author: McEWEN, Judge: HOFFMAN, Judge,

text:
    514 A.2d 552
    MERRILL LYNCH, PIERCE, FENNER & SMITH, Appellee, v. Ira B. PERELLE, Appellant. MERRILL LYNCH, PIERCE, FENNER & SMITH, Appellant, v. Ira B. PERELLE, Appellee.
    Superior Court of Pennsylvania.
    Argued Oct. 11, 1984.
    Filed Aug. 13, 1986.

      David E. Sandel Jr., Philadelphia, for appellant (at 706) and for appellee (at 759).
    C. Clark Hodgson, Jr., and Stephen C. Baker, Philadelphia, for appellant (at 759) and for appellee (at 706).

      Before ROWLEY, McEWEN and HOFFMAN, JJ.
   McEWEN, Judge:

Merrill Lynch, Pierce, Fenner & Smith, Inc. (hereinafter Merrill Lynch, appellant), a brokerage firm with offices in Philadelphia, instituted suit against appellee, Dr. Ira Perelle (hereinafter appellee), seeking sums allegedly due and owing to Merrill Lynch following liquidation of a margin account maintained by appellee. Appellee counterclaimed for damages resulting from, inter alia, an alleged breach of the fiduciary duty owed by Merrill Lynch to appellee. Trial was held before the distinguished Judge Lois Forer sitting without a jury. The court awarded Merrill Lynch the sum of $20,191.77, representing the deficit which resulted when' appellee’s margin account was liquidated, plus interest, and awarded the sum of $13,715.50 to appellee on his counterclaim for breach of fiduciary duty. These awards resulted in the entry of a final judgment in the amount of $6,479.27 in favor of Merrill Lynch from which both parties have appealed.

Merrill Lynch argues that the trial court erred: (1) in finding that Merrill Lynch owed a fiduciary duty to appellee; (2) in finding the “shingle theory” of broker liability applicable; and (3) in finding that five days was a “reasonable time” for purposes of calculating damages on appellee’s counterclaim for breach of fiduciary duty.

The trial court made the following findings of fact:

1. Plaintiff, Merrill Lynch, Pierce, Fenner & Smith, Inc. (hereinafter “Merrill Lynch”) is a registered broker-dealer engaged in the business of purchase and sale of securities on behalf of its customers.

2. Merrill Lynch is a New York corporation with offices in Philadelphia.

3. Defendant, Ira B. Perelle, (hereinafter “Perelle”) is a resident of Bronxville, New York. (Testimony of Perelle).

4. On or about April 17, 1977, Perelle opened an account with Merrill Lynch in Philadelphia by telephone for the purpose of buying and selling securities. (Exhibit P-1; Testimony of Kirkpatrick and Perelle).

5. Perelle was referred to Merrill Lynch by a friend, Dr. Stanford Bazilian who was a customer of Merrill Lynch. Both Perelle and Bazilian were interested in trading in high risk investments. (Exhibit P-1, Testimony of Kirkpatrick and Perelle).

6. In May, 1977, Perelle and Merrill Lynch entered into a margin agreement. (Plaintiff’s Request for Admissions No. 1 Defendant’s Answer; Testimony of Kirkpatrick; Exhibit P-2).

7. The written margin agreement, a form supplied by Merrill Lynch, provided that in consideration for Merrill Lynch’s agreeing to lend Perelle money, partially secured by securities which he purchased, such “securities' ... now or hereafter carried by you [Merrill Lynch] in any of my accounts ... are to be held by you as security for the payment of any liability to you in any of said accounts____”

(Exhibit P-2).

8. The margin agreement further provided that Merrill Lynch

“shall have the right, whenever in your discretion you consider it necessary for your protection ... to sell any or all outstanding contracts, all without demand for margin or additional margin, notice of sale or purchase or other notice or advertisement, and such sales or purchases may be made at your discretion on any exchange or other market where such business is then usually transacted ... it being further understood that I shall at all times be liable for the payment of any debit balance owing in any of my accounts with you upon demand, and that I shall be liable for any deficiency remaining in such accounts in the event of the liquidation thereof in whole or in part by you or by me.’’

(Emphasis added).

9. The margin account further provided that the “monthly debit balance in my [i.e., Perelle’s] account(s) shall be charged, in accordance with your [i.e. Merrill Lynch’s] usual custom with interest at a rate which shall include the average rate paid by you on general loans during the period covered by such balances respectively, and any extra rates caused by market stringency, together with a charge to cover your credit service and facilities.”

(Exhibit P-2).

10. A margin account is a securities account in which a customer purchases securities with, in part, funds lent by the broker. Under the practice of the parties, when a customer purchases securities on margin, he is required to pay to the broker fifty percent (50%) of the price. The balance of the purchase price is lent to the customer by the broker, with interest at the broker’s call loan rate. (Testimony of Kirkpatrick and Perelle).

11. A margin account consists of the following three components:

(a) “long market value” — the present market value of the securities purchased on margin as of a given date,
(b) “debt” — the amount or value of the loan made by the broker to the customer for purchase of the margined securities, and
(c) “equity” — the value of the customer’s account (cash or securities) that exceeds the amount of the margin loan as of a given date. (Testimony of Kirkpatrick).

12. Dr. Perelle’s margin account was handled by Robert J. Kirkpatrick, III (“Kirkpatrick”) at all material times.

13. At all material times prior to October 30, 1978, Dr. Perelle knew the general mechanics of opening and maintaining a margin account and the fact that the downward movement of the positions in his portfolio might require the deposit of additional equity in his account. Dr. Perelle did not know, however, the intricate details applicable to margin accounts, and he was unfamiliar with the mechanics of meeting Merrill Lynch’s margin maintenance calls. (Testimony of Perelle).

14. Plaintiff’s margin account with Merrill Lynch was one of a group of accounts of Dr. Bazilian’s friends handled by Kirkpatrick. These customers relied to a great degree on the investment judgments and advice of Dr. Bazilian.

15. Perelle did not execute a power of attorney in favor of Dr. Bazilian. Perelle was solely responsible for all decisions with respect to his account. (Testimony of Kirkpatrick and Perelle).

16. There are occasions when Merrill Lynch will notify the customer of the need for additional equity in the margin account. This notification is referred to as a “call”. There are:

(a) “Regulation T Calls” — notice of the requirement that, upon the purchase of margined securities for the customer’s account, the customer must deposit with the broker sufficient funds or securities so that the equity in the customer’s account equals fifty percent (50%) of the purchase price of the margined securities, and
(b) “Margin Maintenance Calls” — notice to the customer that additional equity is required in his margin account. Margin maintenance calls are generated by Merrill Lynch when the equity in the customer’s account falls below 30% of the value of the securities held in the account. (Testimony of Kirkpatrick).

17. The customer may satisfy or meet margin maintenance calls in the following ways:

(a) by market action, whereby appreciation in the value of the margined securities causes sufficient increase in long market value,
(b) by deposit with the broker of funds equal to the amount of the margin call,
(c) by sale of securities in the account having a value of three and one-third times the amount of the margin call, and
(d) by deposit with the broker of marginable securities having a value one and one-third times the amount of the margin call. (Testimony of Kirkpatrick).

18. The only information Merrill Lynch requested with respect to Dr. Perelle’s financial status was the application on which Perelle stated that his income was $50,000 per year. (Testimony of Kirkpatrick; Exhibit No. P-1).

19. In the period from April of 1977 through October of 1978, Dr. Perelle actively traded securities in his Merrill Lynch margin account, consisting of approximately eighty transactions.

20. Most of the investment ideas for the purchase and sale of securities originated with Dr. Bazilian; Perelle had a few ideas of his own. No investment recommendation originated with Merrill Lynch; Merrill Lynch carried no investment opinion on any of the securities purchased or sold by Perelle. (Testimony of Kirkpatrick).

21. Kirkpatrick’s service to Perelle as to investments was executing orders to buy or sell placed by Perelle and rendering advice as to the condition of the market or prices of securities held in the account. (Testimony of Kirkpatrick).

22. In the period from April of 1977 through October of 1978, Perelle promptly and faithfully met each of the approximately twelve Regulation T calls from Merrill Lynch requiring him to deposit additional equity in his account.

23. At no time prior to October of 1978, did Merrill Lynch have occasion to make a margin maintenance call on Dr. Perelle, and it had no reason to suspect that Dr. Perelle would not meet any such calls in a timely and faithful fashion if called upon to do so.

24. As of October 1, 1978, Merrill Lynch did not question Dr. Perelle’s financial responsibility. (Testimony of Kirkpatrick).

25. During the period from May, 1977, through October 1, 1978, Perelle made substantial purchases of securities on margin. On or about October 1, 1978, the debt component of his margin account (i.e., the cumulative amount of loans made by Merrill Lynch to Perelle) was in excess of $80,-000.00. (Testimony of Perelle; Exhibit 11(a)).

26. During the month of October, 1978, the stock market experienced a period of very severe decline. (Testimony of Kirkpatrick; Testimony of Derbyshire).

27. The decline in the stock market adversely affected the value of the securities in Perelle’s account. (Testimony of Kirkpatrick; Testimony of Perelle).

28. Beginning on October 19, 1978, the following margin maintenance calls were made on Perelle’s account:

Date Call Originated Date Call Due Amount of Call
10/19/78 10/26/78 $ 2,938.00
10/20/78 10/27/78 16.982.00
10/23/78 10/30/78 14.627.00
10/24/78 10/31/78 19.238.00
10/25/78 11/1/78 18.225.00
10/26/78 11/2/78 25.649.00
10/31/78 11/7/78 12.109.00

(Testimony of Kirkpatrick).

29. The calls were made in the ordinary course of business and sent by mail. Despite Perelle’s testimony that he did not receive the calls, the court finds that he did receive all these calls.

30. Merrill Lynch’s maintenance call record (Exhibits P-4 and P-5) indicates that the margin maintenance calls of October 19, October 20, and October 23 were marked as having been “met in full”.

31. Merrill Lynch required that margin maintenance calls be met within seven days, or five business days, of origination. (Testimony of Kirkpatrick).

32. Merrill Lynch’s margin maintenance calls were calculated in New York following the close of business on the date of origination of the call. The Philadelphia Office was notified of the call the following morning by a high speed printer which printed on a multi-part margin maintenance call form, the name and address of the customer, the amount of the call and the date or origin. That day an employee of the Philadelphia margin department refigured the amount of the call and established the due date for the call. The multi-part form was separated: one form was delivered to the cashier, one was delivered to the desk of the account executive, and one was delivered to the mail room. The call was also recorded by a clerk on a margin maintenance call record. The procedure was observed during October, 1978. (Testimony of Kirkpatrick; Derbyshire).

33. It was Kirkpatrick’s practice, each time he was notified of a margin maintenance call directed to one of his customers, to call that customer, advise him of the call and try to determine how the matter could be resolved. (Testimony of Kirkpatrick).

34. On Friday, October 20, 1978, Perelle had a telephone conversation with Kirkpatrick concerning the status of his account in light of the declining market prices.

35. In the October 20 telephone conversation, Perelle instructed Kirkpatrick to sell his holdings in Community Psychiatric Centers, North American Mortgage Investment and Robinteeh.

36. On October 20, 1978, Merrill Lynch sold the above securities, producing proceeds for Dr. Perelle’s account of approximately $14,000.00.

37. As of the close of business on Friday, October 20, 1978, Dr. Perelle had positions as follows in his account:

(a) Eight Grolier 13% bonds;
(b) Sixty-five hundred shares of Mohawk Data Sciences; [ ]
(c) Forty-four hundred shares of Vertipile; and
(d) Sixty-five hundred shares of Wichita Industries.

38. On Wednesday, October 25, 1978, Kirkpatrick and Perelle had a telephone conversation concerning the condition of the stock market and Perelle’s account generally.

39. Perelle knew as of October 25, 1978, that he might be required to deposit additional equity in his account due to the declining prices of the securities that he held.[]

40. On Friday, October 27, 1978, Perelle called Kirkpatrick, to inquire about the status of his account. In this telephone conversation Perelle informed Kirkpatrick that he would be away for the weekend beginning that afternoon, and gave Kirkpatrick the telephone number where he would be staying.

41. On Sunday, October 29, 1978, Kirkpatrick called Perelle at the telephone number Perelle had supplied. (Testimony of Perelle).

42. In this telephone conversation, Kirkpatrick stated that “all hell broke loose on Friday” and that Perelle’s account would have to be liquidated on Monday. (Testimony of Perelle).

43. Kirkpatrick informed Perelle that liquidation would leave a deficit balance in the account. (Testimony of Kirkpatrick). Dr. Perelle instructed Kirkpatrick not to do anything until he spoke to him. (Testimony of Perelle).

44. Perelle did not indicate at any time a financial inability to meet margin maintenance calls. (Testimony of Perelle). Perelle never told Kirkpatrick he would not pay the amount due. (Testimony of Perelle).

45. On October 30, 1978, before speaking with Perelle, Kirkpatrick liquidated Perelle’s account.

46. At no time did Kirkpatrick inform Perelle of the precise amounts owed on the account or options by which he could meet the margin calls or save a portion of his account.

47. At that time, Perelle had approximately $55,000.00 in cash in Canada, i.e., a Bank of Montreal Certificate of Deposit in the amount of $42,000.00, approximately $7,000.00 to $8,000.00 in four accounts in Montreal, two in his name and two in the name of Black Rock Ltd., Perelle’s consulting firm, and approximately $5,000.00 cash on deposit in Credit Suisse in Canada which has an office in New York. (Perelle’s testimony).

48. Within a week after the liquidation, Perelle bought 800 shares of Wichita Industries stock for cash.

49. Following liquidation of Perelle’s account, the account showed a debit balance of $11,452.05. (Exhibit P-13). There remains due and owing to Merrill Lynch the sum of $20,191.77 which includes interest as agreed upon by the parties through March 4, 1982.

50. Merrill Lynch has demanded that Perelle make payment of the unsecured debit balance but Perelle has refused to make payment of the unsecured debit balance.

51. Perelle has counterclaimed for breach of fiduciary duty alleging damages of $36,150.00, representing the difference between the liquidation price and the closing prices of Mohawk Data Sciences and Wichita Industries on March 4, 1982, the date of trial.

52. The prices of the liquidated securities during the week of liquidation were as follows:

WICHITA INDUSTRIES
DATE HIGH LOW CLOSE
October 31 3% 2% 3%
November 1 3% 3% 3%
November 2 3% 3% 3%
November 3 4% 38A 3%
MOHAWK DATA SCIENCES
DATE HIGH LOW CLOSE
October 31 Th 6Vs 7 Vs
November 1 8 6% 7
November 2 8V2 TVs 8%
November 3 8V2 7% 8

53. The difference between the liquidation price on October 30, 1978, and a repurchase price as of November 3, 1982, is as follows:

WICHITA INDUSTRIES
6500 shares at 4%
(high price 10/31-11/3) $26,812.50
Less
6500 shares at 3 (liquidation price on 10/30) 19,500.00 $ 7,312.50
MOHAWK DATA SCIENCES
3000 shares at 8V2 (high price 10/31-11/3) $25,500.00
Less
2800 shares at 6% (liquidation price on 10/30) 17,850.00
And
200 shares at 6Y4 (liquidation price on 10/30) 1,250.00 $ 6,400.00
$13,712.50

The trial court also found that appellee’s contention that he did not receive the margin call notices sent to him by Merrill Lynch was “not worthy of credence. Over a period of approximately one and one-half years Merrill Lynch sent Dr. Perelle some eighty notices, all of which were duly received____ It is also clear that the sales authorized by Perelle on October 20 and October 25, 1978 were made in response to margin calls arid that the proceeds were in fact applied to satisfy the calls. (Exhibits P-4, P-5).” (Tr.Ct. Opinion, pp. 14-15).

I.

The trial court concluded that the margin maintenance contract was an unambiguous contract which had been entered into by two competent parties dealing at arm’s length, and was, therefore, enforceable according to the provisions contained therein. We agree. Where the language of a contract is clear and unambiguous, a court is required to give effect to that language. Standard Venetian Blind Co. v. American Empire Insurance Co., 503 Pa. 300, 304, 469 A.2d 563, 566 (1983). “ ‘It is not the province of the court to alter a contract by construction or to make a new contract for the parties; its duty is confined to the interpretation of the one which they have made for themselves without regard to its wisdom or folly.’ ” Amoco Oil Company v. Snyder, 505 Pa. 214, 221, 478 A.2d 795, 798 (1984) quoting Steuart v. McChesney, 498 Pa. 45, 51, 444 A.2d 659, 662 (1982). Accord Rusiski v. Pribonic, 326 Pa.Super. 545, 550, 474 A.2d 624, 627 (1984).

As heretofore observed, the customer agreement executed by Dr. Perelle granted Merrill Lynch the right to liquidate Dr. Perelle’s margin account “whenever in your discretion you consider it necessary for your protection ... without demand for margin or additional margin, notice of sale ... or other notice or advertisement ... it being further understood that I shall at all times be liable for the payment of any debit balance, owing in any of my accounts with you upon demand, and that I shall be liable for any deficiency remaining in any such account(s) in the event of the liquidation thereof in whole or in part by you or by me....”

While the contract bestowed upon Merrill Lynch the right to liquidate Dr. Perelle’s account without any notice to him and without any demand for additional margin funds, the trial court found that Merrill Lynch had sent and Dr. Perelle had received demands for additional margin.

Dr. Perelle failed, however, to meet in full the outstanding margin calls due on October 27 and October 30, 1978. As heretofore observed, the first margin call, in the amount of $2,938.00, was due on October 26; the second call, in the amount of $16,982.00, was due on October 27; and the third call, in the amount of $14,627.00, was due on October 30. Dr. Perelle authorized the sale on October 20 of his shares in Community Psychiatric Services, Robinson Technical and North American Mortgage which resulted in a yield of $14,400.00. However, this sum served to reduce the margin deficit in Dr. Perelle’s account by only $4,800.00. Again, on October 25, Dr. Perelle authorized the sale of 1000 shares of Mohawk Data Sciences resulting in a yield of $8,150.26, which further reduced his outstanding margin call by approximately $2,716.00. Thus, the total sum realized by these sales, approximately $7,516.00, and applied to reduce the outstanding margin deficit, was insufficient to meet in full the calls due on October 27 and 30, 1978.

Liquidation of Dr. Perelle’s account, therefore, occurred only after his failure to timely meet the margin call outstanding on October 27, and was thus necessary and proper under the terms of the customer agreement which granted Merrill Lynch the right to liquidate even in the absence of an overdue margin call.

Having properly liquidated Dr. Perelle’s account, Merrill Lynch was entitled to recover from him the amount of the deficit as well as the interest provided for in the customer agreement. See Lincoln Commodity Services v. Meade, 558 F.2d 469, 473 (8th Cir.1977); Geldermann & Company, Inc. v. Lane Processing, Inc., 527 F.2d 571 (8th Cir.1975); Merrill Lynch, Pierce, Fenner & Smith, Inc. v. Brooks, 404 F.Supp. 905 (N.D.Tex.1975) aff'd. 548 F.2d 615 (5th Cir.1977) cert. denied 434 U.S. 855, 98 S.Ct. 173, 54 L.Ed.2d 126 (1977); Kohlmeyer & Co. v. Sobert, 273 So.2d 884 (La.App.1973) aff'd. 286 So.2d 342 (La.1978).

Q: Had the margin call issued on October 20th due October 27th in the amount of $16,982 been satisfied as of October 27th?
A: [Kirkpatrick] No, it had not

II.

Appellee contends that the trial court erred in refusing to hold that Merrill Lynch’s alleged breach of fiduciary duty was a complete defense to the contract action. Appellee has not provided either the trial court or this Court with any case law in support of his position but rather argues that the references to the power of a party to avoid a contract for abuse of a fiduciary duty contained in Sections 380 and 381 of the Restatement (Second) of Contracts support his position.

The Section of the Restatement actually applicable to abuse of a fiduciary duty by one who is a party to a contract is Section 173 of the Restatement (Second) of Contracts, which provides:

If a fiduciary makes a contract with his beneficiary relating to matters within the scope of the fiduciary relation, the contract is voidable by the beneficiary, unless
(a) it is on fair terms, and
(b) all parties beneficially interested manifest assent with full understanding of their legal rights and of all relevant facts that the fiduciary knows or should know, (emphasis supplied).

This section thus makes such a contract voidable under certain circumstances; however, Sections 376, 383 and 384 make clear that a party who seeks to avoid a contract based upon breach of fiduciary duty must avoid the entire contract and not simply disaffirm part of the contract that is particularly disadvantageous to himself, see Restatement (Second) of Contracts § 383, and must return any benefit which he has received from the other party. See Restatement (Second) of Contracts § 384.

As appellee did not contend, either in his pleadings or at trial, that the contract was unfair or that his assent to the contract was improperly procured, the contact is not voidable pursuant to Section 173 of the Restatement (Second) of Contracts. Moreover, the relief appellee seeks, which includes: (a) the increase in the value of the stocks between the date of liquidation and trial, (b) the funds loaned to him by Merrill Lynch, and (c) all interest which would have been due Merrill Lynch on those funds, is not the relief available to a party who seeks to avoid a contract based upon abuse of a fiduciary relation. Thus, the trial court properly rejected appellee’s argument that a breach of fiduciary duty on the part of Merrill Lynch was a complete bar to recovery in the action on the contract.

III.

Both appellant and appellee dispute the findings of the trial court concerning the duties owed by Merrill Lynch to Dr. Perelle as well as the legal effect of a breach of those duties.

The trial court, in awarding damages to Dr. Perelle on his counterclaim, noted that Dr. Perelle “breached [his] agreement to supply the required margin. Under the terms of the agreement [Merrill Lynch] had the right to sell the collateral and recover any deficit. However, [Merrill Lynch] was also [Dr. Perelle’s] broker ... during the phone calls in question on Friday and again on Sunday, October 29, Kirkpatrick was dealing with [Dr. Perelle] as his broker, i.e., his agent. His obligations to inform, advise and follow his principal’s instructions had not terminated____ We note that requiring a broker to inform his client of the exact amount due and other courses of action for meeting margin requirements is not unduly burdensome.” The trial court then concluded that Merrill Lynch, through its agent Mr. Kirkpatrick, had:

(a) failed to keep Dr. Perelle informed of vital information concerning the status of his account in the period from October 19 to October 30, 1978;
(b) failed to advise Dr. Perelle that he could ask for and perhaps obtain an extension of time to meet the margin call;
(c) failed to tell Dr. Perelle in the Sunday, October 29, 1978, telephone conversation the precise amount of money that was required of him on Monday in order to meet the margin call or inform him of other options; and
(d) failed to obey Dr. Perelle’s instruction on October 29, to advise him before doing anything.

(Tr.Ct.Opinion, p. 27).

The relationship between a broker and his customer is one of principal and agent by virtue of which the broker is subject to certain fiduciary obligations to his client. See Jaksich v. Thomson McKinnon Securities, Inc., 582 F.Supp. 485, 502 (S.D.N.Y.1984); Schenck v. Bear, Stearns & Co., 484 F.Supp. 937, 946 (S.D.N.Y.1979); Berkowitz v. Mayflower Securities, Inc., 455 Pa. 531, 532, 317 A.2d 584, 585 (1974). One of these duties is the duty, to communicate certain information to the client as outlined in Section 381 of the Restatement (Second) of Agency:

Unless otherwise agreed, an agent is subject to a duty to use reasonable effort to give his principal information which is relevant to affairs entrusted to him and which, as the agent has notice, the principal would desire to have and which can be communicated without violating a superior duty to a third person.

See Robinson v. Merrill Lynch, Pierce, Fenner & Smith, Inc., 337 F.Supp. 107, 111 (N.D.Ala.1971) aff'd., 453 F.2d 417 (5th Cir.1972).

Other duties owed by a stockbroker to his customer are, in part, determined by the nature of the contract between the parties as well as by the type of account maintained by the customer. See Chipser v. Kohlmeyer & Company, 600 F.2d 1061, 1066-1067 (5th Cir.1979). Where the account is a nondiscretionary account such as the account maintained by Dr. Perelle, the duties of the broker include:

(1) the duty to recommend a stock only after studying it sufficiently to become informed as to its nature, price and financial prognosis. Cash v. Frederick and Co., 57 F.R.D. 71 (E.D.Wis.1972); Hanly v. S.E.C., 415 F.2d 589 (2d Cir.1969); (2) the duty to carry out the customer’s orders promptly in a manner best suited to serve the customer’s interests, Richardson v. Shaw, 209 U.S. 365, 28 S.Ct. 512, 52 L.Ed. 835 (1908); Robinson v. Merrill Lynch, 337 F.Supp. 107 (N.D.Ala.1971), aff'd, 453 F.2d 417 (5th Cir.1972), and cases cited therein; (3) the duty to inform the customer of the risks involved in purchasing or selling a particular security, Hanly v. S.E.C., supra; Cash v. Frederick and Co., supra; (4) the duty to refrain from self-dealing or refusing to disclose any personal interest the broker may have in a particular recommended security, Chasins v. Smith Barney & Co., 438 F.2d 1167 (2d Cir.1971); S.E.C. v. Capital Gains Bureau, 375 U.S. 180, 84 S.Ct. 275, 11 L.Ed.2d 237 (1963); (5) the duty not to misrepresent any fact material to the transaction, Carras v. Burns [516 F.2d 251 (4th Cir.1975)], supra; Shorrock v. Merrill Lynch, CCH Fed.Sec.L.Rep. ¶ 96,251 (D.Or., Nov. 18, 1977); and (6) the duty to transact business only after receiving prior authorization from the customer, Robinson v. Merrill Lynch, supra.

Leib v. Merrill Lynch, Pierce, Fenner & Smith, Inc., 461 F.Supp. 951, 953 (E.D.Mich.1978). Accord Robinson v. Merrill Lynch, Pierce, Fenner & Smith, Inc., supra, 337 F.Supp. at 111.

We do not agree with the conclusion of the trial court that Merrill Lynch, through its agent Mr. Kirkpatrick, had breached its fiduciary duty to appellee by failing to inform him “that he could ask for and perhaps obtain an extension of time to meet the margin call.”

Mr. Kirkpatrick testified that the permission of the sales manager or office manager was required in order to obtain an extension of time to meet a margin maintenance call and that reasons acceptable to management included: “Physical reasons that are difficult to circumvent. A client is out of town, the market goes down, he’s on a business trip and you can’t get him. For extenuating circumstances margin-call extensions are granted, but they’re not granted on a regular basis and there must be an exception made for them to be granted.” (N.T. 111.2-112.2).

Minimum margin maintenance requirements are established by the rules and regulations of the various exchanges which are empowered to discipline member brokers for violations thereof. See Jablon v. Witter, supra, 614 F.2d at 679-690 n. 4; Securities Exchange Act of 1934, 15 U.S.C. § 78f(b). A minority of courts have found brokers liable for failure to promptly liquidate accounts which have become under margined as a result of market action. See and compare Lincoln Commodity Services v. Meade, supra, 558 F.2d at 473 (Rules 928 and 942 of the Chicago Mercantile Exchange); Geldermann & Company, Inc. v. Lane Processing, Inc., supra, 527 F.2d at 574-577 (Margin requirements of Commodity Exchange Commission and the Chicago Board of Trade); Gordon v. duPont Glore Forgan, Inc., 487 F.2d 1260, 1261 n. 1 (5th Cir.1973) cert. denied, 417 U.S. 946, 94 S.Ct. 3071, 41 L.Ed.2d 666 (1974) (New York Stock Exchange Rule 431 setting minimum margin maintenance level at twenty-five percent); First Mid America, Inc. v. Palmer, 197 Neb. 224, 228, 248 N.W.2d 30, 34 (1976) (Rule 928(c) of the Chicago Mercantile Exchange; Rule 210 of the Chicago Board of Trade); Anno., Private Federal Right of Action Against Brokerage Firm for Violation of Exchange or Dealer Association Rule, 54 ALR Fed. 11 (1981). The customer agreement entered into between the parties provided, inter alia: “Any transaction shall be subject to the constitution, rules, regulations, customs and usages of the exchange or market (and its clearing house, if any), where executed." (emphasis supplied).

No extenuating circumstances existed in the instant case, such as a suggestion by appellee that an extension was required in order to transmit the necessary funds or an inability on the part of Merrill Lynch to notify appellee of the margin call. In the absence of unusual circumstances, it would be unreasonable to require that brokers routinely suggest to their margin customers the possibility of obtaining extensions within which to meet margin maintenance calls. Moreover, such a requirement would impose upon Merrill Lynch an obligation inconsistent with the terms of its customer agreement as well as a duty not consistent with its obligations under applicable exchange rules. Thus, we are constrained to find that the court erred in holding that Merrill Lynch breached its fiduciary duty when it failed to inform appellee that he could seek an extension of time within which to meet the margin maintenance calls.

IV.

The trial court also found that Merrill Lynch breached a fiduciary owed to appellee by failing to inform him during the conversation of Sunday, October 29, 1978, the “precise amount of money that was required of him on Monday in order to meet the margin call____”

Initially, it must be noted that the trial court found as a fact that Dr. Perelle received each of the margin maintenance calls mailed to him by Merrill Lynch. As heretofore observed, a call was not due until seven days after its issuance. Dr. Perelle had received the margin maintenance calls due on October 27 and October 30 prior to the telephone conversation of Sunday, October 29 and was, therefore, aware of the “precise amount of money” that was required to meet the margin maintenance calls due on October 27 and October 30. Thus, even were we to assume for purposes of this appeal that Merrill Lynch did breach a duty owed to appellee to use reasonable efforts to provide appellee with all relevant information concerning his account, the failure of Mr. Kirkpatrick to tell appellant the exact amount of the equity deficit in the margin account on Sunday night did not result in any damage to appellee. The margin account was liquidated as a result of appellee’s failure to timely meet the outstanding and overdue notices. Any calls issued on October 27 or thereafter would not fall due for seven days thereafter and could have been cancelled in the interim by virtue of market action.

V.

The trial court found, as well, that Merrill Lynch breached its fiduciary duty to appellee when it failed “to obey Dr. Perelle’s instruction on October 29, to advise him before doing anything.” We cannot agree. The customer agreement granted Merrill Lynch the right to liquidate the margin account at any time, “without demand for margin or additional margin [or] notice of sale____” While the parties were free to alter their contract by mutual agreement or course of conduct, no evidence of any modification of the contract was offered by either party. Thus, there was no breach of a fiduciary duty by Merrill Lynch when it liquidated the margin account pursuant to the terms of the customer agreement after appellee had failed to meet a margin maintenance call.

VI.

The trial court proceeded to find that Merrill Lynch breached a fiduciary duty owed to appellee when it failed to keep him “informed of vital information concerning the status of his account in the period from October 19 to October 30, 1978.”

The trial court accepted the testimony of Dr. Perelle and found that “[a]t no time did Kirkpatrick inform Perelle of the precise amounts owed on the account or options by which he could meet the margin calls or save a portion of his account.” We cannot agree that Merrill Lynch breached a fiduciary duty as a result of Mr. Kirkpatrick’s failure to inform Dr. Perelle of the precise amounts owed on the account or the options by which he could meet the margin calls or save a portion of his account.

The trial court found that Merrill Lynch had mailed and Dr. Perelle had received each of the margin maintenance calls issued in October of 1978 as well as all regular monthly statements and confirmations of transactions. Dr. Perelle was, therefore, aware of the precise amount due on October 30, 1978, in order to prevent liquidation of his margin account.

As previously noted, Dr. Perelle maintained a nondiscretionary account with Merrill Lynch. Due to the nature of the account, the services rendered to Dr. Perelle by Mr. Kirkpatrick consisted of “executing orders to buy or sell placed by Perelle and rendering advice as to the condition of the market or prices of securities held in the account.” Finding of Fact # 21.

Merrill Lynch performed all that was required of it when it mailed margin call notices to Dr. Perelle. Such notification was sufficient to satisfy its obligation to “use reasonable effort to give [its] principal information ... relevant to [the] affairs entrusted to [it]____” Restatement (Second) of Agency, § 381. Merrill Lynch was under no duty to inform Dr. Perelle of the “precise amounts owed on the account or options by which he could meet the margin calls or save a portion of his account.”

As we have concluded that Merrill Lynch fulfilled its obligation to use reasonable efforts to inform Dr. Perelle of the outstanding margin calls by mailing the margin call notices to him, we reject the conclusion of the trial court that Merrill Lynch breached a fiduciary duty owed to Dr. Perelle when its agent, Mr. Kirkpatrick:

(a) failed to keep Dr. Perelle informed of vital information concerning the status of his account in the period from October 19 to October 30, 1978;
(b) failed to advise Dr. Perelle that he could ask for and perhaps obtain an extension of time to meet the margin calc-
ic) failed to tell Dr. Perelle in the Sunday, October 29, 1978, telephone conversation the precise amount of money that was required of him on Monday in order to meet the margin call or inform him of other options; and
(d) failed to obey Dr. Perelle’s instruction on October 29, to advise him before doing anything.

In the absence of any breach of duty on the part of Merrill Lynch, the award of damages to Dr. Perelle in the amount of $13,715.50 must be reversed.

VII.

Both appellee and appellant argue that the court erred in applying Section 8335 of the Judicial Code, 42 Pa.C.S. § 8335, to determine the amount of damages awarded to appellee on his counterclaim for breach of fiduciary duty.

While we believe that the court properly applied Section 8335 of the Judicial Code, fixing four days as a “reasonable time” thereunder, our disposition of these appeals has rendered the issue moot.

We, therefore, affirm the judgment in the amount of $20,191.77 entered in favor of Merrill Lynch and reverse the judgment entered in favor of Dr. Perelle on his counterclaim. Jurisdiction is relinquished.

HOFFMAN, J., files concurring opinion.

HOFFMAN, Judge,

concurring:

I agree with the majority’s conclusion that judgment entered in favor of appellee, Dr. Perelle, on his counterclaim must be reversed. I cannot agree, however, with the majority’s holding that a broker, as an agent, has an obligation to use reasonable efforts to inform its client, the principal, of the precise amount of money due to prevent liquidation of a nondiscretionary margin account. For the following reasons, I would hold that no such fiduciary duty exists.

Under the law of this Commonwealth, a fiduciary relationship exists between a broker and a client. Berkowitz v. Mayflower Securities, Inc., 455 Pa. 531, 533 n. 2, 317 A.2d 584, 585 n. 2 (1974) (citing Butcher v. Newburger, 318 Pa. 547, 179 A. 240 (1935)). An agent is, of course, a fiduciary only with respect to matters within the scope of its agency. Restatement (Second) of Agency (Restatement) § 13 (1958). “The scope of affairs entrusted to a broker is generally limited to the completion of a transaction.” Schenck v. Bear, Stearns & Co., 484 F.Supp. 937, 947 (S.D.N.Y.1979). Thus, the agency relationship exists when a client places an order to buy or sell, and terminates when the transaction is completed. Robinson v. Merrill Lynch, Pierce, Fenner & Smith, Inc., 337 F.Supp. 107, 111 (N.D.Ala.1971). The majority correctly sets forth the duties incident to such transactions. See majority slip op. at 561 (citing Leib v. Merrill Lynch, Pierce, Fenner & Smith, Inc., 461 F.Supp. 951, 953 (E.D.Mich.1978)).

§ 8335. Damages for conversion of property of fluctuating value Damages for the conversion of stocks, bonds, or other like property of fluctuating value shall be limited to the difference between the proceeds of the commission, or that portion thereof duly paid or credited to the owner, and such higher value as the property may have reached within a reasonable time after he had notice of the conversion. Where the facts are not in dispute, such period shall be fixed by the court as a matter of law.

Here, the claimed breaches of fiduciary duty are not with respect to buy or sell orders placed by appellee, but rather with respect to appellant’s, Merrill Lynch, Pierce, Fenner & Smith, Inc.’s, liquidation of appellee’s non-discretionary margin account pursuant to the parties’ margin agreement. The trial court found that appellant, through its agent, Mr. Kirkpatrick, had breached its fiduciary duty by several omissions to act. See majority at 181-182. I believe, however, that contract, not fiduciary, principles govern this case. See Berkowitz v. Mayflower Securities, Inc., supra, 455 Pa. at 534-35, 317 A.2d at 585-86 (plaintiff’s failure to pay for stock constituted a material breach of the parties’ subscription agreement; no fiduciary duty on defendant’s part to notify plaintiff of the pending cancellation of his order).

As the majority points out, a margin account is, in essence, a loan. Majority at 168 n. 1. A fiduciary “act[s] primarily for the benefit of another____” Restatement, supra § 13 comment a. In its role as a creditor, appellant does not act primarily for appellee:

[M]ortgagees, pledgees, and other similar power holders, although having power to sell the property involved under certain conditions or to subject another to contractual liability, are not agents of the power giver; they have not undertaken to exercise such power primarily for the benefit of the person in whose name they formally act, and they are entitled to prefer their own interests in dealing with the subject matter.

Id. comment b; see also id. § 14 H. That a broker acts primarily for its own benefit in requiring additional margin or in liquidating a customer’s account is unquestioned. “House margin requirements ... are established primarily to protect the broker by assuring sufficient collateral for credit extended to finance customer speculation____” Altschul v. Paine, Webber, Jackson & Curtis Inc., 518 F.Supp. 591, 596 (S.D.N.Y.1981). “Stockbrokers carrying marginal accounts do not receive remuneration commensurate with the risk of [excessive losses], and hence must act swiftly in such cases.” Yohey v. Burton, 189 Pa.Superior Ct. 393, 404, 11 A.2d 794, 799 (1940). Furthermore, “[a] principal has the right to control the conduct of the agent with respect to matters entrusted to him.” Restatement, supra § 14. Surely it cannot be said that a customer can control his or her broker’s conduct when the broker seeks to protect itself from losses on its loans.

Here, the margin agreement gave appellant the right, whenever in its discretion it considered the exercise of such right necessary for its protection, “to sell any or all outstanding contracts, all without demand for margin or additional margin, notice of sale or purchase or other notice or advertisement----” The agreement further stated that “it [was] understood that a prior demand, or call, or prior notice of the time and place of such sale or purchase shall not be considered a waiver of [appellant’s] right to sell or buy without demand or notice____” It may be that appellant must exercise its discretion reasonably, see Schenck v. Bear, Stearns & Co., supra at 949, or that other contract principles, such as course of dealing or waiver, may be applicable to cases like this one, but I would hold that fiduciary principles have no place here.

      . "Briefly, a margin account is a loan: when one buys stock on margin, one pays only a portion of the total cost of the securities. The broker puts up the remainder of the money, charging the customer a monthly fee on the amount borrowed.
      To purchase stock on margin, the NYSE requires that the customer (1) put up at least 50% of the cost of the stock, and (2) establish an equity equal to at least $2,000. Once the customer has bought stock on margin, the NYSE requires that the customer’s equity in the account always represent at least 25% of the current market value of the stock. Most brokers require a 30% equity.
      If a customer’s equity falls below the 30% minimum (because the stock has gone down in value), the customer’s account becomes subject to a ‘maintenance margin call’. When such a call is made, the customer must deposit cash or collateral to maintain the account. If the customer is unable to meet a margin call, the broker will sell enough stock in the customer’s margin account to meet the 30% maintenance requirements."

        Jablon v. Dean Witter & Co., 614 F.2d 677, 682 n. 10 (9th Cir.1980).

      . There was considerable disagreement between the parties as to the events preceding the liquidation of appellee's margin account. However, the findings of fact of the trial court are supported by the evidence and are, therefore, binding upon this Court. Princess Hotels International v. Hamilton, 326 Pa.Super. 226, 231, 473 A.2d 1064, 1067 (1984); Delahanty v. First Pennsylvania Bank, N.A., 318 Pa.Super. 90, 113, 464 A.2d 1243, 1255 (1983).

      . It appears from the record that Dr. Perelle actually held only 4,000 shares of Mohawk Data Sciences on October 20, 1978.

      . The trial court noted subsequently in its opinion that Dr. Perelle also authorized the sale, on October 25, 1978, of 1,000 shares of Mohawk Data Sciences for the sum of $8,150.26.

      . See Trial Court’s Finding of Fact 17(c).

      . See Notes of Testimony at 11.2:

      . Section 380 of the Restatement (Second) of Contracts provides in relevant part:
      § 380. Loss of Power of Avoidance by Affirmance (1) The power of a party to avoid a contract for incapacity, duress, undue influence or abuse of a fiduciary relation is lost if, after the circumstances that made the contract voidable have ceased to exist, he manifests to the other party his intention to affirm it or acts with respect to anything that he has received in a manner inconsistent with disaffirmance.
      Section 381 of the Restatement (Second) of Contracts provides in relevant part:
      § 381. Loss of Power of Avoidance by Delay (1) The power of a party to avoid a contract for incapacity, duress, undue influence or abuse of a fiduciary relation is lost if, after the circumstances that made it voidable have ceased to exist, he does not within a reasonable time manifest to the other party his intention to avoid it.

      . Merrill Lynch argues that the trial court erred in finding the "shingle theory” of broker liability applicable to Merrill Lynch under the circumstances of this case. See Charles Hughes & Co. v. Securities and Exchange Commission, 139 F.2d 434 (2nd 1943), cert. denied, 321 U.S. 786, 64 S.Ct. 781, 88 L.Ed. 1077 (1944). However, as noted by appellee, while the court discussed the shingle theory in its opinion, it did not apply the theory to this case. We need not, therefore, decide whether, under the circumstances of this case, the shingle theory of responsibility is applicable to Merrill Lynch as a securities broker-dealer.

      . A non-discretionary account is an account in which the customer rather than the broker determines which purchases and sales to make. See Mullis v. Merrill Lynch, Pierce, Fenner & Smith, Inc., 492 F.Supp. 1345, 1351 n. 6 (D.Nev.1980); Leib v. Merrill Lynch, Pierce, Fenner & Smith, Inc., 461 F.Supp. 951, 952 (E.D.Mich.1978).

      . Dr. Perelle testified under cross-examination that he thought that notices routinely mailed to him by Merrill Lynch arrived approximately one or two days after they were sent. See N.T. 38.2-43.3.

      . The market did, in fact, begin to rise after October 30, 1978.

      . Section 8335 of the Judical Code provides:

      . Appellee argued that the correct measure of damages was the difference between the market price at the time of trial and the liquidation price, the sum of $36,150.00. Appellant argued that the court incorrectly found four days to be a "reasonable time” under Section 8335 of the Judicial Code, 42 Pa.C.S. § 8335.

      . The trial court found that, "[although the contract provides that it is to be governed by New York [l]aw, the counterclaim alleging breach of fiduciary duty is governed by the law of the forum.” Lower Court Opinion of February 4, 1983 (docketed February 24) at 18. Both parties argue Pennsylvania law in their briefs to this Court. See Brief for Appellant at 18; Brief for Appellee at 25. I find it unnecessary to consider whether the trial court applied'the proper state’s law because my research has disclosed no New York State case that stands for the proposition that appellee advances. But see note 3 infra.

      . The only claim presented by appellee at trial was a breach of fiduciary duty claim. Brief for Appellee at 17.

      . But see Gordon v. duPont Glore Forgan Inc., 487 F.2d 1260, 1261-62 (5th Cir.1973) (reverses trial court’s finding that plaintiffs were entitled to recover for defendant’s breach of fiduciary duty to notify them that their account was undermargined because they knew of their broker's breach and took no action) (Florida law), cert. denied, 417 U.S. 946, 94 S.Ct. 3071, 41 L.Ed.2d 666 (1974); Cauble v. Mahon Nugent & Co., 594 F.Supp. 985, 992-93 (S.D.N.Y.1984) (under New York law, broker has fiduciary duty to use reasonable efforts to give its customer information relevant to affairs entrusted to it; suggesting, on defendants' motion for summary judgment, that a margin account cannot be liquidated without authorization or notice).


source: Caselaw Access Project

author: OLSZEWSKI, Judge:

license: Public Domain

text:
    514 A.2d 566
    Marie REIMER, Appellant, v. Paul S. TIEN, Ind. and in the Capacity as President of the American University of the Caribbean, and American University of the Caribbean, Appellees.
    Superior Court of Pennsylvania.
    Argued June 24, 1986.
    Filed Aug. 20, 1986.

      Catherine Miraglia-Lecky, Norristown, for appellant.
    Olena S. Hendler, Jenkintown, for appellees.
    Before OLSZEWSKI, HOFFMAN and ROBERTS, JJ.
   OLSZEWSKI, Judge:

This appeal comes to us as the result of the judgment of the trial court granting a compulsory non-suit, on all counts, as to appellee Paul S. Tien (“Tien”), a directed verdict as to appellee American University of the Caribbean (“AUC”) on three counts, and from the jury award of $3,500 against appellee AUC.

The pertinent facts are as follows. After reading an advertisement in a local paper, appellant contacted AUC for information regarding its medical program. At the appropriate time she applied for admission and was subsequently accepted. In conjunction with this, she paid all applicable fee requirements. In addition, she paid her tuition and room fee. Through this time, appellant continued contact with appellee AUC’s Miami office, frequently to gain additional information.

In September, appellant traveled to Montserrat to begin medical school. She remained only eleven days. During this time, she found the conditions most dissatisfying. Many of her experiences became the basis of her complaint. She then left.

After arriving home, appellant made several attempts to contact the school to receive her refund. These attempts proved fruitless. As a result, a lawsuit was filed. At this time, AUC stipulated that appellant was due $2,200 in refunds. Appellees were granted a compulsory non-suit in favor of appellee Tien and a directed verdict on counts II, III, and IV at the close of appellant’s case. The jury was allowed to deliberate only as to count I, breach of contract. A verdict was entered in appellant’s favor for $3,500. Post-trial motions were filed and later denied. This appeal followed.

I

We now begin with appellant’s contention that the trial court improperly granted a compulsory non-suit as to appellee Tien.

In West Mountain Poultry Co. v. Gress, 309 Pa.Super. 361, 455 A.2d 651 (1982), the standard for a compulsory non-suit was enunciated.

“A judgment of non-suit can be entered only in clear cases and plaintiff must be given the benefit of all evidence favorable to him together with all reasonable inferences of facts arising therefrom, and any conflict with the evidence must be resolved in his favor.” Engel v. Spino, 425 Pa. 254, 256, 228 A.2d 745, 746 (1961 [1967]). When a compulsory non-suit is entered, “lack of evidence to sustain the action must be so clear that it admits no room for fair and reasonable disagreement.” McAuliffe v. Constantine, 228 Pa.Superior Ct. 52, 54, 323 A.2d 158, 159 (1974). “When an issue of credibility is raised on motion for compulsory non-suit, it is not within the province of the trial judge to determine the believability of the plaintiffs testimony.” Scott v. Purcell, 490 Pa. 109, 113, 415 A.2d 56, 58 (1980). “Unless there are no conflicting inferences to be drawn it is far better to hear the defense so that the appellate court may have the benefit of findings of fact and conclusions of law.” Shechter v. Shechter, 366 Pa. 30, 32-33, 76 A.2d 753, 755 (1950). Finally, a non-suit may only be entered where “the facts and circumstances lead unerringly to but one conclusion.” Paul v. Hess Bros., 226 Pa.Superior Ct. 92, 94-95, 312 A.2d 65, 66 (1973).

After a conscientious review of the record, we are compelled to agree with the trial court’s decision. Appellant clearly did not make out a cause of action against appellee Tien. The worst that can be said about Tien was that he was not available to speak with appellant when she so desired and was remiss in answering her letters. This lack of communication does not amount to breach of contract, fraudulent misrepresentation, intentional infliction of emotional distress or negligent infliction of emotional distress. Indeed, appellant admitted on cross-examination that Tien did not personally harass her, verbally abuse her, nor physically attack her. (R.R. 223a). In light of the evidence produced, compulsory non-suit was properly granted according to existing law.

II.

Appellant next argues that the trial court improperly granted a directed verdict on count II, fraudulent misrepresentation; count III, intentional infliction of emotional distress; and count IV, negligent infliction of emotional distress. Although the law to be applied is identical in each count, we shall deal with each charge separately.

A judge may direct a verdict for a plaintiff only if there are no facts upon which a jury could properly find for the defendant. Highland Tank and Mfg. Co. v. Duerr, 423 Pa. 487, 225 A.2d 83 (1966). If there is a conflict of evidence, and the conflict provides a basis upon which a jury could possibly render a verdict for the party against whom the directed verdict is sought, the case must go to the jury. Cox v. Equitable Gas Co., 227 Pa.Super. 153, 324 A.2d 516 (1974). However, the conflict must be real. If there is no more than a scintilla of evidence on the side ruled against, and a jury could not base its verdict upon that evidence, a directed verdict may still be proper.

Krupa by Krupa v. Williams, 316 Pa.Super. 408, 463 A.2d 429 (1983).

Count II. Fraudulent Misrepresentation
The elements of a fraud and deceit action ... may be said to consist of: 1) a false representation of an existing fact, Fidurski v. Hammill, 328 Pa. 1, 195 A. 3 (1937); 2) if the misrepresentation is innocently made, then it is actionable only if it relates to a matter material to the transaction involved; while, if the misrepresentation is knowingly made or involves a non-privileged failure to disclose, materiality is not a requisite to the action, DeJoseph v. Zambelli, 392 Pa. 24, 139 A.2d 644, affirming 11 D. & C.2d 447 (1958); 3) scienter, which may be either actual knowledge of the truth or falsity of the representation, reckless ignorance of the falsity of the matter, or mere false information where a duty to know is imposed on a person by reason of special circumstances, 16 P.L.E., Fraud Sec. 7; 4) reliance, which must be justifiable, so that common prudence or diligence could not have ascertained the truth; and, 5) damage to the person relying thereon.

Shane v. Hoffman, 227 Pa.Super. 176, 324 A.2d 532 (1974).

In suing for fraudulent misrepresentations, appellant alleged that appellees knowingly misrepresented to her that drugs were not a problem, when the truth was that drugs and alcohol were openly pushed; that the school had high standards when the truth was that it allowed her to be harassed and security was lax; that student orientation would be September 14 when it was held September 16 instead; that she would be given a single room; and that class size was approximately thirty students yet while knowing that most classes contained two hundred students. We have studiously reviewed each of these allegations and find them meritless. The directed verdict, then, must stand.

Appellant presented no evidence to substantiate her drug and alcohol claim. Not only did she not prove that drugs and alcohol were rampant and openly used, but she did not prove scienter on appellee’s part nor reliance and damage on her part. Next, a two-day delay in student orientation is not a false representation óf a material fact and clearly is not a fact relied on when picking a school. In addition, we can ascertain no damage to appellant. Since appellant received the single room, albeit with some difficulty, represented as available, she cannot use it as the basis for misrepresentation. Last is the “misrepresentation” as to class size. Testimony revealed that this was a misunderstanding, lab classes contained approximately thirty students while lectures were closer to two hundred. (R.R. 381-382.). Since appellant received brochures of the school and she noted that the classrooms “showed a lot of chairs, like an instruction room,” even if she had been told that class size was thirty students, she should have realized the discrepancy. It is not enough for fraudulent misrepresentation.

Count III. Intentional Infliction of Emotional Distress

According to the Restatement (Second) of Torts Sec. 46 (1965), liability for this tort is allowed against “one who by extreme and outrageous conduct intentionally or recklessly causes severe emotional distress to another____” It is clear that the crucial element is extreme and outrageous conduct. Dawson v. Zayre Dept. Stores, 346 Pa.Super. 357, 499 A.2d 648 (1985); Jones v. Nissenbaum Rudolph & Seidner, 244 Pa.Super. 377, 368 A.2d 770 (1976). Further, it is for the court to determine, in the first instance, whether the actor’s conduct can reasonably be regarded as so extreme and outrageous as to permit recovery. Dawson, supra; Restatement (Second) of Torts Sec. 46, comment (h) (1965).

Conduct which does not meet the requisites for liability is described in comment (d) of the Restatement (Second) of Torts Sec. 46:

The liability clearly does not extend to mere insults, indignities, threats, annoyances, petty oppressions, or other trivialties. The rough edges of our society are still in need of a good deal of filing down, and in the meantime plaintiffs must necessarily be expected and required to be hardened to a certain amount of rough language, and to occasional acts that are definitely inconsiderate and unkind. There is no occasion for the law to intervene in every case where some one’s feelings are hurt. There must still be freedom to express an unflattering opinion, and some safety valve must be left through which irascible tempers may blow off relatively harmless steam.

The conduct recited in appellant’s complaint does not meet the burden of extreme and outrageous. Banging on her room door and being given pornography are surely annoying and possibly even insulting, but annoying and insulting are not extreme and outrageous. A large class may be inconvenient, but inconvenient is not extreme and outrageous. Absent a showing of extreme and outrageous conduct, the directed verdict will be affirmed.

Count IV. Negligent Infliction of Emotional Distress

The Restatement (Second) Torts, Sec. 436 provides:

Sec. 436. Physical Harm Resulting from Emotional Disturbance
(1) If the actor’s conduct is negligent as violating a duty of care designed to protect another from a fright or other emotional disturbance which the actor should recognize as involving an unreasonable risk of bodily harm, the fact that the harm results solely through the internal operation of the fright or other emotional disturbance does not protect the actor from liability.
(2) If the actor’s conduct is negligent as creating an unreasonable risk of causing bodily harm to another otherwise than by subjecting him to fright, shock, or other similar and immediate emotional disturbance, the fact that such harm results solely from the internal operation of fright or other emotional disturbance does not protect the actor from liability.
(3) The rule stated in Subsection (2) applies where the bodily harm to the other results from his shock or fright at harm or peril to a member of his immediate family occuring in his presence.

Restatement (Second) Torts, Sec. 436A states:

Sec. 436A. Negligence Resulting in Emotional Disturbance Alone
If the actor’s conduct is negligent as creating an unreasonable risk of causing either bodily harm or emotional disturbance to another, and it results in such emotional disturbance alone, without bodily harm or other compensable damage, the actor is not liable for such emotional disturbance.
Comment A to the Section explains that “Under the rule stated in this Section, the negligent actor is not liable when his conduct results in the emotional disturbance alone, without the bodily harm or other compensable damage.”

Banyas v. Lower Bucks Hospital, 293 Pa.Super. 122, 437 A.2d 1236 (1981); see also, Sinn v. Burd, 486 Pa. 146, 404 A.2d 672 (1979).

The facts set out by appellant do not suffice to uphold a cause of action in this instance. Appellant’s list of grievances which make up count IV does not amount to a violation of any duties on the part of appellees. In addition, appellant did not sufficiently prove bodily injury as a result of any negligence by appellees. Without this proof, we are compelled to sustain the directed verdict. Sinn, supra; Banyas, supra; see also, Catheart v. Keene Industrial Association, 324 Pa.Super. 123, 471 A.2d 493 (1984).

III.

Our third point of review concerns the actions of the judge during the trial. Appellant alleges that the judge made improper remarks, was biased in appellees’ behalf and “cross-examined” appellant’s witnesses. It is further alleged, as proof of the judge’s prejudice against appellant, that he overruled only 14% of appellees’ objections but 70% of appellant’s objections. Because of this, appellant asserts she is entitled to a new trial.

With respect to the judge’s “cross-examination” of appellant’s witnesses, we find no error. A reading of the trial transcript reveals that the judge’s questions were not biased or prejudicial but were intended to clarify points and gain additional information for the jury. A multitude of cases have held that questions by the judge are entirely proper. See, Commonwealth v. Hammer, 508 Pa. 88, 494 A.2d 1054 (1985); Potochnik v. Pittsburgh Railways Co., 379 Pa. 154, 108 A.2d 733 (1954); Pratt v. Stein, 298 Pa.Super. 92, 444 A.2d 674 (1982); Commonwealth v. Folino, 293 Pa.Super. 347, 439 A.2d 145 (1981); Commonwealth v. Hodge, 246 Pa.Super. 71, 369 A.2d 815 (1977); Commonwealth v. McMillion, 215 Pa.Super. 306, 265 A.2d 375 (1969).

Appellant cites many instances of improper remarks by the judge. A careful review of the trial transcript shows that these comments, taken in context, do not amount to bias and prejudice. We therefore decline appellant’s requested remedy and affirm the lower court.

IV.

Appellant’s next issue alleges improper evidentiary rulings by the trial judge in the areas of hearsay and relevance which resulted in prejudice to Marie Reimer.

Hearsay

Our Court recently set forth the basic rules of hearsay in Spotts v. Reidell, 345 Pa.Super. 37, 497 A.2d 630 (1985).

It is well-established that an out-of-court declaration constitutes hearsay if it is offered for the purpose of proving the truth of the matter contained in the declaration. Carney v. Pennsylvania Railroad Co., 428 Pa. 489, 240 A.2d 71 (1968); Klischer v. Nationwide Life Insurance Co., 281 Pa.Super. 292, 422 A.2d 175 (1980). See Fed.R.Evid. 801(c). However, an out-of-court statement is not hearsay when it is introduced purely for the purpose of establishing that the statement was made and not to establish its truth. See, e.g. Baldino v. Castagna, 308 Pa.Super. 506, 454 A.2d 1012 (1982); Commonwealth v. Tselepis, 198 Pa.Super. 449, 181 A.2d 710 (1962); Wagner v. Wagner, 158 Pa.Super. 93, 43 A.2d 912 (1945). Likewise, an out-of-court statement is not hearsay if it is offered to explain a course of conduct. Commonwealth v. Cruz, 489 Pa. 559, 414 A.2d 1032 (1980), or to reflect the declarant’s state of mind. Commonwealth v. Wright, 455 Pa. 480, 317 A.2d 271 (1974). See also, McCormick, On Evidence, Sec. 294-96 (3rd Ed. 1984).

The complained-of statements excluded on the grounds of hearsay primarily concerned remarks made to appellant by other people at AUC. It was argued then, as now, that these remarks were not offered as the truth but only to show that they were made. We cannot agree. Appellant’s claim against appellee AUC pertained in part to the conditions and action of AUC and its students. Many of the statements excluded directly related to this issue. Thus, comments made to appellant about drugs on campus and remarks pertaining to other students were offered to prove that appellant’s claims were true. The testimony was therefore offered to be the truth and was properly excluded by the trial judge.

Relevancy
Pennsylvania finds evidence relevant “when it tends to establish facts in issue,” Leroi v. Civil Service Commission of City of Philadelphia, 382 A.2d 1260, 34 Pa. Cmwlth. 190 (1978), or when it “in some degree advances the inquiry and thus has probative value,” Bowers v. Garfield, 382 F.Supp. 503, aff. 503 F.2d 1398 (Pa.1974).

Whistler Sportswear, Inc. v. Rullo, 289 Pa.Super. 230, 433 A.2d 40 (1981).

(T)he fundamental consideration in determining the admissibility of evidence is whether the proffered evidence is relevant to the fact sought to be proved. Evidence is relevant if it tends to make a fact at issue more or less probable.

Martin v. Soblotney, 502 Pa. 418, 466 A.2d 1022 (1983); See Gregg v. Fisher, 377 Pa. 445, 105 A.2d 105 (1954).

Relevant evidence is nonetheless excluded “if the probative value is substantially outweighed by the danger of unfair prejudice or confusion,” Carter v. Hewitt, 617 F.2d 961 (Pa.1980). “Prejudice,” of course, does not mean “detrimental to a party’s case” but rather “an undue tendency to suggest decision on an improper basis.”

Whistler Sportswear, Inc., supra.

In addition, Lewis v. Mellor, 259 Pa.Super. 509, 393 A.2d 941 (1978) states:

... the fact that testimony is relevant is not by itself enough to show that its exclusion was error.
The general rule is that “questions concerned with the admission or exclusion of evidence are within the sound discretion of the trial court and will be reversed on appeal only where a clear abuse of discretion exists.” Westerman v. Stout, 232 Pa.Super. 195, 202, 335 A.2d 741, 745 (1975); Patrick F. Dalton Company v. Trans-American Freight Lines, Inc., 219 Pa.Super. 223, 280 A.2d 635 (1971); Cartmel v. Williams, 207 Pa.Super. 144, 215 A.2d 282 (1965); Wolfe v. Pickell, 204 Pa.Super. 541, 205 A.2d 634 (1964). In exercising this discretion, the trial judge may refuse to admit evidence on the grounds that it may “confuse, mislead or prejudice the jury.” (citations omitted).

Appellant’s first complaint in this relevancy issue is that the court should have allowed evidence relating to attorney’s fees in her attempt to collect the tuition refund. Since it was admitted by appellees that appellant was entitled to a refund, appellant argues that attorney fees were compensatory, incidental and/or consequential damages.

We do not agree that the evidence regarding attorney fees was probative to any material issue. Additionally, appellant was not entitled to attorney fees. See Becker, et ux. v. Borough of Schuylkill Haven, 200 Pa.Super. 305, 189 A.2d 764; 42 Pa.C.S.A. Sec. 2503. Therefore, the testimony was properly excluded as irrelevant.

Next, we discuss appellant’s contentions that certain evidence which was admitted was irrelevant and such evidence was thus prejudicial. Specifically, appellant cites the evidence relating to Howard Lantner, a student list, and the testimony of Patricia Litwin regarding laboratory class size and water temperature at AUC. Again, we find the judge’s ruling on relevancy was entirely proper.

With respect to the testimony of Patricia Litwin, we note that a portion of appellant’s claim for breach of contract dealt with a too large class and unsuitable hot water. Since appellant introduced testimony as to what Ms. Litwin told her about the class size and water temperature, appellees were proper in questioning Ms. Litwin on these same issues. Appellant’s testimony as to class size also allowed appellees to introduce a class list. The time of the compilation of the list was fully explored and would go to weight, not relevance.

Furthermore, appellant charged that Howard Lantner was a student at AUC and participated in the harassment about which she now complains. The evidence offered was relevant not only to undermine appellant’s assessment and credibility of Howard Lantner but also to show the quality of the school was not as she described. This reasoning was expressed by the trial court in conjunction with its overruling appellant’s objections and will not be overturned at this point. We find no abuse in the judge’s decision.

y.

We now address appellant’s contention that the trial court’s jury instructions were erroneous, misleading, confusing and prejudicial. This issue is three-pronged: appellant’s charges which were refused; appellees’ charges which were accepted; and instructions by the trial judge. For the following reasons, we decline to find error.

It is well settled in our Commonwealth that when the propriety of the jury instruction of the trial court is at issue those instructions must be viewed in toto to determine if any error has been committed. Unless the charge as a whole can be demonstrated to have caused prejudicial error, we will not reverse for isolated inaccuracies.

Riddle Memorial Hospital v. Dohan, 504 Pa. 571, 475 A.2d 1314 (1984); McCay v. Philadelphia Electric Co., 447 Pa. 490, 291 A.2d 759 (1972); Vanic v. Ragni, 435 Pa. 26, 254 A.2d 618 (1969).

In reviewing a trial judge’s charge, the proper test is not whether certain portions taken out of context appear erroneous. We look to the charge in its entirety, against the background of the evidence in the particular case, to determine whether or not error was committed and whether that error was prejudicial to the complaining party.

Reilly by Reilly v. Southeastern Pa. Transp., 507 Pa. 204, 489 A.2d 1291 (1985); Hrivnak v. Perrone, 472 Pa. 348, 372 A.2d 730 (1977); McCay v. Philadelphia Electric Co., 447 Pa. 490, 291 A.2d 759 (1972); Incollingo v. Ewing, 444 Pa. 263, 282 A.2d 206 (1971); Whitner v. Lojeski, 437 Pa. 448, 263 A.2d 889 (1970).

Furthermore, “(a) judgment is seldom reversed for error in the charge unless that error is the inclusion of ‘incorrect and misleading statements as to a material fact/ ” Whistler Sportswear, Inc., supra. With this in mind, we turn to appellant’s specific complaints.

Appellant’s Charges

The judge first refused appellant’s charge pertaining to incidental costs, which she believed she was entitled to recover. These included the costs of transportation to and from Mexico to learn Spanish, the cost to learn Spanish, and additional costs of living in Mexico. Connected to this was the modification of another damage instruction limiting recovery to $6,660.

On these issues, the judge instructed the jury as follows:

The measure of damages for a breach of a written contract is compensation for the loss sustained by reason of the breach. The damages recoverable by the plaintiff in this case and the items that go to make up each, of which I should discuss separately, are the following: A, all monies paid by plaintiff to defendant for fees, tuition, room and board, purchase of books and other materials, purchase of food, et cetera; all monies paid by plaintiff for transportation to and from Montserrat, including but not limited to air fare, excess baggage charges, taxi fares, et cetera; all monies paid by plaintiff for miscellaneous expenses, including but not limited to, additional taxi fares, telephone charges, costs of mailing, postage and telegrams, room and board, et cetera; all monies expended necessarily by plaintiff if you find they were incurred as a result of defendant’s breach of contract and are naturally and probably damages resulting from said breach.
On the other hand, let’s flip the coin. If the plaintiff breaches the contract, then these damages do not necessarily flow from her breach of contract and are not compensable to her, then we necessarily get back to those refund items of the tuition and a portion of the room deposit as being the only things compensable by reason of the notice to the university of her withdrawal. None of these other expenses are in any way involved if she is the breaching party.
All monies paid by the plaintiff, if she had the contract breached by the defendant, for entry and exit fees to Montserrat, passport fees and student fees. In the event that you find in favor of the plaintiff, you should add the sums of damage together and return your verdict in a single lump sum, but no greater than six six six 0, which was demanded in the complaint.

As the judge noted, appellant requested $6,660 in damages in her complaint. The complaint did not allege the incidental costs she now wants. To recover costs for a breach of contract, compensation is given only for those injuries that are a direct and forseeable result of the breach. See The Dimitros Chandris, 43 F.Supp. 829 (1942); Emerman v. Baldwin, 186 Pa.Super. 561, 142 A.2d 440 (1958). See also, Subcommittee Note to Proposed Jury Instructions, 6.01K Incidental Costs (1973). The damages appellant requested, and were rejected in the instruction, do not fall within this category. As set out, the judge’s instructions sufficiently apprise the jury of their duty as to the measure of the damages.

Appellees’ Charge

Appellant also objects to the acceptance of appellees’ charge that reads:

You may not find the school liable merely because the materials contain opinions or flattering statements unless they were false and misleading and Plaintiff had a right to rely on them. You must also inquire as to whether plaintiff sufficiently was prepared (physically and emotionally) for Medical School and the environment on a Caribbean Island.

It is asserted that this is not an accurate statement of the law and was waived by appellees since it was not raised as a defense.

We do not agree with appellant. Appellant cannot claim a breach of contract based on statements in a brochure unless such statements were a material misrepresentation. See Berkebile v. Brantly Helicopter Corp., 462 Pa. 83, 337 A.2d 893 (1975). Misrepresentation must be distinguished from mere “puffing.” Berkebile, etc., supra. An instruction to this effect was proper.

Instructions Given

Lastly, appellant cites numerous excerpts from the judge’s instructions and claims they are inaccurate and/or misleading, confusing, and prejudicial. We have carefully reviewed the entire jury charge and fail to find support for appellant’s averments. The charge as a whole does not demonstrate prejudice. We therefore will not reverse.

VI.

We now come to appellant’s last allegation of error, that the verdict was against the law, the evidence and the weight of the evidence. It is submitted that since the jury returned a verdict in excess of the amount admittedly owed ($2,200), they had determined that appellees had breached the contract and therefore should have returned a verdict for the entire amount of the loss, $6,660.

The law surrounding this issue is well-settled and was comprehensively set out by this Court in Deitrick v. Karnes, 329 Pa.Super. 372, 478 A.2d 835 (1984).

The amount of the verdict is an issue for the jury; it will rarely be held inadequate on appeal. Our Pennsylvania Supreme Court, in Elza v. Chovan, 396 Pa. 112, 152 A.2d 238 (1959), commented on the scope of the jury’s authority:
It is the province of the jury to assess the worth of the testimony and to accept or reject the estimates given by witnesses. If the verdict bears a reasonable resemblance to the proven damages, it is not the function of the court to substitute its judgment for the jury’s. The mere fact that a verdict is low does not mean that it is inadequate, (citations omitted). Id., 396 Pa. at 115, 152 A.2d at 240.

This Court in Morris v. Peckyno, 202 Pa.Super. 490, 198 A.2d 396 (1964), quoting 15 Am.Jur., Damages, Sec. 231, refined the standard for reviewing an allegedly inadequate verdict:

As a rule, a verdict in an action for a personal tort may be set aside as inadequate when, and only when, it is so inadequate as to indicate passion, prejudice, partiality, or corruption, or that the jury disregarded the instructions of the court, or in some instances, where there was a vital misapprehension or mistake on the part of the jury, or where it clearly appears from uncontradicted evidence that the amount of the verdict bears no reasonable relation to the loss suffered by the plaintiff, or, according to some of the cases, where, otherwise, there has been an evidence failure of justice to the plaintiff, or where the award is so inadequate that it should not be permitted to stand. Generally, a verdict will not be disturbed merely on account of the smallness of the damages awarded or because the reviewing court would have awarded more. Id., 202 Pa.Superior Ct. at 492, 198 A.2d at 397.

Stated more familiarly, a jury verdict will not be set aside in the absence of clear error of law or palpable abuse of discretion. Gagliano v. Ditzler, 437 Pa. 230, 263 A.2d 319 (1970); Rhodes v. Hollender, 260 Pa.Super. 290, 393 A.2d 1268 (1978); Gottlob v. Hillegas, 195 Pa.Super. 453, 171 A.2d 868 (1961). Finally, we note that the Elza court set the standard of review in more graphic terms when it propounded that reversal on ground of inadequacy of the

verdict is appropriate only where “the injustice of the verdict (stands) forth like a beacon.” Elza v. Chovan, 396 Pa. at 118, 152 A.2d at 241.

Mere disparity between the amount of the verdict and out-of-pocket expenses is not in itself sufficient grounds to disturb a verdict. Kravinsky v. Glover, 263 Pa.Super. 8, 396 A.2d 1349 (1979).

A meticulous inspection of the evidence requires us to deny appellant’s request. The jury award reflects their determinations as to credibility and worth of testimony. We deem it entirely proper that the award shows that the jury chose to reject the majority of appellant’s claims.

In admitting appellant to its school, appellees contracted to provide a medical education, as well as certain necessities that could be expected at any learning institution. The record is replete with facts that negate appellant’s contention that appellees breached this contract. To begin, there was evidence of the quality of education, two of appellant’s friends during her brief time at AUC have become successfully placed. All the basic courses were taught; although appellant complains that one professor taught two courses, she offers no proof that any of the professors were unqualified. This is hardly a breach of contract.

Dealing directly with the quality of education, appellant complained about cancelling and rescheduling classes. She alleged that the first five days were disorganized. This looks to be appellant’s most substantive argument. A closer look discloses it to be meritless. Orientation was postponed for two days due to the difficulty approximately one-third of the students had in arriving. Appellant admitted this (R.R. 112a). Appellant also testified that some of the classes were held and roll was established. (R.R. 114a). In addition, many of the classes were rescheduled. (R.R. 417a). Appellant’s testimony concerning lack of seating, audio, and visual problems in the classrooms was extensively refuted. Testimony disclosed the use of microphones, the length of the blackboards, the number of seats and that the rooms were built so that there were no visual obstructions. (R.R. 412).

Appellant was also provided with the single room for which she contracted. She cannot, then, cite this as an instance of a breach. Hot water is the next allegation of a breach. While it would appear that hot water would be a part of the contract (as part of the living arrangements), it is not enough to be considered a breach. Testimony indicated that there was water that was hot enough for normal use, it just was not hot enough for appellant’s use.

Much of appellant’s complaints centered on the fact that _ she was harassed by other students and the security at the school was subpar. She makes reference to people pushing their way into her room and calling to her from below her window. The testimony belies these complaints. It is obvious that many of the instances were attempts by the others to be friendly. (See, R.R. 118a-120a; 129a-1341a). Her complaints about the guards were refuted by a witness appellant thought of as her friend at AUC. This testimony contradicted many of appellant complaints concerning drugs, harassment and lack of security. (R.R. 421-422; 424-426).

We are of the opinion that the jury award accurately reflects the testimony. Clearly, the jury executed its duties in assessing the worth and credibility of the witness. There is no glaring discrepancy between the testimony and verdict. We hesitate to invade the province of the jury in this situation. As such, we will uphold the verdict as being in line with the evidence and decline to award appellant a new trial.

Judgment affirmed.

      . Appellant’s brief also refers the Court to other miscellaneous evidentiary rulings that are allegedly erroneous. We have read the transcript and the pages cited by appellant and find no error. We decline to discuss each of these rulings individually as appellant did not do so herself.

      . The evidence offered was part of Howard Lantner’s AUC records consisting of letters from Howard Lantner and Hahnemann Medical School to AUC.

      . It appears that these words were inserted by the judge.


author: BECK, Judge:

text:
    514 A.2d 576
    Steven JONES, Appellant, v. The TRAVELERS INSURANCE COMPANY and Metro Transportation Company t/a Yellow Cab and Northwestern National Insurance Company.
    Superior Court of Pennsylvania.
    Argued March 6, 1986.
    Filed Aug. 22, 1986.

      T. Jonathan Hankin, Philadelphia, for appellant.
    A. Richard Feldman, Philadelphia, for appellee.
    Before CAVANAUGH, BECK, and JOHNSON, JJ.
   BECK, Judge:

Appellant Steven Jones filed a complaint in assumpsit against appellee Travelers Insurance Company (Travelers) alleging that on January 18, 1982 he had been injured in a collision with an uninsured motorist while riding as a passenger in a taxicab owned and operated by Metro Transportation Company, t/a Yellow Cab Company (“Yellow Cab”). Jones alleged that he was himself uninsured, and that he had filed claims for both basic loss benefits and uninsured motorist benefits with the Pennsylvania Assigned Claims Plan (“Plan”). This appeal involves only Jones’s claim for uninsured motorist benefits.

The complaint further stated that the Plan had designated Travelers as the servicing insurance company for payment of Jones’s basic loss benefits. In addition, the complaint asserted that Travelers denied Jones’s claim for uninsured motorist benefits.

In its answer to Jones’s complaint Travelers in New Matter denied liability for the uninsured motorist benefits and stated that if anyone was liable for such benefits it would be either Yellow Cab as a self-insurer, or Northwestern National Insurance Company (“Northwestern”), the company Travelers apparently understood to be Yellow Cab’s No-fault carrier.

Travelers then filed an additional defendant complaint against Northwestern and Yellow Cab, alleging that one of the two was solely liable for Jones’s uninsured motorist benefits. Yellow Cab and Northwestern filed a joint Answer and New Matter stating that 1) Guaranty National Insurance Company (“Guaranty”) was Yellow Cab’s insurer; and 2) that Yellow Cab had exercised its right to reject uninsured motorist coverage in its policy of insurance with Guaranty pursuant to Section (a) of the Uninsured Motorist Act. See 40 P.S. § 2000(a)(2).

The case proceeded to compulsory arbitration where the arbitrators found in favor of Jones and against Yellow Cab in the amount of $5,000.00, and found Travelers and Northwestern not liable. Yellow Cab then appealed the arbitrator’s decision to the trial court. Travelers filed a Motion for Judgment on the Pleadings. The court granted the motion and issued an order dismissing Travelers from the case and holding Yellow Cab solely liable to Jones for any uninsured motorist benefits to which he might be entitled. This appeal followed.

The sole issue before us is whether the trial court properly granted judgment on the pleadings after determining as a matter of law that Travelers, as the designated assigned claims carrier, was not liable for Jones’s uninsured motorist benefits.

Initially we note that to determine the propriety of awarding judgment on the pleadings, we must accept as true all well-pleaded statements of fact of the party against whom the motion is granted and consider against him only those facts that he specifically admits. West Penn Administration Inc. v. Pittsburgh National Bank, 289 Pa.Super. 460, 467, 433 A.2d 896, 900 (1981) (citations omitted); Zelik v. Daily News Publishing Co., 288 Pa.Super. 277, 431 A.2d 1046 (1981); see also Wojciechowski v. Murray, 345 Pa.Super. 138, 497 A.2d 1342 (1985). The parties cannot be deemed to admit either conclusions of law or unjustified inferences. Sinn v. Burd, 486 Pa. 146, 404 A.2d 672 (1979); West Penn, 289 Pa.Super. at 467, 433 A.2d at 900.

We will affirm the grant of such a motion only when the moving party’s right to succeed is certain and the case is so free from doubt that the trial would clearly be a fruitless exercise. Gallo v. J.C. Penney Casualty Insurance Co., 328 Pa.Super. 267, 476 A.2d 1322 (1984); see also Bata v. Central-Penn National Bank of Philadelphia, 423 Pa. 373, 224 A.2d 174 (1966), cert. denied, 386 U.S. 1007, 87 S.Ct. 1348, 18 L.Ed.2d 433 (1967); Wojciechowski, 345 Pa. Super, at 139, 497 A.2d at 1343. In conducting this inquiry, the court should confine its consideration to the pleadings and documents attached thereto. Gallo, 328 Pa.Super. at 270, 476 A.2d at 1324.

Under the standards governing motions for judgments on the pleadings the trial court in this case could consider only the factual allegations made in Jones’s complaint because these were the only facts specifically admitted by him. See, e.g., Aughenbaugh v. North American Refractories Co., 426 Pa. 211, 231 A.2d 173 (1967); Wojciechowski, 345 Pa.Super. at 139, 497 A.2d at 1343; Gallo, 328 Pa.Super. at 270, 476 A.2d at 1324; Zelik, 288 Pa.Super. at 278, 431 A.2d at 1047; Enoch v. Food Fair Stores, 232 Pa.Super. 1, 331 A.2d 912 (1974). Consequently, the court could not take into account the facts and conclusions of law asserted by Travelers in its Answer and New Matter or those contained in the pleadings exchanged between Travelers and the additional defendants.

Based on the allegations contained in appellant Jones’s complaint, we find that the trial court properly concluded as a matter of law that Travelers as an assignee under the Plan could not be made to bear the cost of Jones’s uninsured motorist benefits. The law governing the issue is not, as appellant claims, indeterminate. The complaint stated that Jones had been a passenger in a Yellow Cab when he was injured in the collision with the uninsured motorist. As we will elaborate upon below, when a common carrier such as Yellow Cab is involved in an uninsured motorist claim, the Uninsured Motorist Act and the regulations governing common carriers clearly dictate the following: either the common carrier’s insurer must provide uninsured motorist coverage, or, the common carrier itself must be presumed to have adopted the status of a self-insurer, thereby choosing to commit its own funds for the payment of benefits to its passengers injured at the hands of uninsured motorists. The imposition of liability on either entity would preclude an obligation on the part of the Assigned Claims Plan insurer to afford uninsured motorist benefits. See Fairbanks v. Travelers Insurance Co., 337 Pa.Super. 39, 46 n. 7; 486 A.2d 469, 472 n. 7 (1984).

The Uninsured Motorist Act is based on public policy considerations:

No motor vehicle liability policy of insurance insuring against loss resulting from liability imposed by law for bodily injury or death suffered by any person arising out of the ownership, maintenance or use of a motor vehicle shall be delivered or issued for delivery in this State with respect to any motor vehicle registered or principally garaged in this State, unless coverage is provided therein or supplemental thereto in limits for bodily injury or death ... for the protection of persons insured thereunder who are legally entitled to recover damages from owners or operators of uninsured motor vehicles because of bodily injury, sickness or disease, including death resulting therefrom____

40 P.S. § 2000(a) (emphasis added).

As our courts have often stated, the Act’s scope is broad and its purpose is remedial: “to afford financial recompense to persons who receive injuries ... solely through the negligence of motorists, who, because they are uninsured and not financially responsible cannot be made to satisfy a judgment.” Johnson v. Concord Mutual Insurance Co., 450 Pa. 614, 619, 300 A.2d 61, 64 (1973) (citation omitted); Patrick v. Cherokee Insurance Co., 354 Pa.Super. 427, 431, 512 A.2d 24, 26 (1986); see also Modesta, 503 Pa. at 437, 469 A.2d at 1019. In this way, the Act provides “monetary protection to that ever changing and tragically large group of persons who while lawfully using the highways themselves suffer grave injuries____” Johnson v. Concord, 450 Pa. at 619, 300 A.2d at 64 (citation omitted); Boyle v. State Farm Mutual Insurance Co., 310 Pa.Super. 10, 21, 456 A.2d 156, 162 (1983). Because of its public policy concerns, we must construe the Act liberally to enable it to achieve its purpose. Johnson v. Concord, 450 Pa. at 619, 300 A.2d at 64; Patrick, 312 A.2d at 26; Novoseller v. Royal Globe Insurance Co, 317 Pa.Super. 217, 463 A.2d 1163 (1983).

The Uninsured Motorist Act attempts to achieve its aims by specifically mandating uninsured motorist coverage in all “motor vehicle liability policies] of insurance.” 40 P.S. § 2000(a) (emphasis added). The Pennsylvania Supreme Court has expanded the expressed scope of the statute to include those owners of motor vehicles who under law are allowed to self-insure and therefore have no “policy of insurance.” Thus, a motor vehicle owner’s obligation to provide uninsured motorist benefits is not tied to the actual purchase of such coverage in an insurance policy. Modesta, 503 Pa. at 441, 469 A.2d at 1022. Despite its mandate of uninsured motorist coverage in all policies of insurance, the Uninsured Motorist Act allows common carriers like Yellow Cab to reject uninsured motorist coverage in conjunction with their policies in certain limited circumstances:

(2) An ... operator of any ... motor vehicle operated for the carriage of ... passengers for hire ... shall have the right to reject such coverage in writing, in which event, such coverage need not be provided____

40 P.S. § 2000(a)(2), construed in Johnson v. Concord, 450 Pa. at 614, 300 A.2d at 61; Patrick, 512 A.2d at 26-27.

The Uninsured Motorist Act therefore delineates three categories of common carriers: 1) those who like SEPTA are authorized to self-insure for all their liability needs; 2) those who accept uninsured motorist coverage in their policies of insurance and pay the premiums for it; and 3) those who reject uninsured motorist coverage in their insurance policies. Appellant Jones argues that when a common carrier rejects uninsured motorist coverage it is not obligated to provide the benefits required of all other common carriers. As a result, Jones maintains that Travelers should not be dismissed from the suit, because Jones will have no other source of uninsured motorist benefits if at trial Yellow Cab is shown to have rejected such coverage.

We cannot accept appellant’s interpretation of the Uninsured Motorist Act. The Act does not state that a common carrier that rejects uninsured motorist coverage is relieved of the responsibility borne by all other motor vehicle owners in Pennsylvania, whether insured or self-insured, of providing for uninsured motorist benefits. The statute merely provides that a common carrier need not purchase uninsured motorist coverage as part of its automobile liability policy; i.e. the common carrier may be self-insured.

The court in Modesta explained its extension of the obligations of the Uninsured Motorist Act to include self-insurers with the following:

[T]he sole purpose of self-insurance is to relieve self-insurers of the burden of expending their assets on insurance premiums; self-insurance is not a means by which self-insurers may avoid the claims of those individuals for whose protection the insurance laws have been enacted.

503 Pa. at 441, 469 A.2d at 1022. Similarly, we find that in light of the broad remedial purpose of the Uninsured Motorist Act, allowing a common carrier to reject uninsured motorist coverage is simply another way of saying that the carrier may choose to self-insure for uninsured motorist benefits:

Thus, while other motorists are required to expend funds to obtain coverage from a licensed insurance carrier, a common carrier is permitted to avoid paying insurance premiums to obtain such coverage. Coupled with this privilege, however, the common carrier must assume the burden of providing benefits from its own resources.

Patrick v. Cherokee Insurance Co., 11 Phila. 413, 417 (1984) (dicta), aff'd on other grounds, Patrick, 512 A.2d at 26-27.

Appellant’s argument that the statute’s rejection provisions deny uninsured motorist benefits to passengers injured in vehicles owned by common carriers implies a harsh and absurd result which we cannot allow. See 1 Pa.C.S.A. § 1922(1) construed in Fireman’s Fund Ins. Co. v. Nationwide Mutual Ins. Co., 317 Pa.Super. 497, 464 A.2d 431 (1983).

Common carriers presumably have a high incidence of uninsured motorist claims since their vehicles carry numerous passengers and those passengers are unlikely to maintain automobile insurance. See Modesta, 503 Pa. at 443 n. 5, 469 A.2d at 1023 n. 5 (“It is precisely because they do not own ... transportation that they must rely upon public transportation providers____”). The Legislature could hardly have intended to deprive so many people of the Act’s protection. Instead, given the expected frequency of uninsured motorist claims, the Legislature clearly intended to afford some latitude to common carriers by permitting them to self-insure rather than requiring them to bear the burden of insurance premiums.

The regulations governing common carriers support our conclusion that a passenger on a common carrier that has rejected uninsured motorist coverage could recover such benefits from the common carrier. The Public Utility Commission’s regulations require all common carriers to provide for the compensation of claims by individuals injured on or by the common carrier, either through insurance or self-insurance. 52 Pa.Code § 29.104(a)(d). The Commission made no exceptions to the rule requiring common carriers to maintain insurance coverage, regardless of whether or not the injuries in question gave rise to uninsured motorist claims:

No common carrier shall engage in intrastate commerce ... until there has been filed ... and approved ... a certificate of insurance ... to provide for the payment of any final judgment recovered against the insured for bodily injury ... to ... any person ... resulting from the operation, maintenance, or use of a motor vehicle in the insured certificated service.

52 Pa.Code § 29.104(a) (emphasis added).

We conclude that the trial court acted properly by granting Travelers’s Motion for Judgment on the Pleadings and by dismissing Jones’s complaint against Travelers. Accordingly, we affirm the trial court’s order.

      . See Section 103 of the Pennsylvania No-fault Motor Vehicle Insurance Act (“No-fault Act"), Act of July 19, 1974, P.L. 489, No. 176, 40 P.S. § 1009.103. The No-fault Act has been replaced by the Motor Vehicle Financial Responsibility Law, Act of February 12, 1984, P.L. 26, No. 11, as amended by Act of February 12, 1984, P.L. 53, No. 12, effective October 1, 1984.

      . See Uninsured Motorist Act, Act of August 14, 1963, P.L. 909, § 1, os amended by Act of December 19, 1968, P.L. 1254, No. 397, as amended, 40 P.S. § 2000.

      . See 40 P.S. § 1009.108.

      . Appellant framed the issue as follows:
      1. Whether the lower court’s order granting a Motion for Judgment on the Pleadings should be reversed where the indeterminate state of relevant Pennsylvania law precludes the showing that the moving party is entitled to judgment as a matter of law?

        2. Whether the lower court erred as a matter of law by holding that Appellee, Travelers Insurance Company, is not liable to appellant for uninsured motorist benefits?

      . Pa.R.C.P. No. 1034 phrases the standards for a motion for judgment on the pleadings as follows:
      (a) After the pleadings are closed, but within such time as not to delay the trial, any party may move for judgment on the pleadings.
      (b) The court shall enter such judgment or order as shall be proper on the pleadings.

      . Because appellant Jones was not required to and did not file a reply in response to Travelers’ Answer and New Matter, none of the allegations contained in Travelers’ Answer can be deemed admitted by Jones.

      . As a motor carrier Yellow Cab is under the aegis of the Public Utility Commission, which has authority to prescribe insurance requirements for motor carriers in order to protect the public. Johnson v. Yellow Cab Co., 456 Pa. 256, 317 A.2d 245 (1974), rev’d on other grounds, Modesta v. Septa, 503 Pa. 437, 469 A.2d 1019 (1983); see also Section 512 of the Public Utility Code, Act of July 1, 1978, P.L. 598, No. 116 § 1, 66 Pa.C.S.A. § 512; 52 Pa.Code. § 29.104.

      . The No-fault Act makes insurance mandatory for all owners of motor vehicles, but allows self-insurance subject to the approval of the insurance commissioner. See 40 P.S. § 1009.104(a)(b). Similarly, as the court in Modesta observed, the Legislature granted SEPTA the authority to self-insure. 503 Pa. at 441 n. 2, 469 A.2d at 1022 n. 2. As a common carrier Yellow Cab may also self-insure if it meets the criteria established by the Public Utility Commission. 52 Pa. Code § 29.104(d).

      . When the Legislature enacted the Uninsured Motorist Act in the 1960’s it could not have assumed that common carrier passengers could obtain uninsured motorist coverage through the Plan, which was not created until 1975 pursuant to the No-fault Act. Thus, as Travelers correctly observed in its brief on appeal, appellant Jones’s argument must assume that the Legislature intended to deny uninsured motorist benefits to common carrier passengers who did not have their own insurance policies. As noted above, we cannot accept such a conclusion.

      . A lawfully promulgated administrative regulation is as valid and binding as the statute under which it was adopted. Tubner v. State

        Farm Mutual Ins. Co., 496 Pa. 215, 219 n. 10, 436 A.2d 621, 623 n. 10 (1981).