482 A.2d 1332 | Pa. Super. Ct. | 1984
The parties herein entered into an agreement whereby plaintiffs-appellees sold their stock in Service Master of Three Rivers, Inc. to defendants-appellants. The agreement provided, inter alia, that appellants would pay appellees ten percent of the monthly gross receipts of the business for cleaning, painting and deodorizing services.
As a result of a dispute between the parties regarding whether appellants actually paid appellees the full ten percent, appellees filed a complaint in equity seeking an accounting and a judgment against appellants for the ten percent of the gross revenues still due and owing. Subse
Appellants then petitioned the trial court to amend its order granting appellees’ discovery motion to include a statement of certification for appeal by permission to this court. The Honorable R. Stanton Wettick entered an order denying the motion and appellant directly petitioned this court for review of both of the aforementioned orders. After consideration, the Honorable James E. Rowley granted the petition for review, transferred the petition to No. 483 Pittsburgh 1982,
Appellants contend that the trial court improperly granted appellees’ motion for production of documents for inspection. They argue that the ordered discovery gave appellees the relief sought prior to establishing their entitlement to an accounting and is contrary to Pa.R.C.P. 1530.
An action for an accounting pursuant to Pa.R.C.P. 1530 required two distinct steps under prior practice: (1) trial on the duty to account; and, (2) if an accounting was warranted, a subsequent proceeding on the accounting to determine the amount due the injured party. Although this procedure is still viable, the court sitting in equity may opt to telescope the process into one step, placing the choice
The trial court herein found that the ultimate objective of the action was the award of damages based upon a contract provision, and the purpose of the accounting was to determine the amount of damages due, if any. As a result, he deemed it proper to permit discovery of business records relevant to the damages issue prior to a hearing on the duty to account, citing Jones v. New Pittsburgh Courier Publishing Company, supra. We have no difficulty with the trial court’s preliminary determination regarding the ultimate objective of the instant action; but, we do not concur with his implied finding that use of the telescoped procedure and accompanying discovery of business records are automatically permissible.
This court in Damirgian v. Damirgian, supra, agreed with that trial court’s decision to utilize the telescoped procedure since the trial on the right to an accounting evinced “that the party awarded the accounting [was] entitled to a sum certain”, thereby obviating the need to hold a second hearing at a later time. Id., 262 Pa.Superior Ct. at 472, 396 A.2d at 1268. The excerpted language implies that the availability of alternative procedural postures under Rule 1530(b) does not necessarily mean that a court in equity should be permitted to arbitrarily choose between them. Instead, circumstances must be such that the judicially expeditious alternative, when chosen, works no substantial harm to the parties in accordance with our interpretation of Damirgian.
In the instant matter, there is no dispute as to the terms of the agreement which provide for payment to appellees of a percentage of certain gross revenues of appellant corporation. The point of contention is whether appellants paid the proper amount and provided appellants with accurate information about that amount and sources of those revenues.
Appellants rely upon Frank v. Light Coach Company, Inc., 72 D & C2d 122 (Lebanon Co., 1976) and Simon v. Simon, 4 D & C3d 176 (Philadelphia Co., 1978) for the proposition that discovery, in effect, grants a partial accounting prior to adjudication of entitlement to an accounting. Appellees and the trial court rely upon language found in Jones v. New Pittsburgh Courier Publishing Company, supra, which is explicated above.
The cases of Frank and Simon are readily distinguishable from that of Jones. The request for an accounting in Simon rested upon whether a conveyance of real property was found to be fraudulent, and the request in Frank depended on whether the court determined that a partnership did in fact exist. The accounting sought in Jones, however, was premised upon undisputed terms of an agreement between the parties, resulting in entitlement to an accounting unless the claim was barred by the pleaded defenses of laches, clean hands or estoppel. Jones v. New Pittsburgh Courier Publishing Company, supra at 36, 24 D & C3d at 332, citing Setlock v. Sutila, 444 Pa. 552, 282 A.2d 380 (1971) and Stuyvesant Insurance Co. v. Keystate Insurance Agency, Inc., 420 Pa. 578, 218 A.2d 294 (1966). The substantive differences between the two types of cases is obvious and facilitates a clearer understanding of when and why a telescoped procedure may be utilized by the court.
We endorse the utilization of this procedure under circumstances such as those present in Jones and the instant matter where it is undisputed that the complaining party is entitled to some percentage or other “sum certain”. Cf., Damirgian v. Damirgian, supra. Situations similar to those found in Simon and Frank, however, do not readily lend themselves to employment of the telescoped procedure
It necessarily follows that if the court in equity elects to use the telescoped procedural alternative and immediately move to the question of the amount due, if any, once a duty to account has been officially established, the pretrial rules of discovery are applicable. As Pa.R.C.P. 4003.1 permits discovery of any nonprivileged matter relevant to the subject matter involved in a pending action, the court may grant appropriate discovery prior to establishing a duty to account when the proceedings will be telescoped. We find that the court in equity herein properly availed itself of the telescoped procedural alternative and did not abuse its discretion in granting, with certain limitations, the motion to produce documents for inspection.
Order affirmed.
. Appellants had filed a direct appeal from the order granting appellees' discovery motion which was docketed at this number. Judge Rowley quashed that interlocutory appeal sua sponte when he granted the petition for review.