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CST v. IRVING W. MARK AND GERALD MARK AND IRVING W. MARK & ASSOCIATES. APPEAL IRVING W. MARK AND IRVING W. MARK & ASSOCIATES (01/27/87)

filed: January 27, 1987.

CST, INC.
v.
IRVING W. MARK AND GERALD MARK AND IRVING W. MARK & ASSOCIATES. APPEAL OF IRVING W. MARK AND IRVING W. MARK & ASSOCIATES



Appeal from Order Entering Judgment by the Court of Common Pleas, Civil Division, of Chester County, No. 199 Equity 1981.

COUNSEL

Martin Techner, Philadelphia, for appellants.

Wieand, Olszewski and Cercone, JJ.

Author: Wieand

[ 360 Pa. Super. Page 305]

In this dispute between a corporate advertising agency and its vice president, the trial court, sitting without a jury, found that the corporate officer had violated a duty of undivided loyalty to the corporation by seizing a business opportunity for himself and, therefore, awarded damages to the corporation in the amount of forty thousand ($40,000.00) dollars. The court also found that the corporation was indebted to its officer for services rendered in the amount of $29,931.46. A motion for post-trial relief by the corporate vice president was denied by the court, and judgments were entered on the findings of the trial court. In this appeal by the corporate vice president, he contends that the trial court erred when it (1) found that he had seized a corporate opportunity for himself; (2) found that he had caused a loss to the corporation; and (3) calculated the amount which he was owed for services rendered and work performed. We disagree and affirm.

CST, Inc. is a Pennsylvania corporation engaged in the business of advertising, with its principal place of business in Devon, Chester County. Irving W. Mark is a specialist in the field of negotiating and preparing ads for insertion in newspapers. He conducted this business under the name of Irving W. Mark & Associates. On October 23, 1978, CST and Irving W. Mark & Associates entered an agreement by the terms of which Irving W. Mark & Associates was to negotiate and prepare all media insertions for CST's clients on a commission basis. The agreement was to continue for a period of one year. On June 25, 1979, Mark agreed to

[ 360 Pa. Super. Page 306]

    become an employee of CST and was appointed Vice President of Media Operations, at an annual salary of $30,000.00, but with an increase in salary to $36,000.00, effective January 1, 1980. Mark's duties as a vice president were essentially the same as they had been under the earlier agreement between CST and Irving W. Mark & Associates.

In early 1980, Mark was put in charge of an advertising project which CST was handling for the Commonwealth of Virginia. This project involved the preparation of a 1981 Trip Planning Guide which was to be distributed to the general public as an advertising supplement in various newspapers along the east coast. The project was completed successfully and resulted in substantial profits to CST. After this, CST expected to be designated by Stuart Ford, Inc., the advertising agent for the Commonwealth of Virginia, as the agency to prepare a Trip Planning Guide for 1982. With this purpose in mind, Mark contacted Stuart Ford and the Virginia State Travel Service in July, 1981. He was informed that whoever published the 1982 guide would be required to put up front an amount between $5,000.00 and $10,000.00 to compensate sales personnel who would be employed to sell advertising for the guide.*fn1

During July and August, 1981, Mark reported to Robert Chapin, the president of CST, that this money had to be advanced and that it was a prerequisite to CST's obtaining the job of preparing the 1982 trip guide. Chapin procrastinated and did not commit himself regarding the necessary advance of funds. The trial court found also that CST had been having cash flow problems at this time. When Stuart Ford, the Virginia advertising agency, began to put pressure on Mark to obtain a definite commitment from CST regarding its willingness to advance the necessary funds and accept the project, Chapin continued to be noncommital. Finally, sometime between August 8 and August 13, Mark travelled to Virginia, where he told Stuart Ford that CST had not agreed to come up with the front money but that he

[ 360 Pa. Super. Page 307]

    would do so and would take the advertising job in the name of Irving W. Mark & Associates. Mark testified that he did this despite the fact that no one at CST had told him that CST was no longer interested in the project or that it would not advance the necessary funds. Mark also testified that before accepting the project for himself, he had told Chapin and other top level employees at CST that he would be willing to advance the sales money and accept the project on behalf of his own company if CST were unwilling to meet the conditions imposed by the Commonwealth of Virginia. However, he did not inform Chapin when he decided to pursue the project himself, and CST did not consent to his accepting the job for his own account.

On October 15, 1981, CST offered to raise Mark's salary even though, as the trial court found, CST was then aware that Mark had taken the Virginia project on behalf of his own company. One month later, Chapin told Mark that CST was in financial trouble. Thereafter, Charles Rhodes, another officer of CST, travelled to Virginia on behalf of CST and discussed the 1982 travel guide project with officials of the Virginia State Travel Service. As a result of this meeting, Stuart Ford, Inc. requested Mark to execute a release of his rights to the project. Mark complied with this request, and CST was offered the job. By that time, however, the Commonwealth of Virginia also required the posting of a $100,000.00 performance ...


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