Scales v. Sheffield Fabricating & MacHine Co.

JACOBS, President Judge:

Appellant has taken this appeal from the entry of a judgment against it in the amount of $6,291. The only issue to be decided is whether Judge SALMON properly directed a verdict in favor of appellee because of appellant’s failure to admit or specifically deny the averments of the complaint. For the reasons stated below, we affirm in part and reverse in part.

Appellee, a mechanical design engineer, brought this suit in assumpsit asserting his status as an intended third party beneficiary under an agreement executed by the Commonwealth of Pennsylvania and appellant. The contract, dated April 4, 1973, provided that the Pennsylvania Department of Commerce would make a grant of $20,000 in consideration for appellant’s production of a full-scale model of an improved “radial truck” 1 previously designed by appellee.

Attached to the contract, and incorporated by reference therein, was a proposal signed by appellant's president, Anthony J. Pécora, and by appellee. The proposal clearly stated that appellee was to be in charge of all engineering work necessary to develop the improved “radial truck” and that of the $20,000 grant, $10,000 was to be used for engineering, design, research and development, and testing. See record at 23a and 24a. It was on the basis of this proposal that the parties to the contract, which was also signed by Mr. Pécora, entered into their agreement.

In signing the contract and accepting the grant from the Commonwealth, appellant impliedly promised to pay appellee up to $10,000 (100 man days at $100 per day) for *572engineering and development. Appellee, as the dissent agrees, was therefore entitled to sue on the contract as an intended third party beneficiary.

A dispute arises, however, with regard to whether appellant properly availed itself of Pa.R.C.P. 1029(c) in answering both the complaint and the amended complaint.2 Rule 1029(a) provides that a responsive pleading shall admit or deny the averments of fact contained in the pleading to which it responds; Averments in a pleading which are not specifically denied are deemed to be admitted unless the exception set forth in Rule 1029(c) comes into play. See Pa.R.C.P. 1029(b).

The language of Rule 1029(c) may be employed, however, only if the pleader demands proof of the averments to which he is responding and states either that after reasonable investigation he is without information sufficient to form a belief as to the truth of the averment or that he is without such information because the means of proof are within the exclusive control of the adverse party. See Pa.R.C.P. 1029(c). As to the averments of fact contained in paragraph 5 of the complaint, appellant could not properly utilize the narrow exception formulated in Rule 1029(c).3 *573When it is obvious as it is here, that the information necessary to formulate a specific denial is neither within the exclusive control of the adverse party nor unascertainable after reasonable investigation, the court ought to ignore the 1029(c) averment. Delaware Valley Carpeting v. Leicht, 73 D. & C.2d 51, 53 (C. P. Bucks 1975), aff’d per curiam 234 Pa.Super. 754, 342 A.2d 419.

Paragraph 5 contains the following averment:

5. That in addition to the Defendant corporation producing two radial trucks as aforesaid, Brian T. Scales was to be employed by the Defendant corporation for engineering, design, research, development and testing for a minimum of one hundred (100) man days at One Hundred Dollars ($100.00) per day totalling Ten Thousand Dollars ($10,000.00). While the Plaintiff performed the work, he has only been paid the sum of Five Thousand Dollars ($5,000.00) of that amount.

Record at 4a.

To this appellant made a general denial using the language of Rule 1029(c). We agree with the lower court that it is “incredible that [appellant] as a party to said documents (contract and proposal) and the party responsible for carrying out the building of the prototype should be so completely ignorant of what transpired . . . as to be unable to answer the clear and simple allegations of the Complaint.” Record at 96a.4

*574The situation of appellant’s president, Mr. Anthony Pécora, is similar to that of the treasurer in the following example given in Goodrich-Amram 2d: 5

For example, if the treasurer of a corporation were sued by a creditor of the corporation upon a personal guaranty of the corporate debt, and the plaintiff averred the exact amount of the indebtedness of the corporation to him as shown in its books, the treasurer, who has the physical custody of the books and is responsible for the fiscal affairs of the corporation, could not plead no knowledge of the truth of the averments of corporate indebtedness, or that he had made a “reasonable investigation” and could not ascertain the truth. Such an averment would be inherently incredible and untrue. The same ruling should be made in interpreting Rule 1029(c) which repeats the language that the defendant “shall not be required to state what investigation he had made.”

Goodrich-Amram 2d § 1029(c) :1 at 279 (footnote omitted).

Here Mr. Pécora was intimately involved in all stages of the transaction under scrutiny, from the signing of the proposal and the contract to executing the jurat to appellant’s answer. An answer which states, using the Rule 1029(c) formulation, that appellant and its corporate president were unable after reasonable investigation to determine whether appellee had been paid only $5,000 or the $10,000 due him by appellant under the contract is classically and inherently incredible. All appellant and its president had to do was scrutinize the contract and the corporate records.

The lower court properly deemed this response to constitute an admission for failure to admit or specifically deny the averments of paragraph 5. See Pa.R.C.P. 1029(b). There was thus no unresolved issue of fact with regard to *575paragraph 5 and, therefore, the lower court properly directed a verdict in the amount of $5,000.6

The remaining $1,291 of the verdict was improperly entered. Paragraph 7 of appellee’s complaint and paragraph 2 of his amended complaint alleged that appellee had incurred certain expenses in the amount of $1,291 as a result of appellant’s abandonment of the “radial truck” project. The Rule 1029(c) formulation was permissibly used to answer paragraph 7 since nothing in the record suggests that appellant knew or should have known the types or amounts of expenses incurred by appellee.

The order of the lower court is affirmed as to paragraph 5 of the complaint. The case must be remanded for trial, however, on the issue of the expenses allegedly incurred and listed in paragraph 2 of the amended complaint.

SPAETH, J., files a concurring and dissenting opinion. HOFFMAN, J., did not participate in the consideration or decision of this case.

. The “radial truck” is an improved undercarriage for railroad freight cars.

. Mr. Anthony Pécora, appellant’s president, swore to the answer filed by appellant. Record at 93a. He was thus personally involved with both the signing of the contract and the ensuing litigation.

. Appellant’s misconception of the manner in which Rule 1029(c) is to be used becomes even more apparent when the averments of paragraphs 3 and 4 of the complaint are examined. Paragraph 3 stated that, “[T]he said Defendant corporation received a grant from the Department of Commerce ... as evidenced by agreement dated April 4, 1973, a copy of which is attached hereto and marked as Exhibit A, to produce two full size radial trucks for railroad freight cars as designed by the Plaintiff.” Record at 3a.

Paragraph 4 stated that, “[A]ccording to the terms of the Agreement, Plaintiff, Brian T. Scales’, contribution to the project was the value of engineering already carried out by him in the amount of Twenty Thousand Dollars ($20,000.00).” Record at 4a.

Although these averments were fully supported by the proposal signed by appellant’s president and attached to the complaint, appellant used the language of Rule 1029(c), denying the averments “in that after reasonable investigation he is without knowledge or infor*573mation sufficient to form a belief as to the truth of the averment and proof thereof is demanded at trial of this case.” Record at 50a.

. Unlike the dissent, we believe that this could be determined from the pleadings above.

In Pennsylvania pleadings are conclusive in the actions in which they are filed. Philadelphia v. Kenny, 28 Pa.Cmwlth. 531, 369 A.2d 1343 (1977), citing Ham v. Gouge, 214 Pa.Super. 423, 257 A.2d 650 (1969). Since appellant improperly utilized Rule 1029(c), the averments of paragraph 5 were deemed to be admitted, see Pa.R.C.P. 1029(b), and no issue of fact with regard to paragraph 5 remained to go to the jury.

. We are unable to understand the dissent’s conclusion that this analogy is unwarranted. Admittedly the treasurer of a corporation has custody of the corporate accounts but he works for the President who has immediate access to such accounts.

. The lower court did not abuse its discretion in denying appellant’s request to amend the answer to include specific denials of the items in question. The grant or denial of a request for amendment is within the court’s discretion; the right to amend is not absolute and may be denied when necessary, as here, to prevent dilatory tactics. See Goodrich-Amram § 1033:1 at 346.