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ANNETTE FERBER v. AMERICAN LAMP CORPORATION (12/30/83)

decided: December 30, 1983.

ANNETTE FERBER, APPELLEE,
v.
AMERICAN LAMP CORPORATION, HARRY COHEN, ISADORE COHEN AND JOSEPH COHEN, APPELLANTS



No. 42 E.D. Appeal Docket 1983, Appeal from the Order of the Superior Court at Nos. 2781 and 2934, Philadelphia 1980, Affirming the Order of the Court of Common Pleas, Philadelphia, at Nos. 339 and 5322, July Term, 1974, Pa. Super, , Roberts, C.j., and Nix, Larsen, Flaherty, McDermott, Hutchinson and Zappala, JJ. Hutchinson, J., joins the majority opinion and files a concurring opinion. Zappala, J., concurs in the result. Larsen, J., files a dissenting opinion in which McDermott, J., joins.

Author: Flaherty

[ 503 Pa. Page 491]

OPINION OF THE COURT

This is an appeal from the judgment of Superior Court, 308 Pa. Super. 619, 457 A.2d 579, affirming the judgment and order of the Court of Common Pleas of Philadelphia County in which Annette Ferber, Appellee herein, was awarded $370,000 under her father's will, as her share of profits from the family business, plus $133,175.48 in interest. This judgment arose from two actions in equity which Ms. Ferber brought against her three brothers Harry Cohen, Isadore Cohen and Joseph Cohen and the American Lamp Corporation. American Lamp Corporation is a closely held family corporation of which Ms. Ferber is a minority shareholder and the Cohen brothers are officers and directors.

[ 503 Pa. Page 492]

In the first action, Ms. Ferber sought, inter alia, an accounting for distributed and undistributed net income from the corporation and payment of dividends. An amended complaint, averring that her father's will left her a share of the profits in the family business, now American Lamp Corporation and Atlantic Industries, Inc., which her brothers have denied her over sixteen years, prayed for judgment against the brothers and American Lamp Corporation for that portion of the estate of her father to which Ms. Ferber is entitled. In the second action, Ms. Ferber sued her brothers only, alleging that they and she are partners in the ownership of certain real estate and praying inter alia for an accounting, a dissolution of the partnership, and payment of any moneys due.

Although the trial court awarded Ms. Ferber $370,000 plus interest as her share of profits from the business, it denied relief in the second action. Superior Court affirmed the trial court's judgment and order and the Cohen brothers and American Lamp Corporation petitioned for allowance of appeal from that portion of the judgment of the Superior Court affirming the money judgment against them. We granted the petition, and for the reasons set out below, reverse the judgment of the Superior Court.

The ownership interests held by Ms. Ferber and her brothers in American Lamp Corporation had their origin in, and are controlled by, the following provision of the will of Benjamin Cohen, their father:

7. I order and direct that my present business shall be conducted by my executors, hereinafter named, their survivors or successors, and that the management and control of said business shall be under their supervision and management. I further direct that my sons, Samuel and Joseph, upon reaching their majority shall, if they so desire, join with my executors in the management and control of the said business, it being my purpose and intention that after my decease, my sons shall carry on and conduct my business so long as they shall so elect. I direct that the profits of the business, after allowing for a

[ 503 Pa. Page 493]

    sufficient working capital to carry on and maintain the purposes of the business, be divided in the following proportions:

One-third unto my beloved wife, Bella Cohen, and the balance thereof in equal shares among my children, Harry, Isadore, Samuel, Joseph and Annette.

Thus, under the terms of the will, profits from the family business were to be distributed one-third to Bella Cohen, and two-fifteenths each (two-thirds divided by five children) to each of the children named, including Ms. Ferber (Annette). Harry and Isadore Cohen, who were named the executors of the estate, were working in the family business when their father died, and were joined by their brother Joseph when he came of age. Samuel Cohen died in 1953 and his interest passed to his mother, Bella Cohen. She, in turn, transferred her interest in the business to her sons Harry, Isadore and Joseph Cohen, who incorporated the business in 1959 as the American Lamp Corporation.

The Cohen brothers also formed another corporation, Atlantic Industries, Inc., as a sales arm for American Lamp, which was a manufacturing entity. Ms. Ferber received shares in the American Lamp Corporation roughly but not exactly proportionate to her two-fifteenths ownership in the business, but she received no shares in Atlantic Industries, Inc. The trial court found, however, that these two corporations were, taken together, the corporate form of the business which had been devised to the testator's spouse and children. During the period from 1963-1979, the period at issue in this case, each of the Cohen ...


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