No. 30 January Term, 1977, Appeal from the Order of the Superior Court of Pennsylvania at No. 1909 October Term, 1975, Affirming the Order of the Court of Common Pleas of Luzerne County, In Equity, at No. 12 October Term, 1971.
Winkler, Danoff, Lubin & Toole, Sol Lubin, Peter B. Broida, Wilkes-Barre, for appellant.
Rosenn, Jenkins & Greenwald, Joseph J. Savitz, Wilkes-Barre, for appellees.
Eagen, C. J., and O'Brien, Roberts, Pomeroy, Nix, Manderino and Larsen, JJ. Pomeroy, J., filed a dissenting opinion. Eagen, C. J., dissents.
On October 8, 1971, appellant, Helen Ashley, commenced an action in equity in the Court of Common Pleas of Luzerne County, seeking to partition assets held as tenants by the entireties by her and her husband, appellee, Joseph Ashley, and to recover certain shares of stock in WIPCO, Inc. and in Ashley Machine and Tool Co. Following an extended hearing, the chancellor ordered an accounting and partition of all the entireties property held by Helen and Joseph Ashley. The Chancellor concluded, however, that appellant was not a shareholder of either WIPCO, Inc., or Ashley Machine and Tool Co. Exceptions filed by both appellant and appellee were denied by the court en banc. Appellee took no appeal from the court ordered accounting and partition of the property held by him and appellant as tenants by the entireties.
Appellant appealed that portion of the Court's decree denying her exceptions to the court's adjudication that she had no stock interest in WIPCO, Inc.; her exception to that portion of the adjudication denying her any stock interest in Ashley Machine and Tool Co. was withdrawn. The Superior Court affirmed the court en banc, Ashley v. Ashley, 240 Pa. Super. 702, 360 A.2d 233 (1976). We granted appellant's petition for allowance of appeal, and this appeal followed.
Appellant argues that she is entitled to 50 shares of WIPCO stock. She bases her argument upon the following facts about which there is no dispute. On January 6, 1964, appellant and her husband, appellee Joseph Ashley, entered into a subscription agreement with the newly formed WIPCO, Inc. The agreement, which was approved by the Board of Directors of WIPCO, Inc., stated that appellant and appellee were each to purchase 50 shares of WIPCO stock at a purchase price of $5,000.00 for each block of 50 shares. On March 5, 1964, individual stock certificates in the amount of 50 shares each to appellant and appellee, Joseph Ashley, were prepared by an attorney who handled appellee's legal
matters. The stock certificates were signed by the Secretary of WIPCO, Inc., Helen Ashley. Stock certificate "Number 1" purported to show that Joseph Ashley was the owner of 50 shares of WIPCO stock; certificate "Number 2" indicated that Helen Ashley owned 50 shares of WIPCO stock. The certificates were receipted for in WIPCO's stock certificate registry book, but they were not signed by the president of WIPCO as required by WIPCO's by-laws and by the Business Corporation Law, Act of May 5, 1933, P.L. 364 art. VI, § 607, as amended 15 P.S. § 1607(B). Appellant placed the certificates in a filing cabinet in the office of Ashley Machine and Tool Co., a corporation wholly owned by appellee, Joseph Ashley, and for whom appellant worked as office manager. Consideration for the subscription offer was provided by Ashley Machine and Tool Co., which transferred assets totaling $10,000.00 to WIPCO in March, 1964.
In May, 1972, subsequent to the commencement of the proceedings which culminated in this appeal, appellee authorized his accountant to mark "void and not issued" on the receipt stubs in WIPCO's stock registry book for the stock certificates indicating that Helen and Joseph Ashley each owned 50 shares of WIPCO stock. The receipt stubs were also crossed out with an "X." No notice was given to appellant that the shares certificate receipt stub indicating her ownership in 50 shares of WIPCO stock was being voided. At the same time that he "voided" the stock certificate receipt stubs above, appellee's accountant filled in WIPCO stock certificate "Number 3" to indicate that 100 shares of WIPCO stock were owned by Ashley Machine and Tool Co. Stock certificate "Number 3" was back-dated to March 11, 1964, pursuant to appellee's directions. In May, 1972, at the time of the above transactions, appellant was a judicially declared incompetent, having been declared so by the court on April 28, 1971, because of alcoholism. Her competency was judicially restored on June 5, 1972.
Appellant presents several theories in support of her contention that she is entitled to 50 shares of WIPCO stock. We agree with appellant that the chancellor erred in concluding
that appellee made no gift to appellant. Because the order of the Superior Court affirming the equity court's decree must be reversed on this ground, we need ...