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FASCO, A.G. v. MODERNAGE

April 17, 1970

FASCO, A.G., Plaintiff,
v.
MODERNAGE, INC. and Robert S. Purcell, Defendants


Gourley, District Judge.


The opinion of the court was delivered by: GOURLEY

This is a suit by a foreign corporation against an individual and a corporate citizen of the State of Pennsylvania. The Court has diversity jurisdiction pursuant to Title 28 U.S.C. § 1332(a)(2). Separate causes of action, both founded in contract have been asserted against each of the defendants. On the first cause of action, asserted against defendant Modernage, Inc. for breach of a contract dated November 1, 1966, judgment has been entered in favor of plaintiff and against defendant Modernage, Inc. by Order of this member of the Court dated September 23, 1969.

 The second cause of action is asserted by plaintiff against defendant Robert S. Purcell, and is founded upon an alleged guaranty agreement dated January 3, 1967. A non-jury trial has been conducted, and briefs and proposed findings of fact and conclusions of law have been submitted by counsel for the respective parties. Having fully reviewed the record, I am of the opinion that judgment must be entered in favor of plaintiff and against defendant Robert S. Purcell.

 The facts are these.

 Plaintiff, Fasco, A.G., is a corporation organized under the laws of Liechtenstein, with its principal place of business in Eschen, Liechtenstein. Defendant Modernage, Inc. is a corporation organized and existing under the laws of Pennsylvania with its principal place of business in Pittsburgh, Pennsylvania. Defendant Robert S. Purcell is a citizen of Pennsylvania and resides at 220 Castlegate Road, Pittsburgh, Pennsylvania 15221. The amount in controversy, exclusive of interest and costs, exceeds $10,000.00.

 By a Stock Purchase Agreement dated November 1, 1966, defendant Modernage, Inc. agreed with plaintiff to purchase all of the issued and outstanding shares of capital stock of Financement of Geneva, Inc. for the sum of $170,000.00, said shares being owned by plaintiff. On November 1, 1966, Samuel Garvin and Robert S. Purcell owned all of the shares of Modernage, Inc., each one owning one-half of the same. At present, defendant Robert S. Purcell is the owner of all or substantially all of the capital stock of defendant, Modernage, Inc., and is the president or chief executive officer of Modernage, Inc.

 It was also agreed by defendant Modernage, Inc., in Paragraph 11 of the Stock Purchase Agreement dated November 1, 1966, that any reduction of the net worth of Financement of Geneva, Inc. to less than 80% of the unpaid principal balance due Fasco, A.G. would constitute an act of default on the part of Modernage, Inc.

 Defendant Modernage, Inc. never had any assets, is presently defunct, and is without assets to pay any obligations under the Stock Purchase Agreement dated November 1, 1966. Defendant Robert S. Purcell, and other principals of defendant Modernage, Inc., in and about December of 1966 and on January 3, 1967 were not in a position to make the January 15, 1967 payment of $50,000.00 due and owing upon the Stock Purchase Agreement.

 It was agreed between plaintiff and defendant Robert S. Purcell that, if defendant and his partners would sign a personal guarantee, plaintiff would extend the time of the January 15, 1967 payment for a period of 30 or 40 days, and plaintiff would permit a transfer of assets from Financement of Geneva, Inc. in an amount greater than that permitted by Paragraph 11 of the Stock Purchase Agreement. Defendant Robert S. Purcell signed a guarantee agreement dated January 3, 1967 and which reads as follows: "We, the undersigned, agree to be severally liable for the obligation of Modernage, Inc., under its stock purchase agreement with Fasco, A.G., for the purchase of the stock of Financement of Geneva, Inc., provided that Fasco, A.G. shall first look to the assets of the company for payment." On January 3, 1967, the date on which a guarantee agreement was executed by defendant Robert S. Purcell, said defendant admitted to Mr. Daniel Porco, agent of plaintiff, Fasco, A.G., that he could not make the January 15, 1967 payment on time.

 The money required to make the January 15, 1967 payment of $50,000.00 by Modernage, Inc. to Fasco, A.G. was to come from the cash and assets of Financement of Geneva, Inc. On January 3, 1967 when defendant Robert S. Purcell met and discussed making the January 15, 1967 payment of $50,000.00 to Fasco, A.G., the balance in Financement of Geneva, Inc.'s bank account was only $14,054.07. On January 15, 1967, the balance in the bank account of Financement of Geneva, Inc. was $15,383.41.

 The $50,000.00 payment due on January 15, 1967 was not made on that date, for Modernage, Inc. and Financement of Geneva, Inc. did not have sufficient money with which to make such payment. On January 16, 1967, Robert S. Purcell personally borrowed $17,000.00, such amount to be a part of the $50,000.00 payment which was delinquent as of January 15, 1967. The $50,000.00 payment due on January 15, 1967 was paid as follows: (a) $30,000.00 of the sum was paid by check dated January 20, 1967, which sum represented the $17,000.00 borrowed by Robert S. Purcell on January 16, 1967, plus the cash on hand of Financement of Geneva, Inc., and $20,000.00, the balance of the $50,000.00 due on January 15, 1967, was paid by check dated February 2, 1967 in the sum of $20,000.00. No further payments were made to Fasco, A.G. as of September 23, 1969, the date upon which the non-jury trial of this action was concluded.

 The personal guarantee agreement dated January 3, 1967 and executed by defendant Robert S. Purcell, whereby said defendant agreed to be severally liable for the obligations of Modernage, Inc., under its Stock Purchase Agreement with Fasco, A.G., was supported by good and valuable legal consideration, said consideration being an extension of time for making the $50,000.00 payment due on January 15, 1967 and permission to transfer from Financement of Geneva, ...


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