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EDEN ROC COUNTRY CLUB v. MULLHAUSER (11/10/64)

decided: November 10, 1964.

EDEN ROC COUNTRY CLUB, APPELLANT,
v.
MULLHAUSER



Appeal from order of Court of Common Pleas of Allegheny County, April T., 1962, No. 2666, in case of Eden Roc Country Club v. William F. Mullhauser, John K. Galbraith, Frank P. Leonardi et al.

COUNSEL

Harry Alan Sherman, for appellant.

Edward L. Springer, with him Louis M. Tarasi, Jr., for appellees.

John H. Neely, with him I. Elmer Ecker, and Neely, Stockdale & Phillips, for appellees.

James R. Orr, with him William T. Marsh, C. John Tillman, Wilbur F. Galbraith, I. Elmer Ecker, Marten R. Jenkins, and Hirsch, Truxall & Weise, and Ecker, Ecker & Ecker, and Campbell, Thomas & Burke, and Reed, Smith, Shaw & McClay, for appellees.

Bell, C. J., Musmanno, Jones, Cohen, Eagen, O'Brien and Roberts, JJ. Opinion by Mr. Chief Justice Bell. Dissenting Opinion by Mr. Justice Cohen.

Author: Bell

[ 416 Pa. Page 62]

Eden Roc Country Club, a nonprofit corporation, filed an amended complaint in trespass for deceit which, inter alia, demanded large compensatory and punitive damages. All the defendants, many of whom were prominent in the sports world, were served with the complaint except the original promoters.*fn* Preliminary objections in the nature of a demurrer were filed by some defendants who were served. Plaintiff appeals from the Order of the Court of Common Pleas which sustained the preliminary objections, and dismissed the complaint as to all defendants.

Preliminary objections in the nature of a demurrer admit as true all facts which are averred in the complaint, together with all reasonable inferences therefrom, but not the pleader's conclusions or averments of law: Bogash v. Elkins, 405 Pa. 437, 176 A.2d 677; Wilkes-Barre Township School District v. Corgan, 403 Pa. 383, 170 A.2d 97; Adams v. Speckman, 385 Pa. 308, 122 A.2d 685; Gardner v. Allegheny County, 382 Pa. 88,

[ 416 Pa. Page 63114]

A.2d 491; Narehood v. Pearson, 374 Pa. 299, 96 A.2d 895.

The complaint relevantly avers that the incorporators and their attorneys, defendants herein, knew the promoters intended to use the nonprofit corporation for their private gain; that after the charter was issued the entire control of the corporation was assumed, in violation of the corporate by-laws, by the promoters for their private profit; that the promoters enlisted an "Advisory Board" to secure members; that the members of the Advisory Board (defendants herein) knew of or ignored the promoters' illegal use of its corporate charter and of the club's false advertisement of the real estate owned and of the luxurious clubhouse and swank swimming pools and golf courses it intended to erect; and finally, that in June 1961, plaintiff discovered that the $350,000 membership dues which had been collected, had been fraudulently converted or embezzled by the promoters and the club was without any funds; and that thereupon the club instituted the present suit in July, 1961.

In Savitz v. Weinstein, 395 Pa. 173, 149 A.2d 110, the Court stated the essential requisites to sustain an action for deceit (page 178): "'. . . there must be (1) a misrepresentation, (2) a fraudulent utterance thereof, (3) an intention by the maker that the recipient will thereby be induced to act, (4) justifiable reliance by the recipient upon ...


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