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ZAMPETTI v. CAVANAUGH (01/02/62)

January 2, 1962

ZAMPETTI
v.
CAVANAUGH, APPELLANT.



Appeal, No. 312, Jan. T., 1961, from decree of Court of Common Pleas No. 6 of Philadelphia County, June T., 1958, No. 680, in equity, in case of Albert G. Zampetti v. Patrick Cavanaugh et al. Decree affirmed.

COUNSEL

Thomas D. McBride, with him Victor Wright, and McBride, von Moschzisker & Bradley, for appellants.

Charles A. Lord, with him David F. Binder, and Richter, Levy, Lord, Toll & Cavanaugh, for appellee.

Before Bell, C.j., Musmanno, Jones, Cohen, Eagen and Alpern, JJ.

Author: Cohen

[ 406 Pa. Page 261]

OPINION BY MR. JUSTICE COHEN

This is appeal by the defendants from a final decree in equity in favor of Zampetti, plaintiff-appellee, in a stockholder derivative action brought in behalf of Mobile Merchandising Units, Inc. (Mobile), against individual defendants, Cavanaugh and the Conways, and corporate defendants, Mr. Softee, Inc. (Softee) and related enterprises.

Early in 1954, Zampetti conceived the idea to produce and promote a mobile soft ice cream truck on a national franchise basis. In order to determine what insurance was necessary on such an item, he called the defendant Conway, his insurance agent. In the course of the conversation, Conway asked plaintiff whether he would be interested in financial backing, and plaintiff replied that he would.

Subsequently, a meeting was held between Zampetti and defendants William Conway and Patrick Cavanaugh at which plaintiff outlined his plans and ideas. Following the meeting, the three men orally agreed to the following: (1) To associate themselves in the business of the promotion, assembly, sale and national franchising of mobile soft ice cream units; (2) that Zampetti should devote his full time to the project, and for this he would receive a salary of $100 per week; (3) that Cavanaugh would initially lend the corporation up to $25,000 and that Zampetti, Conway and Cavanaugh would thereafter share equally in any profits; (4) that, if the enterprise failed, plaintiff would sign over his equity in the proposed corporation and its assets so as to minimize the loss of the financial backers;

[ 406 Pa. Page 262]

    and finally, (5) that each would own a one-third interest in whatever enterprises were formed as a result of the development and growth of the soft ice cream mobile business.

To implement the above agreement, mobile, a Pennsylvania corporation, was formed. The initial capital was stated to be $600, and the three parties were the incorporators and directors of Mobile. Each subscribed to two shares of stock for which both Conway and Cavanaugh paid cash, while Zampetti paid with his services. Conway was elected president; Cavanaugh, vice-president and treasurer, and Zampetti, secretary. None of the parties received their share certificates at that time.

Although single soft ice cream units had been produced before, Zampetti's ideas of mass producing and marketing these units were original, and completely novel to Cavanaugh and Conway. Thereafter, Zampetti worked on an experimental unit which was ...


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