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HEYMANN v. ELECTRIC SERVICE MANUFACTURING COMPANY (10/11/63)

October 11, 1963

HEYMANN
v.
ELECTRIC SERVICE MANUFACTURING COMPANY, APPELLANT.



Appeal, No. 93, Jan. T., 1963, from judgment of Court of Common Pleas No. 5 of Philadelphia County, Dec. T., 1956, No. 1633, in case of Roy A. Heymann and Roy A. Heymann, Jr., trading as Heymann and Brother, and Production Sales, Inc. v. Electric Service Manufacturing Company, Inc. Judgment reversed.

COUNSEL

Francis E. Shields, with him Pepper, Hamilton & Scheetz, for appellant.

Robert L. Trescher, with him S. Jonathan Emerson, and Montgomery, McCracken, Walker & Rhoads, for appellees.

Before Bell, C.j., Musmanno, Jones, Cohen, Eagen, O'brien and Roberts, JJ.

Author: Jones

[ 412 Pa. Page 340]

OPINION BY MR. JUSTICE BENJAMIN R. JONES

This assumpsit action was instituted in the Court of Common Pleas No. 5 of Philadelphia County by Heymann and Brother (Heymann), real estate brokers, and Production Sales, Inc. (Production Sales), business brokers, for the recovery of a brokers' commission allegedly due from Electric Service Manufacturing Company, Inc. (Seller), on the ground that the actions of Heymann and Production Sales constituted the efficient cause of the production of H. K. Porter Company (Porter) as the purchaser of all the capital stock of the Seller. After a trial, the jury rendered a verdict in favor of Heymann and Production Sales and against the Seller in the amount of $39,450 which sum represented a 5% commission upon $600,000 plus interest to the date of the verdict. Seller's motions for judgment n.o.v. and a new trial were refused and judgment was entered on the verdict. From the entry of that judgment this appeal was taken.

On or about November 16, 1954, Seller's board of directors authorized its operating committee to negotiate the sale of one of its several operating plants known as "Plant B" for the price of $600,000. To that end, a brochure and a tabulation of factual date concerning "Plant B" was prepared and "Plant B" was advertised for sale. Initially, the Seller on its own directly contacted prospective customers and it was not until the Spring of 1955 that the Seller sought the aid of various sales organizations.

Sometime prior to May 31, 1955, the Seller authorized one Donald Rogers to find a purchaser for "Plant B" on a non-exclusive basis for $600,000. Sometime prior to November 8, 1955, Robers became associated with Heymann and sometime thereafter, at Heymann's request, Production Sales entered into the matter as a co-broker. A representative of Production Sales contacted

[ 412 Pa. Page 341]

Porter with respect to the purchase by Porter of "Plant B" and data relating to "Plant B" and its operation, as well as some other facets of Seller's operations, was made available to Porter. It seems clear on the record that this constituted the first contact between Porter and the Seller.

On January 5, 1956, Rogers advised a member of the Seller's operating committee that Heymann had arranged for an inspection of "Plant B" by a representative of Porter and, at that time, the Seller instructed Heymann that its authority to sell was limited to "Plant B", such limitation of authority being the subject of a writing initialed by the Seller on January 6, 1956. Several other meetings took place between representatives of the brokers and Porter.

Some months later all the stock of the Seller was sold to Porter and on the basis of such sale the claim for a broker's commission was made.

At the outset, we must determine from the pleadings the issues between the parties to this litigation. Paragraph 9 of the complaint sets forth the basis upon which the brokers seek the payment of a commission. In substance, that paragraph alleges that the Seller, finding that no sale of "Plant B" as a separate unit could be made for the price set by the Seller, fixed a date for a meeting of its officers and directors at which the brokers were requested to be present; that in the "early part of May, 1956, 3 p.m.," seven directors or officers of the Seller - who constituted a majority of Seller's stockholders - met with one Whitney Goit, a representative of the brokers; that at this meeting the Seller "decided to sell all of its property and assets as a going concern and authorized [Goit] to offer ...


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