Appeal, No. 121, Jan. T., 1955, from judgment of Court of Common Pleas No. 5 of Philadelphia County, March T., 1953, No. 4437, in case of Meyer M. Weissman v. A. Weissman, Inc. Judgment reversed; reargument refused June 27, 1955.
Wesley H. Caldwell,, with him Edward J. Hardiman and Roper & Caldwell, for appellant.
Maurice Freedman, with him Robert H. Arronson and Herbert H. Hadra, for appellee.
Before Stern, C.j., Stearne, Jones, Bell, Chidsey, Musmanno and Arnold, JJ.
OPINION BY MR. JUSTICE CHIDSEY
Plaintiff, Meyer M. Weissman, assignee of a mortgage, brought this proceeding for foreclosure against the defendant, A. Weissman, Inc., a Pennsylvania corporation conducting a real estate business in Philadelphia. At the conclusion of the testimony the court below granted binding instructions for defendant. Plaintiff's motions for a new trial and judgment non obstante veredicto were dismissed by the court en banc and judgment was entered on the verdict for defendant. This appeal followed.
The mortgage sought to be foreclosed was executed by defendant on June 7, 1943 in favor of Charles F. Parvis and Lloyd A. Sullivan, partners in a hardware business. The principal amount of the mortgage, secured upon certain premises owned by defendant, was for $2,700, payable within five years with interest at the rate of 5%. At the time the mortgage was given plaintiff was the president and a member of the board of directors of the defendant. The majority of the corporation's stock was owned by plaintiff's parents, Abraham and Bertha Weissman, the only other corporate officers and directors. Approximately two weeks after the execution of the mortgage, plaintiff turned over to the mortgagees at their request $2,700 cash out of his own funds to be held as collateral security on the corporate loan. Plaintiff never made any disclosure of this second transaction to his parents. Abraham Weissman, the treasurer of the corporation, died sometime in January, 1948 and in November,
, for reasons not appearing of record, plaintiff severed his connection with the defendant. On December 5, 1950, seven years after the execution of the mortgage, plaintiff asked for and received an assignment of the mortgage together with a receipt from the mortgagees acknowledging the payment of $2,700 for the purchase and assignment. A short time thereafter plaintiff notified the corporation that he was the holder of the mortgage and demanded payment. The present action was instituted in April, 1953.
The court below being of the opinion that the instant case was practically identical with the case of Weissman v. A. Weissman, Inc., 374 Pa. 470, 97 A.2d 870, another mortgage foreclosure proceeding involving these same parties, held plaintiff violated his fiduciary obligation to the corporation and was therefore precluded from prevailing in the present action. In the prior case between these parties the plaintiff, while he was an officer and director of the defendant corporation, purchased a $4,500 corporate mortgage with his own funds for the sum of $600. At the time of purchase he took an assignment of the mortgage in his own name and then subsequently in August, 1951 instituted an action to foreclose the mortgage. The court below found that the only differences between the former case and the present one were (1) in the cited case, plaintiff received an assignment of the mortgage at the time he purchased it; whereas here, the mortgage was not technically assigned to him until after he left the corporation, and (2) in the cited case, when plaintiff purchased the mortgage, he did so with the knowledge and approval of his father; whereas in this case, no representative of the corporation received notice of the purchase until seven years thereafter.
It is universally established that since directors and officers of a corporation ...