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HARRY M. ZERBEY AND JOSEPH H. ZERBEY v. J.H. ZERBEY NEWSPAPERS (06/12/89)

filed: June 12, 1989.

HARRY M. ZERBEY AND JOSEPH H. ZERBEY, IV, APPELLEES,
v.
J.H. ZERBEY NEWSPAPERS, INC., APPELLANT



Appeal from the Order of the Court of Common Pleas of Schuylkill County, Civil at No. S-160 1985.

COUNSEL

J. Tomlinson Fort, Pittsburgh, for appellant.

John M. Elliott, Philadelphia, for appellees.

Montemuro, Tamilia and Montgomery, JJ.

Author: Montemuro

[ 385 Pa. Super. Page 110]

This is an appeal from a summary judgment entered by an Order of the Court of Common Pleas of Schuylkill County in favor of the appellees, Harry M. Zerbey and Joseph H. Zerbey, IV. It is axiomatic that a motion for summary judgment may be granted only if there is no genuine issue as to any material fact and the moving party is entitled to judgment as a matter of law. The court, in considering a motion for summary judgment, must examine

[ 385 Pa. Super. Page 111]

    the record before it in the light most favorable to the nonmoving party and resolve all doubt against the moving party. In the instant case, the trial court was cognizant of these principles, and we find no error in the entry of summary judgment. Consequently, we affirm.

In January of 1985, Mrs. Joseph H. Zerbey, III, the original plaintiff in this action, filed a complaint which requested the court to order the appellant, J.H. Zerbey Newspapers, Inc., to make available for Mrs. Zerbey's inspection and copying the following records of the corporation:

     a. Salaries of all officers, directors, and employees and consultants, including former employees engaged as consultants, from 1980 to the present;

     b. Bonuses paid to all officers, directors, and employees and consultants, including former employees engaged as consultants, from 1980 to present;

     c. Pension contributions made by and to all officers, directors, and employees and consultants, including former employees engaged as consultants, from 1980 to the present and review the complete actuary report for the years 1980 through 1983;

     d. Any other remuneration paid to all officers, directors, and employees and consultants, including former employees engaged as consultants, from 1980 to the present, including reimbursement for expenses; and

     e. Any travel expenses or reimbursement paid to senior staff from 1980 to the present or officers, directors, employees and consultants, including former employees engaged as consultants.

R.R. at 6a. At the time of the filing of this complaint, Mrs. Zerbey was a stockholder in Zerbey Newspapers, holding ten shares. Following Mrs. Zerbey's death on May 31, 1986, her shares passed equally to her sons, appellees Harry M. Zerbey and Joseph H. Zerbey, IV. Appellees were substituted as plaintiffs in this action on August 13, 1986.

[ 385 Pa. Super. Page 112]

This action has been brought pursuant to various provisions of 15 Pa.S.A. § 1308:

B. Every shareholder shall, upon written demand under oath stating the purpose thereof, have a right to examine in person or by agent or attorney, during the usual hours for business for any proper purpose, the share register, books or records of account, and records of the proceedings of the shareholders and directors, and make copies or extracts therefrom. A proper purpose shall mean a purpose reasonably related to such person's interest as a shareholder. In every instance where an attorney or other agent shall be the person who seeks the right to inspection, the demand under oath shall be accompanied by a power of attorney or such other writing which authorizes the attorney or other agent to so act on behalf of the shareholder. The demand under oath shall be directed to the corporation at its registered office in this Commonwealth or at its principal place of business.

C. If the corporation, or an officer or agent thereof, refuses to permit an inspection sought by a shareholder or attorney or other agent acting for the shareholder pursuant to subsection B of this section or does not reply to the demand within five business days after the demand has been made, the shareholder may apply to the court of common pleas of the county in which the registered office of the corporation is located for an order to compel such inspection. Such court of common pleas is hereby vested with exclusive jurisdiction to determine whether or not the person seeking inspection is entitled to the inspection sought. The court may summarily order the corporation to permit the shareholder to inspect the share register and the other books and records of the corporation and to make copies or extracts therefrom; or the court may order the corporation to furnish to the shareholder a list of its shareholders as of a specific date on condition that the shareholder first pay to the corporation the reasonable cost of obtaining and furnishing such list and on such other conditions as the court deems appropriate. Where the shareholder seeks to inspect the books and

[ 385 Pa. Super. Page 113]

    records of the corporation, other than its share register or list of shareholders, he shall first establish (1) that he has complied with the provisions of this section respecting the form and manner of making demand for inspection of such document; and (2) that the inspection he seeks is for a proper purpose. Where the shareholder seeks to inspect the share register or list of shareholders of the corporation and he has complied with the provisions of this section respecting the form and manner of making demand for inspection of such documents, the burden of proof shall be upon the corporation to establish that the inspection he seeks is for an improper purpose. The court may, in its discretion, prescribe any limitations or conditions with reference to the inspection, or award such other or further relief as the court may deem just and proper. The court may order books, documents and records, pertinent extracts therefrom, or duly authenticated copies thereof, to be brought within this Commonwealth and kept in this Commonwealth upon such terms and conditions as the order may prescribe.

There is no question that Mrs. Zerbey, prior to filing her complaint, did make a written demand, under oath, for the right to examine various documents and records of Zerbey Newspapers, which was refused. The central dispute is whether Mrs. Zerbey, and now substituted plaintiffs, Harry M. Zerbey and Joseph H. Zerbey, IV, have set forth a "proper purpose" within the meaning and intent of 15 Pa.S.A. § 1308.

In her original demand letter to Zerbey Newspapers, which was attached to the complaint, Mrs. Zerbey stated that the purpose for the requested inspection of corporate documents was "to determine the nature and extent of certain corporate expenditures which effect my interest in J.H. Zerbey Newspapers, Inc." R.R. at 9a. Appellees Harry M. Zerbey and Joseph H. Zerbey, IV, continue to adopt this reason as the purpose for the document inspection request, id. at 582a and 631a, and Joseph testified as follows during his February 3, 1987, deposition:

[ 385 Pa. Super. Page 114]

Q. What is your purpose in wanting to see information concerning every employee whether salary or on an hourly basis no matter what their responsibility since 1980?

A. I believe -- being in business, I believe it's important to find out how the business is operated. I believe it's important to know whether or not these hourly rates and/or salaries are in line with industry standards. To give one a sense of how the business is run, one should be able to see all the parts to that.

Q. But I'm asking if you have any information from other sources that, in fact, former employees are being paid salaries or hourly rates other than by pensions.

A. Yes.

Q. What information do ...


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