Friday, November 22, 2013

RKO-Stanley Warner Theatres, Inc. v. Graziano case brief

RKO-Stanley Warner Theatres, Inc. v. Graziano case brief summary
355 A.2d 830 (1976)


CASE SYNOPSIS
Appellant promoter sought review of the order from the trial court (Pennsylvania), which dismissed appellant's exceptions to the chancellor's decree nisi granting appellee seller's requested relief. The court directed that the decree nisi be entered as a final decree in appellee's action in equity for enforcement of an agreement of sale.

DISCUSSION

  • The court affirmed the lower court's decree nisi granting appellee seller equitable enforcement of an agreement of sale against appellant promoter. 
  • The court held appellant, in his capacity as promoter for the corporation at the time of the agreement, was personally liable on the agreement made by him for the benefit of the corporation he intended to organize. 
  • The agreement's provision that, upon incorporation, the corporation would take appellant's place was ambiguous because it was silent as to the effect the formation of the projected corporation would have upon appellant's personal liability. 
  • In light of the ambiguity, the court held that the only rational and prudent interpretation of the parties' intent was that appellant was to be personally responsible until such time as the corporate entity was formed and had ratified the agreement. 
  • A construction that the parties intended to release appellant's personal responsibility upon mere incorporation was illogical and unreasonable because appellee, in the event of non-performance, would not be able to hold any party accountable.

CONCLUSION
The court affirmed the lower court's decree nisi, which granted appellee seller equitable enforcement of an agreement of sale with appellant purchaser, because appellant, as promoter, was personally liable on the agreement and the agreement did not release such liability until the corporation was formed and had ratified the agreement.


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