Steuart v. McChesney Case Brief Summary | Law Case Explained

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Steuart v. McChesney | 444 A.2d 659 (1982)

If a disagreement between contracting parties ends up in court, the court may have to determine what the parties intended the language of their agreement to mean. Steuart versus McChesney explains a straightforward way for a court to determine a contract term’s intended meaning.

In nineteen sixty-eight, James and Lepha Steuart signed an agreement granting William and Joyce McChesney a right of first refusal on a parcel of farmland in Pennsylvania. The agreement provided that if the Steuarts had a bona fide purchaser for the land, the McChesneys could exercise the right to purchase the land at a price equal to the land’s market value according to the tax-assessment rolls the county and commonwealth maintained. Under the county’s usual practice, a property’s valuation on the tax-assessment rolls typically represented fifty percent of the property’s market value.

In July of nineteen seventy-seven, a real estate broker appraised the farmland at fifty thousand dollars. But the valuation in the county tax-assessment rolls was only three thousand nine hundred and ten dollars. In October of nineteen seventy-seven, the Steuarts received bona fide offers of thirty-five thousand dollars and thirty thousand dollars for the farmland. When the McChesneys learned about the offers, they tried to exercise their right to purchase the property by tendering seven thousand eight hundred and twenty dollars. The McChesneys said that price was the property’s market value because it was twice the assessed value in the county tax-assessment rolls.

The Steuarts refused to sell the property and brought an action against the McChesneys in Pennsylvania state court, seeking to cancel the right of first refusal. The Steuarts requested in the alternative that the court interpret the agreement as requiring the McChesneys to match the bona fide offer or the independently determined fair market value of the land. The McChesneys sought specific performance of the agreement as written and requested conveyance of the farmland for seven thousand eight hundred and twenty dollars.

After hearing testimony, the trial court found that the parties had intended the farmland’s assessed market value to be merely the minimum price at which the McChesneys could exercise their right of first refusal to purchase the property. The trial court concluded that the McChesneys had the right to purchase the land for thirty-five thousand dollars, matching the first bona fide offer the Steuarts received. The Pennsylvania Superior Court reversed, holding that the agreement plainly stated that the assessed market value was the price at which the McChesneys could exercise their right of first refusal and purchase the land. Lepha Steuart appealed to the Pennsylvania Supreme Court.

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