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SEIFERT v. DUMATIC INDUSTRIES (01/21/64)

January 21, 1964

SEIFERT
v.
DUMATIC INDUSTRIES, INC. (ET AL., APPELLANT). GLOBE TICKET COMPANY, APPELLANT, V. DUMATIC INDUSTRIES, INC.



Appeals, Nos. 217 and 225, Jan. T., 1963, from orders of Court of Common Pleas No. 6 of Philadelphia County, Sept. T., 1962, No. 2161, and Dec. T., 1962, No. 314, in cases of Maurice Seifert v. Dumatic Industries Incorporated, Globe Ticket Company, New York Globe Ticket Company, Inc. et al; and Globe Ticket Company v. Dumatic Industries Incorporated and Maurice Seifert. Appeal quashed in No. 225; order reversed in No. 217; reargument refused February 23, 1964.

COUNSEL

Abraham L. Shapiro, with him Norman C. Henss, and Cohen, Shapiro and Cohen, for appellants, No. 217, appellee No. 225.

Philip C. Herr, with him Philip C. Herr, II, and Herr and Herr, for appellant, No. 225, appellee No. 217.

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

Author: Cohen

[ 413 Pa. Page 396]

OPINION BY MR. JUSTICE COHEN

We here consider appeals from two rulings of the court below, one granting and one denying motions to remove counsel from pending lawsuits on the ground of conflict of interest.

Globe Ticket Corporation (Globe) is a Pennsylvania corporation engaged in the manufacture and sale of roll tickets and roll labels. Maurice Seifert (Seifert) manufactures and sells machinery and equipment used in applying labels to containers and other items by means of a heat sealing process. Seifert has been developing an attachment to a cigarette purchasing machine whereby labels can be cut from a continuous roll and fed into the machine.

[ 413 Pa. Page 397]

In 1956 Globe and Seifert jointly organized Dumatic Industries, Inc. (Dumatic) for the purpose of manufacturing and merchandising these machines. As part of the incorporation agreement, Seifert transferred his patents on the manufacturing process to Dumatic and agreed to be sales representative for all Globe labels processed through equipment manufactured by Dumatic. In return, Globe furnished working capital to the corporation and promised to furnish the labels necessary in the process. Globe and Seifert each received 50% of the stock of Dumatic and each appointed two directors of the corporation.

In 1962 Seifert, maintaining that Globe had refused to furnish suitable labels to Dumatic, brought suit against Globe in the form of a stockholders' derivative action (appeal No. 217) for breach of contract and also for breach of fiduciary duty alleging that Globe had disclosed trade secrets regarding customers, methods of operation, and inventions to competitors of Dumatic. Globe retaliated by petitioning for removal of the law firm representing Seifert alleging a conflict of interest in that firm's dual capacity as counsel for Dumatic and Seifert.

Subsequently Globe filed suit against Dumatic and Seifert for dissolution of Dumatic (appeal No. 225) and again petitioned for the removal of counsel for Seifert.

The court below granted Globe's petition for removal in No. 217 and counsel for Seifert appealed to this Court. The petition in No. 225 was denied and Globe appealed. Before this Court each party moved that the other's appeal be quashed on the ground ...


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