No. 259 October Term, 1978, Appeal from Order of the Court of Common Pleas, Centre County, Civil Action, in Equity, at No. 1976-1376.
Carl A. Belin, Jr., Clearfield, for appellants.
William F. Donovan, State College, for appellee.
Hester, J., files an Opinion in Support of Affirmance in which Cercone, President Judge and Van der Voort, J., join. Spaeth, J., files an Opinion in Support of Reversal in which Price and Hoffman, JJ., join. Jacobs, Former President Judge, did not participate in the consideration or decision of this case.
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The six judges who heard this appeal being equally divided, the order and decree of the court below is affirmed.
Opinion IN SUPPORT OF AFFIRMANCE
Presently before the court is an appeal from the Chancellor's Decree Nisi dated July 30, 1977.
In said Decree, the Chancellor granted the prayer of the complaint of the appellee and found: (a) that a partnership existed between appellee and appellant Kurosh Ostovar (hereinafter sometimes "Ostovar"); (b) that the stock, now in the name of appellant Marjorie Ostovar (hereinafter sometimes "Marjorie"), was held by her with beneficial ownership therein vested in appellee and Ostovar in equal shares; (c) that appellee should receive a full accounting from the appellants as to the business generated by said partnership; (d) that Joseph F. Taricani, C.P.A., be appointed to supervise said accounting; and (e) that the partnership be dissolved and that such payments and conveyances as are necessary and proper to carry out the findings of the Chancellor, be made and entered into by the parties.
The law of the Commonwealth is such that "we recognize that the findings of facts of the Chancellor who heard the testimony without a jury, approved by the court en banc, are entitled to the weight of a jury's verdict; that such findings are controlling and that the court's decree
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should not be reversed unless it appears that the court abused its discretion or that the court's findings lack evidentiary support or that the court capriciously disbelieved the evidence." Bogosian v. Foerderer, 264 Pa. Super. 84, 399 A.2d 408 (1979); Chatham Communication v. General Press, 463 Pa. 292, at 297, 344 A.2d 837, at 840 (1975); Lanning Will, 414 Pa. 313, 316, 200 A.2d 392, 393 (1964); Sterrett v. Sterrett, 401 Pa. 583, 166 A.2d 1 (1960); Brown v. Gresh, 402 Pa. 35, 165 A.2d 629 (1960). However, where the conclusions reached by the Chancellor, either of law or ultimate fact, are no more than the Chancellor's reasoning from the underlying facts, such conclusions are reviewable. Shapiro v. Shapiro, 424 Pa. 120, 224 A.2d 164, 168 (1966).
Following a careful review of the record, we find that the Chancellor's findings of facts and conclusions of law are supported by a preponderance of the credible and believable evidence and, as such, said findings and conclusions are controlling upon this court and shall not be disturbed.
The credible evidence leads us to conclude that:
1. Appellee Daniel Barbet (hereinafter sometimes "Barbet") and Ostovar had become acquainted with each other in 1968 when Barbet married Ostovar's cousin.
2. Barbet had been primarily involved in the restaurant business all of his life, was trained as and became a chef. Ostovar was a graduate student at Penn State University where he subsequently received his Ph.D. in 1972, thereafter becoming an Assistant Professor at said institution.
3. All three of the individuals involved hereto, to-wit, Barbet, Ostovar and Ostovar's wife, Marjorie, were aliens, with Marjorie the closest to becoming a United States citizen, citizenship for her being expected by 1974.
4. In 1972, Ostovar contacted Barbet with the expressed intent of establishing a French-type restaurant in State College, Pennsylvania.
5. After Barbet made several journeys from Canada to State College at the request of Ostovar and following numerous discussions and plans for the establishment of a
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French-type restaurant, the two men agreed upon establishing a partnership to conduct a restaurant business at 206 West College Avenue, in State College, Pennsylvania.
6. Barbet and Ostovar thereafter agreed to go into business as partners with the understanding that Ostovar was to provide the capital and Barbet was to provide his expertise and to actively manage and supervise the restaurant operations.
7. The parties further agreed that Ostovar was to receive from Barbet reimbursement of the one-half of Ostovar's financial advancements to the partnership business, together with interest, from and out of the partnership profits.
8. Thereafter, the parties executed a lease for the premises at 206 West College Avenue to be used for their restaurant business, both individuals signing the lease as "Kurosh Ostovar and Daniel Barbet, as partners, t/d/b/a La Chaumiere." The lessor at 206 West College Avenue assumed and dealt with Ostovar and Barbet as partners.
9. Barbet proceeded with renovation of the leased premises, purchase of equipment and related other matters, looking towards the opening of said restaurant; however, before completion thereof in June of 1973, the business establishment next door located at 210-214 West College Avenue and known as Meyers Bar Restaurant, Inc., became available for purchase.
10. Having arranged for the purchase of the stock of the Meyers Bar Restaurant, Inc. corporation, the Barbet-Ostovar partnership proceeded to sub-let (or assign) the previously leased premises at 206 West College Avenue to a book store operation. Again, Barbet and Ostovar executed said assignment and sub-lease documents as partners. Moreover, the sellers of the Meyers Corporation stock assumed and dealt with Barbet and Ostovar as partners.
11. The original plan as to assignment of moneys by Ostovar and provision of expertise by Barbet, was maintained throughout this transitional period. Specifically,
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the kitchen equipment, tables and chairs previously ordered for 206 West College Avenue were transferred to 210-214 West College Avenue.
12. Under the mistaken belief held by all of the parties that aliens could not legally own stock in a business which held a liquor license, and since Ostovar's wife, Marjorie, was expected to be the first partner or partner's spouse to become an American citizen, it was decided, on advice of counsel, that instead of them purchasing the bar-restaurant or the corporation, the parties would enter into an option agreement whereby they would buy the corporate stock in Marjorie's name, but same would not be transferred to her until she became a citizen.
13. Accordingly, on August 15, 1973, the Option Agreement was executed. During the period of the option, Barbet and Ostovar took an active part in the operation of the restaurant as "consultants".
14. In 1975, the Meyers' corporate stock was thus transferred to Marjorie in accordance with the terms of the Option Agreement; but in all of the transactions, Barbet participated as a partner and was so acknowledged.
15. Marjorie did not engage in the day-to-day operations of the restaurant except to join with her husband Ostovar in the maintaining of the books and handling of the banking transactions.
16. Between August 15, 1973 (the date of the execution of the Option Agreement) and June 30, 1976 (the day locks were changed by Ostovar to exclude Barbet), Barbet worked practically full time at the restaurant. During that period, Barbet received a salary as Manager of the restaurant, and his wife received pay for services performed in the business and Ostovar and Marjorie similarly received pay for services. Furthermore, during this period, Ostovar and Barbet were reputed to be co-owners among some of the employees of the restaurant by virtue of the circumstances under which the restaurant was operated. Additionally, during this period, the restaurant
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operation was a success; growing from 30 employees with annual sales of approximately $250,000 in 1973, to 60 employees with annual sales of almost $700,000 in 1976.
17. On April 15, 1976, the Collateral Security Agreement which had been originally executed in 1973 by Ostovar and Marjorie for the purchase of the Meyers' stock, was cancelled and a new Collateral Security Agreement and accompanying note was executed by Ostovar and Marjorie as well as by Barbet and his wife, obligating them as security on a judgment note to John Meyers (seller of the Meyers' stock) in the amount of $38,000.
18. The accountant for the corporation, Joseph F. Taricani, C.P.A., at all times, believed that Barbet and Ostovar were partners and the real parties in interest in the restaurant business. On May 5, 1976, Barbet and Ostovar met with Taricani and the corporation's attorney, at which meeting there was a discussion and agreement that Barbet owned one-half of the corporate stock. Attorney McCormick noted that agreement in his notes and Mr. Taricani recalled the same. The agreement, however, was not reduced to writing because Ostovar insisted that it was not necessary, stating, "Isn't my word good enough?"
19. Thereafter, the relationship between Barbet and Ostovar deteriorated rapidly. Several meetings were held to attempt to adjust their differences, all without success, until June 30, 1976, when the restaurant locks were changed by Ostovar to effectively, physically exclude Barbet from the premises. Barbet was also "dismissed" from his employment.
20. Thereafter, Ostovar proceeded to and has continued to proceed to operate the business on his own, refusing to acknowledge any rights of ownership in Barbet.
On July 7, 1976, Barbet filed the instant action in equity seeking specific performance of his partnership agreement with Ostovar and for an accounting in the ownership and operation of Chaumiere, the name of the French-style restaurant operated at 210-214 West ...