Standard Brands, Incorporated v. Millard

• Decision Date: 18 February 1960
• Docket Number: No. 12655.,12655.
• Citation: 273 F.2d 882
• Parties: STANDARD BRANDS, INCORPORATED, a Delaware corporation, Plaintiff-Appellant, v. Earl F. MILLARD, Defendant-Appellee.
• Court: U.S. Court of Appeals — Seventh Circuit

273 F.2d 882 (1960)

STANDARD BRANDS, INCORPORATED, a Delaware corporation, Plaintiff-Appellant, v. Earl F. MILLARD, Defendant-Appellee.

No. 12655.

United States Court of Appeals Seventh Circuit.

January 18, 1960.

Rehearing Denied February 18, 1960.

R. Walston Chubb, St. Louis, Mo., Preston K. Johnson, Jr., Belleville, Ill., Johnson, Johnson, Ducey & Dixon, Belleville, Ill., Robert S. Allen, Lewis, Rice, Tucker, Allen & Chubb, St. Louis, Mo., for appellant.

Marvin E. Klitsner, Lyman A. Precourt, Fairchild, Foley & Sammond, Milwaukee, Wis., for appellee.

Before MAJOR, DUFFY and SCHNACKENBERG, Circuit Judges.

SCHNACKENBERG, Circuit Judge.

This is an appeal by Standard Brands, Incorporated, plaintiff, from a judgment of the District Court sustaining a motion of Earl F. Millard, defendant, to dismiss a complaint against him filed in a diversity of citizenship case by plaintiff, and dismissing the cause. As alleged in the complaint, plaintiff sued as "assignee of substantially all of the assets of Clinton Foods, Inc. (hereinafter referred to as `Clinton'), a Delaware corporation now in dissolution; including all the assets of an unincorporated division of Clinton, known as American Partition Company¹ as a going concern".

The complaint alleges, in some detail, that defendant was a director of Clinton and was chief executive officer of Partition; that he negligently and intentionally failed to carry out his obligations to Partition, resulting in a waste of corporate assets and business opportunities to Partition, and thereby Clinton was damaged.

Plaintiff sues as assignee of Clinton as owner of its cause of action against defendant for such damages.

Attached to the complaint, as Exhibit 1, is a copy of "General Conveyance, Assignment and Transfer" executed and delivered by Clinton (referred to as Grantor) to plaintiff on April 16, 1956, which recites that there was included in assets transferred, inter alia: "(g) All * * *, causes of action, judgments, claims and demands of whatever nature relating to Grantor's Corn Products and * * * Partition Businesses * * *."

Exhibit 1 also recites that Clinton "* * * sold, assigned, * * *" to plaintiff

"* * * all of the property and business (as a going concern) of every name and nature and wheresoever located, of Grantor\'s * * * Partition * * * except refunds or claims for refund of State Income and Franchise Taxes and Federal Income and Excess Profits Taxes paid or to be paid by Grantor, including particularly, but without limiting the generality of the foregoing, the following: * * *" (Emphasis supplied.)

Reference is then made inter alia to real estate, buildings and improvements thereon, machinery, inventories, other tangible property, trademarks and trade names, trade secrets, patents, etc., cash on hand and in banks, accounts receivable, notes receivable, bills of exchange, drafts and checks in transit relating to Grantor's Corn Products and Partition Divisions; all assignable insurance policies, refunds and rebates recoverable under nonassignable insurance policies, advances, the benefit of all prepaid expenses, deferred charges, causes of action, judgments, claims and demands of whatever nature relating to Grantor's Corn Products and Partition Businesses except refunds or claims for refund of State Income and Franchise Taxes and Federal Income and Excess Profits Taxes paid or to be paid by Grantor; all Grantor's leases and contracts; all capital stock of Traver Partition Corporation; certain debentures of Minute Maid Corporation; all other property, whether real, personal or mixed relating to or used in connection with Grantor's Corn Products and Partition Businesses, except refunds or claims for refund of State Income and Franchise Taxes and Federal Income and Excess Profits Taxes paid or to be paid by Grantor.

It appears from the record that "General Conveyance, Assignment and Transfer" was executed pursuant to an agreement for sale dated December 8, 1955, between Clinton, therein called the Seller, and plaintiff, therein called the Buyer.²

1. It is conceded by plaintiff's counsel that at the time of the assignment plaintiff knew nothing of the existence of the alleged cause of action of Clinton against defendant attempted to be enforced by plaintiff as an assignee in this case. There is therefore no indication that plaintiff bargained for the purchase of Clinton's assets having this cause of action in mind. Moreover, there is no contention that at that time the officers or directors of Clinton...