Markovitz v. Markovitz
| Decision Date | 03 July 1939 |
| Docket Number | 116 |
| Parties | Markovitz et al. v. Markovitz, Appellant |
| Court | Pennsylvania Supreme Court |
Argued April 17, 1939
Appeal, No. 116, Jan. T., 1939, from decree of C.P. No. 7 Phila. Co., June T., 1937, No. 2351, in case of Harry Markovitz et al. v. Victor S. Markovitz. Decree affirmed.
Action for removal of director under section 405(c) of the Business Corporation Law of 1933. Before OLIVER, P.J.
The opinion of the Supreme Court states the facts.
Decree entered removing defendant from office as a director and barring him from re-election for a specified period. Defendant appealed.
Errors assigned, among others, relating to the dismissal of exceptions, were various findings and conclusions of the chancellor.
The decree is affirmed. Appellant to pay the costs.
Harry Shapiro, for appellant.
Morris Wolf, of Wolf, Block, Schorr & Solis-Cohen, for appellees.
Before KEPHART, C.J., SCHAFFER, DREW, LINN, STERN and BARNES, JJ.
This is a proceeding for the removal of the defendant, Victor S Markovitz, from the office of director of Markovitz Brothers Inc., and to bar him from re-election thereto for a period prescribed by the court. It is based upon the provisions of Article IV, Section 405(c), of the Business Corporation Law of 1933. [1]
As stated in our decisions in the Markovitz cases which recently have been before this Court [2] the majority shareholder interest in the corporation is held by Harry Markovitz, the survivor of the four brothers who established the business, and by the estate of David Markovitz, deceased. Together they own 64 1/6 shares of the common voting stock of the corporation. The minority shareholders are the widow and two sons of Max Markovitz, Victor and Jerome, who are the owners of the remaining 35 5/6 shares of this stock.
The dissensions between these two groups of shareholders, as to various financial transactions which had taken place while the four brothers were living, resulted in vexatious litigation in the courts, and in serious disputes between them in the management of the company. There are five directors of the corporation of whom three are elected by the majority shareholders. By cumulative voting the remaining two directors are elected by the shares held by the Max Markovitz family.
On December 15, 1930, Victor and Jerome Markovitz were elected directors of the company, and although Victor had not been active in its affairs, he was made its secretary despite his youth and inexperience. Harry Markovitz has been a director of the corporation since its organization, and its president since December 15, 1930, following the decease of his oldest brother, David Markovitz. The son of the latter, Sydney Markovitz, also has been a director, and the treasurer and general manager of the corporation for several years. However, since the death of the three older brothers, the business has been actively conducted by Harry and Sydney Markovitz, who have managed it successfully, as is shown by the fact that its volume per year is around $2,000,000, with a net profit for the year 1936 in excess of $60,000.
It is alleged in the bill, as grounds for the removal of defendant from his office, that he grossly abused the authority and discretion vested in him as a director by deliberately annoying and harassing the other officers of the corporation in the performance of their duties, to the detriment and harm of the business.
Upon hearing on bill and answer, the evidence on behalf of plaintiff showed that beginning in August of 1936 the defendant, in the guise of performing his duties as secretary of the company, went daily to its large store in the City of Philadelphia, where he conducted himself in a manner which was inimical to the business, and injurious to the affairs of the corporation. He became the shadow of Sydney J. Markovitz, the general manager, standing beside him and humiliating him while he was transacting business with the employees and customers; following him wherever he went; demoralizing the office force by making absurd requests for detailed information which he already possessed; insisting that private drawers in the offices be opened; changing locks on doors; and making himself so personally objectionable to the officers, employees and customers of the company that its interests were jeopardized, and the morale of the organization, which carried on the operations of the company, was impaired.
In further aggravation of the defendant's conduct, it appears from the record that on one occasion, in December, 1936, when the corporation required a bank loan to pay for merchandise purchased, it was necessary to obtain from the court and to serve upon defendant a writ of peremptory mandamus to compel him as secretary to furnish the lending bank a certified copy of the resolution of the board of directors authorizing such loan. It further appears that as a director he had voted for the resolution, which he declined to certify, until ordered to do so by the court.
There was no denial by defendant that he committed the acts of which complaint is made, but he sought to justify his conduct by the assertion that it was "the duty of a director to direct," and to investigate and scrutinize the activities of other officers of the company.
The Chancellor in his findings reached the conclusion that the course of conduct followed by defendant constituted an abuse of authority and discretion as a director, which made necessary, for the welfare of the corporation, that defendant be removed from the office of director, and barred therefrom for a disciplinary period of two years from the date of the decree. A decree nisi to such effect was accordingly entered, with the right reserved to the estate of Max Markovitz to elect a director in substitution for the defendant. The defendant has appealed from the final decree, dismissing his exceptions to the Chancellor's findings and conclusions.
Prior to the enactment of the Business Corporation Law, the power to remove a director from office for reasonable and just cause before...
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IN RE NAZARETH FAIRGROUNDS & FARMERS'MARKET, INC.
...for disqualifying a minority director in Pennsylvania, although a record of actual obstruction would be, Markovitz v. Markovitz, 336 Pa. 145, 8 A.2d 46, 124 A.L.R. 359 (1939). To be sure, a court of bankruptcy is not bound to approve a director simply because he has been elected to represen......
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Jacksonville Terminal Co. v. Florida East Coast Ry. Co.
...§ 344, at 136 (1954 rev.); 1 Nadler, Florida Corporation Law § 361, at 617. 9 The Appellants cite cases such as Markovitz v. Markovitz, 336 Pa. 145, 8 A.2d 46, 124 A.L.R. 359; 19 Am.Jur.2d Corporations § 10 The extent to which the Operating and Guaranty Agreement is, or is claimed to be, im......
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Markovitz v. Markovitz
... 8 A.2d 46 MARKOVITZ et al. v. MARKOVITZ. Supreme Court of Pennsylvania. July 3, 1939. 8 A.2d 46 Appeal No. 116, January term, 1939, from the decree of the Court of Common Pleas No. 7 of Philadelphia County, as of June term, 1937, No. 2351; Oliver, President Judge. Proceeding by Harry Marko......
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Campbell v. Loew's, Inc.
...the Vogel letter are legally sufficient to justify the stockholders in voting to remove such directors. Compare Markovitz v. Markovita, 336 Pa. 145, 8 A.2d 46, 124 A.L.R. 359, and see 19 C.J.S. Corporations § 738(4). In so concluding I of course express no opinion as to the truth of the I t......