Egan v. United Gas Improvement Co.

• Decision Date: 13 May 1935
• Docket Number: 244
• Citation: 178 A. 683,319 Pa. 17
• Parties: Egan, Admr., v. United Gas Improvement Company, Appellant
• Court: Pennsylvania Supreme Court

178 A. 683

319 Pa. 17

Egan, Admr., v. United Gas Improvement Company, Appellant

No. 244

Supreme Court of Pennsylvania

May 13, 1935

Argued April 24, 1935

Appeal, No. 244, Jan. T., 1935, by defendant, from decree of C.P. No. 2, Phila. Co., March T., 1934, No. 1264, in case of L. Wallace Egan, administrator d.b.n.c.t.a. of estate of John Stotz, deceased, v. The United Gas Improvement Company. Decree affirmed.

Bill in equity. Before STERN, P.J.

The opinion of the Supreme Court states the facts.

Decree entered in favor of plaintiffs and against defendant. Defendant appealed.

Errors assigned, among others, were dismissal of exceptions to adjudication.

The decree is affirmed at cost of appellant.

William T. Campbell, of Swartz, Campbell & Henry, with him W. Heyward Myers, of Morgan, Lewis & Bockius, for appellant.

A. L Shapiro, with him Harry Shapiro, for appellee.

Before FRAZER, C.J., SIMPSON, MAXEY and DREW, JJ.

OPINION

MR. JUSTICE MAXEY:

John Stotz, now deceased, owned six shares of preferred stock and 285 shares of common stock of the United Gas Improvement Company of Philadelphia. He died April 13, 1932, and left a will which was duly probated, in which he appointed a friend, executor and trustee. Four days after Stotz's death, this stock was delivered to Edward B. Smith & Company (hereinafter referred to as the company), by the man (also now deceased) whom Stotz had named as executor. At that time the company did not know that Stotz was dead. These certificates were endorsed for transfer with the purported signature of John Stotz. The man who delivered the certificates witnessed the "signature." These shares of stock were sold and the company's check in the sum of $7,498.11, payable "to the order of John Stotz," was delivered to the same man who brought the certificates to the company's office. The company duly guaranteed on each certificate the signature of John Stotz, and the signature on the preferred stock certificate was also guaranteed by R.M. Snyder & Company, brokers, and the Pennsylvania Company for Insurances on Lives and Granting Annuities, none of these guarantors then being aware of the death of John Stotz. Edward B. Smith & Company, R.M. Snyder & Company, and the Pennsylvania Company for Insurances on Lives and Granting Annuities were added as defendants in the present action at the instance of the original defendant corporation. A check for the proceeds amounting to $7,498.11 was subsequently endorsed with the purported signature of John Stotz, then dead, and the signature of the man to whom it was delivered, and then was deposited by the latter in his personal bank account. It was later paid by the bank upon which it was drawn. The certificates were delivered in due course to the defendant corporation for transfer on its books to the purchaser. It still was unaware of the death of John Stotz, and on April 18, 1933, can-celled these certificates and issued new ones in lieu thereof.

All these endorsements of John Stotz on the certificates and on the check were forgeries. Upon the subsequent death of the executor, the present appellee was appointed administrator d.b.n.c.t.a. of the estate of John Stotz, and he on November 24, 1933, instituted an action in assumpsit against Albert L. Smith et al., trading as Edward B. Smith & Co., in the Court of Common Pleas No. 2 of Philadelphia County, as of December Term, 1933, No. 342, to recover the sum of $7,546.30 alleged to have been received by Edward B. Smith & Co., for the sale of the certificates referred to. To this suit an affidavit of defense and new matter was filed, and at the time of the hearing on the bill in equity the record in that suit was incorporated in the pending case by reference thereto. This suit in assumpsit is still pending.

On the discovery of the forgeries, demand was made upon the defendant for the issuance of new stock certificates, cancellation of the transfer, and for the reinstatement of the complainant herein as a stockholder in the corporation as of the date of the unlawful, unauthorized transfer. This demand was not complied with. Thereupon, on March 9, 1934, a bill in equity was filed praying that the defendant be ordered to remove from its records the cancellation of the certificates owned by John Stotz; that the transfer of the certificates on the books be can-celled, and that to the complainant there be issued new certificates for 285 shares of common stock and a new certificate for six shares of preferred stock in place of the certificates destroyed; and that complainant be restored to the rights and privileges of membership in the defendant corporation as of the date of the transfer of the certificates, to wit, April 18, 1933. The prayer was granted. This appeal followed.

The appellant stands on three propositions: (1) That the plaintiff is barred from pursuing the present action because of the suit to recover from the brokers the proceeds of the sale of stock. It is urged that this constituted an election on the part of plaintiff to affirm the sale, whereas the present proceedings were brought on the theory that the transfer of the stock was a void transaction. In Holt v. McWilliams, 21 Pa.Super. 137, the Superior Court of Pennsylvania held that the fact that a purchaser of land has brought suit to recover a portion of the purchase money paid by him before a deed to him has been refused, will not prevent him from filing a bill in equity against the vendor, for specific performance. In that case the Superior Court said: "The two proceedings are not inconsistent. It is true, pending both, the plaintiff might have been driven to elect between them." In the case at bar, obviously the plaintiff has in fact made an election by proceeding to a final hearing in an equity suit and permitting the action in assumpsit to lie dormant. See Findlay and Hay v. Keim, 62 Pa. 112. On this point the learned chancellor below says: "Whatever may be the law on this point all the authorities are to the effect that 'In order to constitute a binding election the party must, at the time the election is alleged to have been made, have had knowledge of the facts from which the coexisting, inconsistent remedial rights arise, since any position taken by a party before knowing all the facts should be classed as a mistake and not as an election': 20 C.J. 35, section 28. In the present case the facts indicate that when the suit was brought at law in November, 1933, the plaintiff had no information or knowledge...