author: McEWEN, Judge:

text:
    555 A.2d 218
    COMMONWEALTH of Pennsylvania v. William LAVELLE, III, Appellant. COMMONWEALTH of Pennsylvania v. LAVCO, INC., Appellant.
    Superior Court of Pennsylvania.
    Argued Nov. 9, 1989.
    Decided Feb. 15, 1989.
    Reargument Denied March 14, 1989.

      Charles P. Gelso, Wilkes-Barre, for Lavelle, appellant (at 2928).
    Albert J. Slap, Philadelphia, for Lavco, appellant (at 3129).
    Keith Welks, Deputy Attorney General, Harrisburg, for Com., appellee.
    Before CIRILLO, President Judge, and CAVANAUGH, ROWLEY, WIEAND, McEWEN, OLSZEWSKI, BECK, TAMILIA and POPOVICH, JJ.
   McEWEN, Judge:

These consolidated appeals were undertaken from the judgments of sentence imposed upon appellants, William A. Lavelle, III, and Lavco, Inc., after the trial court, sitting without a jury, found each of them guilty of violations of the corrupt organizations statute, 18 Pa.C.S. § 911.

The able opinion of the distinguished President Judge Edwin M. Kosik provides an apt summary of the facts giving rise to the prosecution of appellants:

The trial developed that defendant Lavelle was President of Control Sanitation Corporation which engaged in the collection and disposal of refuse. On November 7, 1977, a family corporation known as W.A. Lavelle & Son Co. was incorporated in Pennsylvania. Lavelle was its President. Both companies operated out of an office and garage located at 1620 North Keyser Avenue, Scranton. During the period of its existence until March 1979, Lavelle & Son engaged in the business of hauling and disposition of industrial wastes in solid and liquid form. Such materials were systematically dumped or disposed of at the Morgan Highway landfill or poured down a mine borehole located at the office address of both companies then in existence, to wit, 1620 Keyser Avenue, Scranton. Employees engaged in the hauling of the industrial waste were instructed by Lavelle to dispose of the waste at each site. Lavelle reported that the borehold at Keyser Avenue deposited the waste into a holding tank or the lines of the Scranton Sewer Authority. Lavelle, at one point, instructed that windows at the borehole site be painted. Neither site was officially approved for the receipt of industrial waste, nor was the site owner or Lavelle provided with any oral or written permit to dump the industrial waste as required by law.
Lavelle solicited the business of several companies whose operations resulted in the generation of industrial wastes as a by-product. Such wastes had to be disposed of in an appropriate facility. The representatives of the various companies solicited by Lavelle consistently testified that Lavelle personally or through reference represented the epitome of reliability in the field of disposal. Lavelle offered a series of documents which allegedly represented permits for the disposition of waste at various sites, along with letters of recommendation from exisiting customers. In each instance Lavelle assured his customers that disposal would conform with the requirements of both state and federal laws. In at least one instance Lavelle was provided with a sample of a waste by-product to determine if it was acceptable at the Morgan landfill site. The waste generator was orally advised by Lavelle that it was approved and that representatives of the state continued to monitor the landfill operations as material was received. During the period covered in the indictment, there were over seven hundred instances in which Lavelle had contracts or purchase orders to haul and dispose of wastes for a consideration which would not have been authorized had the waste providers known of the deception and false impressions as to the intentions of Lavelle in disposing of the industrial wastes. In the fiscal year October 31, 1978, ending October 31, 1979, Lavelle and Son received over four hundred thousand dollars as [gross] income from undocumented disposal of industrial waste; that is, waste disposed of by Lavelle and Son without documentation as to where such wastes were specifically deposited. The Commonwealth offered evidence that Lavelle was aware of the permit requirements in order to dump industrial wastes at the Morgan landfill. In June of 1978 Lavelle and Son apologized for dumping industrial waste without a permit on one stated instance. There was evidence that in the latter part of 1978 or the early months of 1979 there was much publicity over another local hauler of industrial waste who was being investigated for illegal dumping on a site located within miles of the Lavelle and Son disposals. Lavelle was aware of this investigation and assured at least one of his customers that there was no connection. Soon thereafter, Lavelle represented to customers that it was becoming more difficult to get state approval for the disposition of wastes at sites utilized by him. Thence, Lavelle commenced a withdrawal from the disposal business, and just continued to haul the wastes to locations determined by the customer. In fact, the last date Lavelle and Son performed a service [resulting in illegal dumping] was on March 29, 1979.
It appears from the evidence that when Lavelle and Son ended its corporate activity as a hauler and disposer of industrial wastes, a new corporation, the defendant Lav-co, Inc. took over the work of just hauling industrial wastes which had previously been contracted out to Lavelle and Son. Lavco is a Pennsylvania corporation which was incorporated on December 21, 1978. Members of the Lavelle family, except the defendant Lavelle, are officially and legally the incorporators, stockholders and officers of Lavco. While Lavelle appears to have no official connection with Lavco, he continued to represent Lavco in soliciting business, and as will appear more clearly later, he identified and held himself out as the owner and President of Lavco. Substantial assets of Lavelle and Son were sold to Lavco for a consideration. In addition, monies were loaned to Lavco by Lavelle and Son (labor and other expenses paid by Lavelle and Son), and the employees of Lavelle and Son continued as the employees of Lavco. Lavco at one point made a substantial loan to defendant Lavelle. The Commonwealth has established that between June 1979 and February 1981 there was an aggregate flow of $118,845.00 from Lavelle and Son to Lavco. Of course, a substantial portion of this was repaid by Lavco.

I. Appeal of William A. Lavelle, III

The sole issue raised in the appeal of William A. Lavelle, III, is that he is entitled to discharge by virtue of the fact that the proceedings against him were instituted after the period prescribed by the applicable statute of limitations had expired. Appellant contends that the five year statute of limitations provided by 42 Pa.C.S. § 5552(b)(1), effective July 12, 1982, cannot be retroactively applied to the instant prosecution when the last predicate offense occurred in June of 1979. Rather, appellant argues, the former two year statute of limitations contained at 42 Pa.C.S. § 5552(a) is applicable, so that the criminal complaint issued against appellant on August 5, 1983, was time barred.

The Attorney General argues that the amended five year statute of limitations should be applied retroactively, but that even if the former two year statute of limitations were to be applied, the prosecution was instituted in a timely fashion since the date of the last predicate act is irrelevant in determining the date upon which the statute of limitations commences.

The violations of the corrupt organizations statute committed by appellant are continuing offenses in that the offenses are “deemed to continue so long as the person who committed the violation continues to receive any benefit from the violation.” 18 Pa.C.S. § 911(c). Thus, as the trial court correctly concluded, the statute of limitations does not commence running upon the date on which the last predicate offense is committed but instead, commences upon the date on which the defendant last receives a benefit from the offense. 18 Pa.C.S. § 911(c). Since the statute of limitations period did not begin to run until the continuing violations of the Act, in the form of the receipt of benefits, ceased, we must determine at what point in time appellant Lavelle last received a benefit from his violations of Section 911(b)(1) and (b)(3) of the Corrupt Organizations Act.

A. Charges against William A. Lavelle, III arising under 18 Pa.C.S. § 911(b)(3)

Appellant was charged with and convicted of violating section 911(b)(3) of the Act which provides:

§ 911. Corrupt organizations
******
(b) Prohibited activities.—
******
(3) It shall be unlawful for any person employed by or associated with any enterprise to conduct or participate, directly or indirectly, in the conduct of such enterprise’s affairs through a pattern of racketeering activity.

18 Pa.C.S. § 911(b)(3).

Thus, in order to convict appellant of a violation of 18 Pa.C.S. § 911(b)(3), the Commonwealth was required to prove that:

(1) appellant was an employee of, or associated with, Wm. A. Lavelle & Son, Co.,
(2) appellant participated, directly or indirectly, in the conduct of the affairs of Wm. A. Lavelle & Son, Co., and
(3) Wm. A. Lavelle & Son, Co.’s affairs were conducted through a pattern of racketeering activity.

Appellant’s conviction under subsection (b)(3) rested, as recounted by the trial court in the aforequoted factual summary, upon evidence of a series of thefts by deception committed by appellant in the course of his conduct of the affairs of the corporate enterprise of Wm. A. Lavelle & Son, Co. The company’s final receipt of income from the disposal of hazardous waste was received on June 29, 1979. However, pursuant to section 911(c), the violation of 18 Pa.C.S. § 911(b)(3) continued so long as appellant continued to receive any benefit from conducting the affairs of Wm. A. Lavelle & Son, Co. through a pattern of racketeering. The Commonwealth established that appellant received “loans” from Wm. A. Lavelle & Son, Co., totalling approximately $39,000, and that the last such “loan” occurred, on October 13, 1979. Appellant, however, also received substantial cash payments, designated as wages, from Wm. A. Lavelle & Son, Co. through the last quarter of 1979. Thereafter, appellant received substantial cash payments, designated as wages, from Lavco, Inc. through February of 1981. The last transfer of funds from Wm. A. Lavelle & Son, Co. to Lavco, Inc. occurred in February of 1981. These cash payments were receipts of benefits derived from the racketeering offense. Thus, the violation of 18 Pa.C.S. § 911(b)(3) continued at least until February of 1981. The Commonwealth argues, however, that appellant Lavelle continued to receive a benefit so long as these loans remained unpaid and were carried on the books of Wm. A. Lavelle & Son, Co., as accounts receivable. It appears from our review of the record that these loans were never repaid and, according to the Attorney General, were maintained on the books of the corporation “until at least the last quarter of 1982.” Thus, the Attorney General argues in this appeal that appellant continued to receive a benefit until “at least the last quarter of 1982”.

If we were to accept the argument of the Commonwealth, we would be forced to conclude that because the loans remained unpaid, appellant is still enjoying a benefit and that, as a result, the statutory period of limitations has not yet commenced. This argument is spurious since it ignores the plain language of section 911(c) which tolls the statute for only so long as benefits are “received”, rather than “enjoyed”, and would result in the elimination of the statute of limitations in many, if not all, prosecutions under the Act.

Since we have concluded that the violation of 18 Pa.C.S. § 911(b)(3) by William A. Lavelle III continued, as a result of his receipt of benefits arising from the violation, until at least February of 1981, it is upon this date that the statute of limitations commenced running.

The statute of limitations applicable, in February of 1981, to violations of the Corrupt Organization Act was the two year statute of limitations formerly provided by 42 Pa.C.S. § 5552(a). This two year limitations period would have expired in February of 1983. However, on May 13, 1982, prior to the expiration of the statute of limitations, the legislature enlarged the two year statute of limitations provided by 42 Pa.C.S. § 5552(a) to five years for certain offenses, effective July 12, 1982. 42 Pa.C.S. § 5552(b). Thus, the issue presented by the appeal of William A. Lavelle, III, is whether the five year statute of limitations, which became effective prior to the expiration of the former two year limitations period, is applicable to these offenses.

This Court resolved this issue in the en banc decision of Commonwealth v. Harvey, 374 Pa.Super. 289, 542 A.2d 1027 (1988). The Court held that where a prosecution has not yet been commenced, and the applicable period of limitations is enlarged by the legislature, the new and expanded period of limitations is applicable, so long as at the time of the enactment of the new period of limitations, the right of the Commonwealth to proceed with a prosecution had not yet been barred under the former statute of limitations. Id., 374 Pa.Superior Ct. at 294, 542 A.2d at 1029. The Supreme Court of Pennsylvania thereafter analyzed this very issue and reached the same conclusion. Commonwealth v. Johnson, 520 Pa. 165, 553 A.2d 897 (1989).

In the instant case, the violation of Section 911(b)(3) of the Corrupt Organizations Act by William A. Lavelle III, continued, as a result of his continued receipt of benefits from earlier predicate acts in violation of the Act, until February of 1981. Thus, on July 12, 1982 (the effective date of the Act of May 13, 1982, P.L. 417, No. 122, § 1, 42 Pa.C.S. § 5552(b)), the former two year statute of limitations had not yet expired and the five year period of limitations provided by 42 Pa.C.S. § 5552(b) became applicable to the prosecution which was commenced by the filing of a criminal complaint on August 5, 1983.

B. Charges against William A. Lavelle, III arising under 18 Pa.C.S. § 911(b)(1)

Appellant was also convicted of violating 18 Pa.C.S. 911(b)(1) which provides, in pertinent part:

§ 911. Corrupt organizations.
(b) Prohibited activities.—
(1) It shall be unlawful for any person who has received any income derived, directly or indirectly, from a pattern of racketeering activity in which such person participated as a principal, to use or invest, directly or indirectly, any part of such income, or the proceeds of such income, in the acquisition of any interest in, or the establishment or operation of, any enterprise____

18 Pa.C.S. § 911(b)(1).

Thus, the Commonwealth had the burden of proving that:

(1) appellant was in receipt of income,
(2) the income had been derived directly or indirectly from a pattern of racketeering activity,
(3) appellant had participated as a principal in the racketeering activity, and
(4) appellant used or invested, directly or indirectly, part of this income, or the proceeds of such income, in the acquisition of an interest in or the establishment or operation of, any enterprise.

The evidence at trial established that appellant participated, as a principal, in Wm. A. Lavelle & Son, Co.’s racketeering activities during the period between 1976 and 1979 and that appellant received substantial income from that racketeering activity. Appellant invested part of this income in Lavco, Inc., which utilized the funds for the initial establishment of the business, as well as for its ongoing operating expenses. As heretofore noted, the record indicates that the last transfer of funds from Wm. A. Lavelle & Son, Co., to Lavco, Inc. in February of 1981. Thus, appellant’s violation of 18 Pa.C.S. § 911(b)(1) continued through February of 1981 and was, therefore, pursuant to our earlier analysis, subject to the five year statute of limitations provided by 42 Pa.C.S. § 5552(b).

We find, therefore, that the prosecution of appellant William A. Lavelle III for violations of 18 Pa.C.S. § 911(b)(1) and (b)(3) was timely commenced. We, therefore, affirm the judgment of sentence imposed upon William A. Lavelle, III.

II. Appeal of Lavco, Inc.

A. Imposition of criminal liability upon Lavco, Inc. for acts committed by William A. Lavelle & Son, Co.

Appellant Lavco, Inc. argues, inter alia, that it is entitled to discharge because it did not violate Section 911(b)(1) of the Corrupt Organizations Act since it did not participate as a principal in any racketeering acts or predicate offenses as required by 18 Pa.C.S. § 911(b)(1).

The complaint filed against Lavco, Inc. charged that: On or about February 20, 1976 and continuing until on or about January 31, 1982 in said county, Lavco, Inc., did unlawfully use and invest income and the proceeds of income derived directly and indirectly from a continuous pattern of racketeering activity in which it participated as a principal, comprising almost seven hundred separate thefts by deception which at all times material was against the law of the Commonwealth, each of which is a predicate offense, and the formation of a conspiracy with William A. Lavelle, III; William A. Lavelle IV; Michele Lavelle Mandarino, and other persons known and unknown to commit these thefts, in the acquisition of interest in and the establishment and operation of an enterprise, to wit, Lavco, Inc., while associated with W.A. Lavelle and Son Co. and acting in concert with others so situated used and invested income and the proceeds of income derived from contracts with the following companies for the payment to W.A. Lavelle and Son Co. for the removal, transportation, and lawful disposal of their industrial and other wastes by W.A. Lavelle and Son Co. but which wastes William A. Lavelle, III, and W.A. Lavelle and Son, Co. never intended to and in fact never did lawfully dispose of, thus creating a false impression as to value, intention and state of mind, in violation of 18 Pa.C.S. § 903 and § 3922:
1. Peter Paul Cadbury — 242 thefts from February 20, 1976 through November 11, 1978.
2. Standard Coated Products — 133 thefts from March 25, 1977 through June 18, 1979.
3. Marisol — 194 thefts from June 29, 1977 through February 8, 1978.
4. Tenneco — 25 thefts from June 29, 1977 through February 8, 1978.
5. Spectron — 59 thefts from May 1, 1978 through March 13, 1979.
6. Inland Container — 19 thefts from February 9, 1978 until September 21, 1978.
7. National Can Company — 13 thefts from April 25, 1978 through February 21, 1979.
8. Smith Kline Beckman — ten thefts from February 6, 1979 through March 16, 1979.
In the acquisition, establishment and operation of Lavco, Inc., and that Lavco, Inc. still enjoyed a benefit from the income derived by this violation at least until January 31, 1982; and that William A. Lavelle, III; W.A. Lavelle and Son Co., and Lavco, Inc.; at all times material to this indictment constituted an enterprise within the meaning of 18 Pa.C.S. § 911(b)(3), to wit an individual and businesses associated in fact through the control and direction of William A. Lavelle, III, with the goal of committing the aforementioned thefts by deception and utilizing the proceeds in the continuing operation of one or more waste disposal companies. 18 Pa.C.S. § 911(b)(1).
Thus, the Commonwealth was required to establish:
(1) that Lavco had received income,
(2) the income had been derived, directly or indirectly, from a pattern of racketeering activity,
(3) that Lavco had participated as a principal in the racketeering activity, and
(4) that Lavco had invested or used the income from the racketeering activity in the establishment or operation of an enterprise.

However, contrary to the allegations of the complaint, the prosecution concedes that no evidence was offered to establish that Lavco, Inc. participated in any racketeering activity, as a principal or otherwise, or that Lavco invested, in any other enterprise, any income realized by it from racketeering activity in which it had participated as a principal.

The Commonwealth argues, however, that the trial court properly found appellant Lavco, Inc. guilty of violating 18 Pa.C.S. § 911(b)(1) for the reason that Lavco, Inc. “was a continuation — successor of Wm. A. Lavelle & Son, Co., which participated as a principal in the racketeering pattern.”

The precise issue presented by the appeal of Lavco, Inc., namely, whether a de facto successor corporation can be held criminally liable for the acts of its predecessor in interest, is one of first impression in this Commonwealth. However, the issue of the liability of a successor corporation for compensatory and punitive damages resulting from the conduct of its predecessor has been previously addressed by our appellate courts. Thus, we rely for guidance upon established principles of tort law, believing that reference to principles developed in the civil law is appropriate under the circumstances of this case since “a corporation cannot be sent to jail. The discharge of its liabilities whether criminal or civil can be effected only by the payment of money.” Melrose Distillers, Inc. v. United States, 359 U.S. 271, 274, 79 S.Ct. 763, 766, 3 L.Ed.2d 800 (1959).

The trial court found that Lavco, Inc. was liable for the criminal acts of Wm. A. Lavelle and Son, Co., which had been committed prior to the incorporation, on December 21, 1978, of Lavco, Inc., based upon its finding that “Lavco, Inc. was conceived to be, and did become the de facto successor and a continuation of Wm. A. Lavelle and Son, which remained nothing more than a shell. When such a continuation exists, as demonstrated by the evidence in this case, we believe that the continuing corporation ought to be criminally liable for the acts of its predecessor in fact.”

The trial court based its conclusion upon the following facts:

The Lavelle corporation through Lavelle & Son generated in excess of $400,000 in income from undocumented disposal alone. These monies were generated in the fiscal period October 31, 1978 and ending October 31, 1979, and were used in a successful operation for the hauling and disposal of industrial wastes. During the better part of 1978 and early part of 1979 there was much publicity about another local hauler of industrial waste who was being investigated for illegal dumping. Although he was not associated with this operation, Lavelle was soon to represent to customers that it was becoming more difficult to receive state approval for the disposition of industrial wastes. Lavelle and Lavelle and Son withdrew from the disposal business, but continued to haul waste to locations determined by others. This continuing venture concluded when the last service was performed by Lavelle & Son on March 29, 1979. Any contract Lavelle & Lavelle & Son had for hauling material was thereafter performed by a new entity on the scene, Lavco, which was incorporated on December 21,1978. The lawyer who incorporated Lavco did business with Lavelle, but the latter nowhere appears as a person with a legal interest in Lavco, either as a stockholder or officer. However, the following does appear: Lavco operated out of the same garage where Lavelle & Son was situated, 1620 Keyser Avenue, Scranton; Lavco continued the same business activity of hauling industrial wastes, and with the same customers. Lavco had work performed by employees of Lavelle and Son; eventually all of the Lavelle and Son employees became Lavco employees; Lavelle continued to solicit business for Lavco as he was accustomed to in the case of Lavelle & Son; Lavelle continued as the most visible representative of Lavco; .Lavelle represented himself to be President of Lavco to the State of Virginia; he signed a contract with a banking institution as President of Lavco; Lavelle made application for a hazardous waste license for Lavco as President; Lavelle pledged his personal assets on a loan for Lavco; Lavco applied to Blue Cross/Blue Shield for an extension of the Lavelle and Son policy claiming it was a name change in companies; Lav-co assumed various accounts payable by Lavelle and Son; Lavco identified itself to the Pennsylvania Department of Labor and Industry as a successor corporation to Lavelle and Son and was given the same rate applicable to Lavelle and Son; Lavco acquired through sale from Lavelle and Son its primary asset, the trucks used for hauling; Lavco loaned money to Lavelle which remained unpaid; and after the sale of the trucks for a consideration to Lavelle and Son, the latter used the major part of the consideration to make other payments on behalf of Lavco.”

The court also noted that Wm. A. Lavelle “was represented by a public defender; Lavelle and Son had no representative except for the effort of the public defender, while the thrust of the paid defense was to save Lavco, the sole depository of the Lavelle enterprises.”

The Commonwealth argues that although there was no de jure consolidation or merger, Lavco is a mere continuation-successor to Wm. A. Lavelle & Son, Co. and is, therefore, criminally liable for the acts committed by Wm. A. Lavelle & Son, Co.

Ordinarily when one company sells or transfers all its assets to another company, the latter is not liable for the debts and liabilities of the transferor simply by virtue of its succession to the transferor’s property. In order to find that this general rule is not applicable and that the transferee does acquire such liability, one of the following must be shown: (1) the purchaser expressly or impliedly agrees to assume such obligation; (2) the transaction amounts to a consolidation or merger; (3) the purchasing corporation is merely a continuation of the selling corporation; or (4) the transaction is fraudulently entered into to escape liability. See Granthum v. Textile Machine Works, 230 Pa.Super. 199, 326 A.2d 449 (1974). A fifth circumstance, sometimes included as an exception to the general rule, is where the transfer was without adequate consideration and provisions were not made for creditors of the transferor. See Lopata v. Bemis Co., Inc., 383 F.Supp. 342 (E.D.Pa.1974); McKee v. Harris-Seybold Co., Division of Harris-Intertype Corp., 109 N.J.Super. 555, 264 A.2d 98 (1970); 19 Am.Jr.2d Corporations § 1546 (1965); 15 W. Fletcher, Cyclopedia of Corporations § 7122 (Perm.ed.1973).

Husak v. Berkel, Incorporated, 234 Pa.Super. 452, 456-457, 341 A.2d 174, 176-177 (1975). Accord: Dawejko v. Jorgensen Steel Co., 290 Pa.Super. 15, 18, 434 A.2d 106, 107 (1981); Granthum v. Textile Machine Works, 230 Pa.Super. 199, 202, 326 A.2d 449, 451 (1974); Knapp v. North American Rockwell Corp., 506 F.2d 361, 363 (3rd Cir.1974), cert. denied, North American Rockwell Corp. v. Knapp, 421 U.S. 965, 95 S.Ct. 1955, 44 L.Ed.2d 452 (1975); Amader v. Pittsburgh Corning Corporation, 546 F.Supp. 1033, 1035 (E.D.Pa.1982); Wright v. Federal Machine Co., Inc. 535 F.Supp. 645, 648 (E.D.Pa.1982); Savini v. Kent Machine Works, Inc., 525 F.Supp. 711, 715 (E.D.Pa.1981); Uni-Com Northwest, Ltd. v. Argus Publishing Co., 47 Wash.App. 787, 800, 737 P.2d 304, 311 (1987); Turner v. Bituminous Casualty Co., 397 Mich. 406, 417 n. 3, 244 N.W.2d 873, 878 n. 3 (1976).

The Commonwealth concedes that there was no legal merger or consolidation of the two corporations but contends that Lavco was formed with the sole objective of protecting, from criminal and civil proceedings, the funds realized by Wm. A. Lavelle & Son, Co. from its racketeering activities and that, as part of that plan, Wm. A. Lavelle & Son, Co. was transformed into a mere shell corporation, devoid of assets. The Commonwealth argues that to find that there was not a de facto merger of Wm. A. Lavelle & Son, Co. and Lavco, based solely upon the absence of articles of merger or consolidation, would be to ignore the evidence presented in this case, and would permit corporations engaged in criminal activity to escape all criminal liability for their conduct by simply forming successive corporations to shelter their ill gotten gains.

In approaching the issue of the “de facto merger”/“mere continuation” theory of liability, we are mindful of the admonition of our Supreme Court, albeit made in the context of dissenting shareholders’ rights, that “it is no longer helpful to consider an individual transaction in the abstract and solely by reference to the various elements therein to determine whether it is a ‘merger’ or ‘sale’. Instead to determine properly the nature of a corporate transaction, we must refer not only to all the provisions of the agreement, but also to the consequences of the transaction and to the purposes of the provisions of the corporation law said to be applicable.” Farris v. Glen Alden Corp., 393 Pa. 427, 432, 143 A.2d 25, 28 (1958).

The Commonwealth has referred to both the mere continuation exception and the de facto merger exception to transferee liability in its argument on corporate successor liability. We have elected to analyze this issue under the de facto merger doctrine, which we believe to be applicable to the instant case. Employment of the mere continuation theory of liability would not alter our resolution of the issue since the two theories are difficult to distinguish:

“[T]he first of the four exceptions rendering the purchasing corporation liable for duties of the seller is a transaction amounting to a merger or consolidation. In a merger a corporation absorbs one or more other corporations, which thereby lose their corporate identity. ‘A merger of two corporations contemplates that one will be absorbed by the other and go out of existence, but the absorbing corporation will remain’____ ‘Another of the ... exceptions to the general rule of nonliability arises when there is a continuation. In a continuation, a new corporation is formed to acquire the assets of an extant corporation, which then ceases to exist.’ There is in effect but one corporation which merely changes its form and ordinarily ceases to exist upon the creation of the new corporation which is its successor.”

Knapp v. North American Rockwell Corp., supra at 506 F.2d at 365 (footnotes omitted). See also: Dawejko v. Jorgensen Steel Co., supra 290 Pa.Super. at 20, 434 A.2d at 108.

“For a de facto merger to occur, there must be continuity of the successor and predecessor corporation as evidenced by (1) continuity of ownership; (2) a cessation of ordinary business and dissolution of the predecessor as soon as practically and legally possible; (3) assumption by the successor of the liabilities ordinarily necessary for the uninterrupted continuation of the business of the predecessor, and (4) a continuity of management, personnel, physical location, aspects, and general business operation. ‘Not all of these factors are needed to demonstrate a merger; rather, these factors are only indicators that tend to show a de facto merger.’ ”

Lumbard v. Maglia, Inc., 621 F.Supp. 1529, 1535 (S.D.N.Y.1985) quoting Menacho v. Adamson United Co., 420 F.Supp. 128, 133 (D.C.N.J.1976) (citations omitted). Accord: Dawejko v. Jorgenson Steel Co., supra 290 Pa.Super. at 20, 434 A.2d at 108. See also: Lackawaxen Water & Sewer Co. v. Pennsylvania Public Utility Commission, 85 Pa.Cmwlth. 377, 380, 481 A.2d 1386, 1388 (1984).

The evidence presented by the Commonwealth, and accepted by the trial court sitting as the trier of fact, provided proof beyond a reasonable doubt that Lavco, Inc. was the successor corporation of a de facto merger. Uncontradicted evidence established the (1) continuity of management (William A. Lavelle, III represented himself as President of Lavco, Inc., was its most visible representative, and solicited business for Lavco, Inc., just as he had for Wm. A. Lavelle & Son, Co.); (2) continuity of personnel (all of the employees of Wm. A. Lavelle & Son, Co. became employees of Lavco, Inc.); (3) continuity of physical location, assets and general business operations (Lavco operated out of the premises formerly used by Wm. A. Lavelle & Son, Co., purchased its major assets and took over all of its contracts). There was also a cessation of ordinary business by Wm. A. Lavelle & Son, Co. shortly after the formation of Lavco, Inc., and, although the corporation was not dissolved, it was reduced to an assetless shell. See: Amader v. Pittsburgh Corning Corporation, 546 F.Supp. 1033, 1036 (E.D.Pa.1982). Lavco, Inc. assumed all of the liabilities ordinarily necessary for the uninterrupted continuation of the business conducted by Wm. A. Lavelle & Son, Co. (Lavco, Inc. applied for and was granted an extension by Blue Cross/Blue Shield of the Wm. A. Lavelle & Son, Co. policy on the basis that the transaction was “a name change” in companies; Lavco, Inc. assumed various accounts payable by Wm. A. Lavelle & Son, Co. as well as all of its contracts for hauling; Lavco, Inc. identified itself to the Department of Labor and Industry as a successor corporation to Wm. A. Lavelle & Son, Co., and was given the same rate applicable to Wm. A. Lavelle & Son, Co.). There is one factor absent, namely, continuity of ownership since William A. Lavelle III is not an officer of, and has no ownership interest in Lavco, Inc., but instead his son, William A. Lavelle IV is the designated President of Lavco, Inc., while his daughters, Michelle and Kathleen, are secretary and treasurer, respectively, of the corporation. Nonetheless, for reasons discussed hereinafter, we find that the absence of an identity of legal ownership, under the circumstances of this case, is not an impediment to finding Lavco, Inc. to be the de facto successor corporation to William A. Lavelle & Son, Co. See: Lumbard v. Maglia, Inc., 621 F.Supp. 1529, 1535 (S.D.N.Y.1985). See also: Martin v. Johns-Manville Corp., 322 Pa.Super. 348, 469 A.2d 655 (1983) reversed on other grounds, 508 Pa. 154, 494 A.2d 1088 (1985); Knapp v. North American Rockwell Corp., supra; Turner v. Bituminous Casualty Co., supra.

The effect of a corporate merger or consolidation on the liabilities of the predecessor and successor corporations is set forth in Section 1907 of the Business Corporation Law, Act of May 5,1933, P.L. 364, art. 1, §§ 1 et seq., as amended by the Act of July 20, 1968, P.L. 459, No. 216, § 49, 15 P.S. § 1907. Section 1907 provides, in relevant part:

Upon the merger or consolidation becoming effective, the several corporations parties to the plan of merger or consolidation shall be a single corporation---- All the property, real, personal, and mixed and franchises of each of the corporations parties to the plan of merger or consolidation, and all debts due on whatever accounts to any of them including subscriptions to shares and other choses in action belonging to any of them, shall be taken and deemed to be transferred to and vested in the surviving new corporation, as the case may be, without further act or deed. The surviving or new corporation shall thenceforth be responsible for all the liabilities and obligations of each of the corporations so merged or consolidated, but the liabilities of the merging or consolidating corporations, or of their shareholders, directors, or officers, shall not be affected, nor shall the rights of the creditors thereof or of any persons dealing with such corporations, or any liens upon the property of such corporations, be impaired by such merger or consolidation, and any claim existing or action or proceeding pending by or against any of such corporatiaons may be prosecuted to judgment as if such merger or consolidation had not taken place, or the surviving or new corporation may be proceeded against or substituted in its place. Any taxes, penalties and public accounts of the Commonwealth, claimed against any of the merging or consolidatiang corporations, but not settled, assessed or determined prior to such merger or consolidation, shall be settled, assessed or determined against the surviving or new corporation, and, together with interest thereon, shall be a lien against the franchises and property, both real and personal, of the surviving or new corporation.

15 P.S. § 1907 (emphasis supplied).

The Business Corporation Law thus provides that upon merger or consolidation, “any claim existing or action or proceeding pending” may be prosecuted to judgment against the predecessor corporation or the new corporation may be substituted in the place of the predecessor corporation. Moreover, the statute provides that any “penalties ... of the Commonwealth ... not assessed prior to such merger or consolidation, shall be settled, assessed or detemined against the surviving or new corporation____” Thus, under the unique facts of this case, where Lavco, Inc. was the de facto successor of William A. Lavelle & Son, Co., the Commonwealth was clearly empowered to institute criminal proceedings against Lavco, Inc. as the “surviving or new corporation” of a de facto merger, for the offenses committed by its predecessor. See and compare: U.S. v. Polizzi, 500 F.2d 856, 908-909 (9th Cir.1974).

We believe that the fraud exception to the general rule of non-liability of a purchasing corporation, i.e., where the transaction is fraudulently entered into to escape liability, also has application in the instant case. Lavco argues that it cannot be held criminally liable for the criminal acts of Wm. A. Lavelle & Son, Co., committed under the direction of William A. Lavelle, III, since there is no identity of ownership between the two corporations because the affairs of the corporation were directed and controlled by his three children, and not by William A. Lavelle, III.

The Commonwealth sought to establish at trial that the sole reason for the designation of these officers was to conceal the ownership interest of William A. Lavelle, III, and thus shelter the proceeds of his racketeering activities from the reach of the government. We find that the evidence presented by the Commonwealth, although circumstantial, was sufficient to establish that William A. Lavelle III, assisted in the creation of Lavco, Inc. and retained an undisclosed ownership interest in Lavco, Inc., for the sole purpose of evading financial responsibility for his criminal acts. In fact, such a conclusion seems rather inescapable. There was considerable publicity in the latter part of 1978 and early in 1979 concerning an investigation of illegal dumping by a local hauler of industrial wastes. Lavco, Inc. was incorporated by Mitchell Miller (an attorney previously employed by William A. Lavelle, III) on December 21, 1978, and shortly thereafter, Wm. A. Lavelle & Son, Co. ceased conducting business, all of its contracts for hauling thereafter being performed by Lavco, Inc. William A. Lavelle III, while designated as a mere employee of Lavco, Inc. represented himself to the State of Virginia as President of Lavco, Inc. and also pledged his personal assets in order to obtain loans for Lavco, Inc. from the Scranton National Bank. The documents necessary to secure these loans for Lavco, Inc. were executed by William A. Lavelle, III, as a result of his presentation to the Bank of a “Certified Copy of Resolutions Authorizing Officers to Negotiate Loans”, signed by the secretary of the corporation, which provided that Lavco, Inc., at a meeting of the Board of Directors on September 23,1980, had authorized “William A. Lavelle III, Chairman” to negotiate and effect loans for Lavco. In addition, as has been earlier noted, Lavco indicated to Blue Cross/Blue Shield that Lavco, Inc. was a mere “name change” from Wm. A. Lavelle & Son, Co., and identified itself as a successor corporation to Wm. A. Lavelle & Son, Co. in documents filed with the Pennsylvania Department of Labor & Industry. Further, quarterly tax reports indicate that William A. Lavelle, III, was the only person to receive, as wages, substantial sums of money from Wm. A. Lavelle & Son, Co. and Lavco, Inc.. These records indicate that William A. Lavelle & Son, Co., during the first quarter of 1979 paid the following wages to its president, William A. Lavelle, III and its employee, William A. Lavelle, IV:

William A. Lavelle, III - $17,500
William A. Lavelle, IV - 2,460

William A. Lavelle, III, claims he has no ownership interest in Lavco, Inc. However, Lavco paid its employee (William A. Lavelle, III) and its president (William A. Lavelle, IV) the following wages during the fourth quarter of 1980:

William A. Lavelle, III - $24,521.51
William A. Lavelle, IV - 3,333.17

Similarly, Lavco paid the following wages to its “employee” and president, respectively, during the first quarter of 1981:

William A. Lavelle, III - $32,605.63
William A. Lavelle, IV - 2,064.55

The financial benefits realized by William A. Lavelle, III, from his salary as an employee of Lavco, Inc., when contrasted with the financial benefits realized by the President of the corporation who had an alleged 60% ownership share in the corporation, demonstrate that William A. Lavelle, III was more than a mere employee.

We believe the foregoing evidence was, when viewed as a whole, sufficient to establish that William A. Lavelle, III, was, at all relevant times, possessed of an undisclosed ownership interest in Lavco, Inc., and that the sole purpose for the concealment of that ownership interest was to avoid liability for the criminal acts committed by Wm. A. Lavelle & Son, Co. under the direction of William A. Lavelle III.

Thus, under both the de facto merger exception and the fraudulent transaction exception to the general rule of corporate non-liability of a transferee corporation, we find that Lavco, Inc. was properly held criminally liable for the acts of its predecessor in interest, William A. Lavelle & Son, Co.

It has to be emphasized, however, that our holding here is not a pronunciation of a general rule concerning corporate successor liability or criminal acts of a predecessor corporation for, as our former colleague and eminent President Judge Edmund B. Spaeth, Jr., noted in Martin v. JohnsManville Corp. supra, “[t]he issue of sufficient degree of identity is one that must be resolved on a case-by-case basis.” Id. 322 Pa.Super. at 372 n. 22, 469 A.2d at 667 n. 22.

B. Statute of Limitations

The argument that the prosecution of Lavco, Inc. was barred by the expiration of the two year statute of limitations provided by 42 Pa.C.S. § 5552(a) is rejected as merit-less for the reasons set forth above in the appeal of William A. Lavelle, III.

C. Rule 1100

Lavco, Inc. also argues that it is entitled to discharge because the trial did not commence until twenty days after expiration of the automatic rúndate of Rule 1100. This claim is without merit since the record discloses that the trial court properly granted the Commonwealth’s motion for an extension of time within which to commence trial after (1) excluding eleven days of delay attributable to appellant pursuant to an agreement entered into by its then attorney of record, and (2) finding that the delay in commencing trial was not the result of any conduct by the Commonwealth, which had at all times sought an earlier trial date, but rather, had resulted from defense requests for additional time in which to file pre-trial motions due to the complexity of the issues.

D. Consolidation

Lavco argues that the trial court erred in directing that the trials of all three defendants be consolidated. This argument is based upon the misapprehension that consolidation enabled the Commonwealth to “smear Lavco with alleged racketeering acts occuring before Lavco came into existence.” First, we are compelled to observe that Lavco, Inc. was found guilty by a judge sitting without a jury. Thus, there was no danger of confusion on the part of a jury. Pa.R.Crim.P. 1127 A(1)(a). Consolidation was clearly proper in that all three defendants had participated “in the same series of acts or transactions constituting ana offense or offenses.” Pa.R.Crim.P. 1127 A(2). Commonwealth v. Brunner, 305 Pa.Super. 411, 420-421, 451 A.2d 714, 718-719 (1982); Commonwealth v. Norman, 272 Pa.Super. 300, 304-307, 415 A.2d 898, 901-902 (1979).

Second, Lavco, Inc. was not found guilty of committing predicate offenses under the corrupt organization act. Rather, it was found criminally liable for the criminal acts committed by its predecessor in interest, Wm. A. Lavelle & Son, Co. Thus, even had Lavco, Inc. been tried separately, all of the evidence concerning the affairs of William A. Lavelle, III and Wm. A. Lavelle & Son, Co. would have been admitted into evidence as relevant to the issue of the criminal liability of Lavco, Inc. as a successor to Wm. A. Lavelle & Son, Co. The trial court thus properly consolidated the charges against all three defendants for purposes of trial, and Lavco, Inc. suffered no prejudice as a result of consolidation.

E. Remaining assertions of error.

Lavco, Inc. also argues that certain documents were obtained from its accountant “in violation of the accountant client privilege provided by 63 P.S. § 9.1.” This issue, having been analyzed and correctly rejected in the opinion of the trial court, does not warrant further discussion.

Similarly meritless is the assertion that the evidence was insufficient to establish the underlying theft by deception offenses since “a corporation that generates industrial wastes cannot claim to be deceived when it is negligent and breaches its common law and statutory duties with regard to waste disposal.” Since the evidence presented by the Commonwealth was certainly sufficient to establish each element of the offenses of theft by deception beyond a reasonable doubt, this argument must be rejected.

And, finally, Lavco argues that it is entitled to a new trial because “the investigating grand jury presentment was defective on its face confusing gross income with net income____”

The Commonwealth concedes that the presentment of the Statewide Investigating Grand Jury mistakenly identified, at pages 17-18, the gross income of Wm. A. Lavelle & Son, Co. as net income and the net income as gross income. The Commonwealth argues, however, that the error was irrelevant and non-prejudicial and, in any event, any error was cured by subsequent proceedings.

The mislabeling of the gross and net income figures in the grand jury presentment did not in any way prejudice Lavco, Inc. Initially, we note that “[t]he inadequacy, incompetency, or illegality of the evidence presented to the grand jury do not constitute grounds for the quashing of an indictment on the basis of such evidence.” Commonwealth v. Webster, 462 Pa. 125, 132, 337 A.2d 914, 917 (1975).

An investigating grand jury and an indicting grand jury “are separate legal bodies. Although both may have considered the same alleged crimes involving the same individuals, their proceedings, deliberations, and presentments are distinct. Extraneous matters affecting one may not influence the other, and irregularities before one are not always present in the other; the two bodies are unrelated in this respect. Consequently, an indictment by a regular grand jury is not necessarily tainted by some irregularity or improper influence alleged to have affected the investigating grand jury. Commonwealth v. Gross, [172 Pa.Super. 85, 92 A.2d 251 (1952)]. At least, the irregularity or improper influence must be shown to have also affected the indicting grand jury.” Commonwealth v. Evans, 190 Pa.Super. 179, 198, 154 A.2d 57, 69 (1959), aff'd., Commonwealth v. Evans, 399 Pa. 387, 160 A.2d 407 (1960), cert. denied, 364 U.S. 899, 81 S.Ct. 233, 5 L.Ed.2d 194 (1960).

Our review of the record compels the conclusion that the transpositional error was not material to the issue before the grand jury and could not have affected either the deliberations of the investigating grand jury, or the indicting grand jury. Appellant has not presented any evidence of an irregularity affecting the investigating grand jury, a document of “little significance”. In the absence of such evidence, appellant cannot establish that any irregularity affected the indicting grand jury. Cf. Commonwealth v. Levinson, 480 Pa. 273, 389 A.2d 1062 (1978). Appellant is, therefore, not entitled to the relief requested. See and compare: Commonwealth v. Evans, supra 190 Pa.Super. at 67-68, 154 A.2d at 68-70; Commonwealth v. McKeirnan, 337 Pa.Super. 403, 405-409, 487 A.2d 7, 9-10 (1985); Commonwealth v. Chew, 338 Pa.Super. 472, 479-480, 487 A.2d 1379, 1383 (1985); Commonwealth v. Meoli, 307 Pa.Super. 50, 53, 452 A.2d 1032, 1034 (1982).

The judgment of sentence imposed upon William A. Lavelle, III, which is the subject of appeal No. 2928 Philadelphia 1985, is hereby affirmed.

The judgment of sentence imposed upon Lavco, Inc., which is the subject of appeal No. 3129 Philadelphia 1985, is hereby affirmed.

      . William A. Lavelle, III, was convicted of conducting the affairs of an enterprise through a pattern of racketeering activities, conduct prohibited by 18 Pa.C.S. § 911(b)(3), and investing income, realized from a pattern of racketeering activity in which he had participated as a principal, in an enterprise, a violation of 18 Pa.C.S. § 911(b)(1). Lavelle was sentenced to serve a term of imprisonment of not less than eighteen months nor more than five years, and to pay a fine of $25,000 and costs of prosecution.

      . Lavco, Inc. was convicted of investing, in an enterprise, income derived from a pattern of racketeering activity in which it had participated as a principal, a violation of 18 Pa.C.S. § 911(b)(1). Lavco, Inc. was sentenced to a fine of $25,000.

      . Wm. A. Lavelle & Son, Co., which has not appealed from the judgment of sentence, was also convicted of violating 18 Pa.C.S. § 911(b)(3) which provides that ‘‘[i]t shall be unlawful for any person employed by or associated with any enterprise to conduct or participate, directly or indirectly, in the conduct of such enterprise’s affairs through a pattern of racketeering activity.” Wm. A. Lavelle & Son, Co., a Pennsylvania corporation, was sentenced to pay a fine of $25,000.

      . On May 13, 1982, the Judicial Code was amended and the statute of limitations for violations of the Corrupt Organizations Act was expanded to five years by the Act of May 13, 1982, P.L. 417, No. 122, § 1, 42 Pa.C.S. § 5552(b), effective July 12, 1982.

      . “Racketeering activity’ is defined as including, inter alia, any act indictable under Chapter 39 of the Crimes Code (theft and related offenses). See: 18 Pa.C.S. § 911(h)(1).

      . While the opinion of the trial court suggested March of 1979 as the last date upon which appellant William A. Lavelle, III engaged in racketeering activity, the record indicates that the last date upon which appellant received payment for illegal dumping was June 29, 1979.

      . Due to the confused state of the record and the absence of the Commonwealth’s exhibits Nos. 101, 102 and 103, we are unable to ascertain many of the exact dates of the various transfers of monies between the defendants. The opinion of the trial court notes that the last transfer of funds between Lavco, Inc. and Wm. A. Lavelle & Son, Co. occurred in February of 1981. Our review of the record discloses that Wm. A. Lavelle & Son, Co. paid, in February of 1981, an insurance bill of $1,270.00 owed by Lavco, Inc. The last "loan" from Wm. A. Lavelle & Son, Co. to William A. Lavelle, III appears to have occurred on October 31, 1979. We have, however, used the date of February 1981 throughout this opinion as the last date of a transfer of funds as we have been unable to discern evidence of any later transfer between any of the defendants.

      . We have been unable to ascertain from the record what event caused the Commonwealth to charge in the indictment that the offense continued “until on or about October 31, 1981.”

      . The prosecution is at least inconsistent when it takes the position that, even though the loan is outstanding, once the books of the corporation ceased to reflect the loans as outstanding, the enjoyment of the benefit by appellant ended.

      . If a defendant engaged in racketeering activity for a period of six months and, after ceasing all such activities, used all of the funds realized from his racketeering as a down payment on a home, the argument of the prosecutor would require that a court find that the offense was still continuing 25 years later because the defendant still resided in and continued to enjoy the home which had been purchased in part with funds realized from the racketeering activity.

      . For reasons escaping our comprehension, Wm. A. Lavelle & Son, Co. was not charged with violating 18 Pa.C.S. § 911(b)(1) but, rather, was charged with and convicted of violating Section 911(b)(3). The plain language of the statute requires that the individual defendant or entity be “employed by or associated with ” an enterprise and “conduct such enterprise's affairs through a pattern of racketeering activities.” (emphasis supplied). The corporation could not have been employed by or associated with itself. See: e.g., Cullen v. Margiotta, 811 F.2d 698, 729 (2nd Cir.1987); United States v. Benny, 786 F.2d 1410, 1414-1416 (9th Cir.1986), cert. denied, 479 U.S. 1017, 107 S.Ct. 668, 93 L.Ed.2d 720 (1986); United States v. DiCaro, 772 F.2d 1314, 1319-1320 (7th Cir.1985) cert. denied, 475 U.S. 1081, 106 S.Ct. 1458, 89 L.Ed.2d 716 (1986); Haroco, Inc. v. American National Bank & Trust Co. of Chicago, 747 F.2d 384, 400 (7th Cir.1984), aff’d. 473 U.S. 606, 105 S.Ct. 3291, 87 L.Ed.2d 437 (1985); United States v. Computer Sciences Corporation, 689 F.2d 1181, 1190 (4th Cir.1982), cert. denied, 459 U.S. 1105, 103 S.Ct. 729, 74 L.Ed.2d 953 (1983). While cases interpreting the federal RICO statute are not controlling in proceedings arising under the corrupt organizations statute, Commonwealth v. Taraschi, 327 Pa.Super. 179, 184 n. 2, 475 A.2d 744, 748 n. 2 (1984), the "employed by or associated with” language of Section 911(b)(3) is identical to the corresponding provisions of the federal Racketeer Influenced and Corrupt Organizations Act. See; 18 U.S.C. § 1962(c).

      . While the wages paid fluctuated with each quarter not set forth above, the unusual ratios, whereby the president and alleged 60% owner of Lavco, Inc. received a small fraction of the salary received by the "mere employee", did not change.

      . In re County Investigating Grand Jury of April 24, 1981, 500 Pa. 557, 563, 459 A.2d 304, 307 (1983).


source: Caselaw Access Project

author: POPOVICH, Judge:

license: Public Domain

text:
    555 A.2d 232
    COMMONWEALTH of Pennsylvania, Appellee, v. David E. TYLER, Appellant.
    Superior Court of Pennsylvania.
    Submitted Nov. 21, 1988.
    Filed Feb. 22, 1989.

      Bruce P. Blocher, York, for appellant.
    Mark A. Bellavia, Assistant District Attorney, York, for the Com., appellee.
    Before KELLY, POPOVICH and HESTER, JJ.
   POPOVICH, Judge:

This is an appeal from the judgment of sentence entered by the Court of Common Pleas of York County following the appellant’s conviction on the charges of rape, involuntary deviate sexual intercourse and robbery. The appellant, David E. Tyler, asserts that the Commonwealth did not exercise due diligence in bringing his case to trial, and, as a result, the trial court erred in denying his motion in arrest of judgment based on the Pennsylvania Rules of Criminal Procedure, Rule-1100. After reviewing the circumstances surrounding this case, we affirm this judgment of sentence.

The record reveals the following procedural history: On November 21, 1986, criminal complaints were filed against the appellant, charging him with rape, robbery and involuntary deviate sexual intercourse. Thus, May 20, 1987 was the mechanical run-date for the appellant’s trial period under the operation of Rule 1100. At his arraignment on January 29, 1987, the appellant was represented by the Public Defenders Office of York County.

On May 19, 1987, the appellant filed a motion for trial postponement which was unopposed by the Commonwealth. This waiver gave the Commonwealth 120 days from May 21, 1987 to bring the appellant to trial. On May 20, 1987, the Commonwealth filed a petition for extension of the trial date alleging the unavailability of a Commonwealth’s witness, the victim. This petition was granted on June 19, 1987, extending the trial period to no later than June 26, 1987. The appellant did not oppose this extension.

On June 17, 1987, the Commonwealth filed a second petition to extend the time for commencement of trial, again alleging the unavailability of the victim. The appellant opposed this petition through privately retained counsel, responding that the Commonwealth had not exercised due diligence in bringing the case to trial. On June 29, 1987, the Commonwealth filed an amended petition to extend. In addition to the unavailability of the victim, the Commonwealth alleged that plea bargain negotiations were on-going and that the appellant had agreed to a continuance to allow his private counsel to take on the case. A hearing was held on July 31, 1987, at which time the petition was granted.

On August 21, 1987, the appellant was convicted on all charges. The appellant filed a motion in arrest of judgment based upon a violation of Rule 1100. Ruling upon that motion, the trial court determined that the Commonwealth did not exercise due diligence in bringing the appellant to trial. However, the court ruled that the appellant was not prejudiced by the delay and, therefor, was not entitled to have the charges dismissed. This appeal followed.

We agree with the trial court that the Commonwealth failed to exercise due diligence. The Commonwealth bears the burden of proving prosecutorial due diligence by a preponderance of the evidence. Commonwealth v. Ehredt, 485 Pa. 191, 195-196, 401 A.2d 358, 360-361 (1979); Commonwealth v. Thomas, 361 Pa.Super. 1, 9-11, 521 A.2d 442, 447 (1987). When reviewing the evidence, we will consider evidence presented by the Commonwealth and evidence which remains uncontradicted by the record as a whole. Ehredt, 401 A.2d at 360-361; Thomas, 521 A.2d at 447; Commonwealth v. Hollingsworth, 346 Pa.Super. 199, 206, 499 A.2d 381, 384 (1985).

In Commonwealth v. Cottman, 327 Pa.Super. 453, 476 A.2d 40 (1984), we ruled upon the identical issue now before us. Therein, we stated:

It is well settled that the Commonwealth in order to obtain an extension of time pursuant to Rule 1100(c), need only prove that reasonable efforts were made to secure a witness’ attendance. Commonwealth v. Wroten, 305 Pa.Super. 340, 451 A.2d 678 (1982); Commonwealth v. Sharp, 287 Pa.Super. 314, 430 A.2d 302 (1981). While the Commonwealth must demonstrate that it employed reasonable means to insure the appearance of the witness, it is not necessary that all methods be exhausted in order to establish due diligence. Commonwealth v. Thompkins, 311 Pa.Super. 357, 457 A.2d 925 (1983). See also Commonwealth v. Polsky, 493 Pa. 402, 426 A.2d 610 (1981). Cottman, 476 A.2d at 42,

Simply, “[t]he ‘due diligence’ required of [the Commonwealth] does not demand perfect vigilance and punctilious care, but rather a reasonable effort.” Commonwealth v. Koonce, 511 Pa. 452, 461, 515 A.2d 543, 548 (1986), quoting Polsky, 426 A.2d at 613. See also Thomas, 521 A.2d at 447.

In this case, the Commonwealth subpoenaed the victim at her home in Williamsport, Pennsylvania for the trial dates scheduled during the May and June trial terms. However, in both cases, the subpoena was returned unserved. In reference to the May trial date, the Commonwealth and the York County Police attempted to reach the victim via telephone. The Commonwealth also contacted the Rape Crisis Center where the victim sought counselling. However, these attempts proved fruitless. In reference to the June trial date, the Commonwealth made no attempt to contact the victim other than the subpoena which was returned unserved.

While it is clear that the Commonwealth made a reasonable effort to insure the complainant would attend the appellant’s May term trial, it is equally clear that the Commonwealth made no such reasonable effort to insure her presence at the June term trial. The Commonwealth recognized that the victim was reluctant to testify as evidenced by her prior failure to respond to the subpoena for the appellant’s first trial date; however, the Commonwealth, in preparation for the appellant’s second trial date, did nothing more than send a subpoena to an address from which experience demonstrated a response would not be forthcoming.

In effect, the Commonwealth’s reasons for a second extension amounted to nothing more than a bare assertion that the witness was unavailable. A bare statement of unavailability, without more, does not establish due diligence under Rule 1100. Commonwealth v. Schuster, 288 Pa.Super. 310, 431 A.2d 1063, 1066 (1981); Ehredt, 401 A.2d 358. Therefor, we hold that the Commonwealth failed to exercise due diligence in bringing the appellant to trial. Compare Commonwealth v. Gilliam, 302 Pa.Super. 50, 448 A.2d 89, 91 (1982) (witness unavailable at first trial date, however, due diligence exercised since subpoena was served at every known address of the complainant); See also Commonwealth v. McNeill, 274 Pa.Super. 257, 418 A.2d 394 (1980) (showing of unavailability at some earlier date does not compensate for Commonwealth’s failure to prove unavailability for the remainder of the Rule 1100 period).

Even though the Commonwealth failed to exercise due diligence in bringing the appellant to trial, the charges against the appellant will not be dismissed without a finding that the extension of time prejudiced the appellant. In Commonwealth v. Montevecchio, 367 Pa.Super. 435, 533 A.2d 96 (1987), we stated:

In Barker v. Wingo, 407 U.S. 514, 92 S.Ct. 2182, 33 L.Ed.2d 101 (1972), it was held that the right to speedy trial does not per se prejudice the accused’s ability to defend himself as does the denial of the right to counsel and the right against self-incrimination____ To be considered are the length of delay, the reason for the delay, the defendant’s assertion of his rights and the prejudice to the defendant. It was held in Commonwealth v. Whitaker, 467 Pa. 436, 359 A.2d 174 (1976) that Barker provides only minimum standards and the Pennsylvania Constitution requires more____ After reviewing a plethora of cases, any attempt to establish a per se rule in Pennsylvania is futile. As a general proposition, it may be stated that not one day shall be excluded from the computation of time under the speedy trial Rule 1100, which is due to prosecutorial impropriety or lack of diligence, when a defendant is proceeding normally to obtain his rights to trial. Not one day shall be included when the defendant, for practical or other reasons, has caused the delay and is unwilling or unprepared to proceed to trial. How this balance is ascertained is to be determined on an ad hoc basis and is established by a preponderance of the evidence____ It is the duty of a prosecutor to move a case to trial, but if part of the blame is attributable to privately retained counsel, the entire burden would not be placed on the Commonwealth. Commonwealth v. Cooley, 484 Pa. 14, 398 A.2d 637 (1979).

Montevecchio, 533 A.2d at 101.

At the July 31, 1987 Rule 1100 hearing, the following exchange occurred between the appellant’s counsel, Floyd Jones, Esq., and the court.

MR. JONES: I went and I talked to Mr. MacVeigh [appellant’s public defender], and my recollection is that was the week before the June term of Court. During the conversation, he explained to me they felt the victim was not going to appear, that she hadn’t been appearing or responding to subpoenas.
I indicated to him that, you know, if that was the case, the Mr. Tyler was better to continue with who he had because, obviously, if the case can’t go to trial, one way or the other, sooner or later, he’s going to win. And my recollection is that I told Mr. MacVeigh if they were prepared to go to trial, that at that point in time, I would enter my appearance and go and ask the Court for a continuance, if they were prepared to go to trial.
THE COURT: In other words, if they went through all the trouble to get the victim here from Williamsport, drag her down here under subpoena and were ready to go to trial, then you’d go in and say, “Wait a second, Your Honor, gee whiz, I’m going to represent the Defendant, I haven’t had a chance to look over the defense and we want a continuance.” That’s the way it works? Just so that we’re clear.
MR. JONES: Not exactly, because if I had been aware or if I had been told that the victim had been here in April and May, I wouldn’t have done that. But, you know, my problem, as well as any attorney’s, is that you have to effectuate the best interest of those persons whom you are responsible to—
THE COURT: And that’s the problem the Court has, too.
MR. JONES: And so, I — Miss Stump [the prosecutor], as I recall, had talked to Mr. MacVeigh. She was going in one direction, I was going in another direction, I don’t know where I was going — I’m sure I was going to try something, somewhere — and she had indicated to me, you know, that I thought they were calling David Tyler, or something about David Tyler. I said, “If you’re ready to go to trial, I’m going to enter my appearance and ask for a continuance.” And that was the last I heard for that term of Court; nobody contacted me or came and talked to me about it anymore. And I didn’t do anything at that point because I had talked to Mr. MacVeigh and he said the victim had not come. I thought it would be dismissed. They filed an [Rule 1100] application, I reviewed the application; that’s when I filed an Answer and entered my appearance.

Rule 1100 hearing, July 31, 1987, Notes of Testimony, p. 46-48.

After hearing this testimony, the Rule 1100 court determined that the Commonwealth had exercised due diligence reasoning that, under the circumstances of this case, issuance of a subpoena was sufficient to meet the requirements of Rule 1100 diligence. One of the reasons relied upon was explained by the hearing court as follows:

And so in that interim period, Mr. Jones was approached to represent the Defendant in the event this case went to trial, and there was some differences with regard to the approach as to this case if, indeed, it did go to trial in June. Had the witness been available, there’s absolutely no question in the testimony that a continuance by the defense would have been requested, so that Mr. Jones could have represented the Defendant, and we wouldn’t be here today.

Rule 1100 hearing, July 31,1987, Notes of Testimony, p. 51.

The trial court, ruling upon the appellant’s Rule 1100 motion, more clearly explained the logic behind denying the Rule 1100 dismissal.

In the case at bar, defendant not only was not prejudiced by the delay, but was hoping to capitalize upon it. If the witness was produced, private counsel was going to request a continuance to enable him to prepare the case, but if the witness was not produced, the Public Defender would appear for trial and ask for the charges to be dismissed under a violation of Rule 1100. See Transcript of Rule 1100 hearing, p. 46-47. Counsel for the defendant was attempting to play both sides of the fence, a charade which would waste the court’s time and the district attorney’s efforts to produce the witness. We do not believe that the defendant should be permitted to proceed in this less than forthright manner and then allowed to benefit thereby. We find that the defendant was not prejudiced by the delay, despite the Commonwealth’s lack of due diligence.

Trial Court Opinion, p. 8-9.

Applying the prejudice analysis delineated in Montevecchio, supra, we are persuaded to agree with the trial court’s assessment of the situation. Herein, we are presented with a unique situation, wherein the appellant was, in effect, represented by both private counsel and the public defender office at the same time during his pre-trial period. This dual representation gave the appellant the power to wait and see whether the complainant would appear for the second trial date. If the victim appeared, then the appellant’s private counsel would appear and request a continuance, further postponing the appellant’s trial. However, if the victim did not appear, then the appellant would move to have his case dismissed for violation of Rule 1100. Such disingenuous duplicity by the appellant only serves to waste the valuable resources of the Commonwealth and the Judiciary and is repugnant to the fair and economical administration of criminal justice.

We simply will not allow a defendant to employ a trial strategy which he admits was designed specifically to thwart his prosecution by using, in a less than forthright manner, the purely administrative Rule 1100. See Montevecchio, 533 A.2d at 101 (defense cannot complain of lack of due diligence when trial strategy procures extensions or continuations); Commonwealth v. Guldin, 502 Pa. 66, 463 A.2d 1011 (1983); Commonwealth v. Genovese, 493 Pa. 65, 425 A.2d 367 (1981). While we most certainly do not condone the Commonwealth’s lack of due diligence, we are unable to ascertain, and the appellant fails to assert, any prejudice which may have befallen the appellant as a result of the delay. The delay was relatively short in duration— only one month past the run-date extension of 120 days requested by the appellant on May 19, 1987. Most importantly, the delay was one which the appellant freely admits he would have requested in the form of a continuance had he gone to trial during the June trial term. Accordingly, we affirm the judgment of sentence.

JUDGMENT OF SENTENCE AFFIRMED.

      . This action is based on Rule 1100, as amended October 22, 1981, effective January 1, 1982.

      . It is arguable that the Commonwealth did meet the totality of the circumstances standard espoused in Commonwealth v. Long, 288 Pa.Super. 414, 432 A.2d 228 (1981) and Commonwealth v. Thompkins, 311 Pa.Super. 357, 457 A.2d 925 (1983). This was the basis for the Rule 1100 hearing court’s decision to grant an extension. The court reasoned that the Commonwealth's act of serving a subpoena was sufficient to meet due diligence requirements since the defense concedes that, had the witness attended the trial, new counsel would have entered his appearance and requested a continuance. However, since there is no guarantee a continuance would have been granted, we decline to find that the Commonwealth’s actions were adequate to comply with the requirements of due diligence. See Pa.R.Crim.P. Rule 301.


author: KELLY, Judge:

text:
    555 A.2d 237
    Eva J. SZILLERY, Appellant, v. Paul S. WHEATON, Appellee.
    Superior Court of Pennsylvania.
    Argued Nov. 29, 1988.
    Filed Feb. 23, 1989.

      Eva J. Szillery, in propria persona.

      Craig S. Boyd, Boyertown, for appellee.
    Before McEWEN, MONTEMURO and KELLY, JJ.
   KELLY, Judge:

This is an appeal by appellant, Eva J. Szillery, from an order dated February 23, 1988, directing appellee, Paul S. Wheaton to pay $90.00 per week for child support, and denying appellant’s Petitions for Further Discovery and Additional Hearing and for Counsel Fees, Expenses and Costs. We affirm.

On June 18, 1986, appellant filed a complaint, in Lancaster County, requesting child support for her son, Scott Wheaton, who was born out-of-wedlock on June 6, 1986. A support conference was held and at that time the appellee denied paternity and refused to submit to blood tests. Blood tests were ordered pursuant to the Uniform Act on Blood Tests to Determine Paternity. Appellee, however, did not go through with the blood tests and on October 28, 1986, he signed an Acknowledgement of Paternity. Thereafter, appellee sought to revoke the Acknowledgement and he petitioned for blood tests to be taken. Following an evidentiary hearing, appellee’s petition was denied. The case was then referred to the Domestic Relations Office for a conference to establish an appropriate support order.

A conference was held and the hearing officer recommended an order requiring appellee to pay $70.00 a week in child support. Appellant appealed the recommended order pursuant to 1910.11(f). A complex support hearing was held on November 17, 1987. After the hearing, appellant petitioned for Further Discovery and Additional Hearing. She also filed a Petition for Counsel Fees, Expenses and Costs.

On February 23, 1988, the court sustained appellant’s appeal from the recommended order and directed appellee to pay $90.00 a week in child support. Appellant’s Petition for Further Discovery and Additional Hearing and the Petition for Counsel Fees, Expenses and Costs were denied and dismissed. This timely appeal followed.

On appeal, the appellant raises the following four issues:

I. Did the trial judge err in not considering Defendant’s Petition for Blood Tests vexatious, after Defendant had acknowledged paternity, was provided an opportunity for blood tests, which he failed to take?
II. Did the trial judge fail to consider the higher living expenses in Montgomery County and the costs incurred by Plaintiff in raising her other child from her sole income?
III. Did the trial judge fail to include Defendant’s income from his Christmas tree business in determining the amount Defendant’s net income available for child support?
IV. Did the trial judge fail to include Defendant’s income from real estate sales and car sales in determining the amount of Defendant’s net income available for child support, or else accept the Petition for Further Discovery and Additional hearing?

(Appellant’s Brief at 2).

In Shutter v. Reilly, 372 Pa.Super. 251, 539 A.2d 424 (1988), this Court restated the standard of review applicable in child support cases:

... our standard of review is such that we will not overturn a child support order unless the court abused its discretion in fashioning the award, such abuse will be found where there is insufficient evidence to sustain the award or where the law is overridden or misapplied.

539 A.2d at 426 (citations omitted). Similarly, upon review of a denial of a Petition for Counsel Fees, Expenses and Costs, we recognize that the matter is within the trial court’s discretion and will only be reversed on appeal when there is a clear abuse of that discretion. See American Mut. Liability Ins. v. Zion and Klien, 339 Pa.Super. 475, 489 A.2d 259 (1985); Shearer v. Moore, 277 Pa.Super. 70, 419 A.2d 665 (1980).

After a thorough review of the briefs of the parties, the record and the opinion of the learned trial court, it is our determination that there is no merit to issues I, III and IV raised by appellant. The trial court comprehensively discusses these issues and the applicable law in support of its rulings. Finding no .abuse of discretion or error of law, we affirm on the basis of the trial court opinion as to those issues.

With respect to issue II, we find the particular arguments raised require that we add to the trial court’s analysis. Therefore, we address this issue on the merits.

Appellant contends that the trial judge failed to consider the higher living expenses in Montgomery County and the costs incurred by the appellant in raising her other child from her sole income. Upon review of the record, we find appellant’s assertions without merit.

This Court has recently had occasion to comprehensively discuss a trial court’s obligation in a child support case. DeWalt v. DeWalt, 365 Pa.Super. 280, 529 A.2d 508 (1987). This Court stated in DeWalt v. DeWalt, supra:

In order to calculate the support obligation of each parent, the court must first determine the reasonable needs of the children. Reasonable expenses are not limited to the bare necessities. A child is entitled to a reasonable standard of living based upon the social station, fortune and financial achievements of their parents.
The court must next determine the respective abilities of the parents to support their children. To arrive at this amount, the court must make an allowance for the reasonable living expenses of each parent. The court must then calculate the parent’s net income or earning capacity if that figure differs from actual income. The trial court must consider every aspect of a parent’s financial ability to pay support.
In Melzer v. Witsberger, 505 Pa. 462, 480 A.2d 991 (1984), a plurality of our Supreme Court, per Justice Larsen, established guidelines for the calculation of child support awards.
However, a majority of the Court eschewed strict mechanical formulas and endorsed a flexible approach in these areas. Id., 505 Pa. at 477-78, 480 A.2d at 999 (Flaherty and Hutchinson, JJ. concurring).
A majority of the Court did agree that each parent’s support obligation should be determined based upon the reasonable needs of the children and the parent’s reasonable expenses and earning capacities. The members of the Court differed over whether these criteria should be applied via a mathematical formula or whether we should trust in the judgment and discretion of our trial courts. In interpreting Melzer, the Superior Court has adhered to a middle course. We have recognized the validity of the Melzer formula but at the same time we have remained aware of the majority’s admonition that the formula should not be inflexibly applied. Therefore, we have required trial courts to calculate the Melzer formula but we have allowed them to adjust the resulting support obligation if deviation from the formula is warranted under the particular circumstances.

529 A.2d at 510-11 (emphasis added); see also Shutter v. Reilly, supra.

Appellant contends that the Lancaster County guidelines, the county in which the cause of action was commenced, should not be considered, rather, she argues that the Montgomery County guidelines should be applied because that is the county where the child lives. Specifically, appellant alleges that if the child is living in a county with higher living expenses, that county’s guidelines should be applied and the court should not consider the guidelines where the support-giving parent is living. Further, appellant asserts that the hearing court should have disregarded the Lancaster County guidelines for support and based the amount of support on the actual child care expenses and on appellee’s actual earning capacity.

In 1985, the Legislature promulgated Section 4322 which provides:

The courts of common pleas shall develop guidelines for child and spousal support so that persons similarly situated shall be treated similarly. The guidelines shall be based upon the reasonable needs of the child or spouse seeking support and the ability of the obligor to provide support. In determining the reasonable needs of the child or spouse seeking support and the ability of the obligor to provide support, the guidelines shall place primary emphasis on the net incomes and earning capacities of the parties, with allowable deviations for unusual needs, extraordinary expenses and other factors, such as the parties’ assets, as warrant special attention.

23 Pa.C.S.A. § 4322 (emphasis added). In promulgating Section 4322, the Legislature attempted to ensure that persons similarly situated would be treated the same while at the same time recognizing that deviations should be allowed for unusual needs, expenses, or other factors which required special attention. See 23 Pa.C.S.A. § 4322; 50 House Leg.J. 1465 (1985). Although Section 4322 was promulgated in response to our Supreme Court’s decision in Melzer, Section 4322 has not superceded Melzer.

Both Montgomery County and Lancaster County have promulgated support guidelines pursuant to Section 4322 and the Melzer formula. As a result, in either county, the trial court must consider the reasonable needs of the child and the custodial parent, which will reflect the standard of living of the county in which the child resides. Thus, regardless of which county support guidelines the trial court applies, the standard of living of the county in which the child resides is considered.

Review of the record in the instant case reveals that the trial court considered the. reasonable needs and expenses of appellant, appellee and the child, as well as the appellee’s actual earning capacity. Moreover, in fashioning an appropriate support award, the trial court applied the Melzer formula and the Lancaster County support guidelines. As a result, the higher living expenses incurred from living in Montgomery County were reflected in the trial court’s support award. Thus, we find appellant’s contentions without merit.

Appellant also asserts that the amount of support granted shows the court failed to consider that appellant furnishes sole support for her daughter from a prior marriage. Based on the reasons which follow, we find no merit in appellant’s contentions.

The fact that appellant’s other child affects the amount of her resources, if any, available to support appellee’s child, is unquestionably relevant. Butler v. Butler, 339 Pa.Super. 312, 488 A.2d 1141 (1985); see also Marshall v. Ross, 373 Pa.Super. 235, 540 A.2d 954 (1988). However, review of the record reveals that the trial court did consider the fact that appellant furnishes sole support for her daughter. Thus, her contention that this factor was improperly ignored lacks a factual basis. (See Trial Ct.Op. at 2, 4).

Based upon the foregoing, we find appellant’s issues are without merit. Accordingly, we affirm.

      . 42 Pa.C.S.A. §§ 6131-6137.

      . We note that the trial court’s award of $90.00 per week exceeded the recommended award calculated pursuant to the Lancaster County guidelines by approximately $30.00. Additionally, even if the trial court had applied the Montgomery County support guidelines, the recommended award would have only been $93.46.


author: OLSZEWSKI, Judge:

text:
    555 A.2d 901
    COMMONWEALTH of Pennsylvania v. Jamie MATOS, Appellant.
    Superior Court of Pennsylvania.
    Argued Nov. 15, 1988.
    Filed Feb. 3, 1989.
    Reargument Denied March 30, 1989.

      Peter Rosalsky, Assistant Public Defender, Philadelphia, for appellant.
    Harriet Bumberg, Assistant District Attorney, Philadelphia, for Com., appellee.
    Before OLSZEWSKI, BECK and JOHNSON, JJ.
   OLSZEWSKI, Judge:

This is an appeal from a judgment of sentence after appellant was found guilty of robbery, criminal conspiracy, possessing an instrument of crime, and a violation of the Uniform Firearms Act. Appellant argues that the trial court erred by sentencing him pursuant to the mandatory sentencing provisions of 42 Pa.C.S.A. § 9712, as they are inapplicable to unarmed accomplices. We disagree and affirm the judgment of sentence.

The facts surrounding the present case are set forth in the trial court’s opinion:

... On April 16,1987, at approximately 7:15 p.m., four (4) men robbed a store owner in Philadelphia County at point of gun. Only one (1) of the four (4) participants possessed a weapon — a co-conspirator other than this defendant. All four (4) defendants (footnote deleted) were scheduled to be tried together but, on the day of trial, two (2) defendants, including the one who allegedly physically possessed the firearm, failed to appear. Thus, the cases for only two (2) of the actual participants (including this defendant) and the driver of the car were tried to the jury.
... The record is certain that this defendant never visibly possessed a firearm during the robbery. On the other hand, the record demonstrates that this defendant had knowledge that the firearm was visibly possessed by his co-felon during the commission of the robbery.

Trial court opinion at 2-3.

On February 2, 1988, pursuant to Rule 359(B) of the Pennsylvania Rules of Criminal Procedure, the trial court sentenced appellant to the mandatory minimum term of imprisonment of five-to-ten years for robbery, a concurrent term of two-to-four years for conspiracy, and a concurrent sentence of one-to-two years for the violation of the Uniform Firearms Act. A motion to modify sentence was timely filed on February 10, 1988. On March 16, 1988, the trial court denied post-verdict motions. Appellant then filed the instant appeal.

Appellant presents one issue for review: whether the mandatory sentencing provisions of 42 Pa.C.S.A. § 9712 are inapplicable to unarmed accomplices such as appellant.

Appellant’s claim has twice been addressed by separate panels of this Court. In Commonwealth v. Williams, 353 Pa.Super. 312, 509 A.2d 1292 (1986), we clearly stated that “an unarmed accomplice to a crime mandating imposition of a sentence under § 9712 of the Mandatory Minimum Sentencing Act shall be sentenced in accordance thereof if it is shown by the proof that the unarmed accomplice had knowledge that the firearm was visibly possessed by his co-felon in the commission of the crime.” Id., 353 Pa.Superior Ct. at 319, 509 A.2d at 1295. In Commonwealth v. Grimmitt, 354 Pa.Super. 463, 512 A.2d 43 (1986), a different panel followed the rule as announced in Williams and applied the mandatory minimum sentence to an unarmed accomplice.

Faced with the rule announced in these decisions, appellant does not now challenge that he had knowledge that his co-conspirator visibly possessed a firearm. Rather, appellant argues that Williams was wrongly decided. In support of this argument, appellant points to a footnote set forth in Commonwealth v. Grimmitt, supra, in which the Court acknowledged that, while it was following the rule announced in Williams, a different result could find support by utilizing certain principles and caselaw not directly on point to the case at bar. Even if we were to agree with the analysis set forth in this footnote, we are not in a position at this time to overrule Williams. Thus, appellant’s claim must be rejected.

In the case at bar, the record clearly demonstrates that appellant had knowledge of his co-felon’s visible possession of a firearm during the robbery. Accordingly, under the law as announced by Williams and followed by Grimmitt, the trial court committed no error when it sentenced appellant pursuant to 42 Pa.C.S.A. § 9712 of the Mandatory Minimum Sentence Act.

Judgment of sentence affirmed.

      . Section 9712 provides in pertinent part:

        § 9712. Sentences for offenses committed with firearms
      (a) Mandatory sentence. — Any person who is convicted in any court of this Commonwealth of ... robbery ... shall, if the person visibly possessed a firearm during the commission of the offense, be sentenced to a minimum sentence of at least five years of total confinement ...
      42 Pa.C.S.A. § 9712(a).

      . Rule 359(B) reads in pertinent part:
      B. In cases in which a mandatory sentence is provided for by law, upon verdict, where the court decides not to impose a sentence greater than the mandatory, the court may immediately impose that sentence.
      Pa.R.Crim.P., Rule 359(B), 42 Pa.C.S.A.

      . The trial court suspended sentence for possessing an instrument of crime based on principles of merger.

      . In this rather extensive footnote, the Court first examined the theories behind accomplice liability and concluded that visible possession of a gun was not an element of robbery; therefore, an accomplice does not have the same degree of culpability as the one who carries the gun. Next, the Court addressed the differences between one who carries a weapon and his accomplice, in terms of sentencing, and concluded that the individual who has possession of the weapon normally is given a greater sentence than his accomplice. Finally, the Court argued that penal provisions should be strictly construed and as § 9712 makes no mention of accomplices, as do other sentencing statutes, an accomplice should not be sentenced thereunder. Commonwealth v. Grimmitt, 354 Pa.Super. 463, 465-466 n. 1, 512 A.2d 43, 44 n. 1 (1986).


author: WIEAND, Judge:

text:
    555 A.2d 903
    WEXLER KNITTING MILLS, Appellant, v. ATLANTIC MUTUAL INSURANCE CO., Lewis P. Siegel & Sons, Inc., Appellees.
    Superior Court of Pennsylvania.
    Argued Oct. 25, 1988.
    Filed Feb. 9, 1989.
    Reargument Denied March 30, 1989.

      Alan C. Milstein, Philadelphia, for appellant.
    Francis T. McDevitt, Philadelphia, for appellees.
    Before CIRILLO, President Judge, and WIEAND and McEWEN, JJ.
   WIEAND, Judge:

In this appeal we are called upon to interpret an exclusion clause in an “all risks” policy of insurance to determine whether coverage was provided for losses sustained as a result of employee thefts. The trial court held that losses sustained by virtue of employee thefts were excluded from coverage under the policy and entered a compulsory non-suit in the employer’s action brought to recover such losses. When the court thereafter refused to remove the non-suit on post-trial motion, the employer appealed.

Wexler Knitting Mills (Wexler) is a Philadelphia based sweater manufacturer employing 175 to 200 persons. In 1982, Wexler’s officers began to suspect that employee thefts were occurring and hired a private detective to investigate. Their suspicions were confirmed. Empty sweater boxes were found in an abandoned stairwell, chicken wire which cordoned off an area in which finished sweaters were stored was found to have been cut, and significant quantities of sweaters and yarn were determined to be missing. Eventually, an employee was apprehended as he left the mill with goods having a value of $212.50. An inventory revealed that sweaters and yarn having a value of $214,836.00 were missing.

Wexler was insured under an “all risks” policy which had been issued by Atlantic Mutual Insurance Company (Atlantic Mutual) and which had a general liability limit of $1,040,-000.00. The policy insured against all risks to personal property except those risks which were expressly excluded. Among the perils excluded were the following:

(f) Loss or damage due to shortage disclosed on taking inventory; or unexplained or mysterious disappearance (except property in the custody of bailees or carriers for hire);
(g) Loss or damage, except loss or damage by fire or explosion, caused by or arising out of infidelity or any dishonest act on the part of the Insured or other party of interest, his or their employees or agents or any person or persons to whom the property may be entrusted (carriers for hire excepted); or resulting from the Insured voluntarily parting with title or possession of any property if induced to do so by any fraudulent scheme, trick, device or false pretense;

Wexler purchased several additional endorsements to augment the general coverage provided by the policy. One such endorsement, entitled Employee Dishonesty Commercial Blanket Coverage, covered “[l]oss of Money, Securities and other property which the Insured shall sustain ... through any fraudulent or dishonest act or acts committed by any of the Employees, acting alone or in collusion with others.” The maximum amount recoverable for this type of loss was $20,000.00.

Wexler filed a timely proof of loss, and Atlantic Mutual paid in response thereto the sum of $20,000.00. However, it denied coverage under the general provisions of the “all risks” policy, contending that losses caused by employee thefts were excluded from such coverage. The present action followed; it ended with the trial court’s refusal to remove the compulsory non-suit which it had entered at trial.

The granting of a compulsory non-suit is proper when it is clear that the plaintiff has not established a right of recovery. Thomas v. Duquesne Light Co., 376 Pa.Super. 1, 8, 545 A.2d 289, 292-293 (1988); Storm v. Golden, 371 Pa.Super. 368, 373, 538 A.2d 61, 63 (1988). In an action based upon an “all risks” insurance policy, the burden is upon the insured to show that a loss has occurred; thereafter, the burden is on the insurer to defend by showing that the loss falls within a specific policy exclusion. Miller v. Boston Ins. Co., 420 Pa. 566, 218 A.2d 275 (1966). Although the burden of proving the applicability of an exclusionary provision rests initially on the insurer, “when the existence of facts constituting an exception or exclusion is admitted by the plaintiff or is established by uncontradicted testimony in plaintiff’s case ... such burden is removed from the defendant-insurer.” 19 P.L.E. Insurance § 464.

The parties do not dispute that a loss occurred. Their dispute centers, rather, on the interpretation to be placed upon the language of the policy which excludes coverage for losses caused by “infidelity or any dishonest act on the part of the insured or other party of interest, his or their employees or agents or any person or persons to whom the property may be entrusted.” Wexler contends that the language must be read to exclude only those losses which were caused by a dishonest act on the part of an employee “to whom the property [had been] entrusted,” and it argues that the thieves in the instant case had not been entrusted with the goods which they stole. We reject this argument.

The exclusionary language is clear. It applies to losses or damage caused by the insured, the insured’s employees and any person to whom the property had been entrusted by the insured. The language does not refer only to losses caused by an employee to whom the property had been specifically entrusted. Appellant will not be permitted to create an ambiguity in the language of the exclusion by a strained and grammatically incorrect reading of the terms of the policy. The policy clearly provides in unambiguous terms that there is no coverage for losses caused by or arising out of infidelity or dishonest act on the part of the insured or its employees.

Although there are no Pennsylvania decisions which are controlling of our decision in this case, our holding is consistent with the decision reached by a California Court of Appeals in Atlas Assurance Co., Ltd. v. McCombs Corp., 146 Cal.App.3d 135, 194 Cal.Rptr. 66 (1983). There, the insured had argued that language similar to that in the instant case excluded coverage only for losses occurring to property specifically entrusted to an employee. The California court rejected the argument, saying:

The exclusion removed liability for any dishonest or criminal act “on the part of the Insured or other party of interest, his or their employees or agents or any person or persons to whom the property may be entrusted by the Insured.” Defendants read the phrase “ ‘to whom the property may be entrusted by the Insured’ ” as modifying everything following the words “party of interest”; i.e. employees, agents and persons or persons. Under this reading, the exclusion applies only if the insured first entrusts the property to the employee or agent who then commits a dishonest act. This interpretation leads to inconsistent coverage based on who stole the property and the circumstances of the theft. The exclusion was clearly intended to apply consistently to the insured, his employees and any person to whom the property was entrusted by the insured. Moreover, defendant’s interpretation would require the use of a conjunction before the words “his or their employees” so that all the words which follow could be read as one phrase rather than two. Reading the phrase “to whom the property may be entrusted” as modifying “employees” requires we assume the policy adopted an incorrect sentence construction. An ambiguity cannot be based on a strained and grammatically incorrect reading, of the policy’s terms. (McBride v. Farmers Insurance Group (1982) 130 Cal.App.3d 258, 261, 181 Cal.Rptr. 539.) The alternative interpretation must be one to which the policy is reasonably susceptible. Here the exclusion admits of only one interpretation: there is no coverage for any dishonest or criminal act on the part of the insured or other party of interest, on the part of his or their employees or agents, or on the part of any person or persons to whom the property may be entrusted by the insured.
The exclusion was unambiguous as a matter of law, and the trial court properly rejected McCombs’ interpretation of the exclusion as irrelevant. (Blumenfeld v. R.H. Macy & Co., supra, [1979] 92 Cal.App.3d [38] at p. 45, 154 Cal.Rptr. 652.)

Id. at 143-144, 194 Cal.Rptr. at 70. We find the reasoning of the California court persuasive. Moreover, in other cases interpreting similar language, the courts of sister states have not found it necessary that an employee be specifically entrusted with the goods. See, e.g.: C & H Plumbing and Heating Inc. v. Employers Mutual Casualty Co., 264 Md. 510, 287 A.2d 238 (1972).

Appellant’s argument that the policy exclusion is ambiguous and, therefore, must be construed in appellant’s favor is wholly without merit. The language is clear and unambiguous. The only ambiguity is that which appellant seeks to create by its strained and grammatically incorrect reading of the exclusionary language. “To construe this contract as plaintiff would have us do would not resolve an ambiguity against the insurer, but would change the contract and read into it an undertaking which is not there.” Gottesfeld v. Mechanics and Traders Ins. Co., 196 Pa.Super. 109, 117-118, 173 A.2d 763, 767 (1961). The exclusion under construction unambiguously applies to loss or damage caused by a dishonest act: (1) on the part of the Insured; (2) his employees or agents; or (3) any person or persons to whom the property was entrusted (carriers for hire excepted). Cf. Chadwick v. Aetna Ins. Co., 9 N.C.App. 446, 176 S.E.2d 352 (1970).

Because the loss in the instant case was caused by employee dishonesty, it was excluded from coverage by subsection (g) of the Perils Excluded provision of the general policy. Wexler’s recovery, therefore, was limited to the $20,000.00 additional coverage it had purchased under the Employee Dishonesty endorsement. This being the only possible conclusion, the trial court did not err by refusing to remove the non-suit which it had entered against the plaintiff-appellant at trial.

Affirmed.