58 F.R.D. 165 | E.D. Pa. | 1973
The four members of the partnership, Utah Oil Land Company, bring the action here involved seeking a variety of relief against four defendants.
Trustee Landsburg has moved for summary judgment in his favor seeking dismissal of Counts I, II, V and VI of the complaint. In response, the partnership has filed a cross-motion for summary judgment under those counts and for similar relief against the other three defendants under Counts III and IV. The partnership has also filed its motion for summary judgment seeking dismissal of B & T’s counterclaim, which avers the antitrust violations. The three other de'endants have cross-motioned for summary judgment as to the partnership’s claim against them. These motions are now before me for determination.
1. PLAINTIFFS’ AND TRUSTEE’S CROSS-MOTION FOR SUMMARY JUDGMENT UNDER COUNTS I AND II
The basis for the partnership’s claim for breach of contract is that the trustee, by letter dated July 9, 1971 (Complaint, Exhibit “B”), accepted its offer of a few days earlier to buy all of the 1,365 outstanding shares of B & T common stock by agreeing to sell 750 shares held by him. This is set forth in Count I. Alternatively, it alleges in Count II that, if the letter of July 9 be considered a counteroffer, it was accepted by the partnership as evidenced by the partnership’s letter (Complaint, Exhibit “D”) of December 3, 1971.
The testimony in the depositions of the trustee’s attorney raises considerable doubt whether a contract was entered
United States District Court Judge Charles R. Weiner, of this Court, rendered a decision on certain other preliminary matters heretofore and, in his Memorandum Opinion of May 12, 1972, he stated:
“On January 4, 1972, a hearing was held before the Orphans’ Court on the petition of [the trustee]. The petition referred to both sales and requested that the sale to B & T be approved. The Court approved this request on the basis that the proposed sale to B & T was at a substantially higher price than that provided for in [the partnership’s] contract . . .”
Since the sale to the partnership has not been approved by the Orphans’ Court, an important condition precedent to consummation of the sale has not been met. Therefore, the partnership is not entitled to recover damages from trustee Landsburg, in his official or individual capacity, nor can specific performance be decreed. Accordingly, trustee Lands-burg is entitled to judgment dismissing the action under Counts I and II.
In considering plaintiffs’ cross-motion for summary judgment of these counts, one other observation is pertinent. Even if I were to rule that the sale did not require the approval of the Orphans’ Court, the partnership could still not prevail at this time since it must meet, and indeed ultimately overcome, B & T’s counterclaim that the acquisition or attempted acquisition of the 750 shares of stock would be a violation of the antitrust laws. Only after this occurrence would plaintiffs be given consideration to any entitlement for relief based on a breach of contract.
II. PLAINTIFFS’ MOTION FOR SUMMARY JUDGMENT SEEKING DISMISSAL OF B & T’s COUNTERCLAIM
The partnership’s motion for summary judgment seeking dismissal of B & T’s counterclaim must be denied. Paragraphs 29, 30, 31 and 32 of B & T’s answer to the complaint aver as follows:
“29. Defendant B & T is exclusively engaged in the business of manufacturing and selling homeopathic pharmaceutical products and in publishing literature with respect thereto. It is one of the major producers of such pharmaceuticals in the United States. “30. Wise K. C. Pharmical Company (Wise), Layties Pharmical Company (Layties), Walker Pharmical Company (Walker), New Era Labs, Limited (New Era), and Inland Alkaloid Company (Inland) are all companies engaged in the manufacture and sale of homeopathic products in the United States.
“31. Plaintiff Forrest Murphy is President and Director of Wise, Lay-ties, Walker and New Era, is a Director of Inland, and is an officer of other concerns engaged in the homeopathic pharmaceuticals industry.
“32. Each of the individual plaintiffs has an economic interest in Wise, Lay-
The partnership does not dispute the allegations of paragraph 29, and the deposition of Forrest Murphy, one of the members of the partnership, supports the allegations of the remaining three paragraphs. Thus, the offer of the partnership to buy the majority shares of outstanding B & T stock may have violated the antitrust laws. Although I have ruled that the partnership is not entitled to damages for breach of contract or for specific performance, the offer and the proceedings to enforce the transfer of the 750 shares may have prevented B & T from carrying on a more aggressive business and, thus, decreased its profits. If B & T can prove the antitrust violation, it should be given an opportunity to show that its profits were less than they would have been but for the partnership’s action.
III. TRUSTEE’S MOTION AND PLAINTIFFS’ CROSS-MOTION FOR SUMMARY JUDGMENT UNDER COUNTS V AND VI
The plaintiff partnership avers in Counts V and VI that the trustee Landsburg, using the facilities of interstate commerce, employed a fraudulent scheme to deceive the partnership to enter into negotiations with him to buy 750 shares of B & T stock in order to induce B & T to purchase the same stock at a price higher than that which the partnership had agreed to pay and to thereby profit at the partnership’s expense.
IV. MOTION OF PLAINTIFFS AND DEFENDANTS LEE, TAFEL AND B & T FOR SUMMARY JUDGMENT UNDER COUNTS III AND IV
As mentioned earlier, the partnership seeks damages against the other three defendants (B & T, Lee and Tafel) for malicious interference of the contractual relationship between it and the trustee for the sale of the 750 shares. The act constituting the alleged wrongful interference is the letter (Complaint, Exhibit “G”), dated December 13, 1971, and containing the higher bid for the 750 shares, sent to the trustee by B & T. This claim is made on the assumption that the trustee’s dealings with the partnership were bona fide. Pennsylvania recognizes the tort, as stated in § 766 of the Restatement of Torts (1939 Ed.) of interference with a contractual relationship or with a prospective contractual relationship. See, Glenn v. Point Park College, 441 Pa. 474, 272 A.2d 895 (1971). In addition to the heavy burden placed upon the partnership of establishing this tort (Barlow v. Brunswick Corporation, 311 F.Supp. 209 (E.D.Pa., 1970)), which it has not met up to this point, it must meet and overcome the antitrust counterclaim asserted against it by defendant B & T. The partnership is not entitled to summary judgment under Counts III and IV.
The basis for the motion of B & T, Lee and Tafel is that, even assuming a valid enforceable contract between the partnership and trustee, they were privileged to submit the higher bid. They say in their brief and not by way of affidavit that, except for the trustee’s 750 shares, all of the remaining stock of B & T was held by the Tafel family and has been so held for a number of years and that the two directors, not knowing who had been invited to bid for the 750 shares, felt obliged to submit a bid to protect the economic interest of the family stockholders and the corporation itself. Whether they were privileged under the circumstances is a question of fact. The partnership must be given an opportunity, at least, to show that they were not privileged. The motion of B & T, Lee and Tafel for summary judgment under this heading will also be denied.
V. PLAINTIFFS’ MOTION THAT B & T BE DECLARED A TRUSTEE EX MALEFICIO
The partnership’s request that B & T be declared a trustee ex maleficio in its favor will be denied. A trust “ex maleficio” is another expression for a constructive trust. 38 P.L.E. Trusts, § 101. A constructive trust will be declared by the Pennsylvania courts “where a person holding title to property is subject to an equitable duty to convey it to another on the ground that he would be unjustly enriched if he were permitted to retain it.” Gray v. Leibert et al., 357 Pa. 130, 135, 53 A.2d 132, 135 (1947). Also see Truver v. Kennedy, 425 Pa. 294, 229 A.2d 468 (1967). The burden of establishing the existence of facts upon which a constructive trust will be declared is on the one who seeks such a declaration. In re Haftman’s Estate, 30 Pa.Dist. & Co.R.2d 4 (C.P. Wash.Co.1962). Beyond those facts alleged in support of the contractual-rela
Accordingly, the motion of defendant Landsburg for summary judgment of dismissal of the claims under Counts I and II of the complaint will be granted; all the other motions will be denied.
ORDER
And now, to wit, this 30th day of January, 1973, it is ORDERED as follows:
(1) Under Counts I and II of the Complaint, (a) the motion of defendant Leonard Landsburg for summary judgment of dismissal is granted-, (b) the motion of plaintiffs for summary judgment in their favor is denied;
(2) Under Counts III and IV, (a) both the motion of defendants Boerieke & Tafel, Inc., Donald Lee and Gustav H. Tafel, Jr., for summary judgment of dismissal and that of plaintiffs for summary judgment in their favor are denied-, (b) the motion of plaintiffs for summary judgment of dismissal of the counterclaim of defendants Boerieke & Tafel, Inc., Donald Lee and Gustav H. Tafel, Jr., is denied-,
(3) Under Counts V and VI, both the motion of defendant Leonard Landsburg for summary judgment of dismissal and that of the plaintiffs for summary judgment in their favor are denied; and
(4) Plaintiffs’ motion that defendant Boerieke & Tafel, Inc., be declared a trustee ex maleficio as to the 750 shares of stock is denied.
. United States District Judge Charles R. Weiner, in a Memorandum Opinion and Order filed in this case on May 12, 1972, denied the partnership’s action for a preliminary .injunction and granted the partnership’s motion to dismiss a eounterclaim asserted by the trustee Leonard Landsbui'g.
. The directors of B & T are four in number. The trustee and his brother are the other two. The brother was not named as a defendant.
. At this point, it should be noted that B & T has not filed a cross-claim against the trustee.
. Cert. denied sub nom. Glen Alden Corp. v. Kahan, 398 U.S. 950, 90 S.Ct. 1870, 26 L.Ed.2d 290 (1970). 4.
. Here the partnership does not seek to enjoin any deceptive practices but asks that the trustee be required to sell and transfer the 750 shares to it.