text:
    557 A.2d 775
    Josephine L. SMITH and Allen H. Smith, Co-Executors of the Estate of Reynold B. Smith, Deceased, Appellants, v. COMMONWEALTH NATIONAL BANK, Appellee.
    Superior Court of Pennsylvania.
    Argued Dec. 7, 1988.
    Filed April 17, 1989.

      Allen H. Smith, Wrightsville, in propria persona.
    Geoffrey S. Shuff, York, for appellee.
    Before WIEAND, OLSZEWSKI and TAMILIA, JJ.
   WIEAND, Judge:

The issue in this appeal concerns the liability of an escrow holder for potential income lost on funds removed from an escrow account to pay taxes where the payee, Internal Revenue Service, lost the escrow holder’s check, thus requiring the issuance of a new, later check. The trial court held that there was no liability for failure to keep the funds invested where, as here, the escrow holder had removed the funds and drawn the check in full compliance with the terms of the escrow agreement. We agree and affirm.

As part of a transaction involving the purchase of stock by City Investing Company and Uarco Inc. from the Estate of Reynold B. Smith, deceased, the co-executors of the estate, Josephine L. Smith and Allen H. Smith, Esquire, placed in escrow the sum of one million, four hundred seventy thousand ($1,470,000) dollars to insure the payment of estate and other taxes owed by the estate. The escrow holder was Commonwealth National Bank (CNB), which agreed to keep the escrowed amount invested and to release only those amounts which were directed by the parties to the transaction. The agreement provided that the escrow holder “shall not be liable for any action taken or omitted by it in good faith and believed by it to be authorized hereby.”

On August 1, 1984, the parties to the transaction, including the executors of the decedent’s estate, requested CNB to release the sum of eight hundred twenty-one thousand, four hundred eighty-four and eighty-nine one-hundredths ($821,484.89) dollars for the payment of federal estate taxes. CNB thereupon liquidated escrowed investments and transferred $821,484.89 to a trust division account, on which it drew a cashier’s check in like amount to Internal Revenue Service (IRS). The check, payable within sixty (60) days, was delivered to Allen H. Smith, a co-executor, who caused the check to be mailed to IRS the same day. IRS acknowledged receipt of the check on August 2, 1984.

On or about November 5, 1984, the parties settled and closed the escrow account. A balance of $924,071.75 was paid to the co-executors of the decedent’s estate, who accepted the same “in full satisfaction and payment of monies due us upon termination of the escrow account.” At the same time, they released CNB “from every claim which we may have in connection with said account.” On December 13, 1984, CNB also delivered to the co-executors a check in the amount of $9,761.02, representing the final payment of income earned by the escrowed assets.

On or about March 26, 1985, CNB notified the co-executors that the check issued to IRS had not been presented for payment. At the request of IRS, a stop payment order was issued, and a new check was forwarded to IRS to replace the earlier, misplaced check. This check was subsequently presented and paid. IRS has made no claim for interest or penalty because of late payment.

The co-executors, Josephine and Allen Smith, thereafter commenced an action against CNB to recover interest on the amount of the unpaid IRS check from August 1, 1984 to July 11, 1985, the date on which the replacement check had been issued. They contended that they were entitled to recover this amount as damages (1) for CNB’s violation of its duty to keep the escrow funds invested; (2) for CNB’s negligence in failing to notify them that the IRS check had not been cashed after sixty (60) days; and (3) on equitable principles. Following the completion of discovery, CNB filed a motion for summary judgment, which the court granted. This appeal followed.

The escrow agreement contains language that it was to be governed by the laws of the State of New York. Choice of law provisions in contracts will generally be given effect. See, e.g.: Aluminum Co. of America v. Essex Group, Inc., 499 F.Supp. 53, 59 (W.D.Pa.1980); Admiral Corp. v. Cerullo Electric Supply Co., 32 F.R.D. 379, 381 (M.D.Pa.1961). See also: Restatement 2d, Conflict of Laws § 187; International Paper Co. v. Midvale-Heppenstall Co., 63 D. & C.2d 627 (1973). In New York, the relationship between an escrow holder and his principal is fiduciary in nature. See: Schuman v. Conforti, 41 A.D.2d 661, 340 N.Y.S.2d 686 (1973); Avalon East, Inc. v. Monaghan, 43 Misc.2d 401, 251 N.Y.S.2d 290 (1964). It has also been said that an escrow agent is a trustee and has a duty to act for any party with a beneficial interest in the trust property. See: Oppenheim v. Simon, 57 A.D.2d 1006, 394 N.Y.S.2d 500 (1977); Hetman v. Dixon, 71 Misc.2d 1057, 338 N.Y.S.2d 139 (1972); Avalon East, Inc. v. Monaghan, supra. To fulfill his fiduciary duty, an escrow agent must strictly comply with the instructions given to him. See: Grinblat v. Taubenblat, 107 A.D.2d 735, 484 N.Y.S.2d 96 (1985); Application of Akivis, 128 Misc.2d 965, 492 N.Y.S.2d 316 (1985). See generally: 30A C.J.S. Escrows § 8.

A motion for summary judgment is properly granted where there is no genuine issue of material fact and the moving party is entitled to judgment as a matter of law. French v. United Parcel Service, 377 Pa.Super. 366, 370, 547 A.2d 411, 414 (1988); Thorsen v. Iron and Glass Bank, 328 Pa.Super. 135, 140, 476 A.2d 928, 930 (1984). In the instant case, the facts are not in dispute, and our review confirms that the trial court properly determined that CNB was entitled to judgment as a matter of law.

The escrow agreement, although it required the escrow holder to invest the amount held, also provided that upon receipt of written instructions it “shall release such portion of the Escrowed Amount as it is directed to release to the person or persons specified in such instructions.” The agreement also provided that “[t]he Escrow Agent shall be obligated only for the performance of such duties as are specifically set forth in this Escrow Agreement.” The escrow holder in this case complied fully with its instructions. All funds were invested in accordance with instructions from the principals, and moneys were withdrawn only upon specific instructions. Indeed, the check for the amount withdrawn was delivered to one of the principals, who caused the same to be mailed to IRS.

Appellants contend that CNB violated its agreement by placing the withdrawn funds in a non-interest bearing account from which it drew the check to IRS. Although we now know with the benefit of hindsight that the check was not promptly negotiated by IRS, this is an inadequate basis for imposing liability on the bank. “Hindsight is not helpful in fixing responsibility.” Hazzard v. Chase National Bank of New York, 159 Misc. 57, 287 N.Y.S. 541, 559 (1936). It is an inadequate basis on which to hold a trustee to requirements different than those included in its agreement. Id. at 73, 287 N.Y.S. at 556. The funds were withdrawn from the escrow account and delivered in accordance with instructions delivered to the bank, and we will not read into the agreement a duty, not required by the express terms of the agreement, to keep withdrawn funds invested until a check therefor has been negotiated.

The decision of In re J & J Record Distributing Corp., 80 B.R. 53 (1987), aff'd, 84 B.R. 364 (E.D.Pa.1988), does not require a different result. In that case a law firm acting as counsel for a debtor-in-possession had placed the debtor’s funds in a non-interest bearing account in anticipation of making prompt distribution. After a four month period of inactivity, however, the law firm allowed the funds to remain uninvested. In imposing liability for breaching a duty as trustee on behalf of the debtor’s creditors to keep the funds invested, the court relied upon specific language in the Bankruptcy Code. Moreover, the instant case is factually distinguishable. In this case the escrow holder did not fail to keep escrow funds invested but, pursuant to the terms of its written agreement, kept the funds invested and released them only as directed by its principals.

For similar reasons we reject appellants’ argument that CNB breached a duty to inform the principals when the check was not presented for payment within sixty days after issuance. The check had been issued to IRS in payment of taxes owed by the estate in accordance with instructions given by the principals. The funds set aside for payment were subject to demand by IRS, which had a preferred right thereto. It was IRS, and not appellants, which was entitled to the funds. After the check had been issued it was IRS which held the ownership rights therein. If appellants wished to impose additional duties upon the bank, those duties should have been included in the escrow agreement. We will not impose additional duties not contained therein.

Finally, appellants are not entitled to recover on the basis of general principles of equity. In the first place, CNB was not unjustly enriched by the IRS delay in presentment. It did not earn and retain income earned on the principal while its check was outstanding. Secondly, as we have already observed, it was IRS and not appellants who held ownership rights in the check and who was entitled to demand the funds which had been withdrawn to pay estate taxes. Thus, if anyone would be entitled to claim interest, it would be IRS and not appellants. In fact, however, IRS has made no demand on appellants for interest; and appellants have sustained no loss.

Appellants’ reliance upon the decision of the New Jersey Superior Court in Santos v. First National State Bank of New Jersey, 186 N.J.Super. 52, 451 A.2d 401 (1982), is misplaced. There, at a customer's request, the bank had issued a cashier’s check made payable to the customer. The customer later claimed that the check had been lost and sued to have the bank replace the check or credit his account. The issue for the court involved the relief to which the customer was entitled. The court ordered the bank to issue a certificate of deposit in the customer’s name which was to be held as security for the bank’s liability on the check so long as it remained outstanding during the applicable six year period of the statute of limitations. As a matter of equity, the court also awarded pre-judgment interest. The court did not hold that equity required the payment of interest to the drawee of a check who failed to present the check for payment within a prescribed time.

Because we affirm the trial court's holding that appellants do not have a legally cognizable claim for interest against CNB, we find it unnecessary to determine the effect of the release which appellants signed and delivered to the bank upon termination of the escrow agreement. As a general rule, however, the matters embraced by a release include all those things which are clearly and specifically set forth and which can be ascertained from a reading of the document in question. Public Service Co. of Colorado v. Chase Manhattan Bank, N.A., 577 F.Supp. 92, 109 (S.D.N.Y.1983). See also: ACLI International Commodity Services, Inc. v. Banque Populaire Suisse, 609 F.Supp 434 (S.D.N.Y.1984); Sparler v. Firemans Insurance Co. of Newark, N.J., 360 Pa.Super. 597, 521 A.2d 433 (1987), appeal denied, 518 Pa. 613, 540 A.2d 535.

Because appellants are not entitled to the damages claimed in this action, the summary judgment entered by the trial court is affirmed.

      . If such had been the case, New York law holds that equity may intervene to require the bank to disgorge the interest. See, e.g.: Raab v. Bowery Savings Bank, 77 Misc.2d 1054, 355 N.Y.S.2d 748 (1974).


source: Caselaw Access Project

author: DEL SOLE, Judge:

license: Public Domain

text:
    557 A.2d 779
    James FREDERICK, Susan Coyle and Margaret A. Steighner, Appellants, v. AMERICAN HARDWARE SUPPLY COMPANY, Appellee.
    Superior Court of Pennsylvania.
    Argued Dec. 13, 1988.
    Filed April 20, 1989.
    Petition for Allowance of Appeal Denied Oct. 2, 1989

      William D. Kemper, Butler, for appellants.
    James B. Spears, Pittsburgh, for appellee.
    Before BROSKY, DEL SOLE and JOHNSON, JJ.
   DEL SOLE, Judge:

This is an appeal from an order granting partial summary judgment in favor of Appellee corporation, American Hardware Co. [American]. In count one of their complaint, Appellants, employees of American, claimed that American had breached an implied contract of employment by wrongfully discharging them. American filed a motion for summary judgment and the trial court granted the motion on this contract issue, and denied the motion as to the other counts in the complaint.

The trial court held that an earlier decision of the Unemployment Compensation referee denying compensation because of willful misconduct, which was later affirmed by the Board of Review and the Commonwealth Court, collaterally estopped the employees from asserting that they had been wrongfully discharged from their employment in a contract claim. The trial court stated; “The issue of willful misconduct would be a viable defense to the wrongful discharge cause of action under the alleged implied contract.” In effect, the trial court held that the the referee’s finding that the employees had been discharged for willful misconduct and were ineligible for unemployment compensation (43 P.S. § 802(e)) was equivalent to the finding that the employer had not wrongfully dismissed the employees, and therefore the issue which had already been adjudicated in a prior administrative proceeding was precluded by the doctrine of collateral estoppel.

Briefly, collateral estoppel requires: (1) that the issue or issues of fact determined in a prior action be the same as those appearing in a subsequent action, there being no necessity that the cause of actions be the same, (2) that the party against whom the defense is invoked is identical to or in privity to the party in the first action, (3) the previous judgment be final on the merits, and (4) the party had a full and fair chance to litigate on the merits. Shaffer v. Pullman Trailmobile, 368 Pa.Super. 199, 206, 533 A.2d 1023, 1026 (1987); Thompson v. Karastan Rug Mills, 228 Pa.Super. 260, 323 A.2d 341, 344 (1974). Furthermore, the application of the principle of collateral estoppel is not precluded merely because administrative proceedings are involved. When an administrative agency is acting in a judicial capacity and resolves disputed issues of fact properly before it which the parties have had an adequate opportunity to litigate, the court will not hesitate to apply res judicata principles. Philadelphia Elec. Co. v. Borough of Lansdale, 283 Pa.Super. 378, 424 A.2d 514, 521 (1981), citing, United States v. Utah Construction & Mining Co., 384 U.S. 394, 86 S.Ct. 1545, 16 L.Ed.2d 642 (1966).

For instance, it has been held that collateral estoppel principles apply to judgments from Workers Compensation boards in subsequent products liability and common law tort actions, Shaffer, supra, 533 A.2d at 1026, Nicklos v. Firestone Tire & Rubber Co., 346 F.Supp. 185 (E.D.Pa., 1972), and final judgments of the Public Utilities Commission collaterally estop plaintiffs from asserting the same issue in a subsequent suits for damages. City of Philadelphia v. Lindy, 71 Pa.Cmwlth. 515, 455 A.2d 278, 280 (1983).

Therefore, we will not preclude the use of collateral estoppel solely because the issue was previously litigated in Unemployment Compensation proceedings if the other elements of collateral estoppel are present, although Appellants have urged just such a course, relying on the holding in Philadelphia Transportation Co. v. Unemployment Compensation Board of Review, 186 Pa.Super. 142, 141 A.2d 410 (1958), and a similar line of cases involving a collective bargaining contract. Glen Alden Coal Co. v. Unemployment Compensation Board of Review, 168 Pa. Super. 534, 79 A.2d 796 (1951); Carl Colteryahn Dairy v. UCBR, 46 Pa.Cmwlth. 319, 407 A.2d 71 (1979). We believe such reliance is misplaced.

In Philadelphia Transportation, an employee was discharged from a bus-servicing company. Pursuant to the terms of his collective bargaining contract, his discharge was referred to arbitrators who ordered him reinstated without back pay. He then applied for unemployment compensation for the weeks he was off the job. The referee decided he was dismissed for willful misconduct and refused compensation to the employee, however the Board of Review reversed the referee on the basis of the arbitrator’s decision. This court held that the Board erred in ignoring the referee’s finding of willful misconduct and relying on the arbitrator’s decision.

Appellants conclude that Philadelphia Transportation stands for the principle that a finding of willful misconduct should not preclude that the employer violated its contractual obligations. However, Philadelphia Transportation holds that a finding of a contractual violation by the employer does not preclude a finding of willful misconduct by the employee. Philadelphia Transportation concerns a complex, collective bargaining contract which was the basis of the arbitrator’s decision to reinstate the employee. The terms of a collective bargaining contract specify in great detail discharge procedures and legitimate reasons for discharge, while here there is no such agreement. Most importantly, the court in Philadelphia Transportation held that the issue before the UCB was entirely different than that before the arbitrators. The court stated,

[T]he issue before the arbitrators was entirely different than the issue before the Board of Review. The arbitrators were not dealing with the legal problem of willful misconduct, but with the problem of discharge and reinstatement under the collective bargaining agreement. Philadelphia Transportation, supra, 186 Pa.Super. at 151, 141 A.2d at 415.

We will therefore consider whether the judgment of the Unemployment Compensation Board of Review may have estoppel effect in this case. Most crucially, we must determine if the issue decided in the unemployment compensation proceedings was the same as in the instant action, because the other elements of collateral estoppel are clearly present: (1) the parties against whom the defense is invoked in the instant case, the three employee appellants, are identical to the parties in the unemployment compensation proceedings; (2) the parties in the unemployment compensation proceedings had the opportunity to litigate on the merits, and Appellants then appealed to the Board of Review and the Commonwealth Court, and (3) the Commonwealth’s decision constitutes a final judgment. Fusaro v. Unemployment Compensation Board of Review, 85 Pa. Cmwlth.Ct. 507, 483 A.2d 1013 (1984).

In numerous decisions “willful misconduct” has been defined as an act of wanton or willful disregard of the employer’s interests, deliberate violation of the employer’s rules or instruction, and disregard of standards of behavior which an employer has a right to expect of an employee. Kilgus v. Commonwealth Unemployment Compensation Bd. of Review, 78 Pa.Cmwlth.Ct. 67, 466 A.2d 1121 (1983). In the present case, the Board found that the Appellants were aware of the policies and procedures of the employer but chose to ignore these procedures and policies for personal gain. Therefore their actions rose to the level of willful misconduct.

Appellants’ complaint before the trial court alleged that the provision of the employee handbook set forth terms and conditions of employment with the employer in such a manner that it constituted an implied contract of employment. Although American in its motion for summary judgment did oppose this allegation, the trial court in its opinion and order did not rule on this question. We will do likewise, because the Review Board’s finding of willful misconduct has a preclusive effect whether the Appellants were at-will or contractual employees.

If Appellants had no contract with their employer they would be presumptively at-will employees who may be discharged at any time for any reason, or for no reason at all. Darlington v. General Electric, 350 Pa.Super. 183, 504 A.2d 306, 310 (1986). Therefore, the reason for the discharge would simply not be subject to review in a judicial forum. This non-reviewability is the sine qua non of the at-will relationship. Veno v. Meredith, 357 Pa.Super. 85, 515 A.2d 571, 578 (1986). Therefore, if there were no implied contract we would affirm the grant of partial summary judgment on this issue.

However, if the employee handbook constitutes an implied contract of employment, this then would remove Appellants from the at-will status, and would limit the employer to discharging the employee only for good cause. DiBonaventura v. Consolidated Rail Corp., 372 Pa.Super. 420, 539 A.2d 865 (1988). The Review Board’s finding that Appellants’ actions constituted willful misconduct, precludes them from asserting that they were wrongfully discharged. The Board found that Appellants violated American’s rules and procedures and this is the equivalent of good cause for dismissal. Therefore, we hold that even if American were limited to dismissing Appellants only for good cause, the factual determination that such good cause existed had previously been made in the unemployment compensation proceedings.

We therefore affirm the trial court’s order granting partial summary judgment in favor of the Appellee.


author: CAVANAUGH, Judge:

text:
    557 A.2d 782
    Richard A. GUTMAN, Esquire, Appellant, v. Dolores GIORDANO, v. VALLEY GREENE APARTMENTS, Addl. Def.
    Superior Court of Pennsylvania.
    Argued Dec. 14, 1988.
    Filed April 28, 1989.

      Richard Gutman, Philadelphia, for appellant.
    Mark S. Keenheel, Philadelphia, for Giordano, appellee.
    Before CAVANAUGH, McEWEN and POPOVICH, JJ.
   CAVANAUGH, Judge:

Appellant, Richard A. Gutman seeks reversal of an order which granted summary judgment against him. We con-elude that summary judgment should not have been entered and therefore, we reverse.

The history of the present matter is that in 1981 appellee, Dolores Giordano, filed a complaint in equity against Richard A. Gutman and Valley Greene Apartments, Inc. The suit concerned the sale of Gutman’s stock in Valley Greene, a cooperative apartment house, to Giordano. Gutman counterclaimed seeking damages for the unpaid balance on the purchase agreement for the apartment. The matter came to trial in December, 1986, but after one day of trial the case was continued and returned to the civil trial list. It was again listed for trial on March 19, 1987 and when Giordano failed to appear at the call of the trial list, a judgment of non pros was entered by the calendar judge. No action was taken by Giordano or Gutman to remove the non pros. On April 20, 1987, Gutman commenced an action against Giordano for the balance of the purchase price under the sales agreement which had been the basis for his counterclaim to the original suit. Giordano filed an answer, new matter and counterclaim and subsequently filed a motion for summary judgment. The trial court entered the order which dismissed Gutman’s complaint and this appeal followed. The reasoning of the trial court in granting the summary judgment was that by reason of Gutman’s failure to appeal from or seek to open the judgment of non pros of March 19, 1987, the order became res judicata and could not therefore be the subject of another suit.

Curiously, neither party on appeal had addressed the application of this doctrine to the present case. Our view, nevertheless is that res judicata does not apply to the non pros as a bar to a subsequent suit involving the same subject matter. We have recently stated:

Res judicata applies when, in two actions, there is (1) an identity in the thing sued upon (2) identity in the cause of action (3) identity of persons and parties to the action, and (4) identity of the capacity of the partners suing or sued.
The essential inquiry is whether the ultimate and controlling issues have been decided in a prior proceeding in which the parties had an opportunity to appear and assert their rights. In making this evaluation our courts have looked to the basic issues and the harm sought to be remedied in the separate suits. For a prior class action judgment to bar an action on the basis of res judicata the parties must be identical in both suits; the prior judgment must have been entered by a court of competent jurisdiction; there must have been a final judgment on the merits and the same cause of action must be presented in both cases.

In re Jones & Laughlin Steel Corp., 328 Pa.Super. 442, 477 A.2d 527 (1984). (citations omitted)

It is apparent that a non pros for failure to answer a trial listing is not an adjudication on the merits and thus may not form the basis for application of res judicata. Our court has recently specifically so held. Hatchigian v. Koch, 381 Pa.Super. 377, 553 A.2d 1018 (1989). Accordingly, we examine the arguments on appeal.

Of course, it is settled that notwithstanding the rationale of the trial court we may affirm the decision of that court if the result is correct on any ground. Penn Piping, Inc. v. Insurance Company of North America, 382 Pa.Super. 19, 554 A.2d 925 (1989).

The issue raised on appeal by appellant Gutman is broadly stated as whether the trial court erred in granting the dismissal “where the statute of limitations applicable to said cause of action had not run”. As previously noted the lower court did not address any statute of limitations issue and the parties on appeal raise the issue in the context of whether after the present action was commenced, admittedly within the applicable six years after the cause of action accrued on July 1, 1981, the plaintiff-appellant failed to have the process properly served upon appellee until August 20, 1987, a period beyond the running of the six year statute. Appellee cites a line of cases commencing with Lamp v. Hayman, 469 Pa. 465, 366 A.2d 882 (1977). Before reaching this issue, we must first decide whether, res judicata principles aside, it was permissible to file the present action in the face of the prior non pros.

First we observe that the judgment of non pros does not contain any language that it was entered with prejudice. The significance of orders “with” and “without” prejudice was recently explained by Judge Johnson of this court.

When an action is dismissed, with prejudice, for failure to prosecute a claim, it is contemplated that that action is terminated unless the plaintiff takes positive steps to reinstate the cause of action within the applicable period of the statute of limitations. As the Commonwealth Court explained in Thompson v. Cortese, 41 Pa.Commw. 174, 398 A.2d 1079 (1979), when an action is dismissed with prejudice for failure to prosecute a claim, it is not a denial of relief to the plaintiff because it is not an adjudication on the merits; rather, it means only that the plaintiff whose complaint is thus dismissed cannot reinstate that complaint unless he first petitions the court to exercise its discretion to remove the non pros and establishes certain fact. Id. at 178, 398 A.2d at 1082. The underlying reasons for such a policy are clear — prompt, final conclusion of pending matters, and removal from the docket of cases which would otherwise clutter it for an unreasonable length of time.
Like a dismissal with prejudice for failure to prosecute a claim, a dismissal without prejudice is not intended to be res judicata of the merits of the controversy. Unlike a dismissal with prejudice for failure to prosecute a claim, however, the phrase “without prejudice” ordinarily imports the contemplation of further proceedings. Thus, it is clear that the same considerations of prompt, final conclusion of pending matters, and avoidance of cluttering the docket for an unreasonable length of time are not present.

Robinson v. Trenton Dressed Poultry Co., 344 Pa.Super. 545, 551, 496 A.2d 1240, 1243 (1985). (citations omitted) We do not see that the failure to include the words “without prejudice” should change the effect of the order entered in this case and that it must be considered as a “without prejudice” order since the court did not attempt to give any added significance to the order. Moreover, our courts have held that when a case is dismissed on the basis of a non pros it does not bar a subsequent suit for the same cause of action so long as filed within the applicable statute of limitations. Gordon-Stuart Ltd. v. Allen Shops, 239 Pa. Super. 35, 361 A.2d 770 (1976); Bucci et al. v. Detroit Fire and Maine Ins. Co., 109 Pa.Super. 167, 167 A. 425 (1933); Doner v. Jowitt and Rodgers Co., 299 Pa.Super. 492, 445 A.2d 1237 (1982); Haefner v. Sprague, 343 Pa.Super. 342, 494 A.2d 1115 (1985). (“The legal effect of the entry of a judgment of non pros is not such as to preclude a plaintiff who suffers such a judgment from instituting another suit on the same cause of action provided, however, that the second suit is brought within the period of the statute of limitations.”) Thus, it appears that there is no bar to the institution of the present suit.

We return to appellee’s argument that appellant failed to act in good faith, with due diligence, and expeditiously to effect service. The claim is that Gutman, an attorney “stalled” the proceedings by failing to direct service to Giordano’s residence (which was formerly his own). Instead, service was directed to be made at her part-time place of employment where she was not served presumably because she was there only two days a week. Service was finally made (after the writ was reissued several times) at her home but, appellant argues that the date of service, August 20, 1987, was beyond the applicable six year statute of limitations. Appellant argues that it was appropriate to seek to serve Giordano at her place of employment in center city rather than at her apartment complex; that the writ was properly reissued and only when it appeared that attempted service at appellee’s place of employment would be unsuccessful because the employer had ceased operating was the direction given to seek service at her home.

In Lamp v. Hayman, 469 Pa. 465, 366 A.2d 882 (1976) our Supreme Court held that a writ of summons shall remain effective to commence an action only if the plaintiff then refrains from a course of conduct which serves to stall in its tracks the legal machinery which is set in motion. Here, we do not see that Gutman’s instructions to seek service upon appellee at her place of employment represents a lack of good faith effort to notify Giordano that she had been sued. This is not a case where there was a failure to deliver the writ to the sheriff for service. Compare Feber v. Altman, 357 Pa.Super. 50, 515 A.2d 317 (1986); Robinson v. Trenton Dressed Poultry, supra. Since it is agreed that Giordano was employed, albeit part-time, where service was first attempted, appellant’s efforts at effecting service do not demonstrate a lack of good faith or an effort to stall the legal machinery. Sweet v. Ayres, 277 Pa.Super. 236, 419 A.2d 749 (1980); Gould v. Nazareth Hospital, 354 Pa.Super. 248, 511 A.2d 855 (1986).

We conclude that the trial court erred in entering the order which granted summary judgment and dismissed the complaint.

Order reversed.

      . Although suit was initiated by summons, a complaint was later filed.

      . The order states:
      AND NOW, to wit, this 19th day of March, 1987, it is hereby ORDERED that a Judgment of Non Pros be entered in the above captioned matter for failure to appear at the Call of the List for assignment for trial.
      BY THE COURT:
      Gafni
      J.

      . Appellant argues that it was error for the court to enter a non pros. However, the present appeal is not from the non pros order and we may not consider any attacks on the propriety of that order. It is also argues that the non pros was entered against the appellee only. However, non pros (see F.N.2) was general in its terms and can only be fairly read to apply to both the complaint and the counterclaim.

      . There is the additional requirement that the costs be tendered prior to the filing of the second suit. Appellant argues in his brief that the costs have been tendered. There is nothing in the record on this. On the other hand appellee does not argue that costs have not been tendered.


author: BROSKY, Judge: CIRILLO, President Judge, CAVANAUGH, Judge, POPOVICH, Judge,

text:
    557 A.2d 785
    Janice SNELSIRE and Gary Snelsire v. Elizabeth S. MOXON, Executrix of the Estate of Thomas W. Moxon, Appellant.
    Superior Court of Pennsylvania.
    Argued Dec. 18, 1988.
    Filed April 26, 1989.

      Carl W. Brueck, Jr., Pittsburgh, for appellant.
    J. Bradley Kearns, Pittsburgh, for appellees.
    Before CIRILLO, President Judge, and CAVANAUGH, BROSKY, ROWLEY, McEWEN, OLSZEWSKI, MONTEMURO, POPOVICH and JOHNSON, JJ.
   BROSKY, Judge:

This appeal is from the judgment entered on an award of delay damages after a jury verdict in favor of appellees.

The sole issue presented to the court en banc is whether an award of delay damages is proper under Craig v. Magee Memorial Rehabilitation Center, 512 Pa. 60, 515 A.2d 1350 (1986), where the trial court determined that the parties acted without fault and caused no undue delays in the litigation. Finding the delay damage award to be proper in this case, we affirm the judgment entered on the award.

The undisputed facts giving rise to this litigation relate that a complaint was filed by appellees against appellant on May 24, 1984. The complaint alleged injuries to appellee, Janice Snelsire, as a result of her exit through a window, which was necessitated by a fire on the premises owned by appellant where Janice Snelsire resided with her husband, appellee, Gary Snelsire, and her three children. Gary Snelsire claimed medical expenses as well as the loss of the services and society of Janice Snelsire as a result of her injuries.

The original trial date was set for April 2, 1986. A continuance was granted on March 25, 1986, due to the illness of counsel for appellees. The matter was relisted for trial on the November 1986 trial list, a jury was chosen on November 17, 1986, and a verdict in the amount of one hundred forty-seven thousand dollars ($147,000.00) was rendered after trial on December 3, 1986.

On December 10, 1986, appellees filed a Petition to mold the verdict to add delay damages from February 6, 1985, which date was one year after the date of the accrual of the cause of action to March 25, 1986, the date on which the continuance was granted to the November 1986 trial list, in the amount of sixteen thousand nine hundred five dollars ($16,905.00), for a total verdict of one hundred sixty-three thousand nine hundred five dollars ($163,905.00). On December 16,1986, a hearing was held on the Petition. Subsequently, by Order entered January 8, 1987, the trial court molded the verdict to add the requested delay damages. Judgment was entered on the delay damages portion of the verdict, only, the original verdict amount of one hundred forty-seven thousand dollars ($147,000.00) having been satisfied prior to the entry of said judgment. This appeal followed.

At the hearing on delay damages, the court expressed concern that “although it is not mandatory, the plaintiff is entitled to delay damages unless you have some of these other factors. And we don’t have in this case any of those other factors.” N.T. 8. “[Tjhose other factors” referred to by the trial court (N.T. 8, supra) are what Craig required trial courts to consider in reaching their determinations concerning the awarding of delay damages. These include “the parties’ respective responsibilities in requesting continuances, the parties’ compliance with rules of discovery; the respective responsibilities for delay necessitated by the joinder of additional parties; and other pertinent factors.” Craig at 65-66, 515 A.2d at 1353.

The trial court’s entire reasoning for its decision to award delay damages to appellees is set forth in its one-sentence Opinion as follows: “It was agreed by all parties in the above case that all parties acted properly in this case and there were no undue delays and therefore, delay damages were awarded under Rule 238.” Thus, under the trial court’s interpretation of Craig, the allocation of delay damages is proper despite the absence of delay or fault on the part of either party to the litigation.

On appeal, appellant argues that since the trial court, after hearing, found nó delay in the ordinary course of the case attributable to either party, she should not be compelled to respond in delay damages.

On November 7, 1988, which was subsequent to oral argument of the instant appeal before this court en banc, the Supreme Court of this Commonwealth promulgated New Rule 238. The explanatory comment accompanying the new rule states that the new promulgation “revises Rule 238 in light of the Craig decision.” Subsection (f) of the new rule reads: “This rule shall apply to actions pending on or after the effective date of the rule in which damages for delay have not been determined.” In Staats v. Noll, 381 Pa.Super. 162, 553 A.2d 85 (1989) and Miller v. Wise Business Forms, Inc., 381 Pa.Super. 236, 553 A.2d 443 (1989), this court en banc determined that newly enacted Rule 238 is applicable to cases pending on appeal on the date when the new rule was promulgated and became effective where the issue of delay damages has been properly preserved and presented.

Newly enacted Rule 238 rejects the analysis proffered by appellant that she is not responsible for delay damages under the facts of this case. A fair reading of this new Rule in subsection (b)(1) thereof leads to the conclusion that where a defendant fails to make a written settlement offer comporting with the Rule and where a plaintiff is found to be free from fault in causing any delay to the normal course of the litigation, a defendant is nonetheless responsible for the payment of damages for delay where the verdict recovered, exclusive of delay damages, is in excess of one hundred twenty-five percent of the written settlement offer.

Pertinent to the facts at bar, the record made at the hearing on appellees’ Petition for delay damages reveals that appellant never made a written offer of settlement. Instead, appellant appears to have made an oral offer of fifty thousand dollars ($50,000.00). Under the Rule, however, this is not an acceptable mitigating factor. Consequently, the trial court committed no error in the awarding of delay damages to appellee. Damages awardable under Rule 288 have been held to be in the nature of prejudgment interest. See Dale v. Baltimore and Ohio Railroad Co., 520 Pa. 96, 552 A.2d 1037 (1989) (damages awarded under Rule 238 referred to as “prejudgment interest” damages).

In Staats and Miller, the defendants/appellees failed to make adequate settlement offers. The trial courts in those cases determined that plaintiff/appellant had not caused any delay in the trials of the respective cases. Nevertheless, the trial courts refused to award Staats and Miller damages for delay. On appeal, plaintiff/appellants challenged the propriety of the denial of delay damages.

In Staats and Miller, therefore, no basis existed to deny the plaintiffs/appellants delay damages where a defendant has failed to make a settlement offer in compliance with Rule 288(b)(1), and a plaintiff has been found not to have caused delay of the trial pursuant to Rule 238(b)(2). See Miller, supra. Accordingly, this court en banc remanded Staats and Miller to the trial courts for the calculation and award of delay damages.

Instantly, however, appellee (plaintiff) has been awarded delay damages, after having been found fault free in causing delay in this case. Appellant (defendant) takes this appeal contending that because she has not been found to have caused any delay in the case, she is not responsible for the payment of delay damages. However, based upon the above analysis, appellant is not entitled to relief under new Rule 238. The premise for this conclusion is appellant’s failure to comply with the new Rule’s strictures on the making of settlement offers and appellee’s freedom from fault for causing delay of the trial of the case. Therefore, the trial court was correct in awarding delay damages to appellee.

Because of this, it is not necessary, as it was in Staats and Miller to remand. The result of any remand under the circumstances of this case would only be for recalculation of appellee’s delay damages pursuant to the provisions of the new Rule. Appellee has taken no appeal from the judgment entered on the award of delay damages challenging the amount thereof.

Consequently, our holding is as follows: Where, as here, a plaintiff who has properly been awarded delay damages and who has not taken an appeal challenging the amount thereof and where, as here, a defendant has appealed the award of delay damages to this court but is entitled to no relief under the new Rule, a remand to the trial court for what amounts to a recalculation of a plaintiff’s entitlement to delay damage prejudgment interest is unwarranted. Insofar as this en banc court’s decision in Ceresini v. Valley View Trailer Park, 380 Pa.Super. 416, 552 A.2d 258 (1988), is inconsistent with the approach which we have taken here, it is disapproved and overruled. We therefore affirm the judgment entered on the award of delay damages in this case.

Judgment affirmed.

McEWEN, J., did not participate in the consideration of or decision upon this appeal.

CIRILLO, President Judge, files a concurring opinion.

CAVANAUGH, J., files a dissenting opinion in which OLSZEWSKI, J., joins.

POPOVICH, J., files a dissenting opinion.

CIRILLO, President Judge,

concurring:

I concur in the result reached by the majority for the same reasons expressed in my concurring opinion in King v. SEPTA, 383 Pa.Super. 420, 557 A.2d 11 (1989) (en banc) (Cirillo, P.J., concurring).

CAVANAUGH, Judge,

dissenting:

I dissent on the basis of my dissenting opinion in King v. Southeastern Pennsylvania Transportation Authority, 383 Pa.Super. 420, 557 A.2d 11 (1989).

OLSZEWSKI, J., joins in dissenting opinion.

POPOVICH, Judge,

dissenting:

I cannot join the Majority’s conclusion that the award of delay damages is to be affirmed against the appellant (Moxon), despite the trial court’s determination, following a hearing on the matter, that neither the appellee nor the appellant was found to be “at fault” in bringing the case to completion.

The trial court conducted a hearing on the delay damages question in compliance with the dictates of Craig v. Magee Memorial Rehabilitation Center, 512 Pa. 60, 515 A.2d 1350 (1986), an opinion in which the Supreme Court noted that the imposition of delay damages without a finding of fault undermined the constitutionality of former Pa.R.Civ.P. 238 delay damages. As a result, the Craig Court outlined certain factors that were to be taken into consideration in assessing the imposition of delay damages, not the least of which was the presence of “fault” by the party against whom damages were entered.

To this writer, justification for the issuance of delay damages at a time when Craig was extant, and given the factual setting of the absence of “fault” by either party, should not be affirmed. See Baker v. S. & L. Service Co., 381 Pa.Super. 637, 554 A.2d 565 (1989) (Dissenting Opinion by Popovich, J.), petition for allocatur filed March 23, 1989.

The drafting of new Rule 238 by the Civil Procedural Rules Committee, adopted by the Pennsylvania Supreme Court and ordered to become effective November 7, 1988, seems to be nothing more than a return to the former Rule 238 where delay damages were allowed by merely showing that the award was 125% more than the offer by the defendant. This sort of numerical calculation of delay damages was condemned specifically by the Supreme Court, yet we see it surfacing again in new Rule 238 if one ignores the statements made by the Craig Court.

In other words, I read the law as composed of both Craig and new Rule 238 in assessing the delay damages question, since I interpret Craig to co-exist with new Rule 238 and not be supplanted by it. As such, I would hold that the trial court contravened the holding in Craig in molding the verdict in favor of the plaintiff to include delay damages where the defendant was held to be not at fault in bringing the case to fruition.

Consequently, I respectfully dissent to the Majority’s affirmance of the award of delay damages.

      . Suit was originally entered against Thomas W. Moxon. On November 3, 1986, a document was filed suggesting the death of Mr. Moxon on April 22, 1986, and requesting that the caption of the case be so amended to reflect this occurrence.


author: MONTGOMERY, Judge: DEL SOLE, Judge,

text:
    557 A.2d 789
    Arzenia Delarosa JOHNSON, Appellee, v. PENNSYLVANIA NATIONAL INSURANCE COMPANIES, Appellant.
    Superior Court of Pennsylvania.
    Argued Dec. 1, 1988.
    Filed April 27, 1989.

      Louis C. Long, Pittsburgh, for appellant.
    John P. Lydon, Pittsburgh, for appellee.
    Before ROWLEY, DEL SOLE and MONTGOMERY, JJ.
   MONTGOMERY, Judge:

The Plaintiff-Appellee, Arzenia Delarosa Johnson, was allegedly injured when the taxicab in which she was a passenger was struck by a hit and run driver. She instituted this action to obtain damages through the taxicab owner’s uninsured motorist insurance policy. The Defendant-Appellant, Pennsylvania National Insurance Companies, filed preliminary objections, asserting that the insurance policy required that the Plaintiffs claim be submitted to arbitration. The judge who considered this matter denied the preliminary objections, based upon an earlier decision in a similar factual setting by another judge of the Court of Common Pleas of Allegheny County. However, the trial court certified this matter as appropriate for immediate appellate review, and our Court has granted the Appellant’s request that we consider its interlocutory appeal.

The issue presented is whether the Plaintiff, who was not a party to the insurance contract, is bound by the provisions of that agreement which require the arbitration of a claim for uninsured motorist benefits. The arbitration provisions of the policy state:

a. If we and an “insured” disagree whether the “insured” is legally entitled to recover damages from the owner or driver of an “uninsured motor vehicle” or an “underinsured motor vehicle” or do not agree as to the amount of damages, either party may make a written demand for arbitration. Each party will select an arbitrator. The two arbitrators will select a third. If they cannot agree within 30 days, either may request that selection be made by a judge of a court having jurisdiction. Each party will pay the expenses it incurs and bear the expenses of the third arbitrator equally.
b. Arbitration shall be conducted in accordance with the Pennsylvania Uniform Arbitration Act. Unless both parties agree otherwise, arbitration will take place in the county in which the “insured” lives. Local rules of law as to arbitration procedure and evidence will apply. A decision agreed to by two of the arbitrators will be binding.

In support of its position that the Plaintiff is bound by such arbitration procedures, the Appellant insurer points out that the Plaintiff-Appellee is a third party beneficiary of the insurance contract. As such, it maintains that she is subject to the terms of the contract, and enjoys no greater rights under it than the contract provides. As authority for that position, the insurer cites Miller v. Travelers Ins. Co., 143 Pa.Super. 270, 17 A.2d 907 (1941). In that case, a beneficiary sought life insurance benefits under employee group policy coverages which had been terminated by the employer and the insurer prior to the decedent’s death. While the general principle enunciated in that decision is still sound, it is clearly inapposite as precedent in the instant case. Here no issue is presented as to the Plaintiff’s entitlement to benefits which are provided in a policy which was in existence and applicable to her claim. „ Rather, the question is whether she is bound to a procedure for collection of such benefits which is in derogation of her rights to pursue collection through a suit initiated in the Court of Common Pleas. The Miller holding simply does not address that issue.

The insurer further argues that the question involved in this appeal may be resolved by reference to the decision of our Court in Flamini v. General Accident Fire and Life Assurance Corporation, 328 Pa.Super. 406, 477 A.2d 508 (1984). That case involved claims for uninsured motorist insurance benefits by a police officer who was injured when a hit and run vehicle struck the police car in which he was seated. The insurance contract existed between the insurer and the township which employed the officer. The Appellant relies upon the following language from the Flamini decision:

Appellant, injured while occupying a Township police vehicle covered under the subject policy, derives his claim only from his status as a third party beneficiary of the uninsured motorist provision in the policy. Although appellant is a “person making claim” under the arbitration provision, he is not a party to the contract and has sacrificed nothing to secure his contract right. As such, appellant’s contract right in the policy is subject to any limitations imposed by law or inherent in the policy.

Id., 328 Pa.Superior Ct. at 415, 477 A.2d at 512.

Taken in the limited context in which it is offered by the insurer, such a general proposition would seem to provide strong support for the insurer’s position on this appeal. However, because of the dissimilarity of the question before our Court in Flamini, and that presented in the instant case, and also because of the well-established law in our Commonwealth on the issue of whether a party can be mandated to arbitrate a dispute rather than seeking to enforce his claimed rights in a suit, we must reject the Appellant’s contention that the Flamini decision provides guiding' authority for our disposition in the instant case.

In Flamini the officer pursued his claims by arbitration. No issue was presented as to whether he was compelled to do so, either by law or by the terms of the contract. Rather, the relevant question before our Court was whether the arbitration was to be considered common law arbitration or statutory arbitration, for purposes of determining the appropriate scope of review of the arbitration decision. It was held that it was not common law because statutory arbitration was mandated by the Arbitration Act of 1927 under any contract in which the Commonwealth or one of its subdivisions was a party. It was in the resolution of that problem that our Court noted that the claimant’s contract rights, as a third-party beneficiary, were subject to limitations imposed by law or inherent in the policy. We do not find that such a declaration compels us to reach the conclusion sought herein by the Appellant.

In Flamini, our Court also addressed the question of stacking of coverages. In the discussion on that point, it was pointed out that the claimant was a “class two” claimant, who had no recognizable contractual relationship with the insurer. The same lack of contractual relationship is apparent between the Plaintiff and the Defendant in the instant case. Our recognition of that status, and the clear guidance of other directly applicable precedents, led to our conclusion that the Plaintiff cannot be required to arbitrate her uninsured motorist claims against the Defendant.

Although the policy of Pennsylvania law is to favor arbitration as a method to settle disputes, Children’s Hospital v. American Arbitration Association, 231 Pa.Super. 230, 234, 331 A.2d 848, 850 (1974), arbitration is a matter of contract, and it cannot be compelled between parties who have not contracted to arbitrate the particular dispute in issue. Lincoln University v. Lincoln University Chapter of AAUP, 467 Pa. 112, 354 A.2d 576 (1976); Cumberland-Perry Area Vocational-Technical School Authority v. Bogar & Bink, 261 Pa.Super. 350, 396 A.2d 433 (1978). In the absence of an express agreement to arbitrate, a waiver of the right to trial will not be found, as the waiver of such a right must be by a clear, decisive, and unequivocal act of a party to a contract who has knowledge of the right being waived. See Bragg v. State Automobile Insurance Association, 350 Pa.Super. 257, 504 A.2d 344 (1986). Further, an insured automobile owner, in agreeing to a contract in the form of an insurance policy, has no legal right or authority to bind an unrelated third party in the manner suggested by the insurer in this case. See Solis v. Prudential Property & Casualty Insurance Company, 344 Pa.Super. 284, 496 A.2d 797 (1985). Based upon such well-recognized concepts, we cannot adopt the Appellant’s argument that the Appellee, who is not a party to the insurance agreement, is bound by the contract’s arbitration procedure to resolve her claim dispute.

The Appellant offers the additional contention that the Appellee is bound to arbitrate because the insurance contract policy form containing an arbitration clause was allegedly mandated by the Pennsylvania Insurance Commissioner. See 31 Pa.Code § 63.2(a). In Johnson v. The Travelers, 348 Pa.Super. 278, 502 A.2d 206 (1985), our Court was presented with the issue of whether arbitration of an uninsured motorists coverage claim was mandated in an Assigned Claims Plan case, where there was no contract of insurance in existence. The Claimant in that case maintained that a relevant regulation required binding arbitration to resolve disputes regarding entitlement to such benefits. In rejecting that argument, our Court pointed out the rule that in the absence of a statutory requirement, arbitration may not be required by regulation. See also Hiller v. Allstate Insurance Co., 300 Pa.Super. 149, 151, n. 1, 446 A.2d 273, 274, n. 1 (1982); Ellison v. Safeguard Mutual Insurance Co., 209 Pa.Super. 492, 229 A.2d 482 (1967). In Johnson, supra., our Court also noted that regulations cannot be read to abridge a party’s right to a jury trial where no actual contract exists between the parties. That is certainly the case here. Further, it is evident that there is no statutory requirement that the Appellee submit her uninsured motorist claim to an arbitration procedure. Compare Bragg v. State Automobile Insurance Association, supra. Accordingly we must reject the Appellant’s contention which is based on administrative regulations promulgated by the Insurance Commissioner.

The Order of the trial court is affirmed, and the case is remanded to the trial court for further proceedings. Jurisdiction is not retained.

DEL SOLE, J., files a dissenting opinion.

DEL SOLE, Judge,

dissenting opinion:

I dissent from the majority’s view that the insurance policy’s arbitration clause is not binding on the Appellee. Where liability is premised upon a contract, as it is here, the options available to a person seeking benefits under that contract are circumscribed by the provisions which comprise that contract. Appellee argues that she never entered into an arms length contract with the insurance company, and that she should not, therefore, be subject to limitations imposed by that contract. She, and it appears to me, the majority, overlook the fact that the insurance company and the taxi company did enter into such a contract, and it is only because they did that she is able to claim any benefits from the insurer here. The insurance policy lists among the persons who are insured, “anyone else occupying a covered auto.” This clause indicates that the possibility of a third party bringing a claim was within the contemplation of the parties to the contract. Since the plaintiff is an insured, she is subject to the arbitration clause, and, absent express authority otherwise, the arbitration clause should be enforced. The smorgasbord approach to contract provisions is not something which should be encouraged or tolerated. Appellee derives her right to claim benefits from this contract; she cannot claim that right and at the same time, reject those provisions of the contract which are equally valid but in her view unappealing. I would reverse the trial court order denying the insurer’s preliminary objections and would grant those same preliminary objections.

      . The trial court cited Yudacufski v. Commonwealth, Department of Transportation, 499 Pa. 605, 454 A.2d 923 (1982) as authority for the proposition that he was bound by the legal determinations of a colleague of the same Common Pleas Court when presented with the same factual setting. In the instant case, the trial court felt bound by determinations reached in Jones v. Insurance Company of North America, No. GD 86-12368 (Alleg. Co.).

      . It is not disputed that the Plaintiff is entitled to uninsured motorist coverage benefits under the policy.

      . The Arbitration Act of 1927 (Act of April 25, 1927, P.L. 381, No. 248, as amended, 5 P.S. § 161, et seq.) was repealed by the JARA Continuation Act of 1980 [Act of October 5, 1980, P.L. 693, No. 142, § 501(a) ]. Statutory arbitration is now provided in the Judicial Code (42 Pa.C. S.A. § 7301, et seq.).

      . See Utica Mutual Insurance Co. v. Contrisciane, 504 Pa. 328, 473 A.2d 1005 (1984) on the classifications of claimants as "class one”, "class two”, or "class three”.

      . We recognize some contrary authority on this issue. See Prudential Property and Casualty Insurance Company v. Muir, 99 Pa.Cmwlth. 620, 513 A.2d 1129 (1986), a case in which an insurer challenged the authority of the Insurance Commissioner to promulgate a form policy requiring arbitration of uninsured motorist claims. However, we need not attempt to resolve any issue regarding the authority of the Commissioner, on that point, in order to address the merits of the instant appeal, and we decline to do so.


author: WIEAND, Judge:

text:
    557 A.2d 1064
    Donald F.U. GOEBERT, Corporate Investment Company and Corporate Life Insurance Company v. Steve M. ONDEK and Violet C. Ondek. Appeal of CORPORATE LIFE INSURANCE COMPANY.
    Superior Court of Pennsylvania.
    Argued Oct. 12, 1988.
    Filed March 20, 1989.
    Reargument Denied May 16, 1989.

      James C. Sargent, Jr., West Chester, for appellant.
    Dominic T. Marrone, West Chester, for appellees.
    Before ROWLEY, WIEAND and BECK, JJ.
   WIEAND, Judge:

The issue in this appeal is whether a life insurance company can maintain an action against former officers and directors of the company under Section 406.1(r) of The Insurance Company Law of 1921, as amended, 40 P.S. § 506.1(r), for losses caused by investments made in violation of the statute. The trial court held that the provisions of section 406. l(r) did not create a separate cause of action and entered summary judgment in favor of the former officers and directors. After careful consideration, we reverse.

Prior to January, 1984, Steve and Violet Ondek, husband and wife, owned a controlling interest in Corporate Investment Company, the parent corporation of Corporate Life Insurance Company. In their capacity as officers and directors, the Ondeks purchased certain investments on behalf of the life insurance company which, it is alleged, were in violation of Section 406.1(g) of the Act, 40 P.S. § 506.-1(g). In January, 1984, Donald Goebert purchased from the Ondeks a controlling interest in the parent corporation and thereafter became a director of the parent corporation and its subsidiary, Corporate Life Insurance Company. According to the averments of the complaint, Goebert became aware thereafter that the life insurance company had made unauthorized investments. Consequently, it is alleged, he caused almost all of the life insurance company’s investments to be liquidated. In so doing, the insurance company allegedly realized nine hundred thousand ($900,000.00) dollars less than it had paid for the same investments. Goebert then caused the instant action to be filed on behalf of himself, the parent corporation, and the life insurance company to recover from the Ondeks the alleged loss. The trial court dismissed Goebert and the parent corporation as plaintiffs, and the action continued in the name of Corporate Life Insurance Company.

The plaintiff insurance company expressly disavows any claim against the Ondeks under the Business Corporation Law or at common law for breach of the duties owed by an officer or director to his or her corporation. Instead, the insurance company’s claim is based solely on an alleged violation of Section 406.1(g) of the Insurance Company Law of 1921, as amended, 40 P.S. § 506.1(g), and the liability for loss imposed by section 406.1(r), 40 P.S. § 506.1(r).

Section 406.1(r) of the Insurance Company Law provides: If any investment is made in a manner not authorized by this act, the officers, directors and trustees making or authorizing such investment, shall be personally liable for any loss occasioned thereby.

The trial court held that the foregoing subsection was intended to protect policyholders against loss, and was not intended to create shareholders’ rights against officers and directors in addition to those which existed at common law and under the Business Corporation Law.

This issue has not previously been before an appellate court in this Commonwealth. In construing subsection 406.1(r) of the Insurance Company Law, therefore, we apply the general rule that:

A statute creating a new liability or increasing an existing liability, or even a remedial statute giving a remedy against a person who would not otherwise be liable, must be strictly construed in favor of persons sought to be subjected to their operation. Such statutes will not be so extended as to include liabilities other than those designated or fairly within their terms. However, the rule of strict construction does not authorize the court to thwart, by a narrow construction, a clear legislative intent to impose a new liability.

82 C.J.S. Statutes § 394.

We are also guided by principles which dictate when and under what circumstances a court may properly enter summary judgment. A summary judgment may properly be granted only if the moving party has shown that there is no genuine issue of material fact and that he or she is entitled to judgment as a matter of law. French v. United Parcel Service, 377 Pa.Super. 366, 372-73, 547 A.2d 411, 414 (1988); Thorsen v. Iron and Glass Bank, 328 Pa.Super. 135, 140, 476 A.2d 928, 930 (1984). Summary judgment should not be entered unless a case is clear and free from doubt. Weiss v. Keystone Mack Sales, Inc., 310 Pa.Super. 425, 430, 456 A.2d 1009, 1011 (1983); Dunn v. Teti, 280 Pa.Super. 399, 402, 421 A.2d 782, 783 (1980).

We can readily agree with the learned trial judge that the primary purpose of the Insurance Company Law of 1921, as amended, was to protect policyholders and the members of the public by protecting and preserving funds needed to pay claims. It does not follow, however, that only policyholders who have sustained a loss because of the inability of an insurance company to pay claims can enforce the personal liability which section 406. l(r) has imposed upon officers and directors for losses caused by unauthorized investments. The language of the statute is clear. Officers and directors making unauthorized investments “shall be personally liable for any loss occasioned thereby.” A court should not thwart a clear legislative intent to impose personal liability by construing a statute in an unnecessarily strict manner. This is particularly so where, as here, the statute is intended to be remedial.

Policyholders and members of the public are best protected by vigilant enforcement of the statutory safeguards long before an insurance company’s losses are so great that it can no longer pay claims. As the old adage has it, “an ounce of prevention is worth a pound of cure.” Thus, if we are to interpret the statute so as to achieve the legislative purpose, we should hold that the personal liability of officers and directors accrues immediately upon the sustaining of a loss by the company, and not merely when there is a loss to a policyholder because the company no longer has sufficient assets to pay his claim. Moreover, our interpretation of the statute will place liability for losses caused by unauthorized investments where it belongs, namely, upon the officers and directors responsible therefor. These losses should not be recoverable from members of the public by requiring them to pay increased premiums which will enable the insurance company to recoup its losses.

We reject the argument that the legislature intended to protect the public by placing enforcement in the hands of the Insurance Commissioner. Our examination of the statute does not disclose a legislative intent to limit enforcement of the personal liability provision in this manner. Although it is correct, as appellees argue, that the insurance industry is closely regulated, it does not follow that actions for losses sustained by insurance companies can be brought only by the Commonwealth or its representatives. The losses for which the statute allows recovery are losses sustained by insurance companies; and the personal liability of officers and directors is to their respective insurance companies. Under these circumstances, it would be illogical to hold that an insurance company could not sue to recover losses caused by officers and directors who indulged in unauthorized investments. Moreover, it is important that unauthorized investments be detected and corrected promptly. The first opportunity to detect such unauthorized conduct lies with the company itself. We perceive nothing in the language of the statute which would require us to hold that a company cannot act to recoup its loss from officers and directors responsible therefor. On the contrary, we hold that the cause of action for losses created by Section 406.1(r) can be enforced by an action brought in the name of the insurance company which has sustained the losses. It follows that the summary judgment entered in the instant case must be reversed.

The defendant-appellees argue that the losses sustained by the insurance company were caused by the manner in which Goebert, upon acquiring control, disposed of the company’s investments. This may be correct. The issue of causation, however, is an issue for the factfinder upon a trial of the cause. It cannot be determined summarily, at least on the present state of the record, by the entry of summary judgment.

Reversed and remanded for further proceedings. Jurisdiction is not retained.

      . This subsection of the Insurance Company Law of 1921 provides as ■ follows:
      (g) Exclusive of investments in subsidiaries as provided in section four hundred five point one no investment shall be made which would result in total investments in, or in loans upon, any of the following classes of investment of an amount in excess of the percentage of such company’s admitted assets on the thirty-first day of December next preceding the date of investment, which is specified in the class.
      (1) Stock or shares of any one corporation, other than stock or shares of a corporation incorporated for a purpose stated in subsection (e) or (f) of section four hundred six, all of whose stock or shares, except directors’ qualifying shares, was at the time of acquisition owned by such insurance company or by insurance companies authorized to do business in this Commonwealth, two per cent (2%).
      (2) Common stock or common shares of corporations, including stock or shares of regulated investment companies, but excluding stock or shares of corporations incorporated for a purpose stated in subsection (e) or (f) of section four hundred six, and excluding stock or shares guaranteed by corporations whose obligations would be eligible for investment under section four hundred four, five percent (5%).
      (3) Stock or shares of corporations, incorporated for a purpose stated in subsection (e) or (f) of section four hundred six, and real estate or interests therein, purchased, leased or owned, under authority of such subsections, ten per cent (10%).
      (4) Obligations and stock or shares of corporation or business trusts incorporated or existing under the laws of the Dominion of Canada, or any Province thereof, and bonds or evidence of indebtedness issued, assumed or guaranteed by any Province of the Dominion of Canada, or any county, city, town, municipality or political subdivision located in the Dominion of Canada or any Province thereof, five per cent (5%).
      Although Subsection g was deleted by amendment on June 11, 1986, the provision thereof remains applicable to the instant action which was commenced prior to the amendment.


text:
    557 A.2d 1068
    Robert HAVERSTOCK, a Minor, BY his Parents and Natural Guardians, Charles HAVERSTOCK and Beverly Haverstock, and Charles and Beverly Haverstock, in Their Own Right v. T.I. RALEIGH (USA), Richard Goglia, t/a Oxford Valley Bicycle Company, T.I. Raleigh, Ltd. and The Huffy Corporation, Appeal of T.I. RALEIGH (USA), T.I. Raleigh, Ltd. and the Huffy Corporation. Robert HAVERSTOCK, a Minor, by his Parents and Natural Guardians Charles HAVERSTOCK and Beverly Haverstock, and Charles and Beverly Haverstock, in Their Own Right v. T.I. RALEIGH (USA), Richard Goglia, t/a Oxford Valley Bicycle Company, T.I. Raleigh, Ltd. and The Huffy Corporation. Appeal of T.I. RALEIGH (USA), T.I. Raleigh, Ltd. and the Huffy Corporation.
    Superior Court of Pennsylvania.
    Argued Dec. 14, 1988.
    Filed March 31, 1989.
    Reargument Denied May 24, 1989.

      Kevin Connors, Philadelphia, for appellants in Nos. 1816 and 2041.
    Judy Greenwood, Philadelphia, for Haverstock, appellees in Nos. 1816 and 2041.
    Joseph Glantz, Levittown, for Goglia, appellee in Nos. 1816 and 2041.
    Before CAVANAUGH, McEWEN and POPOVICH, JJ.
   CAVANAUGH, Judge:

The primary issue in this case is whether the court below erred in charging the jury under Restatement of Torts (Second) § 400 which provides:

§ 400. Selling as Own Product Chattel Made by Another
One who puts out as his own product a chattel manufactured by another is subject to the same liability as though he were the manufacturer.
Comment a. to this Section states:
Comment:
a. The words “one who puts out a chattel” include anyone who supplies it to others for their own use or for the use of third persons, either by sale or lease or by gift or loan.

The issue must be considered in light of the facts established by the evidence. In December, 1978 Charles Haverstock went to the Oxford Valley Bicycle Company, an authorized dealer for Raleigh bicycles, to purchase a bicycle for his son, Robert, as a Christmas present. Mr. Haverstock wanted to purchase a Raleigh bicycle because he knew of the company’s reputation as a manufacturer of excellent bicycles and because it came with an extended warranty. When he was at the bicycle shop, Mr. Haverstock saw a Raleigh floor model that had a lifetime guarantee on the fork and frame. He wanted a black bicycle but there was not one on the floor. He also selected a different seat and handlebar from the floor model. Mr. Haverstock left a deposit and returned on Christmas Eve to pick up the bicycle which was assembled and ready for delivery.

The bicycle was given to Robert, who was then about fourteen years of age, on Christmas Day, 1978. He used the bicycle to get around the neighborhood and to go to the store on occasion. Robert decided that he would like the fenders removed and the bicycle was returned to Oxford Valley Bicycle Company in March, 1980 to have this accomplished. Robert also changed a flat tire on the bike. Beyond this, there were no changes or modifications made on the bike after Mr. Haverstock took delivery.

Robert used the bicycle without incident until February 19, 1981 when he was riding near his home. The bicycle suddenly collapsed causing him to fall and as a result of the accident, he suffered severe injuries.

Robert’s parents, who are Charles and Beverly Haverstock, brought two actions as natural guardians of their son and in their own right. One action was against Raleigh Bicycle Company and Oxford Valley Bicycle Company, Inc. and was brought at March Term, 1982 at No. 8197, and alleged that the “bicycle involved in the accident was manufactured by defendant, Raleigh Bicycle Company and was sold, assembled and adjusted by defendant, Oxford Valley Bicycle Company, Inc.” It was further charged that “defendant, Raleigh Bicycle Company, negligently and carelessly designed, manufactured and distributed the bicycle involved in the accident,” and that Oxford Valley Bicycle Company negligently and carelessly assembled, adjusted and sold the bicycle. The second complaint was against T.I. Raleigh, Ltd. and The Huffy Corporation and filed at No. 3802, December Term, 1982, alleging that the defendants in that action were the successor corporations to those named in the earlier complaint. It alleged that the bicycle was “manufactured, designed and distributed” by defendants T.I. Raleigh, Ltd. and Raleigh Bicycle Company. Nowhere in the complaints is it alleged that the Raleigh Bicycle companies were vicariously liable for the acts of another.

The plaintiffs proceeded at trial on the basis of strict liability under Restatement (Second) of Torts § 402A, which provides:

§ 402A. Special Liability of Seller of Product for Physical Harm to User or Consumer
(1) One who sells any product in a defective condition unreasonably dangerous to the user or consumer or to his property is subject to liability for physical harm thereby caused to the ultimate user or consumer, or to his property, if
(a) the seller is engaged in the business of selling such a product, and
(b) it is expected to and does reach the user or consumer without substantial change in the condition in which it is sold.
(2) The rule stated in Subsection (1) applies although
(a) the seller has exercised all possible care in the preparation and sale of his product, and
(b) the user or consumer has not bought the product from or entered into any contractual relation with the seller.

Section 402A sets forth the law in this Commonwealth, having been adopted in Webb v. Zern, 422 Pa. 424, 220 A.2d 853 (1966). This was reaffirmed in Salvador v. Atlantic Steel Boiler Co., 457 Pa. 24, 32, 319 A.2d 903, 907 (1974), wherein the Supreme Court noted that “[t]oday, as the Superior Court correctly recognized, a manufacturer by virtue of Section 402A is effectively the guarantor of his products’ safety”. Where the doctrine of strict liability applies, there is no need to prove negligence. Berkebile v. Brantly Helicopter Corporation, 462 Pa. 83, 337 A.2d 893 (1975). See also, Dambacher v. Mallis, 336 Pa.Super. 22, 485 A.2d 408 (1984); Staymates v. ITT Holub Industries, 364 Pa.Super. 37, 527 A.2d 140 (1987).

The trial testimony on behalf of the plaintiffs indicated that the bicycle, which was manufactured by Raleigh, was not defective in any way but after it was delivered to Oxford Valley Bicycle Company a defective fork assembly was substituted by Oxford for the original part, and the substituted part, which was not manufactured by Raleigh, was defective. The expert witness for the plaintiffs concluded that the fork manufactured by Raleigh would have been very good but that the dealer, in order to accommodate the handlebar selected by Mr. Haverstock, substituted an improperly fitting fork which eventually gave way. Counsel for the appellees, the plaintiffs below, summarizes this as follows at page 9 of the appellees' brief:

In the present case, Raleigh entrusted final assembly of its bicycles to its authorized dealers. From the evidence, the jury reasonably inferred that the dealer substituted a non-Raleigh fork because he had no suitable Raleigh fork to accommodate the handlebar selected by Mr. Haverstock.

Prior to trial, counsel for the appellees sought to proceed not only on the basis of Section 402A of the Restatement (Second) of Torts, but to impose liability upon Raleigh, not as the manufacturer under § 402A, but vicariously under § 400 as one who supplies a chattel “manufactured by another”. Counsel for the appellants objected to this as § 400 is based on a “theory of vicarious liability”. Forry v. Gulf Oil Corp., 428 Pa. 334, 343, 237 A.2d 593, 599 (1968). Nowhere in the pleadings is there any indication that the plaintiffs sought to impose vicarious liability upon Raleigh as the result of someone else’s activity, viz. Oxford Valley Bicycle Company. Rather, the plaintiffs alleged in both complaints that Raleigh was the manufacturer of the bicycle containing defects. In Willinger v. Mercy Catholic Medical Center, 241 Pa.Super. 456, 362 A.2d 280 (1976), affirmed Willinger v. Mercy Catholic Medical Center, 482 Pa. 441, 393 A.2d 1188 (1978), it was pointed out that vicarious liability and personal liability are separate causes of action.

There can be little dispute that vicarious liability as an employer and liability for personal negligence are separate causes of actions, and as such, would require significantly different trial preparation. Thus, had the court allowed the amendment at trial, the additional defendant would have been seriously prejudiced. We note further that the parties engaged in extensive discovery during which defendant had ample opportunity to amend its complaint once it realized that agency would be critical to its defense. 241 Pa.Super. at 466, 362 A.2d at 285.

It is immaterial that the plaintiffs proceeded on a theory of absolute liability under 402A rather than on negligence; they allege in their complaints that Raleigh was the manufacturer of the bicycle in question. They may not, after the statute of limitations has expired, as in this case, proceed on the basis that they sold or distributed a chattel “manufactured by another” under § 400.

Counsel for Raleigh objected to the interjection of § 400, before trial, as the time for amending the complaint had expired. At the pre-trial conference held on November 30, 1987, the day before trial commenced, the following colloquy took place with respect to the applicability of § 400:

MR. WEISS: [Counsel for Raleigh]
I’m speaking in terms of us being liable for the alleged negligent act or improper act.
THE COURT: ... I don’t think anybody suggests that Oxford Valley was anything other than an independent business, do you?
MS. GREENWOOD: [Counsel for Plaintiffs]
No. A franchise dealer so to speak.
THE COURT: That’s why you say it comes under this 400?
MS. GREENWOOD: Yes. It’s not only just being an authorized dealer. This section just seems completely logical in that it’s saying for negligence what 402A says, taking negligence out of it.
THE COURT: It sounds like it’s going to be an incredibly difficult case on which to charge the jury if this is your theory, but I will sound profound.
MS. GREENWOOD: Just a few matters. To the extent that there is a claim being made that there is improper pleading we will probably tomorrow move to amend, correct any.
Since the statute of limitations expired more than three years earlier, the trial court properly denied the amendment.
THE COURT: They didn’t say improper pleading. He just said that you did not plead agency.
MR. WEISS: I will take the position [and] the cases I cite indicate that you can’t do it now.
THE COURT: You can’t amend to add a new cause of action after the case gets to trial. I would be inclined to agree with that. (Emphasis added.)

The issue was again discussed on the day trial commenced.

MS. GREENWOOD: There was a motion that was filed with regard to the question of agency being pleaded and yesterday Your Honor had indicated that it was inclined to grant that motion.
THE COURT: I was inclined to say that raising a new cause of action — I haven’t memorized your pleadings yet so that I’m not sure what the precise language of your pleadings is, but if a fair reading of your pleadings indicates that there is nothing in there now saying that you are trying this case or bringing this case on the agency theory, it’s too late both for statute of limitations and pleadings problems.

Notwithstanding that the complaints were not amended to allege vicarious liability, the court charged on the basis of § 400 as follows:

Now, Raleigh, Limited is a manufacturer. Raleigh, USA is a seller. Oxford Valley Bicycle Company is a seller. Each of them has this obligation that I have discussed. A manufacturer, a seller, is responsible, if they sell a product that is defective at the time that it leaves their control.
The plaintiff is not required to prove that they’re negligent or careless. You may find them liable even though they exercise care in the manufacture, assembly and distribution of the product.
This is not a negligence case. This a product liability case. If the product was defective at the time that Mr. Haverstock purchased it in December, 1979, [sic] then there is liability.
A corporation such as T.I. Raleigh, Limited, or T.I. Raleigh, USA, which puts out as its own product an item manufactured by some other company, is subject to the same liability as though the item was manufactured itself.
The act of placing one’s name on a product is a factor in assessing responsibility because it frequently causes a product to be used in reliance upon the seller’s reputation. (Emphasis added.)

The portion of the charge that incorporated § 400 could do nothing but confuse the jury. The only thing sold to Mr. Haverstock was a Raleigh bicycle which was indisputably manufactured by Raleigh. The plaintiff did not purchase a conglomeration of nuts and bolts, tires, bicycle chain, gears, fenders, handlebars, and steering fork; he purchased a bicycle made by Raleigh. If the bicycle in question were manufactured by one other than Raleigh and Raleigh represented that it was manufactured by it, then § 400 might be applicable to impose vicarious liability on the company.

A review of the Pennsylvania cases involving § 400 substantiates that it is not applicable to the factual situation before us. In Forry v. Gulf Oil Corporation, supra, a tire was manufactured by B.P. Goodrich Co. and distributed to Gulf Tire and Supply Co. which had its name embossed on the tire casing. The court stated at 428 Pa. at 343, 344, 237 A.2d at 599:

If Goodrich would be liable, then Gulf Tire would also be liable under the theory of vicarious liability set forth in Section 400, Restatement 2d, Torts ... The reasons for the extension of liability in such situation are sound: (a) the name and the trademark of the sponsor, plus the reputation of the sponsor, constitute “an assurance to the user of the quality of the product” (Comment d, Section 400) and (b) “reliance [by the user] upon a belief that [the sponsor] has required [the product] to be made properly for him” (Comment d, Section 400). We adopt Section 400 of the Restatement as part of the tort law of this Commonwealth. In the instant factual situation, Gulf Tire had had its name embossed upon the casing of this tire and clearly put out as its own product this tire within the language of Section 400. In addition to contending that Section 400 should not be adopted by this Court, Gulf Tire argues that Section 400 is presently inapposite because Forry placed no reliance on the name of Gulf Tire on the tire nor was he mislead thereby. Such argument goes to a matter of defense the validity of which would depend upon the resolution of the facts produced in support thereof by Gulf Tire. Under the instant circumstances, if the defect in the tire caused the explosion of the tire, then, under the provisions of Section 400, Gulf Tire would be vicariously liable. (Emphasis added.)

Although Section 400 was adopted as the law of Pennsylvania by the Supreme Court in Forry v. Gulf Oil Corporation in 1968, it was not referred to again in a reported decision by an appellate court of this Commonwealth until 1983. In Burch v. Sears, Roebuck & Co., 320 Pa.Super. 444, 467 A.2d 615 (1983), an electric power mower was sold by Sears, Roebuck under its brand name of “Craftsman”. Sears was not the manufacturer of the mower but was held liable for a defective design in it resulting in personal injuries, as well as General Electric Corporation, the supplier of the mower’s electrical system. The court stated at 320 Pa.Super. at 460, 467 A.2d at 624:

... the act of placing one’s name on a product is a factor in assessing responsibility because it frequently causes a product to be used in reliance upon the seller’s reputation, Restatement (Second) of Torts § 400.

In Burch, there was a firm basis for imposing vicarious liability on Sears, Roebuck, as it placed its brand name on an electric mower although it did not manufacture it. In the case before us, Raleigh placed its name on a bicycle that it did manufacture and there was no basis for interjecting § 400 into the case, even if there had been a timely motion to amend the complaint.

Brandimarti v. Caterpillar Tractor Company, 364 Pa. Super. 26, 527 A.2d 134 (1987), appeal denied Brandimarti v. Caterpillar Tractor Company, 517 Pa. 629, 539 A.2d 810 (1988), illustrates the proper application of § 400 of the Restatement to a situation where the non-manufacturer is held responsible for authorizing its name to be placed on a product which it did not manufacture. In Brandimarti, a forklift which was manufactured by Towmotor, Inc. was defective, resulting in its overturning and injuring the plaintiff. Caterpillar Tractor Company was the parent company of Towmotor. The court below directed a verdict in favor of Caterpillar Tractor and we remanded. Although Caterpillar did not manufacture or sell the forklift, the Caterpillar trade name was conspicuously displayed on the forklift. In the case before us, Raleigh was the manufacturer of the bicycle in question; it did not sell or distribute a bicycle manufactured by another company so as to fall within the scope of § 400 as interpreted in Brandimarti, supra.

Carter v. Joseph Bancroft & Sons, Co., 360 F.Supp. 1103 (E.D.Pa.1973) imposed liability on the licensor of a dress which it did not make. However, the defendant permitted the dress to be identified by its trademark, Ban-Lon. The dress caught fire at a dinner party when crepe suzettes were being served, resulting in serious injury to the plaintiff. The United States District Court held that Forry v. Gulf Oil Corporation, supra, was indistinguishable from the case before it and the defendant was liable under § 400 of the Restatement of Torts.

The primary duty of a trial judge in charging the jury is to clarify the issues so that the jury may understand the issues that they are to decide. Wood v. Smith, 343 Pa.Super. 547, 495 A.2d 601 (1985); Brandimarti v. Caterpillar Tractor Company, supra. The court below was cognizant that it would be very difficult to charge the jury on the issues involved in § 400. We are of the opinion that the evidence did not support a charge raising the issue of vicarious liability. The jury could not help but wonder why the court instructed it on the liability of one who does not manufacture a product when it is undisputed that Raleigh manufactured the bicycle in question. In reviewing an allegedly incorrect jury charge an appellate court must read the charge as a whole, and this is particularly important where the trial judge mentions in his charge a rule of law that appears not to be directly applicable to the case before it. White v. Southeastern Pennsylvania Transportation Authority, 359 Pa.Super. 123, 518 A.2d 810 (1986). Considering the charge as a whole, and the complexities involved in cases involving absolute liability, we may not conclude that Raleigh was not prejudiced by the charge. Similarly, a new trial is required as to Oxford Valley Bicycle Company whose fortunes at trial were inextricably tied to those of the manufacturer of the bicycle.

Orders reversed and case remanded for a new trial.

      . The Supreme Court affirmed on appeal, stating 482 Pa. 441, 444, 393 A.2d 1188, 1189, footnote 2:
      Mercy Catholic Medical Center appeals from the trial court’s denial of the hospital’s request to amend its complaint against additional defendant Go. The hospital made its request after plaintiff’s case had been presented at trial and more than three years after the statute of limitations had run. The hospital’s original complaint against Dr. Go alleged individual negligence in the administration of anesthesia to Leonard Willinger. The attempted amendment would have alleged that Dr. Go was vicariously liable for the negligence of a nurse anesthetist. Such an amendment would have raised a new cause of action against Dr. Go.

      . We held that taking all facts and reasonable inferences in favor of the verdict winners, the jury could have concluded that General Electric was primarily liable for the creation of the danger, and that Sears was only secondarily liable.

      . The court noted in Carter v. Joseph Bancroft & Sons Company, supra, that since § 400 has been adopted under Pennsylvania law, one who supplies as his own product, a chattel manufactured by another, is subject to the same liability as though he were its manufacturer.