American Shipbuilding Co. v. Commonwealth S.S. Co.
| Decision Date | 02 June 1914 |
| Docket Number | 2485.,2484 |
| Parties | AMERICAN SHIPBUILDING CO. v. COMMONWEALTH S.S. CO. |
| Court | U.S. Court of Appeals — Sixth Circuit |
These are companion cases to American Shipbuilding Company v Commonwealth Steamship Company, 215 F. 296, . . . C.C.A . . ., No. 2483, an opinion in which is this day filed. The controlling facts are so closely analogous to the facts in that case as not to require further statement, except in one particular.
The steamship Sheldon Parks was built for and delivered to the Cuyahoga Steamship Company, for the price of $410,000, out of which the Hawgoods received a secret commission of $25,000 and the steamer J. Q. Riddle was furnished to the Milwaukee Steamship Company for the same price and with the same secret commission. Each of these corporations was a company organized for the purpose of buying and operating the boat which it did acquire, and the steamboats Abraham Stearns, Sheldon Parks, and J. Q. Riddle were separately operated till 1911. There were four other boats similarly promoted and built and sold, the entire seven within two or three seasons. The seven distinct corporations had many common stockholders, but there was nothing approaching identity of stock interests, and the chief thing in common was that all were operated and managed by the same agents.
Before 1911, it developed that in the business conditions which had then arisen there was not traffic enough for all the boats, and that it would be better policy to keep part of the boats fully occupied and the remainder tied up, whereby the total overhead expenses would be vastly lessened; but the lack of common ownership made this plan not feasible. In addition, it was difficult for the common agents to distribute the business among the boats without continual dissatisfaction. With these as the main reasons, it was, in the spring of 1911, determined to put all seven boats into the ownership of one corporation. Accordingly, the capital stock of the Commonwealth Company was sufficiently increased, and all the stockholders in the other six corporations surrendered and canceled their stock therein and received in exchange practically the same amount of stock in the Commonwealth Company. All the stock had been originally issued to represent the purchase price of the boats (above the bond issue) at par, and the same figures were used when the exchange stock was issued in the Commonwealth Company, except that there was a slight change designed to equalize more perfectly. Thereupon, each of the other corporations, including the Cuyahoga Company and the Milwaukee Company, executed and delivered to the Commonwealth Company a formal transfer and conveyance of 'all properties of every kind and all choses in action and of all claims and demands of whatever kind and nature whether in law or in equity. ' The Commonwealth Company assumed all the indebtedness of the assignor companies, and each of the latter, including the Cuyahoga and Milwaukee Companies, was, under the laws of Ohio, formally dissolved and wound up.
A. C Dustin and Richard Ingles, both of...
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