Massachusetts Bonding & Ins. Co. v. Johnston & Harder, Inc.

• Decision Date: 24 November 1941
• Docket Number: 185,170
• Citation: 22 A.2d 709,343 Pa. 270
• Parties: Massachusetts Bonding & Ins. Co., Appellant, v. Johnston & Harder, Inc., Appellant, et al
• Court: Pennsylvania Supreme Court

22 A.2d 709

343 Pa. 270

Massachusetts Bonding & Ins. Co., Appellant, v. Johnston & Harder, Inc., Appellant, et al

Nos. 170, 185

Supreme Court of Pennsylvania

November 24, 1941

Argued October 1, 1941.

Appeals, Nos. 170 and 185, March T., 1941, from decree of C.P. Allegheny Co., April T., 1937, No. 460, in equity, in case of Massachusetts Bonding & Insurance Company v. Johnston & Harder, Inc., et al. Decree reversed.

Bill in equity.

Decree entered, before GARDNER, RICHARDSON and KENNEDY, JJ., opinion by KENNEDY, J. Plaintiff and defendant each appealed.

The decree of the court below is reversed and the record is remitted to the court below for further proceedings in accordance with this opinion; costs to abide the final disposition of the case.

T. F Ryan, with him Joseph H. Bialas, of Bialas & Ryan, for appellant No. 170 and appellee No. 185.

H Stewart Dunn, with him Wm. G. Bechman, Roy Rose, Con. F McGregor, Bechman, Dunn, Parker & McGregor and E. G. Bothwell, for appellee No. 170 and appellant No. 185.

Before SCHAFFER, C.J.; MAXEY, DREW, LINN, PATTERSON and PARKER, JJ.

OPINION

MR. MAXEY, JUSTICE:

This case has been before this court twice before, and the facts are fully stated in our opinions filed in those appeals: See 330 Pa. 336, 199 A. 216, and 340 Pa. 253, 16 A.2d 444. In the opinion filed on November 25, 1940, when this case was last before us, prior to the present appeal, we said, inter alia, "The basic contested question in this case is whether the defendant, Johnston & Harder, Inc., is entitled to an accounting from the plaintiff. That depends on whether or not the plaintiff was legally justified in cancelling the contract summarily. If it was, J-H can claim against the plaintiff no damages for its cancellation. If it was not, its right to damages is clear and the amount of such damages would be a matter of proof. If such damages were proved, they would be a factor in the final disposition of this case, which originated, as already stated, in plaintiff's claim for an accounting of plaintiff's insurance business transacted for it by the defendant counter-claimant. As to what justification, if any, there was for the cancellation of the contract, the adjudication is silent." In the decree appealed from in the second appeal, the court below reversing its former ruling concluded as a matter of law that the plaintiff "had the right to cancel its general agency contract with the defendant, Johnston & Harder, Inc. on February 3, 1936." In a decree nisi it was ordered (1) that the prayer of Johnston & Harder, Inc., the defendant, for affirmative relief be disallowed, and (2) that the balance of the fund of $15,531.72 less poundage and the record costs of this proceeding is directed to be paid to "plaintiff or its attorneys of record".

On account of the inadequacy of the findings of fact in the adjudication, the decree of the court below was reversed and the record was "remitted to the court below for further proceedings in accordance with this opinion". In that opinion we upheld the complaint of Johnston & Harding, Inc., that the court in banc failed to perform the duty prescribed by Equity Rule 71 which provides, inter alia, that "exceptions which aver that the chancellor's adjudication fails to make substantial disposition of requests for findings of fact, must be answered specifically by findings, refusing to find, or qualifying the facts alleged, and not be a simple refusal of the request."

Without further formal proceedings in the court below, that court filed an opinion on July 8, 1941, holding that the contract in question was illegally breached and awarded damages to the defendant, Johnston & Harder, Inc. in the sum of $35,000 on its claim for affirmative relief which it made under Equity Rule 52. The court below withdrew its three former conclusions of law and "substituted" the following: "(1) The cancellation of the general agency contract . . . was in breach of the contract existing between said parties at the time of said cancellation. (2) The illegal summary cancellation of said contract . . . caused damages to the said Johnston & Harder, Inc. of valuable, tangible and intangible assets salable in the investment market at the time of said illegal termination of said contract. (3) That the damage sustained by Johnston & Harder, Inc. is in the sum of $35,000 including detention money or interest."

The court below then entered a "supplemental final decree" vacating its final decree of June 21, 1940, entered judgment in favor of Johnston & Harder, Inc. and against the plaintiff in the sum of $35,000 and directed that the former "have a first lien on the funds impounded in the registry of this court". Costs were placed on the plaintiff.

Plaintiff took this appeal. It complains that "no specific facts whatsoever are found by the court below in this 'opinion'". It complains because the court below "without any specific facts being found or stated conclusively says 'the illegal cancellation took away or destroyed tangible and intangible assets . . .' without showing what these 'assets' are or how they were 'taken away' or 'destroyed'". Appellant says "No exceptions were before the court in banc nor had opportunity been afforded for submission of any such. The distinction now was actually a reversal of the prior adjudication accomplished by an 'opinion', thus apparently resulting in the entire absence of any formal adjudication as required by the equity rules".

Appellant on July 10, 1941, filed a "petition to amend record", alleging, inter alia, ". . . The court vacates one or more of its findings of fact and vacates the original conclusions of law substituting therefor other findings of fact, new conclusions of law and an entirely different decree, being expressly a final decree. In so doing it appears that the court acted upon reserved rulings adversely to plaintiff, and similarly upon requests and other matters. That under all the foregoing plaintiff has been afforded no right or opportunity to file exceptions, among the subjects for presentment thereby but not exclusive of others being trial rulings, findings of fact, and failure to make substantial disposition of requests for findings of fact. Under the equity rules all objections not covered by specific exceptions are deemed to be waived and actually whatever objections plaintiff might have were never before the court as the subject matter of consideration or disposition by it. Leave is requested to file later as part thereof specification of such objections and exceptions. That such result is assuredly unintended but if allowed to stand would prove highly inequitable as well as prejudicial to the rights of plaintiff and would serve to foreclose many matters which as aforesaid have not been passed upon by the court formally. That in all fairness and equity the action taken July 8, 1941, should be amended so as to be marked and entered as a 'supplemental adjudication including decree nisi' or some such equivalent so that it be recorded with the effect of having been entered by the Chancellor with leave to either party to file exceptions thereto within a reasonable time for disposition by the court en banc under and in accordance with the equity rules and with stay of all proceedings in the meanwhile." Appellant then prayed "that the record of this case be so amended as to constitute the action entered July 8, 1941, a 'supplemental adjudication containing decree nisi' or some such equivalent so that it be recorded with the effect of being entered by the Chancellor with leave to either party to file exceptions thereto within a reasonable time for disposition by the court en banc according to law and with stay of all further proceedings in the meanwhile." Appellant then asked for a rule to show cause why the petition to amend record should not be allowed.

On July 14, 1941, the court below filed a memorandum refusing the rule to show cause. In its memorandum the court said: "It is our construction that the Supreme Court referred this case back to the Court en banc, rather than to the Trial Chancellor, to make proper disposition of it in accordance with the interpretation of the contract between the parties as outlined in the Opinion of the Supreme Court, speaking through Mr. Justice MAXEY. The new Findings of Fact and Conclusions of Law set forth in the Opinion of July 8, 1941, are based not on direct evidence but on fair inferences deducted from all of the evidence submitted by both parties to the proceeding. Our appellate Courts have stated many times that they will not interfere with Findings of Fact based upon the evidence. However, they have never surrendered their right to remould or even to make new Findings of Fact when based upon fair inferences to be drawn from the evidence. This same power has also been lodged with a Court en banc, after exceptions have been filed to the Findings, etc., of a Trial Chancellor. We are of the opinion and counsel for the defendant, J & H, are in full agreement that the whole record again comes before the Supreme Court on appeal and that counsel for the plaintiff company will not be limited or circumscribed in raising any legitimate question, so that substantial justice may be done in this case."

The complaint of the appellant is well founded. The decree appealed from is characterized by an arbitrariness which has no place in due judicial process. The court declares that the plaintiff's cancellation of its contract with Johnston &amp Harder, Inc. without notice "was a breach of said agreement". There is in the court's opinion...