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JAMES F. FRICKERT v. DEITER BROS. FUEL CO. (11/26/75)

decided: November 26, 1975.

JAMES F. FRICKERT
v.
DEITER BROS. FUEL CO., INC. ET AL., APPELLANTS



COUNSEL

Donald B. Corriere, Haber & Corriere, Bethlehem, for appellants.

Jackson M. Sigmon, Bethlehem, for appellee.

Jones, C. J., and Eagen, O'Brien, Roberts, Pomeroy, Nix and Manderino, JJ. Pomeroy, J., filed a concurring opinion.

Author: Roberts

[ 464 Pa. Page 598]

OPINION OF THE COURT

This appeal arises from an action in equity between appellee James F. Frickert and appellants James A. Deiter and William A. Deiter concerning ownership of shares of Deiter Bros. Fuel Co., Inc. Appellee claims that, pursuant to a shareholders' restrictive agreement he is entitled to purchase one-third of the shares of fuel company stock held by appellants.

Appellants contend: (1) that section 711 of the Decedents, Estates and Fiduciaries Code*fn1 vests exclusive jurisdiction over this action in the orphans' court division and that therefore the equity division lacked subject matter jurisdiction; and (2) that the shareholders' restrictive agreement did not entitle appellee to purchase any shares of the corporation. The trial court resolved both issues against appellants,*fn2 and this appeal followed.*fn3 We affirm.

On July 1, 1971, William J. Deiter and Samuel R. Deiter were the sole shareholders of Deiter Bros. Co., Inc. Each owned 10,000 shares. On that date, the two shareholders and their wives entered into an agreement entitled "Shareholders Restrictive Agreement." Appellee

[ 464 Pa. Page 599]

James F. Frickert and Samuel R. Deiter's two sons, appellants James A. Deiter and William A. Deiter, are also parties to the agreement and are referred to as the "key employees" of the corporation. Paragraph 1 of the agreement provides that the corporation's shares cannot be transferred "except as permitted by this agreement and in accordance with its terms." Paragraph 2 provides that while both shareholders are alive, each shareholder may transfer his shares only after offering them first to the corporation and then to the other shareholder. Paragraph 4 provides that, upon the death of one shareholder, his estate must sell and the corporation must buy his shares. It further provides that, upon the death of the surviving shareholder, his estate must sell his shares to the three "key employees" equally. The agreement contains no provision concerning an inter vivos transfer of shares by the surviving shareholder.

While they were both alive, neither shareholder attempted an inter vivos transfer. On November 19, 1972, William J. Deiter died.*fn4 On February 21, 1973, the surviving shareholder, Samuel R. Deiter, sold all of his shares to his sons, appellants James A. and William A. Deiter. Appellee was excluded from all aspects of that transaction. On March 18, 1973, Samuel R. Deiter died. Appellants James A. Deiter and William A. Deiter have refused to allow appellee to purchase stock of the corporation in equal shares with them.

Appellants' first claim is that the orphans' court division of the court of common pleas has exclusive jurisdiction of this action pursuant to section 711 of the Decedents, ...


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