14 A.2d 386 (Del.Super. 1940), Phoenix Finance Corporation v. Iowa-Wisconsin Bridge Company

Citation:14 A.2d 386, 40 Del. 500
Opinion Judge:RODNEY, J.
Party Name:PHOENIX FINANCE CORPORATION, a corporation of the State of Delaware, v. IOWA-WISCONSIN BRIDGE COMPANY, a corporation of the State of Delaware
Attorney:James R. Morford (of Marvel and Morford) for plaintiff. Daniel F. Wolcott (of Southerland, Berl, Potter and Leahy), Fred A. Ontjes (of Mason City, Iowa) and William C. Green (of St. Paul, Minnesota) for defendant.
Judge Panel:RODNEY and SPEAKMAN, J. J., sitting.
Case Date:March 18, 1940
Court:Superior Court of Delaware
 
FREE EXCERPT

Page 386

14 A.2d 386 (Del.Super. 1940)

40 Del. 500

PHOENIX FINANCE CORPORATION, a corporation of the State of Delaware,

v.

IOWA-WISCONSIN BRIDGE COMPANY, a corporation of the State of Delaware

Superior Court of Delaware, New Castle County

March 18, 1940

Superior Court for New Castle County, No. 39, November Term, 1938.

Case heard by the Court without a jury.

This is an action brought by the plaintiff to recover the amount of two notes, both bearing interest at 8%. One note is for $ 2,000.00, dated December 15, 1932, and due June 15, 1933, and the other for $ 3,125.00, dated January 20, 1933, and due July 20, 1933. Both notes were executed by the defendant to the plaintiff, the present holder.

The sole controversy in this case arises from the plea of res adjudicata.

The defendant to sustain its plea of res adjudicata has introduced a lengthy record of a proceeding in the United States District Court for the Northern District of Iowa and being No. 220 in Equity in said Court, the proceedings being entitled "First Trust and Savings Bank (formerly Bechtel Trust Company) and A. S. Schubert, as Trustees, v. Iowa-Wisconsin Bridge Company, defendant."

The present case, by stipulation was tried by the Court without a jury, and the questions are presented by two motions of the plaintiff, (1) that the exhibits offered by the defendant in support of his plea of res adjudicata be stricken from the record, and (2) that regardless of the action of the said exhibits final judgment be entered for the plaintiff.

Judgment entered in favor of the plaintiff and against the defendant.

James R. Morford (of Marvel and Morford) for plaintiff.

Daniel F. Wolcott (of Southerland, Berl, Potter and Leahy), Fred A. Ontjes (of Mason City, Iowa) and William C. Green (of St. Paul, Minnesota) for defendant.

RODNEY and SPEAKMAN, J. J., sitting.

OPINION

[40 Del. 502] RODNEY, J.

It shall be our endeavor to so compress the facts in this case in such a narrow compass as not to unduly recite the long

Page 387

and sordid story of financial manipulation and mismanagement which has characterized the history of the defendant to such an extent that we wonder that their recital has been confined to reports of civil or equitable proceedings. Great masses of detail are summarized in Bechtel Trust Co. v. Iowa-Wisconsin Bridge Co., (D. C.) 19 F. Supp. 127, and First Trust & Savings Bank v. Iowa-Wisconsin Bridge Co., (8 Cir.) 98 F.2d 416. We shall content ourselves with such statements of fact as may be necessary to make clear our legal conclusions.

The defendant was incorporated in 1928 under the Laws of Delaware, for the purpose of erecting a bridge across the Mississippi River, between the States of Iowa and Wisconsin. After a preliminary period of exploitation by other parties one John A. Thompson, about October, 1930, became interested in the bridge through the instrumentalities of two corporations owned or controlled by him, Thompson & Company and Phoenix Finance System, Inc. After a period during which the building of the bridge was in progress, and on March 19, 1931, the Board of Directors [40 Del. 503] of the Bridge Co., controlled by Thompson, and of which he was President, authorized the Vice-President and Secretary to borrow $ 50,000.00 from the Phoenix Finance System, Inc., with interest at 8%, and to execute a mortgage as security therefor. The mortgage was duly executed and delivered, and book entries made to have the appearance that the consideration of $ 50,000.00 was received by the Bridge Company, but it has been judicially determined (19 F. Supp. 137) that no such payment was, in fact, made. The bridge was opened on June 17, 1931, and shortly thereafter steps were taken to further complicate the elaborate financial transactions of the company. On December 22, 1931, a bond issue of $ 200,000.00, secured by a Deed of Trust, was authorized, and from this point of the distribution of these bonds the facts became acutely material to the legal questions of this case.

At about the time of the distribution of the bonds the Phoenix Finance Corporation, the present plaintiff, became incorporated and, with the same officers as the Phoenix Finance System, Inc., took over all the assets of the old corporation.

Upon the distribution of the bonds it appears that $ 177,600.00 of the $ 200,000.00 issue were held by Phoenix Finance Corporation, either by issue to that corporation or to its predecessor, Phoenix Finance System, Inc.

Default having been made in the payment of interest the Phoenix Finance Corporation requested the Trustees, Bechtel Trust Company (afterwards the First Trust and Savings Bank)...

To continue reading

FREE SIGN UP