No. 1244 October Term 1979, No. 1262 October Term 1979, Appeals from the Order of the Court of Common Pleas of Montgomery County, Civil Action, Equity, at No. 77-14009.
Franklin Poul, Philadelphia, for Max A. Hankin and Janet Hankin, appellants.
Thomas Allen, Philadelphia, for Moe Henry Hankin, Sabina Hankin, Perch P. Hankin, Gertrude Hankin, Benjamin R. Shanken and Pauline Shanken, appellees.
Thomas A. Masterson, Philadelphia, for Samuel Hankin, M.D., and Harriet Hankin, appellants.
Robert S. Ryan, Philadelphia, for Pan American Associates, appellee.
Spaeth, Hester and Cavanaugh, JJ.
[ 279 Pa. Super. Page 185]
These are consolidated appeals from an order dismissing exceptions to the chancellor's adjudication and decree nisi, entered in appellants' actions in equity against appellees.*fn1
[ 279 Pa. Super. Page 186]
The parties are all*fn2 members of the Hankin Family Partnership,*fn3 and on this appeal appellants argue that the lower court erred in refusing to grant certain equitable relief,*fn4 including the court's refusal to appoint a receiver to take charge of the liquidation of the partnership assets, and to enjoin a sale of certain partnership property known as Willow Grove Park to the intervenor defendant Pan American Associates.*fn5
Moe, Perch, Max, and Samuel Hankin are brothers and Pauline Hankin Shanken is their sister. They and their spouses represent the five branches of the Hankin family and are equal partners in the Hankin Family Partnership and all the entities and enterprises owned and operated by the partnership. There has never been a written partnership agreement among the members of the Hankin Family
[ 279 Pa. Super. Page 187]
Partnership. The partnership assets include the ownership and operation of seven motor lodges, the Willow Grove bowling alley and shopping center, the Valley Forge and Hidden Springs golf courses, an industrial park, and various tracts of real estate including the Willow Grove Park. The total assets of the partnership are presently worth over $72 million, with total liabilities of about $11 million. Some of the assets are held by corporations.*fn6 The shares of each of these corporations are also owned by the partners equally, and each corporation is held and operated for the benefit of the entire partnership.*fn7 Formal corporate procedures are generally not followed and profits from the corporations are not distributed as dividends but are intermingled in a single bank account entitled Hankin & Hankin Trustees, while various expenses are apportioned to the various entities as a matter of custom or according to which unit is able to afford payment. Besides certain fringe benefits, such as free meals and the use of automobiles, each of the five branches of the Hankin Family receives an equal draw from the Hankin & Hankin Trustees account. The present draw is $40,000 per year. In addition, the partnership has paid the federal and state personal income taxes of the partners, charging these income payments to the partners' capital accounts. There also was a practice of hiring the children and spouses of the children of the partners at a uniform rate of $26,000 per year.*fn8
[ 279 Pa. Super. Page 188]
For approximately twenty years Moe, Perch, and Samuel Hankin, and Benjamin Shanken maintained their offices in one large room on the second floor of the Professional Center Building in the Willow Grove Shopping Center. The files pertaining to the Hankin Family Partnership were kept in this room. Also in this room were the offices of the law firm of Hankin, Hankin & Hankin, and of its predecessor, Hankin, Hankin & Shanken. The firm represented the partnership in most of its legal affairs, and the partnership and its enterprises and the two banks controlled by the partnership have been the principal clients of the firm.
Relations between the parties began to deteriorate in 1975, when there was a conflict over the control of the directorships of one of the banks controlled by the family. This conflict erupted into open warfare in 1977, when appellees, primarily Moe and Perch Hankin, engaged in a course of conduct apparently aimed at freezing appellants out of the business.*fn9 Max Hankin, who had earlier requested a dissolution and liquidation of the partnership in 1967, again became disenchanted with the way the business was proceeding and as a consequence initiated the present litigation. On June 1, 1977, Max and Janet Hankin, through their attorney, formally demanded a dissolution of the partnership, and on August 19, 1977, they filed a complaint in equity seeking dissolution, liquidation, appointment of a receiver, an accounting, and other equitable relief. Appellees filed an answer to the complaint. Samuel and Harriet Hankin, who were also named as defendants,*fn10 also filed an answer to the complaint, and in addition filed a cross-claim against appellees and a petition, seeking dissolution, liquidation, appointment of a receiver, an accounting and other equitable relief. On October 21, 1977, appellees filed preliminary objections and an answer to the cross-claim, and also a counterpetition for a preliminary injunction to enjoin all appellants from interfering with the partnership business.
[ 279 Pa. Super. Page 189]
Meanwhile, in an apparent attempt to liquidate the assets of the partnership, appellees negotiated an agreement with Pan American Associates for the purchase of Willow Grove Park. Appellees and Max and Janet Hankin*fn11 signed the agreement with Pan American Associates but Samuel and Harriet Hankin refused.
The case proceeded to discovery. On June 29, 1978, Max and Janet Hankin filed a new petition for the appointment of a receiver. On July 6, 1978, a hearing was held and September 11 was tentatively scheduled as the day on which hearings on all the petitions would begin. On September 11, Samuel and Harriet Hankin filed an amended petition in which they repeated their request for the appointment of a receiver, and additionally requested that the court enjoin the sale of Willow Grove Park to Pan American Associates. As mentioned, neither Samuel nor Harriet Hankin had signed the agreement with Pan American Associates. Moreover, Samuel had been in contact with another buyer for the property, the Taubman Company, which he alleged wished to purchase not only Willow Grove Park but all of the partnership properties. Hearings on the various petitions were held on September 12, October 4, 5, 6, 30, and 31, and November 1 and 2, 1978.
On December 14, 1978, Pan American Associates filed a petition to intervene as a party defendant. The petition was granted and Pan American Associates filed a counterpetition seeking specific performance and an order enjoining Samuel and Harriet Hankin from interfering with the sale of Willow Grove Park. Further hearings were held on January 31 and February 1, 2, 5, 6 and 8, 1979.
After all the hearings had been completed, the parties submitted proposed findings of fact and conclusions of law. On April 2, 1979, the chancellor, Judge Louis STEFAN, issued an adjudication containing findings of fact and conclusions of law, and a decree nisi. Exceptions were filed by
[ 279 Pa. Super. Page 190]
appellants, and after argument before the court en banc*fn12 the exceptions were dismissed. This appeal followed.*fn13
The chancellor's findings of fact in support of the adjudication and decree nisi are extensive and careful. The most pertinent of these findings are as follows:
17. As among the parties to this case, Moe and Perch Hankin have contributed the most, by way of productive effort and valuable business judgment, in the acquisition, development, and management of the Hankin businesses and properties with which this litigation is concerned.
20. Until recently, . . . Samuel Hankin, M.D. along with his brothers, was active in the day-to-day operation of the Hankin Family Partnership . . . .
21. Dr. Hankin acted as the general contractor and representative of the family partnership on the job sites in connection with the construction of various motor lodges owned by the family, including but not limited to the George Washington Motor Lodges located in King of Prussia and Allentown. He was on the project site each day during the construction of these motor lodges, acting as the general
[ 279 Pa. Super. Page 191]
contractor and coordinating the activities of the various subcontractors.
24. Over the years, both Moe and Perch Hankin frequently signed other owners' names (including those of Max, Janet, Samuel and Harriet Hankin) to various legal documents, with said other owners' foreknowledge and authorization.
29. Since 1977, the actual operation of the partnership has been entirely in the control of a majority group of partners consisting of Moe and Sabina Hankin, Perch and Gertrude Hankin, and Benjamin and Pauline Shanken. The control has normally been exercised by or through Moe or Perch Hankin.
30. In 1977, the majority group discharged [or forced out the children of Samuel and Max Hankin].
33. The disputes within the family partnership reached full blood in April, 1977, when Perch Hankin, his son Mark and son-in-law Robert Nappen, erected partitions in the large room which the four partners had shared as their offices for nearly twenty years.
34. These partitions were erected surreptitiously over a weekend, and without prior consultation with Samuel Hankin.
38. The effect of the partitioning has been to deny Samuel Hankin access to the files and records of the Hankin Family Partnership.
40. Since the family split, James Connor, the controller of the family enterprises, has been taking his instructions from Moe and Perch, and his contacts with Samuel have declined as the family problems increased.
41. Until October 5, 1978, Moe Henry Hankin and Perch P. Hankin refused to cause the family partnership to pay the
[ 279 Pa. Super. Page 1921977]
federal and state income taxes for the individual partners or to pay the 1978 quarterly estimated federal and state income tax payments for the partners, as had been the custom of the partnership in the past, unless: (a) Samuel and Harriet Hankin agreed to sign the option for the sale of Willow Grove Park to Ronald Rubin; and (b) Max and Janet Hankin agreed to a restatement of their capital accounts.*fn14
43. Since the inception of this litigation, the pace of liquidation activities, on the part of the majority Hankins, has intensified.
46. With respect to Willow Grove Park which is listed . . . as having a value of $7.35 million, the documents . . . and the testimony . . . indicate that as of approximately February 1, 1979, there exist two Agreements to sell approximately 85 acres in Willow Grove Park to Pan American Associates for approximately $7,650,000 which Agreements have been signed by all owners except Samuel and Harriet Hankin, and which Agreements have been delivered to and acted upon by the buyer Pan American Associates.
47. On May 15, 1978, Pan American Associates exercised its option pursuant to the Option Agreement dated November 15, 1977, with respect to 75 acres in Willow Grove Park.
48. Irrespective of its relevance, the evidence indicates that at the time of the majority Hankins' execution of the Option Agreement dated November 15, 1977, to sell 75 acres in Willow Grove Park to Pan American Associates, the majority Hankins had no reason to believe, or belief ...