McKenna v. Art Pearl Works, Inc.

• Decision Date: 19 September 1973
• Citation: 310 A.2d 677,225 Pa.Super. 362
• Parties: Elizabeth M. McKENNA and Francis P. McKenna, Appellants, v. ART PEARL WORKS, INC. c/o Herman Golden, Registered Agent and Bernard Dorfmann and Adelphia Button Company, Additional Defendant.
• Court: Pennsylvania Superior Court

Page 677

310 A.2d 677

225 Pa.Super. 362

Elizabeth M. McKENNA and Francis P. McKenna, Appellants, v. ART PEARL WORKS, INC. c/o Herman Golden, Registered Agent and Bernard Dorfmann and Adelphia Button Company Additional Defendant.

Superior Court of Pennsylvania.

Sept. 19, 1973.

Elizabeth M. McKenna, Philadelphia, for appellants.

Saul D. Levit, Philadelphia, for appellees.

Before WRIGHT, President Judge, and WATKINS, JACOBS, HOFFMAN, SPAULDING, CERCONE, and SPAETH, JJ.

HOFFMAN, Judge.

Appellants contend that the trial court erred in granting appellees' motion for summary judgment on the amended complaint.

The instant suit arose out of an accident occurring on December 10, 1969, in which the wife-appellant sustained injuries while operating a punch press in the course of her employment at the Adelphia Button Company. The punch press had been purchased from the Act Pearl Works, Inc., through its authorized agent Bernard Dorfmann. Appellants filed their Complaints in Trespass and Assumpsit against the appellees, Art Pearl Works, Inc., and Bernard Dorfmann individually. Appellees' motion for summary judgment as to appellants' second amended complaints, was granted on January 30, 1973, by the Honorable Ned L. Hirsh of the Court of Common Pleas of Philadelphia County, who based his decision on the deposition of the individual appellee, appellees' affidavit, and the pleadings. Appellants appeal to this Court questioning only those portions of the lower court's Order granting summary judgment in favor of the appellees on the second amended complaint in trespass.

A summary judgment may be sustained (only) 'if the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, show that there is no genuine issue as to any material fact and that the moving party is entitled to a judgment as a matter of law.' Pa.R.C.P. 1035(b), 12 P.S.Appendix. 'The burden of demonstrating that no genuine issue of material facts exists is on the moving party and the record must be examined in the light most favorable to the nonmoving party. Schacter v. Albert, 212 Pa.Super. 58, 239 A.2d 841 (1968) . . . In passing upon a motion for summary judgment, the trial court's function is not to decide issues of fact, but solely to determine whether there is an issue of fact to be tried. All doubts as to the existence of a genuine issue of material fact must be resolved against the moving party.' McFadden v. American Oil Co., 215 Pa.Super. 44, 48--49, 257 A.2d 283, 286 (1969).

The issue, therefore, is whether the appellants raised any genuine issues of material fact to negate the propriety of summary judgment on their amended complaint.

Plaintiffs' Complaint in Trespass sets forth with sufficient clarity and definiteness the identity of the parties, the circumstances of the sale of the punch press to wife-plaintiff's employer, and the injury on December 10, 1969. Plaintiffs' allegations state causes of action based on strict liability in tort and common law negligence. ¹ In their Motion for Summary Judgment, defendants admit to the sale of the punch press and the resulting injury. They deny, however, that they are liable to the plaintiffs on a strict liability theory. We agree. ² Defendants go further, however, and deny liability on any other tort theory. They deny corporate liability, saying that the corporation had ceased doing business in 1964 after a sale of its business assets. Likewise, individual liability is denied, as it is alleged that Bernard Dorfmann at all times acted as an authorized agent for the corporation.

We believe the lower court properly granted the Motion for Summary Judgment with respect to Bernard Dorfmann. Despite the fact that Mr. Dorfmann admitted that he was the president of Art Pearl Works, Inc., and that the corporation was a family business with the shares of stock divided among various family members, we are not persuaded that this is an appropriate case to pierce the corporate veil, as appellants would have us do.

Under the law, there is no authority to look through the corporate appellee to the individual appellee. We have said that the 'equitable doctrine of piercing the corporate veil (should be employed) to prevent the perpetration of wrong; to prevent its use as a shield for illegal and wrongul conduct; or where its use, as a technical device, brings about injustice or an inequitable situation so that justice and public policy demand it be ignored. However, we have not done so where the rights of innocent parties are involved and the corporation is used for a legal purpose, as otherwise the entire theory of the corporate entity would be made useless.' Price Bar Inc. Liquor License Case, 203 Pa.Super. 481, 484, 201 A.2d 221, 222 (1964).

In the instant case, the evidence discloses that the corporate appellee, in an effort to terminate its business operations, sold all its corporate assets. There is absolutely no evidence or averment of fraud, criminal conduct, or other Ultra vires activity on the part of the corporate appellee in any of these transactions. Absent evidence that said corporation was being used for some illegal purpose, we cannot say that the mere fact that appellee sold a defective machine, which subsequently injures an employee of the buyer, would justify holding the selling agent personally liable. The fact that stock is closely held or even held by one stockholder should not, in itself, alter the proposition that the corporation is distinct from its shoreholders. Brown v. Gloeckner, 383 Pa. 318, 118 A.2d 449 (1955); Homestead Boro. v. Defense Plant Corp., 356 Pa. 500, 52 A.2d 581 (1947).

As for the liability of the corporate appellee, we take a different position. While it is true that § 402A liability may not be imposed in the instant case (see footnote 2), plaintiffs, in their Answer and Memorandum contra defendants' Motion for Summary Judgment, aver that defendants' denial of liability is conclusory, and that a cause of action based on common law negligence is sufficiently stated and proved to sustain their Complaint.

Plaintiffs allege in their Second Amended Complaint that defendants sold and supplied a defective punch press knowing or having reason to know of its unreasonably dangerous...