Eden Roc Country Club v. Mullhauser

• Citation: 204 A.2d 465,416 Pa. 61
• Parties: EDEN ROC COUNTRY CLUB, a corporation, Appellant, v. William F. MULLHAUSER et al.
• Decision Date: 10 November 1964
• Court: United States State Supreme Court of Pennsylvania

Page 465

204 A.2d 465

416 Pa. 61

EDEN ROC COUNTRY CLUB, a corporation, Appellant, v. William F. MULLHAUSER et al.

Supreme Court of Pennsylvania.

Nov. 10, 1964.

Harry Alan Sherman, Pittsburgh, for appellant.

James R. Orr, William T. Marsh, Reed, Smith, Shaw & McClay, Pittsburgh for E. E. Reynolds and A. T. Stratton.

Alexander C. Sherrard, Marten R. Jenkins, Campbell, Thomas & Burke, Pittsburgh, for Samuel Jackson Snead.

John H. Neely, Neely, Stockdale & Phillips, Pittsburgh, for William F. Mullhauser.

I. Elmer Ecker, Pittsburgh, for James M. Fallon.

Robert E. Kline, Pittsburgh, for John J. Bruno.

Edward L. Springer, Louis M. Tarasi, Jr., Burgwin, Ruffin, Perry Pohl, Pittsburgh, for Francis J. Longergan and James T. Collie, Jr.

Wilbur F. Galbraith, I. Elmer Ecker, Ecker, Ecker & Ecker, Pittsburgh, for Edward C. Boyle.

C. John Tillman, Hirsch, Truxall & Weise, Pittsburgh, for Stanley W. Sampson.

Before BELL, C. J., and MUSMANNO, JONES, COHEN, EAGEN, O'BRIEN and ROBERTS. JJ.

BELL, Chief Justice.

Eden Roc County Club, a non-profit corporation, filed an amended complaint in trespass for decit which, inter alia, demanded large compensatory and punitive damages. All the defendants, many of whom were prominent in the sports world, were served with the complaint except the original promoters. ¹ Preliminary objections in the nature of a demurrer were filed by some defendants who were served. Plaintiff appeals from the Order of the Court of Common Pleas which sustained the preliminary objections, and dismissed the complaint as to all defendants.

Preliminary objections in the nature of a demurrer admit as true all facts which are averred in the complaint, together with all reasonable inferences therefrom, but not the pleader's conclusions or averments of law: Bogash v. Elkins, 405 Pa. 437, 176 A.2d 677; Wilkes-Barre Township School District v. Corgan, 403 Pa. 383 170 A.2d 97; Adams v. Speckman, 385 Pa. 308, 122 A.2d 685; Gardner v. Allegheny County, 382 Pa. 88, 114 A.2d 491; Narehood v. Pearson, 374 Pa. 299, 96 A.2d 895.

The complaint relevantly avers that the incorporators and their attorneys, defendants herein, knew the promoters intended to use the non-profit corporation for their private gain; that after the Charter was issued the entire control of the corporation was assumed, in violation of the corporate By-Laws, by the promoters for their private profit; that the promoters enlisted an 'Advisory Board' to secure members; that the members of the Advisory Board (defendants herein) knew of or ignored the promoters' illegal use of its corporate Charter and of the Club's false advertisement of the real estate owned and of the luxurious clubhouse and swank swimming pools and golf courses it intended to erect; and finally, that in June 1961, plaintiff discovered that the $350,000. membership dues which had been collected, had been fraudulently converted or embezzled by the promoters and the Club was without any funds; and that thereupon the Club instituted the present suit in July, 1961.

In Savitz v. Weinstein, 395 Pa. 173, 149 A.2d 110, the Court stated the essential requisites to sustain an action for deceit (page 178):

"* * * there must be (1) a misrepresentation, (2) a fraudulent utterance thereof, (3) an intention by the maker that the recipient will thereby be induced to act, (4) justifiable reliance by the recipient upon the misrepresentation and (5) damage to the recipient as the proximate result. ² * * *"

Assuming the truth of the averments of fact set forth in the complaint, there was no legal causal connection between the acts of the officers, members and advisory board on the one hand and the...