Appeal, No. 252, Oct. T., 1963, from decree of County Court of Philadelphia, June T., 1961, No. 12838-C, in case of Clarence W. Norman et ux. v. World Wide Distributors, Inc. et al. Decree affirmed.
Clayton T. Hyman, with him William Shapiro, for appellant.
Almanina B. Carnes, for appellees.
Before Rhodes, P.j., Ervin, Wright, Woodside, Watkins, Montgomery, and Flood, JJ.
[ 202 Pa. Super. Page 55]
This is an appeal from a decree of the County Court of Philadelphia sitting in equity. The court declared null and void a judgment held by Peoples National Fund, Inc. against the plaintiffs, rescinded a purchase agreement for a breakfront and directed the plaintiffs to return the breakfront (for the purchase price of which the judgment was obtained) to State Wide or World Wide Distributors, Inc. Peoples National Fund, Inc. appealed.
This, and a companion case, grew out of transactions which the court below aptly characterized as "reeking with malodorous fraud."
Mancen, agent of defendant World Wide Distributors, Inc., called upon the plaintiffs about January 23, 1961, and outlined to them "a program for direct advertising." He represented to them that if they purchased a breakfront, he would pay them $5 for each letter they wrote to a friend requesting an appointment for World Wide's agent to explain the details of a sound advertising program and $20 for each sale made to any such person. Their friends whose names they furnished were to be given the same opportunity to profit from supplying names of their friends. He said the plaintiffs would realize sufficient money to pay for the breakfront and to enable them to send their laughter to college. He persuaded the plaintiffs to sign, without reading, a purchase agreement, an attached judgment note in blank and an "Owner's Participation Certificate." The plaintiffs were given forms by World Wide of letters to be sent to their friends and they prepared 60 of them for mailing, but
[ 202 Pa. Super. Page 56]
received only $80. When asked for the balance due them under the contract they were told that the bookkeeper was ill, that the matter would be taken up, that the check was on the desk awaiting the treasurer's signature, and similar excuses. Under the terms of the purchase agreement, the plaintiffs agreed to "sign the attached note providing for 30 monthly installments of $35.98 or a total of $1,079.40." (It was alleged that the fair retail price of the breakfront was less than one-fifth this amount.) The first payment was to be made in 45 days.
After the note was signed and taken from the home of the plaintiffs it was filled in for $1,079.40 and made payable 3 days after date "to H. Waldman T/A State Wide Products at the office of Peoples National Fund." The note for $1,079.40, with interest, was purchased by Peoples National Fund, Inc. on January 25, 1961, for $831 and judgment was entered thereon February 7, 1961. It is hardly necessary to add that World Wide is now nowhere to be found. Within approximately a year its principals, unnamed in the record, had operated first under the name of Carpet Industries, then under State Wide, and finally under World Wide Distributors. The appellant dealt with all three companies and purchased notes from all three of them. The vice president of Peoples testified that he "had knowledge of the referral plan," although he claimed that he was not familiar with the details of the plan. Immediately after the plaintiffs received a $50 check from World Wide for the first ten names furnished under the agreement, the vice presient of Peoples called the plaintiffs to inquire whether they were satisfied with the transaction. He told them Peoples had nothing to do with the referral plan.
The referral plan was a fraudulent scheme based on an operation similar to the recurrent chain letter racket. It is one of ...