Appeal from the Order of the Court of Common Pleas of Philadelphia County in case of City of Philadelphia v. B. Axe Company, Samuel Alper and Isadore S. Dion, No. 1190 September Term, 1973.
Michael J. Rutenberg, with him Rutenberg, Rutenberg, Rutenberg & Rutenberg, for appellant.
Stewart M. Weintraub, Deputy City Solicitor, with him Sheldon L. Albert, City Solicitor, and Beryl E. Hoffman, Deputy City Solicitor, for appellee, City of Philadelphia.
Alan Dion, with him David Durben & Associates, P.C., for appellee, Isadore S. Dion.
Judges Crumlish, Jr., DiSalle and MacPhail, sitting as a panel of three. Opinion by Judge MacPhail.
[ 40 Pa. Commw. Page 259]
City of Philadelphia (City) filed a complaint in equity against B. Axe Company (Company), Samuel Alper, Isadore Dion and Doris Dion requesting the Court of Common Pleas of Philadelphia County to: (1) enjoin the defendants from transferring any of their assets; (2) decree the defendants as trustees ex maleficio of wage taxes due the City and unpaid by the Company; and (3) order the defendants to pay the taxes alleged to be due to the City. Subsequently, the City withdrew its complaint against Isadore and Doris Dion, but Alper then joined Isadore Dion as an additional defendant. The Company never filed an answer to the City's complaint, and it appears from the record and the briefs that for all practical purposes the Company has no assets.
After a non-jury trial, the lower court adjudged Alper and the Company jointly and severally liable for the unpaid wage taxes and ordered them to pay those taxes to the City. The Court dismissed the complaint against Isadore Dion. Alper filed exceptions to the decree nisi, which exceptions were subsequently overruled except as to the amount of tax actually due the City. This appeal followed.
We find substantial evidence in the record to support the findings of the Court below which we here summarize in narrative form. Between December, 1971, and February, 1973, the Company failed to pay to the City certain wage taxes which the Company withheld from its employees. Alper was the Company's chief operating officer and Isadore Dion was the Company's secretary. Alper was physically present on the premises of the Company at all relevant times and exercised his authority by hiring and firing employees, reviewing and signing all tax returns (including the returns for the unpaid wage taxes at issue here), signing
[ 40 Pa. Commw. Page 260]
payroll checks, executing contracts, negotiating with contractors and suppliers, signing checks for the payment of expenses, obtaining loans, consulting the Company's books and records and otherwise acting as manager and administrator of the Company. Alper signed checks for the payment of the Company's expenses with knowledge that wage taxes withheld from the Company's employees had not been paid to the City.
Dion was authorized to sign checks for the Company, which authority he exercised only twice. Otherwise, he exercised no control over the corporation and was rarely, if ever, physically present on the premises of the Company.
In his appeal to this Court, Alper contends that: (1) there is no res upon which to impress a constructive trust; (2) he was not an active and controlling officer because he did not prepare the payroll and the tax returns; and (3) if he is liable, Dion is ...