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SKI ROUNDTOP v. JOHN P. HALL (04/12/79)

decided: April 12, 1979.

SKI ROUNDTOP, INC., INDIVIDUALLY AND DERIVATIVELY ON BEHALF OF SKI YELLOWSTONE, INC., APPELLANTS,
v.
JOHN P. HALL, SHERRILL HALL, FREDERICK L. MORGENTHALER AND CHARLES R. MILLER, JR. AND SKI YELLOWSTONE, INC., NOMINAL DEFENDANT, V. IRVIN S. NAYLOR AND JOHANNS GEIER, ADDITIONAL DEFENDANTS, V. GERALD HALL, W. FRED ROSENMILLER, II, LISL MAYER, RICHARD MAGUIRE, EDWARD ST. JOHN, GLENN W. MUNNS, AND L. FREDERICK PACK, FURTHER ADDITIONAL DEFENDANTS



No. 932 October Term 1978, Appeal from the Order dated January 19, 1978, of the Court of Common Pleas of Cumberland County, Pa., Civil Division, at No. 2703 1977.

COUNSEL

Wentworth D. Vedder, York, for appellants.

Jack M. Stover, Harrisburg, for appellees John P. Hall, Sherrill Hall, Frederick L. Morgenthaler, III, and Charles L. Miller, and Ski Yellowstone, Inc., nominal defendant.

No appearance entered nor briefs filed for appellees Irvin S. Naylor and Richard Maguire.

Cercone, Spaeth and Lipez, JJ.

Author: Spaeth

[ 265 Pa. Super. Page 268]

This is an appeal from an order dismissing appellant's complaint on the ground that a Pennsylvania court will not take jurisdiction of a case that involves regulating or interfering with the internal management or affairs of a foreign corporation. Plum v. Tampax, Inc., 399 Pa. 553, 160 A.2d

[ 265 Pa. Super. Page 269549]

(1960); Kahn v. American Cone & Pretzel Co., 365 Pa. 161, 74 A.2d 160 (1950); Hopkins v. Great Western Fuse Co., 343 Pa. 438, 22 A.2d 717 (1941). In stating the case we shall, as we must, Upholsterers' International Union v. United Furniture Workers, 356 Pa. 469, 52 A.2d 217 (1947), take the well-pleaded allegations of the complaint as true.

Appellant, a Pennsylvania corporation, is a minority shareholder in Ski Yellowstone, Inc., a Montana corporation with its principal executive offices in Pennsylvania. Appellant's complaint comprises both derivative*fn1 and individual causes of action. Yellowstone is a nominal defendant; the other defendants are various officers and board members of Yellowstone, all residents of Pennsylvania.

Count I alleges violations of the Pennsylvania Securities Act of 1972, Dec. 5, 1972, P.L. 1280, No. 284, § 101 et seq., 70 P.S. § 1-101 et seq.*fn2 The facts alleged are as follows.

Prior to July 16, 1976, Yellowstone was considering selling notes convertible into Yellowstone common stock at $.20 per share. In order to defeat this proposal, however, appellee John P. Hall circulated the false information that

     a. Mr. Geier's [not further identified] demanded employment contract would be substantially more expensive to Yellowstone [more expensive than what is unclear].

[ 265 Pa. Super. Page 270]

    b. Changes in the Board of Directors and Officers would not detrimentally affect the other shareholders and that basically the officers remained unchanged.

Complaint at paragraph 18.

Though the complaint says these were only part of the misrepresentations made in connection with the defeat of the $.20 per share proposal, no other misrepresentation is alleged.

The Yellowstone board abandoned the $.20 per share proposal, but then considered a sale of common stock at $.10 per share. Hall opposed this proposal also, and it was defeated. However, a proposal to sell stock at $.05 per share (the "Series C offer") was approved, the approval specifying a minimum number of shares to be sold to make the offer effective, and setting various dates for installment payments of the purchase price. Hall subscribed to a large number of shares, but at the last moment he withdrew his subscription with the result that the Series C offer was threatened by undersubscription. Later Hall agreed to purchase enough shares to make the offer effective, and thereby he became the majority shareholder. At a special meeting of shareholders on November 5, 1976, Hall ...


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