John E. Cotsack, Hazleton, for appellants.
Henry Thalenfeld, Wilkes-Barre, for appellees.
Before Rhodes, P. J., and Hirt, Reno, Dithrich, Ross and Arnold, JJ.
[ 166 Pa. Super. Page 534]
Plaintiffs, minority stockholders of Luzerne and Carbon County Motor Transit Company, Inc., sought and secured a preliminary injunction against the corporation and the majority stockholders restraining them from committing certain illegal acts. Before testimony was taken the parties settled their differences by a written agreement which, in accordance with one of its terms, became the basis of a consent decree entered by the chancellor on March 1, 1948. Subsequently, alleging that defendants had violated the consent decree on October 15, 1948, plaintiffs secured a rule to show cause why an attachment for contempt should not issue. After a hearing before the same chancellor, Judge Flannery, the rule was made absolute and, his decree having been approved by the court en banc, defendants appealed.
The equity suit was the culmination of serious controversies and law suits between two brothers, Wasil and Michael Baran, who together own 98% of the stock, Michael holding 630 and Wasil 345 shares.*fn1 The agreement of settlement provided, inter alia, that Michael as president-treasurer and general manager should be paid $2,400 annually 'for expenses incurred by him in the retention of the present existing business of the corporation; and there shall also be paid unto him, as and when incurred, such other expenses as may be advanced by him in the stimulation and procurement of such special patronage as group, party and school bus service, and he shall be reimbursed a reasonable sum for the use of his private conveyance in the business of the company; and this shall be in addition to reasonable compensation for services (not exceeding Two Hundred ($200.00) Dollars
[ 166 Pa. Super. Page 535]
per month) which he may render unto the said corporation as a mechanic, carpenter and artisan in various lines not generally within the purview of the duties of President-Treasurer or General Manager.'*fn2
By the terms of the agreement Wasil was to be vice president, and was to be paid 'a sum equivalent to one-half (1/2) of the salaries paid unto Michael Baran, as President-Treasurer and General Manager of the said corporation, including all bonuses, special payments and items of a cognate character paid unto the said Michael Baran, excluding, however, the expense moneys of Twenty-four Hundred ($2400.00) Dollars per annum herein before referred to and excluding payments for services rendered as mechanic, carpenter or artisan upon behalf of the corporation and reimbursement for use of his private car and travel expenses.'
The chancellor found that the purpose of the settlement agreement and the consent decree founded thereon was to compose the differences between the brothers and to reward them in proportion to their stock holdings. The spirit and letter of the agreement was violated, the chancellor held, when Michael, with the approval of the board of directors, employed his wife as a clerk at $200 per month. Concerning the employment the chancellor found: 'The duties of Mrs. Anna Baran are vague. The telephone was so connected that it rang in the office and in the home situated close by. She was to answer the phone in the home after office hours if her husband was not present. She was to take messages, etc. With this we have no quarrel but she had been doing this since 1937, as part of her domestic routine without any thought of compensation from the corporation. It is a duty commonly discharged by wives generally.
[ 166 Pa. Super. Page 536]
'It may be of interest to note that beginning in 1946 and through 1947 she appears as a director and was receiving $100.00 per month as such. But this was discontinued after the consent decree and so the construction which the parties themselves placed upon their agreement indicates that she was to be dropped from the payroll. To reinstate her now at twice that salary without specific duties, hours of employment ...