the phrase following “adjacent property” inserted embody parties in order to the intention that encompass only property the covenant held defend- ant-appellees agreement at the time the lease ex- ecuted. & P on the other

A term hand, asserts that the employed, not in a “owned” restrictive but sense, defendant-appellees’ merely to describe the nature of relationship property sought to the to be restricted, apply should be construed therefore, to subse- and, acquired property quently give in order to effect to purpose for which the covenant the was included. majority recognizes principle

While the basic parties intention of the govern must that the reso-

549 lution it construction applies of this a rule of dispute,1 their precludes from establishing its A true intent and & P of the benefit deprives defendant-appellees. I am bargain with unable with the agree approach majority. taken con- there my justification permitting is no view, structional modern to obscure the realities of guides commercial life and to of economic purposes defeat the bargaining.

It should be noted that we not here faced are to the challenge recog- of the covenant. It is validity nized and accepted that such are valid and covenants enforceable in this Commonwealth so do long they result an See unreasonable restraint of trade. v. 413 Pa. A. 2d Rittenhouse, 198 543 587, Hoffman Cleaver (1964); v. 182 Pa. Atl. Lenhart, 37 811 285, There is no contention or (1897). suggestion if present interpreted even urged by covenant, A & restraint; would work such an unreasonable P, present restriction cannot be said to be greater than required protection is of the one for whose imposed benefit it was hardship cause undue upon person restricted. Con- See Restatement, cf. Harris tracts, (1932); Co. v. Marra, §515 Calorific 345 Pa. 29 A. 64 2d the sole issue 464, (1942). Thus, before this Court is whether the covenant was intended and should be construed to bind after- acquired property adjacent part made proper approach In considering to the construc- restrictive covenant tion of a commercial context, 1 principle interpretation guiding of contract the in parties governs, Aughenbaugh Co., Heidt v. Coal tention 406 (1962), equally applicable 188, 2d 400 176 restrictive Pa. Hough, (1966): v. 420 Pa. Parker 215 A. 2d 667 McC covenants. Burns, (1954) ; Baederwood, 377 Pa. 104 A. 2d 123 v. andless Moyer, A. 2d Pa. v. Inc. 550

it is increasingly “parties recognized that are entitled to a freedom their degree contracting protect own economic interests de and that controlled [the] velopment of a business center be desira given may . ble. In . .”2 Cragmere v. Holding Corp. Socony- Mobil Co., Oil 65 N.J. Super. 167 A. 2d 825 322, a (1961), issue, here, applicability restrictive covenant re after-acquired In property. fusing permit the rule of strict construction to de feat intent the cove holding nant applicable to thus the court acquired, “the rule of strict construction counter stated, ... by evolving balanced that principle to the effect from covenants refrain or to refrain competition, from to a if leasing reasonable competitor, sufficiently to avoid scope being labeled restraint trade, will be construed in furtherance of their realistically Id. at obvious 167 A. purpose.” 2d at 827. 326, (Em phasis supplied.)3 2Note, Shopping Leases, 34 Restrictive Covenants in Center (1959). reports study by This

N.Y.U. L. Rev. 940 note that a May publication Age” in “Chain Store of 1958 revealed that 40% cove center leases abstracted contained restrictive at n.l. nants. Id. 940 3 gasoline Oragmere, premises a a landlord leased for use as exceptions specific station, (with here certain not and covenanted competitor relevant) to a of his within 1000 to lease tenant year later, Approximately premises. the lessor leased feet of the proscribed acquired area. estate within real additional con rejected that the covenant should not be contention his court language property, stating after-acquired to bind strued ra as to attribute to the read so should the lease apparent purpose, meaning, with their consonant tional applicability'‘during the is its this covenant feature of crucial “the any De or extention thereof.’ . . . renewal of this term seeking and, covenant, virtue ob [lessee] fendant competition, indirect, its direct or from protection tained Molding Socony-Mobil Corp. Co., Cragmere v. Oil landlord.” A. 2d Super. N.J.

551 approach The taken in Cragmere court in line with the of modern I weight authority4 and, represents a sounder to solution believe, approach of the instant case than the uncritical application the doctrine of strict construction to defeat the obvi ous purpose for in which the covenant included the lease agreement between parties.5 these

In ascertaining intention of the parties, terms interpreted restriction should be light 4 See, e.g., Adler, App. 03, v. Carter 111 138 Cal. 2d P. 2d 201 (D.Ct. App. Vaughan 1955) ; Advertising Co., v. General Outdoor 1961) (Ky. Inc., ; Properties, 352 2d 562 S.W. v. 215 Slice Carossa 357, 426, (1958) ; Keniry, Md. 137 A. 2d 687 v. Sirates 231 Mass. (1918) ; Co., 121 151 Parker N.E. v. Lewis 2d 261 Grocer 153 So. (Miss. 1963) ; Crystal Dairies, Neisloss, 2d Daitch Inc. v. 16 Misc. 504, aff’d, 723, (1960) ; 101, 2d 8 N.Y. 2d 201 N.Y.S. 167 N.E. 2d 643 Topol Development Corp., 164, App. v. Div. 34 N.Y.S. 264 Smoleroff Stores, (App. 1942) ; 2d South Inc. v. T. Grant Div. W. 653 Buffalo modified, Co., 549, App. 76, Div. aff’d 248 Misc. 274 N.Y.S. 153 668, opinion, 660, 918, 2d N.Y. 8 N.E. aff’d without N.Y.S. 273 289 Cleaners, Super 1937) ; Deal Marhets Inc. v. Good Renee 335 1965) (App. ; Super. 186, Inc., Div. 214 2d 437 N.J. 89 N.J. Super. 322, Co., Cragmere Socony-Mobil Holding Oil 65 N.J. v.Co. Carey, 273, 288 (1961) ; 83 N.W. 107 v. Wise. A. 2d 825 167 Shaft (1900). 5 requiring majority upon restric line relies of cases The strictly are cases to construed. These be tions deeds contained logical inapposite. constru presently bases The historical strictly ing contained a deed a restrictive not compelling grantor of a in the construction are context, agreement. the latter compete in a lease embodied preclude trade developed unreasonable restraint the doctrines protect against land use undesirable restrictions function such covenants. reason majority Mis- Siciliano v. to the decisions also refers Stores, (1960), 406, Inc. ter, Food Fair A. 2d 422 160 Pa. 399 involving (1959), 397, Kline, 2d both cases 152 A. 661 v. Pa. 396 restricting competition. However, of covenants the construction may supported traditional under cases in both reached result interpretation to the doc- without reference principles contract construction. strict trine of

552 apparent of the covenant object purpose the conditions existing agreement at the time the lease 12-13, executed. Cf. Parker v. 420 Pa. Hough, 7, 215 A. 2d 377 (1966); Burns, MeCandless v. 667, Pa. 19 104 Baederwood, A. 2d (1954); Inc. v. 370 Pa. Moyer, 87 A. 2d 35, 40-41,

There is no dispute objective sought achieve the inclusion of the restrictive covenant in the lease A assur- agreement. sought & P ance that its expenditures promot- into moving ing new untried market area would not jeopardized by competition from of de- another lessee fendant-appellees. There is in the record nothing that such suggest assurances reach were intended to after-acquired shopping assimilated the property into there are no

Although cases on point directly other Commonwealth, determin jurisdictions, ing applicability a covenant in a contained center shopping after-acquired lease made property part of a shopping apparent have held that center, purpose would be cove defeated were the nant not to to such In apply Carter v. property. Adler, App. 138 Cal. 2d 291 P. 2d 111 (D. 1955), Ct. App. a case presenting an analogous court rec problem, that were the ognized restrictive covenant not to bind after-acquired property incorporated shopping into a landlord could center, by devious means circum vent his to his obligation lessee. no Thus, although explicit reference after-acquired con property was tained in the covenant between the the restric parties, found to tion was extend to such property by implica “A tion: restrictive such covenant, as the grant of the mercantile rights exclusive ... is not orna merely mental inserted to words, please the eye. It is a living grantor incorporated of the expression a lease performance. Con faithful for the lessee’s consideration obliga implied such a covenant is the comitant with or dero cancel the covenant tion of the lessor not to property using adjoining gate his from its force so impair enjoyment substantially of the lessee’s premises.” supra Carter v. at leased Adler, P. 2d at 115.6 purpose apparent that the

On this record it is clear object defeated were of the would be property interpreted adjacent ac- not to bind quired by execution the defendant-lessees after the re- A & P. means the lease with The lessee, possi- protection sought strictive covenant, adjacent defendant-appellees bility that would lease permits competitor. majority property here to a purpose defendant-appellees and ob- evade the purchase ject present incor- poration de- thus into the center, right priving bar- A & P benefit of a contractual upon. gained for and relied parties entered into their when the present agreement, center the site of the commercial undeveloped A P an estab- land. & abandoned nearby of location in the town Meadville, lished pro- money expended large of to move into and to sums approximately area. For two untried market mote this only years, tenant on the site it the commercial was present shopping center. of the agreement Garter, contained a covenant the that the In Delicatessen, rights Grocery, “the exclusive have would lessee Poultry Valley Produce, Meats, .” Market Town . . Pish . shopping purchased (who center from the had the landlord The contiguous pur acquired owner) tract of land the original a declaratory judgment, expanding- In a the court center. pose the of after-acquired property part made bound the that held be noted that the restrictive shopping should center. the of par a present was also made reference to case center,” development shopping “a known as commercial ticular precise plan

While no the definite and existed at parties time the lease the was both envisioned executed, development shopping of the site as a Because center.7 of the uncertain nature and future ex- direction of the pansion, unlikely party it is concerned either precise ownership of status land when given; covenant was it is more reasonable rather, primary infer from the circumstances that their inter- meeting est A & P’s desire for assurance competition development in the event of future just development site. It is from such future that the present economic threat emanates. surrounding

Given the circumstances execution subject of the matter of lease, the covenant, apparent object purposes parties, I am of the led to the inevitable conclusion that the restriction was preclude defendant-appellees intended to ing from threaten- position permitting the economic Aof & P a competitor adjacent property. ap- to lease Since the parent object prevent type was to competition, point it is clear that the in time at which defendant-appellees acquired sought the site to be leased competitor competition resulting to a is irrelevant; equally would be harmful to the leasehold interest property prior A & P whether such was owned to or acquired agreement.8 after the execution of its lease

7 The court below found that all the covenants and conditions agreements contemplation of the lease were made in of the eventual development site as appear It should also be noted that themselves premise property have acted on the the covenant bound the defendant-appellees sought here involved. to obtain purpose from the restriction the covenant release after-acquired adjacent Quality leasing Markets, Inc. conditionally obtained, presently inappli but release was precedent found that the court below since conditions cable not were met. While I do consider these its effectiveness flow- Absent evidence which would rebut the inference from the ing circumstances here I can present, only conclude that the present binds after-acquired property adjacent to and part made of defendant-ap- pellees’ I dissent.

Accordingly, Mr. Justice Musmanno Mr. Justice O’Brien in this join opinion. dissenting controlling, courts, circumstances to be in order to determine parties, may subsequent intent of the take into account acts tend ing placed the construction which show themselves Reedy Nypano upon Co., v. the contract. See Railroad Pa. 51. Atl. 343 Appellant. Becker v. Thomas, C. Mus- Bell, Before J., 1966. April 20, Argued Roberts, O’Brien and Eagen, Jones, Cohen, manno, JJ.

Case Details

Case Name: Great A. & P. Tea Co. v. Bailey

Court Name: Supreme Court of Pennsylvania

Date Published: May 26, 1966

Citation: 220 A.2d 1

Docket Number: Appeal, 131

Court Abbreviation: Pa.