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MATTER PRIMO'S BAR (12/28/79)

decided: December 28, 1979.

IN THE MATTER OF: PRIMO'S BAR, INC., COMMONWEALTH OF PENNSYLVANIA, PENNSYLVANIA LIQUOR CONTROL BOARD, APPELLANT


Appeal from the Order of the Court of Common Pleas of Philadelphia County in case of In the Matter of Revocation of Restaurant Liquor License No. R-9142, Amusement Permit No. AP-9142 and Sunday Sales Permit No. SS-9142, issued to Primo's Bar, Inc., No. 2274 March Term, 1978.

COUNSEL

J. Leonard Langan, Assistant Attorney General, with him Kenneth W. Makowski, Acting Chief Counsel, Edward Biester, Jr., Attorney General, for appellant.

Michael D. Fioretti, with him A. Charles Peruto, Peruto, Ryan and Vitullo, for appellee.

Judges Mencer, Blatt and Craig, sitting as a panel of three. Opinion by Judge Craig.

Author: Craig

[ 48 Pa. Commw. Page 189]

The third degree murder conviction of Alberto Santa, formerly the sole shareholder of Primo's Bar, Inc. (the corporation) spawned the case now before us on appeal.

The Pennsylvania Liquor Control Board (PLCB) asks us to reverse the court below, which reversed the board's revocation of the liquor license held by the corporate entity.

After the murder conviction of Santa on October 19, 1977, the PLCB "pierced the corporate veil" -- finding Santa to have been the sole shareholder, president, secretary, treasurer, manager, and one of three members on the board of directors -- and revoked the corporation's license on that basis, pursuant to a hearing in December of 1977.

Well before the homicide occurred, however, Financing by Superior, Inc. (Superior), owned by Jack Kulla, had loaned Santa the money to acquire the bar, including its liquor license, and had entered into an agreement with Santa and the corporation to secure that loan. Pursuant to that agreement, Kulla and his wife held the other two directorships, Superior thereby retaining ultimate potential control of the corporation, which right it could exercise in the event of Santa's default on loan repayments.

To further secure its financial interest, Superior had required that all the shares of stock in Santa's

[ 48 Pa. Commw. Page 190]

    name be endorsed in blank and held by Superior,*fn1 and thereby retained powers to transfer those shares to itself or anyone else, upon any default by Santa.

The corporation was further prohibited from in any way encumbering or transferring its license or its shares of stock, and Superior retained possession of all the corporation's indicia of its separate legal identity (charter, seal, minute book, stock book and lease). Superior also required the corporation to notify it within 48 hours should the PLCB issue a citation against the premises.*fn2

Spurred by 26 consecutive weekly defaults by Santa, Superior, learning of Santa's conviction and the pending PLCB action, promptly called a board of directors meeting. At that meeting, held on February 22, 1978, it ousted Santa from the corporation, assigned all his shares to Kulla, and elected Kulla and his wife to all the corporate offices. From that point on, ...


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