Appeal from decree of Court of Common Pleas of Chester County, No. 1908 of 1967, in case of 202 Inc. v. Stanley L. Kubacki et al.
Lawrence M. Aglow, with him Herbert Braker and Louis H. Levitt, for appellant.
Norman C. Henss, with him Cohen, Shapiro, Berger, Polisher & Cohen, and Gawthrop and Greenwood, for appellee.
Bell, C. J., Cohen, Eagen, O'Brien, Roberts and Pomeroy, JJ. Opinion by Mr. Justice O'Brien. Mr. Justice Jones took no part in the consideration or decision of this case.
Inc. filed a complaint in equity seeking to set aside the assignment of a mortgage by it to appellee, A. Barton Lewis & Co., Inc. [Lewis].*fn1 The Chancellor's adjudication denied relief and dismissed the complaint. This appeal followed the dismissal of appellant's exceptions and the entry of the decree nisi as the final decree.
The facts, as found by the Chancellor, affirmed by the Court en banc and amply supported by the record, disclose a course of events which, to say the least, would disturb the sense of order of the average businessman. The chronicle begins in late January of 1965, at which time Michael and Coramay Izzi, husband and wife, conveyed a tract of land in West Goshen Township to Michael's brother, John Izzi. The deed recited a consideration of $20,000.00, but, in fact,
no consideration passed. The conveyance was apparently made in connection with a plan to develop the land as a shopping center, with John acting as the driving force behind the project. Appellant, 202 Inc., conducted a restaurant and bar business on the property, it being the authorized licensee. At this time, all of the stock of 202 was owned by Michael and Coramay and another brother of Michael, Joseph Izzi.
At the time of the real estate conveyance, the stockholders of 202 turned over to John Izzi certain corporate books and records, including the minute book and stock transfer ledger. Armed with these, John went to an attorney, Kubacki, and convinced Kubacki that he, John, was in control of 202 and that John had been elected president and Kubacki secretary of the corporation. A corporate minute to that effect was prepared by Kubacki and given to John to obtain the signature of Coramay, the previous secretary. The minute was returned to Kubacki with a signature purporting to be Coramay's, but which was not, in fact, her signature.
John then executed mortgages totaling $34,473.45, using the West Goshen real estate as collateral. Debts of Michael and Coramay in the amount of $6,500.00 were satisfied out of the mortgage proceeds and John, apparently, used the rest of the fund for his own purposes. John returned the corporate books to Michael but Michael, unfortunately, did not look at them and returned them to John in the spring of 1966. At about this same time, Joseph sold his interest in 202 to Michael and Coramay.
The mortgagee, at this point, threatened foreclosure and John negotiated a $45,000.00 loan from Lewis. Lewis insisted that John assign and pledge, as additional security, the stock of 202, John having ...