Appeals from judgment and orders of Court of Common Pleas, Civil Division, of Allegheny County, July T., 1965, No. 97, in case of Walter W. Davis v. Pennzoil Company.
Norman J. Cowie, with him Robert S. Grigsby, John R. Walters, and Thomson, Rhodes & Grigsby, for appellant.
Edmund K. Trent, with him Jonathan L. Alder, Charles E. McGinnis, and Reed, Smith, Shaw & McClay, for appellee.
Bell, C. J., Jones, Cohen, Eagen, O'Brien, Roberts and Pomeroy, JJ. Opinion by Mr. Justice Cohen.
On April 6, 1965, appellant, Walter Davis, filed an action of assumpsit in the Court of Common Pleas of Allegheny County against the Pennzoil Company, appellee, on two causes of action. The first seeks recovery of $16,661,489, plus interest, for financial advice allegedly given to South Penn Oil Company (appellee's prior name) by appellant under an agreement to pay him at the prevailing rate in the custom of the trade if the recommendations were accepted and used in whole or part. The second seeks recovery of $1,000,000, plus interest, under an oral agreement to pay appellant at the prevailing rate in the custom of the trade if he would discreetly negotiate with Tidewater Oil Company,
if he were successful in learning that Tidewater's holdings in South Penn could be purchased at a given price and if South Penn were able to purchase those holdings. In addition to these causes of action which are pleaded on express contracts, there are two alternative causes of action in quasi-contract (if no express agreement existed) for the fair value of the alleged services in the identical amount claimed under the express contracts.
Taking the record in a light as favorable to appellant as possible, the factual background is as follows. James Breene, whose family had long been connected with the corporate affairs of appellee, and who was about to inherit stock in South Penn, met with appellant in Arizona in March, 1962. He explained to appellant that in his opinion South Penn "wasn't going any place" and that appellant with his extensive experience in corporate matters could be of great use to the company. He stated that John Selden, President, Chief Executive Officer, and Chairman of the Board of Directors of appellee, should want to know about any recommendations appellant might have. Over the next few months appellant studied South Penn's situation and formulated recommendations. He spoke with Breene several times about his ideas during this period. Towards the end of May, 1962 Breene contacted Selden and told him that Walter Davis would like to discuss with him some matters concerning South Penn. Breene told appellant that Selden had agreed to meet with him and had suggested that he have ready an outline of the plan. After an abortive attempt on June 11 in Pittsburgh, they met on June 24 in Toronto.
In the course of that meeting appellant outlined to Selden the plan he had developed.*fn1 In essence that
plan recommends that: 1. South Penn should advance continually the market price of its shares by purchase of its own shares on the open market on the American Stock Exchange. 2. South Penn should acquire Tidewater's holdings of its shares (amounting to 9-11% of outstanding shares) and thus eliminate a large bloc overhanging the market and eliminate a source of opposition to an expansion program. 3. South Penn should negotiate property-reserve acquisitions through shares of its stock which with South Penn leading the way will be increasing in value. 4. In addition South Penn should -- a. increase the number of authorized shares from 1,715,000 to 10,000,000. b. change its listing from the American to the New York Exchange. c. change its name to Pennzoil Company. d. strengthen the board of directors by replacing those who retire by experienced corporate executives of national prestige. 5. South Penn should expand earnings through acquisition of additional oil and gas production and reserves through merger and/or purchase with shares at advanced prices. Also, there should be substantial extension of product-distributorships, plants and marketing facilities under experienced personnel. 6. South Penn should -- a. issue quarterly reports to shareholders. b. split the shares as the market price advances. c. increase dividends. d. not make any purchases involving the issuance of any substantial amount of stock-conversion rights.
In his deposition appellant states that at that meeting Selden promised to compensate him to the extent of "10 per cent of the difference of the market price value of the outstanding shares of the company on use, adoption
and completion or implementation of the plan as determined by me . . . compensation related to the difference between the market price of the outstanding shares on completion of the plan as compared to the market value of the outstanding shares at the time of the agreement by Selden to compensate me." Appellant also states that Selden agreed to pay him 10% of the purchase price to be paid for the Tidewater bloc if he discovered whether Tidewater would consider selling and the approximate asking price.
After the meeting in Toronto, correspondence between Selden and appellant continued, and on September 5, 1962 Selden informed Davis by letter that the South Penn Board of Directors had rejected his plan. On September 1, 1962 J. Hugh Liedtke had become president and chief executive officer of South Penn, and Selden had resigned.
Appellant asserts that as a result of his plan, the following changes were effected: a. on July 3, 1963, the corporate name of South Penn was changed to Pennzoil Company. b. during 1963 a series of mergers with other petroleum companies were consummated. c. beginning on July 8, 1963, the shares of appellee were listed on the New York Exchange. d. in January, 1964 appellee purchased Tidewater's equity in it. e. by June 12, 1964, appellee had increased its authorized shares to 10,000,000 and had declared a two for one split. f. subsequent to July 1, 1962, appellee increased its dividend. g. subsequent to July 1, 1962, appellee issued quarterly reports to its shareholders.
The procedural history is as follows. Appellant filed the complaint on April 6, 1965. On May 6, 1968, appellee served on appellant, under Pa. R.C.P. 4014, a request for admission of 544 writings. Appellant filed an answer on May 16 stating that he had not been able to read and comprehend the documents because of their volume and that the documents covered so many people
and locations that it was impossible for him to ascertain their accuracy. On June 5, 1968, appellee filed a motion for summary judgment, and on September 12, 1968, it filed preliminary objections to appellant's answer to the requests for admissions. This motion and these objections were argued before the court below on September 27, 1968, and on December 16 the court directed the entry of summary judgment in favor of appellee and declared that the requests for admissions were deemed to be admitted because appellant's answer was insufficient. Appellant then moved for reconsideration of the order relating to the requests for admissions and at the same time filed exceptions to the order for summary judgment and a motion to strike it off. Appellant next moved to have his motion for reconsideration listed for argument before the court (Judge Olbum) and his exceptions and motions to strike listed for argument before a court en banc. On December 26 the court below denied both motions. At No. 145 March Term, 1969, appellant is appealing the entry of summary judgment; at No. 169 March Term, 1969, appellant is appealing from the two orders of December 26, 1968, denying argument on the post-judgment exceptions and motions.
The court below, 117 P.L.J. 343 (1969), granted a summary judgment on the first cause of action because the essence of the plan involved a violation of federal securities law, because Selden lacked authority to enter into such a contract, because the contract was made on a Sunday, because there was want of consideration in that appellant's ideas were neither novel nor concrete and because the contract was too uncertain and indefinite to be enforced. It granted summary judgment as to the second cause of action because the contract was made on Sunday, because Selden lacked authority and because appellant did not perform his obligation under the contract. The court granted summary judgment
on the alternative causes of action because delivery of the plan occurred on Sunday and because appellee received no benefit from appellant's plan. The court granted appellee's preliminary objections to appellant's answer to its request for admissions because it felt Pa. R.C.P. 4014 set no limits on the number of documents that could be included in such a request and considering the nature of the case the number was not unreasonably large nor beyond appellant's reasonable anticipation. It believed appellant made no attempt to determine the truth of any of the matters of fact when he should properly have been expected to spend considerable time on that.
All these matters are before this Court, plus the arguments by appellant that a single judge does not have power to enter summary judgment without the concurrence of the court en banc and that the court below abused its discretion in sustaining the preliminary objections to the answer to the requests for admissions because they were untimely, having been filed 119 days after the filing of the answer, and because the court should have permitted the filing of an amendment to the answer.
It is well settled that summary judgment should not be entered unless the case is clear and free from doubt, that the record must be viewed in the light most favorable to the nonmoving party, and that all doubts as to the existence of a genuine issue of material fact must be resolved against the moving party. Mallesky v. Stevens, 427 Pa. 352, 235 A.2d 154 (1967); Vrabel v. Scholler, 369 Pa. 235, 85 A.2d 858 (1952).
The court below found that the "dominant theme" of the plan appellant relies on as the basis of the contract pleaded in Count 1 involved a violation of federal securities law. Relevant to this issue are sections 9a(2) and 10b of the Securities Exchange Act of 1934 (Exchange Act), 15 U.S.C. § 78i(a) (2), 15 U.S.C. § 78j(b),
which state respectively: "It shall be unlawful for any person, directly or indirectly, by the use of the mails or any means or instrumentality of interstate commerce, or of any facility of any national securities exchange, or for any member of a national securities exchange to effect, alone or with one or more other persons, a series of transactions in any security registered on a national securities exchange creating actual or apparent active trading in such security or raising or depressing the price of such security, for the purpose of inducing the purchase or sale of such security by others. It shall be unlawful for any person, directly or indirectly, by the use of any means or instrumentality of interstate commerce or of the mails, or of any facility of any national securities exchange to use or employ, in connection with the purchase or sale of any security registered on a national securities exchange or any ...