Eiffert v. Pennsylvania Central Brewing Co.

• Decision Date: 03 October 1940
• Docket Number: 9-1940,3-1940,8-1940
• Citation: 15 A.2d 723,141 Pa.Super. 543
• Parties: Eiffert, Appellant, v. Pennsylvania Central Brewing Company (et al., Appellants.)
• Court: Pennsylvania Superior Court

15 A.2d 723

141 Pa.Super. 543

Eiffert, Appellant, v. Pennsylvania Central Brewing Company (et al., Appellants.)

Nos. 3-1940, 8-1940, 9-1940

Superior Court of Pennsylvania

October 3, 1940

Argued March 4, 1940.

Appeals from judgment of C. P. Lackawanna Co., May T., 1935 No. 404, in case of William Eiffert v. Pennsylvania Central Brewing Company et al.

Assumpsit. Before Hoban, J.

The facts are stated in the opinion of the Superior Court.

Verdict directed for plaintiff in stated amount and judgment entered thereon. Plaintiff, and defendants, filed cross appeals.

Error assigned by plaintiff, among others, was refusal to direct a verdict in favor of plaintiff in the amount specified; error assigned by defendant, among others, was refusal of a directed verdict.

Judgment affirmed.

J. Don Reifsnyder, of Stark, Bissell & Reifsnyder, with him J. Julius Levy, for appellant, No. 3 and for appellees, Nos. 8 and 9.

C. P. O'Malley, of O'Malley, Hill, Harris & Harris, with him Casey & Casey, for appellants, Nos. 8 and 9.

Laurence F. Casey, of Casey & Casey, with him O'Malley, Hill, Harris & Harris, for appellees, No. 3.

Before Keller, P. J., Cunningham, Baldrige, Stadtfeld, Parker, Rhodes and Hirt, JJ.

OPINION

Parker, J.

Plaintiff, on March 26, 1935, brought an action in assumpsit against Pennsylvania Central Brewing Company and certain shareholders of that corporation under the provisions of § 514 of the Business Corporation Law of this Commonwealth (Act of May 5, 1933, P. L. 364, printed in the margin, ^[1] since amended by Act of July 17, 1935, P. L. 1123, 15 PS § 2852-514) for $ 1,156.76, wages claimed to be due from the corporation from January 8, 1934, to December 22, 1934. The action is one of 197 suits involving the same questions, in 67 of which cases the appellant stockholders are named as defendants. The trial judge directed a verdict for plaintiff for $ 444.23, refusing plaintiff's motion for binding instructions for $ 889, and refusing defendants' motion for binding instructions in their favor. The case comes into this court on cross appeals from the refusal of motions for judgment n. o. v. by plaintiff and by the defendants who are shareholders in the Brewing Company. The court in banc entered judgment on the verdict. There are no disputed facts affecting the questions presented to us. The appeals were consolidated by order of this court and will be considered in one opinion.

On December 18, 1934, the Brewing Company filed, in the United States District Court for the Middle District of Pennsylvania, its petition for reorganization under the provisions of paragraph 77-B of the federal Bankruptcy Act, and on December 22, 1934, that court issued an order approving the filing of the petition, appointing trustees for the company, and restraining all persons from suing, instituting, or prosecuting any actions or proceedings against the Brewing Company and from filing or entering judgments or levying or proceeding with executions against the property of the petitioner. On June 11, 1935, the district court modified its order of December 22, 1934, so that salary and wage claimants were given leave to bring suit against the corporation either as sole defendant or as defendant with other parties, provided that the order should not be construed to authorize the issuance of any execution against the bankrupt.

The Brewing Company was incorporated August 23, 1897, under the General Corporation Act of April 29, 1874, and amendments, with capital stock of $ 5,600,000. The company had 214 shareholders, 73 of whom are nonresidents of Pennsylvania residing in ten different states.

The appellant shareholders now contend that § 514 is unconstitutional and that there can be no recovery by plaintiff. They first say that that section violates § 9, Article I, of the Constitution of Pennsylvania and the 14th Amendment to the federal Constitution in that it "arbitrarily selects one or more stockholders upon whom is cast the entire wage debt of the corporation without an effective remedy of contribution from other stockholders similarly situated towards the corporation and its wage debt." Their argument, for the most part, is based on the contention that the remedy of contribution afforded them by the statute is not a proceeding appropriate to the character of the particular case. In their brief they thus summarize their position: "It should be noted that the appellants are not here questioning the justice or the fairness of the statutory liability for the corporate wage debt; but it is strongly urged that any law, such as is now questioned, the inevitable operation of which allows one or more shareholders to be arbitrarily singled out and to be deluged with a multiplicity of actions and the heavy costs thereof, and finally denies to such shareholders an effective, adequate remedy of contribution from other shareholders, as contemplated by the act, is a denial of the equal protection of the laws, and a taking of property without regard to the fundamental principles of natural justice and fairness embodied in the constitutional requirement of due process of law."

The attack on the constitutionality of this legislation is directed against its procedural rather than its substantive features. More emphasis is placed on the provisions that deal with contribution than on those having to do with the original action by the creditor. Are the defendants deprived of their property without observing the "law of the land" or without "due process of law"? The terms "law of the land" and "due process of law" are legal equivalents: Palairet's Appeal, 67 Pa. 479. Chief Justice Moschzisker, in Kariher's Petition (No. 1), 284 Pa. 455, 470, 131 A. 265, stated the requirements of due process of law as follows: "There must be notice, an opportunity to present one's cause, a proceeding appropriate to the character of the particular case, and an adjudication of the same nature as is present in other cases .... The Fourteenth Amendment to the Federal Constitution does not undertake to control the power of the State to determine by what process legal rights may be asserted or legal obligations enforced, or what form procedure and practice shall take, so long as the above elements are present: Iowa Central Ry. Co. v. Iowa, 160 U.S. 389, 393 [16 S.Ct. 344, 40 L.Ed. 467]; Louisville & Nashville R. R. Co. v. Schmidt, 177 U.S. 230, 236 [20 S.Ct. 620, 44 L.Ed. 747]."

"The due process clause does not impose upon the states a duty to establish ideal systems for the administration of justice with every modern improvement and with provision against every possible hardship that may befall": Ownbey v. Morgan, 256 U.S. 94, 110, 41 S.Ct. 433, 438, 65 L.Ed. 837. While it would have been to the advantage of the appellants to have had all other shareholders joined with them, the absence of such a requirement is not peculiar to this statute and is not contrary to prevailing practice. Tort actions are frequently brought against a municipality which is only secondarily liable without joining the property owner who is primarily liable. One of the purposes of the legislation was to afford wage earners a speedy method of collecting their claims. They would be seriously delayed in securing satisfaction if they were compelled to ascertain the identity and residence of all the shareholders of a company and join them in a single action. However, the shareholders were at liberty to bring in such other shareholders as were equally responsible with them. They had ready access to the books of the company where they could learn the identity of the other shareholders and probably their addresses. They then had available the Scire Facias Act of 1929 with its amendments (12 PS § 141). Taking this into account, this feature of the act was certainly not in violation of the law of the land or the due process clause.

We find no discrimination between appellants and other shareholders in this corporation which violates the equal protection clause of the 14th Amendment to the federal Constitution. Appellants happen to have been chosen by a wage claimant as defendants in this suit. In so providing, the appellants are treated in the same manner as are all other stockholders and, in addition, they assented to the remedy when they became stockholders. "Differences due to voluntary action and diverse individual choices constantly arise under equal laws": St. Louis & K. C. L. Co. v. Kansas City, 241 U.S. 419, 36 S.Ct. 647, 651, 60 L.Ed. 1072.

This brings us to a consideration of the features of the section dealing with the right of contribution. In Armstrong Co v. Clarion Co., 66 Pa. 218, 221, the Supreme Court quoted with approval the language of Lord Chief Baron Eyre in Dering v. Earl of Winchelsea, 1 Cox 318: "Contribution is bottomed and fixed on general principles of natural justice, and does not spring from contract." Also, see Miller v. Home Ins. Co., 108 Pa.Super. 278, 284, 164 A. 819; Parker v. Rodgers, 125 Pa.Super. 48, 189 A. 693. This statement is sometimes misconstrued. It does not mean that the right to contribution cannot be based on a contract, but merely that it may arise independently of any contract: 13 Am. Jur. -- Contribution, § 4. It may be qualified or controlled by agreement: Annotation, 64 A. L. R. 2210. In this statute the general right which would otherwise be possessed is qualified by the requirement that recourse shall be first had to the corporation which is primarily liable. The defendant shareholders became holders of the corporate stock which ownership gave rise to this action before the passage of the Act of 1933, but that act was in substance a re-enactment of §§ 14 and 15 of the General Corporation Act of April 29, 1874, P. L. 73. The original law of 1...