Opinion
April 29, 1960.
December 1, 1960.
Contracts — Terms — Construction — Construction mortgage loan.
In this action for breach of a construction mortgage loan agreement in which plaintiffs alleged in their complaint that work and material in a specified sum was not done and furnished to finish and complete the building, it was Held that the agreement was not a completion agreement but a construction loan agreement, and that the court below had properly dismissed the action.
Mr. Chief Justice JONES filed a dissenting opinion, in which Mr. Justice COHEN joined.
Before JONES, C. J., BELL, JONES, COHEN, BOK and EAGEN, JJ.
Appeals, Nos. 195 and 196, Jan. T., 1960, from judgment of Court of Common Pleas No. 2 of Philadelphia County, March T., 1959, No. 3063, in case of Harry J. Drenkhahn et al. v. Philadelphia Title Insurance Company. Judgment affirmed; reargument refused January 18, 1961.
Assumpsit.
Opinion filed sustaining defendant's preliminary objection in the nature of demurrer and dismissing complaint, and judgment entered, opinion by DOTY, J. Plaintiffs appealed.
Herman P. Abramson, with him Samuel Kravitz, and Ronald I. Kravitz, for appellants.
Daniel Marcu, with him Howard Saul Marcu, and Marcu, Marcu Marcu, for appellee.
Plaintiffs, who are the owners of a parcel of ground in Bucks County, obtained a construction mortgage loan from the Philadelphia Title Insurance Company. The construction mortgage was in the amount of $14,000, which was deposited by plaintiffs with the defendant to be distributed and disbursed by defendant to plaintiffs or, at defendant's option, to any contractor, sub-contractor or material man in accordance with the provisions of a construction loan agreement duly executed by the parties. The lengthy loan agreement covered 25 printed pages and contained many of the usual provisions for such a loan, including a provision for the payment by defendant from time to time of moneys for work actually done or performed and material actually furnished and delivered in and about the erection and construction of a 1 1/2 story cinder block dwelling.
Plaintiffs alleged in their complaint that work and material in the sum of $5,361.77 was not done and furnished to finish and complete the building, and this sum, plus punitive damages, was demanded. The complaint was based upon an alleged breach of the construction loan agreement which was attached to the complaint and provided, inter alia: ". . . the party of the second part [defendant] shall be the sole judge as to when the parties of the first part shall be entitled under this Agreement to receive any installment provided to be paid upon such respective stage of completion."
Italics, ours.
The lower Court sustained preliminary objections in the nature of a demurrer. Notwithstanding plaintiffs' denial, we are convinced, as was the lower Court, that plaintiffs' claim is based upon the theory that the written agreement was a completion agreement with a guarantee that the building could and would be completed for $14,000. On the contrary, the agreement was not a completion agreement but a construction loan agreement which cannot be distorted to have any other meaning.
Plaintiffs' averments that defendant carelessly, negligently and wantonly distributed plaintiffs' mortgage money for work and labor which was not done and finished, viz., work, labor and material which were necessary to complete the building, are merely conclusions which are deduced from an erroneous interpretation of the agreement and are unsupported by the facts which are set forth in the complaint. We are convinced that plaintiffs have misconstrued the agreement and that there is no merit in any of their contentions.
Judgment affirmed.
The complaint in this case states, inter alia, a cause of action for breach of contract through the alleged mis-disbursement by the defendant of the money which it had undertaken to loan the plaintiffs. In that situation, a summary judgment for the defendant on preliminary objections could not be properly entered. The fact that the plaintiffs pleaded an incorrect measure of damages did not destroy the indicated cause of action pleaded.
Mr. Justice COHEN joins in this dissent.