Appeal, No. 127, Jan. T., 1963, from decree of Court of Common Pleas No. 5 of Philadelphia County, Sept. T., 1960, No. 1077, in case of Harry E. Robinson and Phillip B. Robinson v. Jack Brier, Belber Trunk and Bag Company, Leeds Travelwear, Inc. et al. Decree affirmed.
David N. Weiner, with him Robinson, Greenberg and Lipman, for appellants.
Jack M. Cohen, for appellant.
Bernard M. Borish, with him Alan J. Davis, Morris Wolf, Alfred W. Putnam, and Wolf, Block, Schorr and Solis-Cohen, and Norris, Hart, Hepburn, Ross and Putnam, for appellees.
Before Bell, C.j., Musmanno, Jones, Cohen, Eagen, O'brien and Roberts, JJ.
OPINION BY MR. JUSTICE COHEN
This is a derivative stockholder's suit to recover for the corporation profits made by a director of the corporation as a result of dealings with the corporation.*fn1 The equity court below denied relief and this appeal followed.
In 1957, appellants, Phillip and Harry Robinson, and appellee, Jack Brier, purchased all the stock of Leeds Travelwear Corporation (Leeds) and its various subsidiaries, including Mado Manufacturing Corporation (Mado). At this time, Brier was also the owner of Belber Trunk and Bag Company (Belber) and its subsidiary Saberly Products Corporation (Saberly).
Beier became one of the four directors of Mado whose function was to assemble and store the zippered soft luggage sold by Leeds. Since he had a great deal of experience in the luggage business, Brier was placed in charge of manufacturing, merchandising, and financial affairs. On assuming this position, Brier reviewed the prices that Mado was paying for materials with the aim of reducing the costs of Mado's manufacturing and assembling operations. Prices were obtained from competing suppliers and substantial savings were effected in the costs of cartons, plastics, and zippers. As part of this extensive review of the cost of supplies, Brier examined the schedule of prices being paid for the wooden frames used to give rigidity to the soft luggage bags. He went to Washington Woodcraft Corporation (Washington), the sole supplier of frames to Mado, and secured reductions on certain sized frames.
At this time, Washington was the only known supplier of the type, quality, and quantity of wooden frames required by Mado.*fn2
Brier considered the possibility of having Saberly manufacture the frames for Mado at prices substantially lower than those quoted by Washington. After making a cost analysis and determining that he could sell them at lower prices than Washington, Saberly began manufacturing frames for Mado. Mado purchased Saberly's entire output and bought the remainder of its requirements from Washington. Brier's interest in Saberly and Saberly's sales to Mado were common knowledge to all the directors of Mado, including appellant Phillip Robinson, and although Brier did not ...