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PINCUS v. MUTUAL ASSURANCE CO. (07/01/74)

decided: July 1, 1974.

PINCUS
v.
MUTUAL ASSURANCE CO., APPELLANTS



Appeal from decree of Court of Common Pleas, Trial Division, of Philadelphia, March T., 1973, No. 4604, in case of Erwin L. Pincus et al. v. The Mutual Assurance Company et al.

COUNSEL

H. Francis DeLone, with him Harvey Bartle, III, and Dechert, Price & Rhoads, for appellants.

Pace Reich, with him Judith Eichen and Modell, Pincus, Hahn & Reich, for appellees.

Jones, C. J., Eagen O'Brien, Roberts, Pomeroy, Nix and Manderino, JJ. Opinion by Mr. Justice Nix.

Author: Nix

[ 457 Pa. Page 95]

Appellees Erwin and Hinda Pincus are shareholder-policyholders in the appellant insurance company. They instituted this suit as a class action on behalf of all shareholders alleging that the company directors had wrongfully withheld some $10,000,000.00 in corporate reserves and seeking distribution of that sum to the shareholders. Appellants filed preliminary objections asserting: (1) that the trial court lacked jurisdiction over the individual defendants due to a defect in service of process; and (2) that the individual plaintiffs did not adequately represent the class and therefore, that indispensable parties were not joined in the suit. The trial judge overruled these preliminary objections and this appeal followed. Clearly, these issues are interlocutory and thus not subject to appellate

[ 457 Pa. Page 96]

    review at this time unless either falls within one of the recognized exceptions to the general rule that appellate courts will not entertain interlocutory appeals.

The complaint alleges that this action was brought on behalf of the named plaintiffs and "all other perpetual policyholders similarly situated". It alleges further that the named plaintiffs "fairly and adequately represent the interests of all other policyholders who number . . . more than two thousand." Appellants contend that the vast majority of policyholders do not desire the distribution of corporate funds sought by Mr. and Ms. Pincus. As evidence of this fact, they note that at a shareholders meeting on March 27, 1973, a resolution to effectuate that distribution was introduced and defeated by a vote of 3,082 to 3 with 2 voters abstaining.*fn1 Based upon the above facts, appellants contend that the suit cannot qualify as a class action under Pa. R. C. P. 2230(a) which requires that the individual plaintiffs "adequately represent the interest of all [members of the class]."*fn2

We note at the outset that an order permitting a suit to proceed as a class action is not only an interlocutory order, but also that it is the type of interlocutory order which is not usually appealable. Piltzer v. Independence Federal Savings and Loan Association, 456 Pa. 402, 319 A.2d 677 (1974). See also Thill Securities Corp. v. New York Stock Exchange, 469 F.2d 14, 17

[ 457 Pa. Page 97]

(7th Cir. 1972); Walsh v. Detroit, 412 F.2d 226 (6th Cir. 1969); 9 J. Moore, Federal Practice para. 110.13 [9], at 184-87 (2d ed. 1973).

In Piltzer v. Independent Federal Savings, supra, we reasoned that an order permitting a suit to proceed as a class action did not "put the defendant out of court" because he could still demur to the complaint and, if necessary, defend on the merits at trial. "Whether a suit should proceed as a class action is independent of the question whether plaintiffs have stated a cause of ...


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