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JOSEPH J. GALDO AND ROSANNA M. GALDO v. FIRST PENNSYLVANIA BANK N.A. (10/06/77)

decided: October 6, 1977.

JOSEPH J. GALDO AND ROSANNA M. GALDO, PLAINTIFFS AND MARTIN COHEN AND BEN WEINSTEIN, INTERVENORS-PLAINTIFFS,
v.
FIRST PENNSYLVANIA BANK N.A., APPELLANT, V. MARTIN COHEN, JEROME J. DRUCKER, NORMAN WOLGIN, S. THEODORE BLUMENFELD, SCIENTIFIC RESOURCES CORP., A/K/A ATLAS CREDIT CORP. OR SUNASCO, INC., HILCO HOMES CORP. AND ATLAS FINANCIAL CORP.



NO. 2385 OCTOBER TERM, 1976, Appeal from the Order of the Court of Common Pleas, Trial Division, Law, of Philadelphia County, at No. 2080, August Term 1974.

COUNSEL

Eugene F. Waye, Philadelphia, for appellant.

Michael S. Bomstein, Philadelphia, for appellee, Cohen.

Jerome J. Drucker, appellee, in propria persona.

Michael H. Applebaum, Huntingdon Valley, for additional defendants, Hilco Homes Corp. and Atlas Financial Corp.

Watkins, President Judge, and Jacobs, Cercone, Price, Van der Voort and Spaeth, JJ. Hoffman, J., did not participate in the consideration or decision of this case.

Author: Van Der Voort

[ 250 Pa. Super. Page 386]

The appellant, First Pennsylvania Bank, N.A. (Bank), was the trustee under an indenture relating to convertible subordinated debentures issued by Hilco Homes Corporation (Hilco). Joseph and Rosanna Galdo were owners of $300 in principal amount of the corporate 6 1/2% bonds. On August 13, 1974, the Galdos filed a complaint which contained two counts, one in assumpsit and one in trespass, against the Bank claiming that the Bank breached its contractual and fiduciary obligations as trustee of the debentures. The complaint alleged that Hilco, by liquidating its assets and failing to notify debenture holders of the liquidation, violated the terms of the indenture and was in default thereunder. It further alleged that this default was known to the Bank

[ 250 Pa. Super. Page 387]

    at the time of the occurrence, but the Bank, despite its knowledge, did not notify the debenture holders of the default and thereby violated its fiduciary and contractual obligation as trustee.

On February 21, 1975, intervenor-plaintiffs, Martin Cohen and Ben Weinstein joined the original plaintiffs.*fn1 On September 5, 1975, the appellant, Bank, filed a complaint against additional defendants,*fn2 including Martin Cohen, appellee, and Jerome Drucker among others. This complaint also contained two counts, one in assumpsit and one in trespass. The count in assumpsit averred that Martin Cohen, who was the former president of Hilco, and Jerome Drucker, who was the former treasurer and a principal owner of Hilco along with Cohen caused the damage to the plaintiffs by concealing the financial condition of Hilco and by mismanaging the company. The count in trespass averred that Cohen and Drucker as well as the other additional defendants caused the damage which was alleged by the plaintiffs and intervenor plaintiffs to have been caused by defendants.

Preliminary objections were filed by Martin Cohen as well as some other additional defendants. However, the record does not indicate that Jerome Drucker filed any preliminary objections to appellant's complaint. The lower court by order dated July 21, 1976 sustained the preliminary objections as to Martin Cohen and Jerome Drucker, and the preliminary objections as to ...


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