Neuman v. Corn Exchange National Bank & Trust Co.
| Decision Date | 24 March 1947 |
| Docket Number | 3302 |
| Citation | 51 A.2d 759,356 Pa. 442 |
| Parties | Neuman, Appellant, v. Corn Exchange National Bank and Trust Company |
| Court | Pennsylvania Supreme Court |
Argued November 27, 1946
Appeal, No. 153, Jan. T., 1946, from judgment of C.P. No. 1 Phila. Co., Sept. T., 1945, No. 2596, in case of Hyman C Neuman v. Corn Exchange National Bank and Trust Company. Judgment reversed; reargument refused April 18, 1947.
Action in trespass for damages for deceit. Before ALLESSANDRONI, J.
Verdict for plaintiff; judgment n.o.v. entered for defendant. Plaintiff appealed.
The judgment is reversed and the cause remanded with directions to the court below to enter judgment on the verdict for the plaintiff.
Morris Wolf , with him Wolf, Block, Schorr & Solis-Cohen , for appellant.
Robert T. McCracken , with him Joseph W. Swain, Jr ., and C. Russell Phillips and Montgomery, McCracken, Walker & Rhoads , for appellee.
Before MAXEY, C.J., DREW, LINN, STERN, PATTERSON, STEARNE and JONES, JJ.
This appeal grows out of an action in trespass for deceit. The plaintiff seeks damages which he claims to have suffered in a business transaction through his reliance upon an alleged misrepresentation by the defendant back concerning the consideration said to have been offered by a third person for certain stock held by the bank as the executor of a decedent's estate. Under a subsisting contract that had been entered into by the defendant's decedent, the plaintiff and one other person (all owners of stock of like character), the plaintiff had a right of refusal to buy the estate's holding of the particular stock at the amount of a third person's offer.
The learned trial judge submitted the case to the jury which returned a money verdict for the plaintiff. Subsequently, the court en banc entered judgment for the defendant, n.o.v., and, at the same time, dismissed the defendant's motion for a new trial. All that is now before us, therefore, on the plaintiff's appeal is the action of the court below in entering the judgment for defendant. While, for the purposes of our review, we are required to accept the proven facts of record, as well as the reasonable inferences therefrom, which go to support the jury's verdict (Zurcher v. Pittsburgh Railways Company , 353 Pa. 212, 213-214, 44 A.2d 581), the principal questions in the case are of law (1) as to where the plaintiff pleaded and proved a legally cognizable cause of action and, if so, (2) as to the measure of damages applicable.
The W.A. Haller Co., Inc., a corporation located in Pittsburgh, Pennsylvania, and engaged in the business of rectifying, blending and selling whiskey, had a capital stock consisting of 5000 shares of voting stock (Series B) and a negligible number of non-voting shares (Series A). On July 7, 1941, Theodore G. Stein, Harold S. Laden and Hyman C. Neuman, the present plaintiff-appellant, having negotiated the purchase of 2500 voting shares of Haller stock (Series B), agreed inter se by contract in writing concerning their respective rights and liabilities as the purchasers and owners of such stock. Among other things, they thereby apportioned the 2500 shares, so purchased, in lots of 841 1/3 shares to Laden, 841 1/3 shares to Neuman and 817 1/3 shares to Stein. As Stein already owned 24 shares of like stock, his then aggregate holding was 841 1/3 shares also. By a further provision of the contract, the parties thereto pledged themselves, one to the other, that .
Subsequently, Laden, Neuman and Stein acquired additional stock in the Haller company so that, together with one W. A. Haller, they ultimately owned the whole of the 5000 outstanding voting shares (Series B) of the capital stock of the company in approximately equal quarter interests, Stein's holding amounting to 1241 1/3 shares. While the option above-mentioned originally attached only to the 841 1/3 shares of Haller stock held respectively by each party at the time of the making of the contract of July 7, 1941, the defendant bank, as Stein's personal representative, later extended the option to the whole of his 1241 1/3 shares as will appear.
On June 5, 1943, Stein died. His will named as the executor thereof the defendant bank which duly qualified and began the administration of the decedent's estate. In addition to the 1241 1/3 shares of Haller stock owned and held by Stein's estate, it also owned warehouse certificates for 1000 barrels of bourbon whiskey stored in the warehouse of an Indiana distillery. The whiskey had an O.P.A. ceiling price of $53,963.79 for the lot. It had a value, however, for "blending" [1] purposes far in excess of its legally permissible sale price, as was well known and recognized. The learned trial judge, in his charge to the jury, stated, without exception from anyone, that "It is not denied here that this whiskey had a value greatly in excess of the ceiling price". It is to be assumed that the jury found to the same effect, as it had a right to do under the evidence in the case; and the fact so found is conclusive here on the record now before us.
The bank sold the whiskey certificates at the ceiling price to one Isadore H. Schweidel under an agreement which required him to make an offer of $45,000 for the Stein estate's 1241 1/3 shares of stock in the Haller company, subject, of course, to Neuman's and Laden's prior right to purchase the stock. On July 30, 1943, the stipulated day of Schweidel's settlement with the bank for the whiskey, he conformably signed a written engagement to buy the estate's Haller stock at $45,000 unless Neuman or Laden, the surviving parties to the agreement of July 7, 1941, elected to buy the shares in exercise of the above-specified option. Schweidel contemporaneously deposited with the bank $45,000 to guarantee performance of his undertaking to purchase the estate's stock in the Haller company. He was not interested in acquiring the stock. In fact, he did not want it but made his bid therefor only because he was required by the bank so to do in order to become the purchaser of the whiskey certificates.
Neuman, among a number of others, had offered to purchase the whiskey certificates from Stein's executor at their ceiling price but was never informed that the executor was receiving offers for the certificates on the basis that the purchaser thereof would obligate himself to buy the estate's stock in the Haller company at a certain price if called upon by the executor so to do.
After the whiskey certificates had been sold to Schweidel, as above stated, and his $45,000 deposit guaranteeing his offer for the stock was in the hands of the executor, the bank wrote Neuman a letter under date of August 6, 1943, which, after reciting the option provision of the 1941 agreement, continued as follows: "We hereby notify you that as Executor under the Will of the said Theodore G. Stein, deceased, we do desire to sell his holdings, and we wish to advise you that we have entered into a contract of sale with I. H. Schweidel of this City for the decedent's 1241 1/3 shares of stock for the sum of $45,000., which will be consummated unless you and Mr. Laden, or either of you, arrange to acquire the said stock at that price.
Laden renounced his right to participate in the purchase of the stock.
Neuman knew of Schweidel as a disbarred lawyer; considered him an undesirable prospective stockholder of a close corporation such as the Haller company; and desired to block his acquisition of the stock. To that end, in part at least, Neuman, on August 9, 1943, paid the bank $45,000 and received the estate's 1241 1/3 shares of Haller stock. Neuman had not been told by the bank, nor did he otherwise know, that the bank had sold the whiskey certificates to Schweidel or that Scheweidel's bid of $45,000 for the Haller stock was a prescribed condition precedent to his becoming the purchaser of the warehouse certificates at their ceiling price. It was August 13th following, or shortly thereafter, that Neuman first learned the true facts in such regard.
Upon an allegation that the actual worth of the Stein estate's Haller stock was $20,000, the plaintiff claimed damages accordingly on the theory that neither Schweidel nor anyone else would have bid more than that sum for the stock if sold independently of the whiskey certificates. Apparently finding $27,000 as the actual worth of the stock and therefore, the maximum limit of any possible bona fide bid by Schweidel or anyone else for the stock alone , the jury fixed the plaintiff's damages at $18,000. The jury's verdict further implies, and the evidence fully justifies the finding, that Schweidel's bid for the stock was a required "tie-in" to his purchase of the whiskey certificates and that the bank's statement to Neuman and Laden, that...
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