No. 2543 October Term, 1978, No. 3035 October Term, 1978, Appeal from the Decrees of the Court of Common Pleas of Delaware County, Civil Division - Equity, at No. 75-7818.
Howard D. Scher, Philadelphia, for Cerami and Jones.
Garland D. Cherry, Media, submitted a brief on behalf of Dignazio et al.
Michael P. Dignazio, Media, submitted a brief on behalf of BEDI.
Cercone, President Judge, and Watkins and Hoffman, JJ.
[ 283 Pa. Super. Page 429]
This case involves cross appeals taken from two final decrees entered in an equity action instituted by plaintiffs to establish their status and rights in the corporate defendant; and the alleged obligations of the individual defendants. The events giving rise to the respective appeals are as follows:
[ 283 Pa. Super. Page 430]
After defendants responded to plaintiffs' complaint with, among other things, a counterclaim, pursuant to Pa.R.C.P. 213(b), the chancellor ordered a separate trial limited to the issues of plaintiffs' right to ownership of shares of BEDI, Inc., and plaintiffs' right to manage the business of BEDI. Plaintiffs contend that the chancellor committed several errors in adjudicating these two issues. We disagree.
The record discloses that BEDI is a Pennsylvania corporation organized by defendants in 1968 to engage in the operation of a car wash/gas station known as "Shorty's." As of August 1969, BEDI had issued 50 of its 100 authorized shares to the three individual defendants: Dignazio -- 25 shares, Eufrasio -- 12 1/2 shares, and Idone -- 12 1/2 shares. In the fall of 1969, plaintiffs orally agreed to purchase the remaining unissued 50 shares of BEDI for $70,000. This oral agreement was subsequently finalized by a written shareholders subscription agreement dated January 15, 1970, which required plaintiffs to pay $15,000.00 on the signing of the contract and the balance of $55,000.00 over a seven year period in monthly installments of $913.10. The subscription agreement provided that the 50 shares being purchased by plaintiffs would be placed in escrow and not delivered to them until they had made payment in full in accordance with the agreement.
At the time the agreement was executed, BEDI's only debt was a $70,000.00 note held by Southeast National Bank which was to be paid in monthly installments of $1,162.10. The chancellor found that the individual defendants had assumed the obligation of paying off a $15,000.00 portion of the $70,000.00 note by making monthly payments to BEDI in the amount of $249.00.*fn1 Both plaintiffs and defendants made their monthly payments to BEDI until July 1970, after which no further payments were made by any of the parties.
[ 283 Pa. Super. Page 431]
In the spring of 1970, BEDI obtained from its supplier a discount of two cents per gallon from the regular tank wagon price of gasoline. This discount resulted in an additional monthly profit to BEDI of approximately $1,200.00. The chancellor found that in light of this increased income, the parties agreed that this additional profit would be used to make the monthly payments on the bank note and the parties would accordingly discontinue their monthly payments to BEDI.
In August of 1972 the parties orally agreed that plaintiffs would assume the management of "Shorty's."*fn2 The chancellor found that it was agreed that plaintiffs, as compensation for their management services, would receive 10% of the net profit on gasoline sales only. At approximately the same time, the parties agreed to equalize the share ownership in BEDI by redistributing their shares. Accordingly, plaintiffs agreed to transfer five of their shares to defendant Idone, and five to defendant Eufrasio; and defendant Dignazio agreed to transfer two and one-half shares to both Eufrasio and Idone. As a result of this redistribution, each stockholder in BEDI was to hold twenty shares.
In May of 1974, the parties met to discuss certain problems that had arisen.*fn3 These problems were not resolved and good will between the parties steadily declined. On December 30, 1974, at a special corporate meeting attended by all parties, a resolution was adopted removing plaintiffs as managers, officers, and directors of BEDI. Shortly thereafter, plaintiffs filed the instant action.
As previously noted, the chancellor ordered the trial of the cases separated so that the first hearing or trial would be confined to the issues ...